School District Paid $19 Million in Interest Alone on State Loan

Everyone knows you usually have to pay interest on long-term loans, but apparently the amount paid by the West Contra Costa Unified School District comes as a surprise to some.

Data provided by district officials in response to a request from school board member Madeline Kronenberg shows that the $28.5-million state loan given to the district in 1991 has cost the district $47.4 million to pay off. The final payment was made Tuesday.

"It was a whopping 47 million dollars!" school board President Charles Ramsey said in an email exchange shared with Patch. "I (am) just glad that we are done. I mean 47 million! Wow."

The disclosure comes as the long-standing debt has been in the news. The district has been preparing for a high-profile ceremony with state schools chief Tom Torlakson coming to Richmond Friday to celebrate the early retirement of the longstanding financial burden.

The debt payments had been scheduled to continue for four more years, but the board under Ramsey's leadership along with district Superintendent Bruce Harter recognized that the remaining balance had fallen to the point where the district could pay it off all at once with the funds in its Debt Service Account.

The only hitch was that the idea had to be approved by Torlakson, the state Superintendent of Public Instruction. Torlakson, having lent his aid to the district when he represented it as a state senator, agreed to the deal after an audit gave the district a thumbs-up for it financial management.

The debt, including the interest payments, has placed a significant financial burden on the struggling district. Its academic programs and services suffered from $40 million in cuts in recent years needed to overcome deficits.

The district paid off the remainder of the state loan debt on Tuesday, May 29, with a transfer of $8,130,607.58 to the state, said Marin Trujillo, community engagement coordinator for the school district.

The debt was historic in California. The district, known in 1991 as the Richmond Unified School District, had filed for bankruptcy and planned to close. A lawsuit by Tom Butt, currently a Richmond City Councilman, and other parents resulted in a landmark decision by the state Supreme Court in Butt v. State of California saying the state was obligated to provide an education to students in a district that was failing. 

The district became the first to enter into state receivership and was saddled with a state trustee and the loan.

Today's 10:30 a.m. ceremony will be held at the newly rebuilt Ford Elementary School at 2711 Maricopa Ave. in Richmond. Expected attendees include present and past members of the school board, as well as state and local officials representing Richmond, San Pablo, El Cerrito, Hercules and Pinole, the district said.