(August 3)  SAN BERNARDINO—When San Bernardino’s voters approved a change to the city’s charter that guaranteed police and firefighter salaries will be equal to the average of ten  similarly sized cities in California, the city was in a position to be generous, with a thriving business community generating sales tax revenue.
But in the intervening years, San Bernardino’s financial condition has worsened, with unemployment increasing, businesses closing and the city this week proceeding with a bankruptcy filing, putting it in the same category of other California fiscal pariahs such as Vallejo, Stockton and Mammoth Lakes.
Also contained in Charter Section 186, which was most recently adjusted in 2006, is a commitment giving police officers the right to retire at the age of 50 and begin pulling an annual pension that is equal to their highest yearly pay times three percent times the number of years that particular officer worked for the department.
Now, city officials maintain they need the flexibility of being able to pay all of their employees at a rate that is consistent with the city’s means. Consequently, they want to do away with Charter Section 186, and free themselves up to pay their police and firefighters at whatever rate those employees’ bargaining units can be induced to agree to.
Some city officials, in conjunction with a group calling itself Save San Bernardino, are advocating that a citywide voter initiative be placed on the ballot that rescinds Charter Section 186. A citywide vote on the issue is needed because Charter Section 186 was enacted by initiative and can only be changed by initiative.
Achieving that goal as an indigenous movement would be nearly impossible, because advocates of the initiative would need to garner the valid signatures of 10 percent of the city’s voters by August 10 to qualify the measure for the ballot. The only other alternative is for the city council to use its authority to place the initiative on the ballot by means of a vote.
At press time, there was talk of the council doing just that at its August 6 meeting.
Under Charter Section 186, representatives of both the city and its unions consider the pay grades for fire and police officers in all of California cities with populations between 100,000 and 250,000, and then alternate in eliminating cities from the list until 10 remain. This process normally eliminates the cities with salary levels in the lover 55 percentile and salary levels in the upper 28 percentile. Salaries for each job classification are determined from an average of those classifications in those ten cities remaining.
Police and firefighters are generally opposed to putting the Charter Section 186 rescission measure on the ballot. Proponents point out that firefighters in San Bernardino are particularly well paid.   Newly hired basic San Bernardino firefighters – ones without paramedic skill certification – are paid between $64,581 and $83,243 per year. Overtime pay provided to firefighters raises that remuneration level a considerable degree. Total wages for the city’s 13 rookie firefighters last year ranged from $91,843 to $152,845.
City officials are reportedly looking to see how much public support for the Charter Section 186 revision measure there is before placing it on the ballot. The cost for holding the vote would range from between $90,000 to $130,000, according to the County Registrar of Voters office.

(August 3)  Oakland-based BrightSource Energy Company, which is constructing a massive solar power facility at Ivanpah in northeastern San Bernardino County, and the California Department of Fish and Game are on the verge of working out a $20 million land deal that would allow the company  to offset damages to the habitat of the endangered desert tortoise, thus allowing the project to proceed.
According to both state and federal officials, desert tortoises are threatened with extinction.
Under the terms tentatively worked out, BrightSource is to contribute the money to a state habitat land-bank fund, thereby getting credit for preserving about 7,100 acres of desert tortoise habitat that the state has preserved since 2010 by funding grants to conservation land trusts.
Some $10 million of the money BrightSource is to put up would be used for administrative costs associated with the state’s land grant program and the other $10 million would go toward an endowment for managing and monitoring land as wildlife habitat.
The habitat parcels being purchased are located throughout the western Mojave Desert. In some cases, the parcels lie more than 100 miles from BrightSource’s solar plant now under construction in the Ivanpah Valley off Interstate 15 near the Nevada border. That preserved habitat includes a concentration of  parcels northeast of Kramer Junction between U.S. 395 and Harper Lake; an area north of Joshua Tree National Park east of Yucca Valley; and in Hidden Valley between Barstow and the Mojave National Preserve.
A condition of the California Energy Commission’s October 2010 approval of the solar power facility on 5.6 acres of public land was that BrightSource preserve 7,164 acres of desert tortoise habitat. BrightSource sought to meet that mandate by acquiring mining interests in the Castle Mountains in the eastern Mojave and preventing any activities thereon that would threaten the species. The state rejected that proposal, holding that the area was not heavily populated by tortoises. The state extended an April 2012 deadline for the company to acquire such habitat until next January.
BrightSource earlier committed to meeting the state mandate by placing $34 million into an escrow account to cover whatever costs a tortoise habitat protection regime will entail. Simultaneously, the company is coordinating with federal Bureau of Land Management officials to protect tortoises by fencing roads and taking care that tortoise habitat at its site is not disturbed.
The Ivanpah solar power facility is located on approximately 3,500 acres of federal land in San Bernardino County’s  Mojave Desert overseen  by the U.S. Department of the Interior‘s Bureau of Land Management. The 377 megawatt net output facility consists of  thousands of computer guided mirrors capable of tracking the sun and three separate solar thermal power towers upon which the sun’s rays will be focused, creating high temperature steam to turn a turbine. Once constructed, the facility will produce enough clean energy to power 140,000 homes.
The project’s first phase will be completed and be producing power by early next year.
Federal officials, including President Barack Obama, have cited the project as a forward leap in reducing the nation’s dependence on fossil fuels and in reducing greenhouse gas emissions, and on that basis facilitated its “fast track” approval.
Some 2,400 megawatts of the power generated from the solar plant will be sold under separate contracts with Pacific Gas and Electric (PG&E) and Southern California Edison (SCE), with PG&E  purchasing approximately 1,600 megawatts of the power generated at Ivanpah and SCE purchasing approximately 800 megawatts.
Prior to ground-breaking on the project, surveys commissioned by the company found 16 tortoises in the project area. The U.S. Fish and Wildlife Service issued a permit to move a maximum of 38 tortoises to facilitate project development. But after more tortoises than were expected were found in the path of heavy machinery last year, the company was ordered to temporarily stop construction. Federal officials have moved to reassess the situation and issue a new permit.
In total, 76 adult and about 52 juvenile tortoises have been captured at the site to date, and another 50 have hatched in captivity, according to Bureau of Land Management biologists.
The tortoises in Ivanpah are classified as genetically unique and biologists accordingly are intent on preserving as many as possible at that site.  In certain respects, the preservation work being done at the solar plant is creating a baseline for environmentalists and biologists, since further development in the area is contemplated, including an airport and high speed train line.

(August 3)  The city of San Bernardino filed for Chapter 9 bankruptcy protection Wednesday, August 1, three weeks after the city council first gave the city attorney direction to do so.
When the city council, facing a $45.8 million deficit, voted to take that unprecedented move on July 10 and confirmed it with a follow-up vote on July 18, city attorney James Penman indicated it would take nearly a month to prepare the filing and make full documentation to support it. But on Wednesday, Paul Glassman, a bankruptcy attorney with the Santa Monica-based law firm of Stradling Yocca Carlson and Rauth submitted an “emergency filing” in U.S. Bankruptcy Court in Riverside which bore the signature of interim city manager Andrea Travis-Miller as well as that of Glassman.
The eight page long filing included the five-page resolution the city council passed July 18 declaring that without bankruptcy protection the city’s financial situation “jeopardizes the health, safety or well-being of residents.”
According to the filing, the city has liabilities and assets which both total more than $1 billion and somewhere between 10,001 and 25,000 creditors, which include employees, vendors, the city has worked with, and litigants who have sued the city.

(July 27)  The governing board of the Santa Margarita Water District this week postponed until next week a vote on certifying the environmental impact report for the controversial Cadiz Valley Water Project.
Officially referred to as the Cadiz Valley Conservation, Recovery and Storage Project, if approved it would provide the Cadiz Land Company, also known as Cadiz, Inc. with permission to pump an average of 50,000 acre-feet of water per year out of the aquifer in San Bernardino County’s Eastern Mojave Desert and convey it in a pipeline to Riverside, Orange and Los Angeles counties to replenish the water supply there.
The Santa Margarita Water District, the second largest water district in Orange County that serves an area more than 200 miles from the Cadiz Valley, is the lead agency for the project, overseeing the California Environmental Quality Act (CEQA) review process for the project’s permitting.
After Cadiz, Inc. completes the project, which entails the sinking of 34 wells into the desert and construction of a 44-mile pipeline along a railroad right-of-way until it meets up with the aqueduct that carries Colorado River water to the Los Angeles and Orange County metropolitan areas, the company  will sell the extracted water to the  Santa Margarita Water District; Three Valleys Water District, which provides water to  the Pomona Valley, Walnut Valley, and Eastern San Gabriel Valley; the Golden State Water Company, which serves several communities in Southern California, including Claremont;  Suburban Water Systems, which serves Covina, West Covina and La Mirada; and the Jurupa Community Services District, which serves Mira Loma in Riverside County.
The San Bernardino County Board of Supervisors acceded to the Santa Margarita Water District’s assumption of lead agency authority over the project application and environmental certification and entered into a memorandum of understanding with Cadiz, Inc. and the Santa Margarita Water District that gave the county limited power to second-guess the district’s decision on the environmental certification and compliance with its own ground water management ordinance as well as requiring that Cadiz, Inc. defray the cost of any legal action taken by parties against the project or in reaction to its impacts. The project has garnered considerable opposition, particularly in San Bernardino County and the East Mojave Desert, where the Cadiz Valley is located. A brine mining operation in the desert, Tetra Technologies, has already filed a lawsuit against San Bernardino County over the memorandum of understanding.
On the evening of July 25 and early morning hours of July 26, the governing board of the Santa Margarita Water District met in Santa Margarita in the largest meeting room within the Norman P. Murray Community Center, which was filled to capacity. A two-way video and audio hook-up to the Bell Center Community Room at Copper Mountain College, where several dozen desert residents had gathered, was incorporated into the meeting.
An overview of the project was provided by Santa Margarita general manager Dan Ferons. Leslie Moulton, one of the employees of the Los Angeles-based firm, ESA, which prepared the environmental impact report, gave a Powerpoint summarization of the environmental impact report (EIR). Statements limited to three minutes were then heard from several of those gathered at Copper Mountain College. Most of those speaking from that location were opposed to the project and the environmental certification, though some said they endorsed the project and hailed it as one that would provide some level of economic revitalization to the desert. Notable among the speakers against the project at the desert location was current Needles mayor Ed Paget. His statements were countered by a statement by his predecessor as mayor, Jeff Williams, who is currently the Needles Chamber of Commerce president, which was read into the record by another individual.
After those speaking from the desert location were heard, the board heard statements from those on hand at the Murray Center. Many speaking at that venue, including Cadiz, Inc. president Scott Slater, Cadiz, Inc. chief financial officer Timothy Shaheen, former Rancho Santa Margarita city councilman Gary Thompson, former councilman and mayor Jim Thor and others endorsed the project, characterizing it as one that would ensure water availability to the community served by the Santa Margarita Water District into the future. Slater said his company had incorporated changes in the project plan based upon an earlier version of a water conservation and extraction plan in the East Mojave his company had proposed in conjunction with the Metropolitan Water District that had been abandoned a decade ago and input from project supporters and opponents. He called the current plan an innovative approach to dealing with the region’s water shortage. Shaheen dismissed as inaccurate claims that Cadiz, Inc. was being investigated by the Securities and Exchange Commission and the FBI for making misrepresentations to its investors and he said that it was not true that investors had lost faith in the company.
John Goss, a former assistant administrative officer with San Bernardino County who had worked for 18 months drafting the county’s desert groundwater management ordinance before it was adopted in 2002, said he was concerned that the memorandum of understanding between the county, Cadiz, Inc. and Santa Margarita Water District had been entered into before a groundwater management plan for the Cadiz project was adopted. He said this violated the terms of the 2002 ordinance.
Al Vogler, a Hesperia resident who had sojourned to Orange County to attend the hearing, questioned the viability of the water selling arrangement, saying the $1,127 per acre foot Cadiz, Inc. was seeking to sell the water to Santa Margarita for was far less economical than water available from the California Aqueduct at $400 an acre-foot.
Former Huntington Beach mayor Debbie Cook said that there were “incestuous relationships” between the district’s leadership and Cadiz, Inc. and that the district’s agreement to purchase the water from Cadiz, Inc. was made during an “illegal closed session” more than three years ago. She said the district had an inability to consider the full implication of the project because of “bureaucratic malaise.” She told the board, “You haven’t considered the risks to your agency if Cadiz goes bankrupt.”
Charles Collett, an attorney from Newport Beach who with his brother owns property in the Cadiz Valley on which a well is located, said he was opposed to the project because “it will be taking out more water than will go in. There are uncertainties in the hydrologic methods. There are representations that Cadiz, Inc. is taking the risk but a lot more scientific study needs to be accomplished before you consider the EIR and decide on it. “
Collett said that if pumping in the Cadiz Valley is initiated that make his well run dry “I will file a lawsuit and there will be other lawsuits that will affect the cost of your water.”
Ruth Musser Lopez of Needles said the Santa Margarita Water District serving as the lead agency on the environmental certification of the project was “an abuse of power” that made it so that the desert’s residents “do not have a say in this.” She said the district had involved itself in a criminal conflict of interest when it entered into an agreement with Cadiz, Inc. to be reimbursed for the processing costs for the environmental impact report and other work related to the project conditional upon its approval of the environmental impact report and the water purchase agreement.
In total, more than 80 individuals in Yucca Valley and Rancho Santa Margarita addressed the board throughout the evening and early morning.
The board was presented with voluminous written documentation from multiple individuals during the course of the hearing. Coincidentally, earlier in the day Governor Jerry Brown and Interior Secretary Ken Salazar unveiled a proposal to construct a massive $14 billion twin tunnel system to carry water from the Sacramento-San Joaquin River Delta to farms located as well as 25 million Californians living between the Bay Area and San Diego.
The board voted to postpone its consideration of the Cadiz project until a specially called meeting in a smaller room within the Murray Center on Tuesday July 31.
At the conclusion of the meeting just before 1 a.m. July 26, Slater told the Sentinel he “thought the meeting was open and transparent. I appreciate the opportunity this gave the public to express their points of view.”

(July 27)  Governor Jerry Brown signed into law Tuesday a bill that provides for the California Fair Political Practices Commission to serve as the lead enforcement agency for a campaign finance ordinance now under consideration by San Bernardino County.
Third District Supervisor Neil Derry three years ago floated the concept of creating a county ethics commission that would have authority over possible campaign finance reform. Ultimately, the board rejected creating an ethics panel but last year First District Supervisor Brad Mitzelfelt and Second District Supervisor Janice Rutherford introduced a campaign finance ordinance.
In February, a majority of supervisors expressed support in concept for an ordinance imposing campaign contribution limits on county office candidates modeled after limits in state legislative races, allowing individuals to give no more than $3,900 per election cycle. Additionally, small contributor committees would be limited to $7,800. The ordinance would also prevent contributors from attempting to get around the limits by providing money to candidates through intermediaries. The ordinance would require committees that spend or raise more than $10,000 and participate in local elections to file statements electronically.
With the passage of Assembly Bill 2146, authored by Assemblyman Paul Cook, R-Yucca Valley, the Fair Political Practices Commission is now empowered to enforce contribution limits and disclosure requirements for county races. Supervisors said they would now bring the ordinance containing the $3,900 contribution limit proposal to an official vote, perhaps as early as August 21.
The state Fair Political Practices Commission, which employs 80 and is headquartered in Sacramento, investigates alleged violations of the state Political Reform Act, sending warning letters to offenders with regard to offenses deemed less egregious, and in more substantive cases levies penalties in the form of penalties or court actions that theoretically can remove an offender from office.
“This legislation provides the county with an effective and affordable means of policing campaign contribution and spending rules,”  Rutherford said in a press release. “Now the board can move forward with adopting campaign finance rules that limit campaign contributions and help thwart influence peddling by deep-pocket donors. I thank Assemblyman Cook for his leadership and support of San Bernardino County’s efforts to institute meaningful campaign finance reform. By contracting with the FPPC to police campaign finance regulations, the county can avoid the conflicts of interest and budget-busting costs of forming an internal ethics commission.”
“Without adequate enforcement, campaign finance rules are toothless,” Cook said. “This is a major victory for the public and for voters in San Bernardino County. The FPPC is a proven watchdog agency, with 40 years of experience in rooting out abuses and violations of campaign finance law. AB 2146 will assist the county in setting much-needed limits on political contributions to candidates running for county office, and it will help prevent corruption.”

(July 27)  The parents union at Desert Trails Elementary School this week became the first such coalition of parents and education activists to actuate the provisions of California’s Empowerment Act.
The Parent Empowerment Act, authored by former state senator Gloria Romero and passed by the legislature in 2010, enables a majority of parents at a school at which students score  as low-performers on state academic tests to force a district to implement significant reforms, ranging from replacing the principal and up to half the staff to reopening the school as a charter academy. That process is known by the colloquialism “parent trigger.”
At Desert Trails Elementary School in the Adelanto Elementary School District, a significant number of the students have parents whose first language is not English. For the last seven years, Desert Trails students have had the lowest scores within the district on state standardized academic tests. The school’s students have also collectively scored in the bottom 10 percent of all California elementary schools. In the school’s 2011 graduating sixth grade class 72 percent of students were not proficient with the English language and 70 percent were not proficient in math. Two-thirds of this year’s crop of graduating sixth-graders are unable to read or do math at grade level. Since 2007 Desert Trails has been classified as a failing school.
Pursuant to the Parent Empowerment Act, a parent union was formed by parents at Desert Trails Elementary last year, in large measure at the instigation of the Los Angeles-based nonprofit Parent Revolution, which is devoted to challenging the traditional authority of school districts.
On January 12, the parent union submitted 466 signatures on petitions asking the district to undertake a set of what the parents union maintains will be reforms at the severely underperforming school.
Those petitions, which called upon the district to sack the school’s principal, David Mobley, and surrender to the school’s parents authority in hiring his successor, infuse in the new principal hiring authority for the school’s faculty, reduce class sizes and increase the number of school days and instructional hours, and include more science, history and art in the curriculum, were sufficient to meet the requirements of the Parent Empowerment Act, parent union members believed. The parent union subsequently modified that agenda to request that the school be converted to a charter academy, offering an intensified curriculum.
A group of parents opposed to the parent takeover of the school formed and went to work obtaining rescissions of many of the signatures on the petitions.
In February, the school district, to whom the parent trigger petitions had been entrusted, announced that it had validated the signatures of only 317 of the 466 signatures on the petitions. The Desert Trails Parent Union, represented by a law firm on retainer with Parent Revolution, Los Angeles-based Kirkland & Ellis, demanded a recount and reconsideration of that invalidation of the petition effort. After the district conducted that recount, the board, on March 28, voted unanimously to give a final rejection to the reconsideration of the parent trigger petitions, finding they fell 20 signatures short of the 321 signatures needed.
In response,  Mark Holscher, an attorney with Kirkland & Ellis, on April 5 filed on behalf of five of the members of the parents union – Doreen Diaz, Kathy Duncan, Teresa Rogers, Olivia Zamarripa and Bartola Del Villar – a petition for a writ of mandate and a complaint in Victorville Superior Court seeking a court order that the district verify the signatures and allow the Parent Trigger process to advance, as well as asking for the  recognition of  the educational rights of students at Desert Trails.
While the parent trigger proponents said nearly 70 percent of the parents had signed the petitions, the district claimed that some of those signatures had been rescinded, that there were no signatures on file to verify some of the signatures, and that others were invalid because the signers did not know what they were signing. After discounting them on those grounds, the district claimed the petitions were 16 signatures short.
Holscher maintained that the district did not make an impartial tally of the signatures and “engaged in a systematic effort to invalidate the petitions. First, despite the clear legal mandate that the district must accept every parent’s petition absent proof that a petition was not valid, and the courts’ repeated instructions that any attempt to reject a citizen’s First Amendment protected right to petition must withstand the most ‘exacting scrutiny,’ the district refused to accept 25 parents’ petitions because the district could not find a signature in its files to compare to the petition signature. The parents’ first requested relief is for this court to reverse the improper rejection of these 25 petitions.
“Second, the district’s teachers as well as teachers from outside the district engaged in a campaign to coerce parents to ‘rescind’ their petitions, and the district then used 97 of these purported ‘rescissions’ to block the January 12th petition,” Holscher continued. “The parent trigger statute and its regulations do not allow for any ‘rescissions’ after a petition is filed. The parents’ second request for relief is for this court to rule that the district improperly rejected 97 petitions by rescinding the votes through this unauthorized ‘rescission’ process.   Moreover, not only are rescissions not permitted, the parents have uncovered smoking-gun proof that individuals who obtained the rescissions doctored and falsified rescission forms and engaged in a coercive campaign to block the petition.  Even if the parent trigger statute called for ‘rescissions’ after a vote, which it does not, the fraudulent rescission process here could not possibly survive the ‘exacting scrutiny’ that this court must apply to this rejection of the petition.  Third, the parents here request that the court grant a writ requiring the district to approve the March 6, 2012 resubmission of the petition by the parents.”
Judge Steve Malone, to whom the case was assigned, restored 97 of the signatures tossed out by the district, ruling that the district did not have the authority or a basis in law to discount signatures that proponents gathered and the district had abused its discretion in doing so. “Once the petition was submitted, the district and the trustees lacked authority to reject 97 signatures from the petition based on subsequent extrinsic evidence of rescission,” Malone ruled.  “The district and trustees have a mandatory legislative duty to include those signatures.”
By his ruling Malone raised the number of qualified signatures to well above 50 percent. He ordered the Adelanto Elementary School District to accept the petition as filed by the parent union within 30 days and seek proposals from charter school operators to take over Desert Trails.
The ruling makes the Desert Trails Parent Union the first group to successfully enact California’s 2010 Parent Empowerment Act.
Doreen Diaz, lead petitioner and the coordinator of the Desert Trails Parent Union commented, “In speaking for all the Desert Trails parents, this is a huge milestone in our struggle for our children to receive the basic education they are entitled to and deserve.”
Holscher said, “We appreciate the careful consideration Judge Malone gave the parents in this precedent setting case.   This ruling will pave the way for parents across California to secure their fundamental right to a quality education for their children.”
Adelanto Elementary School District Superintendent Darin Brawley told the Sentinel “We’re disappointed in the ruling. It is ironic that a statute provided to empower parents is actually disempowering parents.”
Brawley said he did not know whether the parent union would insist on restarting the school as a charter academy, turning it around,  seeking alternative governance for the school or shutting it down altogether.  “There has been a lot of speculation about what they will do. They are going to hold a news conference on July 27 to announce their next step. We’re waiting to see what they’ll do next. It would be premature to formulate how we are going to respond at this time.”

More than two weeks after city officials in San Bernardino resolved to file for bankruptcy protection amid charges of widespread fraud and financial document falsification, the city council has declared a state of fiscal emergency exists at the county seat but no criminal charges against any city employees, current or past, have been filed.
Information that has surfaced in the intensive glare of scrutiny following the announcement that the city would play the bankruptcy card indicates some possible corruption of city procedures and cronyism at City Hall, but on a scale that does not  account for the city’s fiscal collapse, one that is unprecedented in San Bernardino County history.
Rather, the city’s dire economic condition appears to be one that has been building for years as businesses in the once-booming municipality have been steadily leaving, unemployment and poverty among the citizenry has been increasing, and short term fixes with ultimately negative and counterproductive long term implications have been applied.
In recent months, city officials have been particularly stingy with municipal financial information. As San Bernardino County’s other 23 municipalities were finalizing and presenting to the public their 2012-13 budgets, San Bernardino, the county’s largest city in terms of population and oldest municipality, had no budget to offer and would not even release a version of the tentative budget city officials were working on. Likewise, city officials were unwilling to release financial reports, audited or unaudited, despite the public nature of nearly all of those documents. Within several days of the council’s vote to seek bankruptcy protection, the firestorm of controversy and criticism forced the release of the most recently compiled audited financial report, a very unflattering snapshot of the city’s fiscal management.
Whereas into the 1990s, the city of San Bernardino had been sitting on comfortable reserves consisting of surplus revenue that municipal operations had been generating for decades, year after year of deficit spending, much of it hidden from public scrutiny, began to deplete that cushion. As early as the latter years of former city manager Shauna Clark’s tenure in the 1990s, expenditures were sometimes outrunning revenues. Under the subsequent 12-year duration management of Fred Wilson, efforts at fiscal discipline were made, including scaling down the size of city government to  bring operations into line with available income, although inevitably, the city was forced to draw on its reserves. Under Wilson, the city avoided taking money out of restricted funds to shore up operations funded by the city’s general fund, but did tap into reserves.
Upon Wilson’s departure for the city of Huntington Beach in 2008, he was succeeded by interim city manager Mark Weinberg and then Charles McNeely. Weinberg and McNeely made  borrowings from the city’s workers compensation and liability insurance funds to balance the budget.
In 2009, the city council supported a staff proposal to borrow $1.3 million from the city’s economic development agency to balance its books.
In 2007-08, the last full year Wilson was in place, the city’s general fund balance stood at $16.1 million at the end of the fiscal year in June 2008. By June 2009, the end of fiscal 2008-09, the general fund, including reserves, had been depleted to $2.7 million. By June 2010, the close of fiscal 2009-10, the general fund’s balance had dropped to $410,000.
Over the decade-long haul from 2002 to 2012, deficit spending continued apace through all of the city’s accounts – including the general fund, enterprise funds, reserve funds, special funds and redevelopment agency, with unrestricted net assets drawing down yearly to the point that the city had $181 million in unserviced debt by 2010.
With the downturn in the economy and the closure of shops, stores and restaurants throughout San Bernardino, sales tax revenues have declined by $10 million to $16 million per year every year for the last four years. .
Since 2008, the city has shed 20 percent of its workforce, either through layoffs or attrition. Within one week of the July 10 declaration of the intent to file for bankruptcy, fourteen more city workers made their exodus, perhaps to ensure that they would be able to receive full pensions rather than be constrained to future pension reductions if they remained employed by the city.
Though the city did not put its figures in concrete, officials were projecting a $45 million deficit in 2012, a consideration that led to the decision to file for bankruptcy protection.
There were suggestions that the city’s financial officers or those in other positions of responsibility had not acted forthrightly in monitoring the city’s financial condition or informing other officials or the public in a timely manner.
But the San Bernardino-based auditing firm Rogers, Anderson, Malody & Scott LLP, which was hired to carry out regular annual audits of the city’s books and operations, said its employees saw a deteriorating financial circumstance and some cause for alarm but no indication of criminal activity.  Rogers, Anderson, Malody & Scott noted the city’s tendency to log in and process information related to its income and expenditures slowly, but attributed that to the shortage of finance department workers. The most recent audit turned in by the company was for fiscal year 2009-10. The audit for fiscal year 2010-2011 has not been completed. The 2009-10 audit found that the city was operating in accordance with generally accepted accounting principles and that it was projected to remain a going concern at least through 2010-11, which indeed it did.
In the atmosphere of fingerpointing that ensued the council’s declaration on July 10, former city manager McNeely, city treasurer David Kennedy and the firm of Rogers, Anderson, Malody & Scott all maintained they had exercised due care in monitoring and reporting up and down the chain of command with regard to the city’s deteriorating financials. In this regard, an August 23, 2010 city council meeting was referenced.
At that meeting, Kennedy and one of the Rogers, Anderson, Malody & Scott auditors, Terry Shea, were in attendance in response to McNeely’s request. Kennedy and Shea briefed the council on the city’s worsening financial condition, including its mushrooming deficits.
“That pool (of available money) has shrunk by $40 million over the last three years,” Kennedy told the council. “We have been getting by with borrowing money from other funds and other magic accounting tricks.”
That evening, McNeely pointed out that that 13 of the 15 previous years, the council undertook each yearly budget discussion with a projected deficit.
Despite the claims by these high ranking city officials and the auditing firm that the city had made full and adequate disclosure of the city’s financial position all along, on July 10, city attorney James Penman alleged individuals affiliated with the city falsified the city’s financial documents in 13 out of the last 16 years. Those documents were doctored or otherwise altered to indicate the city was functioning in the black when it was actually running deficits, Penman said.
Without being specific, Penman seemed to indicate that he had brought the matter to the attention of the San Bernardino Police Department, the San Bernardino County Sheriff’s Department, the San Bernardino County District Attorney’s office and the California Attorney General. But Rogers, Anderson, Malody & Scott said there was no data to confirm Penman’s charge. The state attorney general’s office would not confirm or deny that any such investigation was ongoing. Nor did the district attorney’s office. Indications from the sheriff’s and police departments were that there were investigations on issues relating to San Bernardino City Hall but that they pertained to matters separate from and predating the bankruptcy filing.
Since January, the San Bernardino police department’s economic crimes task force has been looking into allegations of bid-rigging favoring contractors and kickbacks to city employees in connection with city-sponsored construction projects. The names of two former city employees, Robert Lennox and Chris Evans, surfaced during that investigation. Neither Lennox, the city’s former parks and recreation division’s deputy director, nor Evans, the owner of Evans Construction Management and an independent contractor hired by Lennox to serve as the city’s recreation division’s construction manager, have been arrested or charged in the case. Both have denied any wrongdoing.
An affidavit in furtherance of the investigation signed by San Bernardino police  detective Frank Alvarez alleges “bid fixing… on projects which involved Lennox and Evans.”
The sheriff’s department, likewise, was involved in the inquiry into that matter and others that have come under investigation, with two investigators from the division’s white collar crime detail focusing on several allegations that have been made. Among those issues are preparation for and work done at the Hernandez Community Center and the Verdemont Recreation Facility, as well as business and banking accounts maintained by Lennox and Evans.
The amount of money involved in that portion of the investigation, which is yet ongoing, would not approach even one percent of the money at issue with regard to the bankruptcy.
Ironically, Penman’s reference to financial malfeasance at City Hall has resulted in an examination of a matter by the multi-agency task force in which Penman’s action is a consideration.  The task force has again taken up an inquiry into that circumstance, which was previously examined by the police department without a recommendation for prosecution.
At issue in that investigation were alleged improprieties in public works projects, the contracts for which ran into the millions of dollars.
Last October 11, San Bernardino Public Works Director Nadeem Majaj authored a memo to Penman that was widely distributed in which he said he was confronted and threatened by Penman after Majaj cancelled a $2.5 million city contract with the Matich Corporation.
The Matich Corporation and its owners have contributed thousands of dollars to Penman’s various campaigns for city attorney and San Bernardino mayor.
Majaj said in the memo he feared Penman would use his authority as city attorney to have armed investigators search his home and car to obtain a copy of the police report relating to the investigation of the city contract with Matich.
In the memo, Majaj stated that he was questioned in “an intimidating tone” by Penman during an October 5 meeting “as to why I terminated the Matich contract.” Majaj said Penman called the meeting in an effort to bring about “restoring the contract” and that he believed “it is inappropriate for you or any other elected official to be involved with ‘steering’ city staff toward contracting with one of your major contributors.”
Penman, who last fall was involved in an unsuccessful election campaign for mayor against incumbent Patrick Morris, characterized both the investigation targeting Matich Majaj had called for and the October 11 memo as politically motivated. In a memo to then-city manager McNeely, Penman defended the investigation of Majaj for delaying his provision of the police report to the city attorney’s office.
Majaj was reluctant to turn the report over to Penman because of Matich’s political support of Penman, the pressure he felt Penman was putting him under to restore the Matich contract, and his desire to protect the identity of witnesses.
The police report documented public works employees’ allegations that the public works director who preceded Majaj, Randy Kuettle, accepted gifts in the form of a leather jacket, a truck load of Christmas presents, 200 rib eye steaks and travel accommodations to Hawaii and fishing camps from the Matich Corporation. The report further related accusations that Kuettle then removed an inspector who questioned the quality of road paving done by Matich for the city, and inspected the work himself.
According to his memo, Majaj became suspicious after requests to increase the amount being paid to Matich on a 2009 contract came to his office.
Matich corporate officers maintain the company did not provide steaks, gifts or travel accommodations to Kuettle.
Kuettle, who had served in the position of interim public works director for two years, was replaced by Majaj in November 2010 when he was hired as public works director. Kuettle was then reduced in rank to deputy director, but on Feb.10, 2011, Kuettle was informed by Majaj that he was being terminated as of April 30. Kuettle took leave of that post, but remained employed by the city, working in the city attorney’s office until April 30.
The police department in 2011 determined that there was not enough information to proceed with a case against either Kuettle or Matich, but Penman’s accusation has now revived the matter, putting it under the eyes of the multi-agency task force.

(July 27)  The members of the San Bernardino County Association of African American Employees (SBCAAAE) have elected Diana Alexander to serve as their president for the 2012-13 year.
Formed in 1992, the association’s mission is to promote cultural awareness of the county’s – as well as the nation’s – rich, vibrant African American heritage while fostering interest in county government and employment related opportunities through educational and social outreach activities.
Working closely with members and staff, the elected board ensures coordination of African American observances, acts as advocates on issues, and assists the membership in their service as positive role models for African Americans in the county and the community.
Alexander begin her career in April 1993 as an eligibility worker and continued to progress through the ranks.  She now serves as Assistant Director for the county’s Transitional Assistance Department. She has earned a bachelor’s degree in business administration and is on track to earn her master’s degree  in public administration this year.
“I feel very honored and excited to have this opportunity to lead the association,” said Alexander.  “I look forward to continuing the great tradition of leadership that this association has modeled thus far.  We have amazingly gifted members that are ready to lend their talents towards not only furthering the goals of our association, but in working with our county and community in realizing the countywide vision. Together we can make it happen!”
Alexander replaces CaSonya Thomas, who had served as the SBCAAAE’s President for the past two years. Along with Alexander, the following members were elected to serve on June 28, 2012;
1st vice president: Carolyn Tillman, San Bernardino County Schools;
2nd vice president: Keisha Butler, Human Resources;
Treasurer: Tanya Bratton, Department of Behavioral Health;
Recording secretary: Sharon Chivis, Information Services Department;
Communications secretary: Kenneth Hall, Information Technology Services Division.
2013 represents the hallmark 20th anniversary for SBCAAAE. Dr. Terrence J. Roberts, one of the “Little Rock Nine” who desegregated Central High School in Little Rock, Arkansas in 1957, will be the keynote speaker for the 2013 Black History Month Celebration event. Dr. Roberts is a nationally renowned speaker who takes his audience on a journey through which they reflect on his experience and come to understand how he has used that experience to live a more socially responsible life.
The SBCAAAE meets on the fourth Thursday of each month. The next meeting  is on Thursday, July 26, 2012 from 12:00 PM to 1:00 PM at the San Bernardino Public Employees Association office, located at 433 North Sierra Way, San Bernardino.

(July 27)  Over the last eighteen months, supervisors Janice Rutherford and Neil Derry have developed an oftentimes distant relationship that sometimes flared into an outright hostile political rivalry. Shortly after Rutherford was elected to the board in November 2010 and sworn into office the following month, she formed an alliance with supervisor Josie Gonzales, who like her had formerly served on the Fontana City Council, and supervisor Gary Ovitt, who had for a short time in 2009 and 2010 been aligned with Derry. On practically every issue where there has been a substantial difference among the board’s members, the Rutherford/Gonzales/Ovitt troika has prevailed, leaving the coalition of Derry and supervisor Brad Mitzelfelt politically outmuscled and on the outside looking in.
On a few occasions Rutherford and Derry made pointed verbal note of their differences, trading barbed comments or hurling insults at one another.
But last week, Rutherford and Derry found themselves thrown together, standing out in sharp relief as the targets of an attack by the largest public employee union in San Bernardino County.
The San Bernardino Public Employees Association represents over 18,000 of the county’s employees as well as workers with several of the county’s municipalities. Both Rutherford and Derry earned the union’s enmity by taking public stands calling for substantial public employee pension reform.
On July 18, Derry introduced an initiative he is proposing to place on the November 6 ballot calling for public pension reform to address the mounting costs of county employee retirement obligations.
Noting that pension costs as a percentage of total county expenditures had risen from three percent in 1999 to nearly ten percent of all expenditures in 2011 and that the county is currently shelling out $232 million per year to provide its former employees with pensions, Derry said the burden on the county and its taxpayers to sustain the pension fund will grow if the stock market, in which much of the pension fund has been invested, continues to do poorly.
“Simply put, actuarial and investment return assumptions have not lived up to projections and county taxpayers are subjected to an unabated and underfunded pension obligation that cannot be sustained under present conditions,” Derry, who represents the Third District, stated. The Third District includes Twentynine Palms, Joshua Tree, Yucca Valley, Big Bear, Yucaipa, Highland, Redlands, Loma Linda and a portion of the city of San Bernardino.
A problem with the system, according to Derry, is that the county and its taxpayers have guaranteed county employees a defined pension that will be provided to those retirees, even if the retirement fund through its investments does not perform adequately to make those retirement contributions, necessitating that the county in each of its yearly budgets take up the slack such that the budget for basic government services is reduced to make sure those who have retired receive their pensions.
The ballot measure Derry is proposing would increase the retirement age for new county employees, decrease the amount of money employees could earn each year towards their pension benefit, require all new and current employees to contribute to their pensions, and minimize steep increases in pension amounts, referred to as “spiking,” by averaging annual compensation over the final three years of an employee’s employment rather than the current single highest year, which often includes the addition of payouts for accrued vacation and leave time and educational, cell phone, clothing and travel allowances.
Currently, public safety employees are eligible to retire at the age of 50 and draw a pension equal to three percent of their highest year of pay including all of the add-on allowances used to spike their compensation times the number of years they have worked for the county. Non-safety employees are eligible to retire at the age of 55 and draw a pension equal to two percent of their highest year of pay including all of the add-on allowances used to spike their pay times the number of years they have worked for the county. Derry’s proposal calls for adjusting the retirement formula so that public safety employees would be eligible to receive two percent of their pay upon retirement and non-safety employees would not be able to retire until they reach the age of 62.
Derry’s proposal would also eliminate the obligation that the county guarantee the amount of the pensions provided to retirees when the pension fund’s investments generate less than 7.5 percent earnings calculated to provide full coverage to pensioners.
“It is unrealistic to expect the taxpayers to shoulder all the risk for these risk-free pensions at the same time they are bearing all the risk with respect to their own retirement accounts,” Derry said.
Before it can be submitted to the voters, the board of supervisors must vote to place it on the ballot by August 9.  Supervisor Derry said he will introduce the proposal to the board on July 31.
In a opinion piece published in the Inland Valley Daily Bulletin on July 19, Rutherford, who represents the Second District, which includes the cities of Fontana, Rancho Cucamonga and Upland, San Antonio Heights, Lytle Creek, Devore, and the mountain communities of  Mt. Baldy, Rim of the World, Crestline and Lake Arrowhead, cited what she said was $375 million the county is paying toward pensions for its retired employees in fiscal 2012-13 and future unfunded pension liabilities of $2.25 billion.
“That pension debt will crush our county’s ability to stay competitive when it comes to attracting businesses, and our children will be the ones who suffer most if we do not act now to restructure our pension system,” Rutherford wrote. She pointed out that over the last ten years the county’s pension system has only produced an average 4.8 percent investment return while the pension system’s solvency is relying on the assumption that investment returns will average about 7.75 percent. Rutherford said the debt the county is accruing in keeping the pension system afloat will “push local governments off the financial cliff and straight into bankruptcy court.”
Rutherford said “Communities with mammoth pension liabilities and no plan to rein them in will eventually have to raise taxes or dramatically cut services or both to meet their obligations to retired employees. The system needs an overhaul now.” She then referenced her earlier “proposal to place an initiative on the ballot that would require voter approval of any future increases to county employee retirement benefits” and played some of the same themes Derry explored. “In addition, county employees must contribute more of their own money toward their own retirements,” Rutherford said. “We also need to look at increasing the retirement age, which stands at 50 for safety employees and 55 for general employees. And the practice of “spiking” pensions with unused vacation, compensation time, and other perks to boost monthly payouts must end.”
Fiscal reality is making generous retirement packages for public employees untenable, Rutherford said. “The more taxpayers have to put into the public retirement system, the less is available to pay for the police and fire protection, roads, jails, landfills, parks, courts and other public services we need.”
On its website, the San Bernardino Public Employees Association lumped Derry and Rutherford together, posting in bright red an alert headlined “County Board Of Supervisors Attack (sic) Pensions,” which stated “Some members of the board of supervisors are preparing to launch another attack on the pensions of hard working county employees!”
The alert goes on to state that “Supervisor Janice Rutherford has scheduled the re-introduction of her previous initiative that would require voter approval of any future pension formula increases. Instead of negotiating at the table, Supervisor Rutherford believes the county should jam it down the throats of county employees and fight it out in court! What deficit? The county apparently has millions to spend on legal fees!”
The alert then turns to Derry, who is currently locked in a reelection effort against James Ramos, who has been endorsed by the San Bernardino Public Employees Association in the November election. The alert’s language obliquely states that Derry will not win reelection as supervisor.
“On July 31, 2012 at 10:00 a.m. outgoing Supervisor Neil Derry has agendized a new attack to show the level of his dislike for county employees! He will introduce an initiative that will make the formula for non-safety employees 2% at age 62, and safety employees would be 2% at age 55. If approved by the voters, his initiative would also reduce all county non-safety salaries by 7%, but not his own salary!”
The alert then commends the union’s members to “Prepare for action 7/32/2012!!!”
The union’s alert, approved by San Bernardino Public Employee Association President Paula Ready, while perhaps galvanizing the county’s rank and file, succeeded in forging what previously seemed an implausible alliance between Derry and Rutherford.
In his public announcement of his ballot proposal, Derry said his call for a vote on the matter “follows substantive dialogue by the board of supervisors over the last couple of years and is a natural extension of our recognition that reforms need to be implemented.  I particularly wish to praise supervisor Janice Rutherford for her leadership on this issue.”

(July 27)  SAN BERNARDINO –The San Bernardino County Transportation Agency on July 23 announced that the long-awaited connector road from the east 210 Freeway to the south 215 Freeway has been completed.  The opening of the road came later that day. The connector is part of the $723 million Interstate 215 Widening Project which was initiated in 2007. The transportation agency, known by its acronym, SANBAG, for San Bernardino Associated Governments, said the widening project will be completed by next year.
The project will add a general use lane and a carpool lane in both directions between 10 Freeway and the 210 Freeway and an auxiliary lane from approximately the 210 to just south of University Parkway in San Bernardino.
The project also call for ramps between the 215 and the 210 freeways, new on- and off-ramps and the reconstruction of all bridges and underpasses throughout the 7.5-mile project.
Previously, those travelling east on the 210 who wished to go south on the 215 had to exit at State University Parkway and go north to West Highland Avenue and take that east to Mount Vernon and Avenue south and follow a tortuous route to an onramp to the South 215.