Western New York school district plans bond offering to cover child abuse settlement

BY SourceMedia | MUNICIPAL | 06/16/22 02:58 PM EDT By Connor Hussey

The Kenmore-Town of Tonawanda Union Free School District in Erie County, New York intends to issue debt to cover its $17.5 million settlement costs associated with 35 cases under New York?s Child Victims Act.

All 35 lawsuits were leveled against one former employee, Arthur Werner, who before his retirement in 1993, is accused of molestation by dozens of male students from the beginning of his employment in the 1970s onward. The school district has 9 other lawsuits underway in connection with this.

?The District acknowledges that the misconduct alleged was and is reprehensible,? the issuer?s EMMA disclosure said. ?District officials, both now and in the past, have/had no tolerance for this type of alleged misconduct.?

New York?s Child Victims Act was signed into law in 2019 and opened a one year window (later extended a year as a result of COVID-19) for survivors of sexual abuse to file civil lawsuits seeking compensation for abuse suffered as children. Instead of challenging each of these lawsuits in court, the school district chose to settle the 35 cases all at once.

?Recognizing the extreme costs associated with holding separate trials for each of these 35 cases in the upcoming months, the District?s Board of Education has made a business decision to resolve these cases without litigating the merits at numerous individual trials,? the disclosure said.

The issuance is also being executed so that current students won?t have to suffer as a result of past failures.

?The District intends to obtain bond/note financing to fund the settlement, in order to minimize the impact of these costs on programming for current students,? the notice filed to EMMA said.

?While the specific details of the settlement must, by its terms, remain confidential, District officials do not believe that the settlement amount involved will in any way compromise the District?s ability to make required principal and interest payments on the Notes (or any of its other outstanding obligations),?

But the school district may have more troubles on its hands, as 9 other lawsuits are still outstanding.

?At this time the scope of any potential damages arising out of such claims cannot be predicted,? the disclosure said. ?Any liability of the District would be a District charge and would be funded either through budgetary appropriations or through the issuance of notes or bonds.?

The school district?s finance and public relations team, in addition to its municipal advisor, did not respond to requests for comment. The district's most recent annual financial disclosure lists just under $63 million of bond debt outstanding.

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