Lynchburg schools deficit draws comparisons, differences to Va. Beach case

In the summer of 1996, two Virginia Beach school board members stood before a jury and heard their fates pronounced: not guilty.

Brenda Blanchette, president of the E.C. Glass High PTO, says she fully supports the city’s school board, which has faced criticism after auditors found it ended the last fiscal year $440,000 in the red.

That was “very disappointing,” Blanchette admitted, particularly given that it was found at such a late date. But since then, she said, the board and its chairwoman have been “frank and honest” about the mistakes and acknowledged the need to strengthen fiscal oversight.

“I like what I’ve seen out of them so far,” said Blanchette, who has a background in accounting. “… I really think they’ve done a great job. It’s a difficult thing to be in the public eye.”

The disclosure of the Lynchburg City Schools deficit has stirred controversy in the community with some left unsatisfied by the district’s explanation of the error, which has been attributed to overly optimistic revenue projections and a failure to monitor income levels.

The school board has since announced a series of new measures aimed at improving internal checks and balances.

City Councilman Jeff Helgeson, Ward III, has called for heightened accountability in the wake of the budget blunder. Earlier this month, resident Jim Weigand approached council and said school leaders should be investigated for criminal malfeasance. Helgeson, a Republican, moved that they seek an opinion from the commonwealth’s attorney; he was voted down 6-1. Several council members criticized Weigand’s presentation and noted he had no children of his own in the schools.

Mark Peake, chairman of the Lynchburg Republican Party, said he was “appalled” by the behavior of those officials. “Whether or not the gentleman had any children in the school system is completely irrelevant,” he said. “He was a tax-paying citizen there to express his feelings about how his taxes are being spent. All city councilmen should remember they work for that guy and not the other way around.”

On Friday, the commonwealth’s attorney announced he is not bringing any charges against the schools, saying the deficit does not meet the standard for malfeasance.

Peake, interviewed prior to that announcement, declined to give an opinion on the malfeasance question but did say the deficit was a “significant issue” that required a “full and thorough” explanation.

“It seems to me that the explanation given did not fully pan out,” he said, noting the school’s board original analysis contained faulty numbers, a mistake pointed out by Helgeson. The board later corrected its figures in a memo to council, but did not offer an explanation for the earlier mishap.

Helgeson has been the target of criticism on council and in the community for his vocal disapproval of school leaders.

Walter Fore, a longtime civil rights activist, went to a school board meeting shortly after that body appeared before council to say he was outraged by their treatment. Councilman Ceasor Johnson, Ward II, had accused Helgeson of attacking the superintendent at their January session, which Helgeson denied.

Fore agreed with Johnson’s assessment, saying Helgeson had called people’s “character into question” and shown a lot of “gall.”

“I wanted to let (school leaders) know that members of the community were very upset with the way they were treated, black and white,” Fore said. “… I think they’re owed an apology.”

School Board Chairwoman Julie Doyle, the district’s most frequent spokesperson on this issue, declined to comment on any ongoing dispute or the suggestion some school officials may be guilty of malfeasance. “I’m staying out of the debate at this point,” she said.

Doyle would only reiterate her past public comments on the deficit, saying the school board was “not taking it lightly at all.”

“We worked very quickly to identify the issue and I feel very good about the steps taken,” she said. “This whole process made it very clear we need better monitoring and control. As rough as it has been to have this come to light, at the end of the day I do believe this is a positive thing because we’re going to be much more knowledgeable and engaged in our finances in the future.”

In the schools, Blanchette said she hears few parents discussing the deficit. It seems to be a more common topic among teachers, she said, possibly because school employees are more likely to feel the direct consequences of any money troubles in the district.

“I think the teachers are more sensitive to this issue because they’re concerned they could be financially impacted,” she said. “I would say the teachers are talking about this and the parents are not.”

- Alicia Petska

The pair — just exonerated on malfeasance charges related to the worst financial crisis ever at Virginia Beach City Public Schools — “paused quietly to savor the decision,” according to The Virginian-Pilot.

Then one smiled, shook his at-torney’s hand and shouted, “Hallelujah!”

Today, the Virginia Beach case offers perhaps the only real-world model for a malfeasance-in-office case dealing with Virginia school leaders.

Its origins bear some broad similarities, and many differ-ences, to Lynchburg’s own controversy over a $440,000 deficit — a situation that earlier this month led to some contentious debate among City Council members over whether the commonwealth’s attorney should weigh in on the matter.

“If I were your Lynchburg prosecutor, I’d say this is a problem I don’t need,” said Moody “Sonny” Stallings, one of the defense attorneys in the Virginia Beach case.

“It backfired on (our prosecutor) big time,” Stallings said. “He never thought two would stand and fight.”

In 1995, an audit revealed the Virginia Beach schools had a $12 million deficit. Later inquiries concluded administrators misled the school board, falsely claiming they were on track to realize a surplus.

Lynchburg City Attorney Walter Erwin, who advises both city council and the school board, said local conditions differ on several critical points.

Most notably, he said, Lynchburg’s deficit is not believed to be the result of deliberate misconduct on the part of school leaders.

“From everything we’ve seen, this appears to be an honest mistake,” he said. “… We have no indication any school official acted intentionally in an inap-propriate manner and the school board” has responded to the problem.

In the Virginia Beach case, the public demanded answers, and a grand jury was impaneled to investigate. Its findings, released in February 1996, blasted school leaders as reckless and incompetent. They demanded either mass resignations or criminal prosecutions.

Most officials, while denying any wrongdoing, chose the former.

On the school board, only two members, Timothy Jackson and Ferdinand Tolentino, refused to step down. Both were indicted on charges of malfeasance in office, a low-level misdemeanor punishable by a fine.

The three-day trial that summer was a real “dog and pony show,” recalled Stallings, who represented Jackson.

The prosecution divided a community already roiled by months of controversy. Some felt the charges were just comeuppance for the officials. Others felt the prosecutor was crossing the line to score political points, possibly spurred on by an unhappy City Council.

“We wanted accountability,” said former Mayor Meyera Oberndorf, who recently stepped down after 20 years in office. “There didn’t seem to be anyone paying close enough attention to the budgets being presented at the time by the superintendent of schools.”

To the prosecution, it was an open-and-shut case. The defendants were both on school board. Both voted to spend money the district didn’t have without council’s consent, the standard for malfeasance.

Jackson and Tolentino, meanwhile, defended their records and said they did question the budget.

The deficit was not caused by the school board’s failure, they said, but rather by the deliberate deceptions of the district’s staff.

“The people on boards and school boards, most of the time, aren’t accountants,” explained Stallings, a partner in a Virginia Beach law firm. “Even if they are, they usually don’t get in the bow-els of a big organization like that and scrutinize the books.”

At trial, the prosecution called a series of witnesses to the stand. The defense responded by asking each if they could prove the board knew how bad things were. None could.

The not guilty verdict brought the height of the deficit rancor to a close. City and school leaders, however, continued to suffer lingering tension.

Timothy Jenney, the former Virginia Beach superintendent who’s now the superintendent in Fort Bend, Texas, said the two had a “horrible relationship” for years.

Early in the controversy, the city suggested it should assume control of some school finances and the embattled school board signed an agreement supporting the change.

By fall 1996, though, a new slate of board members was in power and that group rescinded the agreement.

In the end, no city and school consolidation ever took place.

The school board and city council continued to publicly spar for years. “Eventually, I think we managed to carve out a position of respect,” Jenney said. “Although it was messy getting there.”

Mayor Meyera Oberndorf said today the city and schools enjoy a more collegial relationship.

“We all have grown,” she said, adding both sides benefited from deciding to “sit down calmly and talk things out.”

In Lynchburg, some are suggesting the school deficit of $440,000 be pursued as a potential malfeasance matter. Commonwealth’s Attorney Michael Doucette said Friday he didn’t believe the local district’s short-fall met the standard for malfeasance and he has no plans to prosecute.

Jenney said he hoped “reasonable people act reasonably” in the Lynchburg case.

“Because,” he said, “tearing the system apart either on the school side or the municipal side, in the final analysis, isn’t worth it. Could things be better? Yes. Could they be fixed? Yes. But fighting creates quite a fallout.”