MOORLACH UPDATE — Snopes is Fired Up — November 14, 2018

Well, well, well. It’s a rare day when one of my UPDATEs gets media attention. But, when a Governor who flies all over the globe, leaving a large carbon footprint in the process, to preach against global warming, vetoes a bill that addresses the reduction of greenhouse gases, I do get fired up (see MOORLACH UPDATE — Fire Prevention Not Embraced — November 13, 2018). Politico did it in their “California Playbook” column. Instead of including the entire column, I’m just providing the brief mention in the first piece below.

The Daily Caller weighs in on the subject in the second piece below. It baffles me that a Governor so consumed with addressing global warming would veto a bill that attempted to reduce wildfires, a major creator or greenhouse gases.

But, would SB 1463 have saved lives if Gov. Brown had signed it? Who’s to know. The answer is an obvious “maybe.” But, if the goal is to reduce greenhouse gases, why not put a little more pressure on the California Public Utilities Commission and CalFire to expedite the process?

In California, Sacramento is managed through legislation. The CPUC and CalFire had more than 8 years to get the job done. I have a community in my District that is in a wildfire zone and lost 441 homes 25 years ago. For the Governor to assume that these two bureaucracies would move at a faster clip is, in my opinion, a serious error in judgment.

What if Malibu would have been ranked as a high-risk area? Or Paradise? Perhaps some form of mitigation may have been pursued by the utility companies. But for an apostle espousing the impacts of climate change to do nothing makes no sense on several levels.

Getting to the bottom of this concern is none other than Snopes. They weigh in with a mixed review in the third piece below. Snopes evaluates a piece by Katy Grimes of the Flashreport back in August of this year (see MOORLACH UPDATE — Spewing Carbon Into The Air — August 8, 2018).

This is the first time I’ve been mentioned in a Snopes piece. It’s unfortunate that they did not contact me or my office in doing their independent research. One wonders if quoting a government bureaucracy that is covering its tracks is a valid refutation. And using terms like “prevalence” and “risk” certainly begs for a longer rebuttal on my part, which may come in a future UPDATE.

If only Governor Brown would have made hardening electrical lines as big a priority as building his high speed rail over the past eight years, just maybe this veto would not have occurred and generated so much social media attention.

California Playbook

POLITICO

California Playbook

Carla Marinucci and Jeremy B. White’s must-read briefing on politics and government in the Golden State

https://www.politico.com/newsletters/california-playbook/2018/11/14/blue-wave-grows-harder-beats-denham-katie-porter-pulls-ahead-of-mimi-walters-thurmonds-lead-over-tuck-grows-former-assembly-gop-leader-gop-is-dead-in-ca-zinke-to-join-brown-in-fire-zone-tour-345853

— FIRED UP: Republican state Sen. John Moorlach, in a blog post, argues that Gov. Jerry Brown had a big chance to push for fire prevention in his bill, SB1463 — and vetoed it. “I thought the adventure with my bill to address electric line-caused conflagrations in wildfire zones with SB 1463 (2016) had run its course.” Read it here.

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As California Burns, Jerry Brown Takes Heat For Voting Down 2016 Wildfire Mitigation Bill

by Michael Bastasch

https://www.conservativedailynews.com/2018/11/as-california-burns-jerry-brown-takes-heat-for-voting-down-2016-wildfire-mitigation-bill/

  • Critics are attacking California Gov. Jerry Brown for vetoing a 2016 bill aimed at mitigating fire risks from utility equipment.
  • “He has done nothing to harden those assets,” said GOP state Sen. John Moorlach.
  • Wildfires have consumed more than 221,000 acres since Thursday, killing at least 44 people.

California Gov. Jerry Brown’s decision to veto a 2016 bipartisan bill aimed at mitigating wildfire risks from power lines and utility equipment has become the focus of critics as fires rage across the state.

Wildfires have scorched more than 221,000 acres across California since Thursday, and Brown’s critics are pointing to the two-year-old veto as news reports suggest power lines may have sparked the deadliest wildfire in California’s history.

“He has done nothing to harden those assets,” state Sen. John Moorlach, a Republican, told The Daily Caller News Foundation.

Moorlach sponsored the 2016 bill, called SB 1463, which would have given local governments a bigger role in putting together fire risk maps with the California Public Utilities Commission (CPUC) and Cal Fire, the state’s firefighting agency.

The bill also required the CPUC to work with utilities to mitigate wildfire risks, including putting transmission lines underground if necessary. The bill passed through both state legislative chambers, but Brown vetoed the bill in September 2016. Brown said state officials “have been doing just that through the existing proceeding on re-threat maps and re-safety regulations.”

Two years later, Moorlach said the state agencies and utilities have made little progress in mitigating the risk of wildfires faced by communities across the state.

“Well they’ve been working on it for like eight years and they haven’t gotten it done. This is really simple stuff,” Moorlach said. “Utilities are just sort of hanging onto the money.”

Journalist Katy Grimes also criticized Brown’s veto. The conservative journalist tweeted that “Brown had many chances to address CA’s increasing wildfires since his election in 2011, but instead chose to play politics.”

Brown, however, did sign legislation in September that would dedicate some funds raised through California’s cap-and-trade program to forest management. Moorlach support the bill, but said Brown should have acted sooner to mitigate wildfire risks.

Brown has largely framed wildfires as the product of man-made global warming. On Sunday, Brown said “those who deny” global warming contributed to the fires.

Moorlach said Brown’s concern about the climate was “inconsistent” with his 2016 veto.

“Not addressing wildfires has reversed all the work we’ve done to reduce greenhouse gases,” Moorlach told TheDCNF. “It’s inconsistent.”

“It’s sort of become his religion,” Moorlach said of Brown’s global warming fervor.

The 135,000-acre Camp Fire destroyed thousands of structures, including engulfing the entire northern California town of Paradise. The Campre Fire resulted in at least 42 deaths, making it the deadliest blaze in state history.

It’s not clear what exactly caused the fire, but local media reports suggest PG&E power lines may be to blame for the deadly fire.

PG&E said it had problems with a power line minutes before the Camp Fire started. Landowner Betsy Ann Cowley said PG&E needed to access to her property in Pulga because “they were having problems with sparks.” The fire started on Cowley’s land.

Cal Fire also blamed PG&E power lines and equipment for deadly wildfires that ravaged northern California last year. Those 16 fires killed at least 44 people and destroyed hundreds of structures.

In southern California, the 96,000-acre Woolsey Fire killed at least two people as it made its way to the iconic beach city of Malibu. Utility SoCal Edison said “a circuit relayed out of the Chatsworth Substation about two minutes before the blaze broke out,” CNN reported.

SoCal Edison reported to state officials that “at this point we have no indication from fire agency personnel that SCE utility facilities may have been involved in the start of the fire.”

Brown’s office did not respond to TheDCNF’s request for comment.

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Did California Governor Jerry Brown Veto a Wildfire Management Bill, Increasing the Risk of Wildfires?

BY DAN MACGUILL

https://www.snopes.com/fact-check/jerry-brown-veto-wildfire-bill/

Claim

Jerry Brown vetoed a wildfire management bill in 2016, contributing to the prevalence and risk of wildfires in the ensuing two years.

Rating

Mixture

What’s True

In September 2016, Governor Brown vetoed SB 1463, a bill in the California legislature which would have required the California Public Utilities Commission to prioritize areas at increased risk from overhead wires in their management of wildfires.

What’s False

There is no evidence that Brown’s veto contributed to or exacerbated the risk or prevalence of wildfires in California, and the California Public Utilities Commission provided details showing that it had already been engaged in work similar to the proposals contained in SB 1463.

Origin

In November 2018, after the Camp Fire broke out in Northern California, killing more than 40 people and destroying thousands of homes, social media users began sharing a three-month-old article that placed a share of the blame for California’s 2018 wildfire season, already one of the most destructive in living memory, at the desk of Governor Jerry Brown.

On 8 August, the “Flash Report” web site, which covers California politics from a conservative-leaning point of view, reported on a piece of legislation from 2016 which was intended to address one aspect of the state’s perennial wildfire problem but was vetoed by Governor Brown, a Democrat. The article carried the headline “CA Gov. Jerry Brown Vetoed Bipartisan Wildfire Management Bill in 2016” and read:

At the request of the City Council of Laguna Beach, Sen. John Moorlach (R-Costa Mesa), authored SB 1463 in 2016, a bipartisan bill which would have given local governments more say in fire-prevention efforts through the Public Utilities Commission proceeding making maps of fire hazard areas around utility lines.

Laguna Beach went through four fires sparked by utility lines in the last ten years, and has done as much in the way of prevention as they could afford. The bill would have allowed cities to work with utilities to underground utility lines, and work with the Public Utilities Commission to develop updated fire maps by requiring the PUC to take into consideration areas in which communities are at risk from the consequences of wildfire — not just those areas where certain environmental hazards are present …

Gov. Brown vetoed SB 1463, despite being passed by the Legislature, 75-0 in the Assembly and 39-0 in the Senate. That tells you this was political. The Governor’s veto message did not properly address why he vetoed the bill. Brown claimed that the [Public Utilities Commission] and CalFire have already been doing what Moorlach’s bill sought to accomplish. How on earth could Brown kill this bill when the state was burning down?

In the context of the Camp Fire in November, Facebook users  shared the Flash Report article widely, with many observers citing it as evidence that Brown bore some of the blame for the many similar wildfires which cost lives and caused massive destruction to property in the intervening two years.

As Flash Report indicated in their August article, Governor Brown did indeed veto Senate Bill 1463 in September 2016, after it had been passed by both houses of the California legislature without a single vote in opposition. That legislation would have had imposed the following requirement:

SECTION 1.

Section 761.2 is added to the Public Utilities Code, to read:

“In determining areas in which to require enhanced mitigation measures for wildfire hazards posed by overhead electrical lines and equipment, the [Public Utilities Commission], in consultation with the Department of Forestry and Fire Protection, shall prioritize areas in which communities are subject to conditions that increase fire hazards associated with overhead utility facilities generally and at specific locations…”

Flash Report was somewhat self-contradictory in their characterization of this veto. On the one hand, the article claimed that Brown “did not properly address” his rationale for refusing to sign the bill, but it also accurately wrote that Brown had said, roughly speaking, he regarded the provisions of the legislation as redundant due to an initiative that was already under way. In his veto message, Brown wrote:

This bill requires the Public Utilities Commission to prioritize areas that have increased fire hazard associated with overhead utility facilities. Since May of last year, the Commission and CalFire have been doing just that through the existing proceeding on fire-threat maps and fire-safety regulations. This deliberative process should continue and the issues this bill seeks to address should be raised in that forum.

The author of the Flash Report article, Katy Grimes, claimed a link between the prevalence of destructive fires in California in recent years and Brown’s decision to veto SB 1463, referencing one of her earlier articles:

Today, as California burns once again under torrential wildfires, many Californians have been asking why the dramatic increase in wildfires in the last five years … that is everyone except Governor Jerry Brown. Governor Brown claims that year-round, devastating fires are the “new normal” we must accept.

Megan Barth and I reported:

“Supporting Obama-era regulations have resulted in the new normal: an endless and devastating fire season. Obama-era regulations introduced excessive layers of bureaucracy that blocked proper forest management and increased environmentalist litigation and costs– a result of far too many radical environmentalists, bureaucrats, Leftist politicians and judicial activists who would rather let forests burn, than let anyone thin out overgrown trees or let professional loggers harvest usable timber left from beetle infestation, or selectively cut timber.”

Mismanaged, overcrowded forests provide fuel to historic California wildfires, experts say. The 129 million dead trees throughout California’s forests are serving as matchsticks and kindling. Jerry Brown, busy mulling ways to prevent the end of the world, took the Clinton and Obama-era gross regulations a step even further when he vetoed a bipartisan wildfire management bill in 2016.

Despite drawing this connection, Grimes’ article did not contain any specific evidence to support the notion that Brown’s vetoing SB 1463 contributed to or exacerbated California’s wildfire problem.

In response to our questions, a spokesperson for Brown directed us to a spokesperson for the California Public Utilities Commission, who outlined in further detail the risk mitigation efforts undertaken as part of the agency’s initiative with CalFire (the California Department of Forestry and Fire Protection) and said that the bill Brown vetoed would actually have slowed down that progress:

Senate Bill 1463 would have prolonged the safety work already going on by requiring the participation of certain entities, which was unnecessary because CAL FIRE was already a party to the proceeding, and local governments and fire departments could also participate.

In fact, [at] the time the vetoed legislation was introduced, the CPUC and CAL FIRE were already deeply engaged in an ongoing fire safety rulemaking process (R.15-05-006, Rulemaking to Develop and Adopt Fire-Threat Maps and Fire-Safety Regulations). Phase 1 of this effort began in 2013 and was completed in 2015. Phase 2 implemented new fire safety regulations in high priority areas of the state as called for in the vetoed legislation, thus making the bill redundant. In January 2018, the Statewide Fire-Threat Map was approved.

Further, the CPUC and CAL FIRE signed a Memorandum of Understanding (MOU) in August 2017 that further bolstered our relationship. The MOU increased information sharing and investigative resources between the two organizations.

CAL FIRE, as first responders, provides findings and immediate facts to the CPUC. The CPUC follows after the event to conduct in-depth investigations if utility involvement is suspected. Key points of the MOU include: Developing consistent approaches to forest management, wildfire prevention, public safety, and energy programs; Assist one another in preparing for, responding to, and mitigating the effects of wildfires; Deepening awareness of the requirements and goals of each other’s programs; and Creation of Interagency Fire Safety Working Group to vet ideas and develop programmatic solutions to shared goals in the interest of fire safety and resource protection.

Sources

·       Grinberg, Emanuella and Holly Yan.   “44 Dead in California Fires as the Camp Fire Becomes the Deadliest in State History.”
CNN.   13 November 2018.

·       Grimes, Katy.   “CA Gov. Jerry Brown Vetoed Bipartisan Wildfire Management Bill in 2016.”
FlashReport.org.   8 August 2018.

·       California Legislature.   “SB 1463 — Electrical Lines: Mitigation of Wildfire Risks.”
29 August 2016.

·       Barth, Megan and Katy Grimes.   “California Burns: the ‘New Normal’ Thanks to Obama Era Environmental Regulations.”
FlashReport.org.   6 August 2018.

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MOORLACH UPDATE — Fire Prevention Not Embraced — November 13, 2018

I thought the adventure with my bill to address electric line-caused conflagrations in wildfire zones with SB 1463 (2016) had run its course. I even did a final recap recently with MOORLACH UPDATE — SB 1463 Epilogue — October 4, 2018.

But, with the Santa Ana Wind season upon us again, we are seeing tragic fires in Southern and Northern California. There is speculation that the fire that wiped out the city of Paradise may have been started by wind-blown and sparking electrical lines, the very concern that SB 1463 was trying to address.

Regretfully, Governor Brown vetoed SB 1463 (2016) with the following message: “I am returning Senate Bill 1463 without my signature. This bill requires the Public Utilities Commission to prioritize areas that have increased fire hazard associated with overhead utility facilities. Since May of last year, the Commission and CalFire have been doing just that through the existing proceeding on fire-threat maps and fire-safety regulations. This deliberative process should continue and the issues this bill seeks to address should be raised in that forum.”

Well, last year The Wall Street Journal rightfully asked, after watching the Napa and Sonoma fires, “where are the fire maps?” Some deliberative process. What a sad joke. No maps. More greenhouse gases. More innocent lives lost. All because a Governor who despises managing a bureaucracy, relied on that same bureaucracy and received what? Nothing. And how did he or the Legislature address these concerns through “that forum”? And he has the gall to blame climate change and the utilities? Now we have the Campfire.

For a more recent account of this sad event, Katy Grimes provides a thorough lashing at https://www.reaganbabe.com/california/ca-gov-jerry-brown-vetoed-2016-wildfire-management-bill-while-ca-burned/.

Not to be discouraged, we introduced a new version of SB 1436 this year, using Cap and Trade revenues to harden electrical assets, but it was voted down by the Senate Environmental Quality Committee. However, the concept resurfaced in SB 901 (see MOORLACH CAMPAIGN UPDATE — Measure P — October 22, 2018). Your welcome, Governor Brown, at least my office brought a reasonable solution to the table to address transmission hardening and climate change.

So, watching the fires on television news reports has been gut wrenching. But, some still noticed this bill may have been a solution. The first piece below, from my appearance yesterday on KXL 101 and The Lars Larson Show, provides the set up and the link provides the audio of the interview.

It has generated more calls. I am scheduled to be on The Dennis Prager Show tomorrow morning at 9:30 a.m. (PST) to discuss the SB 1463 (2016 and 2018).
With the death toll over the last two years reaching over 100 people and the amount of greenhouse gases being produced in California as a result of the fires, you just want to scream. How could a Governor who has made global warming his top priority, even his personal religion, not sign a bill that attempts to harden electric lines? Especially when Gov. Brown wants to transmit even more electricity, including dispersing renewable energy produced in California’s solar and windmill farms, to charge “zero emission vehicles” and run a high speed rail?

The second piece below is from Comstock’s and addresses another major concern of mine, dealing with mental illness (see MOORLACH UPDATE — SB 1004 and CIRM — September 10, 2018).

For more on the successful Proposition 2, see MOORLACH UPDATE — Working With the Governor-Elect — November 8, 2018 and MOORLACH CAMPAIGN UPDATE — 2018 Ballot Measures — September 21, 2018.

 

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Why Hasn’t California

Embraced Your Two Bills That

Would Allow More Fire

Prevention?

https://www.larslarson.com/why-hasnt-california-embraced-your-two-bills-that-would-allow-more-fire-prevention/

Senator John Moorlach is a Republican California State Senator representing 37th Senate district, which includes portions of Orange County. Senator Moorlach has proposed two separate bills in the past that would’ve implemented additional fire prevention efforts. He joined Lars to discuss these efforts and if these efforts would’ve mitigated the California wildfires. As of this writing, the California wildfire has caused the death of 29 people, with more than 200 still missing.

LISTEN HERE

Back and Forward: Maggie Merritt

Steinberg Institute director on mental health resources

https://www.comstocksmag.com/web-only/back-and-forward-maggie-merritt

Maggie Merritt, executive director of the Steinberg Institute, offers her insight into mental health advocacy. For more from the Steinberg Institute, check out “Minding the Gap” in our November issue. Sign up for our newsletter and we’ll email you when it’s available online.

What’s the biggest change in mental health policy or advocacy in the past year?

One of the biggest shifts in mental health policy stems from the passage of landmark legislation we sponsored, Senate Bill 1004. California has a highly decentralized system of mental health care, which can make it difficult to standardize best practices. SB 1004, for the first time, establishes a statewide strategy for how counties can spend nearly $500 million a year in state funds that specifically target prevention and early intervention in mental illness.

The bill ensures that counties are spending PEI funds on areas of proven need and employing best practices in treatment. It builds in accountability, requiring the state to provide technical assistance and evaluation.

The legislation is part of our broader effort to promote a more deliberate approach to mental health care across California. We’re asking: What are the four or five services that we know would cause a dramatic decrease in the number of people who end up in our streets or prisons or morgues because of untreated mental illness? How do we scale up what works?

SB 1004 was co-authored by Senators Scott Wiener, D-San Francisco, and John Moorlach, R-Costa Mesa. It passed the Legislature with bipartisan support and was signed into law in September.

What do you foresee as the biggest change on the horizon in the year to come?

Two major changes are on the horizon, both related to the Nov. 6, 2018 statewide election. California has elected a new governor, and with that comes renewed opportunity to reshape and strengthen the state’s approach to mental health care. In coming months, our Steinberg Institute team will draw on global models to devise a roadmap toward a more effective, efficient and innovative mental health delivery system. We stand ready to work with the new administration to make that system a reality.

In addition, California voters approved Proposition 2, and that will be a gamechanger. That’s the ballot initiative that launches the “No Place Like Home” Program. It authorizes the state to use a small percentage of state mental health funding to leverage $2 billion in bonds to build housing, linked to treatment and services, for people living homeless with a serious mental illness. We know about a third of the people living homeless in California have untreated brain illness. This will mark a massive infusion of resources to attack this public health crisis. Over time, we hope to move tens of thousands of people off the streets and into recovery.

Got something to add? Let us know in the comments, on social media, or email us at editorial

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MOORLACH UPDATE — Fountain Valley Elementary — November 10, 2018

Let’s accentuate the positive and celebrate that the Fountain Valley Elementary School District has a positive unrestricted net position (UNP).

That was cause for the OC Register to find out why. Every school district has a different story. This district has a unique one and it is provided in the first piece below.

The key quote was made by the spokesman for the Orange County Department of Education, concerning the UNPs. “’They do . . . signal a need to develop long-range plans (regarding pensions), and this work is already taking place,’ [Ian] Hanigan said.”

CalSchoolNews.org also provides its perspective on the fiscal circumstances and also gives Fountain Valley Elementary School District a positive mention.

Why do we care? Because the long-term liabilities creating these massive unrestricted net deficits will find that the students currently in these school districts won’t likely see these obligations paid down by the time their children, and maybe their grandchildren, are going to school unless massive budget changes are made now.

At least by one measure, Fountain Valley Elementary is Orange County’s lone district not in the red
By SUSAN CHRISTIAN GOULDING

https://www.ocregister.com/2018/11/09/at-least-by-one-measure-fountain-valley-elementary-is-orange-countys-lone-district-not-in-the-red/

When public-spending watchdog John Moorlach singled out Fountain Valley Elementary School District as the one and only in Orange County boasting a positive balance sheet, Superintendent Mark Johnson didn’t take the honor personally.

“It’s largely due to the decisions of people who came before me,” he modestly responded. “I’ve only been superintendent for four years.”

In a column that ran last month in the Orange County Register, California State Senator Moorlach wrote that out of the county’s 27 public school districts, only Fountain Valley Elementary is in the black.

According to his math, Moorlach said, Fountain Valley Elementary clocks $78 per capita – putting it in the top 10 percent financially of California’s 944 school districts.

“It’s all negative after that,” he said. Laguna Beach is Orange County’s “second best” at minus $223. Santa Ana Unified, at minus $1,805, places last.

A certified public account, Moorlach found fame after predicting the county’s bankruptcy in 1994. He served as Orange County Treasurer-Tax Collector from 1995 to 2007.

Moorlach still enjoys crunching numbers.

“I like to open the hood and see what’s inside,” he said in an interview. “And what I’m seeing is massive debt.”

Over the past few months, Moorlach has been studying the financial soundness of not only school districts but also cities and colleges. For school districts, he scoured online annual financial reports. Then he divided each district’s “unrestricted net position” figure by its population.

And only Fountain Valley Elementary, a century-old district that oversees 10 elementary and middle schools, won bragging rights.

“We’re thrilled whenever we get positive press,” Johnson said. “But most districts do a great job managing their budgets thoughtfully. We have a few advantages. Because we’re small with fewer employees, we don’t have the same scope or scale of unfunded pension liabilities that other districts face.”

Serving about 6,300 students, the district has 680 employees.

By comparison, SAUSD has 48,000 students and 5,000 employees. Superintendent Stefanie Phillips said that in a larger picture, taking into account other factors than the measure used by Moorlach, the district is solvent and paying its bills.

“Are we about to go bankrupt? I don’t think so,” Phillips said with a laugh.

Moorlach’s figures “do not represent a balance due,” said Ian Hanigan, spokesman for Orange County Department of Education. Rather, they reflect a change in reporting requirements for public agencies, which, starting six years ago, must report all unfunded liabilities for pensions.

“They do, however, signal a need to develop long-range plans (regarding pensions), and this work is already taking place,” Hanigan said.

Every district in Orange County, including SAUSD, has a “positive certification” – meaning that each can meet its financial obligations for the current year and the two subsequent years, Hannigan said.

Fountain Valley Elementary benefited from “an extremely fortunate” windfall of $35 million from property sell-offs over the first decade of the 2000s, Johnson said.

“The community of Fountain Valley underwent a population boom in the ’70s and ’80s,” Johnson said. “That’s why so many schools opened in a short period of time. But the population has aged, and many people here are original homeowners without school-aged children. So we found ourselves with nine surplus schools.”

The district held on to one of those properties – “just in case we need it,” Johnson said – and sold the rest. “Then the board made the wise decision to put the proceeds from those sales into a conservative investment portfolio,” he said.

Over the years, proceeds from the investments have gone toward modernization of school sites, he said: “The principle remains invested, and each spring we have a conversation about our priorities and where we need to allocate money.”

Johnson declined to judge the financial prowess of other districts.

“We really do believe that school districts in general do an extraordinary job working for the futures of our children,” he said. “Larger districts manage huge budgets. For them, $35 million wouldn’t go as far as it does for us.”

However, it’s not all luck. The district could have frittered away the initial lump sum “on all sorts of things,” Johnson admitted.

“Instead,” he said, “we are committed to using it as an ongoing revenue stream.”

JOHN MOORLACH WARNS OF IMPENDING DOOM FOR CA SCHOOLS

HTTP://WWW.CALSCHOOLNEWS.ORG/2018/11/JOHN-MOORLACH-WARNS-IMPENDING-DOOM-CA-SCHOOLS.HTML

CALIFORNIA STATE SEN. JOHN MOORLACH SEES A STORM BREWING FOR CALIFORNIA’S PUBLIC SCHOOLS.

The Orange County lawmaker — who serves on the Senate Budget & Fiscal Review Committee and its education subcommittee, and is often credited with predicting Orange County’s 1994 bankruptcy — sounded the alarm in a report last month analyzing financial statements from the state’s 944 K-12 school districts.

More than 85 percent of the districts reported deficits on their balance sheets, which he says indicates a coming “tipping point into insolvency and receivership.”

“The Moorlach Report is a flashing caution light to almost every public education budget in California. Unless things can change quickly, taxpayers can expect new levies, and post-secondary students and parents should fear higher tuition,” according to a press release.

Here are some key findings provided by Moorlach’s office:

• About two-thirds of California’s 944 public school districts run negative balance sheets. These statements show the most distressed districts could soon reach a tipping point into insolvency and receivership.

• Of the state’s large school districts, those in severe distress include Los Angeles Unified School District, with a negative $10.9 billion balance sheet; San Diego Unified at negative $1.5 billion; Fresno Unified at negative $849 million; and Santa Ana Unified at negative $485 million, the worst in Orange County.

• Of Orange County’s 27 public school districts, only one, Fountain Valley School District, is in positive financial territory.

• One bright spot is the 58 county boards of education. At least 51 of them have manageable per capita unrestricted net deficits of -$159 or less, with 14 in positive territory.

• Of the state’s 72 community college districts, only one enjoys a positive unrestricted net position (UNP).

• Cal State University’s balance sheet is negative $3.66 billion.

• The University of California’s balance sheet bleeds red ink all over the state, at negative $19.3 billion. Worse, that will double next year, to $38.6 billion, when retiree medical is included.

Read the full report here.

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MOORLACH UPDATE — Working With the Governor-Elect — November 8, 2018

One of the more amazing aspects of Tuesday’s General Election results is the number of Republicans rioting in the streets upset that Gavin Newsom will be the next California Governor.

I jest, of course. Republicans are not the ones that react this way. There. I got that off of my chest.

Looking at the local election results, please note that Orange County is still Orange County. It voted against Prop 1, while the rest of the state’s voters approved even more debt. And the OC voted for Props 5 and 6, while the rest of the state wanted more taxes (with many complaining that the rent is to damn high). Orange County also voted for the Republican statewide candidates. Orange County is still Orange County.

What did we observe? Diane Harkey, who won in the OC, failed in her run to succeed Congressman Darrell Issa. She raised $1.7 million, only to face $17 million thrown at her opponent from around the nation. The joys of having so many liberal billionaires, like Michael Bloomberg, playing in our local campaigns. Expect more of this in future election cycles, now that they are emboldened.

The voters have spoken. Accordingly, I welcome our new Governor and extend an offer to work together on many critical areas facing the state of California in my submission to The Sacramento Bee. It will be in print tomorrow morning. It is also in the San Luis Obispo Tribune and is the first piece below. And, the Canada Free Press provides Katy Grimes’ election perspectives in the second piece below.

SOAPBOX

Gov.-elect Newsom, let’s work together, starting with housing the homeless

BY JOHN MOORLACH

Special to The Sacramento Bee
https://www.sacbee.com/opinion/op-ed/soapbox/article221325820.html

https://www.sanluisobispo.com/opinion/article221325820.html

 

Congratulations to Gov.-elect Gavin Newsom. I look forward to working with you on solving the state’s most pressing problems. These include our state’s sorry fiscal condition, massive debt foisted upon our children and grandchildren and ending the boondoggle of all boondoggles, the high-speed train that improperly uses cap-and-trade funds, while doing nothing of substance to reduce California’s carbon footprint.

You’ve been opposed to high-speed rail from time to time, but now you’ll be responsible for signing the budget that does or does not continue a multi-billion-dollar black hole. It’s time to redirect this misspending for other urgent needs.

Let’s start with addressing homelessness. Even before I became an elected official a quarter-century ago, I worked diligently to help those who could not find shelter. This issue is so close to my heart that upon my 2015 special election to the state Senate, I chose to be sworn in at the Orange County Rescue Mission in Tustin.

We both could rattle off previous bills on homelessness and some of the underlying issues most prevalent with mentally ill people in California. Yet the state has only taken small steps toward removing the barriers so the least among us can actually afford a place to live.

One of my recent legislative efforts came in a bill that I co-authored with state Sen. Kevin de Leon. Senate Bill 1206, the No Place Like Home Act, became Proposition 2, which voters approved on Tuesday. It authorizes the state to borrow as much as $2 billion against the state income tax on millionaires to build housing for homeless mentally ill individuals.

I also helped move forward the bipartisan Assembly Bill 488, which creates a long-needed Orange County Housing Finance Trust to fund the planning and construction of homeless housing. Orange County generates the second most personal income taxes among California’s counties, but also has to deal with a large mentally ill homeless population.

Looking forward to 2019, there is much more to be done. You have called for building 3.5 million new homes by 2025, a herculean task. But that certainly is possible in a state that once built the State Water Project and the world’s best public universities.

You are quoted as being proud of outraging activists by cutting welfare for single homeless adults and applying those funds to housing services while San Francisco mayor. Good for you.

Now I suggest an even bigger “Nixon goes to China” opportunity to move the dial on housing construction – reform the California Environmental Quality Act. Designed to protect the environment, CEQA instead has become a bureaucratic monstrosity and NIMBY tool that greatly increases the time and cost of building housing of any kind.

When the will is there, CEQA has been magically modified to expedite construction for sports stadiums and arenas, including exemption bills this fall for the Oakland A’s and Los Angeles Clippers. I did not vote for those bills because I oppose CEQA favoritism.

What’s good for millionaire players and billionaire owners should be good for the middle class and the homeless. But Gov. Jerry Brown did little on CEQA reform as he presided over the worst housing situation in generations.

Gov.-elect Newsom, let’s push for substantive CEQA reform stop the expensive and unnecessary high-speed rail fiasco, address the state’s debt and care for the least among us.

John Moorlach, a Costa Mesa Republican, represents the 37th District in the state Senate. He can be contacted at Senator.moorlach.

California Blue Wave: Will it Lead to Insolvency Faster?

There is only so much we faithful, native Californians can take. How much beautiful weather is worth this leftist insanity, and/or before this leftism turns into liberty crushing authoritarianism? Just sayin…

Katy Grimes image

By Katy Grimes

https://canadafreepress.com/article/california-blue-wave-will-it-lead-to-insolvency-faster

The midterm elections have turned out as most observers expected, nationally, statewide, and in Sacramento. By historical standards, nationally, the Democrats underperformed and lost a number of high-profile races. There was no Blue Wave—more like a blue ripple.

However, California is another story, remaining as blue as can be, and headed right into insolvency. In the contest for governor, California voters chose Democratic politician Gavin Newsom over Republican businessman John Cox, who is not a politician.

California goes ‘Full Nuthouse’ as my friend Leslie Eastman reports at Legal Insurrection. In addition to electing Newsom, Eastman points out voters rejected a repeal of the gas tax, and says, “a majority of Californians are thrilled that Sacramento will squander more of their money.”

A friend pointed out “California is a state where everyone bitches about how poor they are and how they need rent control, and yet constantly vote to raise their taxes every chance they get. The voters of this state have never seen a tax increase or bond measure they didn’t love.”

Brilliant.

Californians also re-elected long-time incumbent Democratic U.S. Sen. Dianne Feinstein, rejecting Democratic State Senator Kevin de Leon (Los Angeles). Dumb and dumber was the choice there.

There were some surprises as well. California Democrats flipped three Republican districts: Rep. Steve Knight, (CA-25th District) lost to Democrat Katie Hill, Republican Diane Harkey lost Rep.Darrell Issa’s 49th District to Democrat Mike Levin, and Republican Rep. Dana Rohrabacher lost his race in the 48th District to Democrat Harley Rouda.

In statewide races, it appears Marshall Tuck has beat Assemblyman Tony Thurmond in the race for Schools Superintendent. Tuck is a real reformer. “Tuck made a name for himself in Los Angeles turning around high-poverty, low-performing charter schools before then-Mayor Antonio Villaraigosa recruited him to improve schools within the conventional public school system,” the San Francisco Chronicle Editorial Board said in their endorsement of Tuck. “Marshall Tuck is the clearest and most emphatic voice for reform in the field.”

Democrat State Senator Ricardo Lara and Steve Poizner appear in a near tie for Insurance Commissioner.

California’s Legislative Democrats appear poised to regain their super majority in the state Senate and retain the super majority in the Assembly.

Democrat Assemblywoman Anna Caballero beat Republican Rob Poythress in the race to succeed outgoing Republican Sen. Anthony Cannella in the Central Valley 12th Senate District.

Incumbent Republican State Senator Andy Vidak surprisingly lost his reelection against Democrat Melissa Hurtado in Senate District 14.

“Picking up both seats would give Democrats 28 seats in the Senate and restore the super majority they lost in June when voters recalled Josh Newman of Fullerton,sacbee.com reported.

The ballot initiatives were another surprise. Proposition 3, the water bond, was thankfully defeated. “With millions of dollars of unspent water bond money from 2006 and 2014 water bonds, why is there yet another a water bond on today’s June Primary ballot, and another on the November ballot?” I wrote in June 2018.

Proposition 5 was defeated, which would have allowed homeowners age 55 and older to sell their current homes, purchase a replacement property anywhere in the state and transfer the property tax assessment from the home they sold to the home they bought. The opposition lied and claimed that the state would have lost millions of dollars if Prop. 5 passed. Not so—Prop. 5 would have encouraged empty-nesters to sell their large family homes and downsize without being penalized. And it would have meant more money with the sale to the new owners.

Proposition 6, the gas tax repeal was also defeated—California’s high gas taxes and high car registration fees will remain. Sadly. Prop. 6 would have also amended the state constitution to require voter approval of all future increases in fuel and vehicle taxes or fees.

Proposition 8, which would have authorized State Regulation of Kidney Dialysis Clinics, was defeated. Thankfully.

Proposition 10, repeal of Costa-Hawkins, was defeated. Prop. 10 would have allowed state government to regulate rent, and would actually have created an even worse housing shortage in California.

Sacramento’s Measure U sales tax increase, a slush fund for greedy politicians, was passed by voters, despite that Sacramento city revenues are more than $120 million up from 2010, and up 16 percent in just the past two years.

Measure U doubles the 2012 half-cent sales tax increase and makes it permanent, raising Sacramento’s sales tax to 8.75 percent.

Mayor Darrell Steinberg and most of the members of City Council can’t or won’t be honest about their gross spending and particular taste for other people’s money. Despite promising to spend the Measure U tax increase money wisely, the additional $50 million will likely go straight to unfunded city pensions, which are expected to increase by $60 million a year and are projected to hit $129 million by 2022-23.

What is needed is spending discipline rather than continuing to pick the pockets of the taxpayers and business owners.

Buried at the end of the SacBee article on Measure U’s passage, is this little gem:

“Even with Measure U’s passage, the city’s budget is still projected to be in the red. The city deficit is estimated to be $7.6 million in fiscal year 2019-2020 and $28 million in 2022-23, according to the city budget. If Measure U had failed, the city’s deficit was projected to grow to $47.3 million in fiscal year 2019-2020, and to $80 million in 2022-23.”

Will California’s Blue Wave lead to insolvency faster?

Costa Mesa Republican Sen. John Moorlach’s fiscal report, “Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities” finds 2/3 of California’s 944 School Districts bleed red ink. That report follows his March 2018 reports on the state’s 482 cities that found 2/3 of them in the red; of 58 counties, 55 suffered deficits and only three enjoyed positive balance sheets. His May 2018 report on the 50 U.S. states found only nine were financially healthy, with California ranked among the worst, in 42nd place.

There is only so much we faithful, native Californians can take. How much beautiful weather is worth this leftist insanity, and/or before this leftism turns into liberty crushing authoritarianism? Just sayin…

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MOORLACH UPDATE — San Diego County School Districts — November 7, 2018

The early voting results still have me stunned. There are numerous ballots that still need to be counted, but it looks like I’ve lost my seatmate, Sen. Andy Vidak.

And, Madera County Supervisor Rob Poythress may have barely lost in his attempt to replace Sen. Anthony Cannella.

This means the Republican Senate Caucus is going from 14, enough to stop votes requiring a two-thirds majority, to 12. The next two years do not look good for the Senate Republicans in Sacramento and the taxpayers in California.

Now is the time for good fiscal conservatives to join in the debates in the Capitol. School districts are hemorrhaging money and Democrats are beholden to public employee unions. Consequently, the best solutions will not be pursued and you will have to wait for a crisis to fix the mess.

This reminds me of a famous quote from Winston Churchill, where he observed that “Americans will always do the right thing, only after they have tried everything else.”

The San Diego Patch provides a review for its readership on the school districts in this beautiful county in the piece below.

Get ready for school boards and Sacramento to try everything else to address this fiscal conundrum before doing the right things.

Schools

Senator Predicts Financial Crisis In San Diego Co. Public Schools

In San Diego County, all 17 school districts operating in Patch communities reported deficits ranging from $14 million to $1.5 billion.

By Kristina Houck, Patch Staff

SAN DIEGO COUNTY, CA — California State Sen. John Moorlach may well be giving an encore performance of his role as the canary in the coal mine preceding Orange County’s bankruptcy almost a quarter-century ago when he correctly predicted financial disaster while a candidate for county treasurer-tax collector.

This time Moorlach, a certified public accountant who represents Orange County’s 37th District and serves on the Senate Budget & Fiscal Review Committee and its education subcommittee, isn’t concerned about county government. What bothers him now are the brewing money problems facing hundreds of school districts across California – including in San Diego County – experiencing what he sees as a growing deterioration of their financial stability.

In a report issued in October 2018, summarizing an analysis of the most recent financial statements issued by 944 K-12 school districts, Moorlach found more than 85 percent reported deficits on their general fund balance sheets, something he says indicates that many of these districts “could soon reach a tipping point into insolvency and receivership.”

Moorlach’s conclusion: “It’s not a pretty picture and it’s likely to get worse.”

In San Diego County, all 17 school districts operating in Patch communities reported deficits ranging from $14 million to $1.5 billion.

Moorlach’s report focused on the Unrestricted Net Position (UNP), an accounting function contained on a school district’s balance sheet portraying what is essentially the net worth of its general fund – the account from which it pays salaries, benefits, administrative costs, maintenance of school buildings and other general operating expenses such as insurance, consulting services and travel.

Michael Fine, chief executive officer of the Financial Crisis & Management Assistance Team (FCMAT), a state service designed to provide school districts with financial advice and management assistance, agrees that Moorlach’s analysis of UNP “is accurate and should not be dismissed.”

“However, it has little practical impact on the daily operations of California’s public school districts,” Fine told Patch. “Parents and taxpayers are unlikely to see any direct implications on programs and services purely by a growth in negative UNP.”

Unrestricted general fund revenues are primarily derived from local property taxes, state and federal financial aid not earmarked for specific – or restricted – purposes and other income such as parcel taxes. In many districts the unrestricted state and federal funding exceeds the amount of property tax revenues.

The UNP is just one of three components that in combination provide a detailed picture of just where a district stands financially at the end of its fiscal year.

A second component reports the value of capital assets such as school buildings and property after outstanding debt and depreciation has been subtracted – assets that cannot be used for operating purposes.

The third category reports assets restricted to federal and state programs such as special education. Most school districts consistently report positive results – or surpluses – in both of these categories.

But it’s the UNP that tells school officials just where their district stands when it comes to funds available for paying general operating costs and other expenses. For the majority of K-12 districts in California this significant number is negative, reflecting the fact a district has set aside insufficient assets to pay its obligations – including pension and other retiree benefits.

San Diego County School Districts’ UNP, Explained

A school district’s UNP is similar in concept to an individual’s personal finances where the value of what is owned such as cash investments, a home, cars and other personal property is subtracted from that what is owed, such as a mortgage, credit card debt and monthly expenses. The difference would be the individual’s net worth, a factor considered by banks when assessing the financial and credit quality of a loan applicant.

To provide a more accurate means of comparing and ranking school districts Moorhead divided the UNP deficits by the population in each district to produce a per capita apportionment. In theory this would be the amount each district resident would have to pay over and above existing school taxes to eliminate the general fund deficit in their district.

In San Diego County, the per capita UNP in Patch districts ranged from a negative $247 in the South Bay Union High School District to $2,139 in tiny Cardiff School District.

a-SAN_DIEGO_COUNTY_CHART-Final_Net_Pos-1541437267-8418.jpg

The larger the negative UNP per capita, the more likely a school district’s revenues are being used to pay pension and other retirement benefits, Moorlach said. “This means less funding for other programs and possible elimination of certain areas of study.”

“There is simply insufficient funding [for] K-12 to eliminate negative UNP at this time,” said Fine, who agreed with Moorlach that it will get worse before it gets better.

On average, over the past six years per-student state funding has grown 13 percent annually, Fine said, but that’s about to change because annual growth rate is expected to be less than 3 percent beginning with the next fiscal year.

This level of funding is “a fraction of what is needed to sustain programs and services to students,” said Fine, particularly after you factor in the entire spectrum of expenses incurred by school districts faced with declining enrollments and substantial increases in the cost of special education services.

“Every school district has a different and unique story,” says Moorlach.

But the common denominator is the growing cost of pensions and Other Post Retirement Benefits (OPEB). Salaries and benefits are major factors contributing to growing UNPs, Moorlach said, and every time districts increase employee salaries, there’s an attendant increase in retirement costs. This particularly impacts districts in areas with high costs of living.

San Diego County school districts have growing pension expenses due to the increasing amounts that must be contributed to the California State Teachers Retirement System (STRS) and the California State Public Employees Retirement System (PERS), San Diego County Office of Education spokeswoman Music Watson told Patch.

“The increases in these contributions, and in expenses for other post-retirement benefits (retiree healthcare, life insurance, etc.), are a substantial concern,” Watson said. “The way to mitigate the problem of unfunded liabilities is to increase contributions to STRS and PERS by school districts and employees, which is what is happening.”

Spiraling Costs Of Employee Pensions

During the past five years for which audited financial statements are available, salaries for teachers and other school employees have increased an average of 25 percent, while the cost of benefits has jumped by an average of almost 50 percent with some individual districts seeing increases in excess of 75 and 80 percent.

School districts have little control over the spiraling costs of their annual payments to employee pensions. All districts participate in both the California State Teachers Retirement System (CalSTRS), that provides pensions for teachers and the California Public Employees Retirement System (CalPERS) which handles pension for other district employees.

Each year these pension funds calculate the amount each district must contribute, rates that have been steadily increasing because both funds are significantly underfunded. In addition, the state makes contributions “on-behalf” of every district, money derived from California’s own general fund and included in the total amount the state budgets for education.

In 2017 direct payments from the state’s general fund to CalSTRS on-behalf of Patch school districts in San Diego County totaled $129.4 million in state payments, themselves contributing $182 million.

Combined, pension payments made directly by San Diego County Patch districts to both CalSTRS and CalPERS, over and above the state payments totaled $258.5 million in 2017.

b-SAN_DIEGO_COUNTY_Employee_Expense%20-%20Copy-1541437300-8646.jpg

Fine agrees that pension and OPEB contributions are fueling the growth of UNP and says by 2022 contribution rates will have more than doubled, a trend that “has a direct impact on the district’s ability to support its programs and deliver services.”

“Most districts use the ‘pay as you go’ method of funding, ignoring the long term liability,” says Fine. “This isn’t an unrealistic approach for most districts, but there are examples where a significant portion of [a] district’s annual budget designed to serve today’s students must be set aside to cover benefits for employees that served yesterday’s students.”

While the costs of employee benefits have steadily added to growing UNP deficits, the true magnitude of this subtle erosion in the financial stability of school districts has been hidden in footnotes to annual financial statements most taxpayers don’t bother to read.

However, beginning with the fiscal year ending in June 2015, new rules by the Governmental Accounting Standards Board (GASB), an independent organization that sets financial accounting standards for state and local government, required pension liabilities to be included on the actual balance sheets.

Almost overnight California school districts were forced to increase their general fund liabilities – a major factor in calculating UNP – by millions of dollars. These numbers will only grow, further deteriorating UNP, when financial statements for the 2018 fiscal year begin appearing in December because those reports will reflect GASB’s requirement that additional millions in liabilities for retiree healthcare and other post-employment benefits must also be included on balance sheets.

What Can Be Done To Stem The Red Ink?

Moorlach believes one solution is stronger fiscal management. Another might be renegotiating labor contracts to reduce the cost of retiree medical benefits, something that’s anathema to the powerful teachers’ and other public employee unions.

“Other than that, districts need to have revenues in excess of expenditures every year and the net excess should be plowed into building reserves and reducing liabilities,” Moorlach said. “That’s how you run a fiscally distressed entity.”

To maintain sound fiscal health related to its operating fund, the Poway Unified School District, in collaboration with its employee groups, implemented salary rollbacks in 2010, 2011 and 2012, according to district spokeswoman Christine Paik. The rollbacks were restored in 2013 as the state economy was rebounding, she said.

In 2017, the district formed a community-based budget advisory committee to make recommendations around closing the structural deficit in the general fund.

“We anticipate continuing with that work this year, including budget workshops with the Board of Education and community budget forums,” Paik said.

“We have adopted a districtwide focus this year to increase student attendance in order to increase state funding,” she added. “District board and leadership will explore ways to balance next year’s budget while maintaining the quality educational programs for which Poway Unified is known.”

Oceanside Unified School District is also working to address student attendance and explore ways to bring in more revenue. Attendance has declined at the district for the past decade, according to district Deputy Superintendent Dr. Shannon Soto.

“We have a history over the last 10 years of declining enrollment of approximately 400 students every year,” Soto said.

Last spring, the district launched a pilot program that allowed students who missed school during the week to make up classes on Saturdays. This year, the district has already scheduled several Saturday make-up days at various school sites.

The program enables the district to recoup state funding lost due to student absences.

As The Financial Pressures Grow, Will School Districts Start Going Bankrupt?

Fine, whose FCMAT staff regularly deals with troubled school districts, doesn’t think so because the state is there to bail them out.

Senator Moorlach’s analysis ignores the fact that in California, the state guarantees the continued operation of a public school district or community college by providing a backstop to fiscal insolvency,” Fine said. “Ultimately, when a school district becomes insolvent, the state legislature [makes] an emergency appropriation for that district. This has happened nine times since 1991.”

Moorlach said he’s not ignoring emergency state financial aid to insolvent districts, he just wonders where the state will come up with the resources to bail out multiple districts which might seek help simultaneously, noting the state’s “rainy day” fund only contains $13 billion.

“We’re creating a massive pretzel once a multi-year economic down cycle takes full effect. Then parents and taxpayers will understand what can happen when the fiscal squeeze is on,” said Moorlach. “Regretfully, then it will be too late. Forewarned is forearmed. The sooner we get in front of this the better.”

By Bob Porterfield with Patch Editor Kristina Houck contributing to this report.

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MOORLACH CAMPAIGN UPDATE — It’s Election Day — November 6, 2018

Today is November 6th and it’s election day in Orange County, California and the nation. Don’t waste this opportunity to participate in your God given right to vote.

If you have not voted yet, and you need a last minute assist, go to my complete all-inclusive voter guide at MOORLACH CAMPAIGN UPDATE — All-Inclusive Voter Guide — October 24, 2018. It also has links to the focused subject matter voter guides that I’ve provided over the past few weeks.

If you live in the OC and need any voter information, including polling places or election night results later this evening, go to the Registrar of Voters’ website at https://www.ocvote.com/. For California, go to the Secretary of State’s website at https://www.sos.ca.gov/elections/.

Thankfully, this is my last Campaign UPDATE for this two-year election cycle. Allow me to focus on one race. A contest where I’ve decided to stay neutral.

After some 23 years in public service, I’ve worked with and known both Supervisor Todd Spitzer and District Attorney Tony Rackauckas for a long time. Now they are running head-to-head for the elected office of District Attorney, after making it to the top two in the June Primary.

I did not endorse in the Primary, suggesting that either one would be a good second choice (see MOORLACH CAMPAIGN UPDATE — June Primary Antics — April 28, 2018).

So, let me do a little soul searching and lay it out as best as I can. Let’s start with the incumbent. Speaking as a former department head, Tony Rackauckas has been a miserable manager of a large department. Without going into all the gruesome details, like Grand Jury reports criticizing his managerial efforts from the get-go, I’ll provide a few examples.

For me, the Dekraai mass shooting in Seal Beach was a classic slam dunk. But, because of the now famous snitch scandal, the survivors of Mr. Dekraai’s victims saw the death penalty taken off the table and will not see justice. This is tragically ironic, as Rackauckas is a strong advocate of the death penalty (something he just couldn’t seem to skillfully articulate in a public setting).

If you debated the costs of pursuing the death penalty during the Great Recession, which I did while serving as a County Supervisor in an era where 1,000 employees were laid off, Tony determined that I must be anti-death penalty and accused me of such. So much for seeking the true facts; something a prosecutor is required to do.

I shared my frustrations shortly after being elected to the State Senate (see
MOORLACH UPDATE — Day Two — March 26, 2015)

With the Dekraai case tangled in the informant battle, the trial to decide his punishment could be delayed more than a year, frustrating victims’ families – and at least one locally elected official.

“How do you mess up a case like this?” asked former supervisor John Moorlach, whose district represented Seal Beach. “It’s unconscionable.”

The Dekraai case reverberations would make it to the Legislature and I would make my frustration known on the Senate Floor (see MOORLACH UPDATE — Prosecutor Accountability — October 4, 2016).

Another sad episode was Tony Rackauckas’s charging of then OC Assessor Webster Guillory with felonies for a minor error in signature gathering for Guillory’s re-election efforts, the error was made after numerous appeals Mr. Guillory received to run again at the last minute. It would significantly damage his re-election efforts. But, the winning candidate was a political ally of Tony’s through a fascinating web of relationships. The charges would eventually be reduced to misdemeanors, but it would be too late (see MOORLACH UPDATE — $117B Unrestricted Net Deficit — January 9, 2015).

If you can stretch the rules yourself, you’re probably not going to prosecute other politicos. Shirley Grindle found this to be the case (see MOORLACH UPDATE — Shirley Grindle — July 19, 2015).

When one of my former Chiefs of Staff, a law school professor, publicly hinted that he would consider running for DA, you knew that there were concerns (see MOORLACH UPDATE — Alumnus DA? — June 11, 2017).

We would next see the incumbent announce he was rerunning to somehow repair his tarnished reputation (see MOORLACH UPDATE — DA Doubts — July 9, 2017).

Then we would hear from Supervisor Spitzer, who has made becoming the Orange County District Attorney a life-long pursuit (see MOORLACH UPDATE — Surprise! — July 11, 2017).

Within literally minutes, the fun began, giving me a chance to provide a short history lesson on the office of OC DA (see MOORLACH UPDATE — DA Drama — July 12, 2017).

But, replacing an incompetent DA with someone who also is lacking in managerial skill sets is troubling. I mentioned this concern in MOORLACH UPDATE — DA Doubts — July 9, 2017, which includes the following quote:

“The thought of Todd running for D.A. has been the biggest boon to Tony,” said state Sen. John Moorlach (R-Costa Mesa), who said he doesn’t see either man as fit for the office. “Tony should not be D.A. anymore. He should not have been D.A. for a long time.”

And I recently criticized Supervisor Spitzer for manipulating the homelessness issue by fear mongering and grandstanding on the sensitivities of Orange County’s residents in dealing with this difficult concern (see MOORLACH UPDATE — Inside OC, Part 2 — May 7, 2018).

How’s that for a brutal assessment of this choice?

Incumbents win 90% of the time, so Tony Rackauckas should ordinarily be fine in holding his seat. But, if that win comes with a very small margin, it should wake him up. The question is: Can you wake up someone at this stage in his life and career? Or maybe the question should be: Why should we wait for you to fix the tarnished reputation of Orange County’s District Attorney’s office after you were the major reason for it occurring?

You’ll get a Republican by voting for either one of the candidates. But selecting one over the other is the biggest conundrum OC voters have to deal with today.

For another perspective on this race, the Voice of OC chimes in with its piece below. It also had an editorial submission over the weekend (see MOORLACH CAMPAIGN UPDATE — It’s Time to Vote — November 4, 2018).

Rackauckas and Spitzer Face Off Tuesday in DA Election Showdown

By Nick GerdaNICK GERDA

https://voiceofoc.org/2018/11/rackauckas-and-spitzer-face-off-tuesday-in-da-election-showdown/

OC Supervisor Todd Spitzer is running head-to-head against District Attorney Tony Rackauckas for the DA’s job Tuesday, in one of Orange County’s most closely-watched races.

The face-off, years in the making, pits Rackauckas against his former heir apparent. The two had a very public falling-out in 2010, have feuded ever since, and the race is considered to be highly competitive.

Spitzer was about 3 percentage points behind Rackauckas in the June primary, and split the non-incumbent vote with two other challengers. Spitzer has spent more than twice as much campaign money as Rackauckas: $2.2 million to Rackauckas’ $984,000.

However, Spitzer’s spending and name recognition is far from a guarantee of winning. Incumbents traditionally have a strong built-in advantage to hold onto office, and Rackauckas has built a base of support among elected officials and business owners.

Whoever wins will lead the county prosecutor’s office, which has more than 850 employees and handles more than 60,000 criminal cases each year. The office has about 260 prosecutors and 120 investigators.

Both candidates have been elected officials in OC for decades, and their reputations are well-established.

Rackauckas was first elected DA in 1998, and over the last several years his office has faced accusations of cronyism and misconduct, especially as a number of criminal prosecutions were derailed by illegal misuse of jailhouse informants, known as the “jailhouse snitch scandal.”

A unanimous appeals court ruling found DA prosecutors systematically violated the constitutional rights of defendants through an illegal informants network, and failed to turn over evidence that was favorable to the defense, as required by law.

Illegal use of informants in Orange County has so far resulted in reduced or thrown-out charges in at least seven criminal cases – including one where a gang member facing two murder charges walked free – and potentially affected a dozen more cases.

In the prosecution of mass murderer Scott Evans Dekraai, a judge barred the entire DA’s office was from prosecuting the case and later threw out the death penalty – a decision upheld on appeal.

Law enforcement actions in the OC informants scandal are under investigation by both the California Attorney General’s Office and the U.S. Department of Justice.

Rackauckas has pushed back at criticism, pointing to a controversial Orange County Grand Jury report that dismissed the allegations of systemic informant abuse as a “myth” perpetuated by the media and the public defender’s office. The grand jury report did not discuss the unanimous appeals court ruling from seven months prior that had found systemic misconduct by the DA’s Office and Sheriff’s Department.

Rackauckas and his chief of staff, Susan Kang Schroeder, are under state investigation for allegedly accepting illegal undisclosed gifts of private jet travel from billionaire Henry Nicholas, according to an Oct. 29 letter from the state’s Fair Political Practices Commission. Nicholas was arrested in Las Vegas in August on suspicion of drug trafficking after police found heroin, meth, cocaine, and ecstasy in his hotel suite.

Rackauckas and Schroeder’s lawyer has said they did travel on Nicholas’ plane, but that the gift limit does not apply because of an exemption in state law for travel to speeches regarding legislative or governmental matters.

Spitzer previously worked for Nicholas, though the two had a falling out years ago.

One of Spitzer’s defining moments in office was when he handcuffed a Christian preacher at a Wahoo’s Fish Taco restaurant in 2015 for allegedly staring at Spitzer and a nearby table knife.

A sheriff’s deputy who responded to the incident said the knife on the table was a butter knife. A Wahoo’s employee told the deputy Spitzer decided to handcuff the preacher because he kept looking at Spitzer.

Spitzer disputed the description of the knife, saying it was a steak knife and that his actions were necessary to protect himself and others.

When news of the incident became public, Spitzer tried to send out a county-funded statement claiming he would have been justified to use deadly force against the preacher because table knives were nearby.

“Police officers are trained not to allow anyone either armed with a knife or ready access to a knife to come within 10 feet,” Spitzer wrote in the statement he wanted to send out. “Use of deadly force is justified under those circumstances.”

His proposed statement was titled, “I WILL NEVER TURN MY BACK ON THE PUBLIC OR ITS SAFETY.”

The county’s chief spokeswoman at the time, Jean Pasco, urged Spitzer not to send it out and warned it could expose the county to legal liability. Spitzer ended up not not sending out the statement.

Spitzer and his fellow supervisors fought the public release of the statement and emails, but Voice of OC sued under the state’s Public Records Act and after a year-plus court battle, a judge ordered the county to disclose the records. The supervisors spent over $120,000 in county taxpayer money trying to block the records’ release.

In the DA’s race this year, Spitzer has spent thousands of dollars on mailers and campaign ads focusing on the informant scandal and other allegations against Rackauckas, hoping to convince voters he would lead an honest and accountable prosecutor’s office.

Rackauckas, in turn, has invested in ads alleging Spitzer is “unstable,” “unhinged,” and asking people if they “have experience with him demanding campaign donations in exchange for official actions.”

Rackauckas’ ads level a specific claim about Spitzer’s mental health: that he failed multiple police psychiatric exams – an apparent reference to allegations about Spitzer’s time as a reserve police officer in the 1990s.

In text messages Friday, Spitzer said the psych exam clams are simply not true, and that he “never” was told he failed such an exam. What’s more, Spitzer said, he has been issued a concealed weapon permit and was brought back to the DA’s office in 2008 by Rackauckas himself.

“I have absolutely no mental illness whatsoever,” Spitzer wrote. “They know they’re going to lose on Tuesday and they’re going to lose badly and they are literally grasping at straws.”

One of Spitzer’s defining features is his ability to get his name and face onto TV news, which has been considered helpful for his name recognition in running for DA. His colleagues on the Board of Supervisors have taken notice.

“We would always warn people, when they came to the county [headquarters], to be careful not to be between Supervisor Spitzer and a TV camera, because you were guaranteed to be run over,” said state Sen. John Moorlach (R-Costa Mesa), who served with Spitzer on the county Board of Supervisors, in a March podcast about Spitzer’s appearance at a Costa Mesa City Council meeting outside his district.

Moorlach laughed, adding: “So I would maybe also think twice this June when you…cast a vote for District Attorney.”

Among Spitzer’s highest-profile appearances were connected to controversies this spring over proposed homeless shelters in Costa Mesa and Laguna Niguel. Spitzer went to City Council meetings in those cities, which are outside his district, to warn residents of the dangers of homeless people.

In public comments before packed meetings, Spitzer labeled homeless people as “sex offenders,” even though there was one convicted sex offender among the several hundred homeless people in motels at the time who could have been eligible for the shelters.

And sex offenders would not have been allowed at the proposed shelters, according to county officials.

Spitzer was in a position, in the month between the first discussion of the shelters and when they were publicly proposed, to ask his colleagues to prohibit convicted sex offenders at the shelters, as the county does with its Bridges Kraemer shelter in Anaheim. Spitzer apparently did not do so, and went on to cite the risk of sex offenders in his warnings to residents.

Supervisor Lisa Bartlett, who represents Laguna Niguel and other south county cities, has said Spitzer engaged in “fear mongering” when he went to the Laguna Niguel meeting in her district.

In response, Spitzer said at the time: “The fact of the matter is, I have every right to express my point of view throughout this county on particular issues, especially when it affects my votes.”

The winner on Tuesday will have a four-year term leading the DA’s office. The final result may not be known for days, given the large number of ballots that voters mail in close to and on Election Day.

Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at ngerda.

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MOORLACH UPDATE — San Bernardino County School Districts — November 5, 2018

The Sun provides my editorial submission on the public school districts in San Bernardino County.

For Orange County, see MOORLACH UPDATE — Get Mad, Get Motivated — October 19, 2018.

For Riverside County, see MOORLACH UPDATE — Riverside County School Districts — October 31, 2018.

For a complete overview, see MOORLACH UPDATE — Public Schools Financial Crisis — November 3, 2018.

Sacramento will have to be focusing more on how it funds the education of California’s students. As one of three members of the Senate Budget and Fiscal Review Subcommittee One on Education, you can be sure I’ll be encouraging my two Democratic colleagues that action is required and the sooner the better.

OPINION

All San Bernardino County

school districts but three bleed

red ink

By JOHN MOORLACH

https://www.sbsun.com/2018/11/03/all-san-bernardino-county-school-districts-but-three-bleed-red-ink/

Of San Bernardino County’s 33 public school districts, only three boast a positive balance sheet. Unfortunately, the other school districts have balance sheets that bleed red ink.

The scoring comes as part of my new report, “Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities.” It reviews the financial soundness of all 944 California public school districts. I performed a similar review of California’s 482 cities back in March.

The rankings derive from each district’s latest Comprehensive Annual Financial Report, which you can find on their respective websites. In each CAFR, look for the “Basic Financial Statements,” starting with the page titled “Statement of Net Position.” Look at the top row for “Government Activities.” Then look down the column to where it says, first “Net Position,” then “Unrestricted.” That’s the number you want: the Unrestricted Net Position, or UNP.

The number will either be positive or, with parentheses around it, negative.

I also divide the UNP by the district’s population to get a per-capita UNP. If negative, that’s the amount each person in the district is in hock for, whether or not your children attend school. Citizens should be concerned about the trajectory of these negative balances, which are commonly attributed to unfunded pension liabilities. As school board members are auditioning for their jobs, they need to be held accountable for dealing with these liabilities.

If the negative number runs too high too long, it will mean cuts in teachers, equipment, band and sports, and ultimately calls for tax increases. In the worst cases, takeover by the state, even bankruptcy, is not out of the question.

Trona Joint Unified boasts a positive UNP per capita of $6,354, the top for the county and the third best of the state’s 944 districts. Bravo! That’s quite an accomplishment. It’s followed by Baker Valley Unified, at $2,223, the 17th best in the state. Then by Cucamonga Elementary, at $1,842, the state’s 23rd best.

Scoring three districts in positive territory, San Bernardino surpasses neighboring Orange and Riverside counties, each of which had just one with a positive balance sheet.

That’s the end of the good news. The remaining 30 districts dip into the red. Fourth best in the county is Chaffey Joint Union High, 323rd best in the state at ($462); next is Alta Loma Elementary, ranked 325th at ($465). At least they were in the top third of California districts.

Only 10 districts in San Bernardino County were in the top half of the state’s 944 districts.

The two lowest-ranking districts were Mt. Baldy Joint Elementary, in 888th place at ($1,688); and Fontana Unified, in 882nd place at ($1,662).

While I’m not predicting bankruptcy for these districts, I’m sure everyone in the county is aware of the risks from the city of San Bernardino’s 2012 Chapter 9 filing. For comparison, the city’s CAFR for 2011, the year before it entered a federal courtroom, showed a UNP of ($260.9 million). That put the per capita UNP at ($1,232). But, this was before the unfunded liability for the employees’ defined-benefit pension plan had to be included in the balance sheet.

As with the city, the problem with these schools districts being in the red largely rests with excessive pension costs busting budgets.

Among the largest districts by population, Chaffey Joint Union High in Ontario ranked 323rd, with a ($462) UNP per capita, Fontana Unified placed 882nd at ($1,682) and Silver Valley Unified placed 880th at ($1,642).

In terms of the raw totals of how much these districts are underwater, the numbers are: ($192 million) for Chaffey, ($405 million) for San Bernardino City Unified and ($309 million) for Fontana. That’s nearly a billion dollars for just three districts.

Here are the per capita UNPs for all of San Bernardino County’s school districts, best to worst:

  1. Trona Joint Unified               $6,354
  2. Baker Valley Unified             $2,223
  3. Cucamonga Elementary       $1,842
  4. Chaffey Joint Union High      ($462)
  5. Alta Loma Elem                      ($465)
  6. Barstow Unified                      ($559)
  7. Lucerne Valley Unified          ($632)
  8. Etiwanda Elementary            ($644)
  9. Victor Valley Union High       ($649)
  10. Helendale Elementary           ($696)
  11. Ontario-Montclair                   ($726)
  12. Morongo Unified                     ($774)
  13. Snowline Joint Unified           ($746)
  14. Apple Valley Unified               ($787)
  15. Rim of the World Uni              ($832)
  16. Mountain View Elem              ($876)
  17. Victor Elem                               ($889)
  18. Yucaipa-Calimesa Joint          ($899)
  19. Chino Valley Unified               ($952)
  20. Hesperia Unified                     ($965)
  21. Adelanto Elementary             ($986)
  22. Bear Valley Unified                 ($987)
  23. Oro Grande Elementary     ($1,037)
  24. Redlands Unified                  ($1,097)
  25. Rialto Unified                        ($1,131)
  26. Needles Unified                    ($1,155)
  27. Upland Unified                     ($1,265)
  28. Colton Joint Unified             ($1,417)
  29. Central Elementary             ($1,473)
  30. San Bernardino City Uni    ($1,531)
  31. Silver Valley Unified           ($1,642)
  32. Fontana Unified                   ($1,662)
  33. Mt. Baldy Joint Elem           ($1,688)

The tallies are part of my effort to track the per capita UNPs of California’s various government balance sheets. In addition to the city balance sheets mentioned earlier, I have tracked counties, community colleges, California State University and the University of California as well as all 50 U.S. states.

You can follow all these analyses on my legislative website. The reports will be regularly updated.

Next year is going to be especially revealing – and distressing – as the Governmental Accounting Standards Board for the first time will require balance sheets to include unfunded retiree medical liabilities, which will show even more city and school districts in critical condition.

And when the next economic recession hits, for even those modestly distressed, it’s going to be one big financial train wreck.

Let’s hope our elected school board members and their administrative staff get in front of this serious cash management squeeze on their horizon. It’s time to be proactive, as taxpayers are not very forgiving with those who are reactive. Especially with supposed leaders who only have one solution: raise taxes.

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

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MOORLACH CAMPAIGN UPDATE — It’s Time to Vote — November 4, 2018

You get to vote now if you vote by absentee ballot or take advantage of an early voting facility provided by the OC Registrar of Voters. Or you can be a traditionalist and vote on Tuesday at your local polling place.

If you live in the OC and need help finding your polling place, go to the Registrar’s website at https://www.ocvote.com/voting/voting-in-orange-county/.

For my complete all-inclusive voter guide, go to MOORLACH CAMPAIGN UPDATE — All-Inclusive Voter Guide — October 24, 2018. It also has links to the focused voter guides that I’ve provided over the past few weeks.

The first piece below is a segment of an interview of the three candidates in one district in the city of Costa Mesa that can be found on the electronic version of the OC Register. It deals with the subject matter of my recent unfunded actuarial accrued liability percentage UPDATE (see MOORLACH UPDATE — Trick or Treat? — October 26, 2018). Also, if you go to my Senate website, you’ll find verification of the support claim of my SCA 10 that was made (see https://moorlach.cssrc.us/content/senate-constitutional-amendment-10-pension-transparency).

The second piece is from the Inland Valley Daily Bulletin, which has a letter to the editor in support of a “Yes” vote on Proposition 6. A “Yes” vote repeals the gas tax foisted on Californians last year by two-thirds of the legislature, excluding yours truly.

California’s Department of Transportation needs serious managerial and fiscal reforms before vehicle owners provide it with more funding. The manipulation by the supporters of this gas and auto tax has been astounding. Starting projects and guilting you to continue them by your making the financial sacrifices that Sacramento is not willing to make itself. Again, it is nice to see that my office’s research on the efficiencies, or lack thereof, of Caltrans is being appreciated and referred to.

The third piece is an editorial submission in the Voice of OC on the OC District Attorney’s race, giving one side of the debate on this race. As I know both candidates, I am neutral and have not made an endorsement.

Election 2018: Costa Mesa City Council District 5 candidates share their priorities and thoughts on local issues

By STAFF REPORT

https://www.ocregister.com/2018/10/24/election-2018-costa-mesa-city-council-district-5-candidates-share-their-priorities-and-thoughts-on-local-issues/

Question 4: Communities across the state are grappling with rising pension and other post-employment benefit costs. What do you think needs to be done to deal with this problem?

Allan Mansoor: We need to have greater restraint of pension benefits. That’s why I officially supported SCA 10 by Senator John Moorlach to require voter approval for any increases in retirement benefits. Locally, I voted to authorize prepayments from Costa Mesa to CalPERS when cash flow and cash balances permit. I made the motion to have city staff research using an Internal Revenue Code Section 115 Irrevocable Trust to pre-fund pensions and other accounts, such as OPEB.

Arlis Reynolds: Costa Mesa is in good financial health with an AA+ credit rating. We must establish a strategic plan that proactively allocates budget to pension obligations while maintaining high-quality public safety and services that benefit residents and attract visitors. Employees already contribute at a rate higher than legal mandates. We should optimize non-PERSable benefits, consider a Section 115 trust, invest in upgrades that reduce costs, support economic growth, and leverage credit ratings to optimize debt obligations. I will work with our Finance and Pension Advisory Committee and our new Finance Director to analyze various strategies and develop a long-term plan to address pension costs and overall financial health.

Rebecca Trahan: As a former Costa Mesa finance and pension committee member I had direct access to the city budget information, which included the money allotted for CalPERS. While on that committee I worked with a team to find solutions to this impending financial disaster and minimize the risk to our city — not just for current residents but also for those whom it most likely will have a devastating effect, our younger and future Costa Mesa residents. If I am elected to the city council representing district 5, I will continue to make addressing and resolving the pension debacle one of my top priorities. One of the ways I will address this is by re-examining every aspect of our budget and find areas where we may set aside more money for reserves to cover the pension payday when it will occur. In doing so, I will not just study it and do nothing as has happened with the council in the past — I will actually take action to draw down our liability and set us on a path for recovery and sustainability.

Vote yes on Prop. 6 to stop pols’ wasteful spending: Letters

https://www.dailybulletin.com/2018/10/19/vote-yes-on-prop-6-to-stop-pols-wasteful-spending-letters/

Vote yes on Proposition 6 to repeal an unfair, regressive tax.

The cost of living is already too high in California, and the gas and car tax hikes hurts working families that already struggle to pay bills. On Nov. 1, 2017, Californians were hit with a new tax of 12.5 cents more per gallon of gasoline (and 20 cents more for diesel), also increasing auto registration fees as much as $175 per year. It gets worse!

The car and gas tax hikes are slated to increase every year, automatically. If this tax is not repealed, by 2021 Californians will be paying close to $2 more a gallon extra because of taxes and other government mandates. That’s $40 extra each time you fill up your car.

The tax also hits business owners who rely on transporting good, raising the cost of everything from apples to bread and everything in between, which is then passed on to working families.

This latest gas tax hike will not fix our roads because politicians will continue to fraudulently raid and divert gas tax funds.

State Sen. John Moorlach, a CPA, released a stunning report showing that only 20 percent of existing gas tax funds goes to roads, and Caltrans wastes half a billion dollars annually on extra staffing.

This latest gas tax increase contains no guarantee that even a penny will go to roads. For years, the Sacramento politicians have been raiding the existing gas tax funds to pay for their pet projects and general fund spending rather than fixing our terrible roads.

What little money that is spent on roads is largely wasted. We need to stop politicians’ wasteful spending first. Remember, a yes vote on Proposition 6 will repeal this unfair tax.

— Darryl Craft, Redlands

ELECTION EDITORIALS

Mitchell: Tony Rackauckas – A Threat to Public Safety

By WILLIAM R. MITCHELL

Our Orange County District Attorney Office has become a house of horrors as revelations of misconduct, incompetence, and delayed justice pile up. DA Tony Rackauckas’s failures have not only undermined public confidence in the judicial system – they undermine public safety.

Though the 60 Minutes investigative report highlighted Raukauckas’s disregard for the law, a study by Harvard Law School disclosed that his office’s rate of overturned convictions due to prosecutorial error is among the highest in the state. These overturned criminal convictions are in addition to the botched handling of the homicide case against mass murderer Scott Evan DeKraai, who shot and killed seven in a beauty salon. The DA’s mishandling of the deadliest mass killings in County history meant that DeKraai received a life sentence rather than the death penalty. Also, there have been six recent murder cases that have resulted in dismissed or reduced charges due to errors by the DA’s office.

The Harvard Law School report is just the latest in a litany of findings confirming Rackauckas’s incompetence and misconduct. An Evaluation Committee appointed by Rackauckas found that the DA’s office was a “rudderless ship.” In 2017 a Grand Jury report confirmed the Evaluation Committee’s finding of a lack of leadership by the DA and additionally found the existence of a hostile work place and inadequate sexual harassment policies in the DA’s Office. In the face of the multitude of mishaps, State Senator John Moorlach summed it up best when he said “Tony should not be the D.A. anymore.”

Most recently his delayed response to victim’s reported complaints of rape and sexual assault against Dr. Robicheaux are inexplicable. The unsealed warrants show that the DA dragged its feet in prosecuting the multiple reports of criminal sexual assault.

Given the long and well-documented failures of Rackauckas, one would expect more outrage. The muted response is due to two unrelated factors that silence criticism. In 1995, then District Attorney Michael Capizzi authorized an early morning raid on the home of recently elected Assemblyman Scott Baugh. The outrage over the aggressive prosecutorial tactics on a Republican office holder led to Capizzi being forced from office. When Rackauckas ran for DA, he pledged that he would not criminalize political conduct. Rackauckas has resolutely stuck to his pledge, with the minor exception of the prosecution of Assessor Webster Guillory, which was, unsurprisingly, driven by a personal feud. The most conspicuous example of this pledge at work was Rackauckas’ refusal to investigate the allegations against then Sheriff Michael Carona. Rackauckas’ refusal to investigate Carona for crimes occurring right under his nose forced the Justice Department to take action, leading to Carona’s prosecution and conviction.

Even though Rackauckas bungles prosecutions, his refusal to investigate or prosecute political activity earns him the support, donations and silence of many political elites. To understand this arrangement is to understand both their reluctance to replace Rackauckas, and their reluctance to replace him with anyone who will actually enforce the law. Apparently, for many key Republicans and Democrats, the undermining of the integrity of the criminal justice system is but a small price to pay to avoid the application of the law to them.

In addition to Rackauckas’s unwillingness to investigate politicians, the fear of retaliation by Rackauckas silences would be critics as well. In the last year, four respected employees of the DA’s office have alleged that they were targets of retaliation by Rackauckas because they either reported prosecutorial misconduct or engaged in legitimate political activity. The most troubling claims are those of senior investigators Craig Hunter and Tom Conklin who both independently report that Rackauckas used his office to investigate political rivals and, in one instance, punished the investigator for failing to produce incriminating information on the political rival. Rackauckas’s practice of using his public office to investigate political adversaries is especially repugnant, as is his use of the office to retaliate.

The use of retaliation is a reflection of Rackauckas’s character and his abuse of the office. This lack of character is on full display in his re-election campaign. His chief defense for his failure in office is to use personal invective against his opponent. He avoids running on his record at all cost – his accomplishments are thin and scattered.

Rackauckas’s misconduct and incompetence impact every aspect of the DA’s office. The overturned convictions, the mishandled murder cases, delayed justice and the botched DeKraai case prove that public safety is at risk with Rackauckas in office. His refusal to investigate and prosecute political crimes imperil our community – no one is safe when politicians are above the law. We need a DA that puts public safety first and commits to hold politicians accountable. We need a new DA.

William R. Mitchell – former Chair of Orange County Common Cause, Co-Author and Sponsor of the Orange County Finance and Ethics Commission Ordinance, long standing good government advocate and OC business attorney.

MOORLACH UPDATE — Public Schools Financial Crisis — November 3, 2018

I’ve given you the status of the unrestricted net position (UNP) of California’s 944 school districts in prior UPDATEs this year (also SEE REPORT HERE).

Patch has taken this study and provided a very professional review of the data and what it portends in the piece below. It also had knowledgeable quotes from Mike Fine, formerly the Chief Business Officer for the Newport-Mesa Unified School District and someone I worked with starting a quarter-century ago. Such is the joy of having been involved in local government leadership positions for more than two decades, you build and maintain relationships.

Shortly after predicting the fiscal calamity that the County of Orange endured, I was appointed to serve as the Orange County Treasurer-Tax Collector three months after the County filed for Chapter 9 bankruptcy protection. In this position I enjoyed serving as the Treasurer for all of the county’s school districts. That’s why this project is so important to me. I want our kids and their schools to succeed, and proper fiscal management is a critical component of the success formula.

The closing remark says it all. We know we have a problem, so let’s get proactive in addressing it. Especially in Sacramento, where it is likely to come crashing through the Capitol’s front door, figuratively speaking, when funds will be needed (and probably at a time when it will not have any).

Schools

Orange County Senator Predicts Financial Crisis In Public Schools

25 years ago, Sen. Moorlach predicted the bankruptcy of the county. Now he looks to the school districts as the “canary in the coal mine.”

By Ashley Ludwig, Patch Staff

https://patch.com/california/newportbeach/orange-county-senator-predicts-financial-crisis-public-schools

NEWPORT BEACH, CA — California State Sen. John Moorlach may well be giving an encore performance of his role as the canary in the coal mine preceding Orange County’s bankruptcy almost a quarter-century ago when he correctly predicted financial disaster while a candidate for county Treasurer-Tax Collector.

This time Moorlach, a Certified Public Accountant who represents Orange County’s 37th District and serves on the Senate Budget & Fiscal Review Committee and its education subcommittee, isn’t concerned about county government. What bothers him now are the brewing money problems facing hundreds of school districts across California, all experiencing what he sees as a growing deterioration of their financial stability.

In a report issued in October 2018, summarizing an analysis of the most recent financial statements issued by 944 K-12 school districts, Moorlach found more than 85 percent reported deficits on their general fund balance sheets, something he says indicates that many of these districts “could soon reach a tipping point into insolvency and receivership.”

Moorlach’s conclusion: “It’s not a pretty picture and it’s likely to get worse.”

In Orange County all but one of the 27 school districts reported deficits ranging from $7 million to nearly half a billion dollars. Of these, 14 school districts are located in Patch communities, and only one of those, the Fountain Valley Elementary School District reported positive results.

Moorlach’s report focused on the Unrestricted Net Position (UNP), an accounting function contained on a school district’s balance sheet portraying what is essentially the net worth of its general fund – the account from which it pays salaries, benefits, administrative costs, maintenance of school buildings and other general operating expenses such as insurance, consulting services and travel.

Michael Fine, chief executive officer of the Financial Crisis & Management Assistance Team (FCMAT), a state service designed to provide school districts with financial advice and management assistance, agrees that Moorlach’s analysis of UNP “is accurate and should not be dismissed.”

“However, it has little practical impact on the daily operations of California’s public school districts,” Fine told Patch. “Parents and taxpayers are unlikely to see any direct implications on programs and services purely by a growth in negative UNP.”

Moorlach disagrees, saying he’s not “sure this is a generalization one should hang their hat on.

“The deeper the negative UNP, the more likely there are higher annual payments for pensions and retiree medical. Higher annual payments ‘crowd out’ other expenses, like programming and supplies,” he said.

Unrestricted general fund revenues are primarily derived from local property taxes, state and federal financial aid not earmarked for specific – or restricted – purposes and other income such as parcel taxes. In many districts the unrestricted state and federal funding exceeds the amount of property tax revenues.

The UNP is just one of three components that in combination provide a detailed picture of just where a district stands financially at the end of its fiscal year.

A second component reports the value of capital assets such as school buildings and property after outstanding debt and depreciation has been subtracted – assets that cannot be used for operating purposes.

The third category reports assets restricted to federal and state programs such as special education. Most school districts consistently report positive results – or surpluses — in both of these categories.

But it’s the UNP that tells school officials just where their district stands when it comes to funds available for paying general operating costs and other expenses. For the majority of K-12 districts in California this significant number is negative, reflecting the fact a district has set aside insufficient assets to pay its obligations – including pension and other retiree benefits.

Orange County School Districts’ UNP, Explained

A school district’s UNP is similar in concept to an individual’s personal finances where the value of what is owned such as cash investments, a home, cars and other personal property is subtracted from that what is owed, such as a mortgage, credit card debt and monthly expenses. The difference would be the individual’s net worth, a factor considered by banks when assessing the financial and credit quality of a loan applicant.

To provide a more accurate means of comparing and ranking school districts Moorhead divided the UNP deficits by the population in each district to produce a per capita apportionment. In theory this would be the amount each district resident would have to pay over and above existing school taxes to eliminate the general fund deficit in their district.

In the Orange County Patch districts Moorlach’s study found this per capita amount ranged from a positive $78 in Fountain Valley to $1,089 in Newport-Mesa Unified.

a-ORANGE_COUNTY_CHART-UNP_Final-1541182665-6278.jpg

The larger the negative UNP per capita, the more likely a school district’s revenues are being used to pay pension and other retirement benefits, Moorlach said. “This means less funding for other programs and possible elimination of certain areas of study.”

“There is simply insufficient funding [for] K-12 to eliminate negative UNP at this time” said Fine, who agreed with Moorlach that it will get worse before it gets better.

On average, over the past six years per-student state funding has grown 13% annually, Fine said, but that’s about to change because annual growth rate is expected to be less than 3% beginning with the next fiscal year.

This level of funding is “a fraction of what is needed to sustain programs and services to students,” said Fine, particularly after you factor in the entire spectrum of expenses incurred by school districts faced with declining enrollments and substantial increases in the cost of special education services.

“Every school district has a different and unique story,” says Moorlach. But the common denominator is the growing cost of pensions and Other Post Retirement Benefits (OPEB). Salaries and benefits are major factors contributing to growing UNPs, Moorlach said, and every time districts increase employee salaries, there’s an attendant increase in retirement costs. This particularly impacts districts in areas with high costs of living, such as Orange County.

Orange County teachers tend to have higher salaries and therefore a “greater share of the California State Teacher Retirement System’s Unfunded Liabilities,” the Orange County Department of Education spokesperson Ian Hanigan told Patch.

There may be light at the end of the tunnel for Orange County school districts, as those liabilities are expected to “level off” based upon higher contributions by employers who “hope to improve the outlook for the state’s pension systems,” Hanigan said.

Spiraling Costs Of Employee Pensions

During the past five years for which audited financial statements are available, salaries for teachers and other school employees have increased an average of 25% while the cost of benefits has jumped by an average of almost 50% with some individual districts seeing increases in excess of 75 and 80%.

School districts have little control over the spiraling costs of their annual payments to employee pensions. All districts participate in both the California State Teachers Retirement System (CalSTRS), that provides pensions for teachers and the California Public Employees Retirement System (CalPERS) which handles pension for other district employees.

Each year these pension funds calculate the amount each district must contribute, rates that have been steadily increasing because both funds are significantly underfunded. In addition, the state makes contributions “on-behalf” of every district, money derived from California’s own general fund and included in the total amount the state budgets for education.

In 2017 direct payments from the state’s general fund to CalSTRS on-behalf of Patch school districts in Orange County totaled $89 million in addition to the $141.2 million the districts’ collectively paid from their own funds for teacher pensions.

Combined, pension payments made directly by Orange County Patch districts to both CalSTRS and CalPERS, over and above the state payments totaled $193.7 million in 2017.

b-ORANGE_COUNTY_Employee_Expense-Final-1541183015-4477.jpg

Fine agrees that pension and OPEB contributions are fueling the growth of UNP and says by 2022 contribution rates will have more than doubled, a trend that “has a direct impact on the district’s ability to support its programs and deliver services.”

“Most districts use the ‘pay as you go’ method of funding, ignoring the long term liability,” says Fine. “This isn’t an unrealistic approach for most districts, but there are examples where a significant portion of [a] district’s annual budget designed to serve today’s students must be set aside to cover benefits for employees that served yesterday’s students.”

While the costs of employee benefits have steadily added to growing UNP deficits, the true magnitude of this subtle erosion in the financial stability of school districts has been hidden in footnotes to annual financial statements most taxpayers don’t bother to read.

However, beginning with the fiscal year ending in June 2015, new rules by the Governmental Accounting Standards Board (GASB), an independent organization that sets financial accounting standards for state and local government, required pension liabilities to be included on the actual balance sheets.

Newport Mesa Unified School District told Patch they were aware of Senator Moorlach’s recent citation “that their district had more liabilities than assets.”

According to the NMUSD, the new condition for government agencies to include pension liabilities in the district’s Statement of Net Position, “as opposed to separating pension liabilities into the State’s statement, as it had been in past years.”

Almost overnight California school districts were forced to increase their general fund liabilities – a major factor in calculating UNP – by millions of dollars. These numbers will only grow, further deteriorating UNP, when financial statements for the 2018 fiscal year begin appearing in December because those reports will reflect GASB’s requirement that additional millions in liabilities for retiree healthcare and other post-employment benefits must also be included on balance sheets.

What can be done to stem the red ink?

Moorlach believes one solution is stronger fiscal management. Another might be re-negotiating labor contracts to reduce the cost of retiree medical benefits, something that’s anathema to the powerful teachers’ and other public employee unions.

“Other than that, districts need to have revenues in excess of expenditures every year and the net excess should be plowed into building reserves and reducing liabilities,” Moorlach said. “That’s how you run a fiscally distressed entity.”

As the financial pressures grow will school district start going bankrupt?

Fine, whose FCMAT staff regularly deals with troubled school districts, doesn’t think so because the state is there to bail them out.

Senator Moorlach’s analysis ignores the fact that in California, the state guarantees the continued operation of a public school district or community college by providing a backstop to fiscal insolvency,” Fine said. “Ultimately, when a school district becomes insolvent, the state legislature [makes] an emergency appropriation for that district. This has happened nine times since 1991.”

Moorlach said he’s not ignoring emergency state financial aid to insolvent districts, he just wonders where the state will come up with the resources to bail out multiple districts which might seek help simultaneously, noting the state’s “rainy day” fund only contains $13 billion.

“We’re creating a massive pretzel once a multi-year economic down cycle takes full effect. Then parents and taxpayers will understand what can happen when the fiscal squeeze is on,” said Moorlach. “Regretfully, then it will be too late. Forewarned is forearmed. The sooner we get in front of this the better.”

Bob Porterfield, with Patch Editor Ashley Ludwig contributing to this report.

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MOORLACH UPDATE — Joint Informational Hearings — November 1, 2018

After the conclusion of the Regular 2017-18 Legislative Session at the end of August, State Legislators enjoy a supposed “break.” But, for up to 75 percent of them, they are actually enjoying re-election campaigns.

However, committee chairs still hold hearings to address key subjects that they either didn’t have time for or there was some special request. I’ve recently flown up to Sacramento for three such hearings.

Obviously, this is not a quiet break. And, Republicans should attend to ask the tougher questions. So I do. One major concern was a very recent and unflattering State Auditor report of the California Department of Housing and Community Development (see https://www.bsa.ca.gov/pdfs/reports/2018-037.pdf).

Audit reports are issued, but rarely acted upon in Sacramento. With ballot propositions impacted, wouldn’t it be wise to clean up the management of a department that is responsible for administering housing bonds first before requesting more bond proceeds? I’m just sayin’.

It also gives me an opportunity to provide recommendations, such as better coordination between state departments and agencies and the benefits of creating the office of a Chief Operating Officer.

On October 15th I traveled to Sacramento for a Joint Governance and Finance Hearing on the recent U.S. Supreme Court Wayfair online sales tax decision. This monumental decision will keep the newly created California Department of Tax and Fee Administration (CDTFA) busy. The CDTFA was broken out of the State Board of Equalization’s core responsibilities by the majority party last year. So far, CDTFA is struggling to figure out what their job is and has experienced some awkward growing pains (for an example, see https://www.sacbee.com/news/politics-government/the-state-worker/article217166950.html). I’m hopeful that the dust will settle soon. But, it was very helpful to meet the department head and listen to his challenges and managerial efforts to meet them. Again, a COO would also be helpful here.

This week I flew up for a Joint Insurance Committee hearing to address homeowners’ insurance concerns for families who lost their homes to the devastating fires in recent months. Ironically, it was on a zero-humidity, windy, potential fire warning day. I reminded the committee members present that after the 1993 Laguna Beach fire, only half of the homes were rebuilt three years later. From Sacramento, I had to drive to Napa Valley College for the venue. KCRA-TV 3 was at the hearing and their report can be seen at https://www.kcra.com/article/wine-country-wildfire-victims-learn-many-are-underinsured/24454523.

A joint committee hearing usually includes members of both the Senate and Assembly committees. However, on October 2nd, I attended a hearing titled “Housing for Working Families: How Do We Pay For It?” for two Senate committees, Senate Governance and Finance, on which I serve, and Senate Transportation and Housing. Since I love euphemisms, knowing that the title should state more clearly that the “we” is “you.” Consequently, I thought it would be helpful if I provided some details of this hearing to keep Californians informed.

The submittal is in Fox & Hounds and mentions AB 448 (see MOORLACH UPDATE — AB 448 and SB 1363 — September 12, 2018) and SB 1297 (see MOORLACH UPDATE — SB 1297 – COO — April 19, 2018 and https://moorlach.cssrc.us/content/senate-bill-1297-state-chief-operating-officer).
Regretfully, the real reasons for California’s housing crisis were not on the agenda of this meeting, but will be discussed at a second Senate Governance and Finance and Senate Transportation and Housing Joint informational hearing on November 16th in downtown Los Angeles. For those who wish to attend, you may want to join me that morning for a train ride to Union Station. It’s not often that a Legislative hearing is this close to the OC.

Grappling with California’s Housing Crisis

John Moorlach

By John MoorlachState Senator representing the 37th Senate District

http://www.foxandhoundsdaily.com/2018/10/grappling-californias-housing-crisis/

We see California’s housing crisis every day as the homeless permeate our streets, businesses and neighborhoods. To address that, I participated in the joint informational hearing of the Senate Transportation & Housing and Governance & Finance Committees on October 2. The title: “Housing for Working Families: How Do We Pay for It?”

The video and agenda are here. And the Digital Democracy transcript is here.

The discussion brought up Assembly Bill 448, by Assembly Members Tom Daly, D-Anaheim, and Sharon Quirk-Silva, D-Fullerton. I strongly supported the bill, which sets up the Orange County Housing Finance Trust to enable local municipalities to plan and construct housing for the homeless and those with low incomes. It received unanimous, bipartisan support in both chambers of the Legislature.

“It’s very important to have those trust funds and have as many sources as possible going into them,” said Matt Schwartz, president and CEO of the California Housing Partnership Corporation. In Orange County, we hope to harness existing public and private funds and contributions from governments and foundations.

Enter Proposition 2 on the November ballot, called No Place Like Home. I sponsored putting it on the ballot with state Sen. Kevin DeLeon, D-Los Angeles, when he was the Senate’s president pro Tem, before the Assembly Budget Committee assumed ownership of the bill at the end of the budget process.

Prop. 2 was praised by Lisa Bates, deputy director of financial assistance at the California Department of Housing and Community Development. It would not increase taxes, but better use the proceeds of Proposition 63 from 2004, the 1 percent tax on millionaires for mental health programs.

To clarify problems from a lawsuit, Prop. 2 would permit the state to borrow up to $2 billion, with Prop. 63 to back bonds to fund housing for homeless people with mental health problems. So many of the homeless are on the streets because of substance dependency and mental issues.

Prop. 2 is unique because it taps an existing funding stream via the Mental Health Services Act.

Taxes, Bonds and Debt

Some counterproductive ideas came up at the hearing. Schwartz commended last year’s Senate Bill 2, by state Sen. Toni Atkins, D-San Diego, now the president pro-tem. To fund homeless programs and low-income housing, it imposed a tax of up to $225 at the time of the recording of every real estate instrument, paper or notice. It would raise between $200 and $300 million a year.

But the tax will increase the price of housing. So there’s always a cost. And it was imposed at a time the state was overflowing with $12 billion in surplus revenues.

Then there’s Proposition 1 on the ballot, $4 billion for affordable housing for low-income buyers and veterans. It may cost up to double that, $8 billion, to pay down over 35 years. And the Legislative Analyst estimates the yearly cost to pay down the bonds would be $170 million annually.

At the hearing it was brought up by Larry Flood, director of financing and interim director for multifamily programs at the California Housing Finance Agency. He pointed out if it passed, “We can provide down-payment and/or closing-cost assistance to an additional 20,000 California first-time home buyers over the next three to six years, depending on market conditions.”

I recently asked the State Treasurer’s Office for the cost of the five previous housing bonds voters passed in 1990, 2000, 2002, 2006 and 2014. The total debt service – principal plus interest – for them is $369 million for fiscal year 2018-19 and $422 million for fiscal year 2019-20. So if Prop. 1 passes, the cost would rise to $592 million in 2019-20. (Fortunately, the payments do decline starting in 2022.)

Because these bonds are paid from the general fund, and cannot be postponed, during an economic downturn they could end up causing tax increases. And tax increases hurt everyone, especially the poor and homeless. Even if the “rich” are taxed, that means they have less money to invest in new housing – making the housing crisis worse.

As a CPA, I stress the importance of audits to make sure public money is being spent properly, especially on existing and potential future bonds. So I asked Bates about the September 20 audit of her department by State Auditor Elaine M. Howle. It found, “oversight of housing bond funds remains inconsistent and that HCD has failed to follow through on half of our recommendations from previous reports. We found problems related to how HCD is monitoring some bond programs, whether its housing bond database can perform key functions, and how it is ensuring that it does not exceed administrative spending limits.”

Bates replied, “And so we feel that many of the recommendations that they have provided us, we have already implemented or are well on our way to implementing. The first report will be in November if we have a 60-day report to the Auditor due. And so within that report, we expect to show a tremendous amount of progress and headway in having addressed many of the concerns that were raised.”

That’s something to be watched. And shouldn’t we make sure existing bond funds are being spent properly before voting for new ones?

Who’s In Charge Here?

I also asked her about the organizational chart of the state government, including housing. “What do we have, the Governor? And then we have someone, and then we have all these boxes underneath. Who is the point person to coordinate with all of these departments and agencies?”

She replied, “So one of the things that the Legislature did last year is to move the Homelessness Coordinating and Financing Council from a department level where we had initiated it up to the agency level. So really this is a product of that council that is seeking to coordinate across our various state departments in terms of what we need to do to further address homelessness across the state.”

She pointed out Business, Consumer Services and Housing Agency Secretary Alexa Podesta is the chair of the council. Caltrans was added, but the council “has representation across the various state departments that are implementing these programs and more. And so it is the council’s goal and objective to help ensure [housing is the main concern] of our programs across the state.”

That shows why the state needs not just a governor, largely a political position, but a Chief Operating Officer, who would get down in the trenches and make sure state agencies are functioning efficiently. My Senate Bill 1297 would have created this COO position. Although it passed two committees this year, it was not brought before the full Senate. I’m considering bringing it back next year.

In his October 15 column, Dan Walters wrote on a similar theme, “Brown’s Legacy Will Include a DMV Debacle.” It criticized the governor’s “obvious disdain for nuts-and-bolts management of a very large organizational structure,” leading to complete mismanagement at the DMV of not only motor-voter registration, but its basic job of giving Californians driver’s licenses and license plates.

There was much more in this informative, three-hour hearing. It was a good start to a long process and a second is planned for November 16. Hearing Co-Chair Sen. Jim Beall, D-San Jose, summed it up. He said more than $10 billion has been spent on the homeless the last few years, yet, “The crisis is not over, so our work is not done.”

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