MOORLACH UPDATE — SB 584 Goes To Natural Resources — April 21, 2019

Wishing you a happy Easter! He is risen!

This is the last day of the Legislature’s Spring Break. It comes in the middle of presenting bills and a fast approaching deadline. Consequently, I’ll be presenting some 13 bills this coming week and attending some 10 committee meetings, hearings and Floor sessions. I don’t believe I’ve walked into a busier or crazier one-week schedule in my four years at the Capitol.

One of the bills that I will be presenting to a second committee is SB 584 (see MOORLACH UPDATE — Senate Bills 511, 584, 598, 496 and 640 — April 15, 2019). Laguna Beach Mayor Bob Whalen and I successfully presented this bill to the Senate Energy, Utilities and Communications Committee (12-0) on April 10th. As it was double referred, we now go before the Senate Committee on Natural Resources and Water on April 23rd.

We’re serious about this effort and even produced a short video to explain the bill, which can be seen at the Laguna Beach Patch, which provides the piece below or at https://moorlach.cssrc.us/content/senate-bill-584-wildfire-mitigation-through-undergrounding-power-lines.


25th Anniversary Look Back

If you wonder why I’m so big on government transparency, the April 19, 1994 LA Times page A2 table of contents teaser should make the hair on your neck stand straight up:

In response to a demand from his political opponent, Orange County Treasurer Robert L. Citron for the first time Monday released details of his aggressive investment of a $7.5-billion public funds portfolio.

Can you imagine? There were 187 separate non-County agencies invested in the OCIP and they put their money in with, perhaps, no details on how it was generating returns double that provided by the marketplace. And everyone was fine with that! The media should have been up in arms about the lack of transparency, but was not.

The quotes supporting Mr. Citron’s strategy were amazing. The piece by Jeff Brazil and Jodi Wilgoren can be found at https://www.latimes.com/archives/la-xpm-1994-04-19-me-47798-story.html.

The closing paragraph provided another subtle, but critical clue to the inappropriateness of what Mr. Citron was doing.

Bill Sherwood, director of the investment division for the state treasurer’s office, said he does not use reverse repurchase agreements, but "a lot of people would consider us conservative," he said. "We always put safety and liquidity first."

Thank you, Mr. Sherwood. He reminded everyone about the SLY priorities: safety, liquidity, and then yield. The "beat" reporters missed it again.

I have to make a small confession. I already had the Pool’s investment report. But, apparently no one else did. And I was specific in what I asked for, but received pages of garbage. The Wall Street Journal, in its April 20th edition, would quote me as claiming "the listing is junk."

And, if you wonder why I’m a little sheepish about receiving "awards," it’s because Citron received them for reasons, that in retrospect, seem absurd. The next day, April 21st, the Orange County Chapter of the American Society for Public Accountants announced Mr. Citron "has been awarded the OUTSTANDING PUBLIC OFFICIAL AWARD." The criteria? "To recognize a [sic] elected public official who has made an exemplary contributions [sic] to government and the quality of life in Orange County while holding elected office." You just can’t make this stuff up. Public Accountants are not Certified Public Accountants (thank goodness).

Juxtapose the award with the April 22nd OC Register County Scan page which provides tidbits from every city. For the city of Orange, reporter Anne M. Peterson provided the following hint of uncomfortableness:

Councilwoman Joanne Coontz thinks city officials should re-evaluate their investment policies. She said an investment committee should be formed to look at past problems and review present investments. The city has more than $100 million invested in various ventures.

Laguna Beach Talks Power Line Undergrounding, SB 584

Utilities have taken the view that power lines underground are an aesthetic issue, but Laguna officials disagree. Here’s why.

By Ashley Ludwig, Patch Staff

https://patch.com/california/lagunabeach/laguna-beach-talks-power-line-undergrounding-sb-584

Can undergrounding (burying) power lines save residents lives and property in times of wildfire?

Mayor Bob Whalen and Senator John Moorlach are looking to save lives and property through the introduction of Senate Bill 584, the wildfire mitigation through the undergrounding of powerlines.

"Laguna Beach has restricted access with only three ways in and out," Whalen said. "We are concerned about things from a public safety standpoint."

The introduction of SB 584 expedites opportunities for high-risk jurisdictions to underground power lines, as well as to establish a Wildfire Mitigation Oversight Board to develop and implement policies that reduce the looming threat of more wildfires.

In their research, Laguna officials say overhead utility lines and equipment have caused devastating blazes, with the apparatus of California’s three largest utilities being responsible for igniting over 2,000 fires between 2014 and 2017.

According to the Laguna Beach Fire Department Fire Chief Mike Garcia, a downed power pole can either spark a fire or halt a mass exodus of residents fleeing in times of wildfire.

"As we work with our power companies, they come forward and say they will do a power shut off" in times of wildfire, Laguna Beach Fire Captain said. but that hampers communication which often relies on wifi in the homes and cell service.

"Cities and utilities need to work together," Moorlach said. "That time is now."

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MOORLACH UPDATE — Results-Oriented Government — April 18, 2019

The Reason Foundation had a rather lengthy interview with me about my career in the public sector. The first few questions and the last are provided below. The remainder can be found at https://reason.org/innovators/lone-accountant-in-california-senate-seeks-to-strengthen-states-finances-after-local-successes/.

25th Anniversary Look Back

In the April 19, 1994 edition of the OC Register, a new reporter jumped into the fray. Chris Knap’s piece was titled “Earnings champ takes heat in treasurer race — Government: Orange County Treasurer Bob Citron says he’s being targeted for helping a Democrat.” (At least the incumbent was consistent with his effective partisan defense.) Portions of the piece can be found at MOORLACH UPDATE — April 15th — April 15, 2013.

If you want to get a glimpse of what my life was like during this campaign, I would recommend watching the movie, The Big Short (2015). The credit rating agencies missed the subprime mortgage bundling fiasco, too. And their concerns were used against me by Mr. Citron in his currying media favor (see https://www.latimes.com/archives/la-xpm-1994-04-15-mn-46397-story.html).

Here are the opening two paragraphs and a few selected segments of the OC Register piece:

For more than a decade, Robert L. Citron has been hailed for returning more earnings on Orange County’s government deposits than any other local government treasurer in California – often twice as much.

But Citron now is defending himself against a challenger in the June 7 election. John M. Moorlach suggests that Citron earned these returns by over-extending himself in complicated investments that risk huge losses.

Moorlach said his allies on the [Republican] central committee should not obscure his criticism of Citron’s investment strategies.

Citron and [Assistant Treasurer Matt] Raabe acknowledge that an investment manager can run into trouble with reverse repurchase agreements. If the market value of the bonds used as collateral falls, a dealer will want cash to bring the value of the collateral up to market value. If no cash is available, the investment manager may have to sell bonds at reduced value, creating a loss for the fund.

Diane Brosen, director of short-term debt rating for Standard and Poor’s, said officials from her company met with Citron and Raabe on March 30 and talked at length about the county’s portfolio. “We did not have any cause for concern with regard to the county’s investment strategy,” Brosen said.

For the last 25th Anniversary episode, go to MOORLACH UPDATE — Presenting SB 689 Plus a Dozen More — April 17, 2019.

INNOVATORS IN ACTION

California State Senator John M.W. Moorlach on Results-Oriented Government

Moorlach on how local and state governments can deal with unfunded pension liabilities, spending, debt, outsourcing and more.

By Austill Stuart

https://reason.org/innovators/lone-accountant-in-california-senate-seeks-to-strengthen-states-finances-after-local-successes/

California State Sen. John M.W. Moorlach, a certified public accountant (CPA) by training, started his career in public service in 1994, running for Orange County Treasurer-Tax Collector on the platform that the county’s investment practices would lead to bankruptcy. Although he lost that election, his predictions proved accurate: The county did file for bankruptcy in December that year. After then-Orange County Treasurer Bob Citron resigned, Moorlach served in the post for nearly 12 years, followed by eight years as county supervisor, during which time Orange County was able to emerge from bankruptcy and greatly strengthen its finances.

Since March 2015, Sen. Moorlach has represented the 37th district in Californias’s State Senate, where he has been working to build upon his successes in Orange County to improve the state’s finances.

Reason’s Austill Stuart interviewed Sen. Moorlach on his career in public service, how his accounting background has worked to improve finances in local government, and his plans and challenges for doing the same in California’s state government.

Austill Stuart, Reason Foundation: Looking back to the beginning of your public service, you got involved the 1990s as someone on the outside warning about a possibility of bankruptcy in Orange County that eventually happened, leading you to being appointed as county treasurer. Where did you start trying to right the course on the county’s financial situation? 

California State. Sen. John M.W. Moorlach: Some of the first things we looked at were, should we be outsourcing the investment process? Should we be outsourcing the tax-collection process? And what are we to do with the relationships with outside vendors like the banks, the investment houses and the software underwriters? How do we handle dealing with employees when we needed to downsize?

So one of my first tasks was to reduce my workforce by about 11 percent . You learn quickly that the paradigm in government is not excellence; it’s longevity.  I had to let a lot of wonderful new people go and I was stuck with some of the older people that maybe were not as productive and as innovative, but they were protected by their union. Also, those that had elevated to management did not have union protection, so some really great middle managers had to be laid off. It was really frustrating to deal with the government “last in first out” approach to management.

We looked at the idea of outsourcing our investment process but found it was too costly. Not only was it better from a cost standpoint to hire competent money managers internally, they also were more aggressive in getting better bids than the private sector was. For the idea of trying to outsource the tax collection side of it, that didn’t provide the kind of RFP (Request for Proposals) responses that I was looking for.

There was a firm on the East Coast that was assuming responsibility for collecting taxes for a few counties, but it actually went bankrupt, leaving a lot of counties without the infrastructure to do it internally. We looked at a lot of things, but just letting the staff know we were looking at outsourcing certainly forced them to bring up the level of their game and be more serious that, “Hey, if you want to continue here, we’ve got to prove we can do this cost-effectively and appropriately.” So that was one of the components to what I did to restructure and reform the department. I also worked as just one of many of the officers of the county as a whole to structure a strategy to exit from bankruptcy, so I can’t take a lot of credit. I was just a member of the team.  We worked on ideas and then exited bankruptcy within 18 months.

Then we enacted a lot of other reforms for the whole county. One reform concerned results-oriented government, identifying what our metrics were. What was our job and how do we do it and how do we measure it and compare it to other governments? Or internally? That was a real good process which then led to doing annual business plans for every department, eventually leading to each department completing a 10-year strategic financial plan. So then your business plan and your budget for the next 10 years would fold into the 10-year strategic financial plan. We knew where we were going as a county 10 years ahead, but you were making decisions now that we knew what the impacts would be in the future as opposed to doing budgets every year.

We implemented a lot of fun changes about 12 years later when I became a county supervisor in 2007. We initiated a performance audit department, which did a lot more heavy lifting than, say, an internal audit department. It was more of a managerial function of exploring how certain departments are operating and if they are operating as efficiently as they possibly could, which provided a lot of improvements.

When I became treasurer, we were very transparent and very visible right from the get-go. We had better communication. We did a monthly report as opposed to a quarterly report. We established an investment oversight committee, which monitored the market a lot more closely.  Just trying to calm everything down, trying to calm the markets, trying to get a good rate of return, trying to be innovative in investment style.

At that time, Alan Greenspan was the chairman of the Federal Reserve Board. Our game was, “What is Greenspan going to do next? And how can we anticipate it with the duration of our investment holdings?” We were accurate more than 90 percent of the time. So that gave a little bit of added value in the service we were providing. It was a fun opportunity to manage almost $7 billion in funds for the county and its taxpayers.

Stuart: Did the bankruptcy help you get things done that otherwise may have languished as good ideas that sat on the shelf?

Moorlach:  Well, I put a little note on my credenza that said, “Policies, procedures and oversight.” Our focus: How do we run a good shop post-bankruptcy? Having been through a bankruptcy, everybody knew that we were digging out and had to grab the oars and pull. If that didn’t work for them, then other departments or other careers would be their choice. But we were looking for people that could add value.

For instance, I hired a certified cash manager, who came in and started reviewing the banking relationships with the county and we started saving significant amounts of money quickly because the prior administration was sort of sloppy: We had $400,000 a year in banking costs just for our social services agency. We made some dramatic changes in our working relationship with them that they didn’t like at first, but then they realized they were not to be subsidized by every other department in the county. We had a lot of fun getting people to rethink things.

We had a lot of fun getting industry to rethink how they dealt with governmental business. Orange County had 50,000 welfare checks to pay on the first of the month. Most banks didn’t want those people in their banks on the first of the month.

But instead of giving them the checks, why don’t we just give them positive pay cards through the point of sale opportunities and just swipe it through at ATM machines or at grocery stores, etc.? That was a fun exercise, but at the end of the day, we realized the cost savings alone weren’t going to be enough.

But the banking industry knew we were looking because they heard about our efforts with the Federal Reserve Board and the state banking agency. It made them step up to the plate and be a little more cooperative. It provided a little bit of leverage that we weren’t afraid to look outside the box to get something resolved.

We had to really work with industry to rethink what they were going to do in their roll in servicing government work if they wanted the business. We had a lot of fun because of the paradigm. We could force certain companies that maybe didn’t do so well in providing good service before the bankruptcy to step it up. We even encouraged one major national software firm that does investment software to give us a contract. It provided the services for $1 for the first year of the contract just to try to set the relationship right.

Stuart:  What kind of challenges did you run into during the dozen years or so that you served as treasurer before moving to the county board of supervisors? 

Moorlach: You certainly run into the public employee union paradigm, meaning you can’t lay off employees that might have been lagging in their ability to provide a good work product. You just had to learn to live with that. You also learn that it would take a pretty thick file of documentation to remove employees that were not producing to the standards that were expected—a little different than the private sector. Other than that, I didn’t have too much trouble improving things.

The California Legislature was really nervous about us making unique kinds of changes. It was coming from me and out of Orange County. They knew we were trying to make appropriate and necessary decisions and not invest in anything scary or risky because we were now the most conservative portfolio in the state. We had fun trying to be innovative.

One idea we pursued was trying to start our own bank because most of the major banks did not want to have welfare recipients in their branches. How could we issue 50,000 checks on the first of the month?

Stuart: Was there a limit as to how far you could push reform serving as treasurer or treasurer-tax collector?

Moorlach:  There was. When you saw your Board of Supervisors making certain decisions, it was frustrating to say, “Hey, what you’re doing may put future boards in jeopardy because of the financial impact of the policies you’re approving.”

One example was granting retroactive pension benefits, effective 2002, to the date of hire with an improvement of the benefit just because there was a dot-com boom. It was distressing to me and it was one of the few major reasons for me to leave the treasurer position and run for supervisor to see if I could at least do some damage control after the votes were already cast. Because once you give a pension benefit enhancement, you can’t take it back. And, at the time, I was screaming, “This is a lobster trap that you’re walking into. You can walk into it, but you can’t walk out, so don’t do it!”

Three of the five supervisors, all Republicans, voted for another pension increase for the rank-and-file. That’s when I announced I was going to run for supervisor in 2006 because I’d rather be on the dais and at least lose 4-1 than to watch a 5-0 vote on some of these inappropriate fiscal decisions because a lot of elected officials are not business majors or defined-benefit pension plan students. But I had the privilege of serving on the retirement board for the county for close to a dozen years. Certainty, I had my share of actuary presentations to understand how a defined­-benefit plan works. That was a reaction to a dilemma that most of California and the nation face.

Stuart: You’ve said that pensions were a major issue for you in deciding to make the leap over to the county board. Can you maybe explain a little bit more about that issue and what motivates you?

Moorlach: What I decided to do was leave a position that paid a lot more than the county supervisors earned and it was not subject to term limits, which was one of the things a supervisor is subjected to. They are only allowed two terms, so we had to jump in and start swinging right away with a long list of ideas we wanted to implement.

One of the first things we did was address retiree medical care. The county had an unfunded liability of $1.4 billion. We were able to negotiate with the bargaining units. They agreed to make a number of significant changes, which resulted in a 71 percent reduction in the unfunded liability: from $1.4 billion to $412 million, about $1 billion dollars. If we could do the same at the state level, we could reduce an unfunded liability by about $50 billion dollars. It was a great opportunity to attack at that level. Then we had to deal with all the legal onslaughts of “hey, you can’t do this,” because it’s treated as a vested right. We had to go through all the expense and time to have judges rule that the changes were allowable.

Another area we took on: was that, The California Constitution states, in two sections, you have to retire debts in the year they are created. If you can’t pay it off in that year, then you have to get two–thirds voter approval. So we sued the deputy sheriffs, who received the 50 percent increase in their pension benefits. Their pension formula went from 2 percent at 50 to 3 percent at 50. That means 3 percent of their final salary times the number of years on the job. The deal was made retroactive to the date of hire, so their benefits went up dramatically. If they were going to retire before the change with $100,000 salary after 25 years, they were going to get $50,000 a year if they retired. But if they waited a few days for the new formula to kick in, they would have received a pension of $75,000 a year.

The plan had not been actuarially funded for that massive increase, so we said that’s a debt. When you take a fully funded pension plan and you improve the benefits by 50 percent overnight, your plan becomes 2/3 funded. We said the whole one-third is a new debt, liabilities that have to be paid by future boards.

We took that to the local Orange County Superior Court. The forces against us had it moved to an L.A.-area court. Superior Court judges must go up for election every six years. The decision had very poor citations. And when asked how she came to this conclusion, her response was, “Well I’m looking forward to your brief when you file it at the appellate level.” We fought it in the Appellate Court in L.A. on constitutional grounds.

The unions put up a lawyer by the name of Miriam A. Vogel, who had just retired from the appellate court, and who greeted her former colleagues at the court, “How ya doing, how’s it going?” Her position was simple: “They’re going after my pension and they’re going after yours” – and she sat down. In less than two weeks, the Appellate Court ruled the liability was not a liability, but an estimate, though we’ve got an amicus brief from accounting professors from around the nation saying it was a liability.

Then we took it to the California Supreme court, only to have new Chief Justice Cantil-Sakauye, whose husband was a police sergeant soon to retire. They decided not to hear our case, so we lost that battle. Very unfortunate, as we could have saved the state and local municipalities a boatload of grief, burden and money. Gov. Jerry Brown and I had a conversation about the case, and he realized that granting retroactive benefits was crazy. And so, in his Public Employee Pension Reform Act of 2013 (PEPRA), he put a specific provision that they could not grant retroactive benefit increases, so at least we got a little consolation prize.

Another thing we did in 2009, not too long after I got on the board, was address new tiers for new hires. We were probably the first county in the state to do that, which is now common practice with PEPRA. We also set up a new plan, a hybrid, that was partially defined-contribution and partially defined-benefit, but at a much lower formula than what was being offered. This would be available to new and existing employees. However, for current employees, we found ourselves fighting an Internal Revenue Service ruling. If there’s ambiguity in the tax code, the IRS will issue a Revenue Ruling to clarify their position.

Ours was Revenue Ruling 2006-43. The U.S. Treasury was unwilling to change its position, which was basically that you only have one choice—whether or not to make the pension plan selection. Providing a new lower tier was a second choice, and that would disrupt the deductibility of the contributions and the taxability of the pension benefits, by jeopardizing the tax-exempt status of the retirement trust.  So it would be taxable, as pension payments were being contributed; as opposed to when the pension benefits were being received later on in retirement.

We tried to convince the U.S. Treasury and the IRS to change, but we found the national public employee unions were pretty strong and were lobbying the IRS and the U.S. Treasury just as aggressively, if not more than we were. When you deal with the AFL-CIO, the American Federation of State, County and Municipal Employees and the SEIU at the national level, it gets even more interesting. But at least we had a solution for allowing current employees to opt out to a lower pension formula, which would have been a lot of assistance in lowering unfunded liabilities for the county. That’s still being lobbied and addressed even as we speak.

We took on a lot of things that are now kind of normal. But we were very innovative in Orange County in my two terms as a supervisor in starting the conversation and moving the ball forward and encouraging others to do the same.

Stuart: You’ve now had 20-odd years or so in public service pushing for reform. What are some lessons learned and what advice would you offer to those who might be following in your footsteps getting into government today, especially with respect to how to push reform and the limits of doing so?

Moorlach: I would love to challenge individuals with MBA’s and CPAs and CFPs and other professional designations. To think about running for elected office, which means they have to make significant sacrifices in family time and earning capacity to help their fellow citizens. We need a lot more fiscal brains in elected office. People that really understand how balance sheets and income statements work and can analyze a budget. I’d love to encourage people with fiscal backgrounds to get involved.

A lot of accountants tend to be kind of quiet and introverted individuals. They’re not really accustomed to a public limelight. I would say, if you have that skill set, you are desperately needed to be the adult in the room when it comes to a lot of the financial silliness that’s occurred because of pensions and other promises being put in the shadows and now finally coming out to the light of day.

I would add that it’s a big chore to step up and disagree with public employee unions—be prepared for an unpleasant campaign. Take heart in spite of all the negative mail, TV commercials and all the other things you might have to endure, you’re a part of the solution for resolving and reforming government so that we don’t give a massive debt to our kids, our grandkids and our great-grandkids. Because, by doing nothing, this nonsense just continues.

We must educate critics to help them understand that they’re not going to be able to pursue their programs if they don’t pay attention to the nickels and dimes as they’re putting their budgets together. There are trends. You need to watch the trends and what they’re doing to push other programs out. That’s the job—trying to message and communicate so they understand the ramifications of their decisions.

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MOORLACH UPDATE — Presenting SB 689 Plus a Dozen More — April 17, 2019

Next week I will be presenting 13 bills. Here’s a rundown:

Monday –
Senate Housing — SB 754

Tuesday –
Senate Elections and Constitutional Amendments — SB 57 (Bates) and SB 359
Senate Natural Resources — SB 584

Senate Governmental Organizations — SB 598
Senate Judiciary — SB 435 and SB 496
Senate Transportation — SB 319, SB 571 and SB 319

Wednesday –
Senate Environmental Quality — SB 535
Senate Health — SB 689
Senate Governance and Finance — SB 241

For more details, go to https://moorlach.cssrc.us/legislation.

The OC Register, East Bay Times, and San Jose Mercury News cover SB 689 in the piece below (see MOORLACH UPDATE — SB 689 – Needle Exchange — March 1, 2019, MOORLACH UPDATE — SB 319 and SB 689 — March 3, 2019 and MOORLACH UPDATE — SB 319 and SB 689 Debate — March 12, 2019).

This year, Sacramento is focused on a number of bills that takes away local control from city councils to build more affordable housing. SB 689 is trying to return local control for needle exchange programs. Why should cities have to rake up parks first thing each morning to protect small children? Whom do the parents go to when they wish to complain? They usually go to the city council. So, my bill should reduce legal fees and encourage collaboration between cities and the state. But, since Sacramento is so much smarter than local government (not), it may be reluctant to relinquish an inch in this regard.

25th Anniversary Look Back

One of the unexpected side stories during my 1994 campaign was the city of Tustin pulling its funds out of the Orange County Investment Pool (OCIP). Kevin Johnson of the LA Times thought it was newsworthy. His April 14th piece was titled, “Tustin Pulls Its Money Out of County Portfolio — Finances: City cites what it calls risky investment strategies — Treasurer Robert L. Citron thinks bid to unseat him is motive.” It started an interesting story line about one of the 187 OCIP participants.

When you have a beat reporter covering an unrelated business/investment activity, you find an opening line like this: “In a move shrouded in politics, the city of Tustin has withdrawn about $4 million from Orange County’s investment pool since last month, citing overly risky investment strategies used by longtime county Treasurer-Tax Collector Robert L. Citron.” But, it was prescient and the city would not suffer investment losses or the long struggle endured by the litigation that followed to retrieve lost funds.

Tustin City Councilman Jeffrey Thomas was very clear: “I think the city will come out smelling like a rose because of it.”

About the investment strategy, I was quoted as saying, “I’m nervous. You better believe I’m nervous. I’m praying that the county money is OK. Everyone should be concerned, because this is public money.”

Ricky Young of the OC Register also covered the story the next day. His April 15 piece was titled “Tustin withdraws from O.C. investment pool — Politics: The city removes $4 million from the fund, but Mayor Jim Potts criticizes the action.”

Jeff Thomas would take a serious amount of grief from the media during the campaign. There were days when I wondered how someone other than the candidate could be the recipient of so much abuse. But, it seems to come back to beat reporters covering topics outside of their areas of expertise and only addressing surface issues without digging deeper. The question should have been, “With more than $20 billion under management, why are we crying about a $4 million withdrawal?” Or, “If the fund is having trouble, then why is Tustin getting its entire deposit back, instead of a reduced amount at a lower net asset value (like mutual funds are valued)?”

The City Council would recognize its audit committee after the county filed for Chapter 9 bankruptcy. Tustin had dodged the bullet. But, I would hold one of its audit committee members to a higher account for not being brave enough to criticize one of his fellow California county investment colleagues. He would later become a wonderful mentor of mine in my new role as the Orange County Treasurer-Tax Collector (see MOORLACH UPDATE — OC Register — February 10, 2010).

I would later praise Jeff Thomas for his leadership when he was mentioned as a potential candidate for higher office (see MOORLACH UPDATE — OC Register — February 25, 2010).

For the last 25th Anniversary episode, go to MOORLACH UPDATE — Senate Bills 511, 584, 598, 496 and 640 — April 15, 2019 .

Proposed bill would allow cities to veto needle exchange programs

State Sen. Moorlach says his legislation offers appropriate local control, but program advocates fear worse outcomes including disease and deaths

By ALICIA ROBINSON | arobinson@scng.com

https://www.ocregister.com/2019/04/16/proposed-bill-would-allow-cities-to-veto-needle-exchange-programs/

https://www.eastbaytimes.com/2019/04/16/proposed-bill-would-allow-cities-to-veto-needle-exchange-programs/

https://www.mercurynews.com/2019/04/17/proposed-bill-would-allow-cities-to-veto-needle-exchange-programs/

Regardless of whether a court allows an Orange County nonprofit to run a mobile syringe exchange, the program’s organizers could find themselves barred under proposed legislation from working in the cities they hoped to serve.

State Sen. John Moorlach is behind a bill that would require city or county officials to sign off before a needle exchange could operate in their jurisdiction. Current law says programs can be authorized by either local authorities or the state Department of Public Health.

The Orange County Needle Exchange Program is proposing to provide free clean needles through a mobile exchange program, but the state’s approval has been opposed in court by officials in the county and cities where the group hoped to operate.

Moorlach said his goal is not to take sides, but to give local officials an equal say in what takes place in their community.

“All I’m saying is, you know, convince your city council,” he said. “I don’t feel comfortable with Sacramento saying, ‘We’re smarter than you and we’re going to do whatever we want.’”

But public health advocates of programs such as free, clean needles for injection drug users say Moorlach’s proposal would be a setback they fear could lead to increased transmission of HIV and Hepatitis C and even overdose deaths – syringe exchanges often also distribute naloxone, which can counteract an overdose.

Los Angeles Community Health Project Executive Director Michael Marquesen worried it will turn back the clock to before state health officials had authority to approve needle exchanges.

“It really put a damper on intervention in so many places when it was left up to the local authorities,” he said.

Needle exchanges offer clean syringes and collect used ones for proper disposal, and they typically also offer people other health-related information and referrals, such as to substance abuse treatment.

A previous program in Orange County was one of 45 syringe exchanges around California, according to state health officials. Such programs sprang up in the 1990s to stem the spread of HIV, though Orange County’s was only created in 2016.

It operated in Santa Ana’s Civic Center once a week, but in early 2018 city officials denied organizers a permit to continue after complaints about discarded needles on the ground and in public buildings and workers being pricked by them.

While some local governments sanction and even fund syringe exchange in their communities, others have been resistant. State law was changed in 2011 so the Department of Public Health could approve programs directly.

“Up until then, an individual’s access to syringe programs was determined by where they lived, not how much need there was in a community,” said Laura Thomas, deputy state director for the Drug Policy Alliance, a nonprofit focused on drug policy reform.

When the local program lost its Civic Center permit, organizers proposed a mobile program stopping in Anaheim, Costa Mesa, Orange and Santa Ana and got the state’s approval. But the county and three of the cities – citing public health concerns about stray needles and risk to recovering addicts – successfully sued to block the program before it began.

Moorlach said the needle exchange organizers surprised the cities where they hoped to operate rather than reaching out to them first, and his bill would ensure that doesn’t happen again.

Based on the Orange County Needle Exchange Program’s reported problems in the Civic Center, Costa Mesa Councilman John Stephens said he and his colleagues “did not think that their program was well thought out.”

And that is why a city should have some power to evaluate programs and regulate them in its own jurisdiction, he said.

Orange County Needle Exchange Program officials couldn’t be reached for comment, but in a March 10 op-ed in The Orange County Register they argued that Moorlach failed to propose anything that could help win acceptance for the programs and cautioned, “Local control would serve as a barrier to syringe exchange programs and not a promise to help reform and improve them.”

Meanwhile, other groups have tried to fill the service gap, including Marquesen, who said he’s seen plenty of recent clients at his Los Angeles clinics who came from Orange County because there’s no local needle exchange program.

Volunteers with the Solace Foundation, which had partnered with the Orange County Needle Exchange Program to give out naloxone, have added kits to sterilize syringes and sharps containers for disposal to the supplies they hand out on the street, the group’s founder wrote in a December op-ed.

Moorlach’s bill is scheduled for a Senate Health Committee hearing April 24.

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MOORLACH UPDATE — Senate Bills 511, 584, 598, 496 and 640 — April 15, 2019

It’s bill approval season and I have positive news on those I presented last week

SB 511 – The DMV Motor Voter Registration Transparency and Training Bill — See https://moorlach.cssrc.us/content/senate-bill-511-dmv-voter-registration- transparency-and-training

It was heard by the Senate Elections and Constitutional Amendments Committee on April 2nd and passed 4-0, with one abstention.

SB 584 – The Ability to Underground Electrical Wires with Rule 20A Funding – See https://moorlach.cssrc.us/content/senate-bill-584-wildfire-mitigation-through-undergrounding-power-lines (also see MOORLACH UPDATE — SB 754 — March 16, 2019)

It was heard by the Senate Energy, Utilities and Communications Committee, of which I serve as Vice Chair, on April 10th and passed 12-0, with one abstention.

SB 598 – The Open Financial Statements Act with a Conversion to iXBRL – See https://moorlach.cssrc.us/content/senate-bill-598-open-financial-statements-act (also see MOORLACH UPDATE — SB 496 and SB 598 — March 6, 2019 and MOORLACH UPDATE — Open Transparency — March 8, 2019)

It was heard by the Senate Governance & Finance Committee, of which I also serve as Vice Chair, on April 10th, and passed 7-0.

SB 496 – Updates the Elder Abuse and Dependent Adult Civil Protection Act – See https://moorlach.cssrc.us/content/senate-bill-496-protections-against-financial-abuse-elder-and-dependent-adults (also see MOORLACH UPDATE — SB 496 and SB 598 — March 6, 2019)

It was heard by the Senate Banking and Financial Institutions Committee on April 10th and passed 7-0.

SB 640 – Changes the Definition of “Gravely Disabled” in the Lanterman-Petris-Short Act – See https://moorlach.cssrc.us/content/senate-bill-640-mental-health-services-gravely-disabled

After I presented the bill In the Senate Health Committee on April 10th, with two powerful mothers who provided testimony on behalf of their severely mentally ill sons, it was obvious that members of the committee, though sympathetic, would rather kill my bill than pass it and work on improving it this year. With that understanding, I requested that the Chair allow SB 640 to become a two-year bill so that I may continue to build a stronger case for the redefinition of "gravely disabled".

The bill was developed from a request of Dr. Drew Pinsky, who shares his perspectives in The Sacramento Bee editorial submission below.

I believe California needs to update its mental health laws in order to institutionalize those who cannot make decisions for themselves. Instead, these individuals are being left on the streets to fend for themselves and perish. It’s unconscionable. But, if the definition is changed, then where do we house those in need of assistance? So the private sector is opposed because they do not want this burden imposed on them. And the disability rights nonprofits do not believe individuals should be institutionalized against their own will.

Dr. Pinsky does a great job of addressing those with mental illness. I would state from my personal experience that putting someone in a memory care unit, because they exhibit signs of dementia or Alzheimer’s, is the right and humane action to take.

Orange County has a relatively good pipeline for mentally ill homeless individuals to be released from a hospital and be cared for by a nonprofit, like The Illumination Foundation. This nonprofit then finds supportive housing, and if the individual can function and move toward mainstreaming, they find HUD housing. This is not the case for the remainder of the state. So, I have a little more work to do with SB 640 to integrate "No Place Like Home" and other Mental Health Services Act (Proposition 63, 2004) funding opportunities (see MOORLACH UPDATE — Homelessness Discussion — February 4, 2019).

Kent (Klass) Meindert Moorlach (1927 – 2019)

Many members of my family from around the country and I gathered together this weekend and said goodbye, for now, to my father. My heartfelt thanks go to all of those who attended the service and who provided flowers, cards and words of condolence. I am most grateful.

I shared a few thoughts in MOORLACH UPDATE — Goodbye to my Dad — March 23, 2019. The official obituary can be found at https://www.legacy.com/funeral-homes/obituaries/name/kent-moorlach-obituary?sid=106958880&v=forestlawn&pid=192014885&view=guestbook&page=2.

And, my adjournment on the Senate Floor can be seen at https://www.youtube.com/watch?v=hKUL4rA0BQs&t=27s.

25th Anniversary Look Back

April 15, 1994, was an amazing day. It was the conclusion of tax season. But, it was also the day I made it for the first time to The Wall Street Journal, a publication I used to read faithfully every day for decades. The Wall Street Journal does not, as a policy, cover local races. But, the race for Orange County Treasurer-Tax Collector was compelling enough that the reporter provided a perspective not happening with the local major newspapers.

It would rock the County Administrative Building profoundly. They did not react well to what would be an eerily prescient article. For a link to the piece, see MOORLACH UPDATE — We’re Out! Sort Of — July 2, 2017. For additional perspectives on its importance, see MOORLACH UPDATE — Venezia & Me — November 15, 2014, MOORLACH UPDATE — CEO Candidate — May 1, 2013, and MOORLACH UPDATE — LOOK BACKS — February 4, 2010.

To catch up on these 25th anniversary look-backs, go to MOORLACH UPDATE — Software Incompetence — April 5, 2019.

Housing alone won’t solve homelessness. Let’s rethink how we treat mentally ill

BY DREW PINSKY

https://www.sacbee.com/article229133294.html

As a young, motivated resident in internal medicine, I began to moonlight in a freestanding, full-service psychiatric hospital. I became fascinated with the medical care of the psychiatric patient and the management of substance use disorders. In time, I became a director of Medical Services and Program Medical Director for Chemical Dependency Services and spent the better part of three decades developing expertise in the care of psychiatric patients.

This is why I support a mental health reform bill, Senate Bill 640, by state Sen. John Moorlach (R-Costa Mesa).

Never did I imagine I would live in a state which would systematically allow patients with massive mental health needs to languish and deteriorate in the most unconscionable, abject circumstances. It was unthinkable to me as a young physician that, decades after I began my career, leadership in the State of California would –in the name of some abstract, misplaced notion of compassion – literally position the symptoms of major psychiatric illness as a guiding principle to be protected.

The very symptoms causing desperately ill patients to spill into our streets are being protected in the name of compassion. This is dialing back to a Medieval understanding of psychiatric illness and is absolutely outrageous, particularly in the era of effective treatments which can restore patients to stability.

As I have seen repeatedly, the patients themselves, when their thought disorders are stabilized, become furious that anyone allowed them to languish in abject conditions in the name of compassion. Paranoia, hoarding and the distorted motivation to seek and use powerful narcotics are elevated to protected status under California laws. The very symptoms that lead to progressive misery are privileged above the ability to step in to help. Every civilized society knows to intervene in spite of these symptoms to restore people to health.

It is anathema to the basic needs of civilization to allow the current situation to continue. Summer is approaching and I am terribly concerned about the continued deterioration of these ill individuals. The complete sanitation breakdown, rodent infestation and vector explosion are going to result in an infectious disease crisis. In Southern California, typhus is going to be even worse than our recent epidemics. Tuberculosis is going to massively expand. I predict we will see Yersinia pestis – the plague. And it won’t be just the homeless who are stricken.

This is not a housing or homelessness crisis; this is a mental health crisis. It is a deplorable insult to continue to see this glossed over in the press as somehow the result of expensive housing. Housing does not cause our communities to need to rake the grass in parks before children play to pull up hundreds of needles. Housing is not going to help the paranoid, poorly clothed manic or paranoid schizophrenic. In fact, the symptoms of these illnesses will cause the homeless to refuse to remain indoors and to accept help or treatment. To hear politicians maintain the rhetoric of a housing crisis is tantamount to reckless negligence and materially contributes to the misery and death of untold numbers.

If we are going to show true compassion for these patients, we must have the tools to combat their symptoms. The symptoms of brain disease must lose their protected status and the ability of our highly trained mental health professionals to help must be supported.

As an enlightened approach to solving these problems, SB 640 would provide a more accurate and compassionate definition of the gravely disabled. Doing so would allow mental health professionals to better deliver services to patients whose psychiatric symptoms would otherwise be allowed to drive a wedge between the patient and their ultimate wellness.

Lack of insight, distorted thoughts and beliefs, hoarding, agitation, lack of trust, paranoia, difficulty remaining indoors, driving toward substances that overtake all other priorities and delusional distortions about current conditions – all are symptoms that must be contended with so that, ultimately, a chronically mentally ill patient might accept housing and vocational rehabilitation.

I would also urge the California State Legislature to look at finding ways to increase funding and access to conservatorships for patients with chronic symptoms that prevent them from certain decision making about their wellness, and interfere with their ability to participate in care. Combined with passing SB 640, such reforms are crucial to helping the least among us in this ongoing crisis.

Dr. Drew Pinsky, M.D., Board Certified Internist and Addiction Medicine Specialist, hosts Dr. Drew Midday Live with Leeann Tweeden, noon to 3 pm on 790 KABC

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MOORLACH UPDATE — Software Incompetence — April 5, 2019

The California Globe provides deeper insights into the status of Fi$Cal, the accounting software for the State of California, even quoting my recent UPDATE on the subject, in the piece below (see MOORLACH UPDATE — Fi$Cal Frustrations — March 28, 2019).

25th Anniversary Look Back

April 2

The campaign for Orange County Treasurer-Tax Collector started to receive media attention with a piece in the LA Times on April 2, 1994 (see MOORLACH UPDATE — Goodbye to my Dad — March 23, 2019 and MOORLACH UPDATE — SB 754 — March 16, 2019).

The LA Times elevated the contest with "O.C. Tax Collector to Meet 2nd Challenger in 24 Years — Politics: Opponent may make an issue of county investments, annoying incumbent Robert L. Citron," by Gebe Martinez and Kevin Johnson. Here is the piece with the now famous "red flag" observations, like "being annoyed," "aggressively handles," "recognized nationally for investment ability," "gutsy," "hefty losses," "complicated financial strategy," "borrowing," "a change in the market could turn positive returns into negatives," "contingency plan," and "innovative investment planning."

The classic line out of the entire campaign would be found in this piece: "I don’t know how in the hell he does it, but he makes us all look good."

The deflection strategy of being a Democrat challenged by a Republican was very effective. That’s how shallow things can get. Skip over the $20 billion-plus portfolio "aggressively managed" in an "innovative" manner and focus on the Republican Party Chair’s involvement. Here’s th entire piece:

It was expected to be just another sleepy election year for Orange County Treasurer-Tax Collector Robert L. Citron.

The last time he had an opponent was 24 years ago when he was first elected to the low-key post.

The most recent political fund-raiser Citron held was eight years ago, when there were whispers of an opponent who never materialized. In these days of high-finance politics, holding fund-raisers is just not his style.

But suddenly, Citron, whose office handled 1.1-million property tax bills last year, has a challenger on his hands–one who is promising to make more than a little trouble.

Citron, 68, of Santa Ana received a letter this week from his challenger, John Moorlach, a certified public accountant and financial planner, who is demanding to know how Citron has managed the county’s investments portfolio.

Invoking the state open records law, Moorlach, 38, has submitted a long list of documents he wants released by April 18, detailing where the county’s funds are invested and who the brokers handling the accounts are.

It’s more than a little annoying to the usually soft-spoken Citron, who takes pride in how he aggressively handles a $7.5-billion portfolio for 187 government agencies. Last year, he said, the investments yielded $344 million.

"My reputation is so good as to the types and the quality of investments that I do," Citron said. "I’m not blowing my own horn here, but I am recognized nationally for my investment ability and by the state of California."

Moorlach, he said, "is trying to find a basis to say that I am doing risky investments and so on and so forth. That’s fine. I understand politics."

As the only Democrat in an elective office in county government, Citron claims the Republicans are trying to inject party politics into a nonpartisan race as pay-back for his involvement four years ago in the bitterly fought election victory of Democratic Assemblyman Tom Umberg of Garden Grove.

Umberg defeated Republican Curt Pringle of Garden Grove, who returned to the state Assembly two years later after winning in another district.

Up until the 1990 election, Citron said, he and Orange County GOP Chairman Thomas Fuentes were friends.

"He’s been mad at me ever since and has been out to get me," Citron said. "I am not worried, but I am concerned because you never take an opponent lightly."

But Fuentes says that it was Citron who brought party politics into the county office when he helped Umberg by sending out an endorsement letter that had an imprint of the county seal.

"You know how everyone opens letters from the tax collector like a letter from a lawyer," Fuentes said. "I think he has brought the fox down on his own house by being such a partisan liberal activist."

Moorlach, who is the assistant treasurer for the Orange County GOP Central Committee, said he would not be running if he did not believe Citron should be held accountable after running unopposed six times for four-year terms.

"When I looked at this position, you bet I talked to Tom Fuentes," Moorlach said. "That’s part of the proper etiquette in political circles. Yeah, I was encouraged to look at it."

However, he added, "I am not some puppet" for Fuentes.

Moorlach said he asked for the investment records so he can publicly debate Citron during the campaign without misrepresenting the facts. He also argued that he is not the only one concerned about Citron’s bullish investments.

Moorlach pointed to a recent article in a trade newsletter published by Institutional Investor Inc., which noted Orange County’s profits from its "gutsy" investments but warned that a rise in the interest rate "could leave the fund with hefty losses."

Under a complicated financial strategy, the county is basically borrowing U.S. Treasury bonds and then selling them to invest in higher-yielding bonds.

The trade publication states that as long as the county is borrowing at a lower rate than the return on the security in which it invests, the county is on "solid ground." But a change in the market could turn positive returns into negatives.

Moorlach conceded that Citron may have a contingency plan, but he said what he has heard so far makes him nervous.

"I think (Citron) is taking high risks. I think he’s cavalier," Moorlach, of Costa Mesa, said. "I think his portfolio, a lot of it, has been sheer luck."

But Citron wrote the 1980 law that allows local government treasurers across the state to engage in that innovative investment planning.

And his long record for capturing returns has won plaudits from local government officials, including the Orange County Board of Supervisors, which was recently able to finance a $2-million gang prosecution program using proceeds from Citron’s successful investment transactions.

The program funding came at a most uncertain fiscal time for the county, which has seen once-dependable revenue shrink along with the state’s sagging economy.

Citron’s success is a good example of the power of money in Republican Orange County.

"It doesn’t bother me that he is a Democrat," Board of Supervisors Chairman Thomas F. Riley, a Republican, said. "This is a person who has gotten us millions of dollars. I don’t know how in the hell he does it, but he makes us all look good."

The low-key Citron, who is rarely seen on the local political circuit of dinners and fund-raisers, has managed to ruffle some feathers, though.

When he learned that Sheriff Brad Gates would not be joining the gang program, Citron was one of the few county officials to publicly criticize the sheriff.

The comments touched a nerve with Gates, who maintains a close relationship with Fuentes. "The next time he makes comments about me, I will have a heck of a lot to say," Gates said at the time.

For now, Moorlach is the one planning to take on Citron after he conducts his own informal audit of the county’s financial records.

But Citron warned that Moorlach may be overwhelmed by the task, which is normally handled on a full-time basis by the county auditor’s office.

Citron said he also doubted Moorlach can raise enough money to defeat him.

The latest campaign finance statements filed in the registrar of voters office for the period ending March 17 showed that Moorlach had an ending cash balance of $5,428 compared to $7,237 in Citron’s account.

"I have tremendous name identification (with the voters), which he does not have and is trying to establish," Citron said. "The Republicans have far more needs for Republican candidates, not only in the county but up and down the state, to try to take away a nonpartisan office," Citron said.

But Moorlach countered: "I guess time will tell. . . . He might be surprised at what it’s going to take (to win)."

April 5

The April 5, 1994 edition of the Daily Pilot had a piece by Russ Loar, titled "Moorlach plans to challenge Citron for county treasurer.” Here are some selected portions of the article:

It’s not a political contest expected to generate much excitement, but local accountant John Moorlach is doing his level best to make the sparks fly in the June 7 election battle for county treasurer.

Times are changing, interest rates are rising, and the aggressive, highly leveraged investment strategies of the county treasurer could lead to disaster, [Moorlach] says.

“He’s been a gambler and he’s been lucky,” says Moorlach. “When you leverage, either you win big or you lose big. This is high risk.”

April 7

I wrote another letter to Mr. Citron requesting numerous details: "I would like a full accounting of the investment of the taxable note proceeds transaction involving the Newport-Mesa Unified School District (NMUSD)."

I also wrote to then Orange County Auditor-Controller Steven E. Lewis requesting the June 30, 1993 Comprehensive Annual Financial Report (see, I’ve been focused on CAFRs for a very long time). I also asked about reverse repurchase agreements, margin requirements, and how much the County’s investment pool could be leveraged.

The campaign was on and the media was sniffing around, getting warmer, but was using political reporters, not business reporters, on the case.

Sacramento’s Software Incompetence in the Software Capital of the World

California’s public sector is gummed up by a unionized workforce based on fulfilling ethnic and gender quotas instead of merit

By Edward Ring

https://californiaglobe.com/fl/sacramentos-software-incompetence-in-the-software-capital-of-the-world/

California owns a well-deserved reputation as being the global epicenter of high technology. In nearly every critical area, from aerospace to biotech, from nanotech to green tech, to telecommunications, to chip design, California’s universities and private companies are either the best in the world, or they are counted among the leaders.

Probably at the pinnacle of global achievement is California’s software industry, spawning companies that over the past few decades and especially in recent years have completely transformed how we live. Some of these companies, for better or for worse, have designed products that are literally rewiring our brains.

None of this translates to California’s public sector, which is gummed up by a unionized workforce assembled based on fulfilling ethnic and gender quotas instead of merit, along with the usual waste, fraud and corruption that attends to any institution that relies on taxes instead of having to earn revenues in a competitive marketplace.

If you want to know just how bad California’s state government is at implementing software projects, despite being nestled in the software capital of the world, just review the “IT Project Tracking” report, courtesy of a laudable effort at transparency produced by the California Dept. of Technology.

At first glance, it’s not that bad. Of the 23 projects evaluated, only four are marked with a “red” status, defined as “Escalated for immediate corrective action. There is a significant risk to the health of the project.” But consider the cost of these four projects compared to the cost for all 23 projects combined. The total amount allocated for all 23 projects is $2.8 billion. The total amount of the four projects on the skids? Over $1.7 billion. Of the major software projects being undertaken by the state of California, over 61 percent of the money is being mishandled. By their own admission.

By far the worst offender is the “Financial Information System for California,” a red flagged project that has cost taxpayers $918 million dollars so far, with no end in sight. FI$Cal, which was launched back in 2005, is marked “Red” based on “missed deadlines,” “significant development delays,” “inability to complete all planned scope before project completion,” “inadequate determination of scope,” “quality, implementation and management issues,” “configuration errors and workflow errors resulting in rework and failed batch processing,” “quality management process issues,” “still does not have a production like test environment,” “delayed documentation of risks,” “project level issues are not being managed and mitigated,” and on, and on, and on.

What exactly is FI$Cal? To quote from their website, the goal is to “consolidate multiple financial systems into a common platform and eliminate thousands of legacy systems and applications specific to single state entities.” Their motto? “One state. One system.”

Fi$Cal is needed to improve state spending transparency. The State Controller has been unable to provide an open checkbook or meet public records requests asking for an itemized list of expenditures because financial data is currently scattered across 500 incompatible systems.

Consolidating these systems is a big job. But then again, 14 years is a long time. And $918 million is a lot of money. State Controller Betty Yee has expressed grave concerns about the FI$Cal project and claims that “efforts to tie a new computer program into the state’s legacy systems have delayed monthly cash reports and are threatening the accuracy of the state’s annual financial report.”

State Senator John Moorlach (R-Costa Mesa), who ought to be famous, even if for no other reason, because he is the only Certified Public Accountant serving in either house of the California state legislature, had this to say about the FI$Cal project: “As someone who as a County Supervisor has observed abuses to taxpayers by software producers, I am not amused when providers string a client out and, in the case of Orange County, deliberately forced a customer to spend more on unnecessary change orders. California has paid nearly $1 billion for Fi$Cal. This is outrageous. And it is still not working satisfactorily. And it seems that no one is really being held accountable.”

Who is running the FI$Cal project, one might ask? Maybe that’s part of the problem, because while there is an executive team, the project is a partnership bringing together several branches of state government, the Dept. of Finance, the State Controller’s Office, the Dept. of General Services, the Dept. of Technology, and the State Treasurer’s Office. Representatives from all of these departments sit on the FI$Cal steering committee. With this many players, is there accountability at the top? Is there authority at the top?

Since 2015, the director, where the buck typically stops, has been Miriam Barcellona-Ingenito, a career public bureaucrat with a BA from the University of San Francisco, and an MA in Public Policy Studies from the University of Chicago. According to Transparent California, Barcellona-Ingenito’s total pay and benefits package amounted to $227,360 in 2017. If Barcellona-Ingenito is to be held accountable, then she’s failed. If she hasn’t been given sufficient authority to do her job, then that must change.

At the risk of breaking with orthodoxy, one recommendation would be to not just immediately fire or demote Barcellona-Ingenito, but to bring in someone new at a significantly higher rate of pay. And what is required for the top job is not someone with an MA in public policy, but someone with an advanced degree in computer science, with a track record of success in large enterprise software implementations, and – don’t bother if this isn’t part of the deal – the power to summarily fire any employee or any outside vendor involved in the project, for whatever reason or for no reason, and at any time. Give the the new director six months to turn the ship around, and if they fail, then fire them and find someone new.

Along with the ongoing state IT projects for which California’s IT Project Tracking website offer status reports, there is a legacy of recently completed, mismanaged projects. As reported in the Sacramento Bee, there is “a $100 million government computer program doubled the time it takes to license California nurses,” and “a $290 million tax software upgrade unveiled last summer made it more difficult to file taxes online, prompting a major accounting firm to file by paper instead.” And nobody will soon forget the debacle last year at the Dept. of Motor Vehicles as they fitfully attempted to upgrade their software systems.

California’s new Governor, Gavin Newsom, has claimed he wants to correct California’s state government ineptitude when it comes to information technology projects. Being thirty years younger than outgoing Governor Brown, and unlike Brown, having a more than passing acquaintance with actually running a business, it would be premature to dismiss Newsom’s aspirations. Quoted in the Sacramento Bee in reference to steps he is taking to solve the problem, Newsom said “If you like the status quo, you’re not going to like these reforms.”

One may hope.

Edward Ring is a political and financial analyst, working primarily with start-up and early-stage organizations. In 2013, he co-founded the California Policy Center, a free-market think tank based in Southern California.

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MOORLACH UPDATE — Committee Season Has Started — April 3, 2019

One of the awkward and expensive components of Sacramento’s successfully pursuing controversial legislation is that the state may get sued. If so, it may lose. Then it appeals until it gets the results that it wants. And, then not.

In 2015 I voted against a troubling bill, AB 775, that would require crisis pregnancy centers to post a sign notifying visitors that the state provided abortion service (see MOORLACH UPDATE — Closed Doors — October 13, 2015). It’s not quite like telling Chevrolet dealers to post signs that inform customers there is a Ford dealer down the street, but extremely awkward all the same.

Of course, someone sued the state of California over free speech and doctor-patient discourse concerns (National Institute of Family and Life Advocates vs. Becerra, No. 16-1140). The state eventually lost in the U.S. Supreme Court in June of 2018 (see https://www.sfchronicle.com/news/article/Supreme-Court-rules-CA-can-t-force-13026955.php).

The reason I bring it up is that one wonders, how much did the taxpayers have to pay for this predictable outcome? And, having lost what appears to be a religious liberty debate before, why go down the same path? Even if the cause is righteous.

The Sacramento Bee, in the first piece below, provides a portion of the discussion from Tuesday’s Senate Public Safety Committee, where I serve as Vice Chair, concerning SB 360 (Hill).

I am sick and angry about the number of pedophile Roman Catholic priests that have ruined the lives of so many innocent children. But, SB 360 only addresses this tragic crime if a perpetrator confesses these deplorable activities to another fellow priest. It may help reduce this egregious activity, but it’s an indirect strategy for doing so.

I can see another lawsuit on the horizon if the Governor signs this bill. So I raised this as a concern. But, it seems that, since the members of the Legislature do not have to personally pay for the costs of litigation, it becomes a “damn the torpedoes, full speed ahead” opportunity.

The second piece is from the Daily Pilot, which recognizes the Easterseals award I received last month (see MOORLACH UPDATE — Goodbye to my Dad — March 23, 2019).

The third and fourth pieces from Curbed San Francisco and Daily Post provide some color from Tuesday afternoon’s Senate Housing Committee, on which I sit, of the discussion on SB 50 and SB 4. Both bills have local cities very concerned. But, the list of supporters is growing by the week.

I am a co-author on SB 50 and I sat through the hearings that assisted SB 4 joint authors Sen. Beall and Sen. McGuire in shaping their similar bill (see MOORLACH UPDATE — Really Addressing Housing Goals — January 29, 2019) So, of course, a clarification of the dueling bills was needed. My big ask was for a map. With the amendments to SB 50, I doubt that very many areas of Orange County would be impacted by either bill.

Why am I a co-author of SB 50? You may want to listen to the podcast provided with MOORLACH UPDATE — Mediating Huntington Beach — February 8, 2019. This discussion will come to the Senate Governance & Finance Committee, where I serve as Vice Chair, and the debate should once again be robust.

‘It’s time. It’s beyond time.’ Sex abuse victims back California priest accountability bill

By Andrew Sheeler

https://www.sacbee.com/news/politics-government/capitol-alert/article228735834.html

A procession of sexual assault victims on Tuesday urged the Senate to pass a law requiring priests and other religious leaders to report child abuse, ending a legal exemption that allows them to keep information confidential if they learn it during confessions.

One speaker, Kameron Torres, told lawmakers that he was sexually abused twice while growing up in a Jehovah’s Witness community. When his mother learned of the abuse and tried to report it to the church elders, “They told her, ‘It’s in God’s hands now,” Torres said.

Torres has since left that community, but said his abusers are still there and still in positions of power over potential victims.

“The universe is telling us to protect the children,” Torres said.

While members of the clergy are considered mandated reporters of abuse — meaning state law compels them to inform the police if they suspect a child being abused — there is an exemption to that requirement if the priest learns of the abuse through “penitential communication,” such as the Catholic rite of confession.

Senate Bill 360 erases that exemption, and puts “religious folks on a level playing field with other mandated reporters,” such as doctors, lawyers and mental heath professionals, said Sen. Nancy Skinner, D-Berkeley.

As chair of the Senate Committee on Public Safety, Skinner and other lawmakers took testimony from both supporters and opponents of the bill.

Opposing the bill were representatives from the California Catholic Conference and the Pacific Justice Institute Center for Public Policy.

Andrew Rivas, executive director of the California Catholic Conference, told lawmakers that the bill, if passed, would make religious adherents less likely to consult with their spiritual leaders.

“I don’t think anyone would use the penitential communication any longer. It would be gone,” he said.

Kevin Snider, who serves as legal counsel for the institute, cautioned lawmakers against overturning the Catholic seal of confession, which he called a “millennia-old religious practice.”

Snider said SB 360 would conflict not just with Catholic beliefs, but practices in certain Protestant denominations, the Church of Latter Day Saints and the Church of Scientology as well.

He said the bill “requires the clergy to sail between the Scylla and Charybdis,” referring to a tale in the Odyssey in which sailors had to pass between two deadly dangers. Failing to disclose abuse would be a misdemeanor offense while breaking the seal of confession would result in immediate excommunication from the church, he said.

Snider also warned that SB 360 would infringe on the clergy’s First Amendment-protected religious beliefs.

“The church should not be used as a tool of the state,” he said.

Sen. Hannah-Beth Jackson told Snider that “the First Amendment is not unlimited.”

“We do have laws prohibiting bigamy (also a practice for some religions),” Jackson said.

Jackson said SB 360 is necessary because “we have had a plague, an epidemic, of excuses and claims of religion which have allowed pedophiles and abusers to exist in this country and this world unfettered for far too long.”

Sen. John Moorlach, R-Costa Mesa, said that while the cause of SB 360 was “righteous,” he worried that it could be “an expensive disappointment after a few years” if the law were to be struck down in a legal challenge.

“There are times when the courts are the avenues we need to pursue,” Jackson said, adding that it might be appropriate for the United States Supreme Court to settle the matter.

As the bill hearing came to a close, Skinner, herself an abuse survivor, thanked those survivors who spoke Tuesday and offered them some advice.

“It does get easier to speak about it, but the experience you experienced, they never go away. You don’t forget,” she said.

After the hearing Tuesday, Torres said he was confident in SB 360’s prospects.

“I think we have a strong argument. I think it’s pretty obvious they (those who opposed the bill) didn’t. It’s time. It’s beyond time,” he said.

Political Landscape: Assemblywoman to moderate gun-violence discussion in Costa Mesa

By DAILY PILOT STAFF

https://www.latimes.com/socal/daily-pilot/news/tn-dpt-me-political-landscape-20190402-story.html

Moorlach honored for disability services

State Sen. John Moorlach (R-Costa Mesa) won the Senate Leadership Award at the 2019 Easterseals Legislative Awards on March 19.

Moorlach received the honor for his work on Senate Bill 1004, which aims to develop a statewide strategy for monitoring the implementation and effectiveness of prevention and early intervention programs under the Mental Health Services Act. He was one of four California legislative representatives recognized at the ceremony.

California’s transit-housing bill pushing for taller, denser growth clears first hurdle

“When it comes to housing, California’s system of almost pure local control hasn’t worked,” says State Sen. Scott Wiener

By Camille von Kaenel

https://sf.curbed.com/2019/4/3/18293731/senate-bill-50-scott-wiener-density-transit-hearing-housing

State Sen. Scott Wiener’s effort to boost housing density near public transit in California has officially progressed farther than last year when his similar bill was killed in a different State Senate Committee.

Wiener and his allies will be able to keep negotiating details of the bill with detractors after the State Senate Committee on housing voted to advance the bill, Senate Bill 50, in a 9-to-1 vote Tuesday.

The bill’s main goal is to change zoning codes to allow residential buildings of greater height and density near rail, bus, and other public transit, though it also includes new tenant protections and affordable housing requirements. It’s one of the more ambitious initiatives to address California’s housing crisis—and one of the most controversial.

SB 50 will face a tougher vote on April 24 in the State Senate Governance and Finance Committee, which is chaired by State Sen. Mike McGuire (D-Healdsburg).

McGuire, who represents the North Coast region, has been pushing an alternative bill, SB 4, which also advanced out of the committee Tuesday. McGuire’s bill would seek to increase housing density near transit but much less aggressively than SB 50.

McGuire will work behind the scenes to reach a compromise with Wiener before April 24, he announced at the hearing. He withheld voting yes or no on the current SB 50 version, but recommended the committee advance both bills so that negotiations could continue.

“This bill is a continuing work in progress,” cautioned Wiener. “Over the past year and half, we have worked with a broad spectrum of for profit and not for profit developers, environmental, labor, religious, disability and senior advocates, to craft a bill to move the dial on housing, so that we move away from housing anxiety and towards housing action.”

The Housing committee’s Tuesday hearing, its first, was important because it showed that SB 50 has a better shot at making it, in some form, than last year’s version, which died in its first hearing.

It also showed the current battle lines: Dozens of advocates from across California voiced support or opposition to the bill in rapid-fire succession at the microphone.

The coalition supporting the bill continues to grow as Wiener and allies add in provisions to the bill. The nonprofit Housing Association of Northern California, the California Building Industry Association, and the State Building and Construction Trades Council testified in favor of the bill. They were followed by representatives of labor, developer, social justice, affordable housing, and environmental groups, from local YIMBY groups to the Natural Resources Defense Council to Bay Area Rapid Transit.

A few local elected officials, homeowners, and low-income advocacy groups voiced continued opposition. Among those testifying was a representative Housing is a Human Right, a non-profit focused on tenant organizing and concerned about gentrification.

Another objector was a realtor wanting to protect her single-family neighborhood.

More than fifty organizations signed on to a letter to the committee this week outlining their concerns the bill “would further exacerbate the housing challenges experienced by low-income people, people of color, and other vulnerable people, the very populations being hit hardest by California’s affordability crisis.”

Some top bite-sized exchanges from Tuesday’s hearing:

State Sen. Nancy Skinner (D-East Bay), an original co-author of both SB8 27 and SB 50, thanked Wiener for working with a variety of groups.

“We’re never going to resolve issues of housing and good jobs if we’re not working together. I’m relying on you” to reach a solution, she said.

“Other than that, no pressure,” interjected State Sen. John Moorlach, a Republican from Orange County who voted to advance the bill.

Michael Gunning, a representative for the California Building Industry Association, noted that he rarely finds himself sitting next to Cesar Diaz, from the State Building and Construction Trades Council, a union group, in joint support of a bill. The State Building and Construction Trades Council switched from opposing the bill last year.

“We’ve had a lot of discussion about local control,” said Wiener in his opening remarks, addressing a rallying cry for advocates from mostly rich cities. “It does make adjustments to the state and local decision making balance. Just like we have a balance over public education. Local control isn’t biblical, it’s a good thing when it delivers results, and it usually does deliver good results, and I say this as a former elected local official. When it comes to housing, California’s system of almost pure local control hasn’t worked.”

2 bills pushing tall, dense housing advance in Legislature

BY ALLISON LEVITSKY
Daily Post Staff Writer

https://padailypost.com/2019/04/03/2-bills-pushing-tall-dense-housing-advance-in-legislature/

City officials and neighborhood activists on the mid-Peninsula have been worried about Senate Bill 50, which would pre-empt local zoning to force cities to allow taller, denser housing near jobs and public transit. But at a state Senate Housing Committee hearing in Sacramento yesterday (April 2), it became clear that there’s another bill making headway, SB 4, which would do many of the same things as SB 50.

SB 50, introduced by Sen. Scott Wiener, D-San Francisco, would allow taller, denser buildings with fewer parking spaces in jobs-rich areas like Palo Alto and anywhere in the state within a half-mile of a major transit stop.

SB 4, authored by senators Jim Beall, D-San Jose and Mark McGuire, D-Healdsburg, would apply some of the same principles.

The bill would increase residential height limits to allow for one more story of housing than is currently allowed in a given area of a city of more than 50,000.

A new streamlined permit process would make it easier for developers to get permits to build residential quadplexes in cities with more than 50,000 residents, or to build duplexes in smaller cities. And similar to SB 50, housing developers could get a density bonus in areas around train and ferry stations.

In cities with more than 100,000 people within a half-mile of a transit stop, developers would only have to build one parking space for every two housing units.

“The strategy of saying no to housing no longer works,” McGuire told the Senate Housing Committee yesterday. “This isn’t an easy bill. And candidly, we have had our share of folks who have said this is too aggressive. But at the end of the day, every community must see change.”

SB 50, meet SB 4

More than a month ago, the authors of the two bills agreed to collaborate on their separate efforts until April 24, when both bills will hit the Senate Governance and Finance Committee after the Housing Committee’s vote yesterday to send both bills forward.

Sen. John Moorlach, R-Costa Mesa, asked Wiener whether he would have to choose between SB 4 and SB 50.

“Our goal is for that not to be the case,” Wiener responded. “I am optimistic that we’re going to be able to not have competitive bills.”

Wiener touted the coalition that had built around SB 50, which spans business and labor, developers and environmentalists, Democrats and Republicans.

Opponents of SB 50 include the League of California Cities, a number of city governments including Redondo Beach and Beverly Hills and community groups who fear the bill would accelerate gentrification.

Norma Garcia, the director of policy and advocacy for the Mission Economic Development Agency in San Francisco, said her nonprofit was “very concerned” that SB 50 doesn’t designate most of the Mission District as a “sensitive community.”

Fear of displacement

Sensitive communities are those that Wiener is seeking to protect from displacement.

Garcia said she fears SB 50 would reduce the Latino communities in San Francisco and east Los Angeles’ Boyle Heights neighborhood to “a plaque on the ground that says we were here.”

Wiener pointed out yesterday that the bill doesn’t allow developers to build on property that has operated as a rental in the last seven years. If a tenant has been evicted under the Ellis Act in the last 15 years, a developer wouldn’t be allowed to build there.

“You can’t use this bill to start demolishing tenant-occupied buildings,” Wiener said. “We have to be very careful that we are adding the housing we need that will reduce displacement by stopping this runaway housing market.”

A representative for the League of California Cities said the group agrees that there are not enough homes being built, but that SB 50 undermines local zoning. Nothing prohibits a developer from requesting a zoning change from City Hall, the reasoning goes.

Karen Klinger, a Sacramento real estate agent, also spoke out against SB 50, stating that it would “destroy” her suburban neighborhood of single-family homes.

“This is discrimination against suburban neighborhoods,” Klinger said. “The local officials would be eliminated under this process.”

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MOORLACH UPDATE — Fi$Cal Frustrations — March 28, 2019

Although I have publicly criticized in multiple Senate committee and budget hearings about Fi$Cal, the relatively new accounting software used by the State of California, this is the first time my frustrations have made it into print. And, fortunately (or regretfully), the reporter provided my more polite observations.

As someone who as a County Supervisor has observed abuses to taxpayers by software producers, I am not amused when providers string a client out and, in the case of Orange County, deliberately force a customer to spend more on unnecessary change orders. In the case of Tata, a disappointing county vendor, they paid a steep price for their stunt (see MOORLACH UPDATE — Four Absent Days — September 21, 2016). (Add their settlement, the largest in Orange County that year, to the record $800 million-plus in bankruptcy settlements, and I’ve had some fun results on the plaintiff’s side of the equation.)

California has paid nearly $1 billion for Fi$Cal! This is outrageous. And it is still not working satisfactorily. And it seems that no one is really being held accountable. Recently, the State Controller sent out a notice that this software may delay the issuance of the state’s CAFRs. The Sacramento Bee provides the details in the first piece below.

The Daily Journal requested a submittal from me on Gov. Newsom’s reprieve on the death penalty and it is the second piece below (see MOORLACH UPDATE — Death Penalty Reprieve — March 14, 2019).

California controller ‘gravely concerned’ about state’s $1 billion accounting program

By Wes Venteicher

State Controller Betty Yee is “gravely concerned” that problems with the state’s accounting software could undermine California’s credit worthiness, she wrote in a recent letter to legislators.

Efforts to tie a new computer program into the state’s legacy systems have delayed monthly cash reports and are threatening the accuracy of the state’s annual financial report, which is typically published at the end of April, Yee wrote.

If the annual report is inaccurate, it could negatively affect the state’s credit rating, which influences borrowing costs for spending on things like infrastructure projects.

The computer program, called Fi$Cal, has cost the state more than $900 million and has repeatedly been delayed since its 2005 launch. Yee, echoing a January recommendation from the state auditor, said more delays are needed.

“We need to pause and direct resources to making Fi$Cal work as it was intended to work,” she wrote. “Continuing to push ahead by adding features that do not work or bringing more departments into the troubled system will cost taxpayers exponentially more in the long run.”

Yee addressed the state Senate and Assembly budget committees in her March 18 letter.

Assemblyman Jim Patterson, R-Fresno, a member of the Assembly’s budget committee, said Yee’s letter should add new urgency to the state’s efforts to improve its use of technology.

“It’s amazing to me,” Patterson said. “We are the fifth-largest economy on the planet, we’re almost 20 years into the 21st century, we’re the home of Silicon Valley and we have such a fouled up accounting system that it jeopardizes our credit rating.”

Sen. John Moorlach, R-Costa Mesa, who sits on the Senate budget committee, said the state should consider closer scrutiny of the third-party vendors tasked with implementing most of its new technology.

“It’s just getting to be too much of a common thing, whether it’s Fi$Cal or the DMV or name the department,” Moorlach said.

Yee sent a follow-up letter March 22 clarifying that while she is concerned about the state’s reporting abilities with the new program, she has “no concern about the state’s cash position or overall fiscal health.”

Gov. Newsom disrespects murder victims, their families and voters

By John M. W. Moorlach

Justice. It means giving people what they deserve. For stone-cold killers convicted in the justice system, passed through the appeals process and sitting on death row, justice actually is to be executed.

Executing them also is justice for the dead victims and their surviving families.

And it’s justice for our democracy, for the voters who backed the death penalty three times in recent years. They rejected two initiatives to repeal the death penalty, in 2012 and 2016, and in 2016 also backed an initiative to expedite the appeals of the death penalty.

All that was tossed aside by Gov. Gavin Newsom when he gave reprieves to the 737 convicted murderers on death row. He said, “I cannot sign off on executing hundreds and hundreds of human beings.” But no one was asking him to. The governor’s job is to diligently review each case as it approaches the date of execution, not all of them at once.

Only 13 murderers were executed in California between 1978, when the death penalty was reinstated in California, and 2006 – none since. Five each were executed under Govs. Pete Wilson and Gray Davis, and three under Gov. Arnold Schwarzenegger. Davis, like Newsom, is a Democrat.

So under Newsom, the highest number of executions might have been five. Moreover, Newsom’s reprieve could be reversed by his successor in four or eight years.

Let’s look at the last person executed, Clarence Ray Allen. While incarcerated in Folsom State Prison for murdering Mary Kitts, he arranged for the murders outside of Byron William Schletewitz, who had testified against him, and Josephine Rocha and Douglas White, who were working in the same place.

After Allen received justice in 2006, Schletewitz’ family issued a statement that read, “It has taken 30 years from the burglary of Fran’s Market to this night for Clarence Allen to receive his just punishment. The Schletewitz family wishes to express gratitude to the men and women who stood by our families to ensure a just end to Clarence Allen’s destruction of lives.”

Newsom maintained the death penalty “has provided no public safety benefit or value as a deterrent.” But if Allen had been executed swiftly, after his first conviction, the other three victims never would have been murdered. And the other 12 killers executed in California in recent decades also didn’t commit further crimes.

Next, let’s look at someone Newsom just took off the Green Mile, Randy Kraft, also known as the Scorecard Killer, the Southern California Strangler and the Freeway Killer. According to the Los Angeles Times summary, “Kraft killed 16 young men between 1972 and 1983, sexually mutilating some of them and leaving their bodies by the roadside. Six of the men were Marines. Most of the victims had been drugged with alcohol and prescription relaxants. Kraft was discovered when he was pulled over for drunk driving and officers found a dead man in the passenger seat.”

According to Wikipedia, “Kraft is also believed to have committed the rape and murder of up to 51 other boys and young men.”

For the citizens of California, justice is to execute these killers. Naturally, constitutional safeguards must be followed. The U.S. Supreme Court has set up these safeguards, while affirming the constitutionality of the death penalty for what the Constitution calls a “capital” crime.

“It’s a racist system,” Newsom said on CBS This Morning. “You cannot deny that.” But according to the California Department of Corrections and Rehabilitation, which he now administers, of the 13 executed since 1979, 10 were white, two black and one “other.”

And if Newsom thought too many of one group were being executed, he could have given reprieves to them, while continuing the executions of those in other groups.

Just last year during his campaign, a Newsom spokesperson said that, while he was personally opposed to the death penalty, “he recognizes that California voters have spoken on the issue and, if elected governor, he’d respect the will of the electorate by following and implementing the law.”

As an accountant, I also look at the cost to the taxpayers. California’s counties and elected district attorneys paid an average of $1 million to put each inmate on death row, for a total of $737 million. I believe the Governor owes these counties $737 million in reimbursements, plus interest, which could double the cost.

The governor also brought up the concern that there might be innocent people on death row. Then he should propose in the May Revision of his budget an amount of money to advance a quick appeals process for all of them. If any are proven innocent, then let’s get them out of prison as soon as possible. For the rest, expedite the execution instead of dragging it on for years or decades.

The electorate might again get to flex its will. Assemblymember Marc Levine, D-Los Angeles, has sponsored Assembly Constitutional Amendment 12, which would abolish the death penalty, if approved by voters in 2020.

I’m curious to see the votes on ACA 12 of the new Democratic Assemblymembers and state Senators who came to Sacramento after last November’s Blue Wave.

Will they side with Newsom or with the voters of California, especially those still suffering families and friends of murder victims?

John M. W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate

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MOORLACH UPDATE — Veterans Cemetery — March 25, 2019

My not signing a letter concerning the potential Veterans cemetery at the Great Park was mentioned in the Voice of OC column below. I warned five years ago that this would be a long-term endeavor (see MOORLACH UPDATE — Bicycle Safety — August 26, 2014).

I explained my concerns about the Department of Veterans Affairs back then in great detail (see MOORLACH UPDATE — You’re Being Political — April 9, 2014).

My parents survived Nazi occupation in the Netherlands during World War II. So I am very proud of our veterans who served in the European war zone and liberated Holland. I would not be alive today if not for the sacrifices that generation made. Consequently, I am a big supporter of veterans. Period.

That being said, the proposal to place a Veterans Cemetery at the Great Park has been an interesting effort. From a parochial standpoint, this piece of real estate is located in my Senate District and Steven Choi’s Assembly District. So it’s always awkward when legislators from other areas decide to unilaterally overstep their jurisdictions. Especially when Assemblyman Choi is the former Mayor of the city of Irvine.

Set aside the awkwardness, I have been stating for five years that this should not be a political football. It should be realistic and achievable. Period.

The Orange County Cemetery District may be part of the solution. I’m not so sure that the California Department of Veterans Affairs should be, as economic cycles are not good to this agency. But, if my colleagues are concerned about the cemetery, then let’s form a Blue Ribbon Committee and get things done.

In the meantime, I wrote the following letter to CalVet in January of 2015 to determine my own comfort level:

Secretary Vito Imbasciani, MD

Department of Veterans Affairs

P.O. Box 942895

Sacramento, CA 94295

Dear Secretary Imbasciani:

I respectfully write to you concerning the California Department of Veterans Affairs (CalVet) and its ability to oversee and manage funds appropriated for our California Veterans Cemeteries. Recent inquiries by my staff to both CalVet and the Department of Finance concerning the financing of these cemeteries resulted were less than sufficient. While I had intended to ask the Joint Legislative Audit Committee (JLAC) approve an audit to examine CalVet finances related to the cemeteries, I thought it would be helpful to formally inquire with you first.

For context, with the national Veteran’s Administration scandals over the treatments of our veterans in their hospitals, it gave me pause to read the Little Hoover Commission’s letter dated December 8, 2015 (included) which outlines CalVet’s systematic infrastructure and bureaucratic issues that impair its overall operations, “failing to provide the safe and dignified living environment that California veterans deserve.” During a December 11, 2015 legislative briefing at the State Capitol that Keith Boylan, Deputy Secretary of CalVet, declared the Yountville Veteran Home was their “crowning jewel.” As has been demonstrated by various reports, if maintenance efforts are failing at the best of our veteran homes to assist the living, what is happening at the other California facilities, especially the cemeteries under CalVet jurisdiction to honor the dead? If our veteran homes are not being maintained, how does CalVet properly prioritize and maintain the final resting place of the men, women and their families who have served our country?

With the expansion of regional California Veterans Cemeteries, including the Monterey site currently under construction as well as the Southern California Veterans Cemetery to be located at the Great Park in the City of Irvine as proposed in Assembly Bill 1453 (Quirk-Silva, 2014), I would like more information on the following issues:

  • What is the process for establishing a financing plan that provides for receiving and establishing endowments for Veteran Cemeteries so that they may be well maintained in perpetuity? Is there an endowment process established and is it consistent among the various cemeteries? How are the funds managed?
  • Specifically, do the burial benefits – which include gravesites for casket or cremation remains, headstones or markers, opening and closing of the graves, and continued perpetual care – actually and adequately cover the long-term cost of maintaining the endowment for any or all of the CalVet cemeteries?
  • How has the $6.8 million federal grant awarded for building the California Central Coast Veterans Cemetery been spent? For what were these funds used?
  • Per AB 1453, the legislature created the Southern California Veterans Cemetery Master Development Fund (SCVCMDF). The legislation stipulates that CalVet will “apply for Veterans Cemetery Grants Program of the federal Department of Veterans Affairs for a grant of not more than 100% of the estimated cost for designing, developing, constructing, and equipping the cemetery.” With the SCVCMDF and other federal funding, is there enough funding to adequately maintain the cemetery in perpetuity?
  • How many of the Veteran Cemeteries are in current need of repair and maintenance? What is the extent of the needed repairs or maintenance, including the estimated associated costs? What is CalVet’s process for Veteran Cemetery improvements?
  • In 2013, the state budget authorized $153,000 to Yountville Cemetery and the Northern California Veterans Cemetery in Igo for upgrades. How were those funds utilized? Are these funds sufficient to also deal with continued maintenance needs?
  • What is CalVet doing to ensure Veteran Cemeteries are properly maintained in the future?
  • Has CalVet made a decision to forego or delay replacement or repair of items in any of the California Veterans Cemeteries when funding has been available?
  • Who is currently responsible for CalVet cemetery oversight? Is there someone appointed to the position of Assistant Deputy Secretary for Veterans Outreach, Memorials, and Cemeteries, as listed by the State Personnel Board on November 19, 2015? If not, when does CalVet expect that position to be filled?
  • What responsibility is placed on the Local Interagency Network Coordinators (LINC) – which serve as both informational conduits to the community and feedback resources for CalVet, as well as bridging the gap between CalVet and the federal, state, county, and nongovernment agencies that provide services to our state’s nearly 2 million veterans – to provide maintenance of Veteran Cemeteries?

After sending the letter, members of CalVet’s staff dropped by for a visit with my Capitol staff, but no formal written response was received.

Hopefully this will help you understand why I elected to layoff on signing the letter to the City of Irvine. As the Senator for the Great Park, I am more than happy to assist on something concrete, funded and dignified; showing the due respect our nation’s Veterans deserve. Period.

Santana: OC State Lawmakers Jump Back Into The Fight For a Veterans Cemetery

By Norberto Santana Jr.NORBERTO SANTANA JR.

HTTPS://VOICEOFOC.ORG/2019/03/SANTANA-OC-STATE-LAWMAKERS-JUMP-BACK-INTO-THE-FIGHT-FOR-A-VETERANS-CEMETERY/

Democratic State Assemblywoman Sharon Quirk Silva is leading a bipartisan coalition of OC state lawmakers that want the state government to take over development of the veterans’ cemetery in Irvine.

Quirk Silva, along with five state assembly members from Orange County, late last week sent a joint letter to Irvine City Council members calling on them to essentially give the state ownership over a site in Irvine at the former Marine Air Base at El Toro slated for a Orange County veterans’ cemetery.

“On March 11, 2014, the Irvine City Council by an unanimous vote designated the Amended and Restated Development Agreement (ARDA) Site at the Great Park “as the best possible site” for a Southern California Veterans Memorial Park and Cemetery.

We ask that you continue to support this shared goal by conveying this particular property to the state,” wrote Quirk Silva in a letter co-signed by Democratic State Assembly members Tom Daly (69 AD) and Tom Umberg (34-SD) and Republicans Tyler Diep (72 AD), William Brough (73 AD) and Phillip Chen (55 –AD).

While council members long ago dedicated the 125-acre site near the heart of the old base for a veterans’ cemetery, the project has been mired and ultimately delayed, in the mud of local politics.

After local developers voiced concerns over the location of the cemetery, largely because of Feng Shui concerns from Asian real estate clients, a debate emerged amongst local politicians over how to re-locate the veterans’ site and accommodate all sides.

Not easy. Not even likely.

Local elections in 2018 were dominated by an intense battle over a proposal to swap the original site for a similarly-sized land tract near the interchange between the 405 and 5 freeways, called the Strawberry Fields.

Voters rejected that plan handily last summer.

Afterwards, another plan emerged to use a nearby golf course tract instead of the designated land (the ARDA site). Irvine planning commissioners recently endorsed this option on a 4-1 margin.

Meanwhile, county supervisors offered an option of their own this past summer, offering the potential of developing a county veterans cemetery – alongside a public civilian cemetery – on donated land from the Irvine Company, near the intersection of the 91 freeway and 241 toll road.

Unlike any Irvine project, the county option has the full backing of the dais that can authorize it, in this case the Orange County Board of Supervisors. Former Irvine Mayor Don Wagner – who just won a special election this month onto the board of supervisors – will likely soon impact that debate.

In Irvine, Wagner prevented former City Councilman Jeff Lalloway from offering a motion moving forward with the original ARDA site last summer – after the loss of the Strawberry Fields election – instead calling for traffic and environmental reviews on the original site with no date set for action.

A June 2016 study of the ARDA site conducted by the Los Angeles-based Owen Group for the California Department of General Services priced the first phase of development at $78 million, including nearly $40 million in demolition and cleanup costs.

The Owen report notes that more soil studies should be conducted on the ARDA site and if toxic soil were to be found, the cost to clean it up would increase the price dramatically. The report does not give an estimate on soil remediation, but does say if enough contamination is found, the site should be excavated eight to 10 feet in an effort to remove the contamination.

Quirk Silva years back did secure $5 million from the legislature toward the development of a veterans’ cemetery during a tough election campaign in 2014 that featured the support of then-Gov. Jerry Brown and a supermajority hanging in the balance.

To date, state leaders have largely stayed on the sidelines in Irvine’s longstanding debate about the location of the regional veterans cemetery.

That may have changed.

“History demonstrates that the State Legislature supports a Southern California Veterans Memorial Park and Cemetery,” reads the state legislators’ March 21 letter.

“Previous legislation, supported by the City, AB 1453 (Quirk-Silva, Statutes of 2014) selected the ARDA Site and allocated $4.5 million to a Master Development Fund. This measure received unanimous and bipartisan support.”

The letter essentially calls on Irvine city council members to put up or shut up.

“Today, we are ready to work with State and Federal officials to secure funding for the Southern California Veterans Memorial Park and Cemetery. We ask that you stand by your previous commitment to provide a resting place for California’s veterans at the ARDA site.”

There are some odd names missing from the state legislators’ letter – such as Republicans Steven Choi from Irvine or State Senators like John Moorlach or Pat Bates.

So it’s hard to know how deep the support for this proposal runs.

I reached out to Quirk Silva but mainly got a quote through an official spokesman.

“My colleagues and I felt that our bill needed a location and we wanted the City of Irvine’s Council to be aware that there is support for the original ARDA site,” said Quirk-Silva though her spokesman.

I also reached out this weekend to Nick Berardino, President of VALOR (Veterans Alliance of Orange County), who has been advocating for a veterans’ cemetery for years, for his take.

Berardino – an old veteran of many a legislative trench over the years – is, as always, following the money.

“We are excited that the legislature is poised to support the veterans cemetery and impressed that the Orange County delegation is able to secure the funding in this years budget.”

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MOORLACH UPDATE — Goodbye to my Dad — March 23, 2019

This will be one of those weeks that will be hard to forget.

There were a number of groups in Sacramento that wanted me to share a few thoughts, including the Association of California Cities – Orange County, the Orange County Business Council, Senator Scott Wilk’s annual Santa Clarita business leaders conference, the National Federation of Independent Business (NFIB) – California, Gen Next, the Chief Probation Officers of California, and the Pacific Club (back in the District).

I was also honored at a reception by the National Federation of Independent Business and presented with the Guardian of Small Business Award. A few legislators were feted by the Easterseals Board of Directors at their Annual Awards Dinner, presenting Sen. Scott Wiener and me with the 2019 Senate Leadership Award for joint authoring SB 1004 (see MOORLACH UPDATE — SB 1004 and CIRM — September 10, 2018 and MOORLACH UPDATE — Joint Author Details — July 7, 2018).

If that was not enough, I also had a successful campaign fundraiser in the District after touching down at John Wayne Airport Thursday evening, with appreciation to my hosts and guests.

However, on my way to the Sacramento airport Thursday afternoon, I received the news that my 91 year old father, Kent M. Moorlach, was overcome by his recent battle with a pulmonary embolism and went to be with Jesus in Heaven. How thankful I am that I made a quick trip to Colorado two weeks ago to spend time with him, to thank him for raising me,and to say goodbye to my Dad.

Klaas Meindert Moorlach was born in the Netherlands on October 27, 1927. He would endure Nazi occupation during World War II. After the war, when life settled down, he attended Erasmus University Rotterdam, where he earned a Doctorandus (Drs.) in Economics with distinction.

He married my mother, Rieka Dina Cornelia de Boer, on August 27, 1953. They would have two children, me, Johannes M. W., and Edward H. J. before they immigrated to California in 1960. In the United States, they Americanized their names to Kent and Rita, and mine to John, and had two more children, Kent M. and Annemarie.

My Dad left his family business in the grain industry, the Moorlach Meelfabriek (Flour Mill) in Uithuizermeeden, for the insurance industry in Southern California, attaining the Chartered Life Underwriter (C.L.U.) designation. He worked as an agent for the Penn Mutual Life Insurance Company, where he was a colleague of David Cox, who would later become a California Assemblyman and Senator, and for whom the Cox Lounge is named (which is located off of the Senate Chambers). He also sold property and casualty insurance and took care of my car insurance needs until he retired.

He is survived by my mother and his four children and their spouses, 13 grandchildren (with one more due next month), and 4 great grandchildren. His memorial service will be April 13th at 10:30 a.m. at Christ Community Church in Buena Park (formerly Community Reformed Church, the church in which I was raised and where later married my wife, Trina). For those who knew my remarkable father, you are welcome to attend (please RSVP tokentmoorlach).

Back to my mention of the group from Santa Clarita. I believe they had a fun visit to the State Capitol in Sacramento, which is documented here: https://www.hometownstation.com/santa-clarita-latest-news/2019-khts-sacramento-road-trip-wraps-up-with-talks-of-taxes-budget-270700.

One of the attendees expanded on the topic that I was asked to speak on in the piece below in The Signal.

25th Anniversary Look Back

The March 24, 1994 edition of the Daily Pilot provided some drama to what should have been a nonevent with a piece titled “Supervisorial candidates upset about being left out of forum — Republican group invites only GOP hopefuls to speak at its meeting, although the race is non-partisan.” It gave two Democrat supervisorial candidates a chance to make a news story out of nothing. Not being invited did not offend my opponent. Mr. Citron refused to meet me at any venue throughout the campaign as he was not a good public speaker and also stuttered.

The internet was not so robust 25 years ago and obtaining public documents required a ten day ordeal. But, doing so ratcheted things up a bit. On March 29th, I sent Mr. Citron a California Public Records Act Request, certified mail, with copies to the Board of Supervisors and the media, asking for the following:

1. Copies of the Orange County Investment Pool’s annual financial reports from June 30, 1971 to present.
2. Portfolio listings of for several quarters, including face value, cost basis, date of purchase and date of expiration.
3. A listing of all the transactions in the Pool for the quarter ended March 31, 1994.
4. Copies of broker statements for the first three months of the year.
5. A listing of participant investment amounts at the end of each quarter.
6. The investment policies and procedures for participants.
7. A listing of the brokers of the Pool’s transactions.

These public records were not on the incumbent Treasurer’s website. However, I would post or provide this information after my appointment the following year.

Jason Gibbs | Beware of the State’s Pension Tsunami

https://signalscv.com/2019/03/jason-gibbs-beware-of-the-states-pension-tsunami/

Earlier this week, local leaders and community advocates journeyed to Sacramento to partake in discussions with policy advisors and elected officials on a wide range of state and local issues.

KHTS held their 14th annual Sacramento bus trip providing the opportunity to relay both our concerns and support with actions and legislation that significantly affects the way we live, the businesses we run, and how we raise our families here in Santa Clarita. Thank you to Sen. Scott Wilk, Assemblyman Tom Lackey, Assemblywoman Christy Smith, and to all the employees and staff who made this an incredible and successful experience!

While all of the topics and speakers were well presented and opined, it felt like kismet when the topic I had begun writing about for this column was discussed by Sen. John Moorlach: pension reform.

While it seems to be a requirement in today’s political theater to approach topics and principles solely from a partisan standpoint, the need to evaluate the impacts of our political posturing on those who simply want to live and thrive in this state without engaging in the ceaseless drama, is at critical mass.

It’s no secret that the California pension system is insolvent and is leaving a crushing debt that will inevitably consume our coffers without immediate and drastic action. Unfortunately, under the guise of unfettered democratic rule, the system is reaching all new levels of disaster.

With ever-increasing benefit promises, overinflating return rates from investment portfolios, and the political tentativeness to share costs of these pensions onto employees, Sacramento can no longer play the role of ostrich and ignore this issue.

State and local governments face more than $400 billion in unfunded liabilities (which is just political speak for debt) according to the State Controllers’ office report in 2016. However, these numbers are probably low! CalPERS assumed their investments would have a set return rate over time (set to be 7 percent in 2020). If you assume a market rate return of closer to 3 percent, which is more conservative and practical, the debt is over a TRILLION dollars!

It’s not just non-conservative return rates that have caused this debacle! Gov. Gray Davis signed legislation just before the dot-com bubble burst allowing early retirement and additional pension benefits. This extended to local governments and school districts as well, including providing pension holidays. Suffice it to say, the dot-com crash and then the great recession (which wiped out nearly 30 percent in CalPERS assets) did nothing to help achieve the pie-in-the-sky promises.

Additionally, the life expectancy of workers is more than what the program estimated, which, again means more cost that must be paid! Just like with Social Security, predicative models indicate there will not be enough workers to sustain the amount of retirees.

Bottom line…it is unsustainable!

Pensions are funded from three sources: returns on investment, employee contributions and government employer contributions. Therefore, when we discuss how to get more money into the fund, the answers are charge the government more (i.e. taxes), charge the employer more for the care they are promised, or hope that CalPERS can get a better return on their investment.

Historically, the state has been extremely hesitant on the first two options. Large labor unions do not advocate for making their members pay more for their benefits. Cities will not advocate taxing the populace to pay more for employee pension and health-care promises.

Therefore, the state has relied solely on the investment portfolios to meet their expectations. Thirty years ago, CalPERS projected 8.75 percent returns and CalSTRS assumed 8.5 percent, but those rates are dropping to 7 percent in 2020. Even at these lower rates, many advisors argue that these rates are entirely too optimistic.

Joe Nation, the project director for Pension Tracker, suggests a market rate of closer to 3.3 percent is much more realistic. But, if the retirement plans assume such a low rate of return, that means the employer or employee will have to make up the $700 billion in losses. Good luck getting the unions or taxpayers to agree to that!

In fact, Gov. Brown tried in 2012 to close the gap by forming a hybrid system with pensions and traditional 401(K) plans, but Democrats blocked this plan.

No matter how you look at it, debt is non-partisan. Republican or Democrat, liberal or conservative, we taxpayers are responsible for these obligations. What’s more of a travesty is we are passing this burden on to generations that had no say in its creation! While I was the only City Council candidate to discuss the real dangers of pension liabilities, I hope our elected officials will see the importance of actually doing something, and not just utter phrases like “we need more resources.”

Because frankly, relying on portfolios to outperform reality, for retirees to not live as long, and for a non-stop economic boom to pay these promises, is not just unrealistic, it is immoral!

Jason Gibbs is a Santa Clarita resident. “Right Here, Right Now” appears Saturdays and rotates among several local Republicans.

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MOORLACH UPDATE — Income Tax Returns — March 21, 2019

Two fun subtopics emerge today. The first is receiving a reporter call when my calendar finds me in back-to-back appointments. Staff’s suggestion? Refer to my UPDATE from 2017 on the first iteration of the bill that is being resubmitted, but with a new Governor who may not veto it, like the last Governor did (see MOORLACH UPDATE — 2017 Top 20 Veto Worthy Bills — September 22, 2017).

The second is resubmitting bills in subsequent years. I have two bills this year that are doing the same thing. They were both well received in the Legislature, receiving no opposition votes, only to be vetoed by Governor Brown. So, I can appreciate it when Democrats do the same thing after having had their legislation rebuffed.

The Fresno Bee covers the reintroduction of a requirement that United States Presidential candidates have their tax returns disclosed in the piece below. As a C.P.A., I can appreciate the time commitment just to get the returns completed while also pursuing a nationwide campaign. But, the Federal Election Commission (FEC) reporting requirements are much more onerous and detailed, providing much more information than a tax return.

If Trump wants to get on California’s 2020 ballot, he might need to release his tax returns

By Bryan Anderson

https://www.fresnobee.com/news/state/california/article228187584.html

For the second time in three years, a California Democrat is trying to force President Donald Trump to release his tax returns.

Under Senate Bill 27, presidential candidates from all parties would need to publicly disclose the last five years of their tax returns if they want to have their name on the state’s primary ballot.

Former Gov. Jerry Brown – who didn’t release his own tax returns – vetoed the same proposal in 2017, warning it “may not be constitutional” and could set a “slippery slope” precedent.

State Sen. Mike McGuire, D-Healdsburg, called Brown’s veto “hogwash” and is re-introducing the bill in hopes Gov. Gavin Newsom will sign it. Newsom has promised to be the first California governor to release his tax returns annually.

McGuire will need two-thirds support from his colleagues, but is confident he’ll get it, given that it passed by similar margins in 2017. The proposal even received support from two former Republican Assembly members, one of whom is now a Democrat.

“If Hillary Clinton had done this, we’d be having the same conversation right now,” McGuire said. “This bill is solely focused on providing voters the information they need to make an educated decision.”

Public opinion polls show the vast majority of people want to see Trump’s tax returns. In the months leading up to the 2016 presidential election, 74 percent of American likely voters, including 62 of Republicans, said in a Quinnipiac University poll that Trump should release the information. Nearly three-fourths of adults surveyed after the election in a Washington Post/ABC News poll agreed the president should disclose his tax records.

Secretary of State Alex Padilla supports the proposal, saying in a statement it would “write this vital norm of our democracy into state law.”

“Candidates who are serious about holding the highest office in the nation should be transparent about their personal financial interests,” Padilla added. “The American people have a right to know about the commander-in-chief’s potential conflicts of interest. For years, candidates for president from both parties released their personal tax returns.”

Despite the public’s desire for candidates to release their tax returns, it remains to be seen whether California can legally force Trump’s hand. If the bill is signed into law in the coming months, McGuire said he would expect a legal challenge from Trump.

On the campaign trail, Trump repeatedly said he’d release his tax returns after an IRS audit was completed, even though nothing precludes a president from releasing tax returns while under audit. Former President Richard Nixon disclosed the information as he was being audited when he was in office.

Trump’s tone has shifted bit now that he’s in office, as he’s suggested he wouldn’t release the document during his presidency. In May 2017, he told The Economist, “I might release (the tax returns) after I’m out of office.”

State Sen. John Moorlach, R-Costa Mesa, called McGuire’s plan “constitutionally dubious.” He noted that it doesn’t require the same of statewide California candidates.

McGuire said it isn’t necessary for California elected officials to release their tax records since they are already subject to California ethics laws, unlike the president.

The Democratic lawmaker acknowledged California doesn’t have the ability to dictate the terms of a general election, as the national political parties have that power. Still, he’s adamant that states have the right to set the rules for candidates wishing to get their name on the state’s primary ballots.

“California would not be where we’re at today if the president would have upheld 40 years of tradition and released his tax returns,” McGuire said. “We’re here today because the president has something to hide.”

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This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District. If you no longer wish to subscribe, just let me know by responding with a request to do so.

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