$2.6 Million to Rent Vacant Building for Two Years.
The state has
spent $1.3 million a year to rent a vacant office building for the past two
years, investigative reporter Mike Luery reported July 13.
Mr. Luery, who
frequently unveils government waste in his "On the Money" feature for Sacramento
television station CBS-13, found that the building in Rancho Cordova is
leased by EdFund, the non-profit auxiliary of the California Student Aid
Commission, which had planned to move there.
that the Student Aid Commission was told not to move in," Mr. Luery reported.
"The state was planning to sell EdFund and didn't want to have the Student Aid
Commission move in to the empty building – only to have the commission move out,
in the event of a sale."
Student Aid Commission was moved to another location where the rent reportedly
is cheaper than it would have been in the EdFund building. A spokesman for the
state Department of Finance said that by not moving the commission into the
empty building, the state saved more than $1 million.
Still, the rent
for an empty office is coming out of the student loan operating fund, and
apparently will continue to be paid until EdFund is sold. The Student Aid
Commission said the $2.6 million could have provided financial aid for up to
1,000 college students (while the money comes out of the "student loan" fund,
the report said the aid to students would be in the form of grants, not loans,
so the money would not have to be paid back by the students).
television crew went to the property to film the empty office space, it
initially was met by a security guard and EdFund lawyer who attempted to stop
the cameraman from filming, and threatened to call police to remove the crew
from the property. An EdFund spokeswoman later agreed to be interviewed and said
the guard and lawyer may have been overprotective because of the "confidential
nature of what we do."
Commenting on the
report, news anchor Sam Shane noted: "No private business would be in business
if they ran it like this." (Source: CBS-13's "On the Money," July 13.)
recommendation: The state should identify any other unused properties that are
being rented or maintained with tax dollars, and should take immediate steps to
improve the management of its resources. It doesn't make sense that while
taxpayers are paying $1.3 million a year to rent an empty building, the state is
moving forward with plans to sell state-owned offices and then rent them back
from the new owners.
Welfare Benefits Being
Withdrawn at Strip Club ATMs.
In a follow-up story to an
investigative story cited in last week's Cal-Taxletter, the Los
Angeles Times reports that welfare recipients withdrew $12,000 in cash from
the Temporary Assistance for Needy Families program from ATMs in strip clubs
throughout the state between 2007 and 2009.
The California Department of
Social Services said the governor has ordered the department to correct the
problem by removing strip clubs and casinos from the list of businesses where
recipients can withdraw taxpayer dollars. In an e-mail to the Times,
department spokeswoman Lizelda Lopez said: "We'll take a wide-ranging look and
apply some common sense to the list of outlets where cash assistance should not
The Times earlier
reported that welfare recipients have been withdrawing cash benefits at ATMs in
casinos and cardrooms. The state has now calculated the amount of money that has
been withdrawn from the state's welfare program using ATMs located in casinos:
$1.8 million in just eight months (October 2009 through May 2010). (Source:
Los Angeles Times, June 30.)
Cal-Tax recommendation: Kudos
to the Los Angeles Times for revealing that cash welfare benefits are
being withdrawn at casinos and strip clubs, where much of the cash probably
remained. The state needs to find a better way to help those who truly need
assistance, and to stop giving cash to those who are using it for
extracurricular activities. The governor's orders are a step in the right
direction, but welfare recipients can get around the orders by simply stopping
at other ATMs on the way to the casino or strip club. More safeguards are
Governor Issues Executive
Order Banning Welfare Recipients From Accessing Taxpayer-Provided Benefits at
Casino ATMs. The
Los Angeles Times reported June 24 that "California welfare recipients
are able to use state-issued debit cards to withdraw cash on gaming floors in
more than half of the casinos in the state." The newspaper compared a list of
ATM addresses on the California Department of Social Services' website to a list
of casinos and poker rooms on the California Gambling Control Commission's site,
and found that 32 of 58 tribal casinos and 47 of 90 poker rooms had ATMs that
accept the state's welfare benefits cards.
The amount of money withdrawn
at these gambling facilities is not known, state officials said.
Responding to the report,
Governor Arnold Schwarzenegger on June 24 directed the Department of Social
Services to take immediate action to prevent welfare recipients from being able
to access state-provided cash benefits from ATMs in gambling establishments. "I
will use every available power I have to protect taxpayers from waste, fraud and
abuse in government," the governor said. "I urge the Legislature to pass more
aggressive laws preventing benefit recipients from withdrawing cash assistance
at casino and other gambling location ATMs that I will sign as soon as it hits
my desk." (Sources: Los Angeles Times, June 24; News release from
Governor's Office, June 24.)
(Cal-Tax recommendation: The
Legislature should follow the governor's suggestion, and all state officials
should investigate ways to prevent misuse of state funds with the same intensity
as the Times reporters who uncovered this hole in the state's welfare
San Francisco Spends
$175,000 to Move a Small Shrub.
San Francisco Chronicle columnists Phillip Matier and Andrew Ross have
uncovered a doozy: San Francisco taxpayers recently paid $175,000 to move an
8-inch-tall, 20-foot-wide shrub. They write: "Money may not grow on trees, but
it sure cost taxpayers a bundle to move a bush that was found growing in the
path of the Doyle Drive rebuild. Not just any bush – this was the Franciscan
manzanita, a city native that was thought for 60 years to be extinct until the
bush was spotted late last year. With the final bills in, the cost of moving the
bush in January came to $175,000 – $140,000 to dig up and move the shrub, and
$35,000 for "support" services from geological, botanical and climate experts in
preparation for its new home in the Presidio less than a mile away."
Cal-Tax recommendation: San
Francisco officials need to find out how it could possibly cost $140,000 to dig
up and move a shrub, and then must eliminate the waste that caused the price tag
to grow like a weed.
County Builds $23 Million
Pet Shelter, Then Ponders Closing the Facility.
The Sacramento Bee reports on one of the more remarkable examples of poor
long-range planning: "Six months after unveiling its $23 million shelter for
unwanted dogs and cats, Sacramento County is contemplating getting out of the
animal care business, a county executive acknowledged Thursday. The county has
dismissed its shelter director, Pat Claerbout, and on Thursday met with area
officials to discuss the possible consolidation of animal care services across
The county has faced deficits
for three consecutive years, and a county official said, "Unless we come up with
a different revenue stream, the current model (for sheltering abandoned animals)
is not sustainable."
"The gleaming new shelter on
Bradshaw Road opened to fanfare in October," The Bee reports. "It was
publicly financed, and the county inherited a $1.6 million annual bond
obligation on the building." (Source: The Sacramento Bee, May 28.)
Consolidating animal care services with city-run facilities sounds like a good
idea, and the county also should consider eliminating its fiscal planning staff,
since the taxpayers don't appear to be getting any benefit from their services.
In addition to building a pricy high-end animal shelter when keeping it open
should have been a foreseeable challenge, the county supervisors decided in
mid-2007 to spend $295,000 on a handful of sculptures to beautify the building.
The county needs to examine its priorities.
Audit Shows City of Los
Angeles Misplaced 45 Percent of Purchases.
A new audit reports that the city of Los Angeles, facing a budget deficit of
$222 million, has misplaced hundreds of purchased items worth a total of almost
$1 million. Auditors also found that the city spent taxpayer dollars on many
items that were unneeded and sat in storage.
Auditors could not locate 115
items (45 percent of the items purchased by the city), including a $60,000 video
camera purchased by the Los Angeles Information Technology Agency (ITA).
The audit also found that ITA
and the Los Angeles Recreation and Parks Department purchased 138 items that
were unneeded, including some that have remained in storage for more than seven
years. These items include refrigerators, stoves, a swimming pool heater, a deep
fryer, two televisions, nine microwaves, and several computers and printers. The
unused items in storage are worth $237,000. (Cal-Tax: Of course, a
seven-year-old computer isn't worth much now.)
City Controller Wendy Greuel
said: "With the city facing such a large budget deficit, it's essential that any
equipment that we are able to purchase is easily located if needed and utilized
immediately. It's critical that we keep tight controls on the city's scarce
resources. Unfortunately, we found in this case that no one was minding the
Ms. Greuel offered several
recommendations: departments should update their inventories at least once a
month when assets are disposed or transferred; departments should conduct
biennial physical inventories of all equipment, as required; guidelines should
be developed for departments to follow when conducting physical inventories of
the city's assets; departments should use purchased items by putting them into
service as soon as possible, and such items should not go into storage upon
being purchased; departments should develop policies to monitor and track assets
that cost less than $5,000 and are susceptible to theft or loss; and departments
should place identification tags on every asset owned by the city, to assist in
the inventory process. (Source: News release from Los Angeles City Controller,
Cal-Tax recommendation: Other
cities and counties should follow Controller Greuel's lead and review recent
purchases. It is critical that officials conduct oversight of taxpayer dollars,
especially in times of fiscal hardship. The audit included a number of
recommendations that all local governments should follow.
Tax Dollars for Job
Creation Instead Spent on Trips to the Boardwalk.
The San Francisco Chronicle reports: "Federal stimulus dollars intended
for job creation in Oakland were spent instead on trips to the Santa Cruz Beach
Boardwalk and a Concord water park, rent, church repairs, bus passes, salaries
and car allowances, according to a state review."
Oakland, which has a 17.7
percent unemployment rate, received $3 million last year for summer youth, adult
and dislocated worker programs. But more than $830,000 of the money received
under the American Recovery and Reinvestment Act from February to December 2009
was not properly accounted for or was misspent, according to the state Office of
the Inspector General.
In addition, state auditors
found that the city inflated the number of jobs created, claiming 35 when only
about six jobs were created with the stimulus dollars.
Laura Chick, the state
inspector general overseeing federal recovery dollars, found that stimulus funds
were passed down from a city agency, the Oakland Workforce Investment Board, to
a nonprofit, the Oakland Private Industry Council, which took control of the
money despite the fact that the group had no valid contract with the city from
July 2009 until earlier this month.
$2,806 given to the Spanish
Speaking Citizens Foundation for food and field trips to the Santa Cruz
boardwalk, Waterworld California and Washington Park in Alameda.
$5,415 given to the Alameda
County Youth Development program for staff salaries, benefits and bus passes.
$9,100 given to the Watkins
Memorial Church of God for salaries, maintenance and repairs, and rent.
Auditors had trouble tracking
money in part because the Industry Council drew stimulus funds based on
arbitrary estimates rather than actual expenditures, Ms. Chick's report said.
(Source: San Francisco Chronicle, April 21.)
Cal-Tax recommendation: The
federal government and the city should put some oversight measures in place, and
funds should not continue to go to agencies who have misused the tax dollars
they previously received.
San Francisco Library
Spends Money on Social Worker Instead of Books.
The main branch of the San Francisco Public Library has become the first known
library in the nation to hire a full-time social worker – for $85,000 a year –
to help homeless people.
(Cal-Tax: It is
interesting to note that in 1978, as Californians were preparing to go to the
polls to vote on Proposition 13, the San Francisco libraries posted signs
reading: "NOTICE! If Proposition 13 passes on June 6, the San Francisco Public
Library WILL CLOSE EFFECTIVE JUNE 30, 1978." The library not only survived, but
has expanded with a
multimillion-dollar improvement program,
and now is doing well enough to hire a social worker.)
An Associated Press
report explains that the library "is near a neighborhood of single-room
occupancy hotels, soup kitchens and other service providers for the very poor."
The story continues: "Some mornings, just after it opens, the library seems to
have more people who appear to be homeless – wearing half their clothes and
carrying the rest – than not."
The San Francisco
Chronicle describes the library's situation in more detail: "There has long
been an unwelcome footnote at the San Francisco Main Library in the Civic
Center: homeless people who hang out among the shelves, sometimes cursing loudly
or threatening others. The bathrooms often have proved downright scary, with
people doing drugs, bathing in the sinks and having sex in the stalls. Patrons'
comments collected by the library over the past couple of years include, 'The
Main Branch library, while well-intentioned, looks like a homeless shelter
inside and out.' And, 'The homeless are driving me and many of my professional
friends away.'" (Sources: Associated Press, February 22; San Francisco
Chronicle, January 11.)
(Cal-Tax recommendation: The
city should differentiate between the library and a homeless shelter, rather
than hiring a social worker and further blurring the lines. Turning the library
into a homeless shelter is a disservice to taxpayers who want to use the library
for its intended purpose, and a disservice to homeless people who would receive
more compassion and care at a true shelter.)
Taxpayers Pay for Failed
Waterless Urinal Experiment at Environmental Protection Agency.
In 2007, a spokeswoman for the California Environmental Protection Agency told
The Sacramento Bee that the EPA building's waterless urinals were a major
success, because they saved millions of gallons of water per year, and saved
energy that otherwise would be needed to pump that water around the 25-floor
building. The Bee reported that the spokeswoman
explained that "there's very little odor, since there's no smell-causing
bacteria that are created by the urine and water mixing."
to this month, when the agency quietly removed the 56 waterless urinals due to
complaints about odor and cleanliness.
KXTV was the first to report on the removal of the fixtures, and it
interviewed another EPA spokeswoman who said there were hundreds of complaints
about strong odors and floors wet with splashed urine. The TV station also
interviewed male CalEPA employees, including one who said of the urinals, "They
The total cost
to taxpayers for this failed experiment is not known. The agency spent $25,000
to replace the waterless urinals with new ones that use a half gallon of water
per flush, and the agency acknowledged that it had been spending the equivalent
of $50,000 a year on the extra cleaning needed for the floors around the
agency also will spend tax dollars to replace the large sign near the men's
restroom on the second floor, since the sign still brags about the benefits of
waterless urinals and describes them as using the same technology developed by
NASA for spacecraft. (Sources: KXTV Channel 10, February 23; The
Sacramento Bee, May 14, 2007.)
recommendation: The agency claims that the $25,000 spent on replacing the
urinals will be recouped within six months in decreased cleaning costs, which
indicates that its cleaning budget should be reduced by at least $50,000 per
year after these six months are up. Also, the state should do more homework
before implementing changes – or ordering private businesses to implement
changes – based on claimed benefits that have not been proven.)
Dead People Received IHSS
Benefits, Controller Reports.
Lax state and county
oversight of In-Home Supportive Services (IHSS) program payments may have cost
the state more than $11 million in 2008, Controller John Chiang said, noting
that this money was distributed despite the providers or recipients of care
As samples, the controller
reviewed Fresno and San Diego counties, where questionable payments totaling
$464,000 and $538,700, respectively, were made in 2008 in cases involving IHSS
providers or recipients whose names and Social Security numbers were listed in
the Social Security Administration Death Master File or the California
Department of Public Health's Vital Statistics Death File.
The IHSS program is
administered by the California Department of Social Services. The program
provides services such as housecleaning, meal preparation, shopping and personal
care to keep eligible individuals in their homes instead of in nursing homes or
The controller's survey
showed that counties were slow to take action to stop payment or to recoup
overpayments, even when evidence suggested the payments were fraudulent.
In one case, Fresno County
referred a case involving a deceased recipient to the county fraud investigation
unit on February 9, 2009. As of June 2009, the county was continuing to submit
claims for services provided to this apparently dead recipient.
The controller's report
recommends that the Department of Social Services develop comprehensive policies
and procedures for counties to follow to determine the validity of payments, and
to improve case file tracking. In addition, the report recommends that the
department conduct periodic field visits to ensure county compliance. (Source:
State Controller John Chiang news release, February 1.)
(Cal-Tax recommendation: We
urge the state and local governments to implement the recommendations made by
the controller. We also recommend that the controller build upon his good work
by expanding the review of IHSS payments to additional counties.)
La Quinta Spends Big on
Sculpture, Then Spends Again to Have It Removed.
In 1996, the La Quinta City Council authorized spending $93,000 in tax dollars
for a sculpture that was placed at a busy intersection as an attempt at public
art. In 2001, the city spent an additional $34,900 for improvements. Now,
responding to public complaints that the sculpture is an eyesore, the city is
going to spend another $15,000 to remove and dispose of the piece.
The sculpture, titled "Oasis
One Eleven," is described as an "art piece-turned-blight" by The
Desert Sun. The artist contends that city officials have failed to polish
and maintain the bronze piece, but city officials say the now-dingy artwork "was
not what was originally envisioned" and was "not in keeping with community
design standards." (Source: The Desert Sun, January 20.)
Public art is a constant source of debate – should government stay away from art
entirely, or does taxpayer-funded art sometimes provide a public benefit by
making an area more enjoyable and more attractive to tourists? The jury is still
out, but this example illustrates that government officials would be wise to err
on the side of caution, lest they follow in La Quinta's footsteps by spending
almost $143,000 to install and then remove a hunk of bronze that has the look of
a bunker for defending against Nazi attacks on the Maginot Line.)