National Entropy... thanks to a now fully-parasitic public sector class of thieves and embezzlers.

Scandals Show California Is Broken, Not Broke

By Steven Greenhut Sep 6, 2012 6:30 PM ET


Voters are accustomed to the scare tactics of tax-hungry politicians who warn of looming cuts in schools and public safety.

But nothing gets people’s attention like closing parks. And in California, where the state beaches and mountain refuges are as beloved as the politicians are cynical, the strategy has exposedpractices that border on the corrupt.

It started in May 2011 when Governor Jerry Brown announced that “turbulent times” required the “unthinkable” -- the shuttering of 70 parks to deal with the state’s enduring fiscal problems. Brown’s critics sensed that he found the proposed cuts to be quite “thinkable” -- at least as a ploy to encourage Californians to loosen the grip on their wallets.

Brown has staked his governorship on the idea that Californians need to pay higher taxes to help plug a budget gap estimated at almost $16 billion -- specifically a proposition on the state ballot in November that would boost the sales tax by a quarter cent for four years and impose supposedly temporary income-tax increases on residents who earn more than $250,000 a year.

Brown and his fellow Democrats didn’t count on two things. First, nonprofit groups and local governments came up with the money to keep most of the targeted parks up and running, thus illustrating the effectiveness of nongovernment or local solutions in the face of state-governmentfailure.

Employee Payouts

Second, it turned out that the state parks department, rather than being strapped, was soawash in cash that it handed out huge payouts to employees and hid millions of dollars in special accounts. (Some private groups backed away from their promises to finance individual parks when they learned about the hidden funds.)

The scandal, combined with bad publicity over a multibillion-dollar high-speed-rail projectreferred to as “the train to nowhere,” has eroded the earlier strong public support for tax increases and left state leaders scrounging for proof that they are serious about reform. The latest polls show support for the measure running slightly ahead, but vulnerable.

The Sacramento Bee, which uncovered the park story, pointed to California’s generous policy of allowing employees to bank many weeks a year of unused vacation time so that they have a small fortune by the time they retire. The budgeting system encourages agencies to spend down their reserves at the end of the year, a common procedure in government. The result was “excess cash left over and not enough ways to spend it,” reported the Bee’s Kevin Yamamura.

The gaming of the system was methodical. The Bee detailed how a deputy parks director came up with a surreptitious plan to burn through extra cash and reduce the backlog of vacation hours that employees had accumulated. He evaded state rules and issued payments to department employees, including himself, recording the transactions on Post-it notes to avoid scrutiny. He was eventually demoted and then resigned from the department.

This shell game unveiled the existence of hidden accounts. Two “special” parks funds contained $54 million in reserves -- far more than enough to cover the $22 million in cuts proposed by the governor to help close the general-fund deficit. The money was socked away for more than a decade because the finance department relies on an honor system that doesn’t compare its numbers with the state controller’s figures, according to a San Jose Mercury Newsreport.

Squandered Resources

The Mercury News then looked at all 500 special funds statewide and found $415 million in financial discrepancies from questionable accounts and faulty accounting procedures.

Although the details may be lost on average voters, the scandal is a reminder that the state squanders money even as Brown sticks to the story of services cut to the bone. Since the publicity has highlighted a possible solution -- more efficient use of current dollars -- Brown and the legislators insist that they are serious about streamlining the bureaucracy. Yes, they will reform the state if only Californians do their part and pony up additional tax dollars!

In the final days of the legislative session, a Democratic plan to reform pensions -- in a state with an unfunded pension liability estimated as high as $500 billion -- sailed through both houses and landed on the governor’s desk. This was amazing, given that state Democratic leaders refused until recently to act on even the most modest changes.

The pension deal is fine as far as it goes, but it doesn’t go very far. It offers modest caps on the salary on which the yearly pension formulas are based ($110,000 for those who receive Social Security, $132,000 for those without it). It also bans some of the most outrageous practices (such as collecting a pension after being convicted of an on-the-job felony, and allowing workers to boost their pensions by adding years to their employment history that they didn’t actually work). Most changes apply to new hires, not current workers.

But the governor and Democratic leaders are no more serious about reforming pensions than they are about shuttering state parks. The goal they are serious about is raising taxes. That’s too bad, because the one thing the parks episode showed is that California can make ends meet if it exercises a little oversight and discipline.

(Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. He is based in Sacramento, California. The opinions expressed are his own.)





Chicago's Teaching Moment

Can Mayor Rahm hold out against the union? Calling Mr. Obama.


Has Chicago Mayor Rahm Emanuel met Wisconsin Governor Scott Walker? If he hasn't, we'd be glad to mediate a call. Chicago teachers went on strike Monday for the first time in 25 years, and Mr. Emanuel can help the cause of education reform nationwide if he shows some Walker-like gumption.

On Sunday night, Chicago Teachers Union President Karen Lewis promised that her 25,000 members would walk the picket line until they have a "fair contract," and she called the battle an "education justice fight." Nice to know they're thinking of the kids at the start of the school year.

Ditto working conditions. Union leaders have bellyached mightily about Mr. Emanuel's decision last year to extend the Chicago school day to seven hours from five hours and 45 minutes (the shortest among the country's 10 biggest cities). The longer hours are one reason the union says teachers need a 29% pay raise over two years. The average Chicago teacher works 1,039 instructional hours per year—roughly half the time logged by the average 40-hour-a-week working Joe.Middle-class parents and two-earner households scrambling for child care may not sympathize. According to the union's own figures, the average Chicago public school teacher makes $71,000 a year in salary, and that's before pensions and benefits generally worth $15,000 or more a year. Senior teachers make much more. That's not a bad deal compared to the median household income of $47,000 for a Chicago worker in the private economy.

When Mr. Emanuel came to office last year, the Chicago Public Schools were already facing a $700 million deficit. Over the next three fiscal years amid mounting salaries and pensions, the Chicago system will be $3 billion in the red. Mr. Emanuel's negotiators still offered a 16% pay raise over four years, but the union walked away.

There's a case for no raise considering that Chicago's schools are among the worst in the country, with a graduation rate around 55%. A 2006 study by the Consortium on Chicago School Research found that for every 100 Chicago public high school freshmen, only six get four-year college degrees. Among African-American and Hispanic boys, the number is three of 100.

Another issue is accountability, with Mr. Emanuel seeking a new teacher evaluation program that includes student test scores as a significant factor. The union wants student scores to play a minor role. The union also wants laid-off teachers to be hired back first if school principals have new job openings. Chicago may close up to 100 failing schools in coming years, and if principals have to dip into that layoff pool to hire even lousy teachers, students will suffer.

Under state law, teachers can strike over wages but not over policies set by the Chicago Board of Education. So the strike is also illegal.

The Chicago brawl is notable because it shows the rift between teachers unions and some Democrats. Unions have long had Democrats in their hip pocket, but more office holders are figuring out that this threatens taxpayers and is immoral to boot.

Perhaps Mr. Emanuel should ask his former boss, President Obama, for a good public word. Recall how eager Mr. Obama was to speak against Mr. Walker's collective-bargaining reforms, at least until the Republican looked like he'd win his recall election.

The Chicago stakes are nearly as high. The chance for major school reform comes rarely, and if Mr. Emanuel gets rolled in his first big union showdown, he'll hurt 350,000 Chicago students and the reputation he's hoping to build as a reformer.


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commented 2012-09-13 12:10:58 -0400 · Flag

I cannot even have a discussion with many of the people
that I am friendly with (notice the emphasis, friendly NOT Friends)
about Brown, the at large Rot in California and by Extension
in Obama’s America.

The shallowness of their Thinking is beyond stifling,
they think they are cool personified, are dialed into what
really matters in life and have evolved to a higher state of
enlightenment that consists of just go with the flow.

I don’t even waste my time any more, as it is just that:
A Waste of Time.

As for California’s treasured State Parks, there are some
really great ones, Bliss State Park in Lake Tahoe,
incredible accommodations right on the lake, I noticed they
went to an abbreviated season May to Sept due to Budget
constraints, this article points out that was just another contrivance
they had (past tense) the resources to keep them Open for the
Public but instead opted to Pay Themselves with the Hidden Reserve

As for Rahm (Shalom) Emmanuel, he is one of the Most Obnoxious
people to ever crawl on the Earths surface, the fact that he is
the poster boy for the Democratic Party just underscores what a
Sewer this Country has become !
commented 2012-09-11 20:50:38 -0400 · Flag
Public sector unions should be banned or at least radically reformed. There is no sense in having employees of the people holding their employers hostage and extracting fabulous pay packages and pensions and salaries which are extracted with the help of the politicians they help to elect. In many countries in Europe and many states in the US the public employee salary and benefits are far above the average that the normal taxpayer is able to have. This is not fair.
@TheIntlChronicl tweeted link to this page. 2012-09-11 19:48:57 -0400
National Entropy... thanks to a now fully-parasitic public sector class of thieves and embezzlers.
commented 2012-09-11 19:47:24 -0400 · Flag
Here in Europe this situation is normal. The public sector is a “sacred cow” and not touchable by budget cuts. 6 week paid vacation and another 2 weeks “sick days” and union leaders sit on boards of companies. The government workers are lifetime-guaranteed officials and retire early with wonderful packages that allow them to work 30 years and then retire for another 25-30 year with a majority of their salary. It is unsustainable and another reason the US should avoid the European model.
@TheIntlChronicl tweeted link to this page. 2012-09-11 15:31:15 -0400
National Entropy... thanks to a now fully-parasitic public sector class of thieves and embezzlers.
@TheIntlChronicl tweeted link to this page. 2012-09-11 15:31:11 -0400
National Entropy... thanks to a now fully-parasitic public sector class of thieves and embezzlers.: Scandals Sho...
commented 2012-09-11 13:32:10 -0400 · Flag
this thievery of tax payer funds is occurring in every major urban center across the US… the acivic embezzlement is so pervasive and widespread, it’s a national pathology. what other explanation can be made for the fact that politicians who sanction and protect this conduct continue to be voted back into office?
published this page in U.S. AFFAIRS 2012-09-11 13:29:24 -0400