Even Tax Breaks are Torture for California Businesses

tax signCalifornia has a terrible reputation of being unfriendly to business, but that’s just because some people don’t have a sense of humor.

If you love comedy, check out the website of the Governor’s Office of Business and Economic Development (GO-Biz) at www.business.ca.gov.

There you’ll find all the incentives, programs and helpful information that the state of California has created to help businesses grow and stay in California. There’s not much, but brevity is the soul of wit.

The state offers advice on “Setting up a Facility,” under the category of “Start a Business.” Here, in its entirety, is the section titled, “Acquiring Office Manufacturing Equipment”:

“Office furnishings can be rented or bought through businesses that deal primarily with office occupants. These companies are easy to locate through local telephone Yellow Pages under ‘office furniture and equipment, dealers or rental.’ Companies that sell telephone and computer systems, copy, fax and mail machines and other technical equipment can also be located through the Yellow Pages. Companies selling other office supplies such as pens, paper, tape and staples can be found through the Yellow Pages listed under ‘office supplies’ or ‘stationers,’ or through catalog sales.”

Daunted by the task of shopping for office furnishings? The state suggests a business incubator program.

It doesn’t have one, unfortunately. But “universities, cities or counties, ethnic or industry associations, or private companies” run business incubators, and “generally they offer an individual office, cubicle or at least a desk for the businessperson.”

Let’s just pray they have a copy of the Yellow Pages.

The bureaucrats at the Department of Business Friendliness don’t just sit around all day fielding inquiries on where to buy fax machines. They also administer the California Competes Tax Credit, a program that allows businesses to plead for the chance to keep a little more of the money they earned.

During the current fiscal year, these tax credits will total about $200 million statewide, which is probably less than we’re spending on the latest new watercolors of the bullet train. Those paintings should be hanging in the Louvre for what they’ve cost us.

So, how does a business qualify for the California Competes tax credit and how much money can it save on taxes?

There doesn’t seem to be a clear answer. “Tax credit agreements will be negotiated,” the website states.

The negotiating is done by the governor’s appointees at GO-Biz, then approved by the California Competes Tax Credit Committee.

The CCTC committee is made up of the state treasurer, the director of the Department of Finance, the director of GO-Biz, one person appointed by the Assembly Speaker, and one person appointed by the Senate Rules Committee.

They meet several times a year to consider applications, and the minutes of their meetings are fun reading if you’re a fan of the Inquisition.

One after another, company representatives are brought before the committee to be grilled about their application for a tax credit.

The questions are harsh. Why are your wages so low? Do you provide health benefits? What does your company do? Why do you need this money? What are you doing to get more women on the production floor? Do you have a training program? Will you hire through an employment agency? What is your outreach plan to achieve a diverse workforce?

This kind of thing caused the committee to get a visit from the legal counsel for California Competes, who explained at their meeting last November that under the law, “the sole function of the committee is to approve or reject the agreements” recommended by GO-Biz.

The lawyer said the committee has no authority to collect demographic data, like race and gender, about an applicant’s workforce. The committee also has no authority to require the applicant to collect and turn over that demographic data, and no authority to “promulgate regulations” about diverse work forces.

But that didn’t sit well with the political appointee from the Assembly, who hired an attorney independently and insisted that the intent of the legislature was to use the California Competes tax credits to pursue other “underlying goals.” The interrogations will continue, the committee member made clear, because even if there’s no legal authority for action, “Simply asking the questions sends a message.”

That’s a statement that could give all the old Russians living in the Fairfax District a nasty flashback.

And this is the business incentive program. Imagine if it was the penalty phase.

This piece was originally published by the L.A. Daily News.

Local Voices Unwelcome as State Promotes Affordable Housing

http://www.dreamstime.com/-image14115451From 2011 through the first quarter of 2014, more building permits for single-family homes were issued in the city of Houston than in the entire state of California.

That might be one reason that in April, the median selling price of a single-family home in Houston was $217,000 while in California it was $509,100.

There is widespread agreement that housing affordability in California is a problem, but there’s less agreement on what to do about it. Still, we should be able to agree that whatever is done ought to be transparent, publicly debated by the elected officials who represent us.

But that’s not what’s happening. Instead, Gov. Jerry Brown and legislative leaders are working on a backroom deal to “streamline” the approval of residential housing projects by cutting local voices out of the process.

Under this deal, any “attached housing” development that meets local zoning requirements could be built without local review of the project’s impact on traffic, parking, local businesses, the environment or the neighborhood, as long as 20 percent of its units were designated as affordable housing.

For developments located within one-half mile of a “major transit stop,” even fewer affordable units would trigger the “streamlined” approval. Just 10 percent would be enough to get pre-clearance to build a project like the 3,990-unit “urban village” planned for the former Rocketdyne site in Canoga Park.

No local review would be allowed.

This enormous change of policy is about to be slipped through the legislative process with a trick that prevents committee hearings, debate, amendments, and public notice. It will be written on one of the “spot bills” that was passed earlier in the legislative session.

Spot bills are blank pieces of legislation. They are empty, blank, with nothing written on them except a bill number and the words, “A bill related to the budget.”

Later, when a backroom deal is made, staffers pull out one of the spot bills and write the new law on it. Then the “amended” bill is brought back to the floor of each house for an up-or-down vote.

No hearings, no debate, no amendments, no public notice. …

Click here to read the full article published by the Daily News

 

Anti-petroleum alarmists’ plans to soak oil companies

The oil and gas industry was born in Pennsylvania on Aug. 27, 1859, when Edwin L. Drake drilled the world’s first commercial oil well. A critic said Drake should leave the oil underground because it was needed to fuel the fires of hell, and to pump it out would protect the wicked from their eternal punishment.

That’s how long some people have believed oil companies are in league with the devil.

Today’s anti-petroleum alarmists warn of the hellish climate that someday will result from civilization’s reliance on fossil fuels. Fortunately they’ve hit on a solution: cash payments.

Global WarmingThe strategy was hatched in 2012 at a two-day meeting in La Jolla organized by the Union of Concerned Scientists and the Climate Accountability Institute. It brought together 23 experts on law, science and public opinion for a workshop titled, “Establishing Accountability for Climate Change Damages.”

The idea was to compare “public attitudes and legal strategies related to tobacco control” to those related to climate change, according to a report of the meeting.

The group found a few problems with the comparison to tobacco. For one thing, they couldn’t identify a specific harm from climate change that had damaged anybody.

“What is the ‘cancer’ of climate change that we need to focus on?” asked one attendee.

And there was a bigger problem. “The fact is, we do need some form of energy,” one participant said. Another lamented, “The activities that contribute to climate change are highly beneficial to us.”

Oh, that.

Before fossil fuels, people cut trees to heat their homes, slaughtered whales to make lamp oil and bothered horses when they needed to go someplace. …

Click here to read the full story.

This piece was originally published by the Orange County Register. 

New Gun Laws in California Would be in Supreme Court’s Crosshairs

Photo courtesy of krazydad/jbum, Flickr.

Photo courtesy of krazydad/jbum, Flickr.

Gun owners in California recently woke up to the news that the California Senate had passed a stack of bills putting new restrictions on the use of guns.

If they all become law, you’ll need a license to sell ammunition and a background check to buy it, magazines that hold more than 10 rounds will be illegal, more guns will be classified as “assault weapons,” homemade guns will need state serial numbers, and it will be a crime to loan a gun to anyone who isn’t a family member or a licensed hunter.

Are those proposed laws constitutional?

The Supreme Court said in 2008, in District of Columbia v. Heller, that Americans have the right as individuals to keep and bear arms. The court struck down Washington, D.C.’s, “absolute prohibition of handguns held and used for self-defense in the home.”

But the Heller decision left many questions unanswered, starting with whether the Second Amendment was binding on the 50 states as well as on the District of Columbia.

When the first 10 amendments to the Constitution were ratified in 1791, nobody thought they applied to the states. Chief Justice John Marshall wrote in 1833 that if Congress had intended the Bill of Rights to bind the states, “they would have declared this purpose in plain and intelligible language.”

That understanding still prevailed at the start of the 20th century, as bank robber “Gunplay” Maxwell discovered. In 1900 he complained that Utah had denied his Sixth Amendment right to trial by jury, but the U.S. Supreme Court said the first 10 amendments “were not intended to and did not have any effect upon the powers of the respective states,” adding, “This has been many times decided.”

The Supreme Court never said the whole Bill of Rights applies to the states. Instead, there was a gradual process of selectively declaring particular rights to be “fundamental” to liberty. That makes them apply to the states through the Fourteenth Amendment, which says the states can’t deny liberty to any person without due process of law.

“Gunplay” Maxwell was ahead of his time. The Supreme Court decided that trial by jury was “fundamental” to liberty in 1968.

In 2010, two years after the Heller decision, the right to keep and bear arms was declared “fundamental” in McDonald v. Chicago.

This gradual “incorporation” of the Bill of Rights into the Fourteenth Amendment has been going on for about 90 years and has silently transferred power from state legislatures to federal courts. For example, in 2011 the Supreme Court struck down a California law that banned the sale of violent video games to minors. The justices said California had not shown the court a “compelling” reason to have a law that infringes the First Amendment rights of video game creators.

Soon, California may have to show the court a “compelling” reason for laws that infringe the Second Amendment rights of gun owners.

For 90 years, the justices have invented balancing tests and “scrutiny” levels to guide decisions in these cases, but it remains what Justice Felix Frankfurter called it in 1947: “merely subjective.”

Does California have a “compelling” reason to require background checks for ammunition purchases? One justice may think so, but another may find the reason “only rational.” Five votes for “compelling” would uphold such a law, while five “only rationals” would be enough to strike it down.

Over the next decade, Second Amendment rights will be profoundly affected by the personal values of the justices appointed by the president who’s elected this November.

The NRA made an early endorsement and started the fight before June.

Stolen Social Security number? The IRS doesn’t care

IRSThe IRS is giving away money to people who file tax returns with stolen Social Security numbers, and they intend to keep right on doing it.

That was the message from IRS Commissioner John Koskinen to the Senate Finance Committee during a recent hearing on cybersecurity failures and other problems at the Internal Revenue Service.

“These are cases in which someone uses someone else’s identity, their name or their Social Security number, to get a job illegally,” Sen. Dan Coats, a Republican from Indiana, explained.

The IRS knows but doesn’t care.

Sen. Coats was a bit frustrated. “The IRS continues to process tax returns with false W-2 information and issues refunds as if they were routine tax returns, saying, ‘That’s not really our job,’” he said.

Although the Social Security Administration notifies the IRS when a name does not match a Social Security number, these notifications are ignored. IRS employees are not allowed to tell the real holder of the Social Security number that someone is using their identity, and nobody alerts employers that they have submitted false W-2 information.

Last year, the IRS identified 200,000 new cases of employment-related identity theft.

Koskinen winked at the problem. Sometimes Social Security numbers are “borrowed from friends or acquaintances,” he said, “and people know they’ve been used. Other times they don’t.”

The priority for the IRS, Koskinen told the committee, is “collecting those taxes.”

That’s very misleading.

Millions of low-income people in America don’t owe any income taxes and pay little or nothing to the U.S. Treasury during the year, yet they still receive thousands of dollars in a “tax refund.”

That’s because over the last 40 years, Congress created a financial assistance program which is run through the Internal Revenue Service. For those who qualify, the Earned Income Tax Credit can be worth over $6,000, the child tax credit is worth $1,000 per child, and education credits are worth thousands more. These credits are fully or partially “refundable.”

Most people assume that everyone who receives a tax refund is simply getting back the money they overpaid during the year. Not so.

“Refundable” tax credits are paid out in a tax refund, even if no taxes at all were paid in. The money comes from the U.S. Treasury; in other words, from other taxpayers.

These annual “tax refunds” are routinely worth thousands of dollars, which is why you see storefront tax preparers pop up in low-income neighborhoods every January, why retailers like Walmart offer to cash tax refund checks for customers who don’t have bank accounts, and why there’s so much fraud — over $15 billion in fraudulent refunds for 2014 alone.

However, it’s perfectly legal for undocumented workers to claim the child tax credit and the education credit and to receive a taxpayer-subsidized tax refund.

The government knows who’s working illegally, because the IRS gives undocumented workers an Individual Taxpayer Identification Number, or ITIN, that can be used to file a tax return. An ITIN can’t be used to get a job, because employers aren’t supposed to hire unauthorized workers. Hence, stolen Social Security numbers on the W-2s of people who file their tax returns with ITINs.

The IRS, which will happily send you a threatening letter if you fail to report 12 cents in interest income, has no interest at all in enforcing the laws against working in the United States without legal authorization.

They just process the returns and send out the refunds.

They know they are sending money to people who filed false W-2 forms with somebody else’s Social Security number.

And now, so do you.

Effort to thwart terrorism must start at the U.S. border

border fence mexico immigrationNearly 15 years after the 9/11 attacks, we are still debating what to do to fight terrorism.

Following the attacks in Brussels, President Obama called for bringing the killers to justice, Donald Trump called for waterboarding captured terrorists, and Hillary Clinton called for increased surveillance and interception of communications.

Ted Cruz wants proactive policing in Muslim communities to uncover radicalism, Bernie Sanders wants the international community to come together, and John Kasich wants heads of state to assemble teams to examine vulnerabilities and close security gaps.

Cruz would try “carpet bombing” ISIS territory and Trump would use overwhelming military power against the Islamic State.

Trump also would control the borders more tightly, an idea derided by Clinton, who said America doesn’t “hide behind walls.”

We’ll see.

There are problems with every approach. Overwhelming military force leaves unanswered the question, “And then what?” Will we permanently station U.S. troops to hold the territory and protect the innocent population from the seething rage of rival factions? It’s an option some have supported in the past. Others have waited in line for six hours to rally for candidates who are against it.

The plan to bring terrorists to justice suffers from two major problems. Arresting a terrorist seems only to create a job opening in the organization. And U.S. courts are not friendly to secret intelligence sources or coerced confessions. It’s easy to sneer at “reading terrorists their Miranda rights,” but our justice system protects the rights of the accused, and if we weaken those protections, we all will be at greater risk of wrongful convictions.

Military tribunals are an option for captured foreign terrorists, but Obama wants to close the prison at Guantanamo, which may complicate the process.

Increased surveillance of communications and “pro-active policing” risk further violating the rights of innocent Americans. The Fourth Amendment guarantees the right to be secure from unreasonable searches and seizures and requires the government to get a search warrant. The Fourth Amendment survived the Civil War, the First World War, the Second World War, the Korean War, the Vietnam War and the Cold War. Are we going to lose it in a war against terrorists?

It’s a great idea to have international cooperation and to close security gaps. We’ve been trying to do that for a lot longer than 15 years.

That leaves border control. There is room for improvement on that.

Rep. Ron DeSantis, R-Fla., chairman of the House Subcommittee on National Security, recently held a hearing on the use of asylum claims to avoid deportation. It has long been U.S. policy to allow immigrants, particularly women and children from Central America, to stay in the United States if they assert that they have a credible fear of persecution at home.

In the past, many asylum seekers who entered the U.S. illegally were held in custody until their cases were heard in court, but in 2009 Obama changed that policy. Now anyone who says the magic words “credible fear of persecution” is released and given permission to work in the U.S.

Last year, hundreds of immigrants from Egypt, Somalia, Pakistan, Iran and Syria who were caught entering the U.S. were able to stay in the country by saying those magic words.

“Dangerous criminals and potential terrorists are gaming the system without consequence,” DeSantis said. “These numbers illustrate vulnerabilities throughout our immigration system.”

We could probably tighten that up pretty quickly. But first we need a president who thinks it’s a problem.

Hillary Clinton Put Herself Above the Law

hillary-clinton-biopics-cancelled-ftrIn August 2011, Hurricane Irene was threatening to disrupt communications on the eastern seaboard, and Secretary of State Hillary Clinton’s personal Blackberry was malfunctioning.

State Department official Stephen D. Mull emailed Clinton aide Huma Abedin to offer a back-up. The government Blackberry would have “an operating State Department email account,” he wrote, and would “mask her identity,” but “would also be subject to FOIA requests.”

Abedin wrote back that it “doesn’t make a whole lot of sense” for Clinton to have a State Department Blackberry.

Mull’s email is startling. He was alerting Clinton’s staff that messages sent on a State Department-issued Blackberry would be public records under the Freedom of Information Act, as required by law. Her private server, he implicitly acknowledged, was invisible to public records searches.

“It just boggles the mind that the State Department allowed this circumstance to arise in the first place,” said U.S. District Judge Emmet G. Sullivan, who recently held a hearing in Washington on a Freedom of Information Act request brought by the government watchdog group Judicial Watch. “It’s just very, very, very troubling,” he said.

The Freedom of Information Act was signed into law in 1966 by President Lyndon B. Johnson, and it was expanded and strengthened in 1974 following the Watergate scandal that led to President Richard Nixon’s resignation.

The public has the right to request access to records from any federal agency. The government is required to disclose information requested under the FOIA except for nine specific exemptions, which include personal privacy and national security, but not “running for president.”

Judge Sullivan may allow Judicial Watch to take testimony from Mrs. Clinton’s aides, State Department officials and perhaps the former secretary of state herself, starting in April.

Clinton also may be interviewed by the FBI, which is separately investigating whether anyone committed a crime by mishandling classified material. The State Department says 22 emails on Clinton’s private server contained “top secret” information. Another 65 have been classified “secret” and 2,028 more are “confidential.”

Now there are reports that the Justice Department has granted immunity from prosecution to the former State Department employee and campaign staffer who set up the private server at Clinton’s home in 2009. Bryan Pagliano invoked his Fifth Amendment right to remain silent when called before Congress last September. He will have to answer questions from the FBI.

This is not nothing.

At a minimum, this is a secretary of state who put herself above the law — a law that was signed by a Democratic president — and who handled sensitive information in a manner that ought to disqualify her from ever receiving a security clearance.

It is bizarre that the Clinton presidential campaign is rolling along as if none of this is happening. Hillary Clinton could become the next president of the United States, assuming she makes it to the November election and has still not been charged with a crime.

But the nation’s ethical standard for president of the United States should be higher than “has still not been charged with a crime.”

We need transparency laws like the Freedom of Information Act so the public can hold the government accountable for its actions. When officials can operate in complete secrecy, there is no check on their actions or their ethics.

Using a private email server to evade the Freedom of Information Act is like taking the license plates off a car to evade a ticket from a red-light camera system.

Sooner or later, it’s going to end in a horrible wreck.

Susan Shelley is a San Fernando Valley author, a former television associate producer and twice a Republican candidate for the California Assembly.

To reform DWP, L.A. should learn from other cities

DWPThe Los Angeles City Council is preparing to vote on new water and power rate ordinances that will raise DWP rates annually for the next five years. If Mayor Eric Garcetti signs the ordinances, they will start jacking up your bills within months.

The city has received over 2,000 angry letters of protest about the rate hikes. That may be why Council member Felipe Fuentes introduced a motion for DWP governance reform to be put on the ballot later this year.

The DWP is governed by a five-member board of commissioners, but the utility is really a department of the city, controlled by the mayor. The commissioners are appointed by the mayor and may be removed at any time. The mayor even controls the board’s agenda.

Over the last 15 years, study after study has concluded that the DWP’s governance structure is a problem. There are too many layers of political control, which prevents efficient decision-making and saddles ratepayers with the costs of pet projects, as well as over $250 million per year for general city expenses. DWP salaries are significantly higher than the salaries of L.A. city workers in comparable jobs, and more than double the average salary for comparable jobs nationwide.

Real governance reform would redefine the roles of the board, the general manager and city officials. It would create clear lines of authority and accountability, and it would prevent the kind of political influence or micro-managing that interferes with day-to-day operations.

Instead, city officials have proposed replacing the volunteer board of commissioners with a full-time, salaried board. The mayor also called for more predictable rate adjustments and an overhaul of hiring and contracting practices. Garcetti said he looks forward to a “thorough public discussion” with “stakeholders across the city,” led by Council President Herb J. Wesson Jr.

Wesson sent a letter to the city’s 96 Neighborhood Councils on Feb. 19.

“Dear Neighborhood Council Leaders,” he wrote. “Today marks the beginning of an open and public conversation about making the city’s utility run more efficiently and effectively while ensuring accountability.”

Wesson asks the council leaders to “agendize this item for discussion and action” at their March and April meetings. “This is your time to shine and show the city and its residents the importance and value you bring to city government,” he wrote.

That’s not the way other cities have reformed their utilities.

In 2012, people in Austin, Texas, had some of the same problems with their city-owned utility that L.A. residents have with the DWP.

Rates were going up. Austin Energy had just spent $80 million on a new billing system which was riddled with problems. And the city required the utility to transfer $155 million a year of the money collected from ratepayers to cover general government expenses.

Austin set up a commission to figure out how to make Austin Energy run more efficiently. The commission reviewed research papers on the governance of municipal utilities around the country, studies by the University of Florida, Price Waterhouse, Navigant, the American Public Power Association and the RAND Corporation, and comparisons of utility governance in San Antonio, Denver and Jacksonville.

Sacramento is another city that reformed the governance of its municipal utility. In 2002, the board of directors of the Sacramento Municipal Utility District (SMUD) brought in John Carver, an Atlanta-based expert on nonprofit governing boards. Carver gave the board a presentation of a model he calls Policy Governance, which is designed to make a board effective by balancing independence and accountability.

Ultimately the SMUD board brought in another specialist in governance reform, Leading Resources Inc., to create customized policies for improved efficiency.

Between 2006 and 2011, SMUD’s electricity rates went up by 3.78 percent per year, while LADWP rates rose at an annual rate of 5.67 percent.

Colorado Springs reformed the governance of its public utility in 2011 with a wide-ranging study of reports from consultants and citizen commissions going back to 1993. Researchers looked closely at the city charter, the rate-setting authority, the governance of similar utilities, alternative governance structures, and factors affecting credit and interest rates.

But Los Angeles will reform DWP governance simply by adding it to the agenda of the Neighborhood Councils and discussing it at the March and April meetings.

That’s not how you reform the governance of the nation’s largest municipal utility if you’re serious.

That’s how you do it if you’re trying to fake seriousness just long enough to get a five-year rate increase passed.

Pierce College Foundation inspires with grants, scholarships

graduation cap diploma isolated on a white background

Imagine you’re auditioning for a national commercial and you’re asked to read the line, “What can one person do?”

First, read the line as if you are completely discouraged.

Now try it again, this time believing you really can make a difference and all you’re asking is where to start.

Better.

That’s the way political science professor Denise Robb read the line when she stepped into the role of chair of the Foundation for Pierce College. Robb has volunteered long hours to strengthen the foundation, save the Pierce College farm, and raise money for scholarships to help community college students achieve their dreams.

“People don’t realize how big a difference financial help can make in the life of a community college student,” she said recently. “Out of the 29,000 we serve each year, only 14,000 of them are full-time. Of the full-time students, only 70 percent complete or transfer. Of the part-time students, more than half drop out. The main reason they give? Financial need. Textbook costs, tuition, additional expenses for classes.”

Last month, the foundation awarded $1,000 scholarships to 13 Pierce College students with inspiring stories and tough schedules, like Kelly Sharko, who’s studying to be a nurse while working full-time, and Jason Sturdivant, who grew up in poverty without a father at home and today is a U.S. Army veteran and the first member of his family to pursue an education.

“Forty-one percent of our students are the first in their family to attend college,” Robb said.

Andrea Amara is one of them. When her family endured tough times, she paid for her education by tutoring schoolchildren. The scholarship will help her reach her goal of a degree in computer science.

Another scholarship winner, business management student Barbara Lombrano, is a U.S. Navy veteran who served in the Gulf War and was elected the first female commander of American Legion Post 502 in Moorpark.

Mary Anselmo and Noura Hervani each received scholarships funded by a $50,000 endowment from the Reseda Women’s Club. The checks were presented by longtime club member Evelyn Morris, who recently celebrated her 100th birthday. Ever since her own children were students at Pierce, Morris has been a passionate advocate for agriculture education and for the Pierce College farm.

Robb has been working to build support for permanently protecting the roughly 200-acre farm from the possibility of commercial or residential real estate development. She now has a stack of letters and statements from elected officials, faculty and staff unions, and local civic and business groups. They’re all backing her call for a study of preservation methods that would allow the college to use the farm land for education, but never again to sell or lease pieces of it for commercial purposes.

Unfortunately, most of the members of the Los Angeles Community College Board of Trustees, the people with the power to authorize that study, have not allowed Professor Robb into their offices to make her case.

“It’s proving far more difficult than I anticipated,” she said.

Don’t expect that to stop her. Recently Robb secured a $25,000 grant from the Annenberg Foundation for the farm and renewed a $660,000 grant from Amgen for students and teachers to learn DNA sequencing. And she has recruited new board members for the Foundation to help raise more money for scholarships. “We read essays from 116 students,” Robb said, “It was almost impossible to whittle it down to 13.”

Scholarships went to chemistry major Linda Nguyen, architecture student Paul Macander, sociology students Brenda Lopez and Liliana Flores, science and engineering student Maria Benavides, business administration major Jasmine Boyle and philosophy major Katie Rogers, who worked from the age of 15 to help support her three siblings when her parents lost their business. Rogers put aside her dream of attending a major university after her father developed health problems and she was needed at home. She hopes one day to become an attorney.

“I know that a student from a low-income family statistically isn’t as successful when it comes to obtaining higher education,” Rogers wrote in her essay. “My goal is to beat the statistics.”

What can one person do?

Make a tax-deductible contribution to the Foundation for Pierce College, 6201 Winnetka Ave., Woodland Hills, Calif., 91371, or online at http://foundation.piercecollege.edu.

And ask the board of trustees why some of them won’t meet with Professor Robb about preserving the farm. Call board president Scott Svonkin at (213) 891-2044 or fax your thoughts to him at (213) 891-2035.

Daughters of Charity Deal Carries Warnings for the Future of Health Care

MedizinWhat would happen to our health care system if we took the advice of some politicians and turned it into “Medicare for all,” a single-payer plan?

Right now in California, there is a story of hospitals, nuns, hedge funds, corruption, the state Attorney General and union bosses that may hold the answer to that question.

The story begins in Paris, where the Daughters of Charity religious order was founded in 1633, dedicated to serving the poor. The Daughters came to America in the 1800s, and by 1991, their highly respected nationwide chain of nonprofit Catholic hospitals had $3.1 billion in annual net revenues and a top credit rating.

Six hospitals in California, including St. Vincent Medical Center in Los Angeles, became the Daughters of Charity Health System in 2002. By 2013 they were losing $10 million every month. Why? DCHS said three-quarters of its patients were covered by government health programs, which pay less than private insurers. The recession made it worse as more people lost their jobs and health benefits, and then the government cut back further, slashing Medi-Cal rates that reimbursed providers for low-income patient care.

DCHS also cited the “volume and mix of services” and the “employee salary/benefits structure” as causes of the financial bleeding.

The nonprofit chain put itself up for sale in 2014, hoping to find a buyer that would preserve the pensions of current and retired employees, repay debts, honor existing union contracts, and maintain services.

And they did. Prime Healthcare Services, based in Ontario, California, made an offer of $843 million to buy DCHS. But under state law, nonprofit hospitals can’t change hands without the approval of the California Attorney General.

And that gave Prime Healthcare’s longtime enemy, the Service Employees International Union and its affiliate, United Healthcare Workers West, the power to blow up the deal. In July, 2014, UHW president Dave Regan met with Prime CEO Dr. Prem Reddy and told him, according to court documents, “that he would prevent the sale unless Prime allowed UHW to unionize hospital workers at all of Prime’s hospitals.” Prime refused Regan’s demand.

The union allegedly told Attorney General Kamala Harris that if she blocked Prime’s acquisition of DCHS, they’d spend $25 million to get her elected to the U.S. Senate in 2016, and threatened that if she didn’t, they would spend the money to elect somebody else.

Harris gave conditional approval to the deal but added poison-pill requirements, including an order to run the hospitals without any changes for 10 years, which would have continued the financial meltdown. Prime walked away.

The Daughters of Charity filed a lawsuit against the SEIU-UHW in Santa Clara County Superior Court, accusing the unions of extortion and of chilling bids from other suitors by threatening to block the attorney general’s approval.

Then Prime Healthcare Services filed a lawsuit in federal court accusing Kamala Harris of corruptly abusing her power in an illegal scheme to gain financial support of her political career.

The story is told in disturbing detail in the combined 85 pages of the complaints.

Now a New York-based hedge fund, which has never run a hospital, has offered to take over the management of DCHS. BlueMountain Capital Management would pump $250 million into the nonprofit chain, take 4 percent of annual revenue as a management fee, and have an option to buy the hospitals after three years.

Harris has granted conditional approval, and BlueMountain is presently reviewing the conditions, which include providing services and charity care for ten years.

If the deal falls through again, DCHS could enter bankruptcy. Pensions could be lost and the hospitals could close, costing 7,600 jobs and depriving the communities of local health care services.

Twelve million people are now enrolled in Medi-Cal — one in three state residents — and the number could go higher. How many hospitals will go bankrupt providing legally required services for below-cost reimbursements?

Imagine what would happen if all of American health care was run that way.

It’s easy for politicians to decree that services shall be provided and fees shall be reduced. It’s even easier for them to help their friends get lucrative contracts, and to collect campaign cash as a tip for good service.

What’s not easy is persuading anyone to go to medical school or build hospitals when politicians control health care. Too bad no one has ever been cured by a hedge fund seeking a tax loss.