Can a Virginia school board keep a settlement agreement secret, and does it need the city council or county board to approve it?

Plain-English summary

Senator Joe Morrissey asked the AG whether Virginia school boards can settle lawsuits without the local city council or county board signing off, whether they can include nondisclosure clauses in those settlements, and whether the dollar amount paid out has to stay public. The AG's answer drew a careful line:

• A school board has full and exclusive authority to settle claims against the school division. The city council or county board of supervisors does not get to approve or veto the settlement. This power is implied by the board's statutory authority to "sue and be sued" and to manage school funds.
• The school board can include confidentiality or nondisclosure provisions in a settlement, and to the extent the agreement was created specifically for litigation purposes, it can be withheld from FOIA disclosure under the legal work-product exemption.
• However, the financial records showing the dollar amount the school division actually paid are separate public records. Those are not litigation work product, and they have to be disclosed in response to a FOIA request.

The upshot: a parent or reporter cannot necessarily get the signed settlement document, but they can find out how much taxpayer money was spent.

What this means for you

If you are a parent, journalist, or community member trying to find out how much your school division paid to settle a case

You can get the dollar amount. The AG was explicit: financial documents revealing payments associated with finalized settlement agreements are "separately created public records" and, absent an applicable exception, must be disclosed under FOIA. The opinion reasons that these records are generated in the payment process, after the agreement to settle, so they are distinct from the litigation work product that can be withheld.

You may not be able to get the underlying settlement agreement itself. If the school division created the agreement specifically for litigation purposes and it contains attorney work product or strategy, § 2.2-3705.1(3) lets the board withhold it.

When you file your FOIA request, request both the agreement and the financial records (check disbursements, accounting entries, expenditure reports). The agreement may be withheld, but the payment record should come back.

If you are a school board member or division superintendent

The AG confirmed your authority to settle without city or county approval, and to include confidentiality terms. A few practical points:

• Don't expect the NDA to shield the dollar amount. Financial records showing payment are public, and your annual expenditure report under § 22.1-90 is also public.
• The work-product exemption applies only "to the extent" the agreement was created specifically for litigation. Boilerplate confidentiality clauses dropped into a settlement of, say, a routine vendor dispute that didn't involve real litigation may not qualify. The AG flagged this as a fact-specific determination.
• § 22.1-91 still limits you: you can't contract to spend more than the funds appropriated to your board for the fiscal year without the local governing body's consent. So if a settlement requires a payment beyond your annual appropriation, you do need approval.

If you are a Virginia FOIA officer

When a request comes in for a school board settlement, the analytical path is:

1. Was the agreement created specifically for litigation purposes? If yes, the work-product exemption in § 2.2-3705.1(3) is available, but it's discretionary, not mandatory.
2. Are the financial records associated with the payment separate documents (e.g., a check disbursement record, a journal entry, an accounting record)? If yes, the opinion treats those as separately created public records that, absent another exception, must be released.

If you are a Virginia school-board attorney drafting settlement agreements

The opinion strengthens your hand in negotiating confidentiality clauses. The AG concluded that stipulating to confidentiality terms is a "reasonable method" for school boards to use in resolving disputes. But the opinion holds that the payment amount, reflected in separate accounting records, is a distinct public record subject to disclosure, so a confidentiality clause cannot keep the dollar figure secret.

Common questions

Q: Does the city council or county board of supervisors have to approve a school board settlement?
A: No, not in most cases. The AG said school boards are "bodies corporate" independent of the local governing body and can settle claims on their own authority. The exception is § 22.1-91: if the settlement amount exceeds the funds already appropriated for the fiscal year, the school board needs the governing body's consent to spend the extra money.

Q: Can a school board sign a nondisclosure agreement as part of a settlement?
A: Yes. The AG concluded that stipulating to confidentiality is a "reasonable method" available to school boards as part of the inherent power to settle litigation. The NDA itself is permissible. Whether it sticks against a FOIA request is a separate question.

Q: If a school board signs an NDA, can it really keep the settlement secret?
A: Mostly the agreement can be withheld, but not the payment amount. The work-product exemption in § 2.2-3705.1(3) covers documents created specifically for litigation, which usually includes a settlement agreement that was negotiated to end an actual lawsuit. Financial records showing the dollar amount paid are separate public records created in the payment process, not as litigation work product, so they must be disclosed.

Q: What if the settlement was reached before a lawsuit was actually filed?
A: The AG flagged this as fact-specific. The work-product exemption applies "to the extent" the record was created for litigation. If the dispute never reached actual or threatened litigation, a court could find the exemption doesn't apply and require the full agreement to be released.

Q: Does this apply only to lawsuit settlements, or also to administrative complaints?
A: The opinion focuses on "settlement agreements" generally. The same logic should apply to administrative disputes, but the work-product exemption is harder to invoke when there's no actual or threatened litigation. The AG explicitly limited the analysis to disputes covered by FOIA and didn't address every type of administrative complaint.

Background and statutory framework

Virginia's school boards occupy an unusual constitutional position. Under Va. Const. art. VIII, § 7, supervision of public schools is "vested in a school board," and the General Assembly has codified that independence in § 22.1-71 by making each board a "body corporate." That means the school board is legally distinct from the city council or county board of supervisors that funds it, with its own power to "sue, be sued, contract, [and] be contracted with."

This corporate independence has been consistently enforced by Virginia courts. In Bristol Virginia School Board v. Quarles (1988), the Supreme Court of Virginia reinforced school-board autonomy. In County School Board v. Farrar (1957), the court held that a local governing body has no authority to prohibit a school board from spending its funds for legitimate school purposes. The AG's conclusion that local approval is not required follows directly from this line of authority.

Virginia's Freedom of Information Act starts from the rule that public records are open for inspection unless an exemption applies. The opinion relies on the exemption for "[l]egal memoranda and other work product compiled specifically for use in litigation," which can cover a settlement agreement created specifically for litigation purposes. Whether any given agreement qualifies is, the AG stressed, a fact-specific determination beyond the scope of an opinion.

The opinion draws the dividing line at the records: a settlement agreement may be withheld, but the financial documents that reveal the payment are separately created public records generated in the payment process, so they are not litigation work product and, absent another exception, must be disclosed.

Citations and references

Statutes:

• Va. Code Ann. § 22.1-71 (school boards as bodies corporate)
• Va. Code Ann. § 2.2-3705.1 (FOIA exemptions for personnel and litigation records)
• Va. Code Ann. § 2.2-4116 (settlement payment amounts under ADR Act)

Cases:

• Bristol Va. Sch. Bd. v. Quarles, 235 Va. 108 (1988) (Supreme Court of Virginia): confirms constitutional independence of school boards.
• Sosebee v. Franklin Cnty. Sch. Bd., 299 Va. 17 (2020) (Supreme Court of Virginia): school board powers limited to those expressly granted or necessarily implied.
• Hawkins v. Town of South Hill, 301 Va. 416 (2022) (Supreme Court of Virginia): scope of personnel-information exemption under FOIA.
• LeMond v. McElroy, 239 Va. 515 (1990) (Supreme Court of Virginia): distinguishing litigation work product from financial records.

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2024/23-016-Morrissey-issued.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA

Office of the Attorney General

Jason S. Miyares
Attorney General

202 North Ninth Street
Richmond, Virginia 23219
804-786-2071
Fax 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

January 10, 2024

The Honorable Joseph D. Morrissey
Member, Senate of Virginia
Post Office Box 96
Glade Hill, Virginia 24092

Dear Senator Morrissey:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issues Presented

You present several inquiries regarding the authority of a Virginia school division to enter into settlement agreements. You specifically ask whether such agreements are subject to approval by the school board or local governing body. You also ask whether the terms of a settlement agreement may be made subject to a confidentiality or nondisclosure agreement and whether the school division may withhold how much money was paid pursuant to the settlement.

Response

It is my opinion that school boards have the authority to compromise claims against a school division and that such authority is exclusive to the school board and includes the power to make confidentiality arrangements. It is further my opinion that a school division may withhold a settlement agreement that includes confidentiality or nondisclosure provisions to the extent the agreement was created for litigation purposes. Lastly, it is my opinion that payment information contained in accounting records are distinct from settlement agreements and are subject to disclosure.

Background

You express concern that nondisclosure agreements are being used by school boards to prevent the disclosure of important information to the public. You state that taxpayer money is being used to settle disputes, with the final settlement agreement containing confidentiality provisions that prevent information regarding the dispute, including the basis of the underlying claim and the settlement amount, from being released.

Applicable Law and Discussion

As part of its duty to "provide for a system of free public elementary and secondary schools for all children of school age throughout the Commonwealth," the General Assembly has directed the State Board of Education to "divide the Commonwealth into school divisions of such geographical area and school-age population as will promote the realization of the standards of quality required by... the Constitution of Virginia[.]" Virginia law makes clear that "[t]he supervision of schools in each school division shall be vested in a school board, to be composed of members selected in the manner, for the term, possessing the qualifications, and to the number provided by law."

A school board overseeing a school division is a "body corporate" that is "vested with all the powers and charged with all the duties, obligations and responsibilities imposed upon school boards by law." In exercising their supervisory role, "[s]chool boards only have those powers expressly granted or necessarily implied by statute." Per statute, "a school board may adopt regulations 'not inconsistent with state statutes... for the supervision of schools.'" Where a power exists, the "reasonable selection of method" rule "permits local public bodies to exercise discretionary authority where a grant of power is silent upon its mode or manner of execution."

School boards are expressly empowered to "manage and control the funds made available to the school board... and may incur costs and expenses" for legitimate and proper school purposes. School boards additionally are authorized to "sue, be sued, contract, be contracted with and... purchase, take, hold, lease and convey school property, both real and personal." The power to sue and be sued encompasses the power to settle litigation and spend available funds as part of a settlement agreement. Moreover, the General Assembly has granted school boards the authority to secure liability insurance specifically "to cover the costs and expenses incident to liability, including those for settlement, suit or satisfaction of judgment, arising from [personnel] conduct in discharging their duties or in performing functions or services for a school." Accordingly, a school division, acting through its duly constituted school board, may enter into settlement agreements with prospective claimants.

Absent valid legislation providing otherwise, this power is exclusive to the school board. A local governing body generally "has no authority... to prohibit the [s]chool [board from expending [school funds] for a legitimate and proper purpose." Because "public school boards are by law established as bodies corporate independent of the respective local governing bodies," a school board, absent special circumstances, may enter into a settlement agreement on behalf of the school division without the approval of the local governing body.

You ask whether a school-board settlement agreement may include a confidentiality or nondisclosure arrangement. Settlement agreements typically are created "to resolve an existing dispute and to memorialize and evidence the terms of that resolution." They are designed to avoid or end litigation, which can be costly and distracting; and it is not unusual for parties to a dispute to stipulate to nondisclosure terms in order to facilitate swift resolution of the matter outside of an administrative process or the judicial system. Accordingly, consistent with a school board's power to engage in litigation and the corresponding authority to enter into settlement agreements, I conclude that stipulating to confidentiality terms as part of a settlement negotiation is a "reasonable method" to employ in resolving disputes, and thus a permissible action of a school board on behalf of the school division.

As public bodies, however, school boards are subject to the Virginia Freedom of Information Act (FOIA), which provides that public records are to be open for inspection, unless certain exemptions apply. A public record is defined as "all writings and recordings... prepared or owned by, or in the possession of a public body or its officers, employees, or agents in the transaction of public business." A settlement agreement to which a school board is a party involves the transaction of public business, and thus constitutes a public record under FOIA. Nevertheless, to the extent a public record qualifies as "[l]egal memoranda and other work product compiled specifically for use in litigation[,]" it is exempt from mandatory disclosure. When nondisclosure arrangements are incorporated into settlement agreements that are created specifically for litigation purposes, the agreement may be withheld under FOIA. Whether a particular record satisfies this condition is a fact-specific determination beyond the scope of an opinion.

Although a particular settlement agreement itself may not be subject to mandatory disclosure, the relevant FOIA exemption does not necessarily pertain to disclosing the amount a school board has paid pursuant to a settlement agreement. Records associated with financial transactions and expenditures are distinct public records; and the use of public funds generally is not considered confidential. Moreover, unlike settlement agreements, which are created between parties during or under threat of litigation, financial records are "generated in connection with the payment process, after the mutual agreement to settle." I therefore conclude that financial documents revealing payments associated with finalized settlement agreements are separately created public records and absent an applicable exception, must be disclosed upon request pursuant to FOIA.

Conclusion

Accordingly, it is my opinion that school boards have the authority to compromise claims against a school division and that such authority is exclusive to the school board and includes the power to make confidentiality arrangements. It is further my opinion that a school division may withhold a settlement agreement that includes confidentiality or nondisclosure provisions to the extent the agreement was created for litigation purposes. Lastly, it is my opinion that payment information contained in accounting records are distinct from settlement agreements and are subject to disclosure.

With kindest regards, I am,

Very truly yours,

Jason S. Miyares
Attorney General