From the Desk of the Superintendent
Superindendent J. Brian Sarvis, Ed.D.
Wednesday, April 16, 2008
Setting the record straight...The $150,000 loan to our new Deputy Superintendent Eric D. Smith
I have been asked why we offered a home loan down payment to the new deputy superintendent. The simple answer is that we needed his expertise in the districts and did so to convince him to take a permanent position in the districts.
We have had seven chief financial officers in the districts over the past seven years. We failed to find an appropriate assistant superintendent for business services this fall. When we brought Eric Smith into the districts for his expertise, he agreed only to an interim position. He did not need a permanent position and would have made more money rescuing other districts from bankruptcy as a consultant.
Once we were convinced of his value to the districts we offered to pay him barely more than he previously made in the Berkeley Unified School District, compensation which is almost as much as we pay the superintendent. This still gave Eric little reason to accept a permanent position as other districts were also requesting his help. In short, we needed him but he did not need us.
There were two key points in the deputy superintendent’s contract: salary and housing. The $186,000 contract offer was feasible because the assistant superintendent of secondary education position will not be filled. The deputy superintendent’s position is the second-highest salaried position in the districts, after the superintendent.
The employment contract stipulated that the districts would provide the deputy superintendent a no interest or other favorable down payment loan on a residence in the districts up to $150,000. If the districts were unable to secure such a loan within 90 days, the Eric could cancel the contract and walk away from the position. With the assistance of legal counsel, it was determined that the districts could offer Eric a loan drawn from the districts’ general fund reserve.
Exceptional talent in this area comes at a price and we needed the best person we could find to provide the unique level of fiscal expertise required. Eric is recognized for being one of the best financial minds in the state in school finance. His credentials are stellar.
There appears to be a misperception that the down payment uses funds that could be used to buy supplies or could pay for other positions. This is not the case. The money comes from our state-required three percent reserve and would not be used to buy supplies or pay for other positions. The property funded with the loan will continue to be held as an asset as part of our three percent reserve.
Will the loan cost the district any money? No. Eric offered to pay the district the interest the money would have gained in the county treasury.
The financial health of the district is critical. The work of the new deputy superintendent has already added $1.5 million to the current year budget and $1.4 million to the next year’s budget, which goes a long way toward funding the $4 million in budget cuts forced by the governor’s devastating budget proposal.
Many districts are in financial peril. Our financial health is important to our future and too often detracts from our core mission.
I hope you will join me in welcoming Eric Smith to the districts on a permanent basis.