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VOL. 126 | NO. 25 | Monday, February 7, 2011

MCS Seeks New Court Order For $57 Million

By Bill Dries

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City leaders responded to a new filing by Memphis City Schools in the ongoing funding dispute between the two by saying the city intends to pay the $57 million two courts have ordered it to pay MCS.

“You have never heard us say we are not going to pay,” Memphis Mayor A C Wharton said Friday evening when told of the Chancery Court filing.

MCS attorneys are seeking a court order to enforce a writ of mandamus from a year ago that ordered the city to pay $57,460,947.

The one time payment represents funding cut by the Memphis City Council in 2008 for the 2008-2009 school year.

The school system sued the city claiming state law doesn’t permit the city to reduce funding.

MCS won the lawsuit in Chancery Court and in state appeals court. The Tennessee Supreme Court refused to hear the city’s further appeal.

The payment was delayed pending the appeals, but the latest court filing in the case says payment is now “absolutely mandatory and as to which no discretion exists.”

“Since the remand, the parties have attempted to resolve this dispute at the highest levels of the city and the city schools administration,” wrote attorney Michael R. Marshall, in this week’s filing. “Unfortunately, these negotiations have proved unsuccessful and your plaintiff now seeks enforcement of the writ as originally granted by this court.”

Memphis City Council chairman Myron Lowery, in a written statement, said, “The city accepts this responsibility and Memphis City Schools will be paid.”

He also raised the issue of still pending counterclaims by the city which claim MCS owes the city more than $150 million for financing of school construction and renovation projects.

“Neither of the city’s counter claims have been decided by the Chancery Court,” Lowery said. “If either of these counter claims is decided in the city’s favor, it could reduce or eliminate the city’s obligation.

Marshall, in his court filing, notes that discovery is underway on the counter claims.

“However, the findings which the court has already made are sufficient to establish that the counter claim is an entirely separate matter and should not be allowed to stand in the path of the city performing its ministerial function as and complying with the long standing mandamus.”

Wharton and MCS Superintendent Dr. Kriner Cash have been negotiating terms of payment in the last year. Marshall wrote that the city has “unquestioned discretion as to the method of financing the payment.”

But Wharton and Cash have been talking about an installment plan that would allow the city to pay over several years. Some of the offers and counter offers have involved $54 million total over eight years - $38 million over fewer years and a lump sum of $21 million.

The Memphis City Council voted late last year to have its attorney seek a mediator to negotiate a payment plan between the two parties.

Wharton said as recently as last month that the talks with Cash have continued despite being overshadowed by the prospect and coming referendum on schools consolidation.

PROPERTY SALES 56 295 6,392
MORTGAGES 26 180 4,035
BUILDING PERMITS 128 840 15,361
BANKRUPTCIES 31 153 3,270