Pressure Is On IBM To Forgive Millions In IT Debt

coondoggie writes to tell us that several California state legislators are pressuring IBM to release the Costa school district from some $5 million of long-standing debt as a charitable donation. "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 either 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."

Comments

Re:Do you mean Contra Costa?

[mikael]

More likely the delivery was received by the staff, and then immediately returned.

The office I worked in as a intern had the exact same problem. They made out an order for 50 IBM PC's for a training room. Instead, they received 50 IBM PS/2's that came
in huge palette sized boxes of 25 each. These had to be dismantled inside the container before we could take them out. As soon as our boss found out what they were, they were immediately returned.

This article seems to suggest a similar thing happened.

Nobody seems to know how many or what type of computers Marks ordered, or even whether they ended up being used. Several former district officials called them "obsolete" and "useless."

Re:I really hate these type of arguments...

[magarity]

Well, "honorable" lawmakers, how many of your teacher's pensions are in IBM stock?
 
60.6% of IBM stock is held by institutions such as pension funds according to their latest report.

No...

[msauve]

there is no reason that a resident of another state, or even another city (taxpayers, all), should bear the burden for a bad local decision.

Re:No...

[Lesrahpem]

Yes, I do. My point is that they have a history of spending such levies on stuff they don't need. Rather than buying the textbooks, desks, and (possibly) updated computers they should be buying, they have a history of spending levies on statues, paint, gardens, the teacher's lounge, and sports equipment. A few years back they asked for a levie with the stated purpose being to buy said textbooks. They bought about 50 books and spent the rest on a new soccer field. Now, they have two soccer fields identical soccer fields, only one of which is ever used at a time.

Re:No...

[Jason Earl]

The problem with giving money to schools is that school administrators tend to *always* spend it on glossy paint, then when the money is gone they turn around and complain about the books that they didn't buy when they had the money.

A perfect example of this is the recent teacher pay raise in Utah. The teachers union (and basically everyone else) complained about teacher salaries so $100 million was raised to bump every teacher's salary by $2500 and give them a $1000 bonus. The school districts immediately began planning to spend that money on everything but pay increases. This has forced the legislature to audit the various districts to ensure that the teachers actually receive the money.

I am sure that the school districts planned to simply continue doing the same thing that they have done for years. The plan undoubtedly was to complain about teacher pay, get more money from the legislature, and then spend the new funds on everything but teach salaries allowing them to complain about teacher pay the next year.

What we really need are school vouchers. If there is one thing that public schools across the country continue to prove it is that the government does a poor job of providing education.

contra costa country

[olmy]

as mentioned in the comment section of the network world article:

"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[ed] county begging for debt relief from an evil corporation. Move along."

I went to school there

[rmdir -r *]

The basic problem is, in 1992, they got a superintendant who was going to revolutionize everything. New schools, new ways of doing things, the works.

He turned out to be a corrupt bastard, but he disappeared without ever having to pay or atone for anything, and the people who use the schools have been paying for it ever since.

The school district is broke as hell, and quite honestly, will probably go bankrupt before they pay IBM (if by 'pay' you mean 'pay in the next 50 years').

All the other comments here seem to be going 'lol pay up already', but it's not that simple. IBM should forgive the debt, and everyone should learn a lesson from this:

Don't let public institutions pay with credit. The people who make decisions are not held responsible, and thus do not make responsible decisions. They will rip you off, and rip off the people they are supposed to be representing.

Re:Actually,....

[Frosty Piss]

The should do that so they can get screwed again by a wealthy school district? Do you know where Contra Costa is? It's the land of $500,000 starter / fixer-upper shacks. They can afford to pay their bill.

Re:Do you mean Contra Costa?

[mikael]

From this article it appears there was a real battle over the useability of the systems, and the district
did try and get the machines sent back.

Former school board member Frank Calton said he remembers the deal with IBM being touted by Marks as a mutually beneficial partnership.

"This was submitted to us as kind of a joint venture where IBM could showcase computers as learning tools for students," Calton said. "It was supposed to have a PR angle for IBM."

When asked by the Times last week, the district could not track down invoices for the purchases, so it is unclear how many and what type of computers were ordered. But administrators agree the computers already were outdated when the district got them.

"I think they were out of date before (Marks) even decided to buy them," Basalto said. "Every one of them was obsolete; they were absolutely useless."

Where the computers ended up also is a mystery. Basalto recalls that some were installed in schools, but some sat in warehouses, possibly never turned on.

The district tried to return some of the computers, said Ruth Vedovelli, West Contra Costa school district's current finance chief. IBM refused to take them back, leading to a years-long fight that also included battles over the actual cost.

Negotiations often got ugly, with Fred Stewart, the state trustee appointed to oversee the district's finances after it went into debt in 1990, often getting into shouting matches with IBM representatives, says Herb Cole, Marks' successor.

"He said, 'We can't pay you, so if you want them, come and get them,'" Cole said, adding that Stewart threatened to put the computers on the curb. "He was tough as nails with them at the time."

Stewart, who recently retired as the state trustee, declined to comment.

In late 1993 -- four years after the district agreed to buy the computers -- the parties reached a settlement that called for deferring the first major payment until 2008. That was the year the district, under its previous loan structure, was scheduled to be finished paying back $28.5 million it owed the state.