In its last action before the term's end, the council unanimously approved a settlement in Holcombe's lawsuit against Tupelo. It voted to give Holcombe $150,000 and her attorneys, Jim Waide and Nicole McLaughlin, $50,000.
Holcombe also had wanted her job back, but that was not discussed in the settlement.
The money will come from the city's insurance reserve fund and likely will be distributed in the next few weeks.
"This matter is finally resolved," said city attorney Guy Mitchell after the vote. "And all matters in the lawsuit are settled."
The former CFO filed her suit against the city in December. She claimed Mayor Ed Neelly violated her First Amendment rights and sexually discriminated against her by forcing her to resign after she objected to various financial practices. When she refused to step down, Neelly fired her.
Holcombe later amended her lawsuit to name Neelly personally as a defendant.
A trial had been set in the U.S District Court in Aberdeen for June 7, 2010, but that will now be canceled.
"I think it's probably a wise decision on both sides," Waide said. "Had that case gone to trial there's no telling how much it would have cost the city."
At-Large City Councilwoman Doyce Deas said she's "just glad it's over."
Waide said Holcombe plans to make a presentation to the incoming city council regarding spending.
Holcombe had been employed with the city since 1998. In addition to being the city's chief financial officer, she served as its clerk, internal auditor and purchase agent, as well as overseeing the city's elections, managing its budget and preparing its financial statements. Her annual salary was $95,000.
Many on the council supported her during the lawsuit and praised her strong work ethic.
"In my opinion, she was a good employee, and she just got caught up in the political aspects of this job," said At-Large Councilman Carolyn Mauldin after the vote. "I wish her great luck in finding another job. We were lucky to have had her."