Edison not ‘technically’ in default

Friday, May 17, 2002 | 10:21 a.m.

Faced with the end of the fiscal year in six weeks, the Clark County School District decided to withhold its quarterly payment to Edison Schools when the company came up short on a donation it promised to the district by May 15, an official said.

"Technically, they're not in default with us until the end of June, but we felt it was necessary to make a decision since it was getting to be nip and tuck there," Walt Rulffes, chief financial officer for the district, said.

As part of its five-year contract with the district to manage seven schools, Edison agreed to raise $10.5 million from national philanthropic groups in the first three years, with $4 million due each of the first two years and $2.5 million in the final year.

The money was slated for making technological upgrades and purchasing classroom materials for the schools Edison manages, but the district informed the company when the contract began last July that the improvements were already under way and arranged to have the funds go instead to the district's general fund.

Edison had paid $1.8 million of the $4 million and agreed to pay another $1 million by May 15, when the district was due to make a $3 million quarterly payment to the company for its work managing the schools.

"Basically, we're just trying to protect ourselves by withholding the payment," Bill Hoffman, general counsel for the district, said.

If the $2.2 million balance on the donation is not paid by June 30, it will be added to next year's sum of $4 million, Rulffes said.

"It's starting to stack up, and that's why we felt we had to do something," he said.

"But at least we have a sort of collateral to work with."