THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, March 2, 1996 TAG: 9603020249
SECTION: FRONT PAGE: A4 EDITION: FINAL
SOURCE: BY ALETA PAYNE, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 64 lines
Mordecai L. Smith said Friday he does not plan to resign from the school district, despite a scathing special grand jury report that called on him to quit or face prosecution.
In a brief interview, Smith said he ``absolutely'' plans to remain with the district where he was recently reinstated as director of budget development on a probationary basis.
Commonwealth's Attorney Robert J. Humphreys said on Wednesday when the report was released that he would pursue all the grand jury recommendations to him. That would include seeking indictments for malfeasance from the regular grand jury for Smith and any of the seven School Board members cited in the report should they not resign in a timely manner.
``I think the ball is in the court of the School Board and Mr. Smith,'' Humphreys said at that time.
Smith's reinstatement last month, late in the special grand jury's deliberations, clearly provoked the jurors. The seven board members who supported Smith's return instead of the administration's recommendation to terminate him were called before the grand jury to explain themselves even though six of them had already testified. Smith had also served as chief financial officer, but he did not resume that role.
Indeed, based on the report, the jurors were astounded by the decision and highly critical of those who made it saying they had ``lost touch with reality.'' Given the jurors' incredulity at that decision, it appears Smith's reinstatement may have altered to some degree the tone of the report, which even legal experts have described as surprisingly harsh.
Smith comes under fire for ignoring warnings from other staff members of a looming crisis, fabricating numbers and violating School Board policy. The report says the budget document developed by Smith and then-superintendent Sidney L. Faucette ``contained a great deal of fiction.''
Smith has said since the discovery of a $12.1 million deficit at the end of the 1994-95 fiscal year that he acted on orders from Faucette, who in turn has said he was lied to by Smith.
Still unexplained is one of the report's most bizarre revelations. The jury found that after the board adopted the 1995-96 budget, Smith collected all but a handful of copies and reissued a different document, never approved by the board, with $2.9 million in changes from the original.
According to the report, Smith explained the changes as a ``realignment'' that would not require board approval, an argument which the jurors harshly dismiss. It was not immediately clear how the budget was changed. Associate superintendent Donald Peccia, who was put in charge of finance after Faucette left to take a job in Georgia last summer, said he had worked under the assumption that the budget in the district's computer system was the one approved by the board.
On Friday, Smith declined to comment on the allegations.
``I discussed that in the executive session of the board'' (prior to his reinstatement), Smith said. ``I completely rebutted that issue. It seemed to satisfy the board.''
Smith referred other questions to his attorney, who was expected back in the area Friday evening.
KEYWORDS: VIRGINIA BEACH SCHOOL BOARD INVESTIGATION BUDGET DEFICIT
by CNB