MOORLACH UPDATE — SB 640 Concluding Analysis — January 13, 2020

SB 640

The LB Report is back with a review of SB 640 and how it fared in last week’s meeting of the Senate’s Health Committee (see MOORLACH UPDATE — First Week of 2020 Session — January 9, 2020 and MOORLACH UPDATE — SB 640 and Cities 193 to 240 — November 18, 2019).

25th Anniversary Look Back

January 12, 1995, was a busy day.

In Washington, D.C., the Committee On Commerce held a Congressional Hearing on the Orange County Bankruptcy. Then-Congressman Chris Cox addressed concerns that I thought, at the time, the journalism industry would resolve. If I wasn’t getting adequate information, then newspapers should have sued the County for the information, a common practice today. And, why I’m big on disclosure.

I enjoyed lunch with former SEC Chair and Congressman Chris Cox on December 6th, 2019 with a few friends to commemorate the historic day and share recollections and war stories. Here’s a sample of what he stated in the 1995 hearing:

HON. CHRISTOPHER COX, California: I served as chairman of John Moorlach’s campaign to unseat Bob Citron. The election issue was the investment strategy pursued by Mr. Citron. In the context of that campaign John Moorlach obtained 700 pages of documents from the County Treasurer’s Office–as much as he could get his hands on. Mr. Citron apparently provided to him as much as the law required. The disclosure was wholly inadequate. Whether it was John Moorlach, whether it was participants in the county’s pool, whether it was investors in the publicly issued and traded securities of the county, no one had the kind of information they should have had. And we are speaking here of billions of dollars.

At the time of the June 1994 election, John Moorlach, who was campaigning for the job that Bob Citron held, couldn’t get the complete details of the county’s portfolio. It is difficult to imagine what national security requirement exists to maintain secrecy about the way that public funds are invested when public investors themselves are sharing in that risk.

Here in Orange County, the county filed its now-famous lawsuit against Merrill Lynch. Here is the opening paragraph of the County’s press release issued by its PR consultants:

Saying that Merrill Lynch & Co., Inc. “abused the trust and confidence” of County residents by “permitting and encouraging [County Treasurer Robert L.] Citron to invest public funds in volatile financial instruments that were not authorized by law nor suitable for the investment of taxpayers’ dollars,” Orange County today filed suit in U.S. Bankruptcy Court against one of the world’s largest providers of investment and financial services.

Of course, Merrill Lynch immediately fired back with a press release that would set the stage for where the depositions would be heading in the months following:

It is predictable, but wrong, for the County Supervisors to attempt to scapegoat Merrill Lynch for the county’s bankruptcy. While we have not yet seen a copy of the lawsuit, any allegations of improper conduct by Merrill Lynch are false, and we will contest the lawsuit vigorously.

As this matter proceeds through the legal process, overwhelming evidence will demonstrate that the County Treasurer’s Office disclosed to the Board of Supervisors its leveraged investment strategy, including the fact that “this strategy has been predicated on interest earning rates to continue to remain low.”

There is also ample evidence that the County supervisors and other public officials encouraged the County Treasurer to continue pursuing this investment strategy, and repeatedly applauded the above-average investment returns that the strategy achieved.

For the Board of Supervisors to now accuse Merrill Lynch is disingenuous at best, and an abdication of their own responsibilities in this matter. For years, they reaped high rewards. Now they want to deny the risks. In effect, they’re saying: “Heads we win, tails you lose.”

In the January 12th edition of the Daily Pilot, Hugh Hewitt had an editorial submission titled “Just Do It, Supervisors — The Nike solution to the county’s bankruptcy would be fair, quick and only objectionable to high-priced attorneys.”

Here is the piece in a few selected paragraphs:

The two critical issues facing every citizen of Orange County are remarkably simple: How should the $2 billion loss be allocated among taxpayers, and how should the loss be paid for?

The only way to assure equal impact among all taxpayers is to allocate the loss only to those agencies that include every Orange County taxpayer as a constituent. That means the county, the Transportation Agency, the Sanitation District, etc. All other agencies and special district should receive 100 cents on the dollar.

This is a purely utilitarian analysis, and it is based on simple fairness. All county taxpayers should suffer in the same proportion as a result.

Some final thoughts on accountability and culpability. Bob Citron lost the money, period. He did not disclose his investment strategy, and when John Moorlach called him on it, he successfully duped a majority of the voters. That’s it. It’s over. Recalls and outrage at elected officials are misplaced.

But the problem is now known and understood. Officials are accountable for their actions, or reactions, from Dec. 1 forward. After five weeks of paralysis and analysis, it’s time to retire the lawyers, fire the PR consultants, step up to the problem and dispose of it.

Long Beach State Senator Lena Gonzalez Votes To Kill SB 640 That Would Have Allowed Intervention To Treat Severely Mentally Ill Homeless

Publisher’s preface: Current CA law leaves severely mentally ill homeless persons, a number of whom may be helped with medications, untreated to wander helplessly and try to survive on the streets. has previously reported in detail (here and here) on SB 640, a Sacramento bill that proposed to change the status quo. now reports on what recently happened to SB 640.

(Jan. 12, 2020, 4:30 p.m.) — Long Beach state Senator (former LB City Councilwoman) Lena Gonzalez (D, LB-SE L.A. County) voted as a member of the state Senate Health Committee to prevent the advance of SB 640) that sought to amend current CA law permitting the involuntarily treatment of gravely disabled persons to include persons so severely mentally ill they can’t take care of themselves (details below.)

SB 640 by state Senator John Moorlach (R, Irvine/Costa Mesa) sought to amend the definition in CA’s Lanterman-Petris-Short Act of “gravely disabled” to include persons who suffer from [legislative counsel’s digest] “a condition in which a person, as a result of a mental health disorder, is incapable of making informed decisions about, or providing for, the person’s own basic personal needs for food, clothing, shelter, or medical care or shelter without significant supervision and assistance from another person and, as a result of being incapable of making these informed decisions, the person is at risk of substantial bodily harm, dangerous worsening of a concomitant serious physical illness, significant psychiatric deterioration, or mismanagement of the person’s essential needs that could result in bodily harm.”

At a Jan. 8, 2020 Health Committee hearing, five affirmative Committee votes were needed to advance SB 640 to the Senate Judiciary Committee for further discussion and possible amendments. Two Health Committee members (one Democrat and one Republican) voted “yes”; two Democrats (one of whom was Senator Gonzalez) voted “no”; four Democrats (including the Committee chair) remained silent. The resulting 2-2 vote effectively killed SB 640 for the remainder of 2020.

SB 640 had the support of [source: Health Committee legislative analysis] the California District Attorneys Association. California Police Chiefs Association, City of Fullerton, City of Santa Monica,, NAMI [National Alliance on Mental Illness] Sacramento, Schizophrenia and Related Disorders Alliance of America, Westside Council of Chambers of Commerce and two individuals.

It was opposed by the California Hospital Association (unless amended), County Behavioral Health Directors Association of California, Disability Rights California, Mental Health America of Northern California and SEIU California. [Gonzalez received a $9,300 contribution (the maximum) in her 2019 state Senate campaign from SEIU Local 2015 State PAC.]

Senator Moorlach’s stated need for the bill (as listed in the Senate Health Committee’s legislative analysis) states:

…California is failing its seriously mentally ill. Current law states that a person is gravely disabled if, as a result of a mental health disorder, he or she cannot provide for their basic needs for food, clothing, and shelter. This law was intended to serve as a protection to individual liberties but has created a system that, instead of helping the most seriously mentally ill, relegates them to the streets, jails, and emergency rooms. Better metrics are needed to help seriously mentally ill individuals that are simply powerless to provide for their own personal well-being. This is especially important when the absence of significant supervision and assistance leaves the individual at risk of substantial bodily harm. Clarifying the definition of “gravely disabled” will be a step towards repairing a system that is failing to serve those who need it most.

The full Jan. 8, 2020 state Senate Health Committee legislative analysis of SB 640 is visible here.

SB 640 received “yes” votes from state Senator Shannon Grove, (R, southern central valley/high desert) and state Senator Melissa Hurtado (D, Fresno-Bakersfield) and needed three additional affirmative votes to advance. Committee chair Senator Richard Pan (D, Sacramento) joined by Senators Holly Mitchell (D, Los Angeles), Susan Rubio (D, Baldwin Park) and William Monning (D, Central Coast) remained silent. State Senators Lena Gonzalez (D, Long Beach-SE L.A. County) and Connie Leyva (D, Inland Empire) voted “no.”

The resulting 2-2 vote effectively killed SB 640.

Following the 2-2 vote to block SB 640’s advance, the Committee voted to grant the bill “reconsideration” but under current timelines it was a near empty gesture legislatively; SB 640 was “double-referred” to the state Senate Judiciary Committee meaning it had to pass both Committees by Jan. 24, 2020, which the Health Committee’s vote precluded.

The Health Committee’s action wasn’t a complete surprise. In April 2019 [prior to the election of Sen. Gonzalez], the same Committee held a “testimony only” hearing on SB 640 at which Committee Democrats politely thanked Senator Moorlach and his witnesses (who pleaded for Committee passage of SB 640) but raised various objections to the bill. To see/hear in detail what took place, see VIDEO:

City of Long Beach record

Although SB 640 had been pending since Feb. 2019 and LB Mayor Robert Garcia and City Councilmembers frequently cite homelessness as a major Long Beach issue, the City took no position on SB 640.

The LB City Council’s “State Legislation Committee” chaired by Councilman Al Austin didn’t discuss SB 640; it held no meetings on any matter during the 2019 state legislative session. No other Council committee or Mayor-chosen “advisory commission” discussed SB 640.

Any of LB’s nine City Councilmembers (whose votes set city policy) or Mayor Garcia (who has no policy-setting vote) could have agendized SB 640 for City Council discussion and voted to take a position on SB 640 “on any Tuesday.” None did.

In a November 2019 audio interview with (here), Senator Moorlach indicated he’d welcome support from Long Beach. On January 10, 2020, asked Senator Moorlach’s office if any officials from the City of LB had contacted them about SB 640; we were told none had done so.

What’s next

In or about April 2020, the CA State Auditor’s office is expected to release a report that may discuss how various CA counties interpret the current law’s “gravely disabled” definition that SB 640 sought to amend, how they apply its criteria; and whether funding is an issue. Those findings may spur renewed interest in addressing the issues raised by Senator Moorlach and spur renewed efforts to amend current CA law. Senator Gonzalez mentioned the upcoming State Auditor’s report in her Committee statement.

In Long Beach, Mayor Garcia recently shifted memberships on various City Council committees. He named Councilman Rex Richardson to chair the Council’s State Legislation Committee, added newly elected Councilwoman Mary Zendejas [to replace exited Councilwoman Gonzalez] and retained Councilman Austin as a State Legislation Committee member.

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