WEST WARWICK — The School Committee’s lawsuit — a so-called Caruolo action — seeking $1.4 million more in operating funds from the town is scheduled to go to trial on Oct. 20, but both school and town officials say they are hopeful an out-of-court settlement can be reached within the next week.

School board and Town Council members met informally on Monday, joined by other school and town officials. The negotiations were on the agenda for the council’s closed session the next day, and item 16 on the agenda for the school board’s meeting next Tuesday is “Approval: Caruolo Settlement.”

“We’re going forward,” said acting council President Peter F. Calci Jr. “We’re diligently going forward and hopefully we will have a united direction within a week or so.”

“I’m very confident that there will be a settlement,” said School Committee Chairman Daniel T. Burns Jr.. “We had a very fruitful meeting.”

In April, the School Committee filed the Superior Court suit under the state law known as the Caruolo Act, which allows school districts to seek additional money from their communities. The money is being sought for the fiscal year that ended June 30.

In recent weeks, the board and the council traded offers aimed at settling the dispute.

The last formal negotiation session was held in September. It wasn’t face to face: The offer from the School Committee was presented to the council by fax.

That offer suggested the School Committee borrow $687,343 from the town, to be paid back over three years, ending in fiscal year 2012 and that the town pay the schools’ pension contribution of $475,000. The proposal was unanimously rejected by the council.

Judge Edwin J. Gale advised the two groups to continue talks when he met with lawyers for both sides during a trial conference last week in Kent County Superior Court.

On Monday, council members Calci and Angelo A. Padula Jr. met with School Committee members Burns and Lindagay Palazzo. Town Manager James H. Thomas, Schools Supt. Kenneth Sheehan, and the schools’ director of administration, Michael R. Petrarca, also attended the meeting. The aim, Calci said, was to find common ground..

“Both parties are working very diligently to come to an understanding not only to resolve the 2008 Caruolo litigation, but also, and possibly even more importantly, to get on the same financial page of bringing the [fiscal 2009] budget and its expected over expenditure under control,” he said.

School officials have said they expect a $4.4-million shortfall for the current fiscal year, which ends next June 30, and that another Caruolo lawsuit is likely.

“We need to act as quickly as possible and look at things in a different perspective to see if we can help the School Department live within their budget,” Calci said. The talks had yielded some terms, but he would not divulge any specifics.

Burns, however, said the officials did not discuss any payment arrangements or whether the needed $1.4 million will be given to the district as a loan or an appropriation. But the council and the board agree to have periodic talks about finances.

“We should put them on our agenda and they should put us on their agenda so both parties are fully informed on what’s going on during the year,” Burns said. “Both sides agree to that.”

The meetings had been a sticking point during negotiations. The council wanted monthly meetings, while the school board proposed quarterly meetings. Burns would not elaborate on what meeting frequency the group tentatively agreed upon.

The Town Council expects to meet within the next week to discuss the terms of the potential settlement, said Calci. Their decision will influence what happens at next week’s School Committee meeting.

tbuford@projo.com