By PAUL GULLIXSON
THE PRESS DEMOCRAT
“A good man leaves an inheritance to his children’s children.” — Proverbs 13:22
Frank P. Doyle was such a man. No one should dispute that.
Rather than leave his controlling interest in Exchange Bank — 50.39 percent of common stock — to relatives, Doyle left it to the community. He directed in his will that it be put in a perpetual trust and that the dividends be used to help “worthy young men and women attending Santa Rosa Junior College.”
Since 1948, that scholarship has doled out nearly $80 million to such worthy individuals, more than 115,000 in all. Quite an inheritance.
But that gift came to a halt in 2008. And last week, scores of students descended on a branch of Exchange Bank in Santa Rosa demanding that the scholarship be reinstated. Last Sunday, Page One of The Press Democrat Sunday featured bank president Bill Schrader meeting face to face with the students, explaining why the bank has not yet begun issuing dividends and thus can’t resume giving scholarships.
Schrader deserves credit for not hiding behind a desk and a closed door. Times are tough. We need to face facts.
What bothered me, however, is what happened next: People started scolding the students.
One letter writer accused them of wanting everything handed to them. “Here, the Exchange Bank, which was started by local people, has been voluntarily giving Frank Doyle scholarships over the years … No one owes you a living.” A writer on WatchSonomaCounty.com accused the protesters of being “yelping brats” while another called them “screwballs.”
“A gift … is not an entitlement,” wrote one.
Hey, I’ll be among the first — and was — to criticize Occupiers for being all over the map with their demonstrations. But if anybody has reason to protest these days, it’s young people, students in particular.
First, let’s be clear about something. Those who run Exchange Bank are good people. But the Doyle Scholarship is not their “gift” to give out. There is nothing voluntary about this. They are stewards of a fund that Doyle created, a product of his benevolence.
No, this is not an entitlement. But it’s also true that the people who have been running the bank are not above reproach for how they’ve managed the bank’s assets.
For years, Sonoma County’s oldest and largest bank had a reputation as a risk-averse institution that did well by its shareholders. But that changed during the past decade when the bank decided, at the worst possible time, to go after a piece of the action in the Sacramento area.
At one point in 2008, as this newspaper reported, Exchange Bank was responsible for more than half of the $94 million in bad real estate loans reported by local lenders. As a result, the bank reported losses of $18.5 million in 2008 and $3.9 million in 2009. In addition, the bank accepted $43 million in bailout funds from the U.S. Treasury, money that has yet to be paid back.
The good news is the bank has recovered nicely, posting profits of $10.2 million last year and $9 million through the first three quarters of this year.
I don’t fault Exchange Bank executives for wanting to make sure they’re on solid footing before issuing dividends and scholarships again. At the same time, one can hardly blame students for being eager to see these funds renewed while seeking a little transparency about what the bank is doing to ensure this doesn’t happen again.
Yes, the scholarships have helped students for generations and will again. But that’s small comfort for those who are going through SRJC now and will have to do so without any Doyle help. For all the years that the scholarship has been around, history is likely to show that this is the generation that needs it the most.
Students face escalating fees not only at the JC but on other campuses, while classes are getting tougher to get. While legislators wage war over minor tax hikes, no one seems to have taken a pledge to protect students and oppose increasing tuition. Sonoma State University students, some of whom came from the JC, are likely to see tuition increase 9 percent next fall. That’s on top of the 10 percent hit they took this fall. California State University trustees are about to hoist tuition by another 9 percent. Sonoma State University students, many who come from the JC, already were hit with 10 percent tuition hike this fall.
Nationwide, college students are graduating with an average debt of $25,000.
Meanwhile, the job market for young people remains dim. Nationwide, unemployment for those between the ages of 25 and 34 is at 9.2 percent while for those between 20 and 24 it’s in excess of 14 percent.
It’s common knowledge that many graduates who are fortunate enough to land jobs aren’t doing anything closely related to their degree.
And no, these “screwballs” probably aren’t getting much help from their parents either. Household net worth fell another 4 percent during the last quarter while home equity, the single biggest source of wealth for American families, continues to take a beating.
And some day, when graduates do land a decent job, you can bet they’ll receive benefits — health, retirement, etc. — that are a far cry from what their predecessors received. At the same time, they’ll be stuck with a monster bill for the excesses that came before them. Here’s the running tab:
Sonoma County debt: $1.25 billion, including $249 million in unfunded retirement benefits and $515 million in pension obligation bonds.
California debt: $400 billion, including $240 billion in unfunded liabilities.
U.S. debt: $15 trillion.
Those are staggering encumbrances that are going to be passed down, in part or in whole, to the next generation of workers, employers and government leaders — some of whom were standing out in front of Exchange Bank last week. So, let’s cut them some slack for voicing their frustrations about a scholarship that ranges between $1,000 and $1,800 a year.
Instead of calling them “brats,” it seems to me we should be calling them and apologizing — for the mess they’re about to inherit.
Paul Gullixson is editorial director for The Press Democrat. Email him at email@example.com.