WEST BATH

The town of West Bath’s contention it was overcharged by RSU 1 has been affirmed in Sagadahoc County Superior Court.

A partial summary judgment has been granted for West Bath’s $1.9 million lawsuit against Regional School Unit 1 and member towns Arrowsic, Bath and Woolwich. The judgment was returned Friday, supporting West Bath’s claims that the town was overcharged $1,919,380 by RSU 1 when it applied the wrong cost sharing formula for four fiscal years from 2008-12.

A summary judgment has been rendered on some of the 12 claims put forward in the lawsuit, most notably finding that officials in RSU 1 and the city of Bath were aware that cost sharing formula was not being applied as legislated, and that this could cause member towns to be overcharged.

“Although the defendants have not formally conceded RSU’s 1 error and West Bath’s overpayment,” the ruling stated, “the summary judgment record fully supports West Bath’s contention that the wrong formula was applied …”

“It acknowledges that the cost sharing formula was illegally changed,” said Jonathan Davis, West Bath’s town administrator in an interview with The Times Record on Monday. “It’s refreshing to hear that from another source — it’s a vindication of our reason for doing this.”

The school unit and municipal defendants moved for summary judgment on all 12 claims, and oral arguments were heard by Justice Andrew M. Horton in Sagadahoc County Superior Court on May 6.

“We’ve survived a motion to dismiss, we’ve survived a motion for summary judgment,” said Davis, “and we’re excited to have this acknowledgment of the history of the case.”

West Bath contends the school unit, which operates schools in Arrowsic, Bath, Phippsburg, West Bath and Woolwich, overcharged West Bath when RSU 1 applied the legislated cost sharing formula to only a minor portion of overall education costs.

As a result, Arrowsic underpaid $183,526, Bath underpaid $1,633,917 and Woolwich underpaid $117,156. Phippsburg, which overpaid by $15,919, is not party to the lawsuit.

Arrowsic and Woolwich were both granted motions excusing them from the case as part of the summary judgment, said West Bath’s attorney, Sally Daggett of Jensen Baird Gardner & Henry.

It is not yet decided if West Bath will appeal these judgments and likewise it is unclear if the defendent municipalities will be required to repay the amount they were undercharged.

Only limited discovery has so far been explored, said Daggett, and it has not been determined if discovery will continue or if the counsels will be asked to reach a settlement agreement. The court has scheduled a conference of counsels for July 8, she said, and the next steps in the case will be clearer at that point.

David Ray of Bernstein Shur, attorney for the City of Bath, said that Bath had asked the court dismiss the case because West Bath missed the statutory deadline for filing a claim challenging governmental action and therefore was not entitled to seek remedy.

Justice Horton ruled that, though the deadline was missed, “he believes that there is still potential for relief,” said Ray. “It is not a decision on the merits of the relief they are seeking.”

Further discovery is necessary, he said, to establish that claim.

“The next step is to get all the facts out,” said Ray. “We think that when all of the evidence is out and the court has heard all of the testimony… it will be obvious that these were people acting out in the open, making a decision that they believed to be justified,” he said.

The background stated in the judgment established that a task force was formed in 2005 to develop a plan for merging the school system of Bath with School Unit 47, which served Arrowsic, Phippsburg, West Bath and Woolwich.

RSU 1 was formed prior to all other regional school units, and under different legislation than the standard state policy.

The task force developed a cost sharing formula for towns to pay into the RSU, based one-third on student enrollment, one-third on property value and one-third on the town’s population. The school districts voted on and adopted this formula in 2007, and bill LD 910 was drafted by attorney William Stockmeyer of Drummond Woodsum. Voters in all five municipalities passed the bill into law in Nov. 2007.

In crafting the budget, however, the RSU 1 school board applied LD 910 — the approved cost sharing formula — to only non-essential programs and services costs, which accounted for approximately 10 percent of the budget during the 2008-2012 fiscal years.

Essential programs and services, which are eligible for state subsidy, accounted for 90 percent of the budget during this time period.

According to the court findings, Stockmeyer informed then-superintendent William Shuttleworth in a phone conversation that LD 910 was designed to be applied to the entire budget, and reiterated this belief in an email to the superintendent.

Current RSU 1 superintendent Patrick Manuel was not immediately available for comment on Monday, and a secondary spokesperson was not identified by the office of the superintendent.

Both Stockmeyer’s phone call and email have been contested by Bath as inadmissible hearsay, but were used to identify Stockmeyer’s position on the application of LD 910.

Bath City Manager Bill Giroux was informed by Shuttleworth of Stockmeyer’s stance on LD 910 regarding the budget but, according to the court documents, no other town officials were notified from West Bath or the other RSU 1 member towns.

On May 7, 2008, Shuttleworth received a letter from Stockmeyer reiterating what he purportedly had stated on the phone and via email — that LD 910 had to be applied to as a cost sharing formula to the entire budget, not sections of it.

“The letter was crystal clear in its advice that RSU 1 was required to apply the formula set forth in LD 910,” the judgment states, “and equally clear in spelling out the consequences of failing to do so.”

An excerpt of this letter from Stockmeyer is provided in the partial summary judgment rendering which states, “Should the board not divide the costs in this manner, we believe that a court would invalidate the assessments of towns that were overcharged…”

The attorney for the City of Bath, Roger Therriault, disagreed with Stockmeyer — who had written LD 910 — and told Shuttleworth and two school board members that LD910 did not apply to essential services and programs.

The board of directors favored Therriault’s interpretation, recording in the board’s meeting minutes, “It is moved that the Board acknowledges receiving conflicting legal counsel…and that the Board will apply the 1/3, 1/3, 1/3 cost sharing formula to all local additional funds to be raised for the 2008-09 school budget and that all required costs be allocated according to state policy…”

The summary judgment acknowledges that this language is indeterminate, as it does not specifically state the source and nature of the “conflicting legal counsel,” however, it notes that “the minutes reflect no public discussion of which formula to use, and no reason given for why the Board chose to disregard attorney Stockmeyer’s clear advice.”

Predicting that a lawsuit would eventually follow the board’s decision, Shuttleworth reported that he organized his notes leading up to the limited application of LD 910.

Shuttleworth said he “thought this day would come…And people, at that time when accountability comes, have a way of not remembering that they were a part of that decision-making process.”

According to the partial summary judgment, Shuttleworth did not inform officials of member towns other than Bath “of the Board’s decision to use the wrong formula.”

It was not discovered that the wrong formula was being applied until April 2012. Lynette Eastman, the Woolwich town administrator, said in a Monday interview with The Times Record that she had started looking into the RSU 1 budget to identify why Woolwich’s local share increased for the 2011-12 fiscal year.

“That’s when we discovered that they weren’t using the one-third, one-third, onethird formula for the whole budget, only the non-essential programs,” said Eastman. “I started crunching numbers to see what we would have paid over the years if they had, and it was astounding to see how much West Bath had overpaid.

“At that point, $117,000 seemed like a pittance,” she said. “It was astounding to stumble across information like that accidentally.”

Eastman contacted West Bath and informed the town of her findings, she said, not realizing at the time that it would lead to a lawsuit.

“In retrospect, I’m not surprised,” said Eastman. “Almost $2 million — that’s not just anything to sneeze at.”

As of March, Woolwich had already spent $16,145 in legal fees on the lawsuit, of a total legal budget that usually equalled $8,000 per year.

Arrowsic officials stated at the town’s annual June Town Meeting, that the total legal expenditures last year jumped from $4,000 per year to an estimated $25,000 by the end of the current fiscal year.

Bath has already spent in excess of $119,000 in legal fees associated with the RSU 1 lawsuit.

According to Davis in a March interview with The Times Record, West Bath was overcharged more than $450,000 annually by the RSU, which is almost half the town’s total yearly municipal budget.

“The Town is pleased with the Superior Court’s decision as it largely vindicates the Town’s positions, both factually and legally,” a press release from West Bath stated. “However, it is still regrettable that the Town has had to sue the Board and its members to force them to do what is obviously the right thing.”