“Lehman Bros. bust hit San Mateo County hard” – $150 million

Lehman Bros. bust hit San Mateo County hard
San Mateo County has been stung by the recent Wall Street investment crisis, absorbing about $150 million in potential losses that could result in public school budget cuts, delays on road and Caltrain improvements, and scaled-down city services.

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Funds from these cities, school districts and special districts were pooled together in San Mateo County’s $2.6 billion investment portfolio. Critics have said the county needs to hire an outside expert for this portfolio.

Jean Holbrook, the county’s superintendent of schools, pegged countywide losses at $37.4 million for kindergarten through grade 12. The San Mateo County Community College District, whose three colleges serve 40,000 students, lost $25.2 million. The countywide school insurance fund lost more than $550,000.

“It’s hitting at the same time that we had a late and inadequate state budget,” Holbrook said. “Those losses are impossible for a school district to absorb. This is not money just sitting around in reserves. It’s used for our ongoing operating expenses – paying salaries, and making the payments on buildings and facilities.”

The Sequoia Union High School District, which includes schools in Belmont, Woodside, Atherton, San Carlos, Redwood City and Menlo Park, was hit especially hard by the bankruptcy, losing $6.6 million – more than any other district in the county, said spokeswoman Bettylu Smith.

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Church and other supervisors are considering whether to limit the amounts invested from each issuer of commercial paper and corporate bonds, from 10 percent to just 2 percent of the county pool. The Lehman Bros. portfolio accounted for 5.9 percent of the county’s investment fund.

This is rather unfortunate. Given the precarious position that most schools are in already, this is just more bad news.