IBM cuts Calif. school district a break on $5M debt still unpaid from 1993
A San Francisco Bay-area school district that pressed IBM Corp. to
rip up an old $5 million debt didn’t get its wish, but the technology
company has agreed to let the repayment be stretched out over eight
years instead of four.
The debt dates back to 1989, when
educators with the Richmond Unified School District bought computers
and software from IBM but paid only a fraction of the bill. The
district, now called West Contra Costa Unified, was in financial
disarray and barely averted bankruptcy.
In 1993, IBM and the
school district reached an agreement that rounded the debt down to an
even $5 million and let the schools repay it in four annual
installments of $1.25 million, without interest. IBM also let the
district first repay a $28.5 million loan to the state of California.
That repayment schedule ran through this year, so IBM was due to start
getting its money in 2008.
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This spring, however, district
administrator Bruce Harter asked the technology company for another
break. The 31,000-student district faces lower revenues because of
declining enrollment, and said that if IBM would consider the old debt
forgiven as a charitable contribution, the money would be a sizable
help – enough to cover the salaries of 20 teachers.
After IBM
wrote back contending that the original deal was quite generous, Harter
got several California state legislators to plead with IBM in June.
Finally,
months of negotiations yielded a new agreement: The school district
will now repay IBM $625,000 annually for eight years, still without
interest. The district’s board approved the deal Wednesday night.
”We
think this is the best thing for IBM and for the school district,” IBM
spokeswoman Trink Guarino said. A West Contra Costa schools spokesman
did not immediately return messages seeking comment.
