After years of court battles, the Cobb Electric Membership Corporation agreed to a $98 million settlement of a class-action lawsuit on February 25, which claimed the electricity provider withheld money that should have gone to its customers.
Former county commissioner Butch Thompson, one of the lead petitioners in the class-action lawsuit, questioned why the county opted to receive its portion of the settlement from the electric provider as a lump sum, saying the county could have gotten more money if it had chosen to spread the payments out over several years.
County officials defended their choice, however, saying the amount of money received in the lump sum would have about the same spending power as the money received in installments over 24 years.
Thompson said while most individuals would likely opt for the lump sum payment, a government entity or a business must consider the long-term effect of the revenue.
“It’s newfound money,” Thompson said, “It’s not something that should have been budgeted. It’s not something that they were anticipating or expecting.”
Thompson said the county should have chosen the installments to “get more bang for (its) buck.”
The Cobb Board of Commissioners voted unanimously to take the lump sum at its Feb. 11 meeting.
According to the agenda item, the county could have received a one-time payment of about $1.6 million, or about $4.6 million paid over 24 years.
Jim Pehrson, director of finances for the county, said the lump sum and the installments had essentially the same spending power after considering inflation over the 24-year period. As a result, he said the county opted for the lump sum payment, which it received about a week ago.
“We have the flexibility to use those moneys now toward … capital projects in a more meaningful way than we thought over a period of so many years,” Pehrson said.
The Cobb School District also opted for the lump sum payment, according to interim Superintendent Chris Ragsdale.
Though the decision was made before he was appointed superintendent, Ragsdale said the school system was dealing with a budget deficit at the time, which led officials to decide to take the lump sum.
Ragsdale said the school system received about $1.8 million in its lump sum payment, as opposed to about $4 million paid over 25 years.
Brad Johnson, chief financial officer for the school system, said the district could make more money over the 25-year period by investing the lump sum than it would if it had taken the $4 million in installments.
“Our budget deficit was really big at the time. And we thought, well, we’d rather have the money now for the budget deficit. Plus, over time, if we took a lump sum, theoretically, we could probably earn more interest over 25 years than they would give us,” he said.
Tim Lee, chairman of the Cobb Board of Commissioners, said the county plans to use the money to pay for one-time capital expenses, but the decision hasn’t been made as to what the funds would be spent on.
“We might buy new vehicles,” Lee said. “We might buy a new truck or a dump truck or a car, or just anything like that that we need to do. We just have to figure out what’s in mind, and the highest priority right now and work through that.”
County officials will likely decide how to spend the money within the next few months, Lee added.