The belief that California has a profound housing crisis took hold in the state’s media and political establishments in recent years after Census Bureau statistics showed the Golden State had the highest effective rate of poverty once cost of living was included.

The view was amplified by stories about four-hour commutes forced by housing costs and about shocking numbers of poor college students who struggled to pay for food.

That’s why the decision last week by state Senate Appropriations Chairman Anthony Portantino, D-La Cañada Flintridge, to kill Senate Bill 50 – the latest attempt to spur housing construction by limiting local control of approvals
– came as a surprise to many. That included the bill’s sponsor, Sen. Scott Wiener, D-San Francisco. His push to ease rules to allow four-to-five-story apartment buildings near public transit centers and to allow construction of such units in many zones previously reserved for single-family homes had won support from not just developers but construction labor unions, several large-city Democratic mayors and some activist groups. Many were skeptics of Wiener’s and Gov. Jerry Brown’s previous attempts to limit local control.

Stories about Portantino’s decision focused on the fact that leaders of cities in his district, starting with Pasadena, had been vociferous opponents of Senate Bill 50. Reports also focused on the formidable influence of environmental groups, which prefer strict zoning rules to give them more clout to block development.

These arguments are common. In August 2016, when Brown’s attempt to sharply streamline the approval process for housing projects died in the Legislature, Shamus Roller, executive director of Housing California, blasted “the political gamesmanship of powerful interests.”

Californians ‘must be convinced of benefits’ of adding housing

But another view is that then-state Legislative Analyst Mac Taylor knew what he was talking about in March 2017 when he issued a report on the failure of local governments to meet housing mandates that said major change was unlikely “unless Californians are convinced of the benefits of more home building.” Instead of seeing the failure of housing reforms as a result of special-interest machinations, Taylor argued that elected leaders who backed such measures hadn’t cultivated the public support necessary to enact major changes.

Taylor’s thesis was supported by a USC Dornsife/Los Angeles Times poll of Californians released in October that found little belief that the housing crisis was due to a lack of building. It was the sixth-most cited reason, falling far behind the top two: the lack of rent control in much of the state and inadequate “affordable housing” programs. Two-thirds of those surveyed supported local control of housing approvals even if cities or counties weren’t meeting state mandates for new housing construction.

Still, Wiener said he wasn’t daunted by Portantino’s decision. He said he would bring another housing reform measure to the state Senate in 2020. The former San Francisco supervisor, a Harvard law graduate, also said he thought Senate Bill 50 had a chance of being resurrected this summer, even though appropriation chairs of the Senate and Assembly have a long history of making their decisions stick.

“We’re either serious about solving this crisis, or we aren’t,” he told reporters in Sacramento last week. “At some point, we will need to make the hard political choices necessary for California to have a bright housing future.”

Brown wants to force officials at each of the CCC’s 114 campuses to prioritize their 2.1 million students completing their degrees and vocational certificates. He hopes to do this by tying a portion of state funding – perhaps as much as $3 billion, or 20 percent, of the system budget – both to student performance and to campuses’ ability to help the progress of students who come from poor families or have other life obstacles. Funding has historically been driven primarily by the much simpler metric of total enrollment.

The twist that has upset many community college officials, however, is that the governor wants the new funding formula in place in a little more than two months – on July 1, at the start of the next fiscal year. Given the history of some community colleges doing much worse on student “completion” than others, this could mean they face immediate budget cuts. This would play havoc with planning and affect students adversely, college officials have warned.

The EdSource website reported last week that two lawmakers with key roles in community college budgeting appear to share the fear that the Brown administration’s plan is being prematurely fast-tracked. State Sen. Anthony J. Portantino, D-La Cañada Flintridge, who chairs an education budget subcommittee, said campuses had raised “valid concerns.” Assemblyman Kevin D-McCarty, D-Sacramento, who chairs the education budget subcommittee in his chamber, was even more bluntly skeptical, saying if lawmakers don’t like what they hear from the governor’s office and CCC in coming weeks, they may “nix the plan altogether.”

LAO: Past efforts to speed up graduation a flop

But while Brown’s hope for a quick adoption of his reforms may be stymied, his hope for change may pay off after he leaves office. That’s because momentum has been building for years behind the idea of expecting community colleges to do much more to prod students to meet their goals and move on. The administration of Gov. Arnold Schwarzenegger was also impatient with CCC’s record in his final years in office. Past legislative leaders ordered the creation of a “Student Success” task force and backed other initiatives to improve degree and certificate completion rates.

But a February report by the nonpartisan, respected Legislative Analyst’s Office found little evidence this approach was working.

“Using the most recent data available, community colleges have made little progress with respect to program completion,” the LAO wrote. “The six‑year completion rate for the most recent cohort (students who began college in 2010‑11) is 48 percent, 1 percentage point lower than the completion rate for the 2006‑07 cohort (49 percent).”

These numbers may disappoint California elected officials, but many states would like to have them. In December, the National Student Clearinghouse released its annual report on college completion rates. It found that over the most recent six-year span for which information was available, 38 percent of students at two-year colleges who had begun their studies in 2011 completed a degree or certificate.

With a supermajority, Democrats would be able to increase taxes, override gubernatorial vetoes and send measures to the ballot without Republican support. Democrats need two seats in the Assembly and one in the Senate in order to hold a supermajority — both chambers are a must.

Holding in the Senate

Around 2 a.m., Republicans were holding their seats in the Senate. The biggest question mark was the Southern California seat held by Bob Huff, the termed-out, former Republican leader. However, Republican Assemblywoman Ling Ling Chang led Democrat Josh Newman, 51.6 percent to 46.4.

But Republicans were behind in their best chance to pickup in the Senate, in the seat held by termed-out Sen. Carol Liu, D-La Cañada Flintridge, where Mike Antonovich, a termed-out Los Angeles County supervisor, trailed Democratic former Assemblyman Anthony Portantino by almost nine percentage points.

Losing in the Assembly

In the Assembly, Democrats were ahead in a few competitive interparty races. In the Los Angeles South Bay, Republican Assemblyman David Hadley trailed the man he knocked out of office in 2014, Al Muratsuchi, by almost seven points.

In another rematch from 2014, Young Kim, the Orange County Republican incumbent, trailed Sharon Quirk-Silva by just a few hundred votes. 

Democratic challenger Sabrina Cervantes had a slight, two-point lead over Eric Linder, the Republican incumbent, in this south Inland Empire district.

But some Republican incumbents were holding their ground. In yet another rematch, this time in the Antelope Valley, Republican Assemblyman Tom Lackey led Democrat Steve Fox, who Lackey bested in 2014 by 13 points. 

In San Bernardino County, Republican incumbent Marc Steinorth was pulling away from challenger Abigail Medina, a Democrat. Steinorth led by five points.

And Catharine Baker, the only Republican incumbent in the Legislature from the Bay Area, beat back challenger Cheryl Cook-Kallio by nearly a dozen points to retain her seat.  

The Baker seat was considered a the top target for Speaker Anthony Rendon, D-Paramount. In fact, President Barack Obama endorsed Baker’s Democratic challenger, Cook-Kallio, as well as three others: Newman, Medina and Muratsuchi. 

None of these competitive seats were called by the time this story was published, so the results may change. We’ll update accordingly. 

Editor’s Note: This story was originally published on July 19.

Republicans in the state Legislature are thought to have a challenging election cycle this year. The outcome in November will determine whether the GOP has enough seats in the state Assembly and state Senate to maintain relevance in legislative matters.

Many factors are contributing to the angst, not the least of which is that Donald Trump as the GOP nominee is a wild card. No one knows yet how the reality T.V. star and real estate tycoon will affect down-ticket races — although Democrats are anticipating it will drag down GOP candidates. 

Regardless of the top of the ticket, this year looks to be tough for Republicans — who are largely hoping to just hold seats — as presidential election turnouts are generally more favorable to Democrats, when the electorate becomes more diverse. 

Republicans need to keep Democrats from achieving a two-thirds majority in the Assembly and Senate to have a meaningful impact on state lawmaking. Dipping below that line would mean losing their ability to weigh in on tax increases, gubernatorial veto overrides and legislatively-referred constitutional amendments — their last remaining points of legislative leverage.

To stay above a superminority, Republicans can afford to lose only one seat in the Assembly while Senate Republicans can’t afford to lose any.

Adding intrigue is the fact that it’s not just a war between the parties. The relatively new primary system where the top two candidates advance from the primary to the general election regardless of party has pitted some Democrats against each other, largely playing out proxy wars from outside interests. Of course in some races, a few candidates are termed-out of one chamber and aren’t ready to go home just yet.

Here are some of the top races to watch:

In the fight of their lives 

Catharine Baker, an East Bay Area Republican assemblywoman, led the primary 53.2 percent to 46.8 percent over Democrat Cheryl Cook-Kallio, a former Pleasanton City Council member. Baker is a the only Bay Area Republican in the legislature, so her seat is important both functionally and symbolically. 

Baker narrowly won the open seat in 2014 by about three points, and this time should be close too. Democrats in the district have a 10 percent registration advantage, with 24 percent of voters claiming no party preference. 

In one of several rematches, Republican Assemblyman David Hadley faces Democrat Al Muratsuchi, whom Hadley booted from office in 2014 by only 706 votes — or about 0.5 percentage points — in this Los Angeles south bay district.

In the June primary, Hadley received only 44.6 percent of the vote, with Muratsuchi and another Democrat splitting the majority. Democrats in the district enjoy a nine percentage point registration advantage, with 22 percent of voters claiming no party preference. Winning this seat was a major coup for the GOP in 2014, and retaining it would be as well.

Key holds

In the Antelope Valley, Republican Assemblyman Tom Lackey faces a strong challenge from the man he unseated in 2014, Democrat Steve Fox (who used to be a Republican). In 2014, Lackey destroyed Fox by 20 percentage points. But in the June primary, Lackey advanced with only 48.2 percent of the vote; three Democrats split the rest. Democrats have a six percentage point registration advantage with 19 percent of voters claiming no party preference. 

In the north Inland Empire, first-term Republican Assemblyman Marc Steinorth of Rancho Cucamonga finished second of two candidates in the primary behind Democrat Abigail Medina, a San Bernardino City Unified School District board member, trailing by three percentage points. Democrats have a one percentage point registration advantage with 22 percent of voters claiming no party preference.

And in the south Inland Empire, Republican Assemblyman Eric Linder — who is surprisingly supported by the SEIU, a formidable union — got only 45.6 percent of the vote in the primary with the rest split between two Democrats. In the general, Linder faces Democrat Sabrina Cervantes, the district director for Assemblyman Jose Medina. Democrats have a slight, two percentage point registration advantage with 21 percent of voters claiming no party preference.

Former Republican Senate Leader Bob Huff is termed out and Republican Assemblywoman Ling Ling Chang is hoping to fill Huff’s seat on the other side of the rotunda. Chang faces Democrat Josh Newman — a political neophyte who runs a non-profit aimed at helping veterans find employment — in this Orange County race.

Despite superior name recognition, Chang — the only Republican in the primary — drew 44 percent, while Newman and another Democrat nearly evenly split the majority. Republicans have a one percentage point registration advantage with 24 percent of voters declining to state a party preference.

Another rematch

Republican Assemblywoman Young Kim faces the woman she knocked off in 2014, Democrat Sharon Quirk-Silva, in this Orange County district.

Last cycle, Kim won by 10 percentage points. But in June, Quirk-Silva led the primary by 8.6 percentage points. And Democrats have a four percentage point registration advantage, with 23 percent of voters claiming no party preference.  

Competitive by chance

The race to replace the late Sen. Sharon Runner — the Republican incumbent from Lancaster — is wide open. Runner passed away in July, but had previously decided against running for re-election for health reasons (her second such decision). Runner won the seat in 2015 in a special election after Steve Knight won a Congressional seat. 

Republican Assemblyman Scott Wilk of Santa Clarita came in first in the primary with 46.7 percent of the vote over Johnathon Levar Ervin, an engineer and Air Force reservist, who drew 33.7 percent of the vote. Among four candidates, the results were almost evenly split with a slight edge to the Republicans, but voter registration in the district is closely split as well. Democrats have a two percentage point registration advantage with 21 percent of voters claiming no party preference. 

Republicans best shot to pickup

What would have otherwise been considered a noncompetitive Senate election to replace termed-out Democrat Carol Liu became competitive when longtime Los Angeles County Supervisor Mike Antonovich threw his hat in the ring.

Antonovich brings strong name recognition and a vast fundraising network from his more than 40 years in elected office, but he has a tough path forward having only won 39.5 percent of the vote in the primary. The rest of the vote was split among Democratic candidates, with former Assemblyman Anthony Portantino coming in second. Democrats have a 14 percentage point registration advantage with 24 percent of voters declining to state party preference. 

Dems v. Dems and the proxy wars

While this Silicon Valley election featuring two Democrats won’t affect whether or not there’s a supermajority, it may help fortify a group of business-friendly moderates. Incumbent Senator Jim Beall, of the liberal environmentalist ilk, is facing the more business-friendly Nora Campos, who is termed out of the Assembly.

This race is actually one of a few proxy wars between Big Environment vs. Big Oil, which have both spent considerable money in the race. Beall was a hair away from a majority of the vote in the primary.

So far Campos has stuck to the narrative that both Beall and Senate President Pro Tem Kevin de Leon, a Beall supporter, have bullied her. Campos said de Leon tried to dissuade her from running (party leaders generally dislike having to spend money and energy protecting incumbents from members of their own party). And Campos said Beall attacked her husband through a third party — as they say, it’s complicated.

A moderate Democrat is under fire in the Inland Empire, as incumbent Cheryl Brown faces attorney Eloise Reyes in this competitive Assembly district. Environmentalists and unions dislike Brown and have already spent big money opposing her through the primary, while Big Oil and charter schools have spent more than a half million dollars in support of Brown.

But surprisingly, word leaked that Senate President Pro Tempore Kevin de Leon — a powerful environmentalist — would be endorsing Brown. It’s unclear if this will have any effect on the race. 

In the primary, Brown received 44.1 percent of the vote to Reyes’ 35.6 percent. The Republican challenger received 20 percent of the vote, and how that’s divvied up could decide the race.

By John Hrabe

California’s Department of Parks and Recreation has been holding onto $54 million in surplus funds for the past decade. The agency didn’t bother to tell anyone at the state Department of Finance about their secret stash.

Oops.

Parks agency director, Ruth Coleman, resigned on Friday, but not before firing her second-in-command, Acting Chief Deputy Director Michael Harris. In May, former deputy parks director Manuel Lopez resigned after he approved $271,000 in secret vacation buybacks.

The scandal looks bad because it is bad. My CalWatchDog.com colleague Katy Grimes has uncovered that employees were “keying in the post-it notes amounts, which were used for the buyout requests to avoid a paper trail.” No government officials should hide information from auditors or mislead the public about anything– let alone something as important as its finances.

But, let’s not forget one important fact: the agency saved the money. Coleman confirms that “no taxpayer money is missing and that no funds were embezzled.” If that turns out to be true, there are far greater scandals occurring every day with government agencies that wastefully spend our money. And because those stories have become so commonplace, the public ignores them.

Steinberg: Ready to Spend the Surplus

State Senate President Pro Tem Darrell Steinberg, D-Sacramento, promised that the Legislature was ready to spend the money. “The Senate will also examine how to ensure that these found dollars can be used for the highest benefit for California’s taxpayers,” he said in a press release.

On the very same day, Steinberg was defending the legislature’s approval of $4.6 million in pay raises for its employees. “Steinberg’s chief assistant, Kathryn Dresslar, was among those who received pay raises, a 10 percent increase to $183,480 a year,” the Associated Press reported; 110 of the employees that received raises already make more than $100,000 per year. I reiterate: On the same day that Steinberg was criticizing the state parks department for saving $54 million in taxpayer funds, he was explaining why he gave out pay raises to state employees.

Does that make sense to anyone? The director who saved taxpayer money loses her job, and the politicians that approved extravagant pay raises for their staff now get to spend the windfall.

Oh, the lying and dishonesty, you say. The legislature’s track record of openness and public disclosure is no better than the parks department. Last year, the Legislature fought Assemblymember Anthony Portantino, D-La Cañada Flintridge, in his quest for full disclosure of the legislature’s spending records. At least, state parks lied about saving money.

Only in California is it scandalous when a government agency doesn’t spend taxpayer money. Think about that: It’d have been better politically if the agency had frivolously spent the money rather than secretly stockpile it. If the parks department had spent the money on executive pay raises or renovations of its mansions, there’d be no scandal. Coleman wouldn’t have resigned.

Motivation to Hide

So, why did the agency hide the money? The Mercury News reported, “One parks department official who requested anonymity said it appears there was an error in accounting formulas years ago, and that as the money accumulated in the funds, staff members did not want to admit the mistake, possibly for fear that the finance department would take the money away.”

Here’s the real scandal: every other state agency that spent surplus funds to prevent the money from returning to the general fund. Does anyone really believe that the state parks department was the only agency to have a surplus in the past decade?

Any California agency with surplus funds probably rushed to spend its budget before the end of the year.  That’s what happened in Missouri. Earlier this year, an audit revealed, “Some Missouri agencies rushed to spend money on items not immediately needed as their annual budgets drew to a close.”

Any state agency that wasn’t already engaging in this behavior will do so in the future. The parks department scandal, and its ensuing investigations, will encourage state agencies to squander funds at the end of the year.

State Parks Never Closed

Moreover, there were no harms to hiding the money. The department threatened budget cuts would close state parks, but that never panned out. According the Los Angeles Times, “Closures were averted because donors, nonprofits and other government agencies stepped forward with additional funding.” In other words, the people that enjoy state parks paid for the state parks. Park patrons, environmentalists and nonprofit groups should pay more for a government service from which they enjoy the greatest benefits.

In dire economic times, California’s poor, working class and unemployed can’t afford to take a weekend camping trip to a state park. Gov. Jerry Brown expects this group to pay more taxes to keep the state parks open. Proposition 30 raises the state sales tax by a quarter percent, a regressive tax on the poor and working class.

By all means, investigate state parks, and keep reading Katy Grimes’ great work on the topic. But maybe, just maybe, politicians should be more outraged by the government agencies and departments that are wasting money every day, not the one agency that secretly hid their surplus from the free-spending state Legislature.

Scandals Hidden in Plain Sight

Every day, stories are hidden in plain sight. Take press coverage from this Saturday, the day that the state parks scandal broke, when there were no fewer than a dozen links to the story. On the same day, there were plenty of stories that demonstrate government waste and fiscal mismanagement by agencies that mislead the public.

Let’s start with California’s high-speed rail boondoggle. The California High-Speed Rail Authority has found no shortage of ways to waste taxpayer money. The agency initially spent $9 million on an outreach contract with Ogilvy Public Relations Worldwide to use tax dollars to influence public opinion of the project. The agency rejected French rail company SNCF proposal to “identify a profitable route, hold down building costs, develop realistic ridership forecasts and attract private investors.”

Time and time again, the agency has lied to the public about the project’s cost, ridership estimates and economic benefits. Last year, the San Jose Mercury News debunked the agency’s bogus claim that the project would create a million jobs. Of course, that’s wasteful spending and misinformation that even high-speed rail proponents can’t dispute. Most Californians don’t understand why the state is spending $8 billion on “a train to nowhere” as it cuts school funding.

Next up, the ongoing municipal bankruptcy scandals. CalWatchDog.com contributor Steven Greenhut’s Saturday column focused on the $220 million of debt that has been racked up by the City of San Bernardino. City attorney James Penman initially claimed that city officials were provided false and misleading budget documents.

Wasteful Spending Across the State

Sacramento Valley: In Saturday’s edition of the Sacramento Bee, there’s a story about the renovation of the Hotel Berry. Buried in the story, “The Sacramento Housing and Redevelopment Agency contributed $10.1 million to the Hotel Berry renovation.” That’s money straight from government coffers that goes into the pockets of wealthy developers. Crony capitalism at its worst. Sacramento’s redevelopment experts are the same group that approved a $6 million subsidy of the infamous “mermaid bar,” while illegitimately seizing the property of Moe Mohanna.

Earlier this year, prior to their demise, redevelopment agencies rushed to approve billions of dollars in wasteful spending in order to use up the money before the state could get its hand on it. The Orange County Register’s Teri Sforza reported that Orange County alone spent $1.85 billion in government funds.

Bay Area: Zusha Elinson of the Bay Citizen has a piece in Saturday’s San Francisco Chronicle about thousands of dollars in bonuses fraudulently awarded to San Francisco Municipal Transportation Agency officials. “Muni paid thousands of dollars in bonuses to top executives for meeting or exceeding on-time performance goals, even as the agency inflated its on-time rates by as much as 18 percent,” she writes.

There are dozens of stories like this one each month, and hundreds more that go unreported. A few weeks ago, the San Mateo County violated the county’s pay restrictions in order to hand out a pay raise. “The San Mateo County Board of Supervisors unanimously authorized the new head of the county’s employee retirement system to make 5 percent more than the maximum annual pay of $183,600 for his position,” the Mercury News reported. This is a routine practice by local government agencies, especially cities and schools districts.

Orange County: Head down to Orange County, where former CalOptima Chairman Ed Kacic is accused of steering government contracts worth “millions of dollars to a private foundation that he heads.” OC Supervisor Janet Nguyen told the Register, “When you start an investigation, you start discovering things that you never knew.” Nguyen told the Register that there are more than 3,000 emails to review.

In California, government secrecy and deception are standard operating procedures. Usually, it’s to cover up reckless spending, not a $54 million surplus.

By John Hrabe

With 427,000 students and 44,000 staff on 23 campuses, the California State University System is the nation’s largest higher education system. But from Los Angeles to San Francisco, Cal State is raising tuition, cutting enrollment and campaigning for a multibillion-dollar tax hike — all while providing high salaries and lavish benefits to its top executives. “If the tax measures fail,” the Associated Press recently reported, “fall enrollment would be cut another 20,000 students and 3,000 employees laid off.”

In less than eight years, tuition has risen 150 percent, from $2,334 per year in 2004 to just under $6,000 this fall. Just don’t ask Cal State’s top executives to share the burden. The college’s trustees have doled out massive pay raises, misled the public about its executives’ compensation and now want to use nonprofit donations to supplement already excessive salaries.

College Foundations Face Minimal Scrutiny

Cal State’s official executive-compensation summary leads the public to believe that the average president receives $300,000 in pay and up to $60,000 toward housing costs. The job isn’t easy, and the high salary reflects the need to recruit top executives that can raise money for the school, among other tasks. To fulfill their fundraising obligations, Cal State argues, presidents need two things: a housing reimbursement and the authority to run a tax-exempt, auxiliary foundation. These auxiliary foundations, however, offer crucial evidence that Cal State has underreported the total amount of taxpayer-funded compensation its officials receive.

College auxiliary organizations, like any tax-exempt nonprofit, are required by law to report executive compensation on publicly available tax returns. In order to prevent organizations from hiding the true amount of executive compensation, the IRS requires the disclosure of all compensation from the nonprofit and any related organization, including “a nonprofit organization, a stock corporation, a partnership or limited liability company, a trust, and a governmental unit.”

That means every president’s taxpayer-funded salary should be disclosed on the college foundation’s tax return because it is from a related organization. The IRS regulation is designed to prevent non-profits from hiding executive compensation from other sources. Therefore, Cal State foundation tax returns can act as a way to verify the taxpayer-funded compensation disclosed by each Cal State University. Cal State foundation tax documents don’t come close to matching the numbers disclosed by the Cal State Chancellor’s Office or the State Controller’s Office.

Consider the case of Mohammad Qayoumi, the former president of California State University East Bay and current president of San Jose State University. Cal State’s website reported his East Bay starting salary at $237,072 per year, plus $60,000 toward housing costs. Yet the Cal State East Bay Educational Foundation, the nonprofit auxiliary organization the college president manages, reported that Qayoumi received zero compensation from the foundation or any related organization on federal tax returns for 2008, 2009 and 2010. The foundation’s Form 990 tax return is inaccurate and contradicts the IRS’s straightforward instructions for disclosing executive compensation.

It’s conceivable that East Bay’s missing executive-compensation data could be an inadvertent accounting error. However, East Bay’s tax returns don’t resemble the tax returns of other Cal State foundations that reported total presidential compensation. For example, Sacramento State University’s foundation tax returns for the same period include executive compensation data from both taxpayer and foundation sources.

East Bay: Non Responsive to Requests for Public Information

Cal State East Bay hasn’t responded to repeated requests for the total compensation data for the periods in question. “The IRS Form 990 tax reports filed by Cal State East Bay and available to the public on the university Web site were complete and accurate at the time each was filed,” Barry Zepel, Cal State East Bay’s Media Relations Officer, wrote to CalWatchdog on April 28. “The 990 forms include some information presented on a fiscal year basis and some on a calendar year cycle, which includes data from two fiscal years (e.g., the 990 for CY 2008 would reflect data drawn from FY 2007 and FY 2008).”

Taxpayer advocates like Senator Joel Anderson, R- Santee, aren’t buying the excuses. “CSU’s leaders are proving over and over again that they’re incapable of being good stewards with taxpayers’ money: the $400,000 executive salaries, the tapping of Foundation money to cover-up these outrageous salaries,” Anderson told CalWatchDog.com. “Now we find out that they may have committed tax fraud in the process.”

The foundations’ missing or misreported numbers bear directly on the debate about Cal State’s executive compensation. The Cal State Chancellor’s Office continues to claim that high salaries are needed to attract the best talent. Moreover, the Cal State Board of Trustees has now shifted all future pay raises to these nonprofit foundations.

“As I said last week when the chancellor proposed this new policy, it is nothing more than smoke and mirrors disguised as reform,” said State Senator Leland Yee, D- San Francisco. “The trustees are beyond tone deaf; they are either completely oblivious or simply don’t care what students, lawmakers, and taxpayers think.”

Finance Expert Qayoumi Can’t Fill Out Basic Forms

A former vice president for administration and finance and chief financial officer at Cal State Northridge, Qayoumi had impeccable credentials to sort through the foundation’s finances. However, Qayoumi couldn’t follow basic tax instructions. Two sections of the 2009 tax return clearly call for disclosing compensation from related organizations: “Column E: Reportable compensation from related organizations (W-2/1099-MISC)” and “Column F: Estimated amount of other compensation from the organization and related organizations.”

One reason to think the foundation’s numbers may not be the result of mere oversight or clerical error appears on Schedule O of the East Bay Educational Foundation’s Form 990. It describes in painstaking detail the review process officials undertook before submitting their 2010 returns to the IRS: “Form 990, Part VI, Section B, Line 11: The organization’s Form 990 is reviewed line by line by the president and treasurer and then signed by the president. After the president and the treasurer have approved the final draft of the Form 990, the organization will create a PDF of the form and email it to the members of the governing body before submission and/or due date of the form.”

East Bay is the fourth Cal State campus to report one set of compensation numbers to the IRS and another to the public. On federal tax returns for 2007, 2008, and 2009, San Jose State University’s Tower Foundation reported zero compensation paid by the organization or any related organizations to more than a half-dozen high-ranking university personnel, including the college’s president, provost, athletic director, and several vice-presidents. The California State University Office of the Chancellor understated the annual compensation of San Francisco State University president Robert Corrigan by as much as $52,787 when compared to the San Francisco foundation tax returns.

The most substantial discrepancy uncovered so far involves Cal State Los Angeles president James Rosser. He reported $515,612 in annual compensation to the IRS for the 2009 tax year. In at least five instances, including official statements from the chancellor’s office, Cal State’s website, and an independent competitive pay analysis by the Mercer Consulting firm, Cal State officials have falsely claimed or implied that Rosser’s compensation was nearly $200,000 less—an annual base salary of $325,000.

Rosser’s half-million-dollar compensation, which was reported on foundation tax documents, provides evidence that Cal State’s official compensation data is bogus. It turns out that base salary and housing benefits are only a fraction of total executive compensation, and these miscellaneous benefits represent as much as 50 percent of a college president’s base pay.

Retirement benefits alone cost taxpayers an amount greater than the state’s average per capita income. In the case of East Bay’s 2006 presidential compensation of Qayoumi, base pay and housing were supplemented by a $12,000-per-year car allowance, five weeks of annual paid vacation, 12 days of sick leave, a top-of-the-line health-care plan, dental coverage, vision care, automatic enrollment in the state’s retirement program for public employees, an annual physical examination, relocation costs and moving expenses, and “entertainment allowances.”

In 2011, Qayoumi transferred to San Jose State University, which increased his base salary to $328,200, a $91,128 raise in five years. By transferring to San Jose, Qayoumi picked up another $25,000 from the university’s nonprofit auxiliary foundation. Four Cal State officials (including Qayoumi) collect anywhere from $25,000 to $50,000 in bonuses paid by tax-exempt college foundations.

Cal State’s Ongoing Pay Scandal

Cal State’s executive-compensation woes began last July, when the university’s Board of Trustees approved a $400,000 base salary for Elliott Hirschman, San Diego State University’s new president. At the same meeting, the trustees announced a 12 percent tuition increase for the fall term. Students protested. The faculty union president blasted the trustees for their “complete arrogance and tone deafness.” Governor Jerry Brown questioned why Cal State presidents should be paid “twice that of the Chief Justice of the United States.” Ultimately, the public outrage encouraged Republicans in the State Senate to oppose the reconfirmation of Herbert Carter, chairman of Cal State’s board of trustees.

Carter is gone, but his successor hasn’t learned anything from the executive compensation scandal. “Herb Carter was basically the fall guy,” Bob Linscheid, the board’s interim chairman, bluntly told the Chico Enterprise-Record. The board has matched Linscheid’s talk with equally tone-deaf action. Trustees last month voted 10 percent pay raises—the maximum allowable under a rule the board passed earlier in the year to mollify critics—for the new presidents at Cal State’s East Bay and Fullerton campuses. “I’m just sorry we can’t pay them more because of the policy we adopted,” CSU Trustee Roberta Achtenberg lamented at the meeting.

Assemblyman Anthony Portantino, a Democrat representing La Cañada-Flintridge in Southern California, and Senator Yee are calling on Cal State administrators “to come clean with a complete and detailed look at just how CSU executives are paid.” The two Democratic legislators are hoping to “ferret out the truth,” which isn’t too much to ask, especially since Cal State’s motto is Vox Veritas Vita: “Speak the truth as a way of life.”

By JOHN HRABE

In response to a CalWatchDog.com investigation series, two Democratic state legislators are calling on the California State University system “to come clean with a complete and detailed look at just how CSU executives are paid.” In a letter sent Tuesday afternoon to Cal State Chancellor Charles Reed, Assemblymember Anthony Portantino, D-La Cañada Flintridge, and Senator Leland Yee, D-San Francisco, urged CSU to end its repeated attempts to mislead the public about the total compensation of its top executives.

“Despite repeated attempts to ferret out the truth, recent news reports suggest that CSU officials continue to conceal details about excessive compensation for campus presidents — including tens of thousands of dollars in perks such as housing, car allowances, and retirement and health benefits,” the legislators wrote. “According to CalWatchDog.com, the president of Cal State Los Angeles makes over $515,000 in total compensation per year; that’s about $200,000 more than what’s listed on CSU’s website.”

Earlier this month, a CalWatchdog investigation revealed that Cal State officials have provided false and misleading information to the public about the total compensation provided to at least one of the system’s 23 presidents. According to IRS Form 990 documents of the Cal State University Los Angeles Foundation, CSULA President James Rosser reported receiving $515,612 in total compensation for fiscal year 2009-10, which ended on June 30, 2010. The half-million dollar figure is roughly $200,000 more than CSU’s previously cited base salary of $325,000 per year. In at least five instances, Cal State officials have claimed or implied the lower compensation amount for Rosser.

‘Open and Transparent’?

Following last year’s public outcry over the $400,000 base salary for San Diego State President Elliot Hirschman, Cal State established a special Web page for public information on its executive compensation policies. “As a public institution, the California State University is committed to being as open and transparent to the public as possible,” the Web site reads. “In response to recent discussions about the California State University’s executive compensation policies and practices, we have created this central page to make the documents related to those policies more readily accessible.”

The website makes no reference to any CSU president receiving more than half-a-million dollars per year in taxpayer-funded benefits. The webpage contains an executive compensation summary, titled “2011/2012 CSU Executive Compensation Summary.” This summarizing document lists Rosser’s total compensation as $325,000 per year, plus a $60,000 housing allowance. It excludes any reference to a car allowance or other non-taxable perks, such as retirement, FICA or health benefits.

‘No Justification’

“There is no justification for these bloated salaries and even less justification for hiding the truth from the taxpaying public,” wrote Portantino and Yee. “The need for transparency has never been greater, and thus why we call on you and your administration to use Sunshine Week to come clean with a complete and detailed look at just how CSU executives are paid.”

CalWatchDog.com has been repeatedly rebuffed in our requests for the total compensation packages of all 23 college presidents. “The information is publicly available and included on 990 forms for each president and the chancellor that are posted on each campus website, as well as on the chancellor office website,” said Claudia Keith, Cal State’s assistant vice chancellor of public affairs.

However, the IRS documents provided on the Cal State Foundation’s website are nearly three years old. The most recent IRS Form 990, which is available on the CSU Foundation’s webpage, is for July 1, 2008-June 30, 2009.

In addition to their letter, Portantino and Yee have proposed legislation to limit the excessive compensation of high-ranking government employees.  Portantino’s AB 1787 would freeze compensation for public employees making more than $100,000 a year.  Yee’s SB 967 would prohibit raises for top executives during bad budget years or within two years of a student fee hike.

Both legislators have a long history of championing government openness and transparency. Last year, Portantino led the effort to force the state Assembly to disclose its total operating budget. On January 1, new legislation authored by Yee took effect that expanded the state’s Public Records Act to include the University of California, Cal State and the community college auxiliaries and foundations. SB 8 provides the public with greater tools to investigate the financial statements and contracts of public colleges and universities.

Juliette “Daisy” Gordon Low assembled 18 girls from Savannah, Georgia, on March 12, 1912, for a local Girl Scout meeting. She believed that all girls should be given the opportunity to develop physically, mentally, and spiritually. With the goal of bringing girls out of isolated home environments and into community service and the open air, Girl Scouts hiked, played basketball, went on camping trips, learned how to tell time by the stars, and studied first aid, according to the Girl Scouts of America website.

On my honor, I will try:
To serve God and my country,
To help people at all times,
And to live by the Girl Scout Law.

As legislators waxed nostalgic about the Girl Scouts, speaking of their daughters who are or have been girl scouts, none mentioned the Girl Scout Law or Promise…. until Assemblyman Anthony Portantino, D-La Canada/Flintridge asked colleagues to “do your best” to practice the tenets of the Girl Scout Law:

I will do my best to be
honest and fair,
friendly and helpful,
considerate and caring,
courageous and strong, and
responsible for what I say and do,
and to 
respect myself and others,
respect authority,
use resources wisely,
make the world a better place, and
be a sister to every Girl Scout.

If only more legislators were considerate and caring, courageous and strong, and responsible for what they say and do, the world would be a better place, and California wouldn’t be in such a devistating economic, and corrupt mess.

MAR. 12, 2012

By JOHN HRABE

Senate Republican leader Bob Huff flunked Cal State University’s “fuzzy math” and is calling for “substantial changes at the institution.” His action followed CalWatchDog.com‘s investigation into the system’s false and misleading information about the total compensation of its top administrators.

“The California State University system faces a difficult challenge with mounting trigger cuts that have placed enormous financial pressure on the backs of middle class families,” Huff said. “But using fuzzy math to camouflage escalating executive compensation, while student fees are skyrocketing, underscores a need for substantial changes at the institution.”

CalWatchdog first reported this month on the deceptive practices by Cal State to misinform the public about the total compensation provided to the system’s 23 presidents. According to IRS documents of the Cal State University Los Angeles Foundation, CSULA President James Rosser reported receiving $515,612 in total compensation for fiscal year 2009-10, which ended on June 30, 2010. The half-million dollar figure is roughly $200,000 more than CSU’s previously cited base salary of $325,000 per year. In at least five instances, Cal State officials have claimed or implied a lower compensation amount for CSULA’s Rosser.

‘Doesn’t Look Right’

Senator Doug LaMalfa, R-Redding, also criticized Cal State for deceiving the public and providing its executives with high salaries during the state’s ongoing budget crisis.

“It just doesn’t look right.  We are in the middle of a budget crisis with student fees being increased left and right, yet executives are getting six-figure raises and $100,000 perks not even on the books,” La Malfa told CalWatchDog.com. “These are huge salaries for public officials, larger than the governor, yet they have a much smaller portfolio of responsibilities. They can ‘suffer along’ with their current six-digit compensation while the rest of the public weathers the budget crisis and tough economy.”

Following last year’s public outcry over San Diego State University’s $400,000 base salary for new president Elliot Hirschman, Cal State established a special Web page for public information on its executive compensation policies. “As a public institution, the California State University is committed to being as open and transparent to the public as possible,” the website reads. “In response to recent discussions about the California State University’s executive compensation policies and practices, we have created this central page to make the documents related to those policies more readily accessible.”

Senators Huff and La Malfa join a growing number of legislators that are urging greater fiscal accountability at Cal State. Senator Joel Anderson, R-Santee, and Assemblyman Anthony Portantino, D-La Canada-Flintridge, were the first legislators to criticize Cal State for its efforts to mislead the public on executive compensation.

“If it’s true that the CSU has been hiding important budget information from the Legislature and public review, potentially in violation of state law and the CSU’s own rules, then I believe there needs to be consequences,” said Assemblyman Portantino. “It is PAST time for the CSU to be fully and completely transparent. I call on the Assembly Leadership to support my continuing effort to FREEZE the pay and benefits for the CSU executives until we have adequate time to review, line-by-line, actual spending records.”

By JOHN HRABE

California State University officials have provided false and misleading information to the public about the total compensation provided to at least one of the system’s 23 presidents, a CalWatchDog.com investigation has found. According to IRS documents of the Cal State University Los Angeles Foundation, CSULA President James Rosser reported receiving $515,612 in total compensation for fiscal year 2009-10, which ended on June 30, 2010. The half-million dollar figure is roughly $200,000 more than CSU’s previously cited base salary of $325,000 per year. (For this and other numbers, please see the 15 pages of confirming documents below.)

A university spokeswoman confirmed to CalWatchDog.com that, in addition to his base pay, housing allowance and car stipend, Rosser also receives more than $134,000 per year in “nontaxable benefits such as retirement, FICA, health, etc.” This disclosure is the first time that Cal State has acknowledged the complete and accurate total compensation for its top executives. Rosser’s more than half-million-dollar annual compensation package raises questions about the true cost of other college executives, including San Diego State University’s Elliot Hirschman and Cal State Chancellor Charles Reed, both of whom receive “base pay” in excess of $400,000 per year.

Legislator Calls for Immediate Pay Freeze & Audit

Republican and Democratic legislators quickly criticized Cal State for its apparent deception. One influential member of the Assembly’s Committee on Higher Education is urging the Assembly leadership to freeze CSU’s pay and benefits and conduct a line-by-line review of actual spending records.

“If it’s true that the CSU has been hiding important budget information from the Legislature and public review, potentially in violation of state law and the CSU’s own rules, then I believe there needs to be consequences,” said Assemblyman Anthony Portantino, D-La Canada Flintridge. “It is PAST time for the CSU to be fully and completely transparent. I call on the Assembly Leadership to support my continuing effort to FREEZE the pay and benefits for the CSU executives until we have adequate time to review, line-by-line, actual spending records.”

Senator Joel Anderson, R-Santee, who has been critical of the Cal State Board of Trustees for its executive compensation policies, also disapproved of CSU’s misinformation campaign. “It is always frustrating when intellectually dishonest bureaucrats play hide-the-pea with public records requests,” he said.

The new revelation of the total compensation package provided to Cal State L.A.’s president contradicts at least five instances in which Cal State officials have claimed or implied a lower compensation amount. At a minimum, Cal State has violated its commitment to be “as open and transparent to the public as possible.”

Cal State Executive Compensation Website

Following last year’s public outcry over Hirschman’s $400,000 base salary, Cal State established a special webpage for public information on its executive compensation policies. “As a public institution, the California State University is committed to being as open and transparent to the public as possible,” the website reads. “In response to recent discussions about the California State University’s executive compensation policies and practices, we have created this central page to make the documents related to those policies more readily accessible.”

The website makes no reference to any CSU president receiving more than half-a-million dollars per year in taxpayer-funded benefits. The webpage contains an executive compensation summary, titled “2011/2012 CSU Executive Compensation Summary.” This summarizing document lists Rosser’s total compensation as $325,000 per year, plus a $60,000 housing allowance. It excludes any reference to a car allowance or other non-taxable perks, such as retirement, FICA or health benefits.

Cal State’s Executive Compensation website more closely reflects the compensation amount disclosed to the California State Controller’s Office, which maintains a database of public employee salary information. According to State Controller John Chiang’s Government Compensation database, Cal State L.A.’s president receives $372,461 in “Total Wages Subject to Medicare (Box 5 of W-2).”

March 2011 Mercer Report

Cal State’s campaign to mislead the public about the total compensation package provided to its top executives dates back to last March, when the system hired the high-priced Mercer consulting firm to conduct a competitive pay analysis. The Mercer Report, which has been criticized by California Watch for using bogus comparator institutions, included two references to Rosser’s compensation of $325,000. Under Section IV, “Compensation Analysis,” Mercer concluded that Rosser’s salary was 31 percent lower than the “market average” of $425,945 per year. CalWatchDog.coms revelation of Rosser’s total compensation of $515,612 per year would dramatically alter this comparison. Instead of trailing the “market average” by 31 percent, Rosser would exceed it by 21 percent.

The Mercer Report also included two references that Cal State failed to provide incentives to its presidents, a claim that is refuted by the IRS documents. “CSU does not offer its presidents any short-or long-term incentive programs,” the consultants wrote on page 11 of the report. The report continued on page 12: “CSU does not offer incentives, and therefore its total cash compensation is equivalent to base salary.”

In advance of an August 2011 meeting of the Board of Trustees, CSU staff prepared a 15-page report titled, “Cash Compensation of Public University Chief Executives.” The document summarized the Mercer Report and other executive compensation data. In that report, Rosser’s total compensation is listed at $325,000, with empty boxes in a table that included options for supplemental compensation, bonuses and deferred compensation.

Cal State Assistant Vice Chancellor Confirmed Total Compensation Amount

On February 9, CalWatchDog.com asked Claudia Keith, Cal State’s assistant vice chancellor of public affairs, to confirm the “total compensation package, including taxable and nontaxable benefits” for Cal State L.A.’s president.

CalWatchDog.com asked, “The total compensation package, including taxable and nontaxable benefits, consists of the salary, housing and car allowance. For example, James Rosser, President of CSULA, receives a salary of $325,000, plus a $60,000 housing allowance, and the $12,000 annual car allowance. (Based on the links you’ve supplied). Does that represent Mr. Rosser’s total compensation, including all taxable and nontaxable benefits?”

Keith replied, simply, “Yes.”

Twenty days later, when CalWatchDog.com supplied Keith with the IRS documents, Cal State finally came clean about the true cost of CSULA’s presidential compensation package.

Keith wrote, “Total if $380,666 in taxable compensation which includes $308,666 in salary (this was year we had furloughs for 1/2 the year) + $60,000 housing and $12,000 car allowance.  The $134,946 are nontaxable benefits such as retirement, FICA, health, etc.”

The Cal State Office of Public Affairs’ misinformation, or possible deception, substantiates Portantino’s charge that CSU has repeatedly stifled legislative attempts to rein in the high compensation of public administrators.

“For the past several years, the CSU administration has worked in concert with Assembly Leadership to squash legislation dealing with outrageous executive compensation practices,” he said.

Portantino has proposed legislation that would impose a two-year pay freeze on public employees that earn more than $100,000 per year. AB 1787 would affect more than 3,300 state employees, excluding higher education executives at the University of California and Cal State systems.

On January 1, new legislation took effect that provides the public with greater tools to investigate the financial statements and contracts of public colleges and universities. SB 8, authored by state Senator Leland Yee, D-San Francisco, expanded the state’s Public Records Act to include UC, CSU and the community college auxiliaries and foundations.

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