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Pressure Is On IBM To Forgive Millions In IT Debt
Posted by
ScuttleMonkey
on Mon Jun 18, 2007 05:01 PM
from the highly-unlikely dept.
from the highly-unlikely dept.
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."
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Do you mean Contra Costa? (Score:3, Insightful)
Do you mean Contra Costa?
How do you lose that much computer equipment? It must have walked off.
Re:Do you mean Contra Costa? (Score:5, Informative)
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 [contracostatimes.com] 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."
Parent
Re:Do you mean Contra Costa? (Score:5, Informative)
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.
Parent
I have heard the opposite is true (Score:4, Informative)
The upshot is that the shipper has the right to unload the goods on your sidewalk and walk away if you are being difficult. Obviously, they'd do all sorts of CYA stuff to document their actions - and this sort of ultimate action is never good for business. But in the end, the innocent third party has the right to walk away without burden (providing the shipping order doesn't place restrictions on the delivery. "Must be kept frozen" overrides "I waited five whole minutes for them to empty the freezer and then dropped the goods on the burning sidewalk."
It may be that you legally have the right to return the goods. But, you need to be careful about who has possession the goods, and have proof of transfer of possession.
Parent
Excuses, escuses (Score:5, Funny)
signed,
Epstein's Mom
Re:Excuses, escuses (Score:5, Funny)
Shameful.
Parent
Coming soon to a cinema near you... (Score:4, Funny)
Parent
Bad Records (Score:5, Insightful)
Seriously instead of saying "let us off" they should be saying "here's your money, _please_ don't charge us interest or take us to court".
Re:Bad Records (Score:4, Interesting)
Parent
Wow, it's not often I feel sorry for IBM (Score:5, Insightful)
Re:Wow, it's not often I feel sorry for IBM (Score:5, Insightful)
Parent
Re:Wow, it's not often I feel sorry for IBM (Score:5, Insightful)
To me this seems like gross mismanagement of funds on the part of the school board. And, frankly, forgiving their debt will not compel them to manage their funds any better in the future.
Parent
Re:Wow, it's not often I feel sorry for IBM (Score:5, Interesting)
When it comes down to the asshattery of the administration of the time..there's a lot to go around. The superintendent, Walter Marks, took whatever funds he could to further a pet project called open schooling, which may have been one of the forebearers of the proposed voucher schemes. The different campuses were given specific lines of study, and students were given the choice to go to the school that interested them the most. For example, Pinole Valley HS was given the Dramatic Arts line, while at the same time, all musical and arts classes were cut dramatically at other schools across the district. El Cerrito HS, if I remember right, was given Math & Sciences, while those same courses were underfunded at other schools. Parents could simply not afford to send their children to schools that weren't local, helping to foment serious student disenfranchisement and furthering dropout rates.
The asshattery continued in the state assembly, where Sup. Marks was given high praise by the Secretary of Education, William Bennett. Secretary Bennett felt that this disjointed and disenfranchising method of splitting the district was a model for urban school reform. Sup. Marks was given high praise nationwide for bankrupting the district. Marks was able to find a higher paying job in Kansas City after being fired at the height of the scandal.
All that being said, I still think that the district should pay the debt. The question is, where will the money come from? Can't get them from the teachers, or you won't have any teachers. Can't get an appropriate amount from property taxes, due to proposition 103. There's simply not enough cirriculum to cut back. I wish there was an easy answer that didn't affect students adversely, but I simply don't believe there is.
Parent
I really hate these type of arguments... (Score:5, Insightful)
Oh, so that makes it OK to rip IBM off.
Well, "honorable" lawmakers, how many of your teacher's pensions are in IBM stock?
Or what about your investments?
Or some of your other constituents - many who are retired and are relying on IBM making an actual profit in order to make money on their retirement investments.
Not all stock investors are rich, fat, white, dudes who nobody has pity for.
Mental note: Do not give credit to the CA schools - cash only.
Re:I really hate these type of arguments... (Score:5, Informative)
60.6% of IBM stock is held by institutions such as pension funds according to their latest report.
Parent
Which implies... (Score:4, Insightful)
Parent
Wow (Score:4, Funny)
On a serious note, I am surprised at no mention of paying a smaller amount or anything.. No they expect IBM to just forget about the whole thing.
Cant "find" the computers? Then... (Score:4, Insightful)
"What you subsidize, you get more of".
Have the school district *try* a little harder to find out where it all went.... a good first step.
If the taxpayers het mad enough at the failure to do this, *then* you'll get some accountability, although late.
BWilde
Re:Cant "find" the computers? Then... (Score:5, Insightful)
If the audit is completed, and if the district makes its payments on time, IBM could then make a $5 million charitable donation to the district.
That way, IBM would get good press, the district would hopefully straighten up their records, and everyone would be happy.
Parent
$5 million computers NEVER USED? (Score:5, Interesting)
If it wasn't for the fact that the administrators that created this mess are probably all not working there anymore, I'd say they should pay the full amount, with interest, as punishment for wasting the taxpayers dollars!
Re:$5 million computers NEVER USED? (Score:4, Funny)
Man, relax! This was the late-80s... $5M probably bought about a dozen computers (EGA monitors, 20MB hard drives and 2400bps modems not included). Besides, the "unavailable" hardware and proofs of purchase are probably just cover-ups for someone having lost one or both while on a three-week cocaine bender.
Ah, those halcyon days.
Parent
What a vague article (Score:5, Insightful)
Besides...lets say they were using the computers. How does the fact that they're missing affect whether they can pay for them? Surely the district didn't place a $5 million order with no means to pay for it?
IBM should just turn it over (Score:5, Insightful)
IBM bent over backwards (Score:4, Insightful)
What sort of example are they trying to set?
Pay Up (Score:4, Insightful)
For one reason or another? (Score:5, Interesting)
What a load of crap (Score:5, Insightful)
If every dollar is precious, they should've thought twice before spending $5 million in hardware that was never even used!
This district's atrocious conduct is precisely the reason why IBM should not forgive the debt.
Well, these are politicians we're talking about (Score:4, Interesting)
IBM has been more than fair. They are owed their money. Mistakes are made, but unless the consquences are paid they will happen again.
Let me see if I understand this (Score:5, Insightful)
Meanwhile, the State of California has insisted on, and gotten, much stricter terms (including interest.)
Now, the State is suggesting that IBM should forgive their loan altogether?
Maybe, if forgiving those loans is so good an idea, the State of California should go first?
contra costa country (Score:5, Informative)
"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."
A tale of two counties (Score:4, Informative)
Contra Costa County is broken up into Multiple School Districts [k12.ca.us]. This story is about the West Contra Costa School District, which serves communities such as Richmond & San Pablo. I don't know specifics off the top of my head, but it is one of the poorest school districts in California.
Contra Costa County is a tale of two counties. Eastern Contra Costa County is as you described, with many wealthy suburbs, wealthy inhabitants and well-funded schools. This is the image that Contra Costa County would like to promote on it's website.
Western Contra Costa County is much poorer, with poorly funded schools & high crime rates. Richmond has a disturbing level of corruption in the government. Compare these two cities:
* Richmond [wikipedia.org]Walnut CreekAbout 1.7% of families and 3.7% of the population were below the poverty line
I travel in both areas of Contra Costa Country regularly, and I'm always amazed at the difference. Walnut Creek has beautiful, clean schools located close to grass-covered golden hills. Many Richmond schools have a ton of graffiti, broken windows, boarded-up buildings, etc. Several times a year, schools in the parts of the Western Contra Costa County School district go into 'lockdown' mode due to leaks at the nearby chemical plants or oil refineries. Drive by shootings happen near the schools. In Richmond, you can hear gunshots just about every night.
Parent
I went to school there (Score:5, Informative)
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.
Rewarding bad behavior (Score:5, Insightful)
Re: (Score:3, Interesting)
No... (Score:5, Informative)
Parent
Re:No... (Score:5, Interesting)
This school district has been able to defer this debt for over 15 years. Where is my 15 year, interest free $5 million loan? I want a piece of that action.
If we want to talk about bail outs, why not have the state of California bail out the school district? Why not have the citizens of that school district pass the collection hat round and round till they come up with the money?
I'm sure there are going to be lots of "think of the poor children" arguments about this. It is real easy to have sympathy when it isn't your $5 million at stake.
Parent
Re:No... (Score:5, Informative)
Parent
Re:No... (Score:5, Informative)
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.
Parent
Re:No... (Score:5, Interesting)
Even a cursory reading of the Founders' beliefs and thoughts on the US Federal Government was that states are individual entities, experiments in diversity of regional and local government (yes, right down to their budgets - otherwise, states and locales would've never been allowed to levy taxes, and everything would've been disbursed from Federal revenues all this time). The common bond was that they accepted and abided by a common set of rules (e.g. the US Constitution), and pitched in together on Federal matters (Defense, taxation/tarriffs, infrastructure, etc), each according to their ability and population.
Large-scale Disasters (Katrina), local debts incurred from assisting in (or cleaning up after) national emergencies (e.g. 9/11 or Oklahoma City), or debts incurred by the actions or mishaps any federal agency or branch makes in a locale (say, a fighter jet plowing into something accidentally)? No problem - totally cool with the Feds helping out in the money department.
Bailing out the bad decisions made by a pack of politicians at some distant city council? Nope: they dug their hole - they can float bonds or raise property taxes to un-dig themselves out of it. If I have no vote or say in how that California county spends its discretionary budget, why should I (some random taxpayer up in Oregon) be liable for their mistakes?
After all, if you or I do something dumb and run up a mountain of unpayable debt, the Feds certainly wouldn't be breaking their necks to bail us out... so why should cities and/or counties have such a privilege?
Parent
Re:No... (Score:4, Insightful)
Parent
Actually,.... (Score:5, Interesting)
Parent
Re:Actually,.... (Score:5, Informative)
Parent
Re:15 years (Score:5, Insightful)
Parent
Re:15 years (Score:5, Insightful)
It sucks that elected representatives do this so often, but what's the answer for it? The people doing it know they won't be there to answer for it! Kind of like our current administration at the federal level pissing away money on Iraq while the situation there gets worse every day, and leaving it to the next administration to make the hard decisions and clean up the mess.
Parent
Re:15 years (Score:5, Insightful)
Except the school board isn't stuck with the bill. At least in that the individuals on the board don't have to pay it. It isn't going to affect their salary or anything in any way. The money will have to come from them cutting back on other educational expenses. So the people who are going to suffer are the kids who weren't even born when the deal was made.
Parent
Re:15 years (Score:5, Insightful)
Parent
Re:15 years (Score:5, Insightful)
They had a inept, corrupt school system. 5 Million in computers go poof! Is their outrage? Who's head ended up on the block? Who had to pay for this? So far no one. IBM has been nice, and has made a 15 year 5 million dollar interest free loan.
People 15 and 20 years ago were responsible for this. The city, the school board, the voters and tax payers. They did not pay the piper....It has been put off till now. It is time to pay.
If the city had taken out loans, were improving the school district, etc. Then there was some big natural disaster, something beyond their control. I could see IBM feeling generous and forgiving the debt. But this is due to the school districts own stupidity.
If a car lot (yes another car analogy), sold you a car for $30,000.00, you have a million dollar home for collateral. Your worthless brother in law runs off with the car. You are having cash flow issues, and can't really afford to make the payments. Why should the car lot forgive you this loan?
They entered into a business deal with a party who had the ability to pay. Just the party mismanaged things and has the sob story, why should IBM have to eat it? Because "they can afford it" just does not cut it. IBM could also afford to cash out, take the money and run. To not sell hardware to anybody any more. But no, they are staying in business to do business. They are not extorting their customers. They should not have to eat it. Let the tax payers who allow such government pay for it.
Parent
Re:15 years (Score:4, Funny)
Parent
Re:15 years (Score:4, Funny)
From 15 years ago are the bad guys, unless they've lost the records of who was on the board back then too.
Parent
Re:Cut 'Em Off (Score:4, Informative)
This is no joke - literally billions of people are endangered by well-meaning but ultimately foolish decisions like this.
More money is not the solution to any of the world's current problems. US public education is actually an incontrovertible proof of this - a prototypical example.
Brett
Parent