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VOL. 128 | NO. 230 | Monday, November 25, 2013

Schools Agreements Involve Art of Settlement

By Bill Dries

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Technically, the suburban Shelby County governments that have reached tentative agreements with Shelby County Schools are not paying, in those agreements, for school buildings.

The art of settlement has been the name of the game as suburban Shelby County governments begin reaching agreements with Shelby County Schools.

(Daily News File/Andrew J. Breig)

They are paying $10 each in quitclaims for the buildings and much larger amounts to settle all claims in general, notably the pending lawsuit in U.S. District Court for the Western District of Tennessee.

But if they miss one of the “settlement” payments over a 12-year period, the school buildings in that particular agreement revert back to Shelby County Schools.

Such is the nature of legal settlements in general when the issues are hotly contested and all sides seek to back away from the rhetoric as well as from pursuing the legal claims they made that brought all sides to the table in the first place.

All sides in the settlement talks that have so far led to tentative agreements have emphasized the money the suburban school systems would each pay Shelby County Schools is not for the school buildings.

“It’s a settlement. It’s not a purchase of the buildings,” Bartlett Mayor Keith McDonald said last week, as he confirmed the dollar figures in the tentative agreement involving his city. “It’s a quitclaim deed for $10, but it’s not a purchase of the buildings. It’s a settlement cost.”

Such is the nature of settlements. In this case, each of the settlements includes quitclaim agreements that transfer the school building en masse to a suburban school system for $10, considered a token amount.

But each of the agreements includes identical language with different dollar figures for each suburb that says if the suburban school board misses one of the 12 larger annual “settlement” payments, “the building and property described in numbered paragraph five of this agreement shall revert to the Shelby County Board of Education in according with the provisions set forth in the Deed.”

The buildings and property in paragraph five are the school buildings.

A few lines below is language that is the art of the settlement.

“The payments required by this paragraph shall not be made a consideration of the transfer of title contemplated in paragraph 5, but are instead made in return for the other promises and covenants contained within,” it reads.

One of those other promises and covenants is that the money paid under the agreement but not in the quitclaim deed goes to Shelby County Schools “to reduce its retiree, health and life insurance liabilities incurred as of May 31, 2014.”

That is the continued retirement costs and benefits obligation that Shelby County Schools will have for teachers even if they leave Shelby County Schools for the new suburban school systems. Shelby County Schools superintendent Dorsey Hopson has estimated preliminarily that the cost of that to the school system could be as high as $28 million.

It is those costs that were pegged early on in the discussions as the way around any of the sides claiming victory or admitting defeat – or doing both, depending on a particular part in the settlement.

“They can call it whatever they want to,” McDonald said in late October of the retirement cost estimate by Hopson, before the talks were moving toward a settlement. “It’s consideration. It’s whatever they want to call it. For me, the only way I’m going to consider it is if it’s tied to the judge in some kind of settlement getting the 14th Amendment claim settled as part of the overall piece.”

The 14th Amendment claim is the Shelby County Commission’s third-party claim in U.S. District Court for the Western District of Tennessee that the suburban school districts violate the U.S. Constitution’s equal protection clause by racially “resegregating” public schools in Shelby County.

The settlement covers an agreement by the Shelby County Commission to dismiss the suburban school systems and suburban governments as defendants.

It would end the nearly 3-year-old case that began as a lawsuit by the legacy Shelby County Schools system contesting its merger with the legacy Memphis City Schools system.

MORTGAGES 80 320 1,066
BUILDING PERMITS 120 590 2,248