LAUSD Blows Billions on Construction

At a hearing last week, officials from the Los Angeles Unified School District appeared proud of the massive spending on new school construction and renovations. The officials appeared before a joint hearing of the Senate and Assembly education committees, although only three of the 21 committee members attended.

The LAUSD was asked to update the committees on the new construction and renovation and updating projects for the district. Mark Hovatter, in charge of contracts for LAUSD facilities department, presented a report prepared by the Los Angeles County Economic Development Corporation. “Founded in 1981, the LAEDC was created by the Los Angeles County Board of Supervisors to implement LA County’s economic development program through land development, project financing and marketing activities,” the LAEDC website states.

Hovatter said that LAUSD has been doing exactly that — acquiring land, building new schools and “modernizing” since the late 1990s.

Hovatter appeared excited to report to legislators that 132 new schools have been built by the district. “I get invited to speak a lot. It’s something we are very proud of,” he said.

Of the more than $19 billion in construction and improvements for the LAUSD, financed through five bonds, Hovatter said that 331,000 jobs were created over a 15-year period. “There are 24,000 modernization projects right now,” he added, touting the numerous construction jobs financed by the district. “But we still need modernization projects. It’s exciting to see a new school and drive through a transformed neighborhood.”

Hire Everybody!

“It’s evidently that simple,” said Lance Izumi, Koret Senior Fellow and senior director of education studies at the Pacific Research Institute, CalWatchdog’s parent think tank. “Why don’t we run a giant general bond and hire the 2 million unemployed Californians? Why limit yourself to hiring just a few construction workers? Hire everybody!”

Izumi was critical of the LAUSD spending because of significant declining enrollment, and reckless spending despite California’s historic economic crisis. Izumi said the LAUSD’s wasteful spending on construction projects included the $578 million Robert F. Kennedy High School, “the most expensive government-run school in this nation’s history.” LAUSD voluntarily increased costs by agreeing to employ only union labor through Project Labor Agreements, despite evidence from throughout California that such agreements contribute to higher construction costs.

Not one legislator questioned Hovatter about the RFK High School costs, the $337 million Edward Roybal Learning Center or the $232 million Visual and Performing Arts High School, totaling $1.2 billion in new construction for the LAUSD.

Project Labor Agreements

Labor union construction jobs done through Project Labor Agreements increasing school construction costs by 15 percent, according to Kevin Dayton, Associated Building Contractors’ government affairs director. “It’s what I call the corruption variable,” Dayton said. “California taxpayers would love to know how much money is going to Los Angeles Unified School District.”

Dayton explained that the State Allocation Board allocates one half of approved school bonds to the LAUSD — even though only about 12 percent of California school kids attend LAUSD schools. All of California’s taxpayers are subsidizing the Los Angeles area schools. “Taxpayers don’t want to be giving that school district money until they clean up.”

Dayton explained that, in inflation-adjusted dollars, the ABC found that the presence of a Project Labor Agreement is associated with costs that are $28.90 to $32.49 per square foot higher than with non-union contractors.

The ABC also found that unions in Los Angeles County force contractors to pay journeyman wages and benefits to non-union apprentices under under PLAs. And the unions use the PLAs to force non-union workers to deposit 12 percent of their wages into the International Brotherhood Electrical Workers credit union. “Workers should not be forced to have their paychecks deposited into a specific bank. They may object to that bank because of how it invests its deposits or how it uses their personal information,” Dayton said.

Mega-School District

LAUSD has 885 schools, 668,000 students, 37,000 teachers and 40,000 “other” personnel, such as counselors, nurses, janitors and administrative staff. The school district is the second largest school district in the nation and covers most of Los Angeles County’s 31 cities, and more than 700 square miles.

However, finding an actual budget for the monster district was like trying Whac-A-Mole at the county fair. The LAUSD currently reports, in press releases, $7 billion in total district spending, only slightly down from a $7.1 billion budget last year.

But that figure is suspect. The district claims per-pupil spending of $10,000. But a 2010 report by Adam Schaeffer of the Cato Institute’s Center for Education Freedom, found it was actually $29,780 when capital spending, such as from local and state bond measures passed by voters, is calculated into the actual per-pupil cost.

The school district reports, “We have so many reasons to give thanks in this District. Test scores are up. Attendance is rising. The graduation rate is improving.”

In 2011, the LAUSD school board voted to lay off 1,900 teachers, nurses and counselors. The cuts were less than an earlier proposal, which would have terminated more than 5,000 teachers, 2,000 cafeteria workers, office clerks, bus drivers and other administrative staff. LAUSD threatened repeatedly that if those cuts were made, class sizes would have increased in grades K-8.

Isumi says the class-size threat is not credible. Class size averages in South Korea stand at 66, but test scores and graduation rates are much higher, according to Izumi. “Hybrid blended learning models are part of daily learning settings. You don’t need as many teachers,” Izumi said. “It’s more about teaching techniques and really good, qualified teachers. California needs to eliminate state regulations that prevent online learning to make it more accessible for all kids. And it’s cheaper, too.”

A Lot We Can Learn

Dayton said that LAUSD has not commissioned an independent study since 2000, about how Project Labor Agreements affect construction costs. When the LAUSD first required contractors to sign a PLA in 1999, it agreed that the PLA “shall expire at the end of one year unless the District and/or Council demonstrate that expected economic savings to the District have materialized at a level sufficient to justify continuing the Agreement.”

But that has not happened, said Dayton.

Dayton said that a Price Waterhouse Coopers report was “unable to conclusively determine whether the PLA has to date had either a net positive or net negative economic impact…” But the LAUSD still requires contractors to sign a PLA to work on construction funded by its bond measures, dramatically increasing costs.

Assemblywoman Julia Brownley, D-Santa Monica, contratulated Hovatter. “It is extraordinary,” she said. “LAUSD has done a tremendous amount of building and modernization. There’s a lot we can learn from this program.”

(Katy Grimes is CalWatchdog’s news reporter. Grimes is a longtime political analyst, writer and journalist. This article was first posted on CalWatchdog.)

Let Taxpayers Be Heard

Although there were no statewide issues on the ballot last Tuesday, many Californians had the opportunity to vote on local measures, many of which sought approval for various taxes, fees or bonds. By our count, of the more than 50 tax increases on the ballot, about 75 percent passed. It may surprise some, but we at HJTA are not overly alarmed when local citizens choose to raise their own taxes as long as they are given the opportunity to cast an informed vote. And here is where the problem lies.

Most campaigns for tax measures receive strong support from those who will directly benefit. For example, whenever a school district places a bond on the ballot, it is not unusual for the construction companies who expect to contract for the work the bonds will pay for, to fund expensive campaigns to guarantee their approval. It is also commonplace for bond brokers, who will receive commissions on the bond sales, to supply consultants to advise the district on the best way to gain voter approval. Most local tax increases also receive the political and financial support of government employee unions, who clearly are a principal beneficiary of an increase in revenue.

What this means is that those wanting greater access to taxpayers’ wallets dominate the debate while individual taxpayers are often left feeling that any response is an exercise in futility. While tax promoters will see to it that slick arguments endorsing a measure appear in the ballot book all voters receive, all too often taxpayers leave it up to someone else to present a counter argument and the result is that no one responds. But it doesn’t have to be that way.

Illustrating the point is the e-mail message I received, the day after the election, from a local taxpayer advocate reporting the success of a low budge/no budget campaign in defeating a per-parcel property tax increase.

Among the keys to victory were writing a ballot argument against the tax, sending letters to local papers where they could be printed in the “Letters” section, and sending e-mails to friends and neighbors alerting them to the effort to increase their property taxes. Even though the taxpayer activists lacked the funds to send out mailers, print flyers or yard signs, they were able to convince 56.3 percent of their fellow citizens to vote “no.” Imagine what they could have accomplished with just a few hundred dollars.

Yes, average taxpayers can take on city hall, or any other local government entity, and win. All it takes is the will and using a few basic tools, most of which are free. Key to any of these efforts is as simple as preparing a good ballot argument. For those who believe that voters should hear more than just one side when it comes to tax increases, I invite you to visit www.hjta.org and look under “Taxpayers Action Tools” for more tips on defeating local tax measures.

(Jon Coupal is president of the Howard Jarvis Taxpayers Association -– California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights. This article was first posted on Howard Jarvis Taxpayers Association.)

The Long Stall: CA’s jobs engine broke down well before the financial crisis

Everybody knows that California’s economy has struggled mightily since the 2008 financial crisis and subsequent recession. The state’s current unemployment rate, 12.1 percent, is a full 3 percentage points above the national rate. Liberal pundits and politicians tend to blame this dismal performance entirely on the Great Recession; as Jerry Brown put it while campaigning (successfully) for governor last year, “I’ve seen recessions. They come, they go. California always comes back.”

But a study commissioned by City Journal using the National Establishment Time Series database, which has tracked job creation and migration from 1992 through 2008 (so far) in a way that government statistics can’t, reveals the disturbing truth. California’s economy during the second half of that period—2000 through 2008—was far less vibrant and diverse than it had been during the first. Well before the crisis struck, then, the Golden State was setting itself up for a big fall.

One of the starkest signs of California’s malaise during the first decade of the twenty-first century was its changing job dynamics. Even before the downturn, California had stopped attracting new business investment, whether from within the state or from without.

Economists usually see business start-ups as the most important long-term source of job growth, and California has long had a reputation for nurturing new companies—most famously, in Silicon Valley. As Chart 1 shows, however, this dynamism utterly vanished in the 2000s. From 1992 to 2000, California saw a net gain of 776,500 jobs from start-ups and closures; that is, the state added that many more jobs from start-ups than it lost to closures. But during the first eight years of the new millennium, California had a net loss of 262,200 jobs from start-ups and closures. The difference between the two periods is an astounding 1 million net jobs.

Between 2000 and 2008, California also suffered net job losses of 79,600 to the migration of businesses among states—worse than the net 73,800 jobs that it lost from 1992 through 2000. The leading destination was Texas, with Oregon and North Carolina running second and third (see Chart 2). California managed to add jobs only through the expansion of existing businesses, and even that was at a considerably lower rate than before.

Another dark sign, largely unnoticed at the time: California’s major cities became invalids in the 2000s. Los Angeles and the San Francisco Bay Area had been the engines of California’s economic growth for at least a century. Since World War II, the L.A. metropolitan area, which includes Orange County, has added more people than all but two states (apart from California): Florida and Texas. The Bay Area, which includes the San Francisco and the San Jose metro areas, has been the core of American job growth in information technology and financial services, with San Jose’s Silicon Valley serving as the world’s incubator of information-age technology. During the 1992–2000 period, the L.A. and San Francisco Bay areas added more than 1.1 million new jobs—about half the entire state total. But between 2000 and 2008, as Chart 3 indicates, California’s two big metro areas produced fewer than 70,000 new jobs—a nearly 95 percent drop and a mere 6 percent of job creation in the state. This was a collapse of historic proportions.

Not only did California in the 2000s suffer anemic job growth; the new jobs paid substantially less than before. Chart 4 reveals the sad reversal. From 2000 to 2008, California had a net job loss of more than 270,000 in industries with an average wage higher than the private-sector state average. That marked a turnaround of nearly 1.2 million net jobs from the 1992–2000 period, when 908,900 net jobs were created in above-average-wage industries. Further, during the earlier period, more than 707,000 net jobs were created in the very highest-wage industries—those paying over 150 percent of the private-sector average.

Chart 5, which indicates job growth or decline in selected industries, again suggests that a lopsided amount of California’s economic growth in the 2000s was in below-average-wage fields. It included nearly 590,000 net jobs in “administration and support”—clerical and janitorial jobs, for example, as well as positions in temporary-help services, travel agencies, telemarketing and telephone call centers, and so on. The largest losses in the state during the 2000s were in manufacturing, which traditionally provided above-average wages. After adding a net 64,900 manufacturing jobs from 1992 to 2000, California hemorrhaged a net 403,800 from 2000 to 2008. But information jobs also went into negative territory, while professional, scientific, and technical-services employment experienced far lower growth than in the previous decade.

The chart also shows that California’s growth in the 2000s, such as it was, took place disproportionately in sectors that rode the housing bubble. In fact, 35 percent of the net new jobs in the state were created in construction and real estate. All those jobs have vaporized since 2008, according to Bureau of Labor Statistics data. They are unlikely to come back any time soon.

These are troubling numbers. Fewer jobs and lower wages do not a robust economy make. A continuation of this trend, even if California’s recession-battered condition improves, would result in a far more unequal economy, shrunken tax revenues, and a likely increase in state public assistance—all at a time when officials are struggling with massive deficits.

 

 

 

A final indicator of California’s growing economic weakness during the 2000–2008 period is that the average size of firms headquartered in the state shrank dramatically. As Chart 6 shows, California had a huge increase over the 1992–2000 period in the number of jobs added by companies employing just a single person or between two and nine people, even as larger firms cut hundreds of thousands of jobs. Many of the single-employee companies may simply be struggling consultancies: if they were doing better, they’d likely have to start hiring at least a few people. While start-ups are indeed crucial to economic growth, small companies are especially vulnerable to economic downturns and often feel the brunt of taxes and regulations more acutely than larger firms do. The awful job numbers for the bigger companies—including a net loss of nearly 450,000 positions for firms with 500 or more employees—suggest the toxicity of California’s business climate. After all, bigger firms have the resources to settle and expand in other locales; in the 2000s, they clearly wanted nothing to do with the Golden State.

What is behind California’s shocking decline—its snuffed-out start-ups, unproductive big cities, poorer jobs, and tinier, weaker, or fleeing companies—during the 2000–2008 period? Steven Malanga’s “Cali to Business: Get Out!” identifies the major villains: suffocating regulations, inflated business taxes and fees, a lawsuit-friendly legal environment, and a political class uninterested in business concerns, if not downright hostile to them. One could add to this list the state’s extraordinarily high cost of living, with housing prices particularly onerous, having skyrocketed in the major metropolitan areas before the downturn—thanks, the research suggests, to overzealous land-use regulation.

One thing is for sure: California will never regain its previous prosperity if it leaves these problems unaddressed. Its profound economic woes aren’t just the result of the Great Recession.

Wendell Cox is the principal of Demographia, a public policy consultancy. This article was first posted in City Journal. City Journal thanks the Hertog/Simon Fund for Policy Analysis for its generous support of this issue’s California jobs package.

General Strikeout: Occupy Oakland

Throughout the day and night of November 2, “Occupy Oakland” mobilized to shut down the fifth-largest port in the United States (briefly), storm downtown banks (until managers locked the doors), and confront police (leading to 80 arrests). The day’s events, which attracted endorsements from the local nurses’, service employees’, and teachers’ unions, stemmed from Occupy Oakland’s call for a “general strike.” But contrary to the media’s flattering and hyperbolic portrayals, last Wednesday’s demonstration was nothing of the kind.

Some historical perspective is in order. The term “general strike” has a specific meaning: it signifies a work stoppage in all unionized industries and temporary suspension of operations in the businesses they serve. This was not the case in Oakland: the event merely drew some residents and a host of union members. Some 200 city employees—about 5 percent of the municipal payroll—declined to show up for work. According to CBS News, about 360 of 2,000 Oakland schoolteachers stayed out of school for the occasion. Some students also declared themselves “on strike.” The crowd in the streets Wednesday grew to an estimated 7,000 people, who closed the entrance to the Port of Oakland on Middle Harbor Road for about two and a half hours. But apart from a few blocks downtown and near the harbor, banks and stores remained open, schools remained in session, and life went on.

Destruction in the city was mainly visited on banks, including a Wells Fargo branch that closed early after occupiers made an afternoon attempt to storm it, and where windows were later broken. A Bank of America branch, a Chase branch, and a Citibank branch were also affected on the street corner amusingly referred to by the Oakland Tribune as “Oakland’s financial district at 20th and Webster Streets.” Occupiers demolished or defaced automatic-teller machines in the area. A Whole Foods Market locked its doors and later had its windows broken by masked “anarchists.” A Men’s Wearhouse store closed for the day and posted a sign in its window professing to “stand with the 99 percent.” Demonstrators smashed the store’s windows anyway.

Undercutting the pretensions of Occupy Oakland’s “general strike” was the response from Local 10 of the International Longshore and Warehouse Union. On Thursday morning, truck drivers faced off with about a dozen protesters who blocked four lanes of traffic with a fence and some dumpsters. The occupiers backed down when Local 10 president Richard Mead “appealed to [demonstrators’] sense of fairness after they were told the dockworkers would not receive their full day’s pay if they couldn’t get to work,” according to the Tribune. If the longshoremen, a powerful and symbolic union constituency on the West Coast, refused to leave their jobs, then whatever happened last week could hardly be characterized as a general strike.

By targeting the Port of Oakland and destroying storefronts and ATMs—acts intended to prevent port workers from earning a living and ordinary residents from going about their daily routines—Occupy Oakland’s more militant participants revealed some of the obscure precedents and exotic psychology that shapes their movement.

Occupy Oakland’s radicals come in two varieties. First, a small, aging, fanatical neo-Trotskyist group has tried for 40 years to seize control of the ILWU. The now-moribund Communist Party USA dominated the union from its founding in 1937 until recent decades. Unlike the original Trotskyist movement of the 1930s—which nurtured eventual neoconservatives, such as Irving Kristol—the latter-day remnant are sycophants of the Soviet-style dictatorships in Castro’s Cuba and Hugo Chávez’s Venezuela. Trotsky, whatever his faults, at least had the virtue of fighting Stalin—whom he compared to such small-time tyrants as Porfirio Díaz in Mexico. For the sectarian clique struggling to replace the old Stalinist crowd—and for whom a local leader like Mead is a competitor in running the West Coast waterfront union—Trotskyism stands merely for extremism.

Second, the black-masked vandals calling themselves “anarchists” have an even less well-known but more significant inspiration: nihilism, the ideology of nineteenth-century Russian revolutionary polemicist Sergei Nechayev. The nihilist outlook was summarized in a phrase attributed to a later Russian literary figure, Vasily Rozanov: “The show is over. The audience gets up to leave their seats. Time to collect their coats and go home. They turn around. No more coats, no more home.” For the current crowd inside the ILWU, as well as the “anarchists,” the real enemies are neither the port employers nor the banks, but the people with “coats and homes” who hold jobs, save some money, and wish to shop at Whole Foods free from the noise of agitators with bullhorns.

At the same time, as the New York Times observed but didn’t seem to understand, the neo-Trotskyists and the “anarchists” diverge in their goals. They share an interest in fomenting disorder, but the neo-Trotskyists also have a specific political goal: they want control of a union. The Times noted, “Some members of the group that had closed the port reprimanded those who smashed windows, threw rocks, ignited a 15-foot-high bonfire of garbage and covered downtown storefronts with graffiti.” Clearly, some among those whom the media describe as “leaderless protesters” want to become leaders in the worst way.

But neo-Trotskyism and graffiti-painting “anarchism” simply lack the gravitas of their predecessors. Unlike the phonies in Oakland and elsewhere, authentic anarchists and anarcho-syndicalists understood that a genuine anarchist movement represented a principle of organization: voluntary and anti-statist, but nonetheless thoroughly structured. (They often referred to themselves as “libertarian.”) Today’s anarchists revel in chaos, not the social philosophy of the Russian Peter Kropotkin or the Russian-American Emma Goldman.

Without doubt, the most absurd aspect of Occupy Oakland has been the vacillation of the city’s mayor, Jean Quan, her adviser Dan Siegel, and vice mayor Ignacio De La Fuente. Quan and Siegel were radical activists in the 1960s, and De La Fuente is an international representative of the Glass, Molders, Pottery, Plastics, and Allied Workers International Union, AFL-CIO. The aged leftists in the dockworkers’ union consider Quan, Siegel, and De La Fuente compromised—or “co-opted,” to use the sixties phrase—and the black-masked anarchists neither know nor care about the “movement” exploits of today’s Democratic politicians almost half a century ago. Quan and her allies have appealed pathetically for dialogue and negotiation with the Occupy members. “Reports that tires are burning and barricades set up on 16th,” Quan wrote on a Twitter post. “Protestors need to call my office now.” The mayor briefly mobilized police from surrounding jurisdictions to curb the excesses of the “strikers,” then returned to a posture of confusion and dismay.

Occupy Oakland—like Occupy Wall Street and its precursors in London and Athens—represents a crowd outburst, not a revolutionary uprising. The Occupy movement reflects the consciousness of those who feel “cheated” by the system rather than an agenda for social or political reform. It’s true that such incoherent outbursts sometimes evolve, after the passage of years, into substantial social movements. But all the evidence points to the uproar in Oakland on November 2 as a dead end, rather than a new beginning, in the history of the radical left and its labor allies.

(Stephen Schwartz is a widely published journalist and author who worked from 1989 to 1999 as a staff writer at the San Francisco Chronicle. This article was first published in City Journal.)

San Francisco’s Pension Crisis

A day before Halloween, glorious San Francisco weather brought hundreds of participants to “Pet Pride Day” at Golden Gate Park. As drums pounded and electrified folk tunes blared, children and parents, many in costume, paraded before a reviewing stand with their pets: dogs, cats, birds, a prize-winning hawk, chinchillas, rats, snakes, and even a puppy perched on a pony. Between a tent providing low-cost rabies injections and another offering “doggie makeovers” stood Jeff Adachi, the city’s public defender, shaking hands with passersby. As a lone campaign aide waved a bright blue ADACHI FOR MAYOR sign behind him, the candidate, a long shot in a crowded field of 16 mayoral aspirants, asked voters what was on their minds.

While several mentioned the push to let dogs run off-leash in more city parks—San Francisco supposedly has more dogs than children—others peppered Adachi with questions about bread-and-butter issues. Why was it was so tough to turn a property into condos? Why were the city’s schools so bad? Why were the ranks of the homeless growing? What was the environmental impact of lining parks’ soccer fields with ground-up tires? Why did the police ignore open-air drug dealing in the Tenderloin? Did Adachi support the Central Subway Transit Project extending a branch of the city’s subway to Chinatown—a boondoggle whose cost has spiraled out of control?

What almost no one mentioned, however, was the issue that prompted Adachi to run for mayor in the first place: pension reform. Adachi’s demand that city employees start paying more into their own pensions has not only defined him as a public figure but made him anathema to San Francisco’s political establishment—that is, the mayor, the Board of Supervisors (San Francisco is both a city and a county, so its board serves as city council), and the powerful public-sector unions.

“Pension reform is a tough issue,” Adachi tells me as we travel to the site of his next campaign appearance, a farmer’s market. “Unlike many other campaign issues, it’s hard to explain. It’s not ‘Save the Redwoods.’” Still, Adachi is largely responsible for having turned the issue of pension reform from a conservative talking point into a mainstream cause in liberal San Francisco. He is running as a “pragmatic progressive”—in fact, one of the most liberal candidates in the race. He argues that the underfunded pension obligations undertaken by irresponsible mayors risk not only bankrupting the city but also “crowding out” essential city services upon which middle-class citizens depend.

In San Francisco, a popular vacation destination, signs of that “crowding out” abound. The streets are filled with potholes that the city can’t afford to fix. Though the city earns much of its income from tourism, since 2010 it has imposed stiff fines for parking on the street during holidays, much to the concern of local businesses. For the second summer in a row, San Francisco has been unable to offer summer school to some 10,000 public school students because of a $1 million budget cut in the program. School budget cuts cause particular concern, since the city’s poorly rated school system is often cited as a major cause (along with a stagnant economy and high unemployment) of the flight of middle-class residents with children. Last year, the city’s parks budget was cut in half, while spending on services for seniors and those with AIDS was reduced by 30 percent. San Francisco taxpayers now spend one out of every six tax dollars on city employee benefits, Adachi says.

Though Adachi has been the city’s public defender for nine years, his devotion to pension reform makes him feel like a “consummate outsider.” “I’m the guy in the sci-fi movie who keeps yelling, ‘They’re coming, they’re coming,’” he jokes. But Adachi’s warnings about the city’s precarious finances and the “unsustainable” costs of unfunded pension liabilities have helped change the nature of the debate, analysts say. In late October, Governor Jerry Brown unveiled a 12-point proposal to limit the size of future pension liabilities. And thanks to Adachi, two competing pension-reform proposals will appear on Tuesday’s ballot: the one he drafted, Proposition D, which would save the city $1.7 billion in the next decade, he says; and Proposition C, a compromise measure supported by the current mayor, Ed Lee, the public-employee unions, and the rest of the city establishment. That might save as much as $1.4 billion over the same period, pension experts say.

“Win or lose,” says Corey D. Cook, an associate professor of political science at the University of San Francisco, “as a progressive candidate, Adachi can take credit for helping shift the ground of this debate. Pension reform is now very much in the air.” According to Cook’s latest polling for both the mayoral contest and the dueling pension-reform proposals, the odds seem to favor Lee, the first Chinese-American mayor in the history of a city whose population is about 30 percent Chinese. Widely regarded as a consensus candidate, Lee was appointed by then-mayor Gavin Newsom after he became California’s lieutenant governor ten months ago. Lee promised not to run for a new term, but he changed his mind and (having decided not to accept public money) has raised far more money for his campaign than any of the other candidates.

For this year’s election, San Francisco is inaugurating a complicated voting system that allows voters to rank their top three choices among the candidates. Oakland used this “ranked-choice” or “instant-runoff” system last year and got puzzling results, with the eventual victor, Jean Quan, not receiving the most first-place votes in the initial tally. In a column in the San Francisco Chronicle, kingmaker and former mayor Willie Brown (who, like most of the city’s political establishment, has endorsed Lee) says that the system has “thrown the whole town for a loop.” With 16 candidates “clamoring for attention” in a “town so disconnected,” Brown bets that half of the city’s 450,000 registered voters “give up in frustration.”

By any standard, Adachi, 52, is an unusual candidate. The great-grandson of Japanese immigrants who came to San Francisco in 1890, he was raised in Sacramento, where he attended public school. His parents and grandparents were interned for four years during World War II by the U.S. government at a camp in Arkansas. Given 24 hours to pack and leave their homes, his parents were not bitter, Adachi told me: “They never talked about it until I began asking questions.” That injustice undoubtedly helped shape his determination to defend the poor and vulnerable. In 2002, he ran for public defender—the San Francisco PD is the only elected one in California—against the city’s powerful political machine. Though outspent four to one, he scored an upset victory. But that wasn’t enough for a man who boasts about what the San Francisco Chronicle calls his “masochistic work ethic.” Adachi’s own friends describe him in similar terms: “relentless,” “super-intense,” a “micromanager,” a “dog with a bone.” Adachi lives comfortably, but by San Francisco standards not lavishly, in a $1.5 million house in upscale St. Francis Wood. His wife, Mutsuko, is a stay-at-home mom; their 11-year-old daughter attends private school. Somehow, Adachi found time to write two novels, and he lifts weights at 5 every morning.

Lean and fit, Adachi seems perpetually in motion. His foot never stops tapping as he tells me how pension reform became his cause. His interest began in 2009, when a civil grand jury report concluded that the cost to taxpayers of city-worker pensions would grow from $175 million to $700 million by 2018, crowding out welfare and other services. (That’s not even counting the unfunded pension liability—“bureaucratese for ‘the debt we’ll saddle our children with,’” Adachi says—which currently exceeds $3 billion.) More than a third of San Francisco’s nearly 30,000 city employees earned over $100,000, the report said, but many made little or no contribution toward their pensions.

Adachi succeeded in getting a pension-reform measure on the November 2010 ballot. Opposed furiously by most of the city’s unions, Proposition B went down to defeat, 57 percent to 43 percent. Adachi refused to give up. He revised the measure (weakening some key provisions, pension reformers complain), organized another petition drive, and put his watered-down Prop. D on this year’s ballot. Like the ill-fated Prop. B, the new measure would postpone the impending pension crunch by stopping pension “spiking,” limiting retirement benefits to 75 percent of salaries, and requiring city employees to contribute a greater percentage of their salaries to their pensions. Workers earning less than $50,000 would not be required to pay more than 7.5 percent, while those making over $200,000 could contribute as much as 16 percent in years when the pension fund was earning less than anticipated. Adachi’s plan would also prohibit pensions from topping $140,000 annually. (Former police chief Heather Fong, who retired two years ago at 53, got an annual pension of $264,000.)

To counter Adachi’s new plan, Mayor Lee and his union allies draftedProposition C, which, like Adachi’s plan, would require city employees to contribute 7.5 percent of their salaries to their pensions. And like Proposition D, it would also require them to pay more if the fund was performing poorly—but only up to 13.5 percent of their salaries. Steven Greenhut, an expert on the pension crisis who writes a weekly column in the San Francisco Examiner (and who contributes regularly to City Journal), calls Prop C. a “half-measure . . . designed mainly to take votes from Adachi’s real measure.” To Adachi’s dismay, Lee not only gave the police and firefighters’ unions a 4 percent compensation hike to offset the 3 percent increase in the pension contributions that they would have to make if Prop. C passed; the mayor also cut a deal with those unions to exempt them from Adachi’s Prop. D in case it passed. (Lee declined to be interviewed.) According to figures from the city controller’s office, uniformed police earned average annual wages and benefits last year of $166,607 per officer. Firefighters fared even better, earning an average total compensation of $178,732.

Adding insult to injury, the city’s controller, a Lee ally, skewed what was supposed to be an independent assessment of the rival measures to minimize the expected savings from Adachi’s Prop. D. Greenhut says that the controller used a ten-year timeframe to analyze the projected savings from Prop. D, rather than the customary 25-year timeframe, though the savings would increase dramatically in the later years because the reforms would apply mainly to new hires. It was such shenanigans that prompted Adachi to enter the race for mayor, which he did only hours before the filing deadline in August. “He had no money, no staff, no organization, nothing,” says Ryan Chan, Adachi’s 23-year-old campaign manager, who volunteered to help and wound up managing the fly-by-night operation. Adachi is thick-skinned: accused of being anti-union, a closet Tea Party Republican, and a Republican in progressive’s clothing, he ignores critics and plows ahead.

Still, the pension-reform proposals have thoughtful critics. Max Neiman, senior resident scholar at the Institute for Government Studies at UC Berkeley, recently suggested that the legality of both Propositions C and D would be challenged in court if passed. Both measures, argued Daniel Borenstein, a columnist for the Contra Costa Times, would place a disproportionate burden on the majority of city workers. These rank-and-file employees, he pointed out, would essentially subsidize the much better organized police and firefighters, who have far more lucrative plans and constitute 11,000 of the city’s 34,000 public-service employees. “There’s no reason that general workers, represented by a less-influential union, should have their rates dragged up by the spiraling cost of generous police and firefighter pensions,” Borensteinwrote. As Heather Knight observed in the Chronicle, the average pension for a retiree from the fire department was $108,552; from the police department, $95,016; from all other city agencies, $41,136.

Corey Cook thinks that prospects are poor for Adachi’s measure. “Mayor Lee’s proposition really took the air of the drive for deeper reform,” he says. “And one must ask whether having a consensus among the mayor, the unions, and the Board of Supervisors on the need for some reform isn’t better than the additional savings that Jeff Adachi’s measure would bring.” But Melissa Griffin, a reporter for theSan Francisco Examiner who has covered the mayoral race and the pension contest and anchored three of the mayoral debates, sees little indication that the gravity of the pension crisis has sunk in with city voters. Questions at the debates focused mostly on the shortage of affordable middle-class housing and the flight of middle-income families from San Francisco. “Folks appear to be more worried about their own ability to stay in San Francisco and less about services for the indigent,” Griffin wrote in the Examiner. “The theme this year is ‘Charity Begins at Home.’”

David Crane, a former adviser to Governor Arnold Schwarzenegger who has pressed for pension reform at the state level, thinks that neither Adachi’s nor Lee’s proposition goes far enough. “Neither revision covers existing public-sector workers, just future employees,” he says. Crane thinks that the municipal-pension crisis is far more severe than Americans realize: “Cities are broke; they have no cushion.” And when those cities are forced to make good on their pension promises, “services will cease and people will move. For cities, this is the Number One challenge.”

(Judith Miller is a contributing editor of City Journal, an adjunct fellow at the Manhattan Institute, and a FOX News contributor. This article was first published in City Journal.)

Pension reform rolls at polls: 401(k) test looms

Modesto voters gave advisory-only approval Tuesday to moving city employees from pensions to a 401(k)-style investment plan, a preface to a for-real vote in San Diego next June.

Despite a strong opposition campaign from unions, Modesto voters approved three non-binding advisory measures calling for a switch to a 401(k) plan, extending retirement ages and curbing “spiking” or the improper boosting of pensions.

The Modesto vote echoes support for switching new public employees to a 401(k)-style plan in a Public Policy Institute of California poll issued in March, 71 percent in favor.

A pension reform group led by Dan Pellissier filed two statewide initiatives last week — one switching new public employees to a 401(k)-style plan and the other giving new hires a “hybrid” combining a lower pension and a 401(k)-style plan.

The group plans to pick one initiative by early January and begin gathering signatures to place the measure on the November ballot. But Pellissier said the group is still looking for money to fund the signature drive, an estimated $3 million.

A statewide Field Poll issued in March showed support for a hybrid plan, 58 percent. The Field and PPIC polls both found a reversal in recent years in voter attitude toward public pensions, now regarded by many as “too generous” and a “big problem.”

The vote Tuesday also was a reversal in San Francisco, which rejected a pension reform measure last November as voters in six other cities and one county approved a wide range of pension reforms.

This time San Franciscans approved a measure backed by labor and business groups, Measure C, that increases employee pension contributions and gives new hires a lower pension.

Labor groups negotiated the measure as an alternative to Measure D, a stiffer initiative rejected by voters Tuesday that was sponsored by Jeff Adachi, the San Francisco public defender. He also sponsored the initiative rejected last year.

Adachi was one of 15 candidates in a scramble for mayor. The apparent winner, interim Mayor Ed Lee, cited his success in getting broad support for Measure C after his appointment in January to replace Gavin Newsom, who was elected lieutenant governor.

Measure C has an innovative provision aimed at avoiding a legal challenge. Although some disagree, many believe that a series of court rulings mean that pensions promised current workers cannot be cut without providing a benefit of equal value.

The increase in employee pension contributions imposed by Measure C is regarded as a cut in promised pension benefits. The offsetting benefit in Measure C lowers employee contributions in good economic times.

Some backers hope the agreement on Measure C is a small but significant first step toward solving a huge San Francisco pension and retiree health care problem. Costs have soared to $400 million a year and could double in four years.

Public pension systems often expect to get about two-thirds of their revenue from investment earnings. When those earnings fall short, the burden of covering the shortfall falls on the government employer not the employee.

To avoid this risk, the retirement plan offered by most private-sector employers is not a lifetime guarantee of a monthly pension but a 401(k) individual investment plan. The employer makes an annual contribution and has no long-term debt.

The state of California, on the other hand, has a long-term debt or “unfunded liability” for its three pension systems of roughly $100 billion to $500 billion, depending on whether investments earn 7.75 percent in the decades ahead or only 4 percent.

In San Diego Tuesday, officials announced that an initiative qualified for the June ballot that would switch all new hires except police to a 401(k)-style plan. It’s backed by Mayor Jerry Sanders and Councilmen Carl DeMaio and Kevin Faulconer.

The city has a $2 billion long-term pension debt. Two disastrous deals in 1996 and 2002 raised pensions and lowered city payments into the pension fund, resulting in lawsuits, a moratorium on city bond sales and painful budget cuts.

Switching new hires to a 401(k)-style plan could take decades to cut costs. Savings would come sooner from the initiative’s five-year freeze on pay used to calculate pensions, which likely would be challenged in court.

San Jose Mayor Chuck Reed proposed declaring a fiscal emergency and capping city pension contributions at 9 percent of pay. A ballot measure once planned for this month was delayed for talks on a union counterproposal, which failed last month.

Now the San Jose city council is expected to make a decision early next month about placing a pension reform measure on the March ballot. City retirement costs, $245 million this year, are expected to reach $430 million in four years.

The Modesto measures were written by Councilman Brad Hawn, a mayoral candidate who finished second Tuesday and will be in a runoff. Opponents said the measures were placed on the council agenda at the last minute to make the Nov. 8 ballot, avoiding proper review.

“The unions argue, with some justification, that this was a campaign strategy more than a serious reform effort,” said a Modesto Bee editorial. The newspaper opposed the 401(k) and extended retirement measures, but supported the anti-spiking measure.

A union campaign against the measures included an emotional mailer from the family of a police officer, injured in a vehicle pursuit and left in a coma for several years before dying, that suggested a 401(k)-style plan would have given the family no support.

A union cable television ad showed an elderly man putting on SWAT team gear and saying in a quavering voice, “I’m on my way to help,” as he hobbled forth with the aid of a cane.

Another union video showed Hawn saying a switch to a 401(k)-style plan could cost $106 million plus adding Social Security coverage. But the video said the increased cost was not mentioned in the ballot pamphlet.

Some of the costs of switching to a 401(k)-style plan were mentioned by Alan Milligan, the California Public Employees Retirement System chief actuary, in a Capitol Weekly article last May.

A closed pension plan has to be managed for the lifetime of the members, some in their 20s, which could be 60 years. During this period the employer would be paying the cost of two retirement plans, the pension and the 401(k).

As a frozen pension plan ages, less risky investments to maintain liquidity are likely to result in lower earnings and higher employer contributions. Studies show pensions are cheaper to administer than 401(k) plans. And adding Social Security costs the employer 6.2 percent of pay.

“This means taxpayers may end up paying more for less – higher costs for lower worker benefits,” Milligan wrote.

In Palo Alto Tuesday, voters repealed binding arbitration for police and firefighter contract negotiations. Opponents contend that arbitrators, who must pick either the labor or management offer without modification, usually pick the labor proposal.

The Palo Alto vote continues a string of votes to repeal or limit binding arbitration, some paired with pension measures, that includes Vallejo in June last year, San Jose last November and this year San Luis Obispo in August.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. This article was first posted at Calpensions.

The California Redevelopment Dispute

The fate of California’s redevelopment agencies (RDA’s) is frequently discussed in the news these days. However, resolution is close—on November 10th, oral arguments will be heard by the State’s Supreme Court in the case California Redevelopment Agencies v. Matosantos.

The issue at hand in this important case is the constitutionality of Governor Jerry Brown’s proposed elimination of all 400 of the state’s redevelopment agencies. A critical facet of his budget proposal, Brown claims the move will save the state $1.7 billion this year. Characterizing the state’s redevelopment agencies as a “piggy bank” from which the state must now draw, he plans to redistribute the money back to counties, schools, cities and other special districts.

However, he’s also proposed that RDA’s can avoid elimination if certain steps are taken by their local jurisdictions, including an agreement that the RDA’s will pay $1.7 billion this fiscal year and $400 million in subsequent budget years in statutorily mandated revenues to school entities and other special districts.

Panicked redevelopment agencies are contending that the proposed cuts violate Proposition 22, passed by voters in November 2010, which prohibits the state from borrowing or taking funds used for transportation, redevelopment or local government projects.

Opponents to Governor Brown’s proposal feel that RDA’s are needed more now than ever as the state struggles to recover from the recession. The wholesale elimination of RDA’s, they maintain, eliminates important tools to spur job creation, increase tax revenues, and induce economic growth.

However, proponents of Governor Brown’s proposal, including State Controller John Chiang, claim that RDA’s are mismanaged and waste funds that would be better used to pay for schools and other critical services. Chiang, who recently reviewed 18 RDA’s statewide, cited numerous reporting flaws, questionable payment practices and inappropriate uses of affordable housing money.

This issue –like so many the justice system and voters encounter– begs the question: which decision will positively impact the most people? If political radical and philosopher Jeremy Bentham, an early advocate of utilitarianism, were to ponder the situation, would he lend support to Jerry Brown, attempting to balance a budget and mindfully funnel funds into what he believes are our most critical areas of need; or would he cast his vote with the RDA’s, who enable and encourage local government autonomy and revitalization?

There’s no denying that the ruling by California’s top court – whether in favor, or a rejection of Governor Brown’s controversial move – will impact taxpayers and jurisdictions across the state.

The court has promised a decision by January 15, 2012, which is when the first RDA payments would be due.

(John Hancock is the President of the California Channel.  This article was first posted in Fox & Hounds.)

It’s Time to Blow Up the FDA’s Drug Review Process

The Food and Drug Administration just held its first public meeting to set the course for the future regulation of prescription drugs and medical devices in this country.

Every five years, Congress must reauthorize the Prescription Drug User Fee Act (PDUFA), which governs many of the FDA’s regulatory efforts. Some lawmakers hope to use the debate over PDUFA to streamline the agency’s review process — and thus to get innovative, life-saving treatments to patients faster.

Legislators are right to do so. The FDA’s longstanding aversion to risk and penchant for regulatory overreach are keeping many revolutionary remedies from American patients.

PDUFA was implemented two decades ago to speed up the FDA’s sluggish review process. The law gives the agency the power to charge device manufacturers and others anywhere from $100,000 to $2 million to review their products. These fees fund nearly 25% of the FDA’s total budget.

Many patient advocates, members of Congress — and of course, drug- and device-industry reps — have chided the agency for its sloth despite all that additional funding.

Regulators have bristled at these accusations. At a conference in October, Janet Woodcock, a senior FDA official, suggested that Congress was in a “blowing up mood” and might go overboard with reform efforts. Other officials have tried to downplay concerns about the agency and stated that it could handle reforms internally.

But a little bit of regulatory “blowing up” is exactly what the FDA needs.

Consider the FDA’s device review process. The agency screens medical devices far more slowly than does its counterpart in the European Union.

European officials erect fewer hurdles for manufacturers to clear. For one thing, EU rules focus on safety, not efficacy. So doctors and patients — not bureaucrats — are empowered to decide whether a device is worthwhile.

The European system also does not require device manufacturers to get permission before marketing a device. The United States, in contrast, forces the medical-device industry into a government-run, “mother-may-I” system.

And the problem is getting worse. According to a 2011 study published by the California Healthcare Institute, the FDA’s reviews for higher-risk medical devices are now taking 75% longer than they did between 2003 and 2007.

According to a study coauthored by Josh Makower, a professor of Medicine at Stanford University, patients in America must wait two full years longer, on average, than those in Europe for medical devices to hit the market.

California patient advocate Marti Conger knows this reality all too well. In testimony before Congress earlier this year, Conger spoke of a severe and unusual spinal condition that surfaced in her body in 2006 — and the lack of treatments available to her in America.

The artificial disc she needed had not yet been approved by the FDA — but had been available since 2005 in Britain. Fearing for her health, Conger decided to empty her savings and travel to England for the disc replacement procedure.

And by slapping a new 2.3% tax on device makers, Obamacare is making the situation even worse. The device industry is preparing to cut jobs in the United States and grow outside the country. According to a study by the industry group AdvaMed, the device tax alone could cost the industry more than 10% of its jobs, slashing some 43,000 positions. Some 87.5% of device makers expect growth to be higher outside America in the coming years.

The FDA also serves Americans poorly with respect to prescription drugs. Although the FDA’s budget and headcount have increased dramatically, its productivity has deteriorated, according to a study completed by my colleague John R. Graham. During a twelve-month period in 2008-2009, thirteen new medicines were approved by both the FDA and the European Medicines Authority (EMA) — but the EMA’s approvals came 552 days faster, on average.

The FDA may believe that its review processes are working just fine. But the facts speak otherwise. Congress must seize the opportunity before it to streamline America’s system of medical regulation.

(Sally C. Pipes is president, CEO and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book, The Truth About Obamacare, was published in 2010.)

Arrivaderci, Berlusconi … and the Pronto’er, the Better

A powerful man who has dominated his region in terms of sports, politics, and business clings to power in light of a scandal involving sex with underage youths, cover-ups, and accusations of protecting one’s friends and abuse of power.

No, I’m not talking about Joe Paterno.

I’m talking about Silvio Berlusconi.

If you haven’t been paying attention to Italian politics—and quite frankly, none of us should have to—Berlusconi is the prime minister of Italy and he runs that country with the blunt force and voracious sexual appetite of a Roman emperor.

Berlusconi came to power initially in the entertainment field, where he cobbled together Italy’s first major commercial TV network, at a time when the government controlled everything from the price of pasta to what you saw on the boob tube. (And in Italy, you see so many boobs on the tube that it’s actually an accurate name.)

Berlusconi parlayed his TV money and success into sports, buying the equivalent of the New York Yankees of Italian soccer. In so doing, he discovered what tons of colorless, flavorless business leaders have since learned—that if you buy a major sports team, you suddenly become tall, handsome, charismatic, and fascinating to the media, the public, and especially, young women.

Berlusconi was already charming and fascinating—the guy is Italian, after all—but he took his TV and soccer fame and parlayed it into a new political party, Forza Italia, which is a little like naming a new American political party “Let’s go Dallas Cowboys.” He rode Forza Italia all the way to the top, commandeering the villas of others, throwing parties with allegedly underage prostitutes (in attendance only as guests, Silvio claims), and generally running Italy as if it were his private fiefdom.

Which, in time, it became. Berlusconi was Italy, and Italy was Berlusconi. Anyone who had any kind of power—in the government, in business, in the courts—owed that power to his relationship with Berlusconi. This was no naked emperor. Berlusconi was about as powerful an individual as ever ruled any country at any time. What was the point of indicting him if one of the judges he appointed would drop the charges? What was the point of investigating shady business dealings if everybody in Italy knew the shortest way to end your career was to dig under rocks?

Unfortunately, for Italy and for the rest of the world, there came a point for Berlusconi where his quasi-criminal activity, let alone his fondness for young—and I mean really young—ladies of the night could no longer be ignored by the rest of the world. That time is right now, when Italy is days or perhaps just hours away from being denied the ability to borrow money from the international banking community.

Most of the world’s attention has been devoted to Greece, whose leaders apparently decided that it wasn’t enough to have young, half-naked European and American women lounging on their beaches and drinking Ouzo. No—Greece had to go and borrow gazillions of euros from banks, especially German and French ones, and then spend the money on…well, no one knows what they spent the money on. But it’s gone.

Which is why Greece is broke, and the theoretically sober-minded, worldly-wise German and French bankers are left holding the empty bag. But just to the north of Greece lies another ticking financial time bomb in Berlusconi’s Italy. Silvio has finally been abandoned by his chief political ally and playmate, Umberto Bossi, leader of the Northern League, which means that Berlusconi has nothing to fall back on except billions of dollars of personal wealth, incredible power throughout the entire country, and the short memories of his countrymen who would probably forgive him all manner of financial chicanery if only Inter Milan won another soccer title in the Premier League or wherever they play.

The reason I bring all this up is because yesterday morning, the stock market report on KNX began with a reference to the Italian debt crisis and what Berlusconi was going to do next—resign, reorganize, or just order another plate of risotto.

There is no reason on earth why the stability of the American financial system should be threatened by the actions of a comic opera buffoon running a delightful country 6,000 miles from here.

Unfortunately, that’s how things are these days. The world may or may not be flat, but it sure has gotten small. They used to talk about the butterfly effect—a butterfly flapping its wings in Beijing would cause tremblings in the wind patterns that would affect everyone and everything in the world. Since Italy is the home of grand opera, perhaps we should call this the Madame Butterfly effect. What happens in Rome doesn’t stay in Rome. It affects everything, including how things go on the New York Stock Exchange, and therefore your stock portfolio.

About thirty years ago, Rolling Stone economics columnist (bet you didn’t know they had one) William Greider wrote a fascinating book about the federal reserve system, Secrets of the Temple. In that outstanding book, he quoted a U.S. senator back in 1980 as being amazed that a farmer at a town hall meeting would raise a question about M1, a definition of the money supply created by the Federal Reserve. “How would a farmer know something like that?” the Senator asked in amazement.

Well, today, we should know about M-1 and whatever the Fed is doing, or not doing, to prop up our sagging economy. But we really shouldn’t have to know anything about what goes on in Italy or Greece or any of these other countries where the appetite for borrowing makes their economies look like a college freshman who just got his or her first credit card. Unfortunately, the economic recovery we’re all wishing into existence really does rise and fall with news of what people like Silvio Berlusconi eat for breakfast.

If we’re lucky, he’ll do the right thing and step down, as he recentlys said he would. If not, then the world’s economic condition will move from comic opera to tragedy. And that’s something none of us can afford.

(Michael Levin is a New York Times bestselling author and runs www.BusinessGhost.com, America’s leading provider of ghostwritten business books.)

Redistricting Role Reversal: CA’s Black Leaders and the Voting Rights Act

On an abnormally chilly morning this past summer, a group of black leaders gathered in front of the California African-American Museum in Los Angeles to oppose what they called an “effort to turn back the clock” and “declare the premature death of black political power.” The purported death sentence was issued one day before, with the release of prospective statewide redistricting maps, which consolidated African-American voters in Los Angeles County into one congressional district. Racial gerrymandering has been a common method of disenfranchising black Americans since the days of Reconstruction. But this time, the law that protesters were opposing was one identified with racial progress: the Voting Rights Act of 1965.

“The Voting Rights Act is being used to disadvantage black people in Los Angeles,” explained Jackie Dupont-Walker, the influential leader of the Ward Economic Development Corp., in the Los Angeles Sentinel, one of L.A.’s leading African-American community newspapers. Dupont-Walker wasn’t alone in making the explosive claim. The City of Angels’ most prominent black leaders have taken a united stand against the landmark civil rights legislation. Representative Karen Bass, the first black woman in the United States to serve as speaker of a state legislature, added, “We should not accept the Voting Rights Act.” An African-American member of the state’s redistricting commission lamented at a July hearing: “The Voting Rights Act is now . . . an instrument to be used against the African-American population.”

It’s a dramatic role reversal. Long considered one of the most important pieces of legislation in U.S. history, the Voting Rights Act now finds itself under attack from the same minority groups that once championed its adoption. California’s Citizens Redistricting Commission, which spent the early part of the year redrawing the state’s political maps, ultimately bowed to African-Americans’ demands that it maintain three safe congressional seats in South L.A. The commission’s compromise sets the stage for a showdown in court and at the ballot box. California’s supreme court last week unanimously rejected two challenges to the commission’s new congressional and state senate maps, which the Republican plaintiffs vow to appeal. Opponents of the commission’s work, who also include several Democratic incumbents whose seats are no longer so safe, have until November 15 to collect 504,000 signatures for a referendum that would ensure the new district maps aren’t in effect for the 2012 election cycle.

Over the last few years, California passed two redistricting-reform initiatives—Proposition 11 in 2008 and Proposition 20 in 2010. The effect of both was to strip the legislature of its redistricting authority and vest it in the independent citizens’ commission. The initiatives outlined strict line-drawing criteria, including compliance with the federal Voting Rights Act. Douglas Johnson, a redistricting expert with the Rose Institute of State and Local Government at Claremont McKenna College, says that the Voting Rights Act is one of the most difficult laws to understand. The initiatives’ authors, in an effort to avoid any confusion, added a provision that required the commission to hire special legal counsel, a responsibility eventually bestowed on George Brown and Dan Kolkey of Gibson, Dunn & Crutcher.

Throughout the mapmaking process, Brown and Kolkey advised the commission that in order to comply with Section 2 of the Voting Rights Act, the commission must draw every possible “majority-minority” district in any area with a history of racially polarized voting. Brown made it easy for the citizen commissioners; he gave them a simple numerical bright line of 50 percent. In essence, if census figures show half a district’s worth of historically underrepresented minorities, the commission must draw a corresponding district. Brown based his standard on a 2009 U.S. Supreme Court decision, Bartlett v. Strickland, which set a 50 percent standard for legal standing in redistricting challenges. But with demographic changes in Los Angeles County, that benchmark spelled trouble for the region’s three black members of Congress: Karen Bass, Maxine Waters, and Laura Richardson. Since the 2001 reapportionment, L.A.’s black population declined from 9.5 percent to 8.3 percent—enough for one, maybe two, but certainly notthree majority-black districts.

Black political leaders weren’t about to surrender that third congressional seat without a fight. “We ain’t going nowhere,” vowed L.A. County Supervisor Mark Ridley-Thomas in July. “Our descendants fought, bled, and died to have a right to participate in the political process and we are not going to start sitting down now.” Redistricting commissioner Andre Parvenu proposed an alternative plan to split black voters across three districts. Just one problem: the “30-30-30” plan was a clear violation of the Voting Rights Act. “I don’t think that on its face there is a legal basis for saying just draw three districts with 30 percent African-American voting strength in the same areas that they’re in now,” Brown told the commission in May. “I don’t understand the legal argument for doing that.” Other redistricting experts echoed Brown’s view. Chandra Sharma, a redistricting consultant with Meridian Pacific, testified that a 30 percent split would “apply a different [VRA] standard to Latino populations versus African-American populations.” He added in a recent interview: “The redistricting commission, in drawing congressional districts in South Central Los Angeles, chose to violate both their own mandate and the Federal Voting Rights Act in order to protect a set of incumbent legislators.”

This inconsistent application of the Voting Rights Act motivated some redistricting commissioners to rethink their interpretation of the law altogether. Commissioner Connie Galambos-Malloy said at a tear-filled July 24 hearing, “The Voting Rights Act is not just about Section 2, and it is not just about Section 5. It’s about the big picture. It’s about not just these districts, but when we zoom out and we look at the region, and when we look at the state, and ultimately when we look at the country; what impact is the redistricting process having on minorities?” Two commissioners weren’t ready to adopt such an expansive reinterpretation of the Act and opposed the congressional maps on VRA grounds. Ultimately, the commission carved out a brand-new district in which Waters may safely run.

Redistricting commissioner Michael Ward, a Republican from Anaheim and the most vocal critic of the commission’s work, came out swinging. “I believe that the Citizens Redistricting Commission broke the law. Nowhere is this more apparent than with the commission’s failure to follow the Voting Rights Act,” he said at a press conference following the commission’s final vote on August 15.

To be fair, not everyone is convinced that the commission’s Los Angeles County congressional lines violate the Voting Rights Act. Johnson, the lead technician for Arizona’s 2001 redistricting process, has handled multiple Voting Rights Act challenges. He points out that the law never establishes a numerical standard. “There’s no magic number in the Voting Rights Act about what’s an effective district,” he said. “It’s ironic that the commission knowingly violated their own rules and in the process happened to follow the Voting Rights Act.” Despite his contrarian view, Johnson believes the commission might be susceptible to a legal challenge based on other racial gerrymandering violations.

In Shaw v. Reno (1993), the Supreme Court ruled that states couldn’t draw lines based predominantly on race. “A reapportionment plan that includes in one district individuals who belong to the same race, but who are otherwise widely separated by geographical and political boundaries, and who may have little in common with one another but the color of their skin, bears an uncomfortable resemblance to political apartheid,” Justice Sandra Day O’Connor wrote for the Court. Johnson argues that “time and time again,” California’s commission did just that—draw lines around ethnic communities, most obviously with the Latino communities of South El Monte.

Perhaps most significantly, the African-American community in Los Angeles could be setting a new precedent for how the Voting Rights Act is applied nationwide. “The Voting Rights Act is a monumental piece of legislation that has helped elect minorities all throughout the country,” said Sharma. “If you set a new L.A. County precedent and apply it to other states, the consequences could be disastrous.” Alas, Californians likely won’t know just what the consequences will be unless the U.S. Supreme Court weighs in. Get ready for an ugly fight.

(John Hrabe is a writer and contributes regularly to the Orange County Register and CalWatchdog.com. This article was first published in City Journal.)