A new fund could be created in the Memphis city budget to begin to pay the $57.5 million a court ordered city officials to pay to the Shelby County Schools system for the 2008-2009 school year.
The Memphis City Council will vote Tuesday to ask Memphis Mayor A C Wharton to create the “Schools Litigation Fund” in next year’s budget. The resolution would also ask the mayor to put $4.8 million in the fund next year. That payment would be the first of 12 installment payments to the fund.
The resolution was proposed by council member Lee Harris and it says “there is currently no financial plan in place to cover this contingent liability in the event that either the City of Memphis is ultimately unable to avoid this claim through further litigation or in the event that a settlement is reached whereby the City of Memphis agrees to make payment to Shelby County Schools.”
Coming up with the funds in one year would require budget cuts, borrowing, and/or depleting the city’s reserve fund, the resolution says. If budget cuts are required, “it would place a significant hardship on the citizens and employees and the City of Memphis.”
Efforts have been underway for years to mediate the $57.5 million payment to the school system. Council member Shea Flinn has long said the city has a counter claim against the school system that totals more than $140 million and that the city won’t pay until all claims have been settled.
