Nearly a dozen years of litigation and legal fees came to a close during Thursday’s meeting of the Wayne County School Board.
After adopting the FY24 Budget, members of the panel heard about a Joint Stipulation of Final Settlement with the Quitman School District. Members were told that Quitman’s School Board had already approved the measure, thereby ending nearly 12 years of litigation between the two school districts.
The legal wrangling began when Quitman sued the WCSD regarding oil royalties shared in Section 16-10-7, which is shared by the two counties. The litigation centered around student counts and how the royalties should be shared.
WCSD won at every level, including with the Mississippi Supreme Court, and it appeared that the matter had been settled. There was never any question that the money should be shared; instead, the legalities centered around what percentages each district should receive.
While members of the WCSD appeared to clear the matter, a similar case between Jones County and Covington County reopened the case. In that matter, courts ruled that the custodial district — or the one where the oil well was located, in this case, WCSD — would hold onto the funds and invest it on behalf of the other school district. All of that would be done in the proportions established by student counts.
William Whitehead, who represented WCSD in the litigation, explained the settlement to Board members via conference call.
“We won on appeal,” Whitehead said. “With the other court ruling, though, there is to be one principle account per that township and it is to be held by the custodial district.
“You only share the principal. At one point, the court ruled that we should prorate the principal and that amounted to about $10.5 million of principal being sent to Quitman. That stopped in July 2022 with the Supreme Court ruling. We were holding that principal for Quitman waiting for the court rulings to be completed.”
Whitehead said there were two sets of money — the funds sent to Quitman before July 2022 and then the funds for Quitman being held by WCSD after that date.
“The courts ordered Quitman to return the prorated funds in order to put them under one fund,” Whitehead said. “They are returning about $10.5 million, but Quitman has invested $4.5 million into municipal funds that are now being transferred to the (WCSD) investment funds. Quitman is sending a check for about $6 million to you to be deposited in the 16-10-7 fund account.”
According to CFO Dennis Singelterry, that money has already been put into a separate 16-10-7 account, with that money being invested for both school districts. Interest earned from those investment accounts from the 16-10-7 account are then shared with the two school districts based on student counts.
Currently, the student counts mean that Quitman receives 75 percent of the royalties and interest from the investments while WCSD earns 25 percent.
Under state law, because oil revenue is considered a non-renewable resource, school district must invest oil royalty money into secure, government-backed investments such as municipal bonds and mortgages that are federally guaranteed. Interest earned from those investments can be spent, but principal amounts cannot be legally spent.
Whitehead and Singleterry both said the account from July 2022 forward of principal funds is about $1.3 million. It has earned roughly $17,900 in interest from July 2022 through this month.
Interest payments will be made quarterly to Quitman based on 75 percent of the total interest earned in that quarter.
“Once this is signed, from this date backwards, everything is resolved,” Whitehead said. “We feel very good that this accomplishes your goals.”
