The San Luis Coastal Unified School District (SLCUSD) is dipping its toes in the lending business.
In a move that’s turned some parent and teacher heads, the SLCUSD board of trustees on Dec. 13 voted to use district funds to loan Superintendent Eric Prater up to $950,000 to buy a home, in a stated effort to retain Prater through 2021.
Citing his “phenomenal” leadership since he was hired in 2010 and the looming budget cuts due to the shutdown of the Diablo Canyon Nuclear Power Plant, SLCUSD board President Kathryn Eisendrath-Rogers told New Times that keeping Prater at the helm was a top priority for the district.
“The board knows that we have an asset we need to protect,” Eisendrath-Rogers said. “For us, it’s essentially a retention guarantee program. The only reason we’re interested in getting into this business is to keep him here.”
Under the terms of the 30-year loan, Prater will be charged the federal interest rate—fixed at 2.6 percent—and his monthly loan payments will be deducted from his paychecks. The loan funding will come from general fund monies that would otherwise be invested in the county treasury, which has a 1 percent return rate.
The SLCUSD retains first deed of trust on Prater’s eventual home, which means the district is in possession of the title until Prater repays the loan in full. If Prater leaves the district before June 30, 2021, he must pay the loan back within two years.
Prater currently rents a home with his family in the French Park neighborhood of San Luis Obispo. Prater told New Times that the home loan conversation started when his Sacramento-based landlord decided to sell the house, a sudden decision prompted by a rental housing inspection notice from the city.
Simultaneously, Prater said he’s received higher-paying offers from other school districts in the state—but he’d rather stay at SLCUSD. Those combined forces brought the two parties to the table to negotiate a home loan.
Prater wanted the job security that came with the agreement; the SLCUSD board of trustees wanted the guarantee of keeping Prater as superintendent.
Eisendrath-Rogers lauded Prater for his role in the passage of the $177-million Measure D bond in 2014 and the recent settlement deal with PG&E/Diablo Canyon for $36 million, which she said Prater was “essential” in negotiating.
“This is the board tying itself to me, and me tying myself to the board,” Prater said.
Prater earns $215,273 in salary—and with benefits, nearly $300,000. The median price of a home in San Luis Obispo in November was $688,500. Prater is forgoing about $50,000 in planned salary increases through 2021, but will receive a one-time payment of $50,000 if he remains superintendent through June 2021.
The San Luis Coastal Teachers Association (SLCTA) sent an emailed statement to New Times on Dec. 21 in response to the board’s action.
“The SLCTA understands the school board’s motivation to maintain continuity of leadership at this time,” SLCTA President Craig Stewart said, “but the decision to include a home loan as part of Dr. Prater’s overall compensation plan, considering the gravity of the district’s financial situation, was surprising to many of our members.”