A Crackdown on Misuse of Taxpayer Money

TaxesAlthough state law specifically prohibits public officials from using taxpayers’ money for political campaigning, they have been doing exactly that throughout California.

Local governments hire “consultants” to poll voters on what tax and bond measures they would find acceptable, to draft those proposals accordingly and, finally, to run so-called “information” campaigns to persuade voters to approve them.

It’s so blatant that firms seeking lucrative contracts openly boast of their successful campaigns, eliminating any doubt that they are truly political operatives.

The practice has ballooned because local prosecutors and the state attorney general’s office ignore complaints about its illegality. Indeed, local district attorneys often benefit from the higher taxes.

Finally, however, we may be seeing some effort to sanitize this very stinky phenomenon which, if left unchecked, will only become more commonplace.

Last month, the state Fair Political Practices Commission took a potentially significant action against the Bay Area Rapid Transit District for doing what it and other local governments have been doing.

The FPPC voted unanimously to impose a $7,500 fine on BART for failing to report its spending on a bond issue as a campaign contribution. It also asked the attorney general and Bay Area district attorneys to prosecute the transit district for violating the law prohibiting the use of public funds for political campaigns.

“It’s not the total (amount) of what was used; it’s the concept of misusing public funds,” FPPC chairwoman Alice Germond said at the commission’s December meeting. “We want to send a warning and not create a precedent that it’s a minor, ‘slap on the wrist’ kind of thing.”

The action stems from a proposed $3.5 billion bond issue, Measure RR, that voters in the three-county district approved two years ago by a 70 percent margin. The “information campaign” for the bond included a video, featuring Golden State Warriors player Draymond Green, that the FPPC said was acceptable, while concluding that two other videos and text messages to voters were clearly advocacy.

BART paid a public relations firm, Clifford Moss LLC, $99,000 to craft its measure before the item was placed on the ballot, and the same firm then directed the supposedly independent campaign for the bond measure.

The FPPC acted on a complaint from Jason Bezis, a Lafayette attorney. It’s similar to complaints that have been filed about other local bond and tax measures, including those in Los Angeles County, by taxpayer advocacy groups.

After the FPPC acted, a BART spokeswoman, Alicia Trost, told the Bay Area News Group that the campaign errors were “accidental.”

“We have been and will continue to be committed to following the law,” Trost told BANG. “We accept their finding.”

While state law allows agencies to publish accurate information about their proposals, they are not allowed to advocate their passage, and that’s the line that BART and other agencies have obviously and arrogantly been crossing.

If they use public money for campaigns, they will, the FPPC implies, be treated like other financiers of political campaigns and be required to file reports. If they file such reports, however, they will be admitting, in effect, that they are violating the law prohibiting such spending.

That’s where the prosecutors should come into the picture. They should do their duty, enforce the law and seek personal fines from the officials involved. And the Legislature could, and should, invalidate any local measure that’s passed when those officials ignore the law.

olumnist for CALmatters. 

Legal Cannabis Industry Struggling in California

Marijuana StoreCalifornia’s first year with legal recreational sales of marijuana is wrapping up with a series of downbeat reports on a new industry struggling to find its footing.

An Associated Press analysis posted Sunday said estimated legal sales of cannabis would total just $2.5 billion in 2018 – in a state of 40 million people in which 13 percent of adults admit to use, significantly higher than in most states. State officials will be lucky if they receive half the $630 million in pot taxes anticipated in the 2018 state budget.

When tax revenue goals went unmet early last year, one assumption was that this was primarily the result of resistance to legal cannabis. An estimated 80 percent of local governments have not authorized recreational sales, as is their right under Proposition 64, the 2016 ballot measure that cleared the way for such sales. And in some of the cities that have issued permits, only a handful have been issued.

But as the year wore on – and costly state regulations kicked in mandating careful testing and child-resistant packaging of marijuana and marijuana products, such as edibles – reporting on the California pot beat increasingly focused on the huge price advantage that illegal sellers have.

Medical marijuana law led to sales networks

A recent Southern California News Group article pointed out that with voters’ approval of medicinal marijuana in 1996, growers and sellers had a 20-year head start in establishing sales and distribution networks that were poised to fill demand when cannabis possession and use became legal on Jan. 1, 2018. These networks are able to sell marijuana that is up to 50 percent cheaper than the marijuana available in licensed stores.

These growers and sellers don’t just balk at going the legal route because of fees, regulations and paperwork. They’re emboldened by the weakening of criminal penalties related to marijuana in recent years, according to the Southern California News Group analysis.

A San Francisco Chronicle report published last week quoted Steve DeAngelo, a co-founder of Oakland’s huge Harborside marijuana dispensary, as saying “the unrolling of legal adult-use cannabis has reinvigorated the underground market rather than curtailed it.”

“Because we are up against high taxes and the proliferation of illegal shops, it is difficult right now,” pot shop owner Javier Montes told the Los Angeles Times last week. “We expected lines out of our doors, but unfortunately the underground market was already conducting commercial cannabis activity and are continuing to do so.”

Shop owners in the Los Angeles and Bay areas have urged authorities to crack down on illegal storefront and delivery sellers. But while state regulators say that is a priority in 2019, it’s unclear how much of a priority it will be for local law enforcement agencies who are strapped by pension costs and often have difficulty maintaining police staffing because of recruiting woes.

Among those who anticipated that legal California sellers were going to be seriously undercut by illegal sellers is Gov.-elect Gavin Newsom, who led the Proposition 64 push.

Newsom: Addressing black market to take ‘5 to 7 years’

While on the campaign trail in May, Newsom said he thought it would take “five to seven years to substantively address the black market” issue.

As governor, Newsom could order stepped-up efforts to target growers and sellers, as well as seek new funding for such enforcement.

But the legal marijuana industry also wants help on another front. The Chronicle reported there is a huge backlog at the state office processing permits to legally grow marijuana, with no action yet on about 90 percent of applicants.

Gov. Brown Sues to Prevent Voters from Enacting Criminal Justice Reforms

PrisonGovernor Brown, having been rebuked multiple times last month by the California Supreme Court for “abuse of power” in issuing pardons and commutations, has now resorted to a lawsuit aiming to prevent voters from enacting common sense fixes to his badly flawed Proposition 57.

The soon to be ex-Governor is now attempting to block the “Reducing Crime and Keeping California Safe Act” from appearing on the 2020 ballot by claiming the Secretary of State erred in setting the number of valid signatures needed for the initiative. That measure had received sufficient signatures to appear on the 2018 ballot, but multiple counties failed to verify signatures by the deadline imposed by the Secretary of State. Of course, the governor and his office never registered any objection when the Secretary of State published the required signature threshold, nor did he attempt to intervene via a lawsuit before the signature gathering effort commenced.

What is notable about the lawsuit is that it reinforces the utter duplicity Brown used to gain passage of Prop 57. Brown deliberately repeated the falsehood during that campaign that only “non-violent” inmates would be eligible for early release under Prop 57, knowing full well the voters would never have approved an initiative granting early release to inmates convicted and sentenced for violent crimes.

However, as we have pointed out repeatedly during the campaignand since, the failure to define who qualified as a “non-violent offender” left the prison doors open to many convicted of arguably violent crimes. Not only were violent prison inmates made eligible for early release, many have since been released thanks to Prop 57. Now, in a cynical move that directly contradicts his false assurances to voters, Brown’s new lawsuit argues that the proposed fixes to Prop 57 should be thrown off the ballot because it would make it harder for violent offenders to obtain early release.

Governor Brown was able to fool voters last time, but the documented release of multiple violent inmates thanks to Prop 57 has terminated that talking point. His recently filed lawsuit is a desperate attempt to prevent voters from correcting the failings of Prop 57.

Michele Hanisee is president of the Association of Los Angeles Deputy District Attorneys.

This article was originally published by Fox and Hounds Daily

California’s Work Rules Sabotage the Gig Economy

Th Uber Technologies Inc. car service application (app) is demonstrated for a photograph on an Apple Inc. iPhone in New York, U.S., on Wednesday, Aug. 6, 2014. For San Francisco-based Uber Technologies Inc. which recently raised $1.2 billion of investors' financing at $17 billion valuation, New York is its biggest by revenue among the 150 cities in which it operates across 42 countries. The Hamptons are a pop-up market for high-end season weekends where the average trip is three time that of an average trip in New York City. Photographer: Victor J. Blue/Bloomberg via Getty Images

An anti-technology movement from early 19th century Britain has long been part of our lexicon. Luddites were knitters who destroyed textile machines to protect their jobs. Today the term applies to anyone who fights a crusade against the modern economy.

Original Luddites weren’t against technology per se, Smithsonian magazine explained, but only attacked manufacturers “who used machines in what they called ‘a fraudulent and deceitful manner’ to get around standard labor practices.”

California’s modern-day Luddites don’t commit acts of violence against Google, Uber, Amazon and other firms that have shaken up the existing economic order. No one is toasting cellphones in bonfires or sabotaging Federal Express delivery vans, but these New Luddites have used the courts and the legislative process to throw that figurative wrench in the machine. Indeed, the biggest redoubt of Luddite-ism appears to be the California Supreme Court, which in April issued a ruling that has threatened to grind California’s high-tech economy to a halt.

In Dynamex Operations West, Inc. v. Superior Court, the court didn’t directly target these new technologies or business models, but clamped down on the way companies use independent contractors rather than full-time employees as a means to stay flexible and competitive in the marketplace. As Chief Justice Tani Cantil-Sakauye wrote in the unanimous ruling, “When a worker has not independently decided to engage in an independently established business but instead is simply designated an independent contractor…there is a substantial risk that the hiring business is attempting to evade the demands of an applicable wage order through misclassification.”

The case centered around a package-delivery firm, Dynamex Operations West, which turned its full-time staff into contractors. Obviously, when companies use contractors they need not pay them benefits and are not subject to hourly work rules, wage requirements and the host of labor regulations the state applies to permanent workers. The court tossed out the old, flexible way of determining whether a worker is a contractor or employee and imposed a strict new “ABC Test” for deciding such matters.

Under the new standard, California firms that want to classify their workers as contractors must meet all of these terms: The worker is outside the control of the employer for the work performed; the worker performs work that is outside the company’s normal scope, such as a freelancer who does public relations for a tech firm; and the worker is engaged in an independent business enterprise, perhaps having his or her own LLC. One need not be a labor-law expert to realize how this threatens many burgeoning new business models including Transportation Network Companies such as Uber to old-line industries such as Realtors and hairdressers.

Growing economies are dynamic. There’s no way to lock anyone’s job into place (outside of government work). One of California’s long-standing problems—a key reason for its sky-high poverty rates—is that its labor regulations read like something from the Industrial Revolution. The state imposes burdensome regulations regarding everything from work breaks to overtime. That might be fine on the factory floor, but the rules stifle innovation—and make it far tougher for companies to survive. These union-backed rules also raise the bar so high that many startups can’t get off the ground, which deprives consumers and workers of exciting new opportunities.

The obvious work around has been to use contractors. It’s not just a boon for businesses. Most of the nearly 2 million Californians who are independent contractors prefer to make their own schedules rather than show up 9-5 at the office. Ask your Uber driver, Realtor or barber. The Department of Labor found that 79 percent of contractors prefer these working arrangements with fewer than 9 percent preferring traditional employment.

If companies are forced to hire all their workers on a full-time basis, that might raise some people’s incomes, but it would also raise the cost per worker by a third and could lead to fewer jobs. There’s a market-based way to deal with problems raised by the court. For instance, the state could pass tax and regulatory reforms that make it more cost-competitive for individuals to purchase the kind of healthcare benefits offered to full-time employees. The state could create a “third way”—another worker status that lies between “full-time worker” and “contractor.”

The state’s business community has called on the Legislature and governor to address the problems created by the state high court. Gov. Jerry Brown punted. Incoming Gov. Gavin Newsom has deep ties to the tech community, but one of his top aides is from the California Labor Federation. Unions already are backing a bill to codify Dynamex. This is shaping up as one of the biggest battles in the new session. Will the California government let its ballyhooed New Economy thrive, or will it embrace an approach that was last relevant in the 1800s?

Steven Greenhut is Western region director for the R Street Institute. He was an Orange County Register editorial writer from 1998-2009. Write to him at sgreenhut@rstreet.org.

This column was first published in the Orange County Register.

FPPC Ups The Ante On Illegal Expenditures

money bagOver the last several years, this column has exposed multiple instances of government entities using taxpayer dollars for political advocacy, a practice that is illegal under both state and federal law.  Because progress in stopping these violations has been difficult, taxpayers will be pleased to hear that on December 20th, California’s campaign watchdog agency, the Fair Political Practices Commission, conducted a hearing on illegal activity by the Bay Area Rapid Transit District (BART).

The FPPC stated that BART used public funds to pay for a campaign of “YouTube videos, social media posts, and text messages to promote Measure RR, which authorized BART to issue $3.5 billion in general obligation bonds.” Under California law, spending money on a political campaign to pass the bond measure caused BART to qualify as an “independent expenditure committee” and required it to file campaign finance reports, but the transit agency ignored the requirement.

“BART failed to timely file two late independent expenditure reports in the 90-day period preceding the November 8, 2016 General Election; failed to timely file a semi-annual campaign statement for the period covering July 1, 2016 through December 31, 2016; and failed to include a proper disclosure statement in its electronic media advertisements,” the FPPC said.

The FPPC imposed a fine of $7,500, which critics of BART, including Senator Steve Glazer, rightfully complained was inadequate and no deterrent to future misconduct with taxpayer funds. In fact, the minimal fines may incentivize illegal activity because the ROI (return on investment) is frequently in the millions, if not billions, of dollars. Not only that, because the fines themselves are paid with taxpayer dollars, there are rarely any real-world consequences imposed on public officials who misappropriate public funds for political advocacy.

But things may be different now.

To read the entire column, please click here.

Will Regulators Break Up Scandal-Plagued PG&E?

VENTURA, CA - DECEMBER 5: A home is destroyed by brush fire as Santa Ana winds help propel the flames to move quickly through the landscape on December 5, 2017 in Ventura, California. (Photo by Marcus Yam / Los Angeles Times via Getty Images)

A California Public Utilities Commission report that Pacific Gas & Electric failed to fulfill its responsibilities to properly maintain natural gas lines from 2012 to 2017 even after a natural gas explosion killed eight people in San Bruno in 2010 may be the last straw for state regulators.

On Dec. 21, the CPUC released a dramatic statement saying it would consider drastic steps to address the “serious safety problems” it says the utility has long condoned. The commission said a break-up of the agency into smaller regional utilities or a state takeover would be among the possible changes it examined.

“This process will be like repairing a jetliner while it’s in flight. Crashing a plane to make it safer isn’t good for the passengers,” said CPUC President Michael Picker. “This is not a punitive exercise. The keystone question is would, compared to PG&E and PG&E Corp. as presently constituted, any of the proposals provide Northern Californians with safer natural gas and electric service at just and reasonable rates.”

CPUC looking at seven possible major changes

The CPUC statement said seven possible changes would be considered.

– Having “some or all of PG&E be reconstituted as a publicly owned utility or utilities.”

– Replacing some members of PG&E’s Board of Directors with members “with a stronger background and focus on safety.”

– The replacement of existing corporate management.

– Adoption of a new corporate management structure with regional leaders overseeing regional subsidiaries.

– Linking PG&E’s “return on equity” – the profits it shares with its investor-owners – to its safety performance.

– Breaking the utility’s natural gas operations and its electric transmission operations into separate companies.

– Ending the arrangement in which PG&E is controlled by a holding company so it becomes “exclusively a regulated utility.”

Picker’s statement was a remarkable turnaround from his comments on Nov. 15, when his upbeat remarks about the ability of PG&E to survive its fourth consecutive year of devastating wildfires in Northern California led the utility’s stock price tospike.

It reflected the anger among CPUC officials over a staff report released Dec. 14 that found the utility had systematicallyneglected natural gas infrastructure despite being fined $1.6 billion and convicted of six felonies in federal court over the 2010 disaster in San Bruno, a suburb of San Francisco.

Utility facing 500 lawsuits relating to fires it may have caused

Even if PG&E survives in something like its present form after the CPUC’s review, its future is still very cloudy.

Because of claims that PG&E was responsible for the devastating Camp Fire that killed 85 people in Butte County in November, U.S. District Judge William Alsup announced he was reviewing whether PG&E had violated terms of its federal probation in the San Bruno case.

PG&E also disclosed to the U.S. Securities and Exchange Commission that it is facing roughly 500 lawsuits with more than 3,100 plaintiffs over claims the utility was responsible for many of the dozens of wildfires in Northern California since 2016.

It is also facing wildfire-related lawsuits from the state Office of Emergency Services, Cal Fire, Calaveras County and other government agencies.

But while the CPUC is apparently ready for major changes at the utility, it’s not clear yet how state lawmakers feel.

On Nov. 19 – even as criticism of PG&E swelled as confirmed deaths grew in the Camp Fire – Assemblyman Chris Holden, D-Pasadena, was reported to be considering introducing legislation to help the utility deal with wildfire costs.

Holden helped pass a law earlier this year that allowed PG&E to spread out the costs from the liabilities it faced from 17 wildfires in 2017.

This article was originally published by CalWatchdog.com

Pension Funds, Meet the “Super Bubble”

Earlier this month, outgoing California Governor Jerry Brown predicted “fiscal oblivion” if California’s state and local agencies are not granted more flexibility to modify pension benefits. As if to help Governor Brown make his point, U.S. stock indexes took an obliging plunge. The Dow Jones average cratered in December, dropping nearly 16 percent in three weeks, from 25,826 on December 3rd to a low of 21,792 on December 24th. And whither hence? Nobody knows.

If history and trends are any indication, however, “up” is unlikely. Depicted on the chart below is the performance of the Dow Jones Index from 1995, when the markets began first showing signs of “irrational exuberance,” to the extremely exuberant present day. Clearly shown are the past two bubbles, the internet bubble of 2000, the housing bubble of 2007, and what we may call the “super bubble” or “everything bubble” of 2018.

Dow Jones Stock Index – 1995-2018 

It doesn’t take an economist to notice a pattern here. The Dow Jones Index, which tracks closely with all publicly traded equities in the U.S., more than doubled in the four year heady run-up to its January 2000 peak, than went into decline for nearly four years, before doubling again between 2004 and 2007. Then when the housing bubble popped, the Dow went off a cliff, dropping to half its 2007 peak in little over a year. In the ten years since 2009, the Dow has exploded again, tripling to a high of 26,743 in September 2018. What now? Visually, at least, another correction is past-due.

There are all kinds of economic reasons why what is visually indicated on the above graph is exactly what’s going to happen. At best, we may hope for stocks to merely stop going up, which is sort of what happened after the internet bubble popped. But what’s different this time?

One key difference is that this time, lowering interest rates is not an option. In January 2000 the Federal Funds rate was 5.5 percent. By June of 2003 it had dropped to 1.0 percent. When interest rates drop, stocks become relatively better investments than fixed rate investments. Lower interest rates also induce more people to borrow, creating liquidity, stimulating consumer spending, which helps corporate earnings which drives up stock prices. The cause and effect is reflected in the stock market history – by 2003, after lowering interest rates by 4.5%, the stock market finally began to recover.

In October 2006 the rate had risen to 5.25 percent. In September 2007, as home sales were starting to drop, it was lowered to 4.75 percent. When the housing bubble popped, and the stock market crashed, the Federal Reserve responded by steady lowering of the Federal Funds Rate. By December 2016 it had dropped to 0.25 percent, the lowest rate possible. What should be of concern, is that the rate today, 2.5 percent, is only half as high as it was during the past peaks. During the previous two bull markets, the Federal Reserve was able to bounce the rate up to around 5 percent before the bears came calling. This time, assuming we’ve hit the peak, only half that increase, to 2.5 percent, was achievable.

A consequence of low interest rates is more borrowing, which is a good thing if that borrowing stimulates economic growth that translates into investments in productivity. But borrowing has not been used to stimulate productive investments. Instead, much of the corporate borrowing over the past decade has been used to finance stock buy-backs. This is a dangerous strategy, causing short-term growth in earnings per share, but loading debt onto corporate balance sheets that will have to be refinanced at interest rates that are increasing, at the same time as investment in research and modernizing plant and equipment has been neglected.

In recent years, borrowing has also been an overused tool of government, starting with the federal government. Federal borrowing accelerated in mid-2008, and hasn’t slowed down since, climbing to over $21 trillion by the 3rd quarter of 2018. As interest rates rise, servicing this debt will become far more difficult. Meanwhile, all U.S. credit market debt – government, corporate, and consumer – has continued to increase. After dipping slightly to $54 trillion in the wake of the burst housing bubble, it was up to a new high of $68 trillion by the end of 2017.

When interest rates fall, not only is the stock market stimulated. Bonds make payments at fixed rates, so when the market rate drops, the price of these bonds increases, since they can be sold for whatever price will give the buyer the same return as the current market rate. Interest rate reductions also cause housing prices to rise, since when interest rates are low, people can afford bigger mortgages since they will be making lower monthly payments. The opposite is also true, which is unfortunate for investors. All else held equal, rising interest rates means lower prices for bonds and housing.

What does this mean for pension funds?

When the super bubble pops this time, all assets will drop in value. Everything pension funds are invested in, equities, bonds, and real estate, will all drop in value. Even if extraordinary measures are taken to stop the decline – such as the fed purchasing corporate bonds – there will be nowhere to run. Public sector pension funds have not prepared for this day of reckoning. CalPERS, for example, in its most recent financial statements was only 71% funded. That would be ok at the end of a bear market, but at the end of a bull market, that is a disaster waiting to happen.

As it is, using CalPERS as an example, government agencies are going to have to nearly double their annual payments. The primary reason for this increase appears to be so the participating agencies will eliminate their unfunded liability on a 20 year repayment schedule. To-date, agencies were making those repayments on a 30 year term, and using creative accounting to minimize the payment amounts in the early years. CalPERS does not appear to have lowered the amount they are expecting their investments to earn, and this is critical. Because while they have lowered their expected rate of return to “only” 7.0 percent, they have also quietly lowered their long-term assumed inflation rate. This means they are still relying on nearly the same real rate of return for their investments.

When the super bubble pops, the challenges facing pension funds will not be the only economic problem facing Americans. Unwinding the debt accumulated during a credit binge lasting decades will impact all sectors of the economy. The last thing the fragile finances of government agencies will need is even higher required contributions to the failing pension funds. Instead those running these pension systems need to try new approaches, including modifying benefit formulas, but also redirecting investments into local infrastructure projects – projects that not only create jobs, but address practical and urgent goals such as building resilient, upgraded backbones for supplying water, energy, and transportation.

In early 2019, the California Supreme Court is about to issue one of its most consequential rulings ever, in the case CalFire Local 2881 vs. CalPERSIt is possible this ruling will grant government agencies (and voters) more flexibility to modify pension benefits. Such an opportunity cannot come too soon, if fiscal oblivion is to be avoided when the super bubble finally pops.

Business Flight From California Accelerating – New Study Confirms

leaving-californiaThe evidence is more than anecdotal. According to a recent study, business flight out of California has accelerated to an unprecedented level. In 2016, the year for which the most recent data is available, 1,800 businesses moved out or “disinvested” from California. This is the highest one-year total in the nine-year history of tracking by the study’s author.

The study was released by Spectrum Location Services, a firm specializing in advising businesses about the relative advantages or disadvantages of doing business in various locations. The firm’s principal, Joseph Vranich, is well-versed in California public policy. Not only has he tracked business flight out of the Golden State for nearly a decade, he was the co-author of the study of California’s High Speed Rail Project conducted in 2008, even before voters approved the bond measure. That study was prescient in predicting that the HSR project would meet virtually none of the promises made to voters.

The frequency of business abandonment may have started with a trickle, but it has now become a torrent. A harbinger of the trend occurred in 2005 when Buck Knives, a company founded in 1905 in San Diego, pulled up stakes and moved to Idaho. City leaders attributed the loss to California’s increasingly hostile attitude to the private sector. Since then, a litany of businesses with household names have followed suit, either by abandoning the state entirely or expanding major operations elsewhere. For example, Intel has invested billions in chip manufacturing plants in Oregon, New Mexico and Arizona. Nestle Corp. moved its headquarters from Glendale to Virginia. Others on the list include Waste Connections, Comcast, Campbell’s Soup, Tesla, Apple, Boeing and Farmers Brothers.

One of the more surprising conclusions of the report is that California’s crushing tax burden is no longer the primary motive for disinvestment.

To read the entire column, please click here.

Federal Oversight of California Prison Health Care Continues

Photo credit: Michael Coghlan via Flickr

Photo credit: Michael Coghlan via Flickr

Since 2006, the federal courts have had a formal oversight role with California’s prison health care system – a result of a long history of poor care provided to inmates. A new scandal makes it seem highly unlikely that the state will regain full control of its prisons any time soon.

Sacramento-based U.S. District Judge Kimberly Mueller – who is the present overseer of the system – has ordered an independent investigation into allegations that the state systematically lied about the care being provided to the 30,000-plus inmates with significant mental health issues.

The allegations were detailed in a 161-page report by Dr. Michael Golding, chief psychiatrist for the state Department of Corrections and Rehabilitation. While officials claim that mental health treatment in state prisons is much better than it used to be, Golding wrote in a 161-page whistle-blower report that fewer than half of inmates were seen within the strict time limits set after past lawsuits, and that some inmates didn’t receive treatment for months.

Golding wrote that one female inmate who wasn’t provided needed medication yanked out one of her eyeballs and then ate it.

State denies lying about mental health treatments

The state has vigorously challenged Golding’s claims since he leaked his report in October. In court filings, lawyers for the state say he often jumped to conclusions based on vague evidence. “Dr. Golding’s implication that patients languish for many months without a psychiatric contact is inaccurate,” said one document.

State lawyers also strongly opposed Mueller’s decision to name former U.S. Attorney Charles Stevens to investigate the allegations, saying it overstepped her authority and that existing prison monitors could handle a probe. They also blasted the judge’s requirement that the state pay for the investigation.

But Mueller said in appointing Stevens, she was fulfilling her responsibility in her oversight role. “The court has not merely the authority, but also the duty, to protect the integrity of the judicial process,” Mueller wrote.

She also ordered prison officials not to retaliate against Golding and other prison staffers who helped him gather information for his report.

Mueller directed Stevens to report back to her by mid-April on his findings. While a U.S. attorney in the Clinton administration, Mueller won a reputation as a hard-charging prosecutor for his role in convicting the Unabomber, Theodore John Kaczynski, and in several political corruption cases.

This isn’t the first time that the Brown administration has accused Mueller of going beyond what is allowed in her prison oversight role. But the 9th U.S. Circuit Court of Appeals in November rejected the state’s argument that she didn’t have the authority to fine the state $1,000 a day if mentally ill inmates didn’t get timely treatment.

Mueller may hold off imposing such fines until Stevens delivers his report on the new allegations.

Three prison psychiatrists have alleged wrongdoing

Two other Corrections Department psychiatrists have made allegations about poor mental health care that were similar to Golding’s, according to a Sacramento Bee report last month. Dr. Melanie Gonzalez still works for the department and also received a protection order on her behalf from Mueller. Dr. Karuna Anand says she was fired by the agency last year after complaining about how bad conditions were at the state prison in Stockton. She is pursuing a civil lawsuit against the state.

The federal oversight of state prisons was ordered in 2006 by U.S. District Judge Thelton Henderson. The ruling resulted from a class-action lawsuit filed in 2001 against the state over health care in California prisons.

This article was originally published by CalWatchdog.com

Californians Want to Make Community College Free

College debt

A new poll from the Public Policy Institute of California finds that 53 percent of Golden State adults believe that tuition-free community college should be a priority for the next governor. With the state reporting major cash surpluses, the incoming administration might be inclined to act. But zeroing out the cost of junior colleges won’t save California students much money and will only encourage waste and inefficiency in the state’s bloated higher education bureaucracy.

California residents pay only $46 per credit to attend community college. Full-time tuition and fees add up to about $1,200 annually. Students can earn that much by working just a few hours each week, gaining job experience, and honing their time management skills in the process. Furthermore, $1,200 is just the sticker price: lower income students receive financial aid packages that often exceed their tuition.

Peralta Community College District, which operates four campuses in Alameda County, reported revenues of $270 million for the 2016-17 school year to educate 15,768 full time equivalent students. This works out to $17,000 per student. But net tuition and fee revenue amounted to only $19 million and was more than offset by $38 million in financial aid expenses. Most of the district’s income came from state and federal subsidies as well as local property taxes.

And Peralta district voters are willing to give more. Last month, they approved an eight year extension of a parcel tax to provide continued operational funding and an $800 million bond measure to improve district facilities.

So taxpayers are already investing a lot in community colleges, but what are they getting? Only 30 percent of California community students graduate or transfer to four-year schools within six years of enrolling. Low educational attainment rates are, in part, the result of community colleges accepting students who are not ready for higher education: about 80 percent of new enrollees require some form of remedial education. Encouraging more unprepared students to enter the system through the offer of free tuition would likely reduce success rates even further.

While student preparation plays a role in poor educational outcomes, mismanagement at the institutions themselves also contributes to the problem. Although Peralta receives $17,000 to educate each student, much of this money is diverted to administrative staff and potentially misappropriated. Despite lower enrollment, the district added 23 administrators between 2012 and 2017. Meanwhile, both the district’s spokesperson and the chair of its citizen oversight committee stepped down from their positions and issued complaints about waste and corruption at Peralta.

Unfortunately, the problems aren’t limited to just one district. In 2013, City College of San Francisco nearly lost its accreditation largely due to financial management issues. Last year, California’s Fiscal Crisis and Management Assistance Team found unsustainable fiscal conditions at Santa Barbara City College and Victor Valley Community College District.

Before throwing more money at these districts, state leaders should insist that they be more tightly managed. Meanwhile, legislators could save students money at no taxpayer cost by ordering community colleges to replace expensive textbooks with free online instructional materials. According to an online calculator provided by the state’s community college system, the estimated annual cost of books and supplies is greater than in-state tuition. Although the system has piloted a “zero-textbook-cost degree” program, it could be doing more to save students from having to buy latest edition textbooks and accompanying study guides.

“Tuition free community college” might be a great meme, but as a policy it leaves much to be desired. Current tuition costs are so low that they are not a meaningful barrier to attendance for serious students. Zeroing out tuition risks attracting more unserious students, driving down graduation rates and driving up the amount of tax money being wasted at these institutions.

Marc Joffe is a senior policy analyst at the Reason Foundation.

This article was originally published by Reason.com