Mediator agreed upon in schools lawsuit - FOX13 News, WHBQ FOX 13

Mediator agreed upon in schools lawsuit

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MEMPHIS, Tenn. (FOX13) -

Was it a political move or a litigation tactic?

A mediator has been agreed upon to sort out a $57 million judgement in favor of legacy Memphis City Schools, the money the city has not yet paid to Shelby County Schools, which would receive the payment now that MCS is out of business.

MORE: Council goes after schools for $88M decade-old loan
DOWNLOAD: Documents Memphis proves school system owes $88M


But SCS board member David Reeves wonders if it's even worth pursuing, especially after Tuesday's developments in city council.

Council was considering a motion to pay installments to SCS to finally pay back the $57 million, but council members flipped the script and instead voted to pursue $88 million they say the school system owes the city.

"It's a bad idea for the Memphis City Council to even think about trying to take money away from education," Reeves said. "It's in poor taste. I really expect better of our city government."

But Reeves said he no longer expects the city to pay that court-ordered $57 million for withholding payment in 2008. Even though a third-party mediator has been agreed on, Reeves says it's getting too expensive to fight this lawsuit.

"We've been mediating forever and ever never materializing anything," he said. "So from my viewpoint I don't think it's very effective."

City council attorney Allan Wade advised the council Tuesday to continue with the counterclaim. Wade says the city lent legacy MCS about $88 million to build schools and that money was never paid back.

"The city is aggressively and actively pursuing all amounts it is owed," Wade said. "Otherwise our citizens are baring a responsibility for debts it does not owe for assets it does not own for schools that are now being closed."

But Reeves says money to build schools is not a loan.

"The school system is not a funding body and we have no ability to generate our own funds," Reeves said. "There is no loan from the city of Memphis. When they give you money it's to fund the school system."

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