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Recent Examples of Government Waste, Fraud and Mismanagement

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  • Santa Clara City Attorney Gets $242,000 With Resignation. Santa Clara City Attorney Helene Leichter will pocket an extra $242,828 upon her resignation, effective January 1, thanks to the largesse of the Santa Clara City Council. She also will receive $18,034 for unused vacations and sick pay, and will remain on paid personal leave (thus maintaining benefits and accruing time toward a government pension) through the end of this year.

    Santa Clara Mayor Pat Mahan said, "It was a simple letter of resignation and we accepted it, of course." There was no explanation why the council agreed to give away hundreds of thousands of dollars of taxpayer money. (Source: San Jose Mercury News, October 31.)

  • Orange County Hires Back Hundreds of Workers Who Are Receiving Pensions. In Orange County, complaints are being raised over the county's widespread practice of hiring retired county workers to return and perform part-time work at the same time they are collecting taxpayer-funded pensions. According to a recent county audit, there were 212 working retirees in the fiscal year that ended in June. That figure includes only those people whose pensions come from Orange County employment – the Orange County Register's OC Watchdog noted that it does not include people like Sheriff Sandra Hutchens, who retired from Los Angeles County before taking her job in Orange County.

    The law limits the number of hours a pension recipient can work for the county, but last year's audit revealed that 12 employees exceeded the limits.

    A county official said the returning workers can actually save the county money, because the county does not have to pay retirement or medical insurance costs for people who already are receiving pensions and insurance benefits. But critic Nick Berardino believes the double-dipping is bad for the county and encourages cronyism.

    Supervisor John Moorlach said Mr. Berardino shouldn't be too critical of the system. He said that Mr. Berardino, as general manager of the Orange County Employees Association, helped negotiate a contract that lets the union's members retire at the age of 55 with a sizeable pension. Those young retirees still have many years of work left in them, and the county can use their experience, Mr. Moorlach said. (Source: Orange County Register, September 15.)

  • San Jose Giving Low-Income Home Loans to Top City Officials. If you are a big-shot working for the city of San Jose, you may be eligible for a low-interest home loan. Currently, the city has seven low-interest loans outstanding, worth a total of $1.75 million.

    In August, the City Council had to forgive an "underwater" mortgage when former police auditor Barbara Attard left city employment and had to repay the loan. She had a $250,000 city loan, granted in 2004 when property values were higher, with 2.86 percent interest. The city doesn't believe any other loans are "underwater."

    City Councilman Pete Constant urged the council not to make anymore loans, and along with Councilwoman Nora Campos, he voted "no" on a settlement with Ms. Attard. They were outvoted, however, and the city forgave the loan, took over the property and agreed to pay $94,000 on the property's mortgage.

    According to the San Jose Mercury News, redevelopment director Harry Mavrogenes, an existing loan-holder, "already lived in San Jose and had been working for the city for nearly a decade when he used a city loan in 2006 to buy a $1.5 million spread near the Almaden Golf and Country Club." (Source: San Jose Mercury News, September 20.)

  • Union Outsources Picketing as it Protests Outsourcing. The union representing Sacramento County engineers, engineering technicians and technical inspectors has set up picket lines to protest the county's use of private-sector consultants on a construction project at Sacramento International Airport. But the union hasn't been practicing what it preaches, The Sacramento Bee reports. Two bargaining units have been outsourcing the picketing by hiring homeless people to carry signs and walk the picket lines. On September 21, about 10 homeless people were picketing at the airport, carrying signs printed by the bargaining units, the paper reported. "The homeless protesters seemed pleased for the opportunity to picket," The Bee stated. "Carmen Bray said she and her co-protestors are getting $40 a day plus lunch for about five hours of work." (Cal-Tax: Are 1099s being filed for these independent contractors? Should the homeless people form a union to demand better pay, more rest breaks and medical insurance coverage?) (Source: The Sacramento Bee, September 22.)

  • Santa Ana Workers' Union Creates More Budget Problems by Refusing to Delay Pay Raises. The Orange County Register reports on a major budget problem in the city of Santa Ana: "A union that represents hundreds of city workers has refused to postpone pay raises or make other concessions – a move that will likely force more cuts to the city's already cash-strapped budget."

    The union is a local chapter of the Service Employees International Union, which has been lobbying at the state level for major tax increases.

    The city had hoped to free up $3.2 million by getting the SEIU to agree to postpone two planned pay raises for a year, to accept limits on some benefit payouts and to take six unpaid furlough days. One of the pay raises – a 4 percent hike – went into effect this month.

    Although the city adopted its new budget just weeks ago, it already is having problems, and the union's insistence on pay hikes will force layoffs, according to the assistant city manager. If the concessions had been accepted, the city would have guaranteed that there would be no layoffs of SEIU workers for the next 12 months.

    The union represents approximately 580 workers. The vote was 300-120 against accepting the concessions. (Cal-Tax: So, in a city with roughly 350,000 taxpaying residents, 300 union workers are calling the shots. Nice. We note that the union wasn't being asked to give up the raises, but simply delay them for a year.) (Source: Orange County Register, July 20.)

  • State-Funded Non-Profit Hands Out Generous Bonuses. San Francisco Chronicle columnists Phillip Matier and Andrew Ross, who frequently uncover examples of government waste, reported this example on July 13: "Even as government programs are being slashed across California, a Fresno non-profit for the developmentally disabled – largely funded with state money – handed out $500,000 in bonuses to its 350 administrative employees."

    The bonuses, described by the director of the Central Valley Regional Center as "one-time salary adjustments," averaged about $1,400 a person. The payments were based on a formula that included length of service.

    However, negative public reaction to the bonuses may have an impact. The columnists reported that a state senator called for a full explanation or a return of the money. "And, lo and behold, the center's board announced late last week that it was rescinding the bonuses," they wrote. "But just how the agency plans to get back the money is unclear, given that some employees have already spent their cut." (Source: Phillip Matier and Andrew Ross in the San Francisco Chronicle, July 13.)

  • UC Riverside Pays $355,000 to PR Firm While Keeping Communications Employees on Payroll. The Riverside Press-Enterprise reports that the University of California at Riverside is spending big bucks on a no-bid contract with a public relations firm, even though the university has in-house staff who are paid to perform many of the same functions.

    The paper reports: "UCR contracted with Riverside-based O'Reilly Public Relations in April last year to help win Board of Regents approval for the creation of (a) medical school. Regents approved the school last July, but UCR continued to pay the O'Reilly firm $20,000 a month through June, the end of the $280,000 contract."

    The university also paid the PR firm $75,000 in a subcontracting arrangement to procure the lobbying services of a former state lawmaker, who was more effective than the UC's government relations staff at securing state funding for the medical school, a school official said. (Source: Riverside Press-Enterprise, July 6.)

  • Orange County Public Guardian Accused of Mismanagement. The Orange County Register reports: "Orange County's elected Public Administrator and Public Guardian John Williams has continued to expand his already bloated management staff and engage in questionable personnel practices despite warnings from a grand jury report earlier this year."

    That assessment came from a new grand jury report released June 30. Grand jury foreman Jim Perez said the panel received a deluge of letters and calls complaining about Mr. Williams' department after the first report came out. "They basically went on to do the same thing in spite of our report," Mr. Perez said. "It's chutzpah."

    The grand jury's report said salary growth in the office's management classifi­cation has increased 118 percent over the last four years. The report also stated: "The personnel issues highlighted in the first 2008-2009 Grand Jury report on this matter have increased unabated. Management has con­tinued to add to its ranks. In 2005 there were seven individuals in the management classification. The Grand Jury's previous report stated the number had increased to ten. Now, that number is 11, even while the total PA/PG staff remains at 67."

    Specifically, the grand jury criticized the hiring of two highly paid "chief deputies" who do not appear to be needed. Further, the grand jury found that temporary promotions were handed out and rescinded on a regular basis, as part of a system to deal with conflicts and gain loyalty from certain employees. "It is important to note that a person can be reduced in grade from a supervisory position and yet later receive rapid promotions, all in a matter of months," the report said. "It is difficult to understand how the organiza­tional needs have been served with those types of personnel practices."

    The report concluded: "During a time of unparalleled financial stress, the office of the PA/PG continues to add to its man­agement ranks thereby increasing its operating costs. The need for change is apparent and compelling." (Sources: Orange County Register, June 30; Supplemental Guardian of Last Resort Report, June 30.)

  • State University Chancellor Hires Lobbyists Without Competitive Bids. The San Francisco Chronicle reports: "California State University Chancellor Charles Reed has retained high-priced lobbyists without competitive bidding, even though CSU has a Sacramento office where it runs a $1.1 million-a-year, in-house lobbying unit whose state employees monitor CSU-related bills and follow state budget hearings. In the last decade, the university system has paid more than $2 million in public funds to two Sacramento lobbying firms … to influence the policies and budget decisions of the governor and state lawmakers. At a time of state budget cuts, student tuition hikes, canceled classes, faculty hiring freezes and layoffs, CSU's lobbyists have been paid to defeat bills designed to shed more light on CSU executive salaries and perks as well as public records."

    The paper noted that the outside lobbyists were paid not just to work on CSU-related bills, but also "to monitor nearly a dozen bills that had little or no direct connection to the university, including legislation on affordable housing for Iraq veterans, money laundering, terrorism, sex offenders and sacred Indian grounds."

    Nearly $400,000 was paid to the two lobbying firms as retainer fees during months of the year when they performed no services for the CSU system regarding administrative or legislative actions.

    "There is no need for these lobbyists," Senator Gloria Romero said. "There is no need for us to spend this money." (Source: San Francisco Chronicle, July 6.)

  • Vallejo Officials Get Generous, Retroactive Raises While City Is in Bankruptcy. Three city workers in Vallejo are getting sizeable raises despite the fact that the city has declared bankruptcy. Fire Chief Russ Sherman is getting a 4.67 increase in base salary, retroactive for eight months, while City Engineer David Kleinschmidt and Building Official Gary West each will enjoy a 12.5 percent pay hike, retroactive to July 1, 2008. Vallejo's mayor and City Council members said they do not approve of the raises and, in fact, did not know about them until they were contacted by the media. The raises apparently were approved under a labor union contract that was enacted earlier this year. "When a particular position is determined to be substantially under the average, our agreement gives us the opportunity to request that the city look at that and make that adjustment," Mr. Kleinschmidt said. (Cal-Tax: And some people still insist on blaming local governments' financial problems on Proposition 13!) (Source: Vallejo Times-Herald, June 19.)

  • Contra Costa County Slush Fund Pays for Executive Perks. Contra Costa County supervisors and top executives are enjoying life at the taxpayers' expense. Since 2007, the county has spent $750,000 out of a slush fund for goodies for those in high places.

    According to the Contra Costa Times, "Large digital TV screens, a GPS navigation system, a digital camera and a laptop are among the items Contra Costa elected leaders have purchased with the county's 'professional development' perk."

    Former county administrator John Cullen bought a new computer system one month before he retired. All items purchased belong to the individual, not the county.

    Kris Hunt, executive director of the Contra Costa Taxpayers Association, said: "Clearly, this is a well-intentioned policy that has run amok and needs more oversight. What is the criteria here? There may be some justification for computers. But I am having trouble with the idea of a television as a professional development tool."

    All county supervisors except Mary Piepho have purchased items for themselves in the last 18 months.

    Meanwhile, the county, with a huge deficit, is cutting programs that serve its residents. (Source: Contra Costa Time, June 21.)

  • Half Moon Bay City Council Approves Raises for Top City Officials. While seeking a $10 million no-interest loan from the state, the Half Moon Bay City Council on June 16 voted 4-1 to give city manager Michael Dolder a raise from $150,000 to $186,000. The same generous council voted to raise his monthly expense reimbursement from $2,500 to $3,500 (a $12,000 yearly increase). Finance Director Hector Lwin also got a bump, from a maximum of $100,800 to a maximum of $105,600. Councilman Jim Grady said, "I can't support an increase when we've just laid folks off." (Cal-Tax: Maybe the city is giving up on the loan, as this action certainly won't help its case.) (Source: Half Moon Bay Review, June 17.)

  • No Authorization Found for Placer County Court Executive's Massive Pay Hikes. In California, courts have flexibility in setting their own systems of salary and compensation. A special audit by the Judicial Council found that John Mendes, former executive officer of the Placer County Superior Court, received more than $470,000 in apparently unauthorized compensation from July 2001 to March 2009. According to The Sacramento Bee, he received salary or benefit increases for which there were no records of written authorization. The presiding judges at the time have no recollection of approving the generous pay hikes.

    Since 2002, Mr. Mendes received about $114,000 in bonuses under a management incentive program. By 2008, his compensation was $304,862.

    Mr. Mendes' attorney, Barbara Lawless, said just because there are questions doesn't mean anything was improper. All of the raises were approved either orally or in writing, she said. She blamed the allegations on judges' faulty record-keeping.

    The audit also questioned the amount of management leave time that Mr. Mendes accrued. He should have been eligible for 130 hours of management leave in 2008, according to the audit. Instead, he accrued 455 hours – about 12 weeks of paid time off, worth about $42,000. He was able to get the time at the beginning of the fiscal year and cash it out immediately, the audit stated.

    Ms. Lawless said her client believes he was authorized to increase his management leave by 30 hours every year.

    The audit also found that Mr. Mendes started a program that allowed him to convert unused sick leave to paid time off. Employees can't cash out sick leave, but they can cash out paid time off.

    "In effect, the cash-out option gave the CEO the ability to cash out accrued sick leave," the audit said. "Once this (paid time off) and cash-out policy took effect, the CEO began cashing out significant amounts of (paid time off)."

    From April 2006 through July 2008, Mendes cashed out 1,279 hours of paid time off worth $104,527, auditors found.

    Mr. Mendes is now working as chief financial officer for the Yolo County Superior Court. (Cal-Tax: Whether or not the pay was authorized, this is just another example of sky-high remuneration in the public sector.) (Source: The Sacramento Bee, June 16.)

  • San Mateo County Supervisor Spends Lavishly. In less than two weeks, after feasting at the Four Seasons, jetting to the Beltway and walkin' about Dixie, San Mateo County Supervisor Rose Jacobs Gibson spent $4,220 – more than any other supervisor spent in all of 2008.

    Entering into the summer, San Mateo County is preparing to cut millions from its $1.7 billion budget, and while the county's total supervisor expenses amounted to only $21,741 last year, Ms. Jacobs Gibson's latest travels abandon the image of a guardian watching over public funds.

    "If there was going to be a policy change that said we only want to spend so much money, we would cut it down," Ms. Jacobs Gibson said of her travel expenses. "But at this point, it's allowable. I have the expense and I chose to represent the county on the committees. If I didn't think it was worth it, I really wouldn't do it because I really do care about being responsible to the constituents."

    For Ms. Jacobs Gibson, traveling to conferences meant bringing San Mateo County to a wider audience. For former supervisor Jerry Hill, such conferences are "junkets."

    Mr. Hill, who was invited to attend a number of events held at various locations throughout the state by the California Air Resources Board, said he usually declined such invitations.

    "I did not go on any trips. I always call them 'junkets,' but that's just my interpretation of them," Mr. Hill said. "I frankly don't know the benefits you get from a lot of them."

    Most of Mr. Hill's expenses were spent on meals at official county business events, such as local chambers of commerce luncheons. Mr. Hill said that such meals are "important if you want to understand the county." He added: "You need to understand the people and the issues. The way we do that is to get out and do it." Supervisors Rich Gordon, Mark Church and Adrienne Tissier agreed with those comments, and all sought reimbursement for official meals.

    In contrast, Ms. Jacobs Gibson never sought reimbursement for official meals, and could not recall any specific community events she attended. Instead, she charged the county for many private meals, on more than 18 occasions since January. She treated union officials to lunch in Redwood City, and dined with elected officials in East Palo Alto, members of the Assembly, and members of her staff in New Orleans.

    Ms. Jacobs Gibson noted that it is her "style" to converse with individuals one-on-one, out of the office, rather than in "big meetings." (Source: Palo Alto Daily News, June 16.)

  • Vallejo Superintendent and Spokesman on Paid Leave. Vallejo's school board voted to place district Superintendent Mary Bull and district spokesman Jason Hodge on paid leave pending the results of an investigation for unconfirmed claims of a hostile work environment.

    Neither school employee would comment on their recent absences, and Vallejo City Unified School District Board President Cris Villanueva would not comment on the specifics of the board's action or the source for the investigation.

    Ms. Bull was hired in September 2007, and is paid $200,000 per year. Mr. Hodge is paid $100,000 per year. Both will continue to collect pay despite their leave.

    Vallejo schools are still under partial state control after the district needed a $60 million bailout in 2004 due to its fiscal collapse.

    Before coming on board with the Vallejo school district, Ms. Bull was employed as curriculum director of Carmel Unified School District, where she faced a number of verbal abuse lawsuits. (Source: Contra Costa Times, June 16.)

  • Despite Deficit, Sacramento County Sheriff's Deputies May Get Raises. Sacramento County faces a $180 million deficit, leading the county's top executive to propose laying off 521 workers, including 300 sheriff's deputies, and cutting 421 vacant positions. But The Sacramento Bee noted in a June 10 editorial: "In the midst of the budget crisis, Sacramento County is still offering its sheriff's deputies a 2.9 percent raise next year. That's less than the 6.9 percent boost originally scheduled, but a raise nonetheless. So while psychotic patients are going untreated and county workers are being laid off by the hundreds, deputies are still being offered a 2.9 percent pay raise."

    The Bee continued: "It's difficult to generate a sense of urgency about the county's financial plight when the county's deputies are being offered a pay raise. Sacramento taxpayers should be disgusted. Wall Street experts who monitor the county's handling of its finances certainly are. Last week, the credit rating service Moody's downgraded Sacramento County's credit rating from A1 to A2. The analysis that accompanied the downgrade was as illuminating as it was scathing. 'The negative outlook reflects both the circumstances in which the county finds itself and, more importantly, the fact that the county has no recent history of anything other than expedient one-time fixes to budgetary imbalances,' Moody's analysts state."

    The editorial calls on county supervisors to "demonstrate the political will to stand up to powerful constituents, especially powerful public employee unions," and reject the pay raises. (Source: The Sacramento Bee, June 10.)

  • San Diego School Officials Junket on Federal Funds. While San Diego Unified School District's schools were attempting to survive a $106 million deficit, school administrators spent more than $2,000 in federal funding for disadvantaged students to send Superintendent Terry Grier to a conference in Washington, D.C., possibly violating federal regulations that prohibit such funds from being used for lobbying.

    Several district staff and trustees who accompanied Mr. Grier enjoyed more than $550 in meals, which included a hefty tab at a posh Georgetown restaurant.

    Previously, Mr. Grier's contract limited him to a $25 meal limit. However, his contract was amended last year to allow for "reasonable out-of-pocket costs," with no specific limit. In regards to the change, Mr. Grier commented, "Have you ever tried to eat on $25?"

    The superintendent said the trip may save their district millions of dollars through their lobbying efforts to sway Governor Schwarzenegger to send stimulus money to schools. District Spokesman Bernie Rhinerson said district officials were able to build valuable relationships with legislators and their staff while in D.C., and that focusing on meal expenses was "losing the point."

    School board members Richard Barrera and John Lee Evans also have lobbied on behalf of the district, but when they traveled to Sacramento, they paid for their own meals. Mr. Barrera called the district's expenses while in D.C. "just not appropriate."

    Deputy Superintendent Chuck Morris told the Voice of San Diego: "I screwed it up. I should've have done that." Mr. Morris said he originally approved the spending thinking that the conference was related to federal funding for disadvantaged students. He said he will bill the superintendent's office to correct the error. (Source: Voice of San Diego, June 9.)

  • L.A. Non-Profit's Executives Draw Huge Salaries at Taxpayers' Expense. A recent article in the Los Angeles Times reported that executives at a Los Angeles area drug treatment facility that relies on government contracts are receiving huge salaries.

    The Tarzana Treatment Center, by far the largest user of public funds for drug treatment in Los Angeles County, draws 85 percent of its $45-million-a-year budget from taxpayers.

    Chief operating officer Albert Senella received a salary of $428,057 in 2007, well above the highest paid county employee – the medical director of Harbor UCLA Medical Center, which has a budget 12 times the size of Tarzana's. Chief executive Scott Taylor made $330,732 working 32 hours a week. Both men also collected thousands of dollars more in deferred compensation.

    Mr. Taylor is also a lawyer with a long-standing contract to provide Tarzana with legal counsel. Tax filings show the deal paid him $237,956 in 2007 – on top of his salary.

    Mr. Taylor, Mr. Senella and two other board members also have ownership stakes in six properties that Tarzana leases as its headquarters and treatment sites. In 2007, the four men collected rent of more than $2.27 million.

    The pay, they said, reflects decades of success achieved by chasing government grants and expanding services. Although the business is non-profit, Mr. Senella said, "We are allowed to make money as individuals." (Source: Los Angeles Times, June 11.)

  • Congressional Aide Stole Thousands From Taxpayers. This is a "good news, bad news" story. First, the bad news: Caroline Valdez, a former executive assistant to Congresswoman Loretta Sanchez, used her House of Representatives credit card to buy airline tickets for herself and family members, and to buy pizza and groceries for her personal use. She also forged her boss' signature in order to give herself $6,000 in bonus salary, and she inflated the cost of her taxi fare reimbursements in order to make a profit. This went on for two years.

    Now, the good news: On May 18, she pleaded guilty in federal court. She faces up to six months in prison when she is sentenced in September. (Source: Associated Press, May 18.)

  • Sacramento Bee Chastises UC for Lavish Spending. The Sacramento Bee, in a strongly worded editorial on May 13, rebuked the University of California for lavish spending on administrative salaries.

    According to The Bee:

    "The current chancellor at UC Davis, Larry Vanderhoef, earns a base salary of $315,000 a year. The just-named new chancellor, Linda Katehi, will earn a great deal more, $400,000. She also will get a $100,000 relocation allowance, moving costs, a car allowance of almost $9,000 a year and free housing.

    "On top of Katehi's pay is a generous package for Vanderhoef, who is returning to the faculty. He will take a one-year sabbatical to develop a biology course and write a book about UC Davis.

    "Administrative salaries have become so much higher than faculty salaries that administrators find it difficult to return to teaching after an administrative stint. So instead of giving Vanderhoef a faculty sabbatical salary in his year off, UC will give him his executive salary of $315,000 (plus an office and travel budget of $39,000 and an assistant)."

    The editorial concluded: "The Board of Regents needs to step up and establish a pay structure that serves the state's interest in strong academic institutions, not the personal financial interests of administrators. UC executive pay is the next bubble that needs to burst in California." (Source: The Sacramento Bee, May 13.)

  • Los Angeles School District Pays Teachers Not to Teach. In an excellent investigative piece published May 6, the Los Angeles Times reported that the Los Angeles Unified School District is paying approximately 160 teachers and other school staff not to teach, giving them their full pay while allegations of misconduct – including alleged sexual contact with students, harassment, theft and drug possession – are resolved. "All told, they collect about $10 million in salaries per year – even as the district is contemplating widespread layoffs of teachers because of a financial shortfall," the Times reported.

    The school district refers to these employees as being "housed," and typically places them in district offices where they are required to show up during regular school hours, but are not given any responsibilities. They have the same schedules as teachers, with 30-minute lunch breaks and school holidays off, but perform no work.

    This situation was created by an agreement between the district and the teachers' union. Under the agreement, the "housed" teachers cannot be assigned tasks such as making photocopies, stuffing envelopes or mowing a school's baseball field.

    One of the teachers interviewed by the Times complained that he has been "housed" for more than two months, but has not been informed why he was removed from his ninth-grade teaching duties.

    In a case highlighted by the paper, teacher Matthew Kim has been "housed" with pay and benefits for seven years. The Times noted that the 41-year-old, who suffers from cerebral palsy, "has been accused of inappropriate behavior with two aides and six students, including groping them with his left arm, the one limb over which he has limited control." As suits, countersuits and appeals have been winding through the district's bureaucracy and the courts, the district has spent more than $2 million in salary and legal costs in this case alone. Two weeks ago, the school district decided that Mr. Kim would be allowed to stay home – rather than report to a district office – and still will be paid. (Source: Los Angeles Times, May 6.)

  • Schools Spent $3.7 Million on Superintendent "Buyouts." School districts throughout the state have spent $3.7 million in recent years to pay superintendents to leave, according to data compiled by Assemblyman Tony Mendoza. The Democratic assemblyman has introduced legislation, AB 164, to eliminate "buyout" provisions from superintendents' contracts. He cited 13 buyouts that have been approved recently, in just about every region of the state. So far, the bill has received very little support from the legislator's colleagues, and it appears to be dead for the year.

  • San Jose Paying Big Bucks to Employees. Cash-outs of sick leave by San Jose government employees cost taxpayers an additional $7.8 million in 2008, up from $5.5 million in 2007. The San Jose Mercury News notes that this is one-tenth of the city's projected $78 million deficit.

    City officials say the benefit exceeds what other jurisdictions are providing, and far exceeds private-sector pay-outs. Employee Relations Director Alex Gurza said, "We are the most generous in sick leave pay-outs among cities."

    Some examples:

    • Former San Jose Deputy Fire Chief James H. Carter got an extra $285,000 last year – a check that exceeded the total pay of any of the city's top-ranked officials.

    • Former Assistant Police Chief Charles Younis, who now serves as chief in Los Altos, collected more than $243,000 on top of his salary and pension. Two other San Jose police officials last year took home checks for more than $200,000 each.

    Further, according to the Mercury News, the number of San Jose city employees whose total earnings topped $200,000 nearly doubled from 2007 to 2008, from 37 to 66. In addition, the number of city employees whose total earnings topped $100,000 totaled 2,663 – more than a third of the city's total work force. (Source: San Jose Mercury News, April 12 and 14.)

  • Sacramento Flood Control Agency Considering Pay Raises of 127 Percent. The Sacramento Bee reports: "Despite the economic crisis that has spurred drastic cuts in state and local government spending, the Sacramento Area Flood Control Agency plans to boost salaries for professional employees by up to 127 percent in the coming fiscal year." The agency's board had the pay hikes on its April 16 agenda as a "consent" item, indicating there would be no debate or dissent. However, The Bee's story may have changed things, as the board ended up debating the issue for nearly two hours and then postponing a decision. The board will take up the issue at its May 7 meeting, after members consider alternatives.

    Executive Director Stein Buer told The Bee that the raises are needed to ensure fair treatment of employees and to maintain the agency's ability to attract employees. (Cal-Tax: In the current economic climate, are employees really considering leaving their steady jobs? Does the agency need to worry about recruitment at a time when government entities should be scaling back rather than growing?) Mr. Buer's salary already has been awarded a raise that took his salary from $153,254 to $210,000 – a 36 percent increase.

    The Bee's exclusive story on the raises also indicated that "in most cases under the proposal, employees would change job titles but retain the same duties." In one instance, the agency's director of planning would receive a 67 percent raise – to $186,175 – even though his job recently was split in two to ease his workload.

    Supporters of the salary increases pointed to a salary-comparison study performed by private consultants. The consultants, who were paid $17,000 for their work, did not include benefits in their comparisons.

    State taxpayers fund nearly 75 percent of the agency's $245 million annual budget.

    Comments left on the newspaper's website indicated that many taxpayers are less than pleased about the raises. Here is a representative comment: "Yeah, with double-digit unemployment I'm sure finding people to fill positions is a real hardship. More public employee logic. This is a major contributor to what got us here. It goes on in EVERY department. Fire them all and take back their retirement. That would send a strong message to the rest of entitlement class public employees. But only CEO types are greedy, right?" (Source: The Sacramento Bee, April 16.)

  • Government Workers Doing Far Better Than Private-Sector Employees, Study Finds. USA Today reports: "The pay gap between government workers and lower-compensated private employees is growing as public employees enjoy sizeable benefit growth even in a distressed economy." According to the latest data compiled by government workers at the U.S. Bureau of Labor Statistics, public employees earned benefits worth an average of $13.38 an hour in December 2008, while private workers got benefits worth just $7.98 an hour. Overall, total compensation for state and local workers was $39.25 an hour – $11.90 more than in private business. That $11.90 pay gap has grown from $11.31 the previous year. Last year, government benefits rose three times more than those in the private sector. (Source: USA Today, April 9.)

  • Highly Paid Government Employees Mushrooming in Stanislaus County. Local governments in Stanislaus County do not have a substantial tax base to support government services, but they nevertheless have been generous to their employees. In Modesto, the number of city employees earning $100,000 or more has doubled in the last two years, from 98 to 200. In Turlock, the number earning $100,000 or more tripled from 17 to 53.

    The city of Ceres, with a population of 34,000 in the 2000 census, had the highest paid city manager in the county in 2008. Brad Kilger makes $203,266 – about $16,000 more than Turlock's city manager. Stanislaus County had 235 employees earning $100,000 or more in 2008.

    During the revenue boom of 2006 and 2007, these jurisdictions believed they could afford to pay these amounts. Now, with tax revenue plummeting, they are in fiscal trouble. Modesto City Councilman Brad Hawn said everything is being looked at, including furloughs and reductions in salaries. (Source: Modesto Bee, March 8.)

  • Provision Authorizing Extra Pay for L.A. Judges Is Slipped Into Budget. Without any public hearings or notification, legislators slipped a huge perk for Los Angeles judges into the state budget. The just-approved budget includes language authorizing Los Angeles County to provide extra payments to L.A. Superior Court judges – a formal authorization of a practice that has been going on for years, but was ruled illegal last year by a state appellate court.

    The payments, totaling $47,726 per year for each judge, on top of their $178,789 salary and very generous health and retirement benefits, were ruled illegal because the state sets salaries for judges – a provision intended to prevent judges from being bribed by or beholden to local officials. With the new legislation giving the state's blessing to the payments, the Los Angeles County officials can legally continue giving the extra pay.

    Political columnist Dan Walters, writing in The Sacramento Bee, said: "One wonders how Los Angeles County's taxpayers would have reacted had they known that the Legislature was approving extra judicial payments while the county's supervisors are staring at a $200 million budget deficit and contemplating steep cuts in services, especially those to the poor and unemployed, in a county with a jobless rate of nearly 11 percent." (Source: The Sacramento Bee, March 4.)

  • With Unemployment Rising, Turlock Water District Gives Salary Increases. The Turlock Irrigation District Board of Directors has rewarded its top management with $492,000 in salary increases, less than two months after stiffing its customers with a rate hike to offset a $57 million budget deficit. Board Member Rob Santos, who cast the lone "no" vote, said: "It is a small drop in the bucket of the overall budget of TID, but it's pretty symbolic in these economic times. People are losing their wages, benefits and jobs." (Source: Turlock Journal, March 4.)

  • Governor's Office Checking on Travel Expense Claims. Victoria Bradshaw, the governor's new cabinet secretary, is looking into some alleged mistakes in travel claims of several state officials. For example, Carrie Lopez, who heads the Department of Consumer Affairs, reportedly billed travel costs for a trip that included a Justin Timberlake concert. She said she thought she was going to have a meeting with Sempra Energy, but apparently the meeting was not held. She also reportedly billed for some meals when she was in Los Angeles, even though she received the meals for free. Ms. Lopez, who is a Democrat, was appointed to the $143,000-a-year post of department director in 2007. (Source: San Francisco Chronicle, February 28.)

  • Riverside County Officials Discuss Dire Finances, Then Buy Expensive Vehicles With Taxpayers' Money. The Riverside Press-Enterprise reports: "Riverside County Supervisor Marion Ashley warned in October that no one in county government would be immune from dire budget cutbacks. One week later, he got himself a 2009 Toyota Highlander Hybrid that cost taxpayers almost $53,000, county documents show."

    The paper also reported that Supervisor John Tavaglione, who has repeatedly called for county agencies to cut spending, "had the county buy him a 2008 GMC Yukon hybrid that cost nearly $54,000 with a rear-seat DVD player, Bose speakers, leather seats and other features." Two of the supervisors drive vehicles that do not meet the minimum fuel-efficiency guidelines that the supervisors themselves recently approved – a requirement that county vehicles get at least 25 miles per gallon of fuel.

    Not all supervisors have splurged on new vehicles, however. Supervisor Bob Buster, who drives a 2002 Chevrolet Impala, said: "To be using public funds to get a big impressive status-symbol car, I think that is the wrong message to send out at this time. We need to be saving that money in these hard times." (Source: Riverside Press-Enterprise, February 23.)

  • Firefighters Return Raises Received Based on Fake College Degrees. Seven firefighters in the American Canyon Fire Protection District (in Napa County) have indicated they will return pay raises they received after obtaining fake college degrees. Four other firefighters received raises based on phony degrees, but no longer work for the district, and may not have to return the money. The fire district and the firefighters' union agreed that the public employees would pay back more than $37,000. Meanwhile, the city spent $43,000 on one investigative report and additional funds on another report and attorney fees. The firefighters paid $499 each for online degrees from Almeda University, based on "life experiences" rather than any classes or additional training. (Source: Vallejo Times-Herald, February 26.)

  • Community College Chancellor May Get 18 Percent Raise, Retroactive to July. Budget problems? What budget problems? The Contra Costa Community College District is scheduled to vote January 28 on whether to give the district's chancellor an 18 percent raise, increasing her current $209,000 salary to $247,000. The raise would be retroactive to July 1 of last year. The chancellor, Helen Benjamin, also receives generous fringe benefits as compensation for overseeing the three-college district. The district's board members said the raise is intended to keep Ms. Benjamin from leaving for a higher-paying job, and they said her salary is lower than nearly every other Bay Area chancellor's pay. (Source: Contra Costa Times, January 20.) (Cal-Tax: The district's logic makes no sense. If the pay is intended to keep the chancellor there, why is the raise retroactive to a period of several months that she already worked? It also is troubling when taxpayer-funded agencies get into bidding wars, real or imagined, because the taxpayers will lose that battle every time.)

  • UC Davis Turns Private-Sector Food Servers Into Government Employees. The University of California at Davis has chosen to make a transition that has turned hundreds of private-sector workers into UC employees, adding to the university's spending for salaries and fringe benefits. On January 2, nearly 200 food-service workers and 400 student employees received their first paychecks from UC Davis, having transitioned from working for Sodexo Inc., which continues to have a four-year contract to manage the campus' general food service program. The contract calls for the company to be paid approximately $23 million a year.

    In 2006, some workers and the American Federation of State, County and Municipal Employees complained about a lack of union representation for the workers, and said the employees deserved better pay and health care benefits. The next year, UC Davis and Sodexo agreed to provide higher pay and fringe benefits, thereby increasing the cost to taxpayers at a time when the state budget is far out of balance.

    On January 14, the UC Board of Regents announced a plan to reduce enrollment of new California resident freshmen by 2,300 students systemwide for the 2009-10 academic year in order to "cope with insufficient state funding." (Sources: The Sacramento Bee, January 17; University of California Board of Regents, January 14.)

Pensions and Benefits

  • Courts Hand Out Raises and Perks as Courthouses Close. The Daily Recorder of Sacramento reports: "Despite fiscal woes so deep courthouses are closing once a month, the Administrative Office of the Courts has given out hefty raises, promotions and extra paid vacation time to employees to compensate them for furlough days." From February 2009 to July 2009, the AOC elevated nearly 80 employees, and raised their pay as much as 31 percent, ignoring its self-imposed freeze on promotions.

    From July 2008 through July 2009, the agency's payroll costs grew 6 percent, and now total more than $4.2 million a year. (Source: The Daily Recorder, December 10.)

    Cal-Tax Recommendation: Court officials should reexamine their priorities. All available money should be used to keep the courts open to ensure timely justice for Californians.

  • Stem Cell Research Agency Triples Ex-Lawmaker's Salary. Directors of the California Institute of Regenerative Medicine – the agency formed by voters when they approved the stem cell research bond in 2004 (Proposition 71) – voted this month to triple the salary of former state lawmaker and California Democratic Party Chairman Art Torres. Mr. Torres was hired in March to lead the agency on a half-time basis for $75,000 a year, and he now will work 80 percent of the normal work week for $225,000 per year. He will serve as the agency's director of government relations. (Source: The Sacramento Bee, December 11.)

    Cal-Tax Recommendation: When Californians approved spending $6 billion for stem cell research bonds, they were voting for more medical research, not more highly paid positions for former lawmakers. Leaders of this agency should reread the ballot arguments presented to voters, and should focus their efforts on fulfilling the promises made to voters.

  • City of Oakland to Pay $1.75 Million to Compensate Cops for Dressing Time. The city of Oakland is expected to pay $1.75 million in legal fees and will offer vacation time and money to officers who claimed in a lawsuit that they had not been paid for the time they spent putting on their uniforms.

    Under a tentative agreement reached earlier this month, the city will cover the officers' legal fees, and more than 500 officers will receive an average of 130 vacation hours each. About 60 retired officers will be paid $3,500 each. The agreement will end a three-year legal battle over the issue of whether officers must be paid for the time spent putting on and taking off their uniforms.

    The city could have been liable for as much as $20 million if a jury had ruled in the officers' favor, according to the officers' lawyer.

    The Oakland City Council voted 6-2 in a closed session to approve the settlement, and is expected for formally ratify the deal in January. (Source: San Francisco Chronicle, December 11.)

    Cal-Tax Recommendation: Local governments should learn from this case, and should make sure their contracts specify that employees will not be paid for time spent changing their clothes.

  • Your Proposition 98 Dollars at Work: San Jose Community College Chancellor Gets Huge Benefits as Class Offerings Shrink. As taxpayers know all too well, education funding doesn't always make it into the classroom. The San Jose Mercury News reports that Rosa Perez, the outgoing chancellor of the San Jose/Evergreen Community College District, has enjoyed a 48 percent pay hike in just four years, and currently receives $293,000 per year, plus a $147,000 bonus for staying on the job for four years.

    That's not all. The paper, citing documents uncovered by KGO-TV, reported: "She also has charged the district and its foundation for lavish perks that included overnight stays at San Jose's luxury Fairmont Hotel, a tour of El Salvador, and airfare to Scotland. Perez's partner, Bayinaah Jones, a district administrator hired two months after Perez, has seen her salary climb 35 percent to $122,688."

    The Mercury News noted that the chancellor's spending was "in contrast to the modest goals of the community college system." For about $800, a student can earn a certificate in cosmetology or dental hygiene. Ms. Perez, however, spent twice that much in district money at the Bombay Company to furnish an office in her Bernal Heights home in San Francisco. (Cal-Tax: Ms. Perez lives in San Francisco and oversees a college in San Jose – and she billed the taxpayers for overnight stays in San Jose? Seriously?)

    She also spent $3,700 in district funds for a painting – now hanging near the Evergreen Valley College student center – showing Latinos in a crowded boat, using the American flag as a knapsack.

    While the administrative spending was increasing, budget cuts forced the cancellation of 18 classes at Evergreen and 20 classes at San Jose City College. Funding was cut for programs for disabled students, low-income students and working parents.

    Ms. Perez recently announced that she will be retiring soon for health reasons. The community college district said it has hired an outside investigator to review Ms. Perez's spending. The district board's September response to a grand jury report on the questionable spending indicates that taxpayers shouldn't expect much action even after the investigation. In its rebuttal to the grand jury report, the board wrote: "The Board of Trustees has reviewed the employment agreement with its chancellor and sees no areas where reductions are appropriate." (Source: San Jose Mercury News, November 23.)

  • Santa Clara City Attorney Gets $242,000 With Resignation. Santa Clara City Attorney Helene Leichter will pocket an extra $242,828 upon her resignation, effective January 1, thanks to the largesse of the Santa Clara City Council. She also will receive $18,034 for unused vacations and sick pay, and will remain on paid personal leave (thus maintaining benefits and accruing time toward a government pension) through the end of this year.

    Santa Clara Mayor Pat Mahan said, "It was a simple letter of resignation and we accepted it, of course." There was no explanation why the council agreed to give away hundreds of thousands of dollars of taxpayer money. (Source: San Jose Mercury News, October 31.)

  • Placer County Spends More Than $1 Million on Buyouts. Placer County has spent more than $1 million in the past four years on severance packages for local government and school officials.

    The severance deals started in 2005, with a $500,000 payout that the Sierra College board agreed to give departing President Kevin Ramirez, the Placer Herald reported. Recently, Roseville City Manager Craig Robinson was given $390,000 as his parting gift, while Auburn Recreation District Administrator Alain Grenier was given $118,000 on his way out the door in 2006. Colfax Elementary School District Superintendent John Ray received a severance package worth an estimated $73,000 this year. (Source: Placer Herald, November 10.)

  • State Spends Billions in Overtime. The state auditor reports that some state employees receive more than $150,000 a year in overtime, and the state has paid out more than $2.1 billion in overtime during the past five years. This figure does not include overtime paid to corrections employees at prisons staffed around the clock. The state auditor's report said excessive overtime was earned by a relatively small number of employees at state mental hospitals and developmental centers, which "may compromise their own and patients' or consumers' health and safety."

    The audit found that 19 of the 489 nurses at the Napa State Hospital averaged $78,000 in regular pay and $99,000 in overtime. At the Sonoma Developmental Center, 27 of the 430 employees averaged $41,000 in overtime on top of their average $33,000 in regular salary. (Source: Associated Press, October 21.)

  • Federal Pension Perk Will Cost Taxpayers Hundreds of Millions. San Jose Mercury News columnist Patty Fisher reports that buried in the $680 billion military spending bill approved by Congress is a provision that will let federal government workers count unused sick time toward their pensions. She explains: "For many years, federal workers accrued 13 paid sick days a year, considered as time worked for the purpose of calculating pension benefits. If you worked 30 years and called in sick four days a year, you would have 270 unused days when you retired – more than a year in work days, which would count toward your time of service and increase your pension payments for life."

    Ms. Fisher continues: "That provision was removed in 1986 in return for other improvements to the retirement package, such as an employer-matched 401(k). But eventually workers realized what they had lost, and they wanted their sick time credit back."

    The perk will cost taxpayers $343 million over 10 years, and more after that, according to the Congressional Budget Office.

    The National Active and Retired Federal Employees Association lobbied hard to get the perk included in the military spending bill. (Source: San Jose Mercury News, October 27.)

  • Orange County Hires Back Hundreds of Workers Who Are Receiving Pensions. In Orange County, complaints are being raised over the county's widespread practice of hiring retired county workers to return and perform part-time work at the same time they are collecting taxpayer-funded pensions. According to a recent county audit, there were 212 working retirees in the fiscal year that ended in June. That figure includes only those people whose pensions come from Orange County employment – the Orange County Register's OC Watchdog noted that it does not include people like Sheriff Sandra Hutchens, who retired from Los Angeles County before taking her job in Orange County.

    The law limits the number of hours a pension recipient can work for the county, but last year's audit revealed that 12 employees exceeded the limits.

    A county official said the returning workers can actually save the county money, because the county does not have to pay retirement or medical insurance costs for people who already are receiving pensions and insurance benefits. But critic Nick Berardino believes the double-dipping is bad for the county and encourages cronyism.

    Supervisor John Moorlach said Mr. Berardino shouldn't be too critical of the system. He said that Mr. Berardino, as general manager of the Orange County Employees Association, helped negotiate a contract that lets the union's members retire at the age of 55 with a sizeable pension. Those young retirees still have many years of work left in them, and the county can use their experience, Mr. Moorlach said. (Source: Orange County Register, September 15.)

  • San Jose Giving Low-Income Home Loans to Top City Officials. If you are a big-shot working for the city of San Jose, you may be eligible for a low-interest home loan. Currently, the city has seven low-interest loans outstanding, worth a total of $1.75 million.

    In August, the City Council had to forgive an "underwater" mortgage when former police auditor Barbara Attard left city employment and had to repay the loan. She had a $250,000 city loan, granted in 2004 when property values were higher, with 2.86 percent interest. The city doesn't believe any other loans are "underwater."

    City Councilman Pete Constant urged the council not to make anymore loans, and along with Councilwoman Nora Campos, he voted "no" on a settlement with Ms. Attard. They were outvoted, however, and the city forgave the loan, took over the property and agreed to pay $94,000 on the property's mortgage.

    According to the San Jose Mercury News, redevelopment director Harry Mavrogenes, an existing loan-holder, "already lived in San Jose and had been working for the city for nearly a decade when he used a city loan in 2006 to buy a $1.5 million spread near the Almaden Golf and Country Club." (Source: San Jose Mercury News, September 20.)

  • Union Outsources Picketing as it Protests Outsourcing. The union representing Sacramento County engineers, engineering technicians and technical inspectors has set up picket lines to protest the county's use of private-sector consultants on a construction project at Sacramento International Airport. But the union hasn't been practicing what it preaches, The Sacramento Bee reports. Two bargaining units have been outsourcing the picketing by hiring homeless people to carry signs and walk the picket lines. On September 21, about 10 homeless people were picketing at the airport, carrying signs printed by the bargaining units, the paper reported. "The homeless protesters seemed pleased for the opportunity to picket," The Bee stated. "Carmen Bray said she and her co-protestors are getting $40 a day plus lunch for about five hours of work." (Cal-Tax: Are 1099s being filed for these independent contractors? Should the homeless people form a union to demand better pay, more rest breaks and medical insurance coverage?) (Source: The Sacramento Bee, September 22.)

  • Water District Prepares Pension Hike Despite Investment Losses. The Orange County Register reports: "At a time when generous public employee pensions are generating enormous heat (among the less-well-pensioned populace, at least), the giant Metropolitan Water District of Southern California is poised to hike employee pensions by 25 percent. In coming weeks, Met's board of directors is slated to vote on hiking its pension formula from 2 percent at age 55, to 2.5 percent at age 55."

    The paper notes that this change means that a person who worked at the water district for 25 years would receive 62.5 percent of his or her salary, every year until death, instead of the current 50 percent. This would cost the district approximately $70 million.

    "It happens at a time when water rates are rising significantly, and when Met's pension investments in CalPERS have tanked at least $405 million, bringing Met's 'unfunded liability' to something very close to a half-billion dollars," the Register stated. (Source: Orange County Register's "OC Watchdog," August 31.)

  • SLO County Road Official Resigns After Being on Paid Leave for Three Months. After spending almost three months on paid administrative leave while a mysterious investigation took place, San Luis Obispo Road Supervisor Randy Ghezzi has resigned. According to a media report, Mr. Ghezzi had occupied one of the top spots in the county's public works department, and was under investigation for something described to the public only as a "personnel matter." The county worker was paid more than $19,000 while on leave.

    Another road supervisor, Max Keller, remains on leave pending an investigation into an undisclosed matter. Mr. Keller has received more than $12,000 since he was placed on leave June 1. (Source: San Luis Obispo Tribune, August 31.)

  • Some Teachers Get Pay Raises While Colleagues Get Laid Off. The Sacramento Bee reports that some teachers in Sacramento are getting pay raises, even as other teachers are being laid off due to funding problems. The paper explains: "Most teachers in the Sacramento area will receive raises when they return to school. These increases are automatic 'step' increments, and many teachers don't consider them raises. … Those raises will cost school districts millions as education budgets continue to shrink." Sacramento City Unified laid off 281 teachers in May and is discussing furloughs and salary freezes for the 2010-11 school year. Still, step increases costing $2.5 million already have been approved. Elk Grove Unified laid off seven teachers in May, and will issue $5.2 million in raises to teachers and counselors for the upcoming year. (Source: The Sacramento Bee, August 10.)

  • Legislature Added 336 Workers to Payroll, Gave Pay Raises as Budget Was Slashed. Despite the state's budget problems, the Legislature has been hiring new workers and giving out pay raises to existing employees, according to two newspaper reports.

    "While state lawmakers were contemplating deep cuts to education, children's health care and welfare payments, the legislators were also busy restocking their offices with new employees this year," the San Francisco Chronicle found. The paper reported: "State lawmakers hired 336 employees – about 15 percent of the Legislature's workforce – between January and the end of July, the (Legislature's) records show. The payroll of the new hires totals more than $1.2 million a month or about $14.4 million a year. The positions include a student intern in the Senate mailroom who makes $1,500 a month and a lawmaker's former chief of staff returning as a consultant with a $125,004 annual salary. Some of the newcomers work for committees that have not held a hearing this year."

    The Associated Press reported that at least 87 Assembly staffers recently received pay raises totaling more than $430,000 on an annualized basis, and nine staffers in the Senate received raises worth $152,000 a year.

    During the first six months of the year, Assemblywoman Lori Saldana awarded a total of $41,000 in pay increases to her staff – the highest total increase for any member of the Legislature. That included 20 percent raises for three of her employees and a 15 percent increase for her chief of staff. (Cal-Tax: Will this become an issue in Ms. Saldana's campaign for the San Diego County Board of Supervisors, where she is attempting to unseat a Republican incumbent?) (Sources: San Francisco Chronicle, August 9; The Associated Press, August 18.)

  • A Million Dollars for San Diego Pension Fund Official. A majority on the San Diego County pension fund not only agreed to pay the next person hired as chief investment officer more than $1 million, but they tried to prohibit discussion. Board member Garry Sobeck acted to stifle discussion by an immediate call for the question. Board member David Myers objected, saying, "I think we should continue to discuss it because we're talking about a huge amount of money." He was outvoted 6-3, with County Supervisor Dianne Jacob and Treasurer/Tax Collector Dan McAllister joining him. The three also voted against the pay package.

    David Deutsch, the prior chief investment officer, was paid $209,000 a year. The board also met in closed session to discuss who will get the million-dollar job, but later reported that no action was taken. (Source: San Diego Union-Tribune, August 21.)

  • Community Colleges Hand Out Millions in Raises While Eliminating Classes. The Sacramento Bee reports that the California Community College system has been handing out pay raises even as it has been "cutting thousands of classes, reducing hours for part-time teachers and forcing students to wait longer to get courses they need to graduate, transfer or get jobs." The Los Rios Community College District, in Sacramento, is cutting 630 class sections this year, but still plans to spend more than $3 million to give employees their annual pay raises of 2 percent to 4 percent based on time on the job. Community colleges in Rocklin, Woodland, Marysville, Los Angeles, Orange County and San Diego also are handing out pay raises. (Source: The Sacramento Bee, July 30.)

  • Modesto School Administrator Paid $190,000 to Resign. On August 3, Modesto City Schools trustees publicly released the details of a settlement with the district's former second-in-command, showing that she will be paid $190,000 to resign.

    As part of the settlement, Debbe Bailey, who served as deputy superintendent of business services for eight years before she was placed on paid leave in April, agreed not to sue the district.

    The administrator's problems with the district began after school officials uncovered e-mails between Ms. Bailey and teachers' union officials. Some of the e-mails were critical of one of the school superintendents, who called the conduct disloyal.

    Ms. Bailey's last day was July 31, but she will remain on unpaid leave through July 2010 or until she can settle her retirement credits. The district will pay for the settlement through funds in its self-insurance pool for liability claims, officials said. (Source: The Modesto Bee, August 4.)

  • Public Pension Officers Urged to Junket. San Jose's pension officials were "strongly encouraged" to pack their bags, trek about the state, and visit fund managers and investment properties as often as possible, the San Jose Mercury News reports.

    David Bacigalupi, chair of the seven-member board that oversees the city's police and fire pensions, said in a recent letter that "due diligence" trips are "very informative," and help board members fulfill their role as trustees. However, such trips have been the main focus of critical audits on the city's pension system.

    In August 2008, an audit documented cases of over-billing pension funds for ineligible travel expenses, such as $6,300 in excessive meals and costs that officials never incurred. The audit also found that from July 2005 to February 2008, officials failed to document $50,000 in travel reimbursements.

    Since the audit report was released, several pension board members with questionable travel expenses are no longer serving on the board, and pension officials' travel has been limited.

    Before the August audit, the San Jose Mercury News reported that during business trips, city pension officials often stay in $400-a-night luxury hotels, while nearby hotels cost half as much.

    During such trips, fund managers socialized with trustees to "develop personal relationships with trustees that will then carry the money-management firm through bad periods of performance," said Retirement Director Russell Crosby, who posts the board's travel plans and expenses online.

    Mr. Crosby also noted that as relationships develop between fund managers and pension officials, it makes it "very difficult to terminate the money manager, where a professional staff would look at the manager and say, 'You're under performing, you're out of here.'"

    Mr. Bacigalupi has a long history of excessive travel reimbursements, so much so that when the San Jose City Council appointed him in January, Councilman Pete Constant cautioned the council about his travel expenses. Prior to his appointment as chair of the pension board, Mr. Bacigalupi served on the board from 1994 to 2002, during which time he traveled to Ireland in 1996 at a cost of $8,500, twice to Hawaii in 2000 at a cost of $7,600, and to New York and London in 2001 for $3,280.

    With the recent market crash and recession, San Jose's city employee pension system has lost more than $1 billion, most of which is expected to be made up through San Jose's operating budget.

    On June 4, the pension trustees failed to approve a motion to limit travel, and the Mercury News said the trustees "appeared unlikely" to do so when they resume discussion of the issue at their next meeting. The motion to limit travel failed on a 3-3 vote, with one trustee absent. (Source: San Jose Mercury News, June 2 and June 4.)

  • Thousands of Retired Government Workers Receive Six-Figure Pensions. An Orange County Register examination of the state's pension records found that 4,817 of the 476,000 state and local government retirees in the system make more than $100,000 in pension income, and 24 have pensions in excess of $200,000.

    Critics cited by the paper noted that many of the high-dollar pensions are going to managers who shepherded large pay raises for their employees through the political process, and then collected raises of their own. Of the 351 Orange County retirees who make more than $100,000 in retirement, nearly two-thirds were public safety workers, the newspaper reported.

    Some highlights of the Register's findings:

    • The 5.5-square-mile Los Angeles County city of Vernon, population 110, paid a politically connected insider, Bruce Malkenhorst Sr., $600,000 a year to serve in six different capacities at once, spiking his pension to $499,674 – the highest pension in the state's system. Mr. Malkenhorst is currently fighting a criminal indictment charging him with embezzling $60,000 for such things as massages.

    • Generous years-of-service clauses allow officials to ring up huge pensions; then retire and take another government job while drawing the pension. An example is former Anaheim City Manager Jim Ruth, who retired in 2001 on a pension of $219,045, then went on to serve another year as a consultant to the city for $192,000. Mr. Ruth later did a stint as Orange County's chief executive and, currently, is the county sanitation district chief. His annual salary is $225,000, but between retirement and salary, he makes $444,000.

    • Retirement deals often are used as escape hatches when officials run into trouble. For instance, Art Simonian, 28-year city manager of Yorba Linda, was suspended in August 1999 amid accusations by the City council that he doled out $600,000 in unapproved bonuses to himself and others. After a bitter 10-month feud, he agreed to resign with $200,293 in severance. He continues to receive $173,204 in retirement pay.

    (Source: Orange County Register, May 15.)

  • Sacramento Managers Get Huge Payouts for Unused Sick Leave. Sacramento County employees who work in management positions are given a special perk that is not enjoyed by rank-and-file workers or many private-sector workers: they are allowed to bank unused sick days and cash in the unused days when they retire.

    From January 2008 through March 2009, the county paid $1.9 million to retiring managers for unused sick leave, The Sacramento Bee reported. A former water quality manager received a $126,000 payout, while the former chief deputy sheriff got $114,000.

    Some former managers defended the practice, saying they are at-will employees who put in long hours but do not receive overtime pay. Critics of the system pointed out that managers are allowed to take "management time" off, with pay, ostensibly in recognition of the long hours they work, and the county does not keep records of how much "management time" is used. Thus, under the current system, managers can use "management time" when they are sick, so they can keep their unused sick days in the bank, accruing for a big payout at retirement. (Source: The Sacramento Bee, May 7.)

  • Union Owes State $1.3 Million for Abuse of Leave Time, Auditor Reports. In September 2005, the state auditor reported that the Department of Corrections did not track the total number of hours available in a rank-and-file release time bank composed of personal leave hours donated by members of the California Correctional Peace Officers Association for union representatives to use when conducting union business. The investigation identified 10,980 hours that three union representatives used but that the department failed to charge against the time bank from May 2003 through April 2005. Evidence indicated the state paid for those hours through its regular payroll, at a cost of $395,256.

    The auditor said: "Moreover, Corrections has not attempted to obtain reimbursements for the hours the three union representatives spent conducting union activities from April 2005 through January 2006. This failure resulted in an additional cost to the State of $185,546. As a result, the State unnecessarily paid a total of $580,802 for union leave hours from May 2003 through January 2006."

    The auditor said the department began to charge union leave for the hours the three union representatives spent working on union activities beginning in February 2006. However, union leave hours, unlike time-bank hours, must be reimbursed to the state and must include both salary and benefit costs. In January 2009, the department reported that it had submitted invoices to the union totaling $753,460 for the union representatives' work on union activities from February 2006 through December 2008; however, as of the end of December 2008, the department had not received payments on any of these invoices.

    "Therefore, Corrections has either failed to account for or to recover any reimbursements for hours that the three representatives used to conduct union activities from May 2003 through December 2008," the auditor concluded. "These unrecovered reimbursements cost the State a total of $1,334,262." (Source: California State Auditor Report I2009-1, April 2009.)

  • San Jose Paying Big Bucks to Employees. Cash-outs of sick leave by San Jose government employees cost taxpayers an additional $7.8 million in 2008, up from $5.5 million in 2007. The San Jose Mercury News notes that this is one-tenth of the city's projected $78 million deficit.

    City officials say the benefit exceeds what other jurisdictions are providing, and far exceeds private-sector pay-outs. Employee Relations Director Alex Gurza said, "We are the most generous in sick leave pay-outs among cities."

    Some examples:

    • Former San Jose Deputy Fire Chief James H. Carter got an extra $285,000 last year – a check that exceeded the total pay of any of the city's top-ranked officials.

    • Former Assistant Police Chief Charles Younis, who now serves as chief in Los Altos, collected more than $243,000 on top of his salary and pension. Two other San Jose police officials last year took home checks for more than $200,000 each.

    Further, according to the Mercury News, the number of San Jose city employees whose total earnings topped $200,000 nearly doubled from 2007 to 2008, from 37 to 66. In addition, the number of city employees whose total earnings topped $100,000 totaled 2,663 – more than a third of the city's total work force. (Source: San Jose Mercury News, April 12 and 14.)

  • After Reports on Car and Pension Spending, Riverside County Asked to Release Records. The Riverside Press-Enterprise reports: "One of Riverside County's largest unions requested three years of county spending records Tuesday after criticizing some supervisors for driving costly cars, at taxpayer expense, and the board for almost granting a $15,000 annual compensation increase to County Executive Officer Bill Luna."

    "While we sincerely hope that these recently revealed expenses were an anomaly, this episode raises serious concerns about what other excessive expenses county supervisors and the county executive may have incurred," a letter from the Service Employees International Union said. "The only way to be sure, and to assure the people of Riverside County that you are safeguarding our precious resources, is for you to immediately release all records of your county expenses and spending for at least the past three years."

    Union representatives mentioned a newspaper article that revealed the county had purchased SUVs costing more than $50,000 each last year for Supervisors John Tavaglione and Marion Ashley.

    They also pointed to a situation earlier this month in which a large pay raise for Mr. Luna was buried deep in an 88-page resolution that was described as a cost-cutting plan. The resolution primarily dealt with mandatory furloughs, cuts to other officials' retirement plans and suspension of pay raises, but included was a provision to boost Mr. Luna's retirement account by approximately $15,000 a year (he currently is compensated with a $275,000 salary, plus generous benefits including contributions to his retirement account). After newspapers reported on the proposed retirement fund boost, Mr. Luna asked that it be removed from the resolution. (Source: Riverside Press-Enterprise, April 14.)

  • Kern County Taxpayers Paying Part of Teachers' Union President's Salary. Taxpayers in the 37,000-student Kern Union High School District are paying 60 percent of local teachers' union President Mitch Olsen's salary. Mr. Olsen is working for the union full-time and does not teach any classes.

    School board member Ken Mettler is suggesting that the union, which he says receives $1.6 million in dues, pick up the full tab. Mr. Olsen said he would not respond to comments by one board member, but would deal with the board as a whole.

    (Cal-Tax: We do not believe this situation is unique to Kern High School District. At a time when schools are making cuts in instructional services to students, it is outrageous that taxpayers are funding the operations of a flush teachers' union. In fact, it is inappropriate at any time.) (Source: Bakersfield Californian, January 27.)

  • Berkeley Running Out of Money, but City Gives Huge Raise to City Manager. The Berkeley Daily Planet reports that while Berkeley city officials are predicting "some difficult choices, as budget cuts are unavoidable," that hasn't stopped Mayor Tom Bates and the City Council from giving an 8 percent raise to City Manager Phil Kamlarz. Effective February 8, the city manager will receive $232,020 a year. The rationale, according to the city, is to bring his salary "to the median of City Managers in comparable cities in the Bay Area."

    The mayor argued that without the raise, Mr. Kamlarz would be working for the same amount of money he could get from his pension if he retired. "Basically, he's working as a volunteer," the mayor said. (Cal-Tax: Whenever huge pension increases are approved, the explanation is that generous pensions are needed so government agencies can retain the best and brightest. Then, when the retirement benefits get so generous that they are a disincentive to employee retention, the "solution" is to get into taxpayer-funded bidding wars for salary increases rather than to scale back on the pensions!)

    The Daily Planet noted that the mayor actually is pushing for a raise of even more than 8 percent – he wants to reclassify the position to allow even higher pay. And city documents reviewed by the paper reveal that his salary plus benefits already comes to $241,156 per year, before next month's raise.

    To top it off, Mr. Kamlarz will receive an automatic 2 percent to 2.5 percent increase on June 28, just four months after getting his big raise.

    The vote for the pay increase was 6-2, with one council member abstaining. (Berkeley Daily Planet, January 21 and January 28.)

  • San Jose's Police and Firefighter Pension Cost Up 167 Percent in Eight Years. Pensions costs for police officers and firefighters in the city of San Jose have increased 167 percent since 2000 – twice the rate of the increase in pension costs for the city's civilian workforce, and far outpacing the 3.4 percent increase in staffing and the 23 percent increase in the Consumer Price Index for the Bay Area during the same period.

    Still, the city's police officers' union is pushing for enhanced retirement benefits, saying they are crucial to recruitment and retention.

    The city's contribution rate for the police pensions has increased from 15.7 percent of payroll to 25.8 percent since 2000. For firefighters, the rate is 28.3 percent. The rates that the officers and firefighters put in themselves are less than half of those amounts. Under the maximum pension, these workers can receive 90 percent of their salary when they retire, and the pension automatically increases 3 percent a year (thanks to a 2002 change in which the annual increase replaced an adjustment based on the Consumer Price Index).

    Compounding the problem is the fact that the city's pension funds have lost more than $1 billion – about a quarter of their value – in recent months.

    While the police officers' union maintains that new benefits are needed to keep officers on the job, the city's director of employee relations told the San Jose Mercury News that new pension benefits could actually provide more incentive for officers to retire early. (Source: San Jose Mercury News, January 13.)

  • Orange County Managers Take $4.4 Million in Cash Perk. Orange County has laid off 210 social services workers, and more layoffs are expected, but that hasn't kept county administrators from accepting more than $4.4 million in cash bonuses through the county's "optional benefit plan." The money is meant to be used to pay for education and career improvement courses, but instead is being used as a cash bonus, with recipients failing to disclose how the cash has been spent.

    Nick Berardino, head of the Orange County Employees Association, complained that the county should be cutting perks before people. "They're scamming," he said. "It's more management manipulation to line their pockets." Mr. Berardino estimated that the perks would have covered the salaries of nearly half the laid-off social workers.

    Orange County Executive Director Thomas Mauk said the "optional benefit plan" was negotiated into the management contract as a legitimate way to help administrators pay for uncovered medical, educational and child-care costs. "It helps our employees deal with their individual issues," Mauk said. (Source: Orange County Register, January 7.)

  • Legislators' Car Allowance Estimated at $1.3 Million. San Francisco Chronicle columnists Phillip Matier and Andrew Ross write: "California's multibillion-dollar deficit hasn't stopped the state from shelling out an estimated $1.3 million to keep 40 new and returning lawmakers rolling in style during these toughest of times." The columnists note that legislators lease their vehicles from the state with the help of a monthly vehicle allowance of $350 to $500, with the amount varying depending on lease terms and whether the lawmaker serves in the Assembly or Senate. Lawmakers also receive free gas and maintenance. When the cars are turned in, the state sells them – for a fraction of their original value – and the state keeps the proceeds. (Source: San Francisco Chronicle, December 8.)

  • San Francisco's Deficit Doesn't Stop City Workers' Pay Raises. The local government in San Francisco is facing a deficit, but that isn't stopping Mayor Gavin Newsom from moving forward on his promise to grant approximately $70 million in pay raises to nearly all 27,000 city workers. San Francisco Chronicle columnists Phillip Matier and Andrew Ross write: "The raises help explain why the city is facing an immediate shortage of as much as $125 million, with a lot more to come next year. As of Friday (December 5), none of the unions had volunteered any salary give-backs or freezes – nor was the mayor's office asking them to make any concessions." (Source: San Francisco Chronicle, December 8.)

  • Sacramento City Officials Offer Misleading Salary Information. The Sacramento Business Journal recently published lists of the top earners among city officials in the newspaper's circulation area, with salary amounts provided primarily by city representatives. Sacramento's city officials apparently aren't eager for taxpayers to know what they are making, as their pay is listed in salary ranges, rather than specific salaries for specific employees. For example, City Manager Ray Kerridge, ranked as the top-paid city employee, is listed as receiving somewhere between $187,357 and $281,035 – a range of more than $93,000! City Attorney Eileen Teichert receives either a low of $157,708 or a high of $236,562, or possibly somewhere in the Grand Canyon-sized area in between. Several other cities also provided ranges so large as to render their listings completely meaningless, while others respected the taxpayers and provided solid amounts for each employee. (Cal-Tax: The next question, of course, is how much taxpayers are paying for the pensions and fringe benefits of these government employees.) (Source: Sacramento Business Journal, January 2.)

Public Safety

  • Los Angeles Police Department Mismanaged Millions, Audit Finds. The Los Angeles Police Department under former chief William Bratton mismanaged and mishandled millions of dollars in taxpayers' money, according to an internal department audit.

    The auditor's report said: "Policies were inconsistently followed, loosely followed and, in one instance, bypassed altogether. The purchasing process and controls, which handles approximately $60 million in department purchases annually, must be improved, formalized, and enforced."

    Among the findings:

    • In approximately 56 percent of audited transactions totaling $2.6 million, LAPD employees could not produce receipts.

    •  Ten percent of LAPD purchases had failed to go through the multiple levels of approval required.

    • LAPD administrators failed to solicit bids from at least three competitors – as required by city rules – on 80 percent of large purchases.

    • LAPD divisions bought and received goods and services in violation of a requirement that separate offices place orders and receive goods.

    Although the audit was completed in late summer, as Chief Bratton was preparing to leave office, it was not made public until this month. (Source: Los Angeles Daily News, December 14.)

    Cal-Tax Recommendation: The LAPD should heed the recommendations of this audit. In early 2007, another audit reported that LAPD's "business functions are stuck in the 1950s," but it appears that little has been done to address the concerns raised in that audit – that mistake should not be repeated.

  • Courts Hand Out Raises and Perks as Courthouses Close. The Daily Recorder of Sacramento reports: "Despite fiscal woes so deep courthouses are closing once a month, the Administrative Office of the Courts has given out hefty raises, promotions and extra paid vacation time to employees to compensate them for furlough days." From February 2009 to July 2009, the AOC elevated nearly 80 employees, and raised their pay as much as 31 percent, ignoring its self-imposed freeze on promotions.

    From July 2008 through July 2009, the agency's payroll costs grew 6 percent, and now total more than $4.2 million a year. (Source: The Daily Recorder, December 10.)

    Cal-Tax Recommendation: Court officials should reexamine their priorities. All available money should be used to keep the courts open to ensure timely justice for Californians.

  • City of Oakland to Pay $1.75 Million to Compensate Cops for Dressing Time. The city of Oakland is expected to pay $1.75 million in legal fees and will offer vacation time and money to officers who claimed in a lawsuit that they had not been paid for the time they spent putting on their uniforms.

    Under a tentative agreement reached earlier this month, the city will cover the officers' legal fees, and more than 500 officers will receive an average of 130 vacation hours each. About 60 retired officers will be paid $3,500 each. The agreement will end a three-year legal battle over the issue of whether officers must be paid for the time spent putting on and taking off their uniforms.

    The city could have been liable for as much as $20 million if a jury had ruled in the officers' favor, according to the officers' lawyer.

    The Oakland City Council voted 6-2 in a closed session to approve the settlement, and is expected for formally ratify the deal in January. (Source: San Francisco Chronicle, December 11.)

    Cal-Tax Recommendation: Local governments should learn from this case, and should make sure their contracts specify that employees will not be paid for time spent changing their clothes.

  • Cities Puts the Brakes on Red Light Cameras. In Southern California, city officials are ripping out red light cameras due to increasingly expensive camera contracts. In most cases, officials have found that the fines generated through red-light violations are insufficient to pay for the cameras, which are mounted on stoplights. Loma Linda, Redlands, Uplands and Montclair are among several of the cities that have begun analyzing traffic data, collision rates and red-light camera effectiveness. While the cities haven't given up entirely on red-light cameras, they will be considering where cameras provide effective results.

    In the city of Montclair, Police Captain Chris Weiske said the initial cost of setting up red-light cameras was $288,000 in 2003. In 2005 and 2006, the city lost $42,000 and $111,000, respectively.

    San Bernardino Attorney Lee Rittenburg, who specializes in defending motorists, said the cities' decisions to end the red-light camera contracts proves that "this was about money all along – trying to generate revenues, over public safety." (Source: Redlands Daily Facts, October 31.)

  • Court Computer System Will Cost More Than $1 Million Per Judge. A new computer system sought by the Administrative Office of the Courts – the body that oversees the day-to-day workings of the state's judicial branch – is running $260 million over budget and will end up costing the taxpayers more than $2 billion, according to published reports. "That's equivalent to more than $1 million per computer system for each judge in the state of California," San Diego Superior Court Judge Dan Goldstein noted in a newspaper column.

    The Sacramento Bee said the computer upgrade originally was planned to be a modest upgrade in a few counties. However, the paper reported, "The project has ballooned in scope and costs since its 2001 inception without the scrutiny other state computer systems face because the Administrative Office of the Courts is not bound by the same project review requirements."

    Judge Goldstein said it makes no sense to spend so much on a computer project while the AOC also is shutting down courthouses due to budget problems. The judge also noted that the AOC has grown from 490 employees to 901 employees since 2004 "and continues to hire despite a hiring freeze." The judge said one-third of the office's employees receive annual salaries over $100,000. Judge Goldstein is director of the Alliance for California Judges, a group formed in September to advance the interests of judges who aren't happy with the work of the AOC or the lobbying of the 80-year-old California Judges Association. (Source: The Sacramento Bee, October 25 and October 28.)

  • City of San Jose to Pay $200,000 in Firehouse Porn Case. The city of San Jose is expected to pay $200,000 to settle a suit filed by a firefighter who said her colleagues retaliated against her after she complained that pornography had been left out in the firehouse. The firefighter, Julie LeBlanc, said her 9-year-old son visited the firehouse and found a porn magazine, which he took home and attempted to hide. She filed a complaint, and her colleagues allegedly responded by shunning her and, in one case, failing to give her important work-related information.

    Scott Herhold, a columnist for the San Jose Mercury News, writes: "Fundamentally, this was a failure of management, not of morals or of rules." Mr. Herhold said the investigation into Ms. LeBlanc's complaint took far too long, and the delay helped build resentment. "A quicker and shrewder response from the fire department brass might not have avoided a lawsuit," he concluded. "But it might have spared LeBlanc from ostracism and saved the city from such an expensive payout." (Source: San Jose Mercury News, October 14.)

  • Inmates' Flushing Habits Cost San Mateo County $2.3 Million. The San Francisco Chronicle reports: "San Mateo County has agreed to pay $2.3 million to settle a lawsuit that accused county jail inmates of clogging Redwood City's sewage system by flushing clothes, sheets and other items down toilets."

    The suit was filed after flushed items clogged a grinder and broke a shaft at a pumping station operated by South Bayside Systems Authority, a publicly owned system that handles sewage for several Peninsula cities. Officials knew the items came from inmates because many were emblazoned with "San Mateo County Jail, Maguire Facility."

    Readers who left comments on the Chronicle's website suggested that inmates be issued paper clothes and paper sheets to eliminate the problem. (Source: San Francisco Chronicle, October 9.)

  • State Auditor Slams Department of Corrections Spending. In a September 8 report, State Auditor Elaine Howle blasted the Department of Corrections for skyrocketing costs. The department's budget increased nearly 32 percent, to $10 billion, from 2005 to 2008 even as the number of prison inmates declined.

    "Corrections fails to track, maintain and use data that would allow it to more effectively monitor and manage its operations," the auditor said.

    Other findings in the report:

    • The cost of housing an inmate out of state in fiscal year 2007-08 was less per inmate than the amount the Department of Corrections spent to house inmates in some of its institutions.

    • Overtime is so prevalent that of the almost 28,000 correctional officers paid in fiscal year 2007-08, more than 8,400 earned pay in excess of the top pay rate for officers two ranks above a correctional officer.

    • Over the next 14 years, the difference between providing new correctional officers with enhanced retirement benefits, as opposed to the retirement benefits many other state workers receive, will cost the state an additional $1 billion.

    • Although the department's budget for academic and vocational programs totaled more than $208 million for fiscal year 2008-09, it is unable to assess the success of its programs.

    • California Prison Health Care Services' ability to transition to using telemedicine is impeded by a manual scheduling system and limited technology.

    At this writing, the governor's proposal to release 27,000 prisoners is bogged down in the Legislature. It is not known what impact this report will have on this proposal. (Source: California State Auditor report on Department of Corrections, Report 2009 – 107.1, September 2009.)

  • Oakland Auditor Reports Misuse of Revenue From 2004 Tax Measure. Oakland City Auditor Courtney A. Ruby reported August 31 that the city has misused some of the proceeds of Measure Y, a 2004 ballot measure that authorized a parcel tax and parking tax to raise money for violence-prevention programs.

    The audit, which was the first to examine Measure Y funds – despite proponents' promises that audits would be conducted on a yearly basis – reviewed fiscal years 2006-07 and 2007-08. The audit found:

    • One grant recipient "received funding for salary costs for a position that was not filled."

    • Two recipients charged items to the grant that were not approved in the contract.

    • Approximately 27 percent of the grants were awarded to applicants who did not go through the official "request for proposal" process.

    • The city "paid grantees the full contract amount despite deliverables not being met and without sufficiently documenting the reason for full payment."

    • On a day an auditor made a site visit to check a violence-prevention program, 70 percent of the students enrolled in the program were not present.

    • One grant recipient could not provide eligibility documentation for 23 out of the 40 participants (58 percent) in a program funded by Measure Y revenue.

    • The city hired an independent evaluator to measure the effectiveness of programs funded by Measure Y revenue, but six grantees who received more than $1.7 million were not evaluated.

    "Without a fully effective grant management and oversight program, Measure Y funds are subject to risk of inappropriate use and inability to meet program objectives," the audit report stated.

    Measure Y was approved in November 2004 with 70 percent of the vote. It set a parcel tax of $88 for single-family residential parcels (with other amounts for apartments and other business properties) along with an 8.5 percent tax on the cost of parking in a commercial parking lot. The exactions cost taxpayers approximately $20 million per year. Both taxes will sunset in 2014 unless extended by the voters.

    The ballot argument signed by Congresswoman Barbara Lee and four others said: "Measure Y includes strict financial oversight and performance reviews of police and violence prevention programs. An annual, independent audit will be performed to ensure fiscal accountability."

    In the official rebuttal to the "No on Y" statement, Jerry Brown, then mayor of Oakland, wrote: "Measure Y assures accountability. A yearly audit will be performed and an independent oversight committee will review all Measure Y programs."

    Since the inception of the Measure Y Violence Prevention Program in 2004, the city has awarded approximately $23 million in 104 grants. (Sources: Measure Y Violence Prevention Performance Audit, August 31; City of Oakland Summary of Measure Y, 2004.)

  • San Bernardino County Fire Chief Used County Vehicle as Moving Van. San Bernardino County Fire Chief Pat Dennen will take two weeks of punitive unpaid administrative leave for helping Deputy Chief Dan Wurl move into a new home on county time and with a county vehicle, officials said. Possible disciplinary action for Mr. Wurl has yet to be announced.

    On July 9, a Fire Department employee spotted a department trailer equipped to fight terrorism parked outside Mr. Wurl's home. The employee took photos and filed a complaint. An investigation determined that the two fire officials had used the vehicle and on-duty department personnel to move belongings from Mr. Wurl's old home in Running Springs to a new home in Yucaipa. Investigators also found that the two men regularly used county vehicles, despite receiving a $1,000-a-month vehicle allowance from the county to cover gas and maintenance on their personal vehicles. (Source: San Bernardino Sun, August 11.)

  • Fresno Pays $11,000 to Guard Vacant Homeless Camp. When residents of Fresno's downtown "tent city" relocated to apartments at the city's expense, they left behind abandoned shelters, piles of wood, old clothing and shopping carts. Now, the city is spending $11,000 a month to guard these personal belongings that were left behind.

    According to city officials, spending the $11,000 is much cheaper than cataloguing and storing belongings, or potentially losing a lawsuit if the city destroys the items.

    Watching over left-behind items is not a new scenario for city officials. Last year, Fresno settled a $2.35 million lawsuit after a judge determined that the city illegally destroyed personal belongings of dozens of homeless residents.

    Several days after "tent city" residents were relocated, city staffers allowed former residents to re-enter and remove their belongings. Now, a barbed wire wall has been erected. With the gate locked and under watch, former residents must make an appointment to remove their belongings within 90 days. According to a court order, after 90 days the city may remove all personal belongings and return use of the property to its owner, Union Pacific Railroad. (Source: The Fresno Bee, July 27.)

  • Court Officials Spend More Than $82,000 to Discuss Judicial Branch Budget Crisis. The Administrative Office of the Courts recently gathered in San Francisco to discuss "The California Judicial Branch Budget Crisis." Conference attendees met and stayed at the San Francisco Hilton. According to a memo, $40,000 was spent on five facilitators, $42,000 was spent on meeting rooms, and an estimated 25 of 70 attendees spent two nights each at the Hilton (at a discounted rate of $138 per night). Also, the memo noted that Judge Brad R. Hill spent the night in the "Presidential Suite." (Source: The Grass Valley Union, July 28.)

  • San Francisco Program Trained People for Jobs They Couldn't Legally Perform. San Francisco District Attorney Kamala Harris has run a job-training program that allowed illegal immigrants charged with felonies to avoid prison by training for jobs they couldn't legally hold. The Back on Track program has been touted by Harris, who is running for state attorney general, for reducing recidivism among first-time, nonviolent drug offenders. Media reports said it isn't known how many illegal immigrants participated in the program, and no dollar amounts were reported. Ms. Harris said letting the immigrants participate was a "flaw in the design" of the program, and she said illegal immigrants no longer are being trained with taxpayers' money. (Source: San Jose Mercury News, June 23.)

  • No Authorization Found for Placer County Court Executive's Massive Pay Hikes. In California, courts have flexibility in setting their own systems of salary and compensation. A special audit by the Judicial Council found that John Mendes, former executive officer of the Placer County Superior Court, received more than $470,000 in apparently unauthorized compensation from July 2001 to March 2009. According to The Sacramento Bee, he received salary or benefit increases for which there were no records of written authorization. The presiding judges at the time have no recollection of approving the generous pay hikes.

    Since 2002, Mr. Mendes received about $114,000 in bonuses under a management incentive program. By 2008, his compensation was $304,862.

    Mr. Mendes' attorney, Barbara Lawless, said just because there are questions doesn't mean anything was improper. All of the raises were approved either orally or in writing, she said. She blamed the allegations on judges' faulty record-keeping.

    The audit also questioned the amount of management leave time that Mr. Mendes accrued. He should have been eligible for 130 hours of management leave in 2008, according to the audit. Instead, he accrued 455 hours – about 12 weeks of paid time off, worth about $42,000. He was able to get the time at the beginning of the fiscal year and cash it out immediately, the audit stated.

    Ms. Lawless said her client believes he was authorized to increase his management leave by 30 hours every year.

    The audit also found that Mr. Mendes started a program that allowed him to convert unused sick leave to paid time off. Employees can't cash out sick leave, but they can cash out paid time off.

    "In effect, the cash-out option gave the CEO the ability to cash out accrued sick leave," the audit said. "Once this (paid time off) and cash-out policy took effect, the CEO began cashing out significant amounts of (paid time off)."

    From April 2006 through July 2008, Mendes cashed out 1,279 hours of paid time off worth $104,527, auditors found.

    Mr. Mendes is now working as chief financial officer for the Yolo County Superior Court. (Cal-Tax: Whether or not the pay was authorized, this is just another example of sky-high remuneration in the public sector.) (Source: The Sacramento Bee, June 16.)

  • Examples of Waste in San Jose. In a June 18 piece, San Jose Mercury News columnist Scott Herhold gives several examples of waste in the city of San Jose:

    • A fully staffed fire station on Communications Hill gets approximately three calls per week.

    • At a rate of $45 an hour, off-duty police officers are used to patrol street work, when traffic cones do nicely in other cities.

    Mr. Herhold's column was a response to a comment by the city's police union chief, Bobby Lopez, who cited as waste the $115,000 in tax money that goes to support a week-long mariachi festival in September. (Source: San Jose Mercury News, June 18.)

  • State Paid $580,000 to Rent Vacant Office for Four Years. The state's prisons may be overcrowded, but the same cannot be said for the offices of the agency that oversees the penal system. A state audit revealed that the California Department of Corrections and Rehabilitation and the Department of General Services "wasted a total of $580,000 in state funds by leasing office space that Corrections had left unoccupied for more than four years." (Source: California State Auditor Report I2009-1, April 2009.)

  • State Department of Corrections Paid $1.3 Million to Fired Employees. The California Department of Corrections and Rehabilitation spent nearly $1.3 million in just two fiscal years to pay unemployment benefits to workers who had been fired, according to a report released March 30 by the California Office of the Inspector General. The sum represented nearly 25 percent of the department's spending on unemployment benefits in 2006-07 and 2007-08, the inspector general said.

    The report, which refers to fired workers as "adversely separated employees," stated: "The CDCR's lack of internal procedures to effectively process UI claims and poor communication between the CDCR and the Employment Development Department (EDD) contributed significantly to adversely separated employees receiving UI benefits. Of the 1,045 employees adversely separated during fiscal years 2006-07 and 2007-08, 186 employees received UI benefits."

    Additionally, the report notes that unemployment benefits "should be available for employees who have lost their jobs due to no fault of their own, not for employees the CDCR separated for misconduct."

    According to the report, the EDD did not do a good job of gathering information about people submitting claims for unemployment benefits, and the Department of Corrections did not do a good job of responding to the EDD requests that were made. "Of the 25 cases investigated, the CDCR responded in writing to the EDD only ten times and only five of the responses were timely," the report said. "Furthermore, the CDCR had the opportunity to appeal the EDD decisions to grant UI benefits; however, it did so in only one case."

    Three case studies included in the report reveal that unemployment benefits were given to: a peace officer who was fired after she committed a hit-and-run accident while driving under the influence and then refused to cooperate with the California Highway Patrol; an officer who was fired because he was affiliated with a prison gang and possessed an illegal assault weapon; and an employee who was let go because she failed to report for work 132 days (the equivalent of six months of work) during her 15-month probationary period.

    Mary Fernandez, undersecretary of the department, said the department agrees with the report's conclusions and is working with the EDD to fix the problems identified by the inspector general. (Source: California Office of the Inspector General Special Report, March 30.)

  • Firefighters Return Raises Received Based on Fake College Degrees. Seven firefighters in the American Canyon Fire Protection District (in Napa County) have indicated they will return pay raises they received after obtaining fake college degrees. Four other firefighters received raises based on phony degrees, but no longer work for the district, and may not have to return the money. The fire district and the firefighters' union agreed that the public employees would pay back more than $37,000. Meanwhile, the city spent $43,000 on one investigative report and additional funds on another report and attorney fees. The firefighters paid $499 each for online degrees from Almeda University, based on "life experiences" rather than any classes or additional training. (Source: Vallejo Times-Herald, February 26.)

  • Firefighters Return Raises Received Based on Fake College Degrees. Seven firefighters in the American Canyon Fire Protection District (in Napa County) have indicated they will return pay raises they received after obtaining fake college degrees. Four other firefighters received raises based on phony degrees, but no longer work for the district, and may not have to return the money. The fire district and the firefighters' union agreed that the public employees would pay back more than $37,000. Meanwhile, the city spent $43,000 on one investigative report and additional funds on another report and attorney fees. The firefighters paid $499 each for online degrees from Almeda University, based on "life experiences" rather than any classes or additional training. (Source: Vallejo Times-Herald, February 26.)

  • Marin County Spends $9,000 a Month on Public Opinion Polls. Marin County has spent at least $270,500 on public opinion polls over the past 30 months – an average of $9,000 a month – in order to test residents' support for various tax increases. The Marin Independent Journal reported, for example, that $84,500 was spent by county supervisors in 2007 and 2008 for polls to gauge support for a sales tax proposal. County Administrator Matthew Hymel said the polls "helped inform us not to go to residents for a tax increase."

    Another poll, this time costing $30,000, has been commissioned by the Board of Supervisors to poll residents on county budgeting procedures. A letter to the editor of the newspaper responded: "In order to cut costs at the county level, the first thing we must do is stop the county from wasting money by hiring consultants to make recommendations that the supervisors and other county officials should be making themselves." (Source: Marin Independent Journal, February 14.)

  • Local Governments Spend Millions on Sacramento Lobbying. Local governments are spending a massive – and growing – amount of taxpayer dollars for Sacramento lobbying, The Sacramento Bee reported February 8. In 2007-08, the amount spent was $58.3 million, up a whopping 33 percent over the $43.7 million spent in 2006-07.

    Leading the pack was Los Angeles County, with $3.7 million spent on lobbyists. The city of Los Angeles was not far behind, at $2.8 million. The Los Angeles Unified School District spent $1.8 million in the same period. Dan Wall, lobbyist for Los Angeles County, tried to justify the spending, saying the budget fight in 2007-08 threatened more than $500 million in county dollars. (Cal-Tax: It is worth noting that representation in both houses of the state Legislature is based on population, so Los Angeles residents have the largest number of elected officials representing them in both the Senate and the Assembly.)

    Jon Coupal, president of the Howard Jarvis Taxpayers Association, said local government lobbying "doesn't always serve the taxpayer well." He added, "We believe a lot of wasted money goes into local government lobbying."

    Lobbying dollars spent by type of local government in 2007-08:

     

    (in millions)

    Counties

    $27.0

    Cities

    $25.3

    Schools

    $6.1

    With this year's budget crunch at the local level, some jurisdictions are cutting back, but it is unclear how many will do so. Twin Rivers Unified School District, in Sacramento County, says no funds have been budgeted this year for lobbying. The city of Folsom, which spent $139,980 in the past two years for lobbyists, last month decided to abandon Sacramento lobbying. However, Jackson Gualco, president of the Institute of Government Advocates, said he is not aware of any statewide trend by local governments to cut lobbying. (Source: The Sacramento Bee, February 8.)

  • City of Stockton Pays $25,000 for 'Elephant Dung Clean-Up.' Taxpayers in the city of Stockton might be interested to know they paid $25,000 for what city records describe as "elephant dung clean-up" at the Stockton Arena last year after a circus left town. City officials said government regulations require specialized cleaning and testing. (Cal-Tax: What kind of clown would pay $25,000 for this service? Dare we ask what this equates to on a per-pound basis?)

    The Stockton Record further reported that four city-owned venues are losing millions of dollars each year. The Stockton Arena, which cost taxpayers $69 million to build, lost $2.4 million in 2008, and about $2.1 million in 2007. The arena's first full year in operation was 2006, and it already has a $7 million deficit.

    Meanwhile, the Stockton Ballpark lost $335,801 last year, the Oak Park Ice Arena lost $34,863 and the Bob Hope Theatre lost $350,784. (Cal-Tax: The Bob Hope Theatre is a beautiful, ornate venue that books big-name acts.)

    The four facilities are managed by Illinois-based International Facilities Group. City officials are suggesting a renegotiation of the management contract, but the private management firm said the losses are the result of reduced consumer spending in a weak economy. (Source: Stockton Record, February 8.)

  • San Jose Replacing Street Lights, at $1,000 Per Lamp. The city of San Jose wants to replace its 62,000 yellow street lights. The lights were put in place in the early 1980s to cut energy costs and reduce glare caused by the previous high-pressure sodium lights. The cost for replacement: about $1,000 per lamp for new light-emitting diodes with white, warm glows.

    The city said the yellow street lights sometimes confuse motorists, and the police and motorists have lodged complaints. To power the new lights, the city intends to put solar panels on light poles, on canopies over sidewalks, etc.

    The city will start this costly change with 100 lamps in the spring, and hopes to finish by 2022. (Cal-Tax: This will provide an answer to the burning question: How many San Jose city workers does it take to change a light bulb?) (Source: San Jose Mercury News, February 9.)

  • Follow-Up: Alum Rock School District Repeals Superintendent's Buyout. Last year, the Alum Rock School District gave former Superintendent Norma Martinez a $500,000 buyout, approved at an illegal December board meeting (see Cal-Taxletter of December 5, 2008). This created a public outrage, and as a result, new members of the school board have declared the agreement non-existent because it was adopted illegally (before the December meeting where the buyout was approved, the contract was not listed on the agenda). (Source: San Jose Mercury News, February 8.) (Cal-Tax: Publicity about outrageous government spending sometimes gets results.)

  • Fresno's Accounting Errors Led to $34 Million in Overpayments to Schools. An accounting error by the Fresno County Auditor's Office led to the county overpaying schools $34 million in property tax revenue over four years, the Fresno Bee reports.

    "The county will be sending a letter to the school districts in the next few days telling them how much they have to pay back," the newspaper reported. "Although the Auditor's Office first notified the Fresno County Office of Education about the possibility of repayment last April, the county needed to figure out how much was owed before contacting the school districts."

    Ultimately, the state will repay the schools. The Bee explained: "Whenever property tax revenues come in lower than budgeted, the state is required to make up the difference to school districts. Because the county overpaid property tax revenues to local districts, the state didn't have to kick in any money during the past four years. Now that the overpayment has been uncovered, the state is obligated to reimburse the districts." (Source: Fresno Bee, February 3.)

  • Los Angeles Pays $12.85 Million for One Day's Worth of Police Misconduct. The Los Angeles City Council voted unanimously February 4 to pay $12.85 million to protestors and bystanders who sued the city claiming they were mistreated by police officers during the May Day 2007 demonstration in opposition to U.S. immigration laws and border enforcement. The payment will settle nine suits against the city. Approximately 18 additional suits remain unresolved. The Police Department announced that four officers would be fired and 11 disciplined for using excessive force to disburse protestors as they marched through MacArthur Park. Police officials said the "May Day melee" began when demonstrators threw objects at officers, prompting a police response that including use of batons and rubber bullets. (Source: Los Angeles Times, February 4.)

  • Orange County Sheriff's Officials Sent Disparaging Text Messages at Taxpayers' Expense. During a November Board of Supervisors meeting on gun issues, Orange County Sheriff's Department officials used taxpayer-provided Blackberry devices to send numerous text messages ridiculing members of the public and county supervisors, the Orange County Register reports. "The messages, obtained under a public records request by a group named Ordinary California Citizens Concerned With Safety, reveal a combative tone by sheriff's command staff toward the activists," the newspaper reported.

    The activists were there to support gun owners' rights in response to Sheriff Sandra Hutchens' announcement that she was tightening the policies for issuing concealed weapons permits.

    One of the activists was described as "creepy" in a text message from one department staffer to another, and several messages ridiculed the man's bow tie, hair and glasses. Toward the end of the long hearing, an official texted that he was "ready to stick a pencil in my eye." The same official made fun of Supervisor Janet Nguyen, a vocal critic of the sheriff's gun policies, in a text that said, "I hope Janet has a pet she can call a friend."

    Ms. Nguyen said her staff is reviewing 300 pages of text message transcripts. Sheriff Hutchens said, "I do not condone comments that were made on the e-mails and I have admonished those that participated in that as being unprofessional conduct and I do not expect that to occur again." (Source: Orange County Register, February 2.)

  • Fresno Spends $115,000 on TV Show. The city of Fresno spent approximately $115,000 to support the filming of an episode of "Extreme Makeover: Home Edition." The largest expense was nearly $80,000 for police officers who provided traffic and parking control during the seven-day shoot.

    Defending the spending, a city spokesman said much of the money would have been spent on other things anyway. The mayor predicted economic gains for the city, estimating that the show will lead to $1.25 million worth of economic activity.

    (Cal-Tax: We heartily support the show's mission of remodeling homes for families in need, typically through the donations of volunteers and business groups. We wonder whether the city's employees could also have found the heart to volunteer time for this worthy cause. Also, if Fresno really can generate $1.25 million in economic activity by revamping one house on national TV, then Washington, D.C. should start taking more advice from Fresnans.) (Source: Fresno Bee, January 25.)

  • State Gives Free Hotel Rooms, Cable TV and Breakfast to Paroled Sex Offenders. Foreclosures and homelessness are problems for many Californians, but the state is helping paroled sex offenders keep a roof over their heads, sometimes with free breakfast and cable TV provided by the taxpayers.

    The Contra Costa Times reports: "State corrections officials spent nearly $22 million last year on apartments and motel rooms for hundreds of paroled sex offenders, paying more than $2,000 a month for some parolees and housing others in locations apparently prohibited under Jessica's Law, according to a MediaNews analysis of bank drafts issued by parole agents and addresses from the Megan's Law sex offender database."

    Some parolees have received housing assistance for more than two years after being released from prison. The spending violates a state policy directive that housing payments "shall not exceed 60 days" except in limited cases. Also, the assistance is supposed to be a loan that is repaid by the parolees, but state data indicates that repayments are rare.

    The newspaper interviewed one paroled sex offender who has received free rent for more than two years at a Budget Inn in Santa Fe Springs, just minutes from Disneyland. "When I first got out, they were having me pay it," he said. "When I found out only a few of us were paying it, I didn't see that was fair, so I stopped paying." At the hotel, parolees get free HBO, complementary continental breakfast every day, and fresh sheets every other day.

    The newspaper further reported: "The state has paid rent for sex offenders at an apartment complex in Martinez that stands about 1,000 feet from the gates of John Muir National Historic Site, which sees a steady stream of school field trip groups. The corrections spokesman said they don't consider the historic site, run by the National Park Service, to be a park. Jessica's Law (which bans sex offenders from living within 2,000 feet of a school or a park where kids "regularly gather") … did not define a park, or how to measure the 2,000 feet – about four-tenths of a mile. Parole agents use GPS."

    A spokesman for the California Department of Corrections and Rehabilitation said the department is planning to dramatically scale back the housing payments, and will focus on providing limited, short-term assistance. Corrections officials say that without the housing subsidies, there will be an increase in sex offenders who become homeless, which will lead to more recidivism and less public awareness of their whereabouts. (Cal-Tax: California needs to get its prison spending under control, so inmates who aren't ready to be released to live independently can be kept behind bars. If the taxpayers are going to pay for prisoners' room and board, it should be cheaper and more secure to keep them in prison, rather than to put them in hotels near potential victims.) (Source: Contra Costa Times, January 17.)

 

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