Bell, CA, In Huge Financial Hole

An alert reader of this blog sent me the following article, which updates what is going on in Bell, CA. As regular visitors to this blog will note, there have been occasional entries about this small southern California town. Bell's claim to fame (or infamy), is the scandalous salaries received by the top City managers and most of the Town's Councilors (see "Arrest of Bell, CA, Officials", "Update on Bell", and "Bell City - Just the Absurd Apex of Business As Usual").

Jeff Gottlieb and Ruben Vibes, wrote the following for yesterday's LA Times:

Scandal-plagued Bell is hovering on the brink of insolvency and drastic cuts in city services — including disbanding the Police Department — probably will be necessary to fix its finances, according to a review of the city's books that Los Angeles County officials plan to release next month.

The report by the Los Angeles County auditor-controller paints the most dire financial picture yet of the southeast Los Angeles County city, where eight current and former city officials have been charged in a sweeping public corruption case. The findings were discussed with The Times by officials familiar with its contents who spoke on condition of anonymity because the document remains under wraps.

The review found that Bell has been running a deficit totaling several million dollars over at least the last three years under former Chief Administrative Officer Robert Rizzo. The red ink is the result of hefty salaries and pensions for top Bell officials and extensive city-run programs, the review found. To cover part of the deficit, city officials took money raised by the sale of bonds for specific projects and diverted it to the general fund, a likely violation of the law, according to experts on municipal finance.

When cities issue bonds, they must spell out in legal documents how the proceeds will be spent. Diverting the proceeds to other purposes would be "definitely against the law," said Erik R. Schleicher, a trader and fixed income analyst with M&I investment Management Corp. in Milwaukee, who has followed the Bell scandal closely.

"There are certain provisions that say bond proceeds need to be used for the designated project, and that only a small percentage can be used for costs of issuance and things like that," he said.

The budget shortfall described in the audit may explain the city's relentless drive for money under Rizzo. The Times has reported that Bell had aggressive — and legally uncertain — programs to tow cars, enforce questionable city codes and charge arbitrary business fees to merchants. Some of these programs are the subject of a federal civil rights investigation.

As the Town tries to right its ship, extra bills are piling up:

The city has been forced to refund more than $5 million in illegal taxes levied during the Rizzo era and faces hefty legal bills because of the scandal. In addition, it has racked up $600,000 in fees from interim City Atty. Jamie Casso and his law firm since they were hired last summer. And, like virtually all municipal governments in California, Bell has been hurt by the poor economy.

And, they are left wondering what bond proceeds have actually been spent on:

It's unclear which bond revenues the city used to help close its operating deficit. In 2003, voters approved a measure allowing the city to issue $70 million in general obligation bonds. The bonds were to be used to build a gym, expand the Bell Community Center and build a library, civic center and theater.

An audit by state Controller John Chiang found that little had been done with the money and that a promised sports park consisted of a dirt lot encircled by a fence.

The $70-million bond was issued in two phases. Chiang's audit found "no rationale" for the city's decision to issue the second $35-million phase. About $23.5 million of that money was moved into a city bank account that did not earn interest.

It appears that any path to fixing the finances will be rocky:

The county review concluded that Bell will have to make deep cuts in services, including possibly closing the Police Department and contracting with the Los Angeles County Sheriff's Department.

Steve Whitmore, a spokesman for the Los Angeles County Sheriff's Department, said Bell officials had informally contacted the agency about replacing the Police Department before the scandal broke. He said that the Sheriff's Department would be cheaper than a hometown police force because much of the infrastructure already is in place.

Gilbert Jara, president of the Bell Police Officers Assn., said the city could disband the department fairly quickly because officers' contract with the city expired in June. The police association has been unable to meet with Carrillo to negotiate a new pact, he said.

Neighboring Maywood disbanded its Police Department this summer in favor of sheriff's deputies. The city, which is slightly larger than Bell, pays the county $3.8 million. In 2009, Bell spent roughly $6 million on its police.

Closing the department would require approval from the Bell City Council and would probably generate intense controversy. One of Bell's largest activist groups, BASTA, is funded in part by the Bell Police Officers Assn.

"It's devastating. You just handed me a gut bomb," Bell Police Capt. Anthony Miranda said when told about the auditor's finding. "I hope that through this turmoil, we can maintain the Police Department and find a way to keep that ship afloat."

Arrest of Bell, CA, Officials

So, what would you say to the arrest and prosecution of the Mayor and 80% of the City Council? Like the old joke, maybe -- a good start?

Well in the ongoing exposure of 'corruption on steriods' in the small, southern California town of Bell, that is exactly what has happened. The Mayor, Vice Mayor, City Manager, Assistant City Manager, and four of the five City Council members have been arrested and charged with the misappropriation of funds.

Thanks to an alert reader of this blog, for the tip.

You will recall, this past July (see "Bell City - Just the Apex of Business as Usual" and "Update on Bell") an LA Times investigation exposed the enormous salaries of the City managers and fake meetings held to amp up the part time salaries of the Council members, and how the Bell town folk erupted in anger at the news. Well justice has come a-knocking.

The San Francisco Chronicle is reporting the following:

"This, needless to say, is corruption on steroids," [LA County] District Attorney Steve Cooley said at a news conference, standing next to a display of pictures of the suspects.

Rizzo, who was making nearly $800,000 a year, was booked on 53 counts of misappropriation of public funds and conflict of interest. He was expected to be arraigned Wednesday, with officials seeking bail of $3.2 million.

Others taken into custody were former Assistant City Manager Angela Spaccia, Vice Mayor Teresa Jacobo, Councilmen George Mirabal and Luis Artiga, and former Councilmen George Cole and Victor Bello.

The complaint said Rizzo made $4.3 million by paying himself through different employment contracts that were not approved by the City Council and that council members paid themselves a combined $1.25 million for what Cooley called "phantom meetings" of various city boards and agencies.

Rizzo also was accused of giving $1.9 million in loans to himself, Spaccia, Hernandez, Artiga and dozens of others, authorities said.

Cooley said his office had been investigating the officials since March - four months before the public learned they were paying themselves huge salaries to run the city of 40,000 people.

And the San Francisco Examiner reports on the investigation of how a poor town was able to sustain the high salaries nearly all of their officials got:

The Bell, California corruption probe continued with an audit revealing over $50 million in mismanaged city funds.

The audit, commissioned by State Controller John Chiang, examined over $65 million in city government spending.

The audit revealed financial improprieties including over $5.6 million in questionable licensing fees, an unnecessary $50 million bond, $10.4 million paid to contracting companies owned by Bell's director of planning services, a $4.8 million sweetheart land deal with a former mayor and nearly $6 million in compensation packages for the mayor and other top city officials. City Manager Robert Rizzo received a salary nearly twice that of President Barack Obama. Of the $50 million bond, over $23.5 sat in a noninterest bearing account for a Bell Sports Complex with no development plan.

Interim City Manager Pedro Carrillo, interim City Attorney Jamie Casso and Lorenzo Velez -- the lone member of the city council not under investigation -- continued meeting regularly to keep business going in Bell.

Here is the AP video report:




Meanwhile, former Bell Chief of Police is under investigation for possibly defrauding the California state pension system. The LA Times reports:

Los Angeles County prosecutors are investigating former Bell Police Chief Randy Adams for having himself declared disabled for the job the day he was hired, an arrangement that could pay him millions in tax-free pension money, Dist. Atty. Steve Cooley said Thursday.

The Times reported Thursday that Adams struck a deal with former Bell City Administrator Robert Rizzo that guaranteed the incoming chief a disability retirement because of injuries he sustained years earlier. Under such a retirement, he would not have to pay taxes on half his pension income.

Adams' attorney, Mark Pachowicz, said his client had done nothing wrong and the pension agreement was merely an effort to avoid litigation with Bell if the city objected to a disability retirement sometime in the future."I don't think he should be under investigation," Pachowicz said.

Adams, 59, entered into the pact with Rizzo even though he had filed for a less lucrative non-disability retirement as he prepared to leave his job as Glendale police chief. That application was approved, but he rescinded it the same month his service officially ended in Glendale and he went to work for Bell in 2009, Glendale and state pension officials say.

Glendale City Manager Jim Starbird said that Adams, who worked in the city for six years, was not disabled and had never indicated to him that he should be entitled to a medical retirement.

Disability pensions are designed for employees who must give up a job because of a work-related injury, and the tax break is intended to compensate them for lost earnings, said representatives of the California Public Employees' Retirement System.

There is little corruption, and big corruption. Then there is gynormous corruption. For the easy and obvious conclusion to this blog entry, let me first apologize to John Donne, then quote him:

"Ask not for whom the Bell tolls, it tolls for thee."

Suddenly - Decatur School Board Calls Special Session

A special session of the MSD Decatur Township school board has been called for 8:15 pm, tomorrow night, July 29, in the Board Room of the Central Office. The agenda is posted here.

All that is on the agenda is:

1. Call to Order
2. Personnel
a. Staff Report
3. Other
a. High School Handbook
4. Adjournment

One has to wonder exactly why this could not have waited until the next regularly scheduled meeting in August. Perhaps the disclosure of the illegality of the recent retirement packages given to Administrators in contradiction of Board policy and without contractual obligations or any evidence of Board action... (see "Decatur Administrator Severance Packages Really Sweet" and "Decatur Administrator Severance Packages in Contradiction of School Board Policy") is proving too much ?

This agenda, of course and per usual, says absolutely nothing. This has prompted me to begin a task I have been intending to do, but never quite got the time. That task is to look at the agendas and minutes of other school districts in Marion County.

Today I take a peek at what IPS is doing for agendas.

Here's a link to their agendas. You'll have to click on a date in the far left to view one. I suggest "Jul 27, 2010", which is the most current as I write this entry.

They have a great deal of information on their agenda. Imagine that - the public can actually see what is to be discussed and some real detail about each action item !! Don Stinson would never allow that to happen here in Decatur.

Scroll down the left hand panel and click on any action item. I clicked on "5.05 Increase Contract with Luerssen Consulting, LLC For Substitute Nursing Services". That already is far more detail than any Decatur School Board agenda would have. Clicking the link brings up information in the right hand panel. Imagine - MORE INFORMATION for the public !!! I have reprinted this one item below:

Agenda Item Details
Meeting Jul 27, 2010 - Board Action Session; July 27, 2010; 7:00 P.M.
Category General Superintendent's Recommendations - New Business
Subject Increse Contract with Luerssen Consulting, LLC for Substitute Nursing Services
Type Action
Fiscal Impact Yes
Dollar Amount $ 35,000.00
Budgeted Yes
Budget Source IDEA Grant

Presented By: Dr. Willie Giles Robb K. Warriner
Strategic Plan: Everyone Can Learn

TOPIC: Approval to extend contract with Luerssen Consulting, LLC for substitute nursing service at a cost of $35,000.00.

Background Information: Given the continuing need for substitute nursing services, it is recommended that we extend our contract with Luerssen Consulting, LLC, for the 2010/2011 school year to include services through June 30, 2011. The amount of the contract will remain the same at $35,000.00.

***Superintendent’s Recommendation: I recommend that the Board of School Commissioners approve the contract with Luerssen Consulting LLC for substitute nursing services at a cost not to exceed $35,000.00. I also recommend the Board authorize the Director of Special Education to execute the extension on behalf of the Board. Funding will be provided through the Individuals with Disabilities Education Act (IDEA) grant and will not impact the General Fund.

The Decatur School Board doesn't approve contracts - in violation of State law -- much less let the public know how much money is involved in anything. Not only are their agendas worthless, attending meetings leaves the audience without a clue as to what is being decided, and their minutes complete the trifecta of keeping the public in the dark. Even the Bell, California, Council meeting agendas have more detail than Decatur School Board does - and look what they got away with !

Update on Bell

You will recall the gynormous salaries of Bell, CA, elected and appointed officials and the outrage that resulted from an LA Times expose' on the matter (see "Bell City - Just the Absurd Apex of Business as Usual", if you perchance missed this one).

Well, the hammer has been coming down. UPI is reporting that the City Manager, Assistance City Manager, and Police Chief, whose combined salaries topped $1.6 million per year, have resigned. The four of five City Council members have all agreed to a 90% reduction in their roughly $100,000 per year part time salaries - down to $673 per month. The fifth member only makes $8000 per year as it is. (I erroneously noted only 3 Council members in my previous blog entry, as these were the only ones noted on the Bell website) And the Mayor is now working for free and vows not to seek re-election in March, when his current term expires.

Meanwhile, Los Angeles County and State officials are investigating the salaries to determine if laws were broken.

AP posted this video on YouTube:

Bell City - Just the Absurd Apex of Business as Usual

Bell, California, just 10 miles from Los Angeles, is a town of 37,000, with a per capita income half the US average, and a general fund budget of $15 million. Wikipedia reports the median income in Bell is $29,946.

Last week the Los Angeles Times broke the story that, unbeknownst to most of the town's population, the city manager, the assistant city manager, the chief of police, and even the town council members, all pull down stratospheric salaries.

Reporters Jeff Gottlieb and Ruben Vives noted:

Bell, one of the poorest cities in Los Angeles County, pays its top officials some of the highest salaries in the nation, including nearly $800,000 annually for its city manager, according to documents reviewed by The Times.

In addition to the $787,637 salary of Chief Administrative Officer Robert Rizzo, Bell pays Police Chief Randy Adams $457,000 a year, about 50% more than Los Angeles Police Chief Charlie Beck or Los Angeles County Sheriff Lee Baca and more than double New York City's police commissioner. Assistant City Manager Angela Spaccia makes $376,288 annually, more than most city managers.

and goes into how the Council may have worked their way around State laws in garnering salaries 20 times what they should have received

The district attorney is investigating Bell over the hefty compensation of its City Council members -- about $100,000 a year for part-time positions. Normally, council members in a city the size of Bell would be paid about $400 a month, Demerjian said.

The council has increased its compensation by paying members for serving on a variety of city agencies, including the Community Redevelopment Agency, the Community Housing Authority, the Planning Commission, the Public Financing Authority, the Surplus Property Authority and the Solid Waste and Recycling Authority.

Demerjian said city records show each council member receives $7,873.25 per month for sitting on those boards.

Records indicate that the boards of those agencies perform little work and that board meetings take place during council meetings, though the names of some of the agencies seldom appear.

In some years, the council would hold separate meetings for those agencies, and they would sometimes last no more than a minute. On July 31, 2006, four agencies each met for one minute. On March 3, 2008, the redevelopment agency meeting was called to order at 7:21 p.m. and adjourned at 7:22 p.m.

Councilman Luis Artiga, who was appointed to the council 15 months ago to fill an unexpired term, said he had no idea how much he would be paid. When he received his first check, he thought it was "a miracle from God."

Rubin posted a follow up article yesterday in the Times, now that the Bell community is up in arms.

At a closed-door meeting Monday night, as hundreds of residents protested outside, council members also discussed reducing their own pay. Most of them make $100,000 a year.

The Los Angeles County district attorney's office has inquired about the salaries.

Resigning would make City Manager Robert Rizzo, Police Chief Randy Adams and Assistant City Manager Angela Spaccia eligible for lucrative pensions. But the three also have contracts that protect them from being fired without cause.

As a result, unless they agree to resign, the city would face the prospect of buying out their contracts, which could cost hundreds of thousands of dollars in additional payments.

Reuters reporter, Jim Christie, is reporting that the Bell city manager, Robert Rizzo, is expected to do quite well on his pension:

If Rizzo leaves his job, which irate residents of Bell are demanding, he could draw $884,692 in his first year of retirement, according to her calculations [Marcia Fritz, who heads the California Foundation for Fiscal Responsibility].

At age 62, when Rizzo could also begin receiving Social Security payments, his annual pension would rise to $976,771, topping $1 million two years later. If he lives to age 83, his annual payout would rise to $1.48 million.

The Bell website lists a Mayor, Vice Mayor, and three Council members.

Now, the Bell officials chose to spend their tax money on themselves and key employees. How different are we in Indianapolis, where we choose, instead, to spend our tax money on powerful movers and shakers?