San Luis Coastal to help its top exec buy a home
December 20, 2016
The San Luis Coastal Unified School District is giving its superintendent a $950,000 loan to buy a home. San Luis Coastal’s school board unanimously approved the loan at a meeting last week.
However, some teachers and members of the public question whether the under rate loan is a gift of public funds at a time the district is increasing class sizes to save money.
Superintendent Eric Prater, who makes a base salary of about $215,000 and receives nearly $300,000 a year in total pay, will receive a fixed-rate, 30 year loan from the district. The loan has a 2.6 percent rate that matches the federal interest rate for long term investments for Dec. 2016.
Nevertheless, on Thursday, federal loan agency Freddie Mac issued a report stating the average 30-year fixed-rate mortgage was 4.16. The Wall Street Journal reported the average “plain-vanilla,” 30-year fixed-rate mortgage was 4.38 percent on Thursday.
Mortgage rates surged by .76 percentage points since Election Day, according to the Wall Street Journal report. Mortgage rates are expected to keep rising, due in part to the Federal Reserve’s decision to raise interest rates. The Fed raised the federal-funds target rate on Wednesday, just hours after the district approved Prater’s loan.
The loan will also allow Prater to avoid making a down payment on a house.
By issuing the loan, San Luis Coastal intends to guarantee Prater will remain with the district for the long-term. But, it only mandates that Prater stay with the district until June 30, 2021, and it contains an opt-out clause allowing Prater to leave before then if he pays the principal and interest within two years of his departure.
District officials say, with Diablo Canyon Power Plant due to close in 2024-2025, San Luis Coastal needs to maintain strong and stable leadership. The school board also wants to reward Prater for delivering a successful 2014 bond measure and for negotiating a $36 million settlement deal with PG&E.
San Luis Coastal will lose about $8 million a year from the Diablo Canyon closure.
Prater told other media that he had been renting, and his landlord is selling the home in which he has been living. Prater wants to own a home in the San Luis Obispo area, but he says the housing market is incredibly challenging.
In 2015, Prater received $295,064 in total compensation, according to Transparent California. His earnings significantly increased from the previous year in which he received $236,555 in total pay.
From 2014 to 2015, Prater’s base salary increased from $191,730 to $211,053. His benefits rose from $27,150 to $65,315.
Additionally, Prater regularly receives about $15,000 to $20,000 a year in money classified as “other pay.” That could include bonuses, incentive pay and car allowances.
Prater’s renegotiated contract states he is entitled to approximately $50,000 in raises and tax-deferred savings over the next five years. Prater is foregoing the money, but instead he is entitled to receive a $50,000 write-off on his mortgage, if he remains superintendent until July 2021.