DATE: Saturday, April 26, 1997              TAG: 9704260251

SECTION: LOCAL                   PAGE: B8   EDITION: FINAL 

SOURCE: BY PHILIP WALZER, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:   64 lines

INCOMING NSU PRESIDENT SAYS SOME DEFICITS RAISE ``HUGE RED FLAG''

Norfolk State University's next president, Marie V. McDemmond, said Friday that deficits in some university accounts raise a ``huge red flag'' and need to be investigated.

During a meeting of NSU's Board of Visitors, she said financial statements showed that deficits in some NSU auxiliary accounts totaled $4 million. The auxiliary budget - part of the university's overall budget - includes athletics, food services and parking.

``None of us knew that till I came here,'' she said of the deficits. ``I think we have to address how that was caused and how we get rid of it.''

McDemmond spoke during a board discussion of whether to conduct an independent audit to look more closely at campus finances. The board decided to delay action.

After the meeting, McDemmond said in an interview, ``Operating anything in deficit is a huge red flag.''

McDemmond, vice president for finance at Florida Atlantic University, will succeed NSU President Harrison B. Wilson July 1.

The board's rector, William R. Miller III, the owner of the Duck-In restaurant in Virginia Beach, said state audits have shown that NSU is financially sound: ``The university is in the black. We're not running a deficit'' overall.

But he supported an independent audit to give the board a better handle on university finances.

``The state audit is clear and specific, but it is not getting into the inner workings'' of the university, Miller said. ``We want to get another look at the finances since we're a new board and we have a new president.''

Nearly all 13 board members have been serving for less than three years. Five were appointed by Gov. George F. Allen earlier this year.

The most recent state audit, for the 1995-96 school year, listed a handful of concerns - none including the auxiliary budget - but said Norfolk State had ``no . . . material weaknesses.''

The audit shows that the auxiliary budget, as a whole, ended the year with a $986,000 surplus. Shortfalls in auxiliary categories - mainly dorms and athletics - totaled more than $3.1 million. But they were more than offset by surpluses in other auxiliary areas like recreation facilities and the university center.

Walter J. Kucharski, Virginia's auditor of public accounts, said Friday that state law requires universities to keep balanced auxiliary budgets, but not every auxiliary category must be in the black.

The state audit, he said, showed that NSU overall has ``sound accounting practices.''

One of NSU's new board members, Marian Harris, a retired lawyer who lives in Virginia Beach, proposed the independent audit. But not all her colleagues saw the need, so the motion was tabled until the next meeting.

William H. Davis Sr. of Richmond said, ``I just don't understand the reason why. Checking up on the state: Is that what we're doing?''

The audit discussion came after more than two hours of debate on changes in Wilson's retirement package.

Edginess crept into the members' voices as they discussed the audit.

Actor Tim Reid, sitting next to Harris, asked: ``How much is this going to cost, Mrs. Fiduciary?''

She said the cost wouldn't exceed $50,000, which sounded like too much to some board members.

Wilson was not present during the discussion and could not be reached Friday afternoon. KEYWORDS: NORFOLK STATE UNIVERSITY BUDGET DEFICIT

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