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September 18, 2013

UPDATED: Ruling dismantles whole-grade sharing agreement

CLINTON — A district court judge has ruled that a whole-grade sharing agreement between the Northeast and East Central school districts is "not enforceable" against the newly formed Easton Valley.

“We're pleased that the judge took our theory on the case,” Easton Valley Superintendent Robert Lagerblade said in response to the decision.

Judge Gary McKenrick denied Northeast's request for summary judgment that asked him to uphold a three-year, whole-grade sharing agreement between East Central and Northeast, beginning in 2011. As part of the former agreement, East Central provided transportation for its students to go to Northeast and paid Northeast 90 percent of the state aid it receives for the students to attend classes at Northeast. According to the court judgement, such funds exceeded $500,000 per year.

After East Central and Preston school districts voted to merge and create Easton Valley — which opened its doors in August — the school board voted to cancel the whole-grade sharing agreement. Northeast filed a suit in February to compel Easton Valley to honor the existing whole-grade sharing agreement.

McKenrick's ruling points out that the record establishes that Easton Valley did not agree to be bound by East Central's whole-grade sharing agreement. An amendment to the agreement was approved on Aug. 24, 2011, stating that any "successor to the East Central School District would be bound by the agreement. However, McKenrick found this amendment to be void and unenforceable.

"However, the ability does not exist for the East Central board to bind a future Easton Valley board to its legislative determination that a whole-grade sharing arrangement with Northeast was the better educational choice than merger with Preston," McKenrick wrote.

According to the written judgment, Northeast continued that even without the amendment, the general rule is that a successor corporation in a merge is bound by its predecessor's contracts. McKenrick argued that this is inconsistent with Iowa Code.

"Northeast's position fails to recognize the clearly legislative component to the whole-grade sharing regimen as a means to obtain the most economical and efficient educational program for the involved students," McKenrick wrote.

On Aug. 14, Northeast filed a motion to amend its petition, adding claims for breach of contract. McKenrick did grant this motion to amend, while taking no position on its validity in light of the rest of his ruling.

About the ruling, Northeast Superintendent Jim Cox replied, “it is what it is.” He added that no matter what the decision, the district will not be “in harm's way” In fact, he said Northeast will gain between $100,000 and $125,000 in open enrollments.

“I just have mixed emotions,” Cox said. “And there's something to say about moving on.”

Cox will discuss the ruling with the board of education during next Monday's meeting to decide whether the district will appeal.


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