BATH — The City Council on Wednesday approved spending $1.2 million to settle a 2-year-old lawsuit with West Bath.
The panel in separate, 6-1 decisions – with Councilor Kyle Rogers opposed in both votes – approved a settlement agreement to resolve the litigation, and a bond ordinance for the $1.2 million payment.
The bond requires second and final passage, scheduled for Dec. 17.
West Bath has been suing Regional School Unit 1 and member city Bath to recover $1.9 million the town believes it overpaid in the first four years of the school district’s existence. The case was scheduled to be tried this month, until Sagadahoc County Superior Court Justice Andrew Horton postponed it pending the City Council decision.
The settlement eliminates the need for a trial.
“I couldn’t vote to settle because the entire financial accountability was laid in the lap of the Bath taxpayers,” Rogers wrote in an email after Wednesday’s meeting. “I was disappointed that absolutely no accountability was placed on (City Solicitor) Roger Therriault or (former RSU 1 Superintendent) William Shuttleworth.”
Horton ruled in June that RSU 1 overcharged West Bath more than $1.9 million, but stopped short of ordering reimbursement of the overcharges, choosing to leave that issue and others to be decided at trial.
The lawsuit, filed in October 2012, claimed West Bath should have been assessed a total of $8.2 million over the course of four years, but instead paid $10.1 million. The suit claimed RSU 1 owes West Bath $1.9 million, plus interest.
Because of West Bath’s overpayment, Bath underpaid RSU 1 by $1.6 million, City Manager Bill Giroux said Monday. The $1.2 million settlement was the result of negotiations between West Bath and Bath, he said.
The insurance carrier for RSU 1 will also pay West Bath $50,000, according to a West Bath press release.
West Bath had included Arrowsic and Woolwich in the lawsuit, claiming that they had underpaid, but the amount was small enough for Horton to dismiss those towns from the case, the manager said.
Horton said in his June 17 decision that the cost-sharing mistake led to greater education bills for West Bath and smaller ones for Bath, Arrowsic and Woolwich. Phippsburg was not named in the lawsuit.
Bath will borrow the $1.2 million through a 10-year bond, paying about $130,000 a year, Giroux said.
Bath will pay West Bath the funds in full within 30 days, according to the West Bath press release.
“I feel like it’s a fair settlement,” Giroux said. “Our risk was, if we lost would have had to pay the $1.6 (million) and possibly interest as well, plus our legal fees. So that would have come to nearly $2 million if we had lost. It was an all-or-nothing type of trial.”
Attorney Sally Daggett, who represented West Bath, noted in the town’s press release that West Bath residents will decide at future town meetings how to spend the settlement money. Board of Selectmen Chairwoman Paula Nelson said selectmen would probably recommend the funds be put aside to pay for future education costs.
West Bath has received final approval from the Maine Department of Education to withdraw from Regional School Unit 1.
A public hearing on withdrawal will be held at West Bath School at 6 p.m. Thursday, Dec. 18. A withdrawal referendum will be held Jan. 13, 2015.
Selectman Peter Oceretko, co-chairman of the town’s Withdrawal Committee, said the final withdrawal agreement, dated Nov. 18, includes one change from DOE’s Sept. 28 preliminary approval.
A major concern expressed by district residents at an Oct. 22 withdrawal hearing was that, under the preliminary agreement, students from other towns in RSU 1 would no longer be able to attend the West Bath School.
But the final pact includes an agreement with RSU 1 that allows current school choice students not residing in West Bath to continue attending the West Bath School, Ocerekto said via email. He had noted that RSU 1 policy calls for its own students to remain within the school district.
“We have since resolved the issue to the benefit and satisfaction of both parties,” he said.
West Bath needs a minimum voter turnout of 50 percent of the total ballots cast in the November gubernatorial election for the January referendum to be valid. The withdrawal initiative’s success requires a simple majority of votes: 50 percent plus one.
If withdrawal is approved, a three-member transition committee will be formed. The panel will create a new school administration, form a budget, and set a special election to establish a new school board, according to Oceretko.
West Bath’s final day in RSU 1 would be June 30, 2015. Students from the town could continue to attend their own school, which serves kindergarten through grade five. For the first year following withdrawal, West Bath students would be able to attend the RSU 1 school they would have gone to were the town still in the district.
Afterward, students from West Bath “may choose to attend any middle or secondary school that suits their educational goals or desires at which they are accepted,” according to the agreement.
RSU 1 has agreed to accept middle and high school West Bath pupils as tuition students for 10 years after withdrawal. At that point, in 2025, a new agreement would have to be negotiated, RSU 1 Superintendent Patrick Manuel said Sept. 30.
West Bath residents voted 185-64 in January to initiate the process of withdrawing from RSU 1, which the town helped form in 2008.
— Alex Lear