District should account for settlement payment

The Beaufort County school district got some very good news in its case to recoup money paid out to settle legal claims stemming from the sexual abuse of students by a former elementary school teacher.

A three-judge panel of the S.C. Court of Appeals upheld a lower court decision that the six claims should be treated separately under the school district's insurance policy and not as a single claim, which would severely limit the amount of money the company would have to pay out.

The district sued United National Insurance and the S.C. School Boards Insurance Trust in June 2007, seeking to recover $4.55 million the district paid to the victims of former Coosa Elementary School music teacher Philip Underwood-Sheppard. He pleaded guilty to molesting at least nine students and was sentenced in 2003 to 25 years in prison. The abuse occurred between 1999 and 2002. Two other students' claims were dealt with separately -- one receiving $563,000 from the district and another $200,000 from the insurance company. A ninth victim died in August 2007, according to school officials.

If the district is successful in getting back all or a significant portion of the more than $5.1 million it has paid out, the school board should be very clear about what happens to the money once it is in district hands.

A special tax that was levied in 2007 to raise the money to pay the settlement did not sit well with the commercial and nonresident property owners who paid it. Heightening their dismay was that it came in the same year property taxes for school operations were lifted from resident homeowners.

The 2.9-mill levy was offset by a corresponding decrease in property taxes for school district debt -- at the insistence of Beaufort County Council -- so nonresident taxpayers paid no more than they would have before the district asked for the special surcharge. But it still rankled, not least because resident homeowners saw their taxes go down when the debt side of the tax bill was adjusted.

When the district first asked for the special tax, board members talked about a tax rebate should the district win its case against the insurance company. They later backed away from that after the tax-rate adjustment for district debt.

Still, taxpayers are owed a clear line of accountability for this money. It could go into the district's reserve fund. It could go toward paying debt. It could be used for operations. Wherever it is used, taxpayers should be able to follow it.

Payments made to victims of sexual abuse committed by a school district employee on school property are not part of the ordinary course of business. Money reimbursed from the insurance company should be accounted for separately. Taxpayers should know where and how that money being spent and its impact on the total dollar needs of the district.