The Virginian-Pilot
                             THE VIRGINIAN-PILOT 
              Copyright (c) 1996, Landmark Communications, Inc.

DATE: Thursday, February 29, 1996            TAG: 9602290278
SECTION: FRONT                    PAGE: A6   EDITION: FINAL 
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER 
DATELINE: VIRGINIA BEACH                     LENGTH: Medium:   62 lines

GRAND JURY REPORT PUTS COUNCIL IN TIGHT SPOT ``IF ALL THESE PEOPLE RESIGN, WHAT DO YOU DO ABOUT A SCHOOL BOARD?'' COUNCILMAN ASKS.

The special grand jury considering the school district's financial crisis cleared the City Council of responsibility Wednesday but left the 11-member body in an awkward spot.

``If all these people resign, what do you do about a School Board?'' City Council member John A. Baum wondered aloud Wednesday.

The grand jury recommended that all seven School Board members who have served more than a year quickly resign. Two other board members have already stepped down.

The City Council could temporarily fill five vacancies; with the Virginia Beach Circuit Court making the other appointments. Elections set for May will fill those spots, but the winners would not take office until July 1.

Council members are concerned about finding people who would be good ``caretakers'' of the school system until newly elected members take office. Tuesday, the council nominated businesswoman Delceno C. Miles for the Blackwater Borough seat vacated earlier this month by Susan L. Creamer.

But the appointment process is slow, and council members said they are loath to nominate someone who will face a contested election in two months.

The jury strongly supported the City Council's efforts to merge the district's financial departments into its own, and in part blamed the crisis on the state's school board system, which limits board members' fiscal responsibility. The council is responsible for raising taxes to support the school system, but it has no control over how that money is spent. The council has repeatedly pushed the School Board to merge purchasing, accounting and payroll functions with the city. Board members have said they support consolidation but they fought the council's efforts to require a merger.

The majority of council members reached Wednesday mentioned the jury's conclusion that the system's structure contributed to the problem.

Several council members said they thought the district's fiscal problems were made worse by the switch from an appointed School Board to an elected one. If a similar crisis had arisen in the past, council members could have required more cooperation from the board, they said.

``The School Board and superintendent need not concern themselves with the necessity to be efficient or to set priorities because they are not responsible to impose the taxes to fund their requests. . . ,'' the jury's report says. ``The City Council, on the other hand, must raise the tax money. once it is appropriated.''

Council member William W. Harrison said the jury's conclusions make him nervous about the school district's budgeting for construction projects and for the next fiscal year.

Harrison said he had regained some confidence in the district's budgeting after former budget director Mordecai L. Smith was placed on administrative leave. But the board's reinstatement of Smith made him nervous again, Harrison said.

KEYWORDS: GRAND JURY VIRGINIA BEACH CITY COUNCIL VIRGINIA BEACH SCHOOL

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