Estimated read time: 2-3 minutes
FARMINGTON, Utah (AP) -- The Davis School District appears to be stuck with a $400,000 bill and the Box Elder School District expects to owe $250,000 for fitness equipment they expected to be paid by a Utah-based foundation.
Davis High School, West Point Junior High and Bountiful Junior High were three of more than 130 Utah schools participating in the program sponsored by the American Fork-based National School Fitness Foundation.
The foundation arranged to sell $77.5 million in stationary bicycles, weight machines, treadmills and other equipment to more than 600 schools in 20 states. The schools were to be reimbursed from government grants or private donations, but the payments stopped in April.
Minnesota's attorney general called it a pyramid scheme in which money from newly enlisted schools was used to make token reimbursements to schools that signed up earlier.
The foundation has fired its president and filed for bankruptcy reorganization June. The state revoked its solicitation license.
Grant Sumsion, a lawyer with Sumsion and Crandall, which represents the foundation, said the foundation never misled schools. He said it never guaranteed reimbursement and clearly stated that in the contract.
Davis spokesman Chris Williams said the district still owed almost $455,000 to Zions Bank when it heard about the bankrupt organization. It has already paid about $56,000 to the debt and it earlier had been reimbursed about $227,000 by the foundation so far.
Williams said the district plans to continue repaying the debt by making monthly payments over a two-year period. The money will come from the capital outlay account that is used to pay off leases.
"What is put on the back burner because of this is hard to tell at this point," Williams said. "It could be as simple as one asphalt resurfacing. Overall in the grand scheme of things, this $454,000 is pretty small in our $407 million budget."
Still, Williams said the money could have been used elsewhere.
"The bottom line is we're going to keep the equipment," he said. "It wouldn't be wise to renege on our side of the agreements even though we might not get reimbursed."
Williams said the district was using the three schools as a pilot to see how it went before involving more schools in the program.
"We were cautious when we first got into it," he said. "If there's any silver lining, we only had equipment at three schools."
Jay Stuart, assistant superintendent for Box Elder School District, said his district had two schools participating for a total of $500,000. The district still owes around $246,600.
"We're still hoping that we will get reimbursed," he said, but also are trying to figure a payment schedule out of their capital budget.
"It's putting an obligation on us that we didn't expect."
Earlier, Cache County School District officials said they appeared to be stuck with a $316,931 tab. School district business manager Dale Hansen said the district would be able to cover the loss.
(Copyright 2004 by The Associated Press. All Rights Reserved.)