Can a $93 billion company be publicly shamed into charity? My guess is not, but the Contra Costa school district in California is hoping IBM can see it in its Big Blue heart to erase some $5 million in long-overdue debt.
This week four California state legislators threw their support behind West Contra Costa School District by pleading with IBM to release the district from the debt. Assemblywoman Loni Hancock, D-Berkeley; Assemblyman Mark DeSaulnier, D-Concord; state Senate President Pro Tem Don Perata, D-Oakland; and Sen. Tom Torlakson, D-Antioch, sent a letter to IBM CEO Samuel Palmisano requesting that the computer-industry giant write off the 15-year-old debt as a charitable contribution, according to a story in the Contra Costa Times.
"Unlike corporations such as IBM - with revenues of $22 billion in the first quarter of 2007 alone - our schools do not have the ability to generate new dollars to fund projects or pay for employees," the lawmakers wrote. "Our schools rely solely on limited state and federal assistance to educate our students and every dollar is precious."
The back story on this tale is that the school district owes IBM for computers ordered in the late 1980s and early 1990s. For one reason or another the computers were never used and no one now seems to be able to locate the paperwork or the hardware. The school district experienced hard financial times and ultimately never paid Big Blue for the computers.
In 1993 the district and IBM negotiated a long-term settlement that said the school district would pay the first of four $1.25 million installments beginning in 2008. Payments were deferred until then because 2008 was the year the district was scheduled to finish making state loan repayments under its previous loan plan, according to the Contra Costa story.
Reports this past April said IBM executives expect the district to pay the amount in full under the agreed-upon pay schedule. A letter from IBM Chief Financial Officer Mark Loughridge to district Superintendent Bruce Harter called the repayment plan "generous" on the part of IBM because the company is not charging interest. IBM has not commented on the situation since then.
So now the school district is looking to put a little political pressure on IBM to forgive the debt entirely. Such a move might create a precedent IBM wouldn't want to set.
Typically such debts are restructured further or spread into a new contract. For example, IBM and Amtrak in 2002 signed a $229 million IT outsourcing deal with that will save the passenger railroad $85 million over the course of the seven-year deal. The contract, which is an extension of a 10-year agreement between the two companies, calls for IBM Global Services in Armonk, New York, to manage Amtrak's entire computing infrastructure from a data center in Manassas, Virginia. Because Amtrak still owes IBM $101 million from the previous contract, the total of the renegotiated deal is $330 million, according to an IBM.
Then again maybe IBM has had it with state educators. IBM is involved in another case in North Carolina where state education officials recently dropped IBM as the contractor for an elaborate computer network intended to manage student and school data statewide and will instead complete the costly project themselves, according to the News & Observer.
IBM and the state Department of Public Instruction have been at odds for months over the development of a complex computer system, known as NC WISE, that will replace a data management system in place since the mid-1980s. The state has withheld $4.5 million in payments to IBM, saying the company has failed to correct problems and provide promised computer applications. The company didn't respond to a request in December from the state to fix what it said were problems and says it has lived up to its obligations.
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YEAH RIGHT
SCHOOL DISATRICT PLEADING FOR RELEASE FROM ITS BIL;LS WHAT A JOKE. WHATS TO STOP THE FEDRAL GOVENMENT FRM "FORGETTOING OUR SOCIAL SEFCURITY? WHAT KEPT HITLER FROM ATTACKING FRANCE? FORGIVENESS OF DEBT?
of course, it's worth
of course, it's worth pointing out that Contra Costa County is the predominant county and tax base for the East Bay -- a sprawling set of towns/cities full of people that work in downtown San Francisco, Oakland, and Silicon Valley. It's the same county where median home prices for most of the towns are well north of $500,000.
To quote the Contra Costa website: "Due to the presence of relatively high-wage skilled jobs and relatively wealthy residents, the County achieves high rankings among all California counties on a variety of income measurements."
This isn't the story of an impoverish county begging for debt relief from an evil corporation. Move along.
Responsibility at school
Due to Proposition 13 limiting property taxes, and due to the redistribution of property taxes outside of the districts where they were collected, Contra Costa's relative affluence does not translate into well-funded schools. Nonetheless, even though the school district needs the money more than IBM does, the district also needs to learn that "fifteen years" and "never" are not the same thing. If they need help paying it, they should go to the legislature or taxpayers, not IBM.
Contra Costa County is a
Contra Costa County is a sprawling county that has very weathy areas and very poor areas. It should be widely known that schools (and districts) in wealthy areas are far better off than schools in poor areas. West Contra Costa is in the poorer of areas in Contra Costa County. And although gentrification is coming to the area, how much homes in the area are worth does not always equate to how much a school district receives in funding.
WEST Contra Costa...NOT Contra Costa County...
Just making sure people know that WEST Contra Costa Unified is RICHMOND (impoverished and largely African American), not Concord, Walnut Creek or Martinez (the Contra Costa you describe, CENTRAL CC). It constantly gets the short end of the stick from "the other side" of the east bay hills...
This is a more complicated picture than some people paint...
After reading the above
After reading the above user's reply, I believe the need for more money in education has never been more evident. I believe my eyes are still bleeding...
After reading "...no one now
After reading
"...no one now seems to be able to locate neither the paperwork nor the hardware."
I am convinced that we should err on the side of the school system. Or do we all agree that schools should stop teaching silly subjects such as grammar?
SCHOOL DISATRICT PLEADING
Wow, that's the fastest invocation of Godwin's law I've ever seen.
Isn't the school district looking to the wrong party?
Let's step back a moment. The school district ordered computers, more than they needed, could use or even intended to use, based on the events. They were delivered. I don't see any dispute about that.
After the fact, the district admitted it owed the debt, but due to their own negligence, the hardware and paperwork were "gone". Sounds like fraud and theft to me, a criminal matter. Sounds like they need to find the folks within the district that profited. Prosecute them and collect restitution.
Instead, the district re-negotiated the debt, delaying it beyond the office terms of the guilty parties. Covered their asses but made it impossible to trace the crime.
Now, 15 years past due, they ask IBM to eat the cost of their failure.
Gee, why not build on a beach, in a flood zone, and ask why the government should not rebuild your home annually ...
Stupidity should not be subsidized, and just shifting the blame from the district to IBM hides the real responsibility and problem.
It never worked for me......
"The dog ate my homework. "