Port Jefferson schools to use bonds, reserve funds for $16.5M sex abuse settlement
The high school in Port Jefferson. The school board has approved using bond money and reserve funds to pay the $16.5 million settlement of a decades-old sex abuse case involving a former high school principal. Credit: Newsday/J. Conrad Williams Jr.
Port Jefferson schools will borrow millions and dip into reserves to pay for $16.5 million in settlements resulting from claims filed by former students who alleged a high school principal sexually abused them decades ago.
The school board, in a meeting Tuesday, approved a resolution to use $5.1 million in reserves and finance up to $11.4 million through bonds.
The payment plan came less than two weeks after the board announced it had approved settlements with seven plaintiffs who sued the district under the Child Victims Act, which allowed alleged victims of childhood sexual abuse to file lawsuits seeking damages.
Settling the cases “eliminated the potential of protracted trial litigation, which involves inherent risk, and could have resulted in significantly greater overall costs to the district,” schools Superintendent Jessica Schmettan read in a statement at the board meeting Tuesday.
WHAT NEWSDAY FOUND
- Port Jefferson school officials have detailed how they will pay for $16.5 million in settlements resulting from claims filed by former students who alleged a high school principal sexually abused them decades ago.
- The district plans to to use $5.1 million in reserves and finance up to $11.4 million through bonds to pay for the settlements.
- A clearer picture is expected by late January of the tax impact on homeowners as the bonds are yet to be bid out.
The incidents alleged in the claims occurred 45 or more years ago, and the district said it did not locate insurance coverage for them. The principal, Anthony Prochilo, died in 2002 at age 76.
Seeking changes in how to pay
For Port Jefferson, the settlements meant the end of the Child Victims Act claims as the lookback window to file closed in 2021. But the question as to how the district will pay for them could linger.
Schmettan said at the Tuesday meeting that she and educators in other school districts as well as state and local associations will ask the State Legislature for changes in law to allow districts to access restricted reserves and exempt debt financing costs from tax cap calculations. They will also seek state aid to help pay for the claims.
The worst scenario for Port Jefferson is if the district has to borrow all of the $11.4 million, Schmettan said.
“We are hopeful … that because of the other school districts that are also involved with much larger settlements, you can't decimate communities like that and school districts,” Schmettan said.
Port Jefferson schools Superintendent Jessica Schmettan at the school board meeting Tuesday. Credit: Newsday/Steve Pfost
As of this week, Long Island school districts have paid more than $128 million to settle 98 Child Victims Act cases, according to a Newsday database. Herricks paid nearly $50 million in board-approved settlements to 27 former students.
The total cost adds up to more than $150 million after a Bay Shore verdict where a Suffolk jury awarded a former Bay Shore schools student who said he was abused by an elementary schoolteacher decades ago $25 million after finding the district liable.
About 80 cases remain active, including 36 against Bay Shore.
The costs for districts also include legal fees. In Port Jefferson, that cost has added up to about $650,000 over the past four years, said Deputy Superintendent Sean Leister.
The district is planning to borrow the $11 million short-term, meaning one to two years at an estimated interest rate of about 5%, to give the district time for advocacy at the state level, Leister said. The terms could be extended to 15 years.
Impact on taxpayers unclear
Leister said the district will have a clearer picture by late January of the tax impact on homeowners as the bonds are yet to be bid out.
The district’s 2024-25 budget is $48 million. Port Jefferson is a relatively small district on the North Shore in Suffolk County, with about 900 students.
Plaintiffs attorney Anna Kull declined to comment.
In public comment Tuesday, Port Jefferson resident Gail Sternberg told the board she was pleased with the settlements the board reached with the plaintiffs.
“It gave these men some closure,” she said. “Nothing can make up for what happened to them. But I’m glad they did get this amount of money. I know it could have been a lot worse. I saw the $25 million for one case.”
Sternberg also noted the potential financial impact on taxpayers.
“I'm sure no one has an appetite in this village for larger tax bills,” she said. “And we are trying to keep our taxes down so young families can move in.”
With Jim Baumbach
Dandan Zou covers education for Newsday. Previously, she worked for a community newspaper in Maryland and a personal finance magazine in Washington, D.C.
