The Bay Area Air Quality Management District argued that it’s not enough for developers to detail the environmental impacts from their proposed projects. Instead, they must also detail how the existing environment would affect the residents, employees or customers of new housing, commercial-retail or mixed-use projects. That assertion outraged the California Building Industry Association, which said it placed huge new obstacles on projects in urban areas — especially “infill” projects championed by environmentalists as a way to increase housing density near mass transit options.

Builders got their way at the trial court level, but an appellate court sided with the Bay Area AQMD. This month, however, a unanimous state Supreme Court ruled that CEQA simply doesn’t mandate that sweeping a review.

“Given the sometimes costly nature of the analysis required under CEQA when an EIR is required, such an expansion would tend to complicate a variety of residential, commercial, and other projects beyond what a fair reading of the statute would support,” wrote Judge Mariano-Florentino Cuéllar. Instead, he wrote, CEQA deals with “the project’s impact on the environment – and not the environment’s impact on the project.”

Builders feared adverse ruling

The decision came as a huge relief to developers and business interests, many of whom expected an adverse decision in the wake of the California high court’s Nov. 30 ruling that rejected the 5,800-page environmental impact report for the Newhall master planned community in the Santa Clarita Valley. The project, first proposed in the 1980s, would create homes, retail-commercial zones and leisure-recreational facilities for 58,000 people.

Contrary to some reports, this wasn’t just a simple battle between environmentalists — in this case, the Center for Biological Diversity — and a developer — the Newhall Land & Farming Co.  The California Department of Fish and Wildlife was the first named party in the lawsuit because it had helped prepare an EIR that said the project had enough mitigation that it would have no net negative effect on the environment, specifically in the release of additional greenhouse gases. The state had been encouraged to take this position by Los Angeles County, which approved the Newhall project’s zoning in 2003.

Justice knocks ‘recipe for paralysis’

The Newhall decision was supported by five of the seven California justices. Interestingly, one of the two dissenters invoked not just his reading of CEQA but the larger issue of a lack of housing in California. This is from the Los Angeles Times:

Justice Ming W. Chin said the environmental impact report could be fairly easily revised but complained the litigation would delay the project by years at a time when the state faces a housing shortage.

 

“Delay the project long enough and it has to meet new targets, and then perhaps new targets after that,” Chin wrote. “All this is a recipe for paralysis.”

This acknowledgment of the effects of judicial decisions on the real world is relatively unusual. For example, in May, the Illinois Supreme Court threw out a state pension reform program that supporters said was crucial to keeping Illinois from becoming the first state to declare bankruptcy. This account is from The New York Times:

All seven members of the state’s highest court found that a pension overhaul lawmakers had agreed to almost a year and a half ago violated the Illinois Constitution. The changes would have curtailed future cost-of-living adjustments for workers, raised the age of retirement for some and put a cap on pensions for those with the highest salaries. But under the state Constitution, benefits promised as part of a pension system for public workers “shall not be diminished or impaired.”

“Crisis is not an excuse to abandon the rule of law,” Justice Lloyd A. Karmeier wrote in an opinion. “It is a summons to defend it.”

Whether or not the federal government might come to the rescue of Illinois if it went bankrupt has been the topic of intense speculation in that state’s media.

Reported the Detroit News:

Detroit Public Schools is $53 million behind in pension payments, costing the cash-strapped district $7,600 a day in interest penalties — or the equivalent of one child’s annual state funding grant.

Based on its minimal payments, the Detroit school district would be $81 million behind in mandatory pension contributions by July 1, state records show. The cost is exacerbated by $78,000 in fees for each month DPS remains delinquent — depriving the city schools of the equivalent of one teacher’s annual salary and benefits.

The sporadic pension payments, which date to October 2010, are the latest sign of worsening finances for Michigan’s largest school system as it continues to rack up debts and hemorrhage students and cash. Forgoing required contributions for pension payments mirrors a cash-hoarding tactic the city of Detroit pursued in November 2012 — nine months before declaring bankruptcy.

Detroit itself used to be the “Paris of the West.” Its booming auto industry was like Silicon Valley today — highly prosperous, lifting the tide of the state and country. Then general political mismanagement, including unbearable public pension costs, brought hard times, and eventually bankruptcy.

Detroit is less a pattern California will follow than a cautionary tale that public finances matter, and mismanagement can lead to federal bankruptcy court.

As attorney Mark Cabaniss wrote on this news site in Sept. 2012:

“Even if politicians’ pensions are contracts protected by the Constitution, they are still breakable.  In pretending otherwise, the politicians are lying.  In other words, merely noting that pensions are contracts protected by the Constitution is not the end of analysis, but only the beginning, for all contracts are breakable, and all constitutional rights are subject to limits.”

Now the Los Angeles Times reports:

As millions of private employees lost their pension benefits in recent years, government workers rested easy, believing that their promised retirements couldn’t be touched.

Now the safety of a government pension in California may be fading fast.

It cited Stockton’s bankruptcy:

In his written opinion, U.S. Bankruptcy Court Judge Christopher M. Klein blasted CalPERS as “a bully” for weighing in on the proceeding to insist — wrongly — that the city had no choice but to pay workers their promised pensions.

Karol Denniston, a public finance lawyer at Squire Patton Boggs, said Klein’s ruling was “critical for every municipality in California.”

“Next time we see a Chapter 9 bankruptcy filing,” she said, “pensions will be up for negotiation just like every other creditor.”

The skyrocketing bill for pensions is a problem for cities across the state. Californians now owe nearly $200 billion for pensions promised to state and local government workers, according to an analysis by Adam Tatum, research director at California Common Sense, a nonprofit think tank.

The key event will be the next recession, when more may go bankrupt and face: a) eliminating key services, such as police and fire, that are the reason governments exist in the first place; b) raising taxes to unsustainable levels that drive out business and personal taxpayers; c) cutting pensions, despite what the California Constitution supposedly says; or d) some combination of the above.

When there’s no money, there’s no money.

Facing a weakened police force and a failed experiment in citizen-driven budgeting, Vallejo’s structural challenges have persisted. In the wake of the pension crisis that helped plunge the city into bankruptcy, residents have become resistant to spending more money.

Hungry for cash, the City Council has turned its attention to a raft of proposals for big-ticket projects like large new casinos. Meanwhile, law enforcement has attempted to staff up even while suing the city for modifying proposed pension benefits during its bankruptcy proceedings.

All told, this portrait of a precarious, ailing city has cast doubt even on bankruptcy as a reliable fix for the budgetary woes imposed by public pensions — a challenge still unmet across California.

Spending confusion

Vallejo residents have recently encountered several unexpected developments in city budgeting. In a bid to avoid a second bankruptcy, they narrowly voted in a 1 percentage-point increase in the city sales tax in 2011. As CityLab reported, however, concerns mounted that the increased revenues would simply be funneled back into Vallejo’s broken budgetary system.

As a result, Councilwoman Marti Brown advanced a radical notion. Cooked up during Brazil’s 2005 World Social Forum, so-called “participatory budgeting” was designed to give residents a direct say in how budgets were allocated. Over strenuous objections, Brown worked with the Participatory Budgeting Project to squeak their approach through the Vallejo City Council with a 4-3 vote.

That’s when things took an unpredictable turn. As CityLab recounted, residents’ initial skepticism turned to curiosity, and soon citizens had produced some 800 potential budget items. By May 2013, the shortlist of expenditures was ready for a vote. And once it came time to allocate funds for the winners, city council meetings became a hotbed of civic engagement. “For the first time with participatory budgeting, you had a packed room, rooting for the budget,” city manager Dan Keen told CityLab. “They had a stake in the budget that they had imparted.”

The elation, however, was short-lived. The program’s operating costs, reaching $300,000 a year, have been tough for Vallejo to swallow at a time when basic services like law enforcement require more funds. The chunk of Vallejo’s money allocated for participatory budget spending has been cut by two-thirds, down to $1 million. Although increased citizen participation brought a brief wave of city pride, it failed to surmount Vallejo’s structural challenges.

Police drama

Vallejo’s new police chief, Andrew Bidou, came into office with a clear mission: grow. “At its lowest staffing point, the Vallejo Police Department had seen as few as 77 sworn officers on duty, for a city of about 120,000 residents,” the Times-Herald reported. “Bidou said he’s looking to get 110 officers on duty and that the department is on track to meet that number by the end of the year” — up from the current tally of 101.

Though many in Vallejo have strongly supported a return to pre-bankruptcy levels of policing, law enforcement was part of the spending problem that drove Vallejo toward insolvency. Vallejo police refused to negotiate away from their unaffordable pension agreements with the city.

As a result, Vallejo declared an impasse in contract negotiations and unilaterally included police in its $300-a-month cap on medical benefits for retired public employees. That led to a lawsuit brought by police. After a year of legal wrangling, a hearing date has been set for December.

Although the case has yet to progress, the expenses faced by the city could, once again, threaten bankruptcy.

A search for funding

Amid the uncertainty, Vallejo has lurched from budget proposal to budget proposal.

Measure E, a $239 million bond that would have renovated sites throughout the local school district, won 59 percent of the vote on Election Day, but fell short of the two-thirds of votes necessary to make it law. Now the City Council has been confronted with a series of offers for massive casino construction.

In partnership with Native American tribes, not all of which possess reservations, developers have promised thousands of jobs and millions in revenue.

Opponents, however, continued to worry that embracing casinos as a way out of Vallejo’s challenges would be more of a gamble than ever.

It’s a cautionary tale for Stockton and San Bernardino, both of which are working through bankruptcies — and for all California cities.

Also stiffed will be bondholders. That puts at risk other municipal bonds throughout California. And it will mean higher costs to service future bonds, such as the $7.5 billion in water bonds on the Nov. 4 ballot as Proposition 1. Investors understandably will demand higher interest rates for any bonds emanating from the Pyrite State.

Which means taxpayers again will pick up the tab.

The city sensibly argued that Klein’s action also puts it at risk for another bankruptcy. “But Klein said Thursday that Stockton’s plan for paying creditors over the years was adequate and passed all legal tests,” reported the Los Angeles Times.

But that’s just what has happened to Vallejo after its 2008 bankruptcy also left it forced to pay full pension benefits. As CNN reported in March:

“The California city of Vallejo emerged from bankruptcy just over two years ago, but it is still struggling to pay its bills. The main culprit: Ballooning pension costs, which will hit more than $14 million this year, a nearly 40% increase from two years ago.”

Meanwhile, the California Public Employees Retirement System has been spiking pensions again.

Next up: San Bernardino’s bankruptcy. In September, Judge Meredith Jury ruled the city unilaterally could cut firefighter pensions. We’ll soon see if her ruling sticks.

Meanwhile, as James Poulos reported on our website, the state is spending so much on pensions its roads are crumbling to dust.

Well, I guess it’s ok to make sure state pensioners, more than 16,000 of whom now pull down $100,000 or more a year, can enjoy their retirements in Lucullan luxury on their Idaho ranches.

However, with Democrats in California, you see even worse canards. The worst is the idea that stricter regulations and government-imposed costs — AB 32, minimum-wage hikes and more — are somehow good for the economy.

Just as laughable is the claim that without good-to-great pay and ridiculously generous benefits, there will be an exodus of wonderful workers from government jobs. We’re hearing lots of this in the aftermath of the federal bankruptcy judge’s ruling that the city of Stockton can invalidate and renegotiate pensions for current and retired employees. Example:

Dave Low, the chairman of Californians for Retirement Security, a coalition of state public employees, said the decision could hurt not only workers but also residents of cities across the state.

“We are disappointed,” he said, “that the judge has sided with Wall Street in a decision that has the potential of devastating citizens, employees and making bad situations worse.”

If cities are forced to break promises made to employees, Low said, “it will result in a mass exodus of police, firefighters and other public employees who will have no incentive to rebuild bankrupt cities.”

That’s from the L.A. Times.

No market demand for public employees at all — except cops

What a load of hooey. As I wrote for City Journal a while ago ….

With the exception of law enforcement and some niche categories, no evidence exists of substantial market demand in any area of public employment. Public-sector compensation is so much higher than private-sector pay because of pay practices — including automatic raises negotiated by bureaucrats who often stand to benefit from the policies — and because of the political clout of public-employee unions.

What’s happened this year in L.A. with firefighter vacancies illustrates this. See my account here; there were 10,000 applicants for a 300-job fire recruit class.

And here’s what I wrote a decade ago for the Orange County Register. I can’t find it online, but Nexis comes to the rescue:

After the 1994 bankruptcy, it was plain that the biggest enemy of Orange County taxpayers was reckless Treasurer Robert Citron, who gambled vast sums on risky investments with the aid of his Ouija board and ended up $1.6 billion in the red.

A decade later, our worst enemy is something much more abstract: a theory advocated by county personnel managers. Leaving out the jargon, it boils down to the notion that wages and benefits must go up on a regular basis so as to keep the county’s uniformly competent workers happy and stop them from fleeing to better jobs elsewhere.

The latest example of bureaucrats’ devotion to this theory came last month when a plan surfaced that would push the top salary range for about 100 county bosses to nearly $250,000 a year and the range for another 850 executives to nearly $200,000.

The problem with this theory is basic: It’s a crock.

“It’s the bureaucratic equivalent of an urban myth. With the exception of police officers, there’s no data that indicates [competition for public-sector employees] at all,” says Steve Frates, a senior fellow with the Rose Institute of State and Local Government in Claremont.

No turnover shows job satisfaction is high

What does the data indicate? You guessed it.

How often an organization loses employees is far and away the best indicator of relative satisfaction with pay and benefits. County officials I spoke with last week said overall figures on employee turnover were not available, but they didn’t dispute that it was low compared with the private sector.

This job satisfaction isn’t surprising. As economist Paul Craig Roberts has documented, public employees have higher average annual pay, better benefits and more paid days off than private-sector workers. This gap has widened over the past 20 years, during which the private sector has undergone a productivity revolution while government manifestly has not.

I’m still waiting on that government productivity revolution.

First came Los Angeles Superior Court Judge Rolf True’s ruling that teacher tenure laws are unconstitutional and “shock the conscience” because they protect incompetent teachers and funnel them to the schools in poor minority communities that most need the best teachers.

Now U.S. Bankruptcy Judge Christopher Klein has struck another blow for sanity by rejecting CalPERS’ argument that the city of Stockton can’t cut the pensions of city employees and retirees as it tries to get out of bankruptcy. CalPERS’ claim that state laws somehow trump federal laws has always seemed strange. Klein’s comments Wednesday certainly reflected that view. This is from Ed Mendel at calpensions.com:

Part of his analysis yesterday that CalPERS pensions are not state “governmental or political powers” protected under federal bankruptcy law is that while state workers are in CalPERS by statute, cities choose to join CalPERS.

Klein said California cities have the option of forming their own pension systems, joining a county pension system, hiring a private pension provider or withdrawing from CalPERS, if they can afford to do so.

He concluded that benefits not prescribed by state law are not “governmental or political” powers protected by the federal bankruptcy law, but instead are unprotected “business powers.”

Klein said a CalPERS-sponsored state law preventing cities from rejecting their CalPERS contracts in bankruptcy is “flat-out invalid” under the constitutional “supremacy clause” giving federal law priority over state law.

The judge said another CalPERS-sponsored state law that gives CalPERS a lien on all city assets, except wages, when they declare insolvency is an invalid attempt by the state Legislature to “edit” the federal bankruptcy law.

Judge: “Why should I take [CalPERS claim] seriously?

The New York Times treated this ruling as a major national story and made a point that California coverage did not: “Judge Klein’s ruling went beyond anything that Stockton was seeking.” More from the NYT:

Calpers had argued that if Stockton stopped making payments and dropped out of the state pension system, the lien would let it claim $1.6 billion of its assets. But Judge Klein said those statutory powers were suspended once a California city received federal bankruptcy protection.

“Why should I take that lien seriously?” he asked a lawyer for Calpers, Michael Gearin. …

“The bankruptcy code provides that the lien can be avoided and be treated as an unsecured claim,” Judge Klein said.

Judge Klein also said that Stockton had many options other than Calpers for retirement benefits: a private provider, like an insurance company; a multiemployer pension plan affiliated with a union; one of California’s county-run pension plans; or it could even offer no pensions at all.

“There are lots of permutations and combinations out there with respect to the art of the possible,” he said, adding that nothing in the law required any city to give its business to Calpers. “The whole world is out there.”

Conservatives, libertarians and believers in small government have long viewed the courts with suspicion. That’s especially so in California, where conservative ballot propositions have often been scrapped or enfeebled by courts but liberal ballot measures rarely seem to get picked apart.

But Judge Treu and Judge Klein go against that narrative — and offer hope that a new balance of power is coming in a state dominated for too long by public employee unions.

]]> https://calwatchdog.com/2014/10/02/stockton-ruling-like-vergara-ruling-shakes-ca-status-quo/feed/ 20 68689 https://calwatchdog.com/2014/09/15/bankruptcy-could-cut-san-bernardino-fire-pensions/ https://calwatchdog.com/2014/09/15/bankruptcy-could-cut-san-bernardino-fire-pensions/#comments Mon, 15 Sep 2014 23:41:54 +0000 http://calwatchdog.com/?p=68043  

It was a hot 102 degrees last Thursday in San Bernardino — perfect weather for a city bankruptcy “cramdown.” Federal Bankruptcy Court Judge Meredith Jury ruled the city, as Reuters reported, “may impose cuts to its firefighters’ overtime and pension benefits in a bid to reach a bankruptcy exit plan.”

In bankruptcy law parlance, according to Investopedia:

“Cramdown allows the bankruptcy courts to modify loan terms subject to certain conditions in an attempt to have all parties come out better than they would have without such modifications. The conditions are mainly that the new terms are fair and equitable to all parties involved.”

The city wants keep vacant positions for firefighters who don’t show up for work. That would cut $4 million  in overtime costs. And firefighters would have to pick up the former city contribution to their pensions, which amounts to 14 percent of their net pay.

Jury said the city was persuasive in proving the current pensions and benefits contributed to the city’s bad finances. She now is allowing the city to reject the firefighters’ collective bargaining agreement.

In the bankruptcies of private businesses, federal bankruptcy courts have near-total discretion in disposing of assets and liabilities. But the San Bernardino and Detroit bankruptcies are testing whether judges have similar powers in municipal bankruptcies, in particular involving union contracts and pension obligations.

San Bernardino’s city charter expressly forbids imposing pay cuts on police or firefighters’ salaries, so the cuts have to be made to overtime and pension benefits.  The city is pursuing an amendment to its charter in a ballot initiative in November that would allow cuts in police and firefighters salaries as well.

The firefighters’ union wants to appeal the judge’s decision based on allegations the city didn’t follow state law in its negotiations. Judge Jury said their claim was mostly not legitimate.

Lucrative

The bankruptcy proceedings have brought forth the reason the city went bust.

Annual pay for the top 40 San Bernardino firefighters averages $190,000. And it averages $166,000 even for the bottom 40 firefighters.

If the court-ordered changes are enacted, those amounts would be reduced, respectively, to about $163,400 and $142,760.  The latter number still would be 3.6 times the city’s median income of $39,097. Moreover, San Bernardino remains one of the least expensive places to live in California, with the median price of a home $166,100, less than half the state price of $383,900.

San Bernardino filed for bankruptcy under Chapter 9 of the Federal Bankruptcy Code in August 2012. At that time the city was running a $45 million annual operating budget deficit.  As of January 7, 2013, the City General Fund had an $18,730,274 operating deficit.

San Bernardino reached an agreement with the California Public Employee’s Retirement System in June this year that cannot be disclosed due to a judicial gag order.  The city already has started making back payments to CalPERS for pension contributions.  Another undisclosed deal with the city’s police union was reached in August.

Economic problems 

The immediate cause of the bankruptcy was the city’s establishment of pension benefits equivalent to wealthier cities its own size, rather than pegged to its economic and tax base. Although the city’s economy finally has begun recovering from the Great Recession, it enjoys nothing near the productivity of such wealthy California coastal areas as Silicon Valley.

Even before the Great Recession, the city was hit with the closure of Norton Air Base. The city lost its economic base and has become a magnet for lower-end housing.

The city’s unemployment rate was 12.2 percent as of July 2014. And 17.6 percent of the population was below the poverty level in 2012.

Building permits were down from 537 in 2005 to 23 in 2012.  Burglaries are running at an all-time high of 1,306 per 100,000 of population as of 2012.

The city lost 32,937 in population from 2000 to 2012.  San Bernardino is the poorest city of its size in California and the second poorest in the United States after Detroit, which also gave its employees lavish pay and benefits that could not be sustained.

Selling water 

Strangely, the bankruptcy has not advanced consideration of one source of income for the city: groundwater. It is especially valuable during this time of drought.

The city is unique in arid Southern California because it has more groundwater than it needs.  It has so much groundwater that 1.5 million acre-feet are potentially extractable.

Plans have been in the works for decades to sell some of its excess groundwater to other water agencies, but this has never happened due the quality of the groundwater, local problems and California’s bureaucratic water transfer process.

The huge regional Inland Feeder water pipeline is about 10 miles east, but the city has never capitalized on its proximity as a potential economic resource.

Here’s the response from the California Public Employees’ Retirement System:

CalPERS Issues Statement on Detroit Bankruptcy Ruling
December 3, 2013

In response to Judge Steven Rhodes ruling today that Detroit can impair current employee and retiree pensions as it moves through the bankruptcy process, the California Public Employees’ Retirement System (CalPERS) issued the following statement:

“The Detroit court failed to recognize the difference between a two party contract and the unique nature of a state public employee retirement system, which creates a three-way relationship among a public agency, its employees and the retirement system. In California, our members’ vested rights to their pensions are protected by the California constitution, statutes and case law.

“Unlike Detroit, CalPERS is not a city pension plan. CalPERS is an arm of the state and was formed to carry out the state’s policy regarding public employees. The Bankruptcy Code is clear that a federal bankruptcy court may not interfere in the relationship between a state and its municipalities. The ruling in Detroit is not applicable to state public employee pension systems like CalPERS.

“The ruling is short-sighted and does not take into account the promises made in exchange for the financial and physical investments that public employees and retirees make in our communities.

“CalPERS will continue to protect and champion the public employees and retirees who serve California every day.”

Taxpayers?

Two things need to be noted. First, notice which party isn’t even mentioned by CalPERS: you, the California taxpayer. CalPERS will not “continue to protect and champion” you. You’re stuck paying the bill even if that means your city effectively dissolves — with all police, fire, parks, roads and other functions canceled — and the city only existing to pay the pensions of long-retired workers.

Second, it’s touching how CalPERS has faith that the California Constitution presides; that the courts will interpret it according to the wishes of CalPERS; and that the federal government won’t say federal courts, federal laws, and the federal Constitution don’t trump California legalisms.

In fact, constitutions and laws are playthings for courts, legislators and chief executives. Look at the legal gyrations involving same-sex marriage in California in just the past 15 years.

Judges of all kinds, including bankruptcy judges, meet all the time for conferences. It’s a nice junket, paid for by taxpayers, and they discuss off-agenda matters over martinis and golf. The National Conference of Bankruptcy Judges threw a big bash in Atlanta just over a month ago. Nearby is a screen shot of the Oct. 31 panel on municipal bankruptcy.

Description: “This panel will discuss competition for a municipality’s funds between pension obligations and Capital Market Creditors.”

Notice one of the panelists: “Kevyn Orr, Emergency Manager, City of Detroit, MI.”

The judges obviously are aware of the municipal pension problems plaguing many cities, and likely won’t want their dockets stuffed with hundreds of cases. And they likely won’t want a passel of municipal bankruptcies bleeding red ink into state budgets. (Technically, state’s can’t go bankrupt; but they can become insolvent.)

So they’re letting CalPERS and the other pension funds know that the funds better start getting a little more reasonable, or they’ll all end up like Detroit.

Oh, and this also was from the brochure for the bankruptcy judge convention:

On the Zocalo Public Square website, Pepperdine academic Pete Peterson takes a look at how this sort of thinking could help California — at least if its citizens were able to receive more sophisticated information about how their local governments were performing:

“For Californians, Detroit was not our first warning about the costs of limited and self-interested civic participation. We have our own examples — like the bankrupt cities of San Bernardino, Stockton, and Vallejo, and the municipal corruption of Bell. …

“The use of perfor- mance 'dashboards' — online platforms that visualize spend- ing and program performance — by forward-thinking municipal and state governments shows how we can much better evaluate and communicate government programs. The challenge comes …  finding the courage to shut down programs that simply don’t work. …

“The field of data visualization has made presenting complex information — from budgets to program performance — almost easy. Take a look at Salinas, California’s 'Open Budget Platform' (full disclosure: I’m an advisor to this company) or Michigan’s 'Mi Dashboard,' and you’ll see the days of budgets in three-ring binders are numbered.”

The second piece — “Can Government Play Moneyball?” in The Atlantic by former budget officials for both the Bush 43 and Obama administrations — is maddening in that it shows efforts to actually evaluate federal programs for their efficacy date back to the early years of the Clinton administration.  The results, alas, are rarely followed through on.

Coming to the rescue of a counterproductive program

The authors are ultimately upbeat that such evaluations will someday help hack down federal spending. But they also provide an amusing/depressing anecdote about the circumstances that led Congress to keep going with a failed program, starring then-future Gov. Arnold Schwarzenegger.

“The federal government’s long-running after-school program, 21st Century Community Learning Centers, has shown no effect on academic outcomes on elementary-school students—and significant increases in school suspensions and incidents requiring other forms of discipline. The Bush administration attempted to reduce funding for the program. But following impassioned testimony on behalf of the program by Arnold Schwarzenegger, then a potential candidate for governor of California, congressional appropriators agreed to restore all funding. Today the program still gets more than $1 billion a year in federal funds.”

It's been 11 years since Arnold was an ardent campaigner for afterschool programs, including his own California initiative. But the federal version doesn't work, and yet we've poured more than $10 billion into it over the last decade — because Arnold got in the way when reasonable and rational people tried to pull the plug.

One more example that Arnold only pretended to be a Milton Friedman acolyte all those years before he got into politics and ended all doubts.