Insurance Pool Won’t Pay School Board Members’ Legal Costs

Orange Unified School District lost two attempts on Friday to have the cooperative insurance pool it belongs to pay the legal costs for defending three school board members accused of “willful misconduct.”

The five other school units participating in the cooperative insurance coverage refused to support two requests made by Orange Unified representatives at a special meeting of the insurance cooperative in Costa Mesa. The requests, both of which would have committed the insurance cooperative to pay the legal costs of the Orange Unified Board members, died for lack of support from any representative of the cooperative’s other member districts.

The defeat apparently leaves the money-strapped Orange district with the choice of either approving a special appropriation to defend the board members or forcing the board members to pay their own legal costs.

Asked for Up to $50,000

No official estimate of the legal costs has been made by the district. But one of the two legal motions that the district made on Friday asked for up to $50,000 in insurance coverage to defend its three board members.

At issue is the proposed legal defense for board members Ruth Evans, Joe C. Cherry and Robert James Elliott. The Orange County Grand Jury in June accused those three and board member Eleanore Pleines of not properly doing their elected jobs. The district attorney’s office, in carrying out the grand jury action, said the four had been so deficient “in minding the store” that an alleged bid-rigging scheme was carried out for four years by a former school employee.

Pleines resigned her board seat July 17, saying she didn’t want the district to have to spend money to defend her. Her resignation from the board dropped court action against her, said Deputy Dist. Atty. Martin G. Engquist. The other three are scheduled to appear in Orange County Superior Court on Aug. 21.

District administrators have been seeking to find ways to finance the defense of the three board members without having to tap its money-short general fund. Declining enrollment for the past decade has continually kept the school district with tight budgets.

Set Off a Furor

The grand jury’s disclosure that more than $3 million in school maintenance contracts were rigged from 1980 to 1984, with part of the money allegedly going into kickbacks, set off a furor among residents in the school district. The district serves Orange, Villa Park, Anaheim Hills and parts of Garden Grove and Santa Ana.

The district’s effort to use insurance money for the legal defense of board members came up at a special meeting Friday of the Southern Orange County Property/Liability Joint Powers Authority. The organization is composed of the Orange County Department of Education and five county school districts: Orange Unified, Brea-Olinda Unified, Saddleback Unified, Irvine Unified and Ocean View (Elementary) School District.

The authority provides a way for the participants to pool their insurance coverage. Periodic meetings of the authority are for policy matters, such as the proposal of Orange Unified to have the insurance cooperative pay legal costs of the three board members.

Orange Unified was represented at the meeting by its superintendent, John Ikerd, and its assistant superintendent for business services, H. C. Tanner. Ikerd told the meeting that “the outcome may have implications for other (school) districts in the state.”

Sat There Mute

Tanner said school board members can’t be expected to know the specifics of the many complex items that come before them.

But a Los Angeles lawyer, Erwin E. Adler, told authority representatives that his research had concluded that legal defense of school board members accused of willful misconduct “is not what an insurance policy is designed to cover.” Tanner and Ikerd disagreed, but representatives of the other school districts sat mute. There was no debate.

Tanner made the first motion, asking that the authority “fund the defense of the Orange Unified School District board members in this case because we do not feel any misconduct was willful misconduct. . . . “ No one spoke. The motion died for lack of a second.

Tanner’s second motion was similar, but it specified that the authority would not be obligated in excess of $50,000. That motion also brought no discussion and was unsuccessful. The meeting, held at the headquarters of the Orange County Department of Education in Costa Mesa, then adjourned.

After the meeting, Ikerd told reporters that the school board will have a regular session Monday night, but that so far the issue of paying for legal defense of the three board members is not on the agenda.