The Iowa City School District will pay a settlement of $200,000 to First Student Inc., after the bus company threatened to take legal action against the district for its payment practices.

The agreement, which was approved by the School Board at its Tuesday meeting, required the district to make the payment within five business days.

The settlement agreement noted the litigation would have “[arisen] out of the district’s nonpayment of certain invoices and alleged communications with the University of Iowa regarding First Student’s billing practices.”

Under the agreement, the district must pay First Student, and the company acknowledged it would not sue the district. The agreement was signed by the presidents of First Student and the School Board during a closed session, Superintendent Lane Plugge said.

— by Nora Heaton