The well-being of every business, public or private, is critically dependent on the knowledge and leadership skills of fiscal operations. As one of the largest businesses in the Santa Barbara County, with a general fund of $128 million, plus millions more in the management of general obligation bond funds for school facilities, the Santa Barbara School Districts have a fiduciary responsibility to secure the best people to do the job.
Tuesday the Santa Barbara School Districts Board of Education approved a $150,000 loan to Deputy Superintendent Eric D. Smith to help him secure housing in the area. The loan was part of the contract agreement used to attract Smith to the districts. Commented board member Nancy Harter, “This is a critical position that is difficult to fill because of the unique expertise required.”
The board’s decision fulfilled the employment contract offered to Smith on Feb. 29, when he was hired as the districts’ new deputy superintendent. The contract stipulated that the districts would provide Smith a no interest or other favorable down payment loan on a residence in the district.
Of Tuesday’s decision, Superintendent Brian Sarvis said Smith had proven himself a highly competent interim Chief Business Office (CBO) and the loan was necessary to bring him into the districts on a permanent basis. Following the erroneous budget received in June, the districts put a new fiscal services team in place in to provide accurate, reliable information and restore confidence in budget numbers. The team was lead by interim CBO Eric Smith, who has sterling credentials in fiscal management, and Shirley Corpuz, the district’s new director of fiscal services. Within three months, the Smith-led fiscal team restored order and confidence and, along the way, streamlined the system in ways that will save the districts more than $1 million.
Sarvis stated, “Our districts need the best person possible to manage the budget so we can maintain programs critical to a high quality education, provide fair compensation for the districts’ 2,700 employees (staff comprise approximately 88 percent of budget expenditures) and position the districts’ finances for the future.”
The board agreed to provide Smith with a zero-interest or favorable-interest down payment loan up to $150,000 on a local residence in February. The contract stipulated that if the districts were unable to secure such a loan within 90 days, the deputy superintendent could cancel the contract and walk away from the position.
The loan will come from the districts’ general fund reserve. As established in a promissory note, Smith agreed to pay the interest so that the loan would be at no cost to the districts and his interest payments would replace interest money the districts would have earned in the county treasury.
If Smith were to leave earlier than the 39-month term of the loan, the loan plus interest would be due within six months. The districts explored a number of possibilities and found a solution that satisfies the terms of the contract and would provide the districts the additional interest the money would earn.
The loan will come from the districts’ legally required general fund three percent reserve. The loan is a receivable and will be carried forward as part of the three percent reserve.
As part of the reserve, the fund would not be used for other purposes, such as funding staff positions.
At Tuesday’s meeting, board member Kate Parker commented that other school districts in the nation use hiring incentives, which are not uncommon, but the loan under discussion is a “big step” for the Santa Barbara School Districts.
The Santa Barbara School Districts offer other types of incentives for eligible staff, as appropriate, such as early retirement incentives, stipends, professional development opportunities, transfer opportunities for the children of full-time employees, and financial incentives for employees with masters and doctorate degrees. Sarvis noted, “Perhaps in the future, a similar loan program can be made available to other employees.”
“Our students and the community deserve highly qualified professionals at every level and our new deputy superintendent is at work providing stable financial leadership for the Santa Barbara School Districts,” stated the superintendent.
Barbara Keyani is the Santa Barbara School Districts’ special projects and communication director.