The Cambridge School Committee, the city teacher's union and a group representing minority teachers and parents have reached a negotiated settlement in a long-running dispute over the school committee's lay-off policy. Mayor Alfred E. Vellucci announced at last night's city council meeting.

With Vellucci acting as mediator, the three groups agreed on modifications of the teachers' contract designed to prevent the lay-off of tenured or minority teachers. The changes require that staff members land off recently be rehired on the basis of seniority.

Suit May Be Dropped

The mayor said that both the Cambridge Teachers Association (CTA) and the minority representatives informed the US District Court in Boston that they are prepared to drop civil suits filed against the school committee. The decision to drop the CTA suit, as well as the proposed contract changes, must be approved by the full membership at a meeting scheduled for May 20, a CTA official said last night.

The CTA filed the suit last June, claiming that the school committee used criteria other than seniority, such as race, in cutting its staff after severe budget reductions in 1981.

Vellucei said that he "blew a fuse" when a request for $90,000 for legal fees in the dispute came before the city council last fall, adding that a settlement "was my first priority upon being elected mayor" earlier this year.

After several late-night meetings attended by representatives from the three groups, a tentative settlement was reached last month, and the parties agreed on a final compromise Thursday, Vellucci said.

"This took street savvy," the mayor said adding that he had "eliminated the educated people and the intellects and let these people talk it out."

Cambridge spent more than $150,000 in legal fees in the case. Vellucci said the city council last night passed a revolution thanking the mayor for allowing the city to save another $100,000 to finish the litigation.

"I've been the mediator for my family of eight children for years," Vellucci said. "I just used all my experience to work to solve this."