Okay, comparative cost time:

The state of California spends 35 percent of its budget, or nearly $50 billion, on its 900,000 students in K-12 education.

Even after all the budget cuts made this past year or two, California spends 11 percent of its budget, or $8.6 billion, on state prisons in order to house approximately 166,000 prisoners. That’s $52,363 per prisoner per year.

And we spend 5 percent of our state budget on higher education —not even half our prison bill.

Sacramento’s CBS affiliate, KBET, has a tidy little report in which it looks at the newest versions of all these depressing numbers.

In the course of the report, the KBET folks played my favorite teeth gnashing game, which is to compare the yearly price tag of keeping someone in an overcrowded lock-up, with the cost of sending a student to a top university, including tuition room and board.

Here’s what they found:

Compare the cost of housing a prison inmate in California–$52,363 —to room, board, and tuition for one year at a college or university. Some examples:

Stanford: $50,576

University of Pacific: $42,346

Sacramento State University: $14,916

University of Davis, California: $25,580

Of course, at the end of a nice four years at, say, the California Institute for Men at Chino, an inmate will have $200 “gate money,” and little or nothing in the way of new job or academic or skills, and his or her psychological health is likely to be worse, not better.

While at the end of four years at Stanford University, a student will have……well, a degree from Stanford—-plus, one hopes and assumes, a list of new skills and capabilities.

So why do prisons cost so much? It ain’t the amenities, folks. Guys in prison aren’t given adequate soap much less anything truly useful.

KBET reports that 35 percent of the per-year cost goes to staff, and 50 percent goes to “operations.”

(Interestingly, California inmates who were shipped out-of-state to facilities in places like Mississippi in order to relieve overcrowding here, said they liked the out-of-state facilities much better—even though those states spend less per inmate per year. I leave you to draw your own conclusions about those seemingly discrepant facts.)

Sadly, in a brand new display of penny-wise-and-pound-foolishness, Governor Arnold Schwarzenegger has just proposed cutting another $250 million out of neither staff nor operations costs but, instead out of the rehabilitation and educational programs budget. So whatever programs were in existence that might have helped a man or woman stay out of prison upon release, are about to be vaporized.

But, hey, that’s much easier than delving into the CCPOA’s overtime figures. (Regular readers will know by now that the CCPOA refers to the correctional officers’ union.)

Anyway, I thought you’d all want to be kept up to date on these cheery stats.

Aren’t you glad we had this little chat?

CONTROVERSIAL LAPD CHIEF DARYL GATES DIES

He was the LAPD chief lots of us loved to hate, and was beloved by many of the rank and file. Whatever you thought of him, Gates affected Los Angeles in large ways. From his actions—or tragic lack thereof—following the Rodney King verdicts and his community-demonizing Big Blue Hammer policy, to his shaping of SWAT into an internationally respected model of the modern crisis management team, he left a mark.

For all my dislike of a list of his actions and policies, I find myself unexpectedly sorry that he’s gone.

The LA Times has a good obit.

GOLDMAN SACHS CHARGED WITH FRAUD BY THE SEC

I hope to heaven the previously spineless and incompetent SEC nails Goldmans’ sorry butt to as many legal walls as it can possibly find.

Yes, this news is causing the DOW to do something of a mini-cliff jump today. But these people—and many like them—knowingly and cynically put their own profits ahead of everything and the country has paid a terrible price. We are still paying it, as is evidenced by the newest California jobless figure, which has hit a new high at 12.5.

In short (literally), Goldman is being charged with creating a financial instrument, ABACUS 2007-AC1, at the request of a hedge fund manager, John Paulson, which sold a toxic group of mortgage-backed securities to investors while simultaneously placing big bets against that securities package, which Goldman and Paulson had selected specifically because of their strong likelihood of failure.

To get an overview of what the charges mean, read the NY Times article, the WSJ blog on a translation of the charges “for humans” and this WSJ report on one of the juicier Goldman emails to emerge today, plus my post from earlier this week about a nearly identical hedge fund strategy.

Here is the text of the SEC complaint.

Robert Khuzami, an SEC director of enforcement, has nicely summed up Goldman’s actions, the product was new and complex but the deception and conflicts old and simple.

Since obviously, this move by the SEC cannot help but aid the financial reform bill in congress, watch how, in the next ten minutes, if it hasn’t happened already, those opposed to financial reform will try to spin this SEC charge in some truly bizarre and creepy way.

[Gentlemen at Fox News, start your fact-free spin machines.]

In the meantime, read Stephen Gambel’s blog post over at Time Magazine in which Gamdel opines that the SEC news proves conclusively the rightness of Matt Taibbi’s 2009 contention that Goldman Sachs is actually….a VAMPIRE SQUID (wrapped around the face of humanity)!

(And, yes, in answer to your question, vampire squids are, by definition, social justice issues.)

While Congress argues over financial reform, with the fights inevitably fracturing along partisan lines (again), the radio show This American Life has managed to bring out a perfectly timed show that deals with how one single hedge fund firm made hundreds of millions of dollars for itself while blithely worsening the financial crisis for the rest of us—and how it knew what it was doing all along.

The show is called “The Inside Job.” Here’s the summary:

A hedge fund named Magnetar comes up with an elaborate plan to make money. It sponsors the creation of complicated and ultimately toxic financial securities… while at the same time betting against the very securities it helped create. Planet Money’s Alex Blumberg teams up with two investigative reporters from ProPublica, Jake Bernstein and Jesse Eisinger, to tell the story. Jake and Jesse pored through thousands of pages of documents and interviewed dozens of Wall Street Insiders. We bring you the result: a tale of intrigue and questionable behavior, which parallels quite closely the plot of a Mel Brooks musical.

The musical this debacle most resembles is The Producers-–in which the protagonists figure out that they can make much more money on a failed musical than on a successful one. So they set about trying to make the worst musical in the world.

That is basically what Magnetar did. Right as the mortgage market was about to collapse, they forced the creation of billions of dollars worth of the riskiest possible mortgages to package into securities. Since they were betting against those mortgages, it was more profitable if they failed.

Anyway, just listen. This is something that you really ought to hear.

Meanwhile, the LA Times reports that the unemployment numbers are looking very grim. Here’s the opening of the story:

Despite optimism over recent job gains, one grim statistic casts a long shadow over the recovering economy — a record 44% of the nation’s 15 million unemployed have been out of work for more than six months.

And the evidence suggests that many of them may never completely rebuild the working lives they lost.

Never since the Great Depression has the U.S. labor market seen anything like it.…

if you think your blood preassure can stand it, read those statistics over again once you’ve listen to the TAL segment.

(NOTE: Lighter blogging than usual, but up to speed again tomorrow.)

UPDATE: 2 p.m. Wednesday.

The city council has just approved a motion to wrest control of the DWP away from the mayor. This would require a ballot measure.

The AP has the story.

I got a note late Tuesday night from a friend of mine who is a very talented LA librarian. She had evidently just heard Mayor Villaraigosa’s newest plan to shut down all of LA’s “nonessential” agencies’ for two days a week and other dizzying acts of fiscal brinkmanship.

“He’s making a whole lot of people very very scared including me,” she said. And then my normally refined and dignified friend, called Antonio a less than printable name.

The LA Times Op Ed for Wednesday explained the situation in stark terms.

Here are some of the most relevant parts of the essay:

Los Angeles is suddenly back in a deep and immediate financial crisis, and this time it’s not a result of recession, the mortgage meltdown or a persistent structural deficit. All those things pushed the city to the brink, but officials had begun dealing with the problem by making painful yet necessary program and job cuts. Now, just as the city was backing away from the edge, Mayor Antonio Villaraigosa and the Department of Water and Power are trying to see just how far over it the city can hang without falling. It’s an arrogant and irresponsible approach that leaves the city short of cash to pay its bills and compelled to imprudently empty its reserve fund, shut down city services or lay off more people.

At issue is the DWP’s breach of its commitment to transfer cash, as it does each year, from its account to the city’s general fund. As a municipally owned utility, it makes the transfers in lieu of the taxes that privately owned utilities must pay to the state or the dividends they must pay their investors. The DWP promised $220 million in the current fiscal year, and city leaders planned, budgeted and slashed accordingly. But the money comes in installments, and the utility had yet to pay the final $73 million. DWP officials now claim they never had any intention of making the final payment — unless the City Council agreed to increase power rates….

The city agreed to raise the rates—but not as much as the mayor and the DWP wanted. So in retaliation the DWP harrumphed and said it wasn’t going to give the city the $73 million period.

Things have gone downhill precipitously ever since. City Controller Wendy Greuel said that without that $73 million payment from DWP, the city’s General Fund would be $10 million in the red by May 5 and LA wouldn’t be able to meet its payroll. Next came the news that the city’s emergency fund—which is not meant to be the can’t-balance-the-budget purse—had to be raided. The fun-filled day climaxed with the mayor’s announcement that all city workers—save fire and police (or workers for any city agency that “makes money”)—will lose 2 fifths of their salaries, starting Monday. Those who are not laid off altogether that is.

Yeah. I think scared is an appropriate response.

There’s a lot going on in the city

UPDATE: The mayor is on Air Talk on KPCC Wednesday morning. Live right now. Podcast later.

Villaraigosa is interesting. Although I believe this problem deserves to be laid directly at his doorstep, there are some other doors that should get part of it, one of which he mentions.

He said, “If the union leaders would agree to a 4 percent pay cut [at least I think that was the number he gave.] we could generate $450 million. If the unions would take a voluntary cut, I wouldn’t have to shut down City Hall.”

The comments section for the KPCC story is particularly good—with a lot of very angry, and very articulate LA residents weighing in.

NOTE: I’m tentatively opening up the comments section. Operative word, “tentatively.”

After 25 years and 7.7 million cars, Toyota Motors closed its manufacturing plant in Fremont on Thursday, tossing 4700 Californians out of work and into the worst job market since the great depression, imperiling, according to the NY Times approximately 20,000 collateral jobs.

The last car the factory made was a bright red Toyota Corolla. Dozens of workers walked the Corolla reverently through the assembly line.

The plant, originally opened in 1984 as a joint venture between Toyota and General Motors, was called the New United Motor Manufacturing Inc.—otherwise known as NUMMI.

NUMMI’s purpose was to allow Toyota to establish its first manufacturing beachhead in the U.S. and, in turn, the Japanese car maker taught the American unionized employees the secret to its amazing efficiency and what was, for many years, stellar quality conrol—all of which GM badly needed. But, in an astonishing and irrational display of pigheadedness, it took a stubborn GM management nearly 20 years to learn the lesson, too late to stave off its bankruptcy. Last year GM announced it was pulling out.

Although, at the end the GM cars represented only around 10 percent of those coming off the NUMMI line, Toyota said it was shutting down the plant.

Many tried to talk the Japanese company out of it. Why close the plant now? they argued. It had a stellar production record and, after all, this was a time when Toyota most needed to mend its PR profile—particularly in California, which according to the NY Times Bob Herbert, accounts for 18 percent of all Toyotas sold, worldwide.

NPR has this:

Toyota officials say NUMMI simply wasn’t economically viable, but many workers suspect that [the closing] may have something to do with their union. This was Toyota’s only unionized workforce.

“Toyota has never shut a plant down in 73 years, and we were the only plant to get a zero-defect audit, ever, in the Toyota history,” said Ann Ezra, who worked for NUMMI for more than two decades. “Only another Lexus plant has ever done it, and they’re going to shut us down? Why? So yeah, it’s because of the union

Whatever the real reason for the shutdown, NUMMI’s joint venture history is unique. This past week, This American Life, did a full show on NUMMI—the opportunity that the NUMMI plant once represented, and how General motors squandered it.

A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: how it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn’t learn the lessons — until it was too late.

It is a remarkable victory story of one factory utterly transforming it’s way of working (and its attitude toward the work itself), and a tale of a stupendous opportunity lost by the whole of the American car industry, at a time when it needed it most.

And it is great hour of radio—brilliant, really—made all the more poignant now that the very last car has rolled off NUMMI’s line.

On Monday, California lawmakers saw their pay cut by 18 percent. Instead of earning $116,208 a year, they will drop to $95,291.

It was a move that our dear legislators did everything they could to keep from occurring, including pleading with State Attorney General Jerry Brown to declare the cut illegal. (He wisely and correctly declined to do so.)

This brings us to this past Tuesday when the LAUSD board threatened cuts closer to home. The board told the LA’s public school teachers that either 5000 more jobs would be slashed from the district payrolls in the next two years, OR the teachers could take a more than 11 percent drop in pay.

It hardly needs to be said that, if LA’s teachers take the proposed wage hit, they will NOT be grossing $95 grand as their remaining take home.

On the Huffington Post, impassioned Venice High English teacher Dennis Danziger takes a look at the brand new unholy choice of LAUSD cuts from a perspective other than purely fiscal: He sees the cuts as a civil rights issue.

Here, in part, is what he writes:

I stood in a crowd of four or five hundred red-shirted fellow teachers outside Los Angeles Unified School District headquarters near downtown LA late this afternoon. Inside the LAUSD Board was debating, and would later vote on a budget plan which called for a 12% teacher pay cut; plus they’d consider tossing in a few furlough dates just for good measure. All totaled, the package, if approved, would amount to just under a 15% pay cut.

There goes cable TV. Christmas gifts to everyone on my list. The photographer at my daughter’s upcoming wedding. Hand sanitizer. July, August and September rent. Abbot Kinney pizza. The 3,000 mile oil change. Bully sticks for my dogs Leo and Soni. And the land line.

[SNIP]

More disappointing than imagining my shrinking paycheck was the Board’s lone alternative to the proposed pay cuts. In lieu of a pay cut we teachers could vote to have 5,000 LAUSD employees, including 1,400 of our fellow teachers, canned. Kind of a Sophie’s Choice move by the Board. Your money or your colleagues’ jobs. You choose.

This year the LAUSD booted 2,000 teachers off its payroll, and the English classes I teach at Venice HS jumped from 27 students per class in 2008 to 37 students per class this year. Another round of teacher cuts and my classes will be so packed they’ll be in violation of city fire codes. Oh well.

We few hundred protesters milled around in the cold shouting the same old lame union chants: “Enough is enough. Enough is enough.” And the old reliable United Teachers of Los Angeles chant, “U-T-L-A! U-T-L-A!”

Someone with a microphone shouted, “Louder, so they can hear you upstairs!”

Maybe if the 48,000 UTLA members who stayed away from our demonstration had showed up, the people upstairs would have heard our voices. Would have thought twice before threatening our livelihoods, trashing our profession, before threatening to turn a second-rate school district into little more than storage units, holding facilities for the poor. Because that’s what the LAUSD is fast becoming.

Check out the LAUSD website and you’ll learn that over 90% of its students are non-white and the vast majority of them are poor.

So I don’t take the Board’s proposed pay cuts, furloughs and layoffs personally. It’s not that the Board hates teachers. Heck, I figure they could care less about us one way or the other.

This is a civil rights issue. What the Board is doing, if they impose these cuts, is making sure that LA’s poor and working class children don’t stand much of a chance when it comes time to compete for college slots. When it comes time for these kids to enter the workforce.

What the Board will insure if they pass these cuts is that the status quo will prevail. They’ll make sure the tech schools and the military fill their quotas. Make sure there’s another generation of cheap labor. Bus boys, car wash attendants, people who can answer phones, vacuum office floors, deliver pizzas, rake leaves, change diapers, stock shelves and check the oil…..

Read the rest here.

Unemployment in California is at 12.2 percent and expected to go higher when the new figures come out this month. Newly minted college graduates are having trouble getting jobs. Teachers and other laid off professionals are having trouble.

So how bad is the job market for those applicants who, when they fill out an employment application, have to check the YES box next to the question that asks if you’ve ever been convicted of a felony?

Even in good economic times, studies have indicated that 65 percent of all American employers say they won’t hire felons.

This leaves California in general, and LA in particular with a problem. In our state, 130,00 adults are paroled from prison every year. More than a third of them will come to Los Angeles, which is already home to the largest parole population in the U.S. The majority of those parolees will need jobs.

The Wall Street Journal reports that in this market, people with with 20-year old misdemeanor conviction records are running into trouble, and acting to get their records expunged.

But with felonies, people are pretty much out of luck.

I spoke to a young man just last night, an 18-year-old former gang member who is trying to set his life right. He’s a smart and personable guy. But he has a juvenile felony conviction. He told me me that he’s been looking for a job since this summer. He’s tried everywhere he can think of. All the chains like Target and Home Depot, MacDonalds, mom and pop stores. . But, thus far, no one has been even willing to interview him.

I worry that he will resort to less-than-legal means just to pay his bills.

It is no accident that California has the highest recidivism rate in the nation.

Rachel Mayrow of NPR’s California Report has an excellent story about the problem and what a few compassionate employers are doing to help out.

Goodwill Industries, is one of those places that is stepping up. And they’re not the only ones.

Tri-Ced Recycling, the state’s largest non-profit recycling company, is committed to helping people with such barriers to employment.

It isn’t enough, but it is a beginning.

I tried to ignore this story yesterday, I really did. But find that I can’t do it.

According to the London Times, Bernie Madoff has hired a “top prison consultant” (who knew that such people existed) to “help him find the the best possible jail” in which to do his 150 years.

Aside from our irritation that Madoff has access to any funds at all with which he can hire such a person, it is even more vexing that Madoff and his lawyers believe that, once they determine “the best possible” prison (It’s prison, people, not jail), that they will be able to influence the choice of facilities.

Due to Madoff’s lengthy sentence, he is prohibited from being sent to any of the Club Fed-type places that house such other high profile law breakers as Martha Stewart and other first time, non-violent white collar inmates.

This little bit of news was, according to the Times, a bit of a shock to Mr. Madoff and his “consultant”—Herb Hoelter, of the National Center for Institutions and Alternatives, whose previous clients include the jailed Sotheby’s chairman Alfred Taubman and the financiers Michael Milken and Ivan Boesky. .

“He was incredibly disappointed. He knew he was going to spend the rest of his life in prison. I don’t think that was ever an issue,” Mr Hoelter told The Times. “But it’s patently unfair to cast him as a symbol of all evil.”

Federal convicts are assigned to minimum, low, medium, high-security prison, or even the sole Supermax facility, by the US Bureau of Prisons using a score-card known as Form BP-337 to calculate an inmate’s “Security Point Total”. A first-time non-violent white-collar criminal convicted in a US federal court would normally qualify for incarceration at a minimum-security “prison camp” with easygoing rules and no perimeter fence. But the length of Mr Madoff’s jail term means that he has no hope at all of going to one of them.

Bummer.

Or as some of his soon to be colleagues would say, if you don’t want to do the time, dearest Bernie, don’t do the crime.

According to AOL’s Daily Finance, Southeby’s Taubman….

…. spent his nine and a half months at the Federal Medical Center in Rochester, Minnesota, getting medical care on the government dime. Taubman’s book, Threshold Resistance, contains some prison advice Madoff may find useful, such as making friends, keeping a pleasant demeanor, and bringing reading material.

Madoff, however, may need some slightly different advice.

A sentence above 30 years usually places an inmate in a high-security category, meaning that Madoff would be assigned to a prison housing violent offenders including murderers and rapists. Ed Bales, of Federal Prison Consultants, which is not involved in the case, said that Madoff was likely to be held in isolation, known as “the hole”, at least at first.

Yeah, well, that’s what happens to most people who draw big, bad sentences. Consultant or no consultant, in the end his location will be up to the discretion of Federal Bureau of Prisons.

Look. I honestly don’t mean to sound vengeful. It is merely that I do not believe that the guy who robbed thousands of people of their life savings merits special treatment simply because he’s rich and….you know….white.

We put eighteen-year-olds with no priors in level four maximum security prisons if their crimes are deemed to be gang related. Bernie Madoff is no more vulnerable or valuable than they are.
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Photo by Bob Daemmrich/Polaris/eyevine

The now familiar tango continues in the California state capitol in which the governor threatens hideous actions if the lawmakers don’t get their collective acts together and come up with a viable budget by a certain deadline, the lawmakers miss the deadline, and the governor re-calibrates his threat.

One of the worst of Arnold’s previous threats is, I believe, about to be yanked off the table, and that is the proposed closing of 220 of California’s 279 state parks.

While the parks’ hours may be shortened to save money, the threatened closures will not happen for the following three reasons:

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1. The Park Closures Aren’t Legal.

For one thing, Robert Garcia of the City Project says it isn’t legal to close the parks—and he said as much in a detailed letter citing plenty of case law that he sent this week to Arnold Schwarzenegger and the rest of the big five, namely Senate President pro tempore Darrell Steinberg, Senate Minority Leader Dennis Hollingsworth, Assembly Speaker Karen Bass and Assembly Minority Leader Sam Blakeslee.

Since Garcia is arguably the smartest environmental justice lawyer in the state, I tend to believe him on such things, the five would be wise to believe him too. (Since otherwise he’ll sue their sorry butts and likely win. Here’s a link to the letter.)
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2. If We Close the Parks, the Feds will Take Them Over

Well, not all the parks. But as of Wednesday, National Park Service Regional Director Jonathan Jarvis said that if Schwarzenegger goes ahead with the closures he threatened last month, that the Feds are legally empowered to seize the state parks that are located on Federal land, which include the Big Sur area, Point Magu, and four of California’s other big parks. To make things worse, we will lose millions in federal grants. And….by all accounts, Jarvis is willing to make good on the threat.

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3. Closing the Parks Was Always a Stupid idea, Fiscally Speaking.

Exactly a month ago, advocates pointed out that the revenue generated by visitors to the various state parks, exceeds their cost. But no one seemed to be listening.

Then in early June, Sacramento State University released a study that verified the fact that the cost/benefit ratio does not favor shuttering the parks at all. In other words, closing the parks would ultimately result in losing money, not gaining it.

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Certainly, the legislature and governor have demonstrated repeatedly that logic is not always their strong suit. But this logic is inescapable.

For the last month, reports have been drifting in that various states have been trimming their troubled budgets by cutting prisoners food—both in quantity and quality. For instance, Georgia cut inmates food from three meals down to two.

And, in Alabama, a federal judge ordered the Morgan County sheriff locked up in his own jail for contempt for failing to adequately feed his inmates.

Yet, while they were reported locally, the cuts have flown mostly under the national media radar.

Yesterday, however, the NY Times ran an editorial pointing to the budget cuts that are being made at the expense of those who have no power over even the food they eat:

With budgets tight, states and local governments have been looking at prisons — and prison food — as a place to save money. Three days a week, Georgia now serves inmates only two meals. And across the country, there have been increasing reports of substandard food. This is inhumane. Adequate meals should be a nonnegotiable part of a civilized penal system. It is also bad policy. Researchers have found a connection between poor food quality and discipline problems and violence. Alabama allows sheriffs to keep food money they do not spend, and the sheriff reportedly pocketed more than $200,000 over three years.

Prisoners’ rights advocates say they are receiving an increasing number of complaints from inmates nationwide who report being served spoiled or inedible food or inadequate portions. Earlier this year, a riot at Reeves County Detention Center in Texas caused heavy damage to a prison building. Inmates said it was prompted in part by poor food.

Cutbacks in food could violate inmates’ constitutional rights, notes Elizabeth Alexander, director of the American Civil Liberties Union’s National Prison Project, if they create a substantial risk of serious harm — a particular concern for inmates with diabetes and other illnesses.

In California I have received reports of inmates being fed food that is stale and past the marked sell-by date. (Last month, for instance, I got a call from an inmate at Ironwood state prison who told me that prisoners were staging a hunger strike because the were twice served a packaged food meal that had a sell-by date of 2007.)

Hey, maybe as alternative to underfeeding prisoners, we could cut inmate healthcare.

Oh, no, wait. In California, we’ve already cut inmate health care past the boundaries of Constitutionality.

Ooops. My bad.

God forbid that we should address budget shortfalls by quickly instituting some smart sentencing reforms in order to cut the number of people we lock up every year.

Nah, let’s just cut the portions of food we dole out.

After that, maybe we can cut education again.