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

DATE: Friday, March 29, 1996                 TAG: 9603290462
SECTION: LOCAL                    PAGE: B3   EDITION: FINAL 
SOURCE: BY ALETA PAYNE, STAFF WRITER 
DATELINE: VIRGINIA BEACH                     LENGTH: Short :   48 lines

SCHOOL DISTRICT AGREES TO GIVE SMITH $30,000 HIS SEPARATION PACT ALSO INCLUDES A YEAR OF HEALTH BENEFITS; HE AGREES NOT TO SUE.

Mordecai L. Smith will receive a $30,000 lump-sum payment and continuation of his health benefits for one year, according to the separation agreement between him and the school district.

Along with Smith's resignation from his post as the schools' director of budget development, the district gets his promise that he will not sue the schools, its employees or the board.

``It's basically a settlement based on a compromise - severance pay,'' said Attorney Joseph L. Lyle Jr. who has represented the district in matters related to its financial problems.

``It was agreeable to both sides.''

Smith's attorney, Timothy P. Sceviour, said he did not have a copy of the agreement and declined to comment. Smith had signed the document more than a week ago, however.

Smith resigned on March 19 as it appeared the School Board would muster enough votes to fire him. He had been reinstated to the budget development job on a probationary basis in February, but not to the chief financial officer's post he had held as well.

Superintendent Timothy R. Jenney said there was money in the budget to pay both a CFO and budget development director, but that Smith had been paid from only one of those salary lines. The separation agreement payment will come from the other salary line in the budget, Jenney said.

Smith has been a key player in the district's ongoing financial crisis. He had assured board members that the district would end the year with a small surplus just days before a multimillion-dollar shortfall was discovered. He was placed on paid administrative leave in September.

A scathing special grand jury report on the district's finances called for Smith, among others, to resign or face malfeasance charges. Smith's attorney said the potential charges had nothing to do with the resignation.

The school district will also continue Smith's health insurance coverage for a period of one year or until he is employed by another company offering comparable health insurance, whichever comes first.

KEYWORDS: SETTLEMENT VIRGINIA BEACH SCHOOL BOARD by CNB