Almanac

Schools - November 16, 2011

Judge dismisses suit over Lehman losses

• Local school districts lost about $4.6 million

A San Francisco judge has dismissed a lawsuit brought by 12 San Mateo County school districts against the county seeking to recover about $20 million in losses due to the 2008 collapse of Lehman Brothers.

San Francisco Superior Court Judge Richard Kramer on Thursday affirmed a tentative ruling that the county and former treasurer-tax collector Lee Buffington were immune from civil suits.

The school districts — including Menlo Park City, Las Lomitas, Portola Valley, and Woodside — sued the county and now-retired treasurer Lee Buffington in January for actions that led to the schools' losses.

Tom Prountzos, an attorney for the school districts, said they plan to appeal.

Of the local school districts, Menlo Park City lost the most by far — about $4 million. The Las Lomitas district lost nearly $400,000; the Portola Valley district, almost $150,000; and the Woodside district, almost $100,000.

The county treasurer's office is in charge of funds that school districts are required to put in an investment pool. The lawsuit alleged the treasurer invested an "imprudent portion" of the funds in Lehman, and kept them there "after learning of deterioration in the finances, credit rating, and stock price of Lehman."

Overall, the Lehman bankruptcy led to $155 million in losses for the county and other agencies participating in the investment pool. But most of those agencies are not required to participate, unlike school districts. The treasurer's office charges "substantial fees" to manage the money, according to Anne Campbell, superintendent of the county Office of Education.

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