The trend of government bailing out large corporations was reversed yesterday when the Geico Corp. donated nearly $600,000 to the D.C. public schools in an 11th-hour rescue of the driver-education program.
With schools reopening today, driver education was scheduled to become a casualty of the city's financial crisis until Geico, the largest writer of automobile insurance policies in the Washington area, stepped in with funds to preserve it for a year.
In a ceremony following a special meeting of the school board at Wilson High School, O.M. (Tony) Nicely, Geico's regional vice president, handed the first of 10 monthly checks that will total $593.833 to a beaming superintendent of schools, Vincent Reed.
Ten of the 11 school board members were on hand to express their gratitude to Geico, as was Chief of Police Burtell Jefferson. They sipped coffee and snacked on pastries and fruit salad in the Wilson library along with a cluster of Geico's top executives, including president William B. Snyder and Joseph Sisco, former assistant secretary of state and former president of American University, who is chairman of the Social Responsibility Committee of Geico's board of directors.
If any of the participants in yesterday's ceremony had reservations about the ethical implications of such a corporation financing classes in the public schools, there was no sign of it. aOn the contrary, all the school board members and Reed and Jefferson said they hoped Geico's action would be a precedent for further private involvement in the financing of public programs.
Snyder, Geico's president, said that "education properly should be funded through the city budget, but this was an emergency." The donation, he said, was a "one-time emergency grant," and the contract signed yesterday by Snider and R. Calvin Lockridge, president of the school board, specifies that "this grant is offered on a one-time basis and that there is no plan to offer similar grants in subsequent years."
Nicely said that Geico, which is headquartered in Chevy Chase and incorporated in Delaware, would be able to count the donation as a "normal business practice expense" to be deducted from its corporate taxes, but he said the company would not provide literature or training aids for classroom use that would promote Geico business.
Sisco, noting with a grin that he had been interviewed about events in Iran on the "Today" show only a few hours before facing the local television cameras at Wilson to talk about driver education, said the donation was "good business, an investment in our youth and an investment in good citizenship."
About 5,000 students take driver education courses each year in the city's public high schools and in weekend classes. Graduates are eligible for substantial discounts on their insurance premiums.
Abandonment of driver education would have cost the jobs of 25 teachers who were to be laid off and would have meant the loss of about $1 million in U.S. highway safety funds that are contingent upon, the maintenance of a driver training program.
Reed said that driver education is "not an extracurricular activity but an intergral part of our educational program." He said that most driver education teachers who had been laid off or transferred would be returned to their original posts.
Geico is the parent corporation of Government Employees Insurance Co., the nation's seventh-largest auto insurance firm. Geico says it insures about one-quarter of all Washington area drivers.
School board members said that the idea of salvaging driver education with private funds originated in Reed's office and that Reed approached Geico. In doing so, he chose a potential donor that was not without a debt of gratitude to the District of Columbia government.
Four years ago, Geico was on the brink of collapse, desperately searching for new sources of captial to stave of creditors and for insurance partners who would shoulder some of Geico's liabilities. It was the D.C. Superintendent of Insurance, Maximilian Wallach, who engineered an industry agreement to assume losses on about 25 percent of Geico's policies and obtained the approval of the Justice Department for the deal.
Geico stock, which had plummeted from $60 a share to $3, now is trading at about $13, and the company is reported by industry analysts to be strong and prosperous.