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School funding lawsuit settlement nears closure

The Memphis City Council voted 10-0 Tuesday to approve a $41.8 million settlement and end a six-year funding dispute over local schools.

The agreement now goes to the Shelby County School Board, which is expected to sign off on the settlement at its next business meeting on Jan. 27, or at a special session this week.

Under the compromise hammered out during mediation talks this month, the city will pay Shelby County Schools $28 million in cash, with the first payment of $8 million due by Feb. 15, followed by annual payments of $1.3 million during the next 15 years. The city also will pay the district’s outstanding bond debt of $8 million and provide police officers at schools through June 30, 2016, valued at about $2 million.

The longstanding lawsuit dates to 2008 when the City Council voted to withhold $57 million from the former Memphis City Schools. The city argued it was not legally obligated to pay the district and that the school system owed the city for previous debts. The schools sued the council and won, but the case has been stalled in appeals and counter lawsuits.

In recent months, Memphis Mayor A C Wharton and school Superintendent Dorsey Hopson have pushed to reach a settlement to put the lingering dispute to rest. Gaining approval from the City Council, which has rejected previous proposals, was a significant step toward their goal.

Hopson has said he intends to invest the money in the district’s school improvement effort known as the Innovation Zone, or iZone. The initiative seeks to turn around low-performing schools by giving them flexibility over their budgets, staffing, schedules and programming. It has been funded through federal School Improvement Grants, which run out in 2016.

Thus far, six of the 13 schools in the district’s iZone have improved enough academically so that they no longer are at risk for state intervention.