The California High-Speed Rail Authority – the agency in charge of building the state’s bullet train system – has already faced a tough year, with Gov. Gavin Newsom signaling in February that he’s not confident the full system can ever be built. But now the rail authority has two new public relations headaches on its hands.

In the Central Valley, farmers were already upset over state use of eminent domain to seize their property for construction of the project’s first segment – a 110-mile route from Bakersfield to Merced projected to cost $12.2 billion. But a recent report in the Los Angeles Times documented how slow the rail authority was in paying for seized land and in refunding farmers for the cost of the train project’s effects on their businesses.

The Times’ story focused on a kiwi farmer who lost 70 acres of land to the project more than a year ago and who since has gone unpaid for $250,000 incurred in “relocating wells, removing trees, building a road and other expenses.” It also noted farmers who had been owed $1.9 million and $630,000 for three years, and two others owed $500,000 and $150,000, though for shorter periods of time.

State officials questioned by the Times had no explanation for the delays beyond saying the project was complex in its legal and engineering challenges.

A follow-up story by Fox News emphasized why the delayed payments are particularly upsetting to many Central Valley residents. Not only is there a chance the initial segment between Bakersfield and Merced will never be completed because the state doesn’t have enough funds, there is a good chance that even if the segment is finished, some of the property that has been seized won’t be used for the project. That’s because even now – more than five years after the administration of Gov. Jerry Brown decided to start the bullet train’s construction in the Central Valley – authority officials still haven’t agreed on the exact details of the final route.

“The property owners are very frustrated that the High-Speed Rail Authority [doesn’t] seem to know what they actually need,” Sacramento attorney Mark Wasser said. “We have farmers who the authority has come back four times to change where they want to take.” Wasser has more than 70 clients affected by the rail authority’s Central Valley project.

Audit warnings validated by ethics probe

Meanwhile, state audits which have long warned that it is problematic for the rail authority to rely so heavily on outside consultants have been vindicated with what appears to be evidence of a conflict-of-interest scandal.

Recently, the authority’s deputy chief operating officer – Roy Hill – was suspended pending an investigation by the state Fair Political Practices Commission. Hill is a top executive with the WSP consulting firm employed by the authority. Evidence suggests that Hill approved a $51 million increase in a bullet-train contract held by the Spanish firm Dragados despite his apparent ownership of more than $100,000 in stock in Jacobs Engineering, a multibillion-dollar multinational corporation that is providing key services to Dragados on the California project.

The FPPC approved the request of Assemblyman Jim Patterson, R-Fresno, to investigate Hill, his actions and his personal economic interests.

“This is such a deep conflict that it calls into question whether the entire High-Speed Rail Authority and the contractors they have put together are involved in a massive corruption,” Patterson told Fresno TV station KMJ.

The rail authority says it will cooperate with the FPPC probe.

Hill has not yet commented publicly on the matter.

Brown said the six bills had several worthwhile ideas. “Unfortunately, taken together there are various technical and conflicting issues that make the over 50 proposed reforms unworkable. Some prudent prioritization is needed,” he wrote.

Sen. Mark Leno, D-San Francisco, and Sen. Ben Hueso, D-San Diego, who co-sponsored Senate Bill 660, the most sweeping reform measure, expressed disappointment and dismay. So did Assemblyman Anthony Rendon, the Lakewood Democrat who will take over as speaker in coming months.

The measures were intended to limit back-room dealings in which PUC officials and board members met surreptitiously with representatives of the state’s powerful investor-owned utilities. The most notorious example was a 2013 meeting in a Warsaw, Poland, hotel between then-PUC President Michael Peevey and a Southern California Edison executive at which the parameters were set for a later-approved deal in which ratepayers bore 70 percent of the $4.7 billion cost of the shutdown of the San Onofre nuclear plant. Southern California Edison is San Onofre’s majority owner and San Diego Gas & Electric is the minority owner. The meeting and its central role in the bailout approved by the PUC wasn’t disclosed until February of this year.

Ex-PUC president’s home searched by investigators

Peevey is the subject of state and federal criminal investigations over the San Onofre deal and other PUC decisions. He left the PUC under pressure in late 2014. Soon after, his La Canada Flintridge home was searched by investigators looking for evidence of improper relationships with the utilities he used to govern.

Within weeks after the raid, the PUC released emails that raised troubling questions about the cozy ties between Peevey and top officials at Pacific Gas & Electric, the giant Northern California utility. This is from a February CalWatchdog account:

Emails show Peevey pressured PG&E to give money to oppose Proposition 23, the failed 2010 ballot measure opposing AB32; appeared to link his support for rate hikes to PG&E actions on unrelated issues; and was open to PG&E efforts to influence inquiries into a San Pedro pipeline explosion that killed eight people. … He sought to prop up a project by the Hydrogen Energy California (HECA) firm by constantly reminding PG&E how much he had done for it.

The Brown administration promised to work with lawmakers on a more streamlined reform proposal in coming months. But in the meantime, as Hueso told the Union-Tribune, the PUC has “little incentive to work toward a culture of openness and accountability.”

The agency has been accused of being excruciatingly slow in releasing crucial documents, whether to criminal investigators, the Legislature or journalists. It also appears to be shrugging off growing calls to scrap the deal on how to cover the $4.7 billion cost of closing San Onofre.

Michael Aguirre, the San Diego attorney who led testimony against the San Onofre plan last fall, had the sharpest reaction to the governor’s decision. He told the Union-Tribune that “Jerry Brown’s vetoes show he is helping — not stopping– the dishonest practices known to the people of California.”

Brown chose aide to replace Peevey, not outsider

A previous decision by the governor already suggested he doesn’t share the prevailing view in Sacramento that the PUC is badly in need of a culture change. When Peevey was forced out in December of last year, Brown could have appointed an outside energy expert with a history of independence. Instead, he named PUC board member Michael Picker as president. Though Picker has only been on the board since January 2014, he is an energy establishment insider, working for Brown — and with the utilities  — from 2009 as a senior energy adviser until joining PUC management.

Despite continued criticism of PUC secretiveness, Picker’s selection as board president was ratified by the state Senate a month ago.

Marne Foster

For the second time in recent months, San Diego Unified School Board President Marne Foster is facing official scrutiny over her conduct.

The California Attorney General’s Office has questioned the legality of a raffle held at an unusual July 25 fundraiser in which Foster sold tickets to pay for college debt and expenses of two of her sons. This account is from the Union-Tribune:

Organizers of a fundraiser held last month to help pay off debt and college costs for the sons of San Diego school board President Marne Foster have been given until Sept. 9 to show that a raffle-like drawing held at the event was conducted legally.

 

The state Attorney General’s office sent a letter to C. Anthony Cole Repertory Dance Theatre on Aug. 10 to inquire about the drawing that generated money at the Brothers 2 College benefit held on July 25 at the Neighborhood House Association headquarters.

 

The letter includes a summary of state legal requirements for holding raffles, including the code provision that authorizes eligible organizations to conduct raffles provided they are registered with the California Attorney General Registry of Trusts.

The fundraiser was already in the news because of conflict of interest questions. A flier for the event featured San Diego Unified’s logo; it was also publicized on the Facebook page for Foster’s district. The fundraiser was held at a local facility that has a school district contract that Foster voted for last year. The event was attended by representatives of groups, such as the local teachers union, which hope to stay on Foster’s good side.

Grand jury knocks interference at son’s school

This controversy comes in the wake of a May report from the San Diego County Grand Jury calling on the school district to impose tougher rules for board member behavior because of Foster’s alleged interference with teachers, counselors and the principal of the School of Creative and Performing Arts, a high school attended by her son. The Voice of San Diego detailed the allegations.

Foster’s son was a student at SCPA. Foster and [Principal Mitzi] Lizarraga did not like each other. This is one of the few things on which they agree.

 

Lizarraga said Foster regularly used her position on the school board to push for special treatment for her son. She pressured his teachers to tweak grades and attendance records, Lizarraga said, and demanded a counselor for her son with whom she had a personal relationship.

Lizarraga says her staff was forced to write a favorable college recommendation for Foster’s son and that she was ousted as principal at her behest. She left San Diego Unified last year and now is principal of an arts school in Los Angeles.

Foster denies any wrongdoing. She has not commented on the attorney general’s questions about her July 25 fundraiser, but depicted criticism of it as politically motivated.

Foster says if there was any improper behavior at the School of Creative and Performing Arts, it was by staff members, which took out their differences with her on her son.

In its formal response to the grand jury report, the school district challenged the assertion that it had inadequate ethical standards and said the allegations against Foster were too vague to act upon.

San Diego Unified is the second largest school district in California, with more than 130,000 students.

Foster, a community college teacher, was elected to the board in 2012.

But at another powerful state agency, what appears to be an open conflict of interest is playing out without objection from its leaders. A CTA lobbyist who sits on the State Board of Education wants the board’s test-giving contractor to pay the teachers it hires to grade the tests more than the contractor thinks is necessary.

John Fensterwald mentions this in a post on EdSource on the board’s decision to award a three-year, $240 million contract to the Educational Testing Service to administer standardized tests required by state law:

ETS will continue to handle the administration and scoring of the new online tests, including the Smarter Balanced English language arts and math tests in the Common Core State Standards, which debuted this spring, and the yet-to-be developed Next Generation Science Standards. … 

In its revised bid, ETS said it will hold summer institutes and weekend trainings for teachers and would pay California certificated teachers $20 per hour to be trained in and score the tests. Ashley acknowledged that’s less than teachers earn per hour, but the primary benefit, he said, would be the knowledge that teachers would gain in both the end-of-the-year tests and the interim assessments that teachers would give during the year.

However, board member Patricia Rucker, who works as a lobbyist for the California Teachers Association, called $20 per hour “insufficient” and predicted that fewer than half of the scorers will end up being teachers. Teachers “carry the greatest burden to see that students are prepared and have the greatest stake” in the test results, and yet still will not be the primary focus of the recruitment strategy for scorers, she said.

Gov. Jerry Brown wouldn’t have appointed Rucker to the state school board without the general expectation that she would take the same positions as the CTA. However, a union official openly using her role as a state board member to push a contractor to help her union members get more money is unusual.

Two state laws spell out conflicts

On city councils, members routinely recuse themselves when contracts come before them in which they have some financial connection. They are heeding Government Code 1090:

Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.

Government Code 87100 offers a similar injunction:

No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.

In California, union members and officials are often on governing boards, where they participate broadly in setting policies that affect unions.

But that doesn’t usually apply to matters directly involving pay. For example, in Ontario, a police officer and a senior fire department official served on the City Council in the 1990s. They abstained from contract negotiations or other matters involving compensation and the city agencies that provided their full-time jobs.

Specifically, Form 700 is a Statement of Economic Interests required of “designated” government employees, meaning the governor’s top aides and consultants. Some, but not all, of Brown’s “designated” appointees have filed Form 700s with the Fair Political Practices Commission.

As CalWatchdog.com detailed, the FPPC included in its files Form 700 from Fish and Game Commissioner Mike Sutton.

But for new Labor Secretary David Lanier, the FPPC did not comply with CalWatchdog.com’s request for copies of his Form 700.

Because of the discrepancy, CalWatchdog.com asked Brown’s press secretary, Evan Westrup, “What is the Brown administration policy on Form 700s, gifts, travel expense claims, and conflicts of interest?”

Westrup replied:

“Pursuant to the Political Reform Act (Government Code section 81000 et seq.), the Governor’s Office maintains a Conflict of Interest Code, which lists the designated employees that are required to file statements of economic interest. A copy of the Conflict of Interest Code is attached. All employees of the Governor’s Office maintain strict adherence to the requirements of the Political Reform Act.”

The code requires Brown administration employees first to file their statements of economic interest with the governor’s office. The governor’s office then sends only some of the statements to the FPPC, and retains others. Government Code Section 81000 et seq. can be found here.

Schwarzenegger administration

A March 2009 Los Angeles Times story found that Gov. Arnold Schwarzenegger banned nonessential travel in his administration. But records showed members of his administration ran up significant commuting travel expenses that were paid at the taxpayers’ expense.

In the story, Michael Josephson, president of the nonprofit Josephson Institute of Ethics in Los Angeles, accused the Schwarzenegger administration of lackadaisical oversight of its required reporting.

“Is anybody at the wheel here?” asked Josephson. “The best possible case for this, which is still not a good case, is [that] nobody is providing oversight. . . . The worst case is that you have some people who are knowingly taking advantage.”

Transparency: word du jour

When Arnold Schwarzenegger was governor 2003-2011, his administration created a transparency website that Brown shut down upon taking office in 2011.

The Schwarzenegger policy was formalized in April of 2009 with the transparency website launch. On June 4, 2009, Schwarzenegger issued Executive Order S-08-09, directing state agencies and departments to post audits of their operations performed by outside entities dating back to January 1, 2008, and financial and programmatic audits, as well as audits that they have performed on other government entities.

The order said:

“WHEREAS the technical definition of ‘audits’ is too narrow and there is a need to increase transparency in government by posting other types of reports and similar documents on the Reporting Government Transparency web site.”

A 2009 press release said:

“Continuing his commitment to making government more transparent to the people of California, Governor Arnold Schwarzenegger today launched www.reportingtransparency.ca.gov. This Web site makes publicly available the Statement of Economic Interests, Form 700, and the Travel Expense claims for the Governor’s Office Senior Staff and Deputies, Agency Secretaries, Agency Undersecretaries and Department Directors.”

The press release is no longer available on the state’s website. And the transparency site has been reduced to announcing Brown pulling the plug, plus other resources that might be tried to find the information.

The press release, which only remains in a Sacramento Bee story, is pictured below.

Additionally, travel expense claims and Form 700s from the senior staff and deputies in the governor’s office were posted on the Governor’s Office Web site before it was taken down.

Schwarzenegger himself said:

“Since taking office I have taken steps to make government more accountable and responsive to the people. By making the economic, gift and travel information of the senior members of my administration easily available online, we are taking unprecedented steps to open up our government to the people — yet another critical step toward more government transparency.”

Website taken down

“‘The website eliminated more than four months ago was poorly maintained, underutilized and had not been regularly updated by the previous administration,’ Westrup said. He noted that Sunshine Review, a national nonprofit organization dedicated to government transparency, gave California an A grade in its annual report this week, praising the state for posting budgets, contracts and audits on its websites.”

CalWatchdog.com asked Westrup why the Brown administration didn’t just bring the website up-to-date?

He replied with wording similar to what he gave the Times:

“The website, eliminated more than two years ago was poorly maintained, underutilized and had not been regularly updated by the previous administration. The information that was previously posted on that website remains available to the public.”

CalWatchdog.com suggested to Westrup that, while the Sunshine Review gave California an “A” grade in its annual report, posting budgets and contracts is not in the same as reporting conflicts of interest and financial disclosures.

Westrup then forwarded CalWatchdog.com a copy of the Brown administration’s two-page Conflict of interest Code (reproduced below). And he wrote:

“Pursuant to the Political Reform Act (Government Code section 81000 et seq.), the Governor’s Office maintains a Conflict of Interest Code, which lists the designated employees that are required to file statements of economic interest. All employees of the Governor’s Office maintain strict adherence to the requirements of the Political Reform Act.

“Regarding travel, the Governor’s Office follows DGS and CalHR state travel policies (you can read more here, here and here). Regarding: the ‘transparency website,’ the statement you cite below still applies.”

He was referring to his statement about the Schwarzenegger transparency website being poorly maintained.

Meanwhile, Controller John Chiang, using no money above that already allocated to his office, was putting up a widely praised, comprehensive website listing state and local government employees’ compensation. Brown’s notice on the dismantled transparency website even pointed to Chiang’s website as a place to dig for the compensation information no longer easily available on the governor’s site.

References: The Conflict of Interest Code

The FPPC website explains:

“Assets and income of public officials which may be materially affected by their official actions should be disclosed and in appropriate circumstances the officials should be disqualified from acting in order that conflicts of interest may be avoided. No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.”

“The Political Reform Act prevents conflicts of interest in two ways — financial disclosure and disqualification. (See Gov. Code Sections 87100–87350.)

“Disclosure: The purpose of financial disclosure is to alert public officials to personal interests that might be affected while they are performing their official duties, i.e., making governmental decisions. Disclosure also helps inform the public about potential conflicts of interest.

“Disqualification: If a public official has a conflict of interest, the official may be required to disqualify himself or herself from making or participating in a governmental decision, or using his or her official position to influence or attempt to influence a governmental decision.”

Does Timm bother to consider the possibility that this is sequester theater — another attempt by the Obama administration to make tiny cuts in overall federal spending hurt to build pressure on Congress to raise taxes? Does he consider the angle that the Army Corps could have made cuts elsewhere?

Nah. He’s got his glib, easy thesis and he’s sticking to it. Meanwhile, the Hill newspaper offers insight into why an agency that has a budget that has gone up may struggle to pay for things it used to handle:

“President Obama proposed a one percent pay increase for federal workers and military employees in a pair of letters to Speaker John Boehner (R-Ohio) sent Friday afternoon. …

“In a statement earlier this year, House Oversight Committee Chairman Darrell Issa (R-Calif.) said Obama’s push for a pay increase was ‘not necessary to retain talented employees and just wastes taxpayer money.’

“’Federal employees have continued to receive promotions and within-grade pay increases over the past few years of the supposed ‘pay freeze,’ and voluntary separations from the federal government are near all-time lows,’ Issa said.”

Issa, a Vista entrepreneur and the most successful businessman in Congress, frames the issue in exactly correct fashion: If present compensation is so generous that federal employees almost never seek greener pastures, then pay and benefits are obviously perfectly adequate. Not only shouldn’t they be increased, maybe they should be cut.

But in Washington, as in Sacramento, such logic prompts expressions of horror from unions. Why? Because government’s primary role isn’t to provide services to the public. It’s to provide really good jobs. They’re not mad at Issa. They’re mad at Obama.

“Instead of holding to its promise to protect the middle class and the working poor, the administration seems determined to contribute to a worsening of living standards for federal workers, disabled veterans, and the elderly,”  American Federal of Government Employees president J. David Cox Sr. told the Alabama Media Group.

The common-sense observations of Issa remind me of one of my many gripes with how reporters cover government: They don’t see obvious issues that are right in front of them. If upper management benefits from the same sort of automatic “step” pay increases as the rank-and-file, that’s a huge conflict of interest that leads to pay hikes. Duh. But do you ever see this mentioned in coverage of government pay negotiations? Never.

There’s also this avenue of ignorance: We continue to witness a productivity revolution in the private sector driven by information technology that began two decades ago and is still transforming industries, white collar and blue collar alike. Shouldn’t this bleed over into the public sector? Of course. The respected McKinsey consulting group has been making this point for nearly a decade.

“The opportunity to improve government productivity is huge … [with] three classic management tools . . . organizational redesign, strategic procurement and operational redesign.”

 But do journalists ever bring this up? Nope. Duh.

By Chris Reed

In the private sector, there are all kinds of laws that govern employment, conduct, conflict of interest and appropriate use of shareholder funds. They may not always be enforced, but in the best-run companies, they are usually taken seriously.

In the public sector, there are all kinds of rules and regulations that are supposed to cover these same areas, but they are ignored. And sometimes there are rules and regulations that protect misconduct and tolerate ridiculous conflicts.

Public sector mischief and worse: Ho-hum, nothing to see here

Examples are everywhere, but I stick to these four:

It took a lawsuit by parents of students in bad schools to get the Los Angeles Unified School District to begin heeding a 1971 state law that requires student performance be part of teacher evanluations.

In the same school district, administrators chose to pay off a perverted teacher who fed semen to first-graders because they didn’t think it was within their authority to immediately dismiss him.

In the California Public Employees’ Retirement System, the longtime president of the board, incredibly enough, is the same guy who is the executive vice president of the California Federation of Labor. Boy, I wonder why CalPERS has acted so irresponsbily for so long.

Shut up, complainers, and butt out

Which brings us to California’s second-largest school district after LAUSD, San Diego Unified. The San Diego County grand jury issued a report last week that noted all the different ways the district has used taxpayer resources to promote ballot measures and bills in Sacramento in explicit defiance of state law. This is from a U-T San Diego story:

“[The U-T] last year highlighted a district email blast to parents with the subject line ‘Make Your Voice Heard — Support AB 2434,’ a proposal by Marty Block, D-San Diego, affecting the sale or lease of district property.

The story also looked at the district’s Education Issues Action Center, a website that urged residents to write their representatives or sign petitions asking them to provide adequate funding for schools. It also linked to advocacy websites for two tax increases.

“Another story highlighted school board President John Lee Evans’ use of his district email to coordinate a news conference with the region’s school board presidents to advocate for the passage of two tax increases, Propositions 30 and 38.”

Behind the flouting of the law? You guessed it

But as I pointed out in an editorial, San Diego Unified has already rejected the idea that it must use taxpayer funds legally.

“Last year, an attorney for the school district said SDUSD emails and a website advocating passage of a state bill were perfectly legal. So much for state courts’ established view that it is illegal to ‘use the public treasury to finance an appeal to the voters to lobby their Legislature.’

“There’s the law of the state of California, and then the one governing the San Diego Unified School District. That latter law amounts to, ‘We do what we want, and if you don’t like it, tough luck.’”

If this attitude sounds like standard union thuggish politics, bingo. San Diego Unified’s CTA-affiliated teachers union has its hooks firmly into four of the five school board members. The rules of the state just don’t apply, these members jave concluded — just the rules as determined by the bullies of Burlingame.