Nearly one in six California school districts has dropped out of a federal outreach program for low-income student health that brings millions in unfettered dollars into schools, citing bungled state management and years-long delays in receiving funds … . The exodus is part of the continuing fallout from a 2012 federal investigation that found California had “serious deficiencies” in its oversight and management of the School-Based Medi-Cal Administrative Activities program. The program reimburses schools for a portion of the cost of referring students to Medi-Cal, California’s name for the federal Medicaid low-income health insurance program.

 

After the 2012 investigation, federal officials temporarily froze payments to school districts effective July 1, 2012, recalculated previously paid claims submitted in 2011-12, introduced a formula for interim payments and devised a new method of calculating claims moving forward.

 

As a result, some districts are still waiting to be reimbursed for 2009 expenses, while others have been told to return money from previous reimbursements that are now under review.

Lax oversight, poor Internet security and more

It’s the sixth highly critical audit of state government since June. That’s an unusual concentration of negative reports based on a review of the auditor’s archive of reports and a Nexis search of recent years of Sacramento coverage. Many audits in past years offered mixed reviews of government agencies, such as this October 2012 assessment of how public universities report crime. This summer, audits appeared much more likely to be harsh.

Last month, Howle issued a report about wrongdoing revealed by state whistle-blowers. This is from the San Francisco Chronicle:

An engineer for the California Department of Transportation was busy working on his golf swing when he was supposed to be at work, according to an audit released this week detailing bad behavior by state employees and public agencies. … [The} report found 10 substantiated allegations from whistle-blowers with more than $4.2 million in wasted money, improper payments and misuse of work time by public employees.

 

The Caltrans engineer was found to have played golf on 55 workdays in a 19-month period while his time card listed him as working. State auditors faulted the engineer’s supervisor for failing to manage the employee or ensure his time sheets were accurate from August 2012 to March 2014.

 

The employee said he played golf as much as possible — for an estimated 4½ hours a day — during hours the auditor found he was supposed to be working.

 

The audit also found a month in May 2014 in which no one could account for how much work the engineer had done, if any, because there was a miscommunication about who was supposed to oversee the employee.

Also in August, Howle faulted state bureaucrats for being indifferent about Internet security. This is from AP:

Many state agencies are not complying with the state’s information technology standards, leaving them vulnerable to a major security breach of sensitive data such as Social Security numbers, health information or tax returns, the state auditor reported Tuesday.

 

“Our review found that many state entities have weaknesses in their controls over information security. These weaknesses leave some of the state’s sensitive data vulnerable to unauthorized use, disclosure, or disruption,” Auditor Elaine Howle wrote in the report. She notes that the state is a prime target for information security breaches as government agencies keep extensive amounts of confidential data. Many agencies also have not sufficiently planned for interruptions or disasters, she found.

State not tracking mentally ill gun owners

In July, Howle knocked Attorney General Kamala Harris and the state Department of Justice. This is from the Sacramento Bee:

Nearly two years after that the state Department of Justice and courts failed to identify thousands of mentally ill gun owners who are prohibited from having guns, the state auditor said Thursday that the department has failed to resolve its backlog of such cases.

 

State Auditor Elaine Howle wrote that the department’s “delays in fully implementing certain recommendations result in continued risk to public safety.”

 

Lawmakers in 2013 approved legislation appropriating $24 million to the Department of Justice to address a backlog of cases of prohibited people having guns. But the state auditor said the department had failed to fully implement seven of eight recommendations made in 2013 to improve department procedures.

 

For example, the department has not taken sufficient steps to ensure courts and mental health facilities are reporting mentally ill people for review, the audit said, and it continues to redirect staff to work on other priorities.

 

As of April, the audit said, the department had a review backlog of more than 257,000 people who are potentially prohibited from having guns.

In June, Howle ripped the State Bar of California. This is from AP:

The nation’s largest state bar failed to consistently protect the public from bad lawyers by settling hundreds of complaints, many without adequate discipline for botched cases or ethical violations, according to a scathing audit released Thursday that also found the organization has spent money with little financial accountability. …

 

As the state bar scurried to settle more than 5,100 backlogged complaints in 2010 and 2011, the severity of discipline imposed against attorneys decreased, according to the State Auditor’s report.

 

In 2012, the California Supreme Court rejected settlements reached with 27 attorneys because of insufficient discipline; 21 of those attorneys later got harsher punishments, including five who were disbarred, the audit said. Additionally, 131 attorneys whose complaints were settled in 2010 and 2011 later were disciplined after new complaints were filed, including 28 disbarments.

 

To reduce its backlog, the state bar allowed some attorneys whom it otherwise might have disciplined more severely – or even disbarred – to continue practicing law, placing the public at risk,” State Auditor Elaine Howle wrote to the governor and legislative leaders Thursday.

Call Medi-Cal, never get through

Also in June, Howle was sharply critical of the state Medi-Cal program. This is from AP:

Thousands of calls to California’s Medi-Cal complaint lines don’t get through, and thousands more that manage to ring the call center go unanswered, according to a new state audit.

 

For the year that ended in January 2015, the phone system to the Medi-Cal ombudsman’s office rejected up to 45,000 calls in a month, State Auditor Elaine Howle said in her report. Of the calls that did get through, only one-third and one-half were handled by ombudsman’s staff each month.

 

(B)etween February 2014 and January 2015, an average of 12,500 additional calls went unanswered,” the audit states. A department official blamed the unrelenting backlog and unanswered calls on inadequate staffing and “hardware limitations” that cause the call database to crash.

It is difficult to know what to make, if anything, of this rash of harsh audits. But former state Sen. Mark Wyland, R-Solana Beach, complained for years about a state government culture that he felt tolerated mistakes and poor performance. Perhaps the relative budget austerity of 2007-2013 led to even lower standards at some agencies.

But a California-based journalist who specializes in science reporting based on hard evidence — Hank Campbell, author of “Science Left Behind” and founder of the popular Science 2.0 website — takes a broader view based on the last 50 years of state governance.

In an essay titled “California Government Is The Big Water Management Problem,” featured on the Real Clear Science site, Campbell notes that ….

… much of the fresh water that California has runs into the Pacific Ocean. You might wonder why the Pacific Ocean needs so much, since 96 percent of Earth’s water is already in oceans, but the oceans are not asking for it. Instead, it is due to anti-science policies lobbied for by well-heeled California environmentalists.

Environmental regulations mandate that water that would sustain 4.4 million families gets flushed this way, regardless of drought conditions (however, farmers do get penalized during a drought, the environment must come before food). Meanwhile, Governor Jerry Brown just now got around to mandating water conservation among his wealthiest and most loyal voters. It had to be mandated because the wealthy are not conserving anything the way the more agricultural sections of California have been doing for two years. …

[If] we cared about the actual problem — having enough water in good times and bad — the situation would be easy to resolve. For example, enough water to sustain 2.6 million California families was dumped into the ocean because there isn’t enough storage capacity in the north of the state and environmental rules limit the amount of water that can be pumped to reservoirs in the south.

An intentional effort to not prepare for drought

Campbell notes that this isn’t just a failure of government foresight. He says this inaction was the goal of powerful interests.

Why not allow more water to be stored in the south or build more reservoirs in the north instead of dumping fresh water into the ocean? Californians know water is important, we have agreed to water bonds totaling $22 billion in recent years, but the money has ended up going to environmental projects rather than things that help the people paying interest on those bonds.

Most of California is actually desert, the green parts are all watered to be that way, and we know droughts will happen — this is the fourth one in 50 years — so it would make sense to store more water, a literal anti-rainy day plan. But environmentalists block all efforts to create more reservoirs even though we know this sort of thing has always happened and will continue to happen. ….

Because of environmental impact lawsuits and lobbying by environmental groups, there hasn’t been a real investment in water infrastructure since the 1960s, when there were only 16 million people in California. Now there are 40 million people all using the same major infrastructure. …

The common denominators in our water problem are a lack of snow and lawsuit-driven, rather than science-driven, environmentalism. We can only fix one of those.

Greens bitterly fight desalination plants

California environmentalists have also been the biggest opponents of a soon-to-open desalination plant in Carlsbad and one proposed for Huntington Beach. They say it is because of legitimate concerns about effects on fish, ocean water quality and the coastline.

Defenders of desalination efforts, such as former state Sen. Mark Wyland, R-Carlsbad, say that many greens’ real long-term goal is blocking growth or making it more difficult. Constricting water supplies could be seen as a tactic toward that end.

Harkey and Wyland are both running for the Orange County/San Diego County/Inland Empire Board of Equalization seat now held by Michelle Steel that is a good bet to remain in GOP hands. It has a slight Republican registration edge. Also expected to run are three Orange County pols: Democratic state Sen. Lou Correa and former GOP state lawmakers Tom Harman and Van Tran.

But the key to understanding Harkey's suit isn't her pending political fight with Wyland. It's her thin-skinnedness, if that's a word. Let's look at some of her dealings with the media that reflect her perception of a world in which she is an unjustly put-upon heroine:

'Totally unfair and extremely biased'

This is from O.C. Register political reporter Martin Wisckol's blog of Oct. 19, 2007:…

“Diane Harkey left me a phone message today (that was Oct. 17), saying the blog was singling her out and posting unflattering photos. You can see the two photos I’ve used of her here.

“I’m not that unphotogenic,” she said. “I think it’s totally unfair and extremely biased.”

Then came Martin's story of March 17, 2009, which showed Harkey had been misleading and inconsistent in describing her involvement with her husband's troubled financial firm.

Victim of 'slander'? Or trapped in denial?

At that time, I interviewed Harkey, who at that point represented a big chunk of northwest San Diego County, for a Union-Tribune editorial that was published March 22, 2009. Here's part of the editorial; the image is from an extensive website on the Harkey scandal:

 “… Her husband, Dan Harkey, runs Point Center Financial, an Aliso Viejo company that lends investors' money to land developers. It is the target of a Securities and Exchange Commission probe. It is also facing a lawsuit from 53 investors who say Dan Harkey used their money for dubious loans – and to fund his wife's rapid rise in Orange County politics. Campaign disclosure firms show Diane Harkey has spent $2.1 million in personal funds since 2004.

“However, the suit presents no evidence for the alleged diversion of money. An aide to Diane Harkey told The Orange County Register last month that the campaign funds came entirely from the wealth she had accumulated in a 30-year banking career. Both Harkeys said she had never worked for Point Center. …

“But a follow-up Register report said Diane Harkey had been listed as a Point Center official in state documents and in campaign disclosure forms for two political donations to other GOP candidates. Harkey's own 'statement of economic interests' said she received more than $100,000 in annual income from a rental property that happens to be Point Center's headquarters. She also appears to be backing away from her claim that she didn't use her husband's money for political purposes.

professional writing service

“Plainly, this matter deserves coverage. Yet in a phone interview, Harkey told us our questions amounted to 'slander'; that news accounts of the mess were all 'libel' written by journalists determined to 'massacre' her family; and that she was the victim of a sexist double-standard.

“Given the holes in her initial story, this is a startling approach for Harkey to take. … If she wants to clear her name, step one is to get out of the denial stage of her grief.”

Routine budget questions an 'unbelievable grilling'

I wrote more about Harkey in a March 23, 2009, blog item for the Union-Tribune:

“How is it possible Harkey managed to get elected to any job, much less the Assembly? She has no conception of her role; of the proper role of the media; or of her responsibilities to the media. I have another example to offer.

“Last fall, the U-T editorial board met with nearly two dozen candidates for state Assembly and Senate seats. I asked every last one how they would balance the state budget and was ready with follow-up questions seeking specifics if they offered vague answers or it's-that-simple Ross Perot-style sophistry. Guess who thought that amounted to unfair treatment? You got it.

“Last week, after I had an unproductive phone interview with her, I wrote Harkey to say I needed to get fuller answers so I could understand her position. Part of her response was to harken back to the candidate interviews: '… you have a personal bias in my case. I recall the unbelievable grilling you gave me when I interviewed with your editorial board.'

“I asked the same questions of everyone, with the same follow-ups to all the evaders. To Diane Harkey, it was an 'unbelievable grilling.'

“Here's the kicker: The U-T ended up endorsing her, and I wrote the editorial! Despite my 'bias'!

“South O.C. and Oceanside, you have my condolences. There doesn't seem to be much of a learning curve on display with your Assembly rep.”

Incumbent Steel probably regrets Harkey endorsement

Four years later, that still seems true. It's just strange for Harkey to think her scandal isn't fair game for her political rivals; that the amazingly personal details in her lawsuit against Wyland will play well; and not to realize that her lawsuit has put a vast spotlight on Wyland's remarks that might otherwise have been largely ignored.

Michelle Steel, the incumbent, also may be regretting endorsing Harkey on Sept. 5.

Assemblywoman Diane Harkey, R-Dana Point, is suing state Sen. Mark Wyland, R- San Diego, for defamation, presenting her in a false light and intentional infliction of emotional distress, according to court records first obtained by SDRostra.com. Harkey says that Wyland’s statements at a summer Tea Party event exposed her to “hatred, contempt, ridicule” and even caused her to seek “medical treatment on a number of occasions.”

Wyland allegedly alluded to Harkey’s ongoing financial and legal troubles surrounding the bankruptcy of Point Center Financial Inc., a company that is controlled by her husband, Dan. The Orange County assemblywoman has reported the company on her financial disclosure forms filed with the state’s Fair Political Practices Commission.

Disgruntled investors say that Dan Harkey made ill-advised loans and pocketed additional fees from the company. In July, a jury “found Dan Harkey and his company liable for $9 million to investors,” according to the Los Angeles Times.

Statements in question

The week of the jury verdict, Wyland allegedly made the following statements that were apparently so hateful they forced Harkey to seek medical treatment:

“Unfortunately, there has been a lawsuit brought by a lot of investors of modest means against her and her husband for defrauding them. … There was decision that those investors were defrauded and there is a judgment.”

While Harkey has filed a $10 million lawsuit against Wyland for allegedly misstating facts, her own complaint gets some simple facts wrong. Harkey’s complaint refers to “the public office for which she seeking as a Member of the Franchise Tax Board.” That’s factually incorrect. Not only is Harkey seeking a position on the state Board of Equalization, but members of the Franchise Tax Board are not elected at all.

Harkey: Critic of “feeding trial lawyers”

As a member of the Legislature, Harkey has repeatedly criticized lawsuit abuse. Earlier this month, Harkey opposed SB131, a measure to allow victims of sexual abuse to bring civil lawsuits against private organizations that harbored abusers, which the Legislature just passed.

“It ought not to be just about reopening wounds and feeding trial attorneys,” Harkey said in a floor speech against the bill.

Harkey, according to her legislative website, has also introduced legislation that “prevents lawsuit abuse and protects our state and local municipalities.” She has also criticized the state’s payment of interest on legal settlements because it “often times merely serves to fund the next lawsuit against small businesses and California employers.”

Possible SLAPP lawsuit?

Harkey’s defamation suit could be considered an example of a “Strategic Lawsuit Against Public Participation,” or SLAPP case. According to the California Anti-SLAPP Project, a public interest law firm and policy organization that fights such cases, a SLAPP case is “legally meritless, they can effectively achieve their principal purpose: to chill public debate on specific issues.”

Wyland’s reference to Harkey’s lawsuit could be considered to be a valid criticism that is relevant to her campaign for the state’s tax board. In the past, the business dealing of the Harkey family have been raised in her political campaigns.

In February 2013, the Orange County Register reported that a group of angry investors had demanded that Harkey resign from office and abandon her candidacy for the state Board of Equalization. “Investors have lost 96-cents on the dollar invested yet you and your husband continue to live in a guard gated, ocean front home, drive a Rolls Royce, own a stable of horses and otherwise live an affluent lifestyle paid for by investors,” a letter from the investors said.

In 2009, the Los Angeles Times reported, “Harkey accepted $16,600 in political contributions from real estate developers who had received loans from her husband’s business, now under investigation by the Securities and Exchange Commission.”

(Correction: This article originally said the lawsuit was for $5 million. It really was for $10 million, as the text now shows.)

By DAVE ROBERTS

“Sunshine is the best disinfectant,” said Supreme Court Justice Lewis Brandeis regarding the need for governmental transparency – but apparently not when it comes to solar power and other renewable energy sources. California has embarked on an ambitious, unprecedented program to provide one-third of its power from renewable energy sources by 2020. It’s likely to be expensive replacing oil and cheap natural gas with costly, inefficient solar and wind power. But Californians aren’t being told how much extra they’ll have to pay.

“I don’t understand what the size of the bill will be for it all,” said Robert Michaels, a Cal State Fullerton professor of economics and an energy expert. “Basically, what’s happening is everybody is being kept in the dark about this. Allegedly because it’s necessary to maintain competition among projects. It’s a drama that none of us is allowed to see, and none of us is allowed to get the figures on.”

Many of the purchase power agreements for renewable energy projects are coming in at above the market rate for energy — a cost that will be passed on to ratepayers. But the amount is known only to the California Public Utilities Commission, which keeps the figures under wraps for years.

The CPUC approves nearly every renewable project that comes before it, regardless of cost. But that’s not how it was supposed to be. The enabling legislation in 2002 for what is known as the Renewables Portfolio Standard, SB 1078, required that the cost of proposed renewable projects be compared to the market price of energy, and that procurement be restricted if the project’s price is too high. It also provided for above-market costs to be paid from a state-controlled above-market fund, rather than passing the extra cost on to the consumer.

This was reaffirmed in follow-up legislation. In 2006, SB 107, by State Senator Joe Simitian, D-Palo Alto, increased and accelerated the renewable target goals while continuing to limit procurement if prices were too high. Likewise in 2007 with SB 1036 by then-Sen. Don Perata, D-Oakland. And similarly in last year’s SBx1 2 by Simitian.

But as the pressure has increased to meet the state’s renewable energy goals, the prices have also increased — and cost-containment has gone by the wayside like a golden eagle after flying into a windmill blade.

The average bids for solar projects doubled while wind projects increased about 50 percent from 2005 to 2007, according to the CPUC’s Division of Ratepayer Advocates in a report last August titled “The Green Rush.” Fifty-nine percent of renewable contracts have been awarded at above-the-market rates in recent years, with PG&E leading the way with 77 percent of its contracts.

But what about that above-market fund that was supposed to pick up the tab for the high-cost contracts? As of last August, $773 million had been allocated — but a whopping $6 billion is needed to pay for all of the above-market contracts that have been approved. Michaels said that fund has since run out of money.

Pay for It

“Essentially you now have no choice but to pay whatever the contract price is for the renewable,” he said. “Renewable energy in California means wind and solar. Wind is expensive and solar is astronomical, particularly for the power you get. So what you have got now is a more interesting problem: People are not allowed to find out what the actual bills for these projects will be. The reason is because the PUC has agreed with utilities complaining, ‘We can’t let ordinary people know what the price of these things are, because you can cause competitive problems and it can result in price fixing’ — or something like that.”

Michaels cited what he called an “outrageous project” — PG&E’s solar project in the Mojave Desert. The plant could cost an estimated $1.6 billion while generating only 250 megawatts. Although scheduled to be completed it 2014, it may not be hooked up to the electrical grid until 2018 after needed upgrades are made.

Likely emboldening PG&E to lay out that kind of money for a questionable project is that it comes with a $1.2 billion loan guarantee from the U.S. Department of Energy. That’s the same DOE that provided a $535 million loan guarantee for Solyndra.

“That’s a staggering amount to pay for the kind of power you are getting — it only works when the sun is shining,” said Michaels. “The Division of Ratepayer Advocates is very upset about all of this. But there’s nothing that can be done about it. This is only the start. When we get closer to the 33 percent requirement, it’s just going to get worse, because the resources will be even more expensive.”

Shortly after the PUC approved PGE’s 25-year contract for the Mojave project in November 2011, the Division of Ratepayer Advocates sent out a press release headlined, “DRA Troubled By Continued CPUC Approval of Overpriced Renewable Projects.” It pointed out that the CPUC had also recently approved the overpriced North Star Solar project in Fresno. Both approvals ignored the legislative directive to contain costs.

“The Commission has the power to keep the cost of renewable energy reasonable,” said DRA’s acting Director, Joe Como. “Instead … it is signaling to the market that California will accept overpriced renewable energy, and that it is willing to lock customers into higher rates for decades to come. I agree with Commissioner [Mike] Florio [the only vote against the Mojave project], who said that we should be getting twice the amount of renewable energy for the price of this contract.

“The CPUC must get serious about reducing greenhouse gas emissions from power plants, and it can’t do that by ignoring the costs. DRA strongly supports the state’s renewable energy goals, but fears that customer backlash against high energy bills will hurt the state’s efforts. Sending a message to renewable energy developers and investors that the cost of renewables must be reasonable will support the effort to reach California’s goals to reduce greenhouse gas. We simply can’t afford to do otherwise.”

Encouraging Development

One of the encouraging developments in renewable energy recently is the significant price drop for photovoltaic energy due to the increased production of solar cells (ironically a contributing factor in Solyndra’s demise because its products were made at a higher price). The cost of these systems dropped 19-23 percent in California (depending on the size of the system) from late 2008 to mid-2010. But, at the same time the utility bid prices for photovoltaic systems actually increased, according to the DRA.

Also concerned about the increased cost of renewable energy is the state watchdog agency the Little Hoover Commission. It held a hearing Feb. 28 at which Commissioner David Schwarz asked what can be done to get the CPUC to put the brakes on the renewable energy “spending binge.”

Matt Freedman, an attorney for The Utility Reform Network, responded, “The era of approving overpriced renewable generators has passed. Most were in 2008, 2009. For years the PUC has pretty much approved whatever the utilities wanted. It goes to the oversight of utilities by regulators who feel it’s their job to give the utilities what they want when they want it. There’s been a spending binge.”

But that binge may not be over, according to Como, who said, “The commission has accepted all but two contracts in the last several years. There have been about 170 contracts from 2003, and only two have been rejected. It does speak a lot to the fact that there are political and other pressures that go into the final decision other than ‘best fit, least cost’ analysis. I think we are still looking at contracts that are overpriced. The prices are confidential. But we do look at the trends.”

Schwarz accused Como’s group of not sufficiently advocating for ratepayers by not fighting the confidential pricing system. “Aren’t you doing your constituents a disservice?” Schwarz asked. “I would like to see confidentiality lifted so we have transparency.”

Como responded, “I’m in support of modifying confidentiality, not lifting it. Three years of confidentiality may be too long. Six months to a year would be good. Nevada doesn’t have a confidentiality cloak on its procurement.”

Asked what the cost impact will be to customers in order to achieve the 33 percent goal, Como said, “It’s probably about 5 to 7 percent on a typical bill of a customer. The above-market costs that we have identified, that’s probably what the impact will be.”

Cost Unknown

But Freedman said that no one knows how much it’s going to cost. In 2009, a consultant estimated there would be a 7 percent increase, but that study is already out of date because “all of the assumptions are totally wrong in respect to price. For example, it was thought solar thermal, big mirrors in the desert, was going to be the primary way we would reach the 33 percent target. It assumed 7,200 megawatts of solar thermal. Half of that has been canceled. It assumed photovoltaics would cost between 29 and 47 cents a kilowatt-hour. We have been looking at prices in the 11-to-14 cent range approved last year. They are lower today than last year, and it looks like they will be going lower still. Every long-term model ends up being wrong. In the field of renewables, we have seen a very dynamic market with extremely fast-changing prices, more than anybody could ever predict.”

The energy experts are confident that California will be able to meet the renewable energy goal by 2020. The big question remains the size of the bill that Californians will get stuck with.

“It would be wonderful if we can make this work,” said a dubious state Sen. Mark Wyland, R-Carlsbad, who is also a Little Hoover commissioner. “To me right now the bottom line is what is the cost to the user. Particularly in a state where we have the second-highest unemployment in the country, where privately a very senior official in this government has said, ‘We all know the real rate of unemployment is closer to 17 percent,’ where the human cost is really, really, really difficult, and at the same time when we have some companies leaving. I just think at the end of the day we need to know: Can we deliver this in such a way that it doesn’t hurt jobs? We’ll see.”