Two years after Lehman Collapse, schools wait for answers

Nearly two years ago, the Lehman Brothers bankruptcy brought with it severe repercussions to San Mateo County and the school districts of San Carlos. 

Today, the lawsuit brought by the county is still pending, according to county chief deputy John Beiers.

"I believe we are still waiting on the judge to rule on the class-action case, and once he does that, we can move forward the individual suits that are still pending," said Beiers.

The County lost an estimated $155 million - five percent of the county's entire investment portfolio - a loss four times greater than any other municipality, according to county records.  Of that $155 million, 41 percent was from the education sector.

The San Carlos School District lost $630,000, according to court records. And the effects are still being felt today. 

"The budget situation is difficult for everybody,"  said superintendent Dr. Craig Baker. "We're doing our best and to meet the needs of kids wile struggling to come up with funds. Other than that, I can't really speak out about this issue too much."

Baker's silence is the result of a pending lawsuit the county has against Lehman in an effort to recoup its losses. The judge presiding over the lawsuit has allowed the county to amend its complaint due to new findings that came out of recent congressional hearings, according to the county attorney. 

But in a letter written to parents entitled, "A Tough Day For San Carlos Schools," Craig was more candid with the troubles the school's face. "A number of teachers positions may not exist in the 2010/2011 school year," the note read. He went on to discuss the $2.8 million budget gap the school district faces this year.

"This is a very difficult, heart-wrenching situation, as it affects the lives of wonderful people who have served our children well," Baker said in the letter.

And as the lawsuit pends, the residents of San Carlos wait.

"It's shaken the confidence of the investment trust," said city manager Mark Weiss. "We're invested in the county pool and we've had to cover for that. But it's sure shaken our confidence."