ORANGE : Trustees Opt for Settlement Option A

Orange Unified School District trustees voted this week to accept a settlement option offered by the county that will pay the district 77% of its money tied up in the bankrupt investment pool but initially limits the right to sue.

The trustees Thursday night debated the options offered by the county and even considered suing the county and Merrill Lynch Co. for putting their investments at risk.

They took the matter into a late-night closed session after questioning administrators and an attorney, then voted 6 to 1 to accept the Option A plan.

Under Option A, the county will pay the district 77% of the $19.3 million that it had in the county investment pool when it collapsed Dec. 6. Another 13% will be paid in the form of notes that can be cashed by June 5. The remaining 10% of the funds will be paid at an unspecified date.

Option B would have paid the same 77% in cash, but would have allowed the district the right to sue for the remaining funds. Under the terms of the settlement, the trustees can switch to Option B if the county does not manage to fund the recovery notes by June 5.

Trustee Martin Jacobson voted for Option B, saying he fears the county will never come up with the last 10% of the district’s funds.

“To me, the only alternative to collecting this money is through litigation,” he said.

Jacobson also said he hoped that if Orange Unified had voted for Option B other school districts might have joined in a legal effort.

“There is strength in numbers,” he said.

Although trustees debated rejecting the first two options and trying for the full amount in court--Option C--administrators were not encouraging.

“I would like to express to you that because of the timeline, we could not finish the year if we went with Option C,” said Assistant Supt. Harvey M. Grimshaw.