Jon Coupal is nothing if not blunt when he describes one motive behind a Ventura County ballot measure that would replace the “defined benefit” pensions currently enjoyed by county employees and replace them with 401(k)-type plans for all future hires.

“This is meant to be a template for other counties,” Coupal tells Capital & Main. By that, the Howard Jarvis Taxpayers Association’s president means the measure’s conservative and libertarian backers see the “Sustainable Retirement System Initiative” as the newest and most promising weapon in their assault on California’s public employee retirement plans. Having failed to place similar measures on state ballots in  2012 and 2014, a coalition of wealthy individuals, anti-tax activists and government privatizers has seized on an aspect of California law that allows 20 counties to fashion their own public employee retirement policies apart from the CalPERS system that administers such policies for nearly all of the state’s remaining 38 counties.

Ventura, with its postcard shoreline, rugged mountains and groves of avocado and lemon trees, is one of the 20 so-called ’37 Act counties whose retirement systems operate under the County Employees Retirement Law of 1937. These range from Los Angeles County, the most populous in the nation with nearly 10 million people, to sparsely populated Mendocino County along California’s northern coast. Few people doubt that Ventura, which borders Los Angeles County, potentially represents the first domino in a series of future measures targeting public employee pensions.

“I guarantee you that when this passes,” Ventura County Supervisor Peter Foy has said, “in 2016 every ’37 Act county will have this on their ballot.” Foy, who was addressing a supervisor’s meeting, is a strong advocate for the county ballot initiative. He also happens to have served as chairman of the state chapter of Americans for Prosperity, the radical corporatist group funded by billionaire David Koch. (Foy, who has in the past denied such a connection with Koch, did not return multiple requests for an interview.)

County employees are generally paid less than their private sector counterparts and have long counted on traditional defined benefit plans as a kind of economic equalizer. The Ventura measure would phase out these retirement plans for anyone hired after July 1, 2015 and throw future retirees’ pensions into the riptides of Wall Street trading. (During the last stock market crash and resulting recession, an estimated $16 trillion in household wealth was lost in America.) Furthermore, new employees would be ineligible for the county’s existing death and disability plan. Although the initiative states a new death and disability plan “shall be established by the Board of Supervisors,” it provides no details about its terms.

“Ending the defined benefit plan is a time-bomb disaster for lower income people,” cautions Steve Bennett, chairman of the Ventura County Board of Supervisors. “It’s very difficult for them to save and they won’t be able to maneuver the 401(k) [system] to appropriately invest their savings,” Bennett told Capital & Main.

Proponents argue that the current system is not financially sustainable and is forcing Ventura County further into debt. Critics, however, say the claims of financial doom are greatly exaggerated and they counter that if the measure is adopted it will be harder to attract and retain good employees, particularly in the area of public safety.

Virginia Tinoco

At 43, Virginia Tinoco has worked as a public employee in Ventura County for more than two decades — as a canine handler, jailer and, for the last 18 years, as a deputy sheriff who’s been forced to pull her gun far more often than she’s been comfortable with. She will not be affected by the measure’s passage, but worries about future generations of law enforcement officers, firefighters and other county employees whose retirements will be at the mercy of the New York Stock Exchange.

“Why would I risk my life day in and day out, without knowing I had a secure retirement?” asks Tinoco. “If we don’t have a promising future and retirement, why would  anyone want to come here?”

Peter Botz agrees. The 34-year-old firefighter has worked in Ventura County’s Simi Valley for the past six years after previously working as a project manager for Amgen, a biotech company.

“Our job is hazardous,” he says. “If we get hurt on the job, we have a benefit. If we make the ultimate sacrifice and die on the job, the pension system takes care of our families. But the ballot measure doesn’t provide a defined death and disability benefit.”

Unless it is blocked by a pending legal challenge filed by public employee unions, the pension measure will appear on the November ballot. A Superior Court hearing on the matter is scheduled for August 4. The measure’s importance goes well beyond the borders of a single county.

“Everybody is carefully watching what happens in Ventura,” says Robert Palmer, executive director of the Sacramento-based State Association of County Retirement Systems, which represents the retirement systems in 20 California counties, including Ventura. “If Ventura passes the initiative, it likely will spread to other counties.”

“I do see something like this having a domino effect,” agrees Peter Botz. “One of the big points about working here is that people know they have a secure retirement and benefits. If you take that away, a lot of very qualified people are going to leave our department.”

Peter Foy

In addition to Foy and Coupal, the measure has been endorsed across the conservative bandwidth, from the local Lincoln Club to some of the same people and groups that are working to cut public employee pensions statewide and nationally. For example, sponsors of the initiative have declared they have received $150,000 from the Action Now Initiative, a Houston-based organization founded by hedge-fund billionaire John Arnold, a leader of nationwide efforts to limit pensions for state and municipal workers. He and his wife Laura disclosed the contribution to the Committee for Pension Fairness, which filed the Ventura initiative, on the couple’s website page dealing with personal advocacy and political contributions. The $150,000 is a significant contribution for a ballot measure in a single county and approaches Action Now Initiative’s $200,000 contribution supporting San Jose Mayor Chuck Reed’s failed 2014 statewide initiative effort.

For its part, the Committee for Pension Fairness commissioned a report from the Reason Foundation, a Los Angeles-based conservative and libertarian public policy group that advocates privatizing government functions and cutting public employee pensions. That report claimed the initiative would save Ventura County taxpayers $460 million over 15 years and eliminate the county’s pension debt. (Coincidentally, the Arnolds’ foundation has given $1,013,000 in grants to the Reason Foundation, according to the former’s website.)

Steve Bennett, the Board of Supervisors chairman, is highly skeptical of the Reason Foundation and its white paper.

“It’s not an objective evaluation of our pension system,” Bennett says in an interview. “I didn’t expect much else. I’m familiar with their biases. The Reason Foundation supports policies that lead to greater income inequality in the United States.”

Last year Capital & Main revealed that the Reason Foundation hosted a secret “pension summit” in Sacramento in May, 2013. The foundation’s most prominent trustee is David Koch, a longtime advocate of reducing pensions for public employees. The foundation is also allied with the Koch-funded American Legislative Exchange Council (ALEC).

None of these connections surprises Jordan Marks, executive director of the Washington, D.C.-based National Public Pension Coalition.

“What we’re seeing in Ventura County is what we’re seeing all over the country,” says Marks. “Out-of-state, dark money forces — often with the assistance of John Arnold — are dropping in and creating poorly written, ideological ballot initiatives that will rob workers of their modest retirements . . . In the last year alone we’ve witnessed similar efforts in Cincinnati, Tucson and Phoenix, and only expect that number to grow.

“Arnold’s work on gutting pensions doesn’t stop at ballot initiatives,” Marks continues.  “His billions finance tainted research, anti-pension journalism and the careers of politicians who make pension-gutting the centerpiece of their issue platform.”

Both its proponents and opponents believe the Ventura County measure has a good chance of being approved by the voters if it remains on the ballot. Supporters collected more than 40,000 signatures, considerably more than the 26,000 required to get the initiative on the ballot. To a large extent, the drive has been fueled by publicity about instances of excessive pensions paid to a handful of Ventura County officials.

In one well-publicized instance, former Ventura County Sheriff Bob Brooks’ annual pension totaled $283,000 after a longevity bonus and other items were factored in. When Brooks filed a claim in 2013 seeking to increase his pension by $75,000 a year, the resulting furor powered calls for pension reforms and helped set the stage for the current ballot initiative.

“This stoked a lot of public anger and rightly so,” says Rick Shimmel, executive director of the Ventura County Deputy Sheriff’s Association and a leading voice in the fight against the pension ballot initiative. “Unfortunately, the proponents capitalized on what appears to be overly generous pension benefits to vilify the system.”

Shimmel says that the average annual pension for public employees in Ventura County is $34,344. Generally deputy sheriffs and firefighters make higher pensions because on average they have longer service records and higher pay than most other county workers. Safety members make up 18.6 percent of all employees who work for Ventura County.

Besides focusing on selective abuses, advocates of reducing public employee pensions argue that public sector pensions are out of line with those in the private sector. But Jean-Pierre Aubry, assistant director of state and local research for the Center for Retirement Research at Boston College, says it is important to examine the total compensation picture, not just pensions.

“On the whole, there is basic parity between public employees and those in the private sector,” says Aubry, co-author of a 2011 study that compared the compensation of state and local public employees with that of private sector workers. “In the private sector, there are better wages and lesser pensions. In the public sector, there are less wages and better pensions. The total compensation is about the same.”

“Any honest effort for reform should begin with that question,” he says, referring to the total compensation picture. “If you just cut pensions, you are saying to public sector workers, ‘I’m offering you less.’ Public sector employers should be cautious in just cutting benefits because you’ll get a lower quality workforce going forward. We think that’s conspicuously absent from the conversation.”

Also Read:

• Pension Cutters Bet Against Prosperity
• Pension Cutters: Bipartisan Slogans, Right-Wing Money
• Promise Breakers: How Pew Trusts Is Helping to Gut Public Employee Pensions
• Slash and Burn: The War Against California Pensions

This week we continue our series about the shaping of California’s laws and policies by Corporate Democrats. In his second article, Pulitzer Prize-winning investigative reporter Gary Cohn examines how a bill does not become a law when powerful business interests lobby against it.

Jim Araby was dead asleep when his cell phone rang at 6 a.m. last June. Until then the labor activist had been enjoying an idyllic family vacation in Guerneville, on Sonoma County’s Russian River. But the number appearing on his phone told him the call was from Sacramento, suggesting bad news. The voice he now heard confirmed it.

“Can you get here?” a union colleague asked. “We need you.”

Araby, a regional director of the United Food and Commercial Workers, listened in dismay as he learned that Assembly Bill 880, which more than half a dozen community groups and unions had supported, and which had looked certain to land on top of Jerry Brown’s in-box, was suddenly an endangered species.

Introduced by Jimmy Gomez (D-Los Angeles), AB 880 was designed to close a legal loophole in the new Affordable Care Act (ACA, or “Obamacare”). Without the bill, large employers could get around a requirement to provide their full-time workers with health care by cutting their hours enough to make them part-time. The measure would impose penalties on companies with 500 or more employees that cut work hours and eliminated benefits in response to ACA – and in the process dumped their workers on California’s taxpayer-funded Medi-Cal program. It was a bill that, according to the University of California, Berkeley’s Center for Labor Research and Education, could potentially benefit at least 310,000 Californians.

“How a Health Care Bill Didn’t Become a Law” from LAANE on Vimeo.

According to Anthony Wright, executive director for Health Access California, a statewide health care consumer advocacy coalition, AB 880 was “first and foremost a way of getting people coverage. This was a commonsense policy — it expanded access to coverage, leveled the playing field for employers and increased funding to improve the health care system we all rely on.”

But now the bill, which required two-thirds passage in the Assembly and Senate, was in deep trouble. What left Araby incredulous wasn’t the predictable Republican opposition. The Democrats, who were carrying AB 880, owned a supermajority in both houses of the legislature. And even though the bill had made the California Chamber of Commerce’s dreaded Job Killer list, this had seemed to be one battle the Chamber would lose.

Although failure to enact AB 880 would not result in workers who were already enrolled in Medi-Cal losing that coverage, its passage would have prodded large companies to provide medical care for those low-income workers and their families who were not on Medi-Cal. It would have also helped correct an inequity by requiring such companies – and not taxpayers – to shoulder the burden of their employees’ health care. Defeat of AB 880 would allow large companies to cut the hours – and thus, incomes — of their most vulnerable employees.

Araby, wearing board shorts and a tank top, hopped into his Ford Fusion and sped to Sacramento, gnawed by the news that his bill wasn’t being killed by Republicans or the Chamber – not directly, at least. Instead, it was being sabotaged from within by eight Democrats.

Two and a half hours later, Araby pulled several of the eight off the Assembly floor and lobbied for their votes. In vain: On June 27, 2013, the California Assembly voted 46-27 to approve AB 880 – exactly eight votes short of the required 54 Yes votes. “Cal Chamber Stops Job Killer on Assembly Floor,” crowed a California Chamber of Commerce press release the next day.

The eight Democrats who helped defeat AB 880 included Fresno’s Henry Perea, the leader of a somewhat nebulous group known as the Assembly Moderate Caucus. Perea abstained on the final vote but worked behind the scenes to turn Democrats against the bill. His compatriots included four lawmakers who together had received more than $549,000 in contributions and independent expenditures from the California Chamber of Commerce’s political action committees. The money had rolled in just before their freshmen victories in the 2012 election. Three of the four – Tom Daly of Anaheim, Adam Gray of Merced and Cheryl Brown of San Bernardino — voted No on AB 880. Raul Bocanegra of Pacoima abstained – a passive gesture that would prove just as effective as a No vote. Three other Democrats also abstained – Rudy Salas of Bakersfield, Steve Fox of Lancaster and Al Muratsuchi of Torrance. (None of the eight responded to interview requests for this article.)

Click graphic for larger image

The bill’s opposition comprised a Who’s Who of California’s most influential corporate interests, including the California Chamber of Commerce, California Restaurant Association, California Retailers Association, Western Growers, California Grocers Association, California Manufacturers and Technology Association, and corporations including Walmart, Target and Darden — the Orlando-based restaurant chain that owns Red Lobster and Olive Garden, among others, and which was one of the Affordable Care Act’s biggest opponents.

The lobbying against AB 880 was spearheaded by Bill Dombrowski, president and chief executive of the California Retailers Association. In an interview with Capital & Main, Dombrowski explained his opposition to the measure.

“The bill basically penalized companies for reducing hours in anticipation of Obamacare,” Dombrowski says. “The penalties were so onerous it made it almost impossible to make money. A number of companies said they would not make money in California if this was the law.”

A year earlier, in 2012, Darden Restaurants had considered hiring more part-time workers as a way of cutting its health care obligations to company workers, but dropped that plan after a public outcry. In May, 2013, Darden’s chief executive, Clarence Otis, flew from Florida to Sacramento to lobby against AB 880 — a signal that the California bill had potential implications nationwide. If California passed this bill, other states might follow suit.

Despite the tough lobbying against it, AB 880 was approved by the Assembly’s Appropriations Committee later that month. Among those voting for it was Raul Bocanegra, who would later abstain during the full floor vote.

The lobbying intensified, and in the week leading up to the crucial June vote, Walmart and Target – two of the bill’s key opponents – gave political contributions to select Democratic legislators. On June 20, Walmart gave $4,000 apiece to Bocanegra, Brown, Perea and Salas. Four days later Target gave $1,000 apiece to Bocanegra and Gray. The bill failed on June 27. A few days later, Cheryl Brown explained her No vote.

“I reluctantly had to oppose AB 880, a bill that was supposed to curb the practice of mega companies forcing employees onto government-assisted medical care,” Brown said in a press release. “While I agree that no business should generate profits by subsidizing their employees’ medical care with taxpayer dollars, AB 880 was not the remedy it was touted to be.”

This would not quite be the end of the story. On November 14, Darden gave identical $4,100 contributions to all eight Corporate Democrats who had helped kill it. GMRI Inc., a Darden subsidiary, gave similar $4,100 contributions to the same lawmakers in the following weeks.

After AB 880’s defeat, its combatants would either celebrate victory or lick their wounds, but all moved on to other legislative fights. Yet the thousands of Californians who would have benefited from company-sponsored health care plans became the collateral damage in the Assembly Moderate Caucus’ attempt to push the Democratic Party to what it considered “the center.”

Barbara Collins was one of these unfortunates. Now 38, she had worked in a Placerville Walmart for more than seven years when she was fired during the same month as AB 880’s defeat. For Collins, AB 880 epitomized public interest legislation.

“To me, it was a win-win situation,” she tells Capital & Main. Like many California workers – especially low-income workers – Collins trusted the traditionally worker-friendly Democratic Party to pass AB 880.

“I was devastated,” says Collins, who was earning $12.05 at the time of her termination. She adds that she doesn’t know what led the eight moderate Democrats to help kill the bill. “I don’t understand why, if [Democrats] are for the people, they didn’t want to help the people.”

It’s tempting to say that if the Moderate Caucus didn’t exist, it would be necessary to invent it. But in fact, it was invented, by the very forces that killed AB 880. The caucus came into existence in the late 1990s as a way for Democrats to raise money from corporate interests. But it has gained new momentum and attention as a direct result of the top-two primary system that voters approved in 2010, after years of being told by editorial writers that Sacramento gridlock was the result of centrifugal ideological forces tugging both parties to left-right extremes.

A top-two primary system, in theory, should pull candidates to “the center,” a political Promised Land of common sense and compromise – and the most votes for any candidate willing to tone down his or her rhetoric.

In reality, the new system has allowed members of a dwindling Republican Party to cast enough primary votes for pro-business Democrats to ensure costly and divisive intra-party runoffs in November. Sometimes progressive candidates lose these runoffs, as those same Republicans, with no hope of electing their own candidates to state office, return to the polls to push the “lesser evil” Corporate Democrats over the top.

Proposition 14, the 2010 ballot initiative that created the top-two primary system, was not born in a vacuum, but was fought for by the California Chamber of Commerce and other business interests. Once the measure was adopted, the Chamber followed up by heavily backing corporate-friendly Democratic candidates in ensuing election races.

The first test came in 2012, when nine business-friendly Democrats, supported by the Chamber or its affiliated JobsPAC, were elected to the state Assembly – including four who later abstained on AB 880. In a statement on its website, the Chamber attributed its success in helping to elect “business-friendly Democrats” to the top-two primary system and a similarly new redistricting process, both of which were backed by the Chamber.

Four years ago Richard Winger, the publisher and editor of Ballot Access Now, opposed Proposition 14.

“There’s no doubt it’s made money more important,” Winger says today, explaining that candidates now have to plan on raising large amounts of money both for the June primary and the November general election.

For their part, the “Mods” cannot be said to have brought much moderation under the Capitol dome. Instead, they’ve hindered or blocked an array of initiatives aimed to strengthen consumer rights, the environment and rights in the workplace, and to expand health care coverage and educational opportunities. Occasionally Corporate Democrats go on the offensive to help approve pro-business legislation, such as AB 1309, a law passed to exclude injured professional athletes living in California from applying for workers compensation. It was fought for by virtually every corporate-run professional sports team in the state, along with various insurance companies and the L.A. Chamber of Commerce. Its author? Henry Perea, the head of the Assembly Moderate Caucus.

Ben Tulchin, a pollster and political consultant who recently participated in a University of California, Berkeley forum on the top-two primary system, says the new process has also made elections more complicated – to the advantage of big business.

“They were losing,” Tulchin says of the latter under the old closed primary system, in which Democrats and Republicans each elected their own candidate to run in the November election. “The business interests’ best hope is [now] to play in Democratic races and try to elect a more moderate member of the legislature. This gives them an opportunity they did not have before.”

Meanwhile, those who lost the most with AB 880’s defeat can only wonder what went wrong.

“We were very, very disappointed in the vote,” says Anthony Wright of Health Access California. “And we were certainly disappointed that there was opposition within the Democratic caucus.”

Also see:

In Plain Sight: The Rise of Corporate Democrats in California

When Californians elected Democratic supermajorities in the state Assembly and Senate in 2012, many expected to see a new era marked by progressive policies on everything from the economy to the environment to education. While some change has come, it’s not the kind most voters envisioned when they left the polling booth two years ago.

A central reason, as Pulitzer Prize-winning investigative reporter Gary Cohn reveals in this first article of a new series, is the emergence of the Corporate Democrat, who is not a traditional moderate but an enabler of big developers, gambling concerns, insurance companies and other interests. With the continuing decline of the Republican Party in the nation’s largest state, the Corporate Democrat promises to shape California politics and policies for years to come.

Marin County is one of California’s most liberal regions and, with its iconic redwoods and stunning coastline, it is also a power center for environmental activism. And so, when a bill to give the state Coastal Commission authority to levy fines against shoreline despoilers came for a vote in the state Assembly in 2013, it was taken for granted that Marin’s new Assemblyman, Marc Levine, would vote for passage. That didn’t happen. Instead, the San Rafael Democrat sat out the single most important vote for his constituents that year – which helped doom the measure.

Marc Levine

But Levine was not finished. In Sacramento he would abstain or skip votes on bills helping farm workers and creating a bill of rights for domestic workers. He has also voted against legislation requiring economic impact reports for big box stores and requiring more rate-increase disclosure from Kaiser Permanente. That Levine keeps at arm’s length the progressive values of the 10th Assembly District, which includes much of equally liberal Sonoma County, should come as no surprise. During his two Assembly campaigns he has received hundreds of thousands of dollars from some of the state’s largest business interests.

What is baffling is that Levine, who declined to comment for this article, is neither a DINO (a conservative who is a Democrat inname only) nor a farm belt centrist. He remains a committed suburban liberal. One, that is, who happened to attend a local Mitt Romney rally in 2012 and who felt at ease appearing at a Republican Lincoln Dinner last year. Levine is also no aberration. Rather, he is part of a new breed of Democrat, one exceedingly attentive to big business while tone-deaf toward the Democratic Party’s traditional base, which includes union workers, environmentalists and public school advocates.

The Corporate Democrats from LAANE on Vimeo.
At the very moment that California’s Republican Party is melting into electoral irrelevancy, Levine and other hybrid Democrats are appearing in all corners of the state. Their ranks include Bill Dodd, a Napa County Supervisor and former Republican, and Palmdale Assemblyman Steve Fox, another erstwhile Republican. Fox, who says he is proud to have earned the California Chamber of Commerce’s highest approval rating for a Democrat, tells Capital & Main that the Democratic Party’s becoming friendlier to business is a positive development.

“We’re pulling the party to the center, towards being more business friendly,” Fox says.

Steve Glazer

Then there’s Orinda city councilman Steve Glazer, a former top advisor to Governor Jerry Brown, who recently worked as a consultant to the California Chamber of Commerce and its Jobs Political Action Committee, fiercely challenging the right of transit workers to strike.

“I am trying to redefine what it means to be a Democrat,” Glazer told Capital & Main. “I think you can be a financial conservative and be a strong Democratic officeholder.”

The rise of what might be called the Corporate Democrat can only be partly explained by shrinking GOP delegations in Sacramento. It is also the product of redistricting and effects of the “top-two primary,” by which members of the same political party can win the top two primary positions and then face off in November. These two structural changes were approved by voters in, respectively, 2008 and 2010. Since then, powerful corporations, agricultural associations and other political high rollers have been turning away from their traditional Republican partners and placing more and more of their chips on the Democratic end of the table – specifically, on politicians like Marc Levine. These changes are only now catching the attention of Democratic electeds and activists, who see a coming fight for the soul of their party.

“Democrats, we are just as guilty of getting sucked into the influence of money and power about which we criticize Republicans,” state controller candidate Betty Yee told Democrats at the party’s annual state convention last month. Yee, who is a member of the State Board of Equalization, expanded on her wake-up call in an interview.

“What’s different now is the wholesale moderation of Democratic positions on issues we used to own – education, income inequality and poverty,” Yee says.

Those issues don’t rate high on the bucket lists of the corporations and millionaires now backing friendly Democratic politicians.

Bill Dodd

Campaign contribution records maintained by California’s Secretary of State reveal a dense constellation of wealthy backers of politicians such as Levine, Glazer, Dodd and Fox.

Both Levine and Glazer, for example, have received top dollar from Los Angeles billionaire Eli Broad, PG&E, Time Warner, Walmart, Safeway and such pharmaceutical titans as Eli Lilly and Pfizer. Levine, Glazer and Dodd count as patrons Walmart heiress Carrie Walton Penner, San Francisco magnate Joseph O. Tobin II, the California Chamber of Commerce, public pension reform advocate David Crane, Gap stores scion William S. Fisher and Basic American Foods heir George Hume. Meanwhile, former Los Angeles mayor Richard Riordan has contributed to both Levine and Dodd’s campaigns, while PricewaterhouseCoopers, the California Real Estate PAC and the California Forestry Association PAC are among those donating to both Levine and Fox. And Levine, Glazer and Fox all receive funds from AT&T’s political action committee.

This donor list represents only a selection of contributors who have donated money through mid-April of this year – the number of donors and the amount of campaign spending will only increase as the June primary nears, and then afterwards, leading up to the November runoffs.

“What business is doing is coming to terms with the new structure of politics in California,” says Raphael Sonenshein, executive director of the Edmund G. “Pat” Brown Institute for Public Affairs at California State University, Los Angeles. “The top-two primary [system] really opens the door to be able to support business-friendly Democrats.”

Fernando Guerra, a political science professor and director of the Thomas and Dorothy Leavey Center for the Study of Los Angeles at Loyola Marymount University, agrees.

“This new environment,” says Guerra, “where Democrats are very dominant, and with new electoral laws, allows for a strategy for electing moderate Democrats in districts particularly defined as liberal-leaning districts.”

Indeed, a recent University of Southern California study found that the electoral reforms in California are associated with an ideological shift toward the center for Democrats (i.e., in a rightward direction) in California’s state legislature — with no perceptible move to the center from the Republican Party. Except, perhaps, from Republicans who have simply switched parties. The legislative effects of such defections have yet to be gauged.

In 2012 the California Chamber of Commerce and other business groups played a key role in targeting a pair of progressive, pro-labor Democratic incumbents in two liberal districts. In Northern California, Marc Levine narrowly defeated Michael Allen, while in the 50th Assembly District, which includes Santa Monica, challenger Richard Bloom squeaked by Betsy Butler. Levine and Bloom (who was then mayor of Santa Monica) were widely considered friendlier to business than Allen and Butler.

“Those are two shining examples of candidates that might not have been elected pre-top two primary,” says Franklin Gilliam Jr., dean of the University of California, Los Angeles’ Luskin School of Public Affairs. The USC study similarly pointed to these races, adding that “Levine supported the CalChamber in 43 percent of votes, which is high for a Democratic legislator.”

In fact, the Chamber’s Jobs PAC had paid at least $100,000 for polling and mailers that were used to attack Allen and Butler. A group affiliated with the Western Growers Association was heavily involved with the attack mailers – which played a role electing Levine and Bloom.

It’s not unusual for big business to hedge its bets by contributing to liberal candidates. Likewise, the mere acceptance of corporate money doesn’t guarantee a candidate will always vote business’ way. What raises eyebrows about Corporate Democrats, however, is the preponderance of corporate money in their coffers, which more resemble the treasuries of traditional Republican candidates than of progressives. At first glance, Corporate Democrats may not seem to be conservative surrogates, thanks to their votes for causes dear to progressives and because of the ratings they receive from liberal activist groups. To look at the high rankings (often in the 90 to 100 percentiles) bestowed by environmental organizations, reproductive-rights groups and unions – and correspondingly low scores from, say, conservative tax organizations and gun lobbyists – Corporate Democrats have little trouble appearing to be pragmatists who are forced by circumstances to stand up to their party’s base for the common good of California.

Steve Fox

Yet the fact remains that California is the most progressive state in the nation, governed by the most progressive wing of a Democratic Party that has discovered its Sacramento supermajority is not so super. (What’s stopping the state from enacting more visionary legislation than it has since 2012? Or from offering its low-income workforce a higher minimum wage than $10 an hour – and sooner than 2016?) Unlike Washington D.C., where progressive reforms have been thwarted by a determined conservative opposition, in California that opposition comes from within. And, voting records show, this opposition does not necessarily exercise power in obvious ways.

Once elected, Corporate Democrats don’t always flex their muscle by openly sponsoring or supporting business-friendly bills, but sometimes by doing nothing – by abstaining from voting on bills that business opposes. A single abstention can mean life or death for a measure that requires a supermajority to pass. The bill to give enforcement power to the Coastal Commission, AB 976, for instance, died after Levine and several other Democrats abstained on the final vote. The same thing happened to AB 880, the “Walmart Loophole” bill, which received 46 Aye votes, with 27 lawmakers voting against it and six abstaining. A total of 54 Ayes, or a two-thirds supermajority, was required. Although Levine voted Yes, three other Democrats voted against the bill, while five more abstained.

The California Chamber candidly acknowledges the importance of persuading Democrats to abstain from voting as part of its strategy to defeat bills business opposes. In its website recap of legislators’ 2013 voting records, the Chamber notes, in a section titled “When Not Voting Helps”:

Sometimes a legislator is unwilling to vote against a colleague, but is willing to support the CalChamber’s opposition to a bill. In such cases, a legislator may abstain from voting, which will hinder passage of a bill, just as a “no” vote does.

Kenneth Burt, who has taught as a visiting scholar at the University of California at Berkeley’s Institute of Governmental Studies, agrees that the Chamber has been increasingly involved in trying to elect Democrats who are aligned with big business interests. Burt adds that this process has accelerated since the 2010 passage of another ballot initiative, Proposition 25, which allows a simple majority vote to pass the state budget. (Disclosure: Burt also serves as the political director for the California Federation of Teachers, a financial supporter of Capital & Main.)

“Prop. 25 eliminated the ability of a few Republicans to demand additional tax breaks for big business as the price of passing a budget,” Burt says. “As a result, the Chamber could no longer get its Republican allies to hold hostage the whole legislative process.”

Loyola Marymount’s Guerra foresees consequences for progressive initiatives in California that are more profound than the loss of one party’s supermajority.

“I could see,” Guerra says, “in the future almost three parties in California — Republicans, the liberal progressive wing of the Democratic Party and moderate Democrats.”

Such a tectonic divide may already be in motion.

Andrea Vidales makes $9 an hour taking care of a blind Korean War veteran and an elderly couple in their Merced County homes. Under California’s In-Home Supportive Services (IHSS) program, she spends about 60 hours every week bathing her clients, preparing their meals, cleaning house, paying their bills, driving them to doctors and dealing with other aspects of their medical care. She was delighted, then, when the Obama administration, through the U.S. Department of Labor, announced new regulations last September requiring in-home caregivers to be paid overtime for working more than 40 hours a week.

Andrea Vidales with Juan Roybal

Her good fortune didn’t last long. On January 9, Governor Jerry Brown unveiled his proposed $155-billion budget for 2014-2015 at a press conference in Sacramento. Under the governor’s budget, Vidales and hundreds of thousands of other home health care workers would be prohibited from working more than eight hours a day, or 40 hours a week. Now, suddenly, the state’s home health care workers are not only facing the possibility of not receiving overtime, but of also losing the extra hours they’ve been accustomed to working.

The overtime prohibition would cover all IHSS caregivers. The IHSS program, which has operated for nearly four decades, is designed to allow seniors and people with disabilities to live in their homes rather than in more expensive institutions – whose per-patient costs typically run five times as much as in-home care. Under the program, about 360,000 home health care workers provide care to roughly 450,000 people as part of California’s Medi-Cal program. It is five times larger than the next largest program operated by any other state.

Brown’s provision is intended to save California from paying the overtime required under the new federal regulations. But home health care workers say the overtime prohibition would have a devastating impact on their incomes, and advocates for seniors and the disabled claim that care would be disrupted for some of the state’s most vulnerable people. The ensuing conflict between federal generosity and the pressures of a state budget have set in motion a classic example of good intentions producing unintended consequences.

“It’s really going to create chaos for recipients and for present caregivers,” says Gary Passmore, vice president of the Sacramento-based advocacy group Congress of California Seniors. He warns that the elderly and disabled who require care beyond 40 hours a week will be forced to rely on other caregivers with less familiarity with their special needs. “Ironically, the people who need the most hours [have] the highest needs,” he says. “They are the frailest and the most profoundly disabled.”

The impact would be felt by a largely female workforce, whose members earn an average of $11.62 an hour. Vidales, for instance, would have more than 80 hours of pay cut each month and would lose more than a third of her current income.

“I would be really, really broke,” Vidales, a 62-year-old resident of the Central Valley town of Atwater, tells Capital & Main.

Under the program, elderly, disabled and blind recipients can chose the person who cares for them. In California, more than 72 percent of IHSS recipients receive care from a relative and more than 42 percent of caregivers live with the person for whom they provide care.

Mary Burch (r) with daughter Christy

Mary Burch, a 72-year-old Modesto widow, is one such caregiver. She takes care of her severely disabled 40-year-old daughter, Christy. Under the IHSS program, Burch is currently paid $9.38 an hour for 272 hours a month. If the overtime ban goes into effect, she would lose more than 100 hours of work each month, a 40 percent cut in her income. She says the $1,000-a-month cutback might force her to lose her house.

“It would just devastate us,” she says in an interview. “I couldn’t make it if they cut my hours to 40 a week.”

She adds, “I’m angry and not only for myself. I can’t understand Governor Brown’s thinking. A lot of people are going to be forced to go to nursing homes. It doesn’t make any sense to me.”

Why should family members get overtime pay to take care of their own family members?

Like many other caregivers, Burch gave up a career to care for a family member. Moreover, since the program allows many elderly and disabled people to remain in their homes, it drastically cuts the need for expensive institutional care: The annual cost for someone in a skilled nursing facility is more than $65,000, compared with $13,000 for someone with an average number of IHSS hours, according to a 2012 report from the state’s Legislative Analyst’s Office.

The Congress of California Seniors’ Passmore says that, like any other workers, family members employed as home health care workers have a right to overtime.

“Just because they are a family member doesn’t disqualify them from having worker rights,” he says. “If you work for a family business, you still get overtime. Overtime is a fundamental worker right. Why would you not? What this argument does is diminish the important work that people [who] provide home care do.”

He adds that in many instances, the caregivers taking care of relatives have given up the opportunity for better paying jobs in order to make sure family members get the best care possible: “I know people who have sacrificed their careers because they felt, as a family member, they could provide higher quality care.”

The Obama administration’s decision to extend overtime pay to two million home care workers nationwide came after nearly two years of debate and much opposition from Congressional Republicans. Under the new regulations, home health care workers, such as those in California’s IHSS program, will be covered by the Fair Labor Standards Act. The new regulations go into effect January 1, 2015.

In announcing them, Labor Secretary Thomas Perez stated, “Today, we are taking an important step toward guaranteeing that these professionals receive the wage protections they deserve while protecting the rights of individuals to live at home.”

Brown himself has been silent on the matter and calls to his office requesting comment were not returned. His administration spelled out its opposition to including state in-home workers in the overtime protections in a May 2012 letter to the Department of Labor, and in an April 2013 letter to the federal Office of Management and Budget.

“Please be advised that we share the President’s and Department of Labor’s view that domestic care and other workers should be fairly compensated for the important services they provide,” wrote Diane Dooley, California’s Health and Human Services Agency Secretary. “However, we believe the proposed overtime rule will significantly impact the hundreds of thousands of persons who are elderly, blind and disabled that depend upon these workers for their care.”

If the overtime rule was extended, Dooley warned, the state would have two options: paying the overtime or avoiding the increased cost by not allowing providers to work overtime. The latter choice would require elderly and disabled recipients to hire supplemental caregivers to meet their needs that exceed the work-limit hours. The cost of paying overtime to IHSS providers is nearly $300 million, and doesn’t include additional millions in administrative costs to reprogram computer software programs used to track and pay IHSS workers, the letter stated. (Critics of Brown’s decision to cap caregiver hours say the figure is closer to $220 million.)

Considering the strong opposition expressed by the Brown administration while the overtime policy was being considered, it wasn’t totally unexpected that the governor’s budget proposal contains the prohibition on overtime. Nonetheless, it has already provoked controversy — labor unions and other groups have vowed to fight the overtime prohibition.

The Congress of California Seniors’ Passmore says he understands the governor’s desire for fiscal responsibility “when you do it fairly and it doesn’t create hardship.” But he says the overtime ban involving IHSS workers isn’t fair and doesn’t make sense.

“We think it’s a wrongheaded policy,” he says, adding that the state needs to come up with the funding to pay the overtime.

“I’d rather have the extra hours and not be given overtime,” says Vidales when asked about the issue. “I will have a hard time deciding who to cut back on. That’s my dilemma. I’ve been with these people for years. This is more than just a job. You become attached to these people. They count on me.”

Kady Crick

To help others understand why paying overtime is a responsible policy, proponents point to home health care worker Kady Crick. For the last five years Crick, a 58-year-old Riverside woman, has taken care of a 38-year-old neighbor who suffers from lupus and heart and kidney problems.

“We’ve gotten to have a strong bond,” says Crick. “She’s not only my patient, she’s my friend. It would be hard to have a stranger come in because lupus [care] isn’t a science. . . . I’ve kept her out of the hospital for two years.”

Crick now takes care of her neighbor about 202 hours a month, and earns $11.50 an hour. Under the new regulations, Crick’s hours would be cut to 160 a month, about a 20 percent reduction. To make up the difference, her client would have to interview and hire a supplemental worker who doesn’t have the same familiarity with her symptoms and medical problems.

“It’s not just a job for me,” Crick says. “I care about her wellbeing, I work really hard.”

Andrea Vidales, the Atwater woman who takes care of three people in Merced County, has a similar bond with those she cares for. One of them is Juan Benjamin Roybal, a retired book seller and Navy veteran who served in the Korean War. Roybal, who is 82 years old and blind, says he trusts and depends on Vidales.

“She keeps track of my banking, she knows where all the food is,” he says, listing a few of the ways that Vidales helps him navigate his life and remain in his home.

“I wouldn’t want to have anyone other than her,” he says. “She’s indispensable.”

Illustration by Lalo Alcaraz. (Click image twice for full size.)

See Gary Cohn’s reports on California’s enterprise zone program and the tax credits received by two Sacramento strip clubs.

To appreciate the value of a community college education, consider the transformation of Shanell Williams.

By the time she was a teenager, Williams was constantly getting into trouble on the streets of San Francisco’s Fillmore District. Her abuse of drugs and alcohol, along with a difficult family life, would lead her into the juvenile justice system, drug treatment centers and foster homes.

“I was a juvenile delinquent,” she admits.

Today Williams, now 29, hardly resembles that troubled youth. She is a hard-working student at City College of San Francisco, taking urban studies courses and hoping to transfer to Stanford University or the University of California at Berkeley. She has served as president of the student council at CCSF’s Ocean campus and was elected to be the student representative on CCSF’s Board of Trustees.

“Community college has helped give me a pathway to higher education,” she says.

That pathway may soon be closing. A little-known but powerful organization called the Accrediting Commission for Community and Junior Colleges (ACCJC) has announced plans to revoke CCSF’s accreditation on July 31, 2014, subject to appeals and a one-year review. The loss of accreditation would certainly mean that CCSF, which has about 80,000 students and is California’s largest public college, would be forced to close – possibly during its 80th anniversary. Students at unaccredited colleges are not eligible for student loans or other types of financial aid through government agencies.

The decision to impose sanctions on CCSF has set in motion a fierce yearlong struggle that is being played out on its 11 campuses, in hearing rooms in Sacramento and Washington, D.C., and in San Francisco courtrooms. San Francisco City Attorney Dennis Herrera, the California Federation of Teachers and the Save CCSF Coalition have filed lawsuits alleging that ACCJC allowed its advocacy and political bias to prejudice its evaluation of college accreditation standards. (Editor’s Note: The California Federation of Teachers is a financial supporter of Capital & Main.)

In Sacramento, the Joint Legislative Audit Committee has approved a request to audit the ACCJC. In Washington, a federal Department of Education staff report has criticized the ACCJC for not including enough faculty members on its accrediting team.

Next week in San Francisco, a state superior court judge will hear a motion from Herrera’s office seeking a preliminary injunction to stop the ACCJC from revoking CCSF’s accreditation status in July. The City Attorney’s office says that the accrediting body has been using stalling tactics and failing to turn over records. The hearing is scheduled for the day after Christmas.

In an interview with Capital & Main, Deputy City Attorney Therese Stewart calls the ACCJC a “rogue agency that is accountable to no-one,” adding that its efforts to revoke CCSF’s accreditation status represent an “unconscionable” move that would devastate tens of thousands of poor and working class students.

“The people served by City College are the most economically in need of a boost,” says Stewart. “Community colleges provide that at an affordable price.”

Stewart says, and the lawsuit filed by the City Attorney alleges, that the accrediting agency took the unfair and unusual step of moving to sanction CCSF and revoke its accreditation because the college’s trustees, faculty and students opposed the ACCJC’s efforts to reshape the mission of California’s community colleges. The ACCJC has been a leading proponent of policies that would focus on degree completion to the exclusion of remedial courses, such as those that teach English as a second language to immigrants.

The lawsuit says that the ACCJC strongly supported state legislation to limit certain low-income students’ eligibility for fee waivers to those identified with a specific degree or certificate. The provision was later removed from the legislation at the urging of advocates for open education, including many members of the CCSF community. At the same time this dispute was raging, the ACCJC was in the process of evaluating CCSF.

Stewart says that it was “highly questionable” for the accrediting agency to become so heavily involved in the legislative fight at the same time when it was supposedly acting as a neutral judge of the college’s academic standards.

“The process is really tainted here,” she says. “It appears to us this was about retaliation for political views.”

Barbara A. Beno, the ACCJC’s president, declined through an aide to be interviewed for this article. A statement on its web site said the ACCJC believes the San Francisco City attorney’s lawsuit and injunction request  are without merit:

ACCJC has confidence in our judiciary to rule appropriately on the City Attorney’s motion. ACCJC will resist any efforts by any third party, including the City Attorney of San Francisco, to interfere with its internal processes, including those processes that relate to the CCSF decision.

Beno’s office later replied to queries about its sanctioning CCSF with a lengthy email attributed to ACCJC’s president. In that statement, Beno said:

“The accreditation process holds colleges accountable. This distresses some people. However, holding colleges to standards ensures quality, betterment and, in some cases, continued fiscal viability.”

“. . . there appears to be an effort to spread misinformation in order to politically pressure the Commission. Instead of joining forces to help improve City College of San Francisco, many purported supporters of the college are bent on disrupting the ACCJC operations. It is simple to blame the messenger of bad news.”

Demonstration to keep CCSF open. (Steve Rhodes/Flickr Commons)

The ACCJC is one of seven regional accrediting bodies that evaluate community colleges around the nation. Accreditors are supposed to ensure that a college meets certain standards for high quality teaching, demonstrates sound management and fiscal practices. The ACCJC is responsible for accrediting California’s 112 community colleges and those in Hawaii and other Pacific locations.

The average sanction rate for America’s other accrediting agencies is about two percent. Ron Galatolo, Chancellor of the San Mateo County Community College District, says that over a 10-year period from 2003-2013, the ACCJC sanctioned 66 percent of California’s community colleges undergoing accreditation. Galatolo believes ACCJC’s sanctions are way out of line with those of other accrediting bodies nationwide and has detailed the statistics in an interview with Capital & Main, and in correspondence sent to other community college chancellors.

Since 2007, for example, all 112 California community colleges were reviewed by the ACCJC, and 71 of 112 colleges were sanctioned (63 percent). In the last three years, 35 of 51 community colleges were reviewed by the ACCJC, and 69 percent were sanctioned.

From 2003 to 2008, ACCJC generated 89 percent of all sanctions nationwide.

“I truly think they are doing the right thing for the purpose of teaching and learning for member institutions,” Galatolo says in the interview. “The problem is that they have lost their way in trying to get there. They have an inordinately high sanction rate compared to the rest of the accrediting bodies throughout the nation.”

In its assessment of City College of San Francisco, the ACCJC identified several problems, stating that the community college did not have a prescribed process and timeline to regularly review its mission statement; that it had not developed a strategy for implementing its planning process; that it failed to properly track student outcomes and that it had run budget deficits.

The ACCJC has issued similar warnings to other community colleges across the state, including the College of Marin, L.A. Trade Tech, College of the Sequoias, Barstow Community College and the Peralta Community College District. Some of the sanctions seem particularly curious. In March 2013, Santa Barbara City College received a prominent national award by the Aspen Institute for “high achievement and performance in America’s community colleges.” In winning this award, Santa Barbara City College was chosen from more than 1,000 colleges nationwide. Nonetheless, the ACCJC had sanctioned the school two months earlier.

By identifying problems, accrediting bodies can present a roadmap for needed solutions. That’s what Rafael Mandelman, an Oakland attorney, anticipated when he was elected to the CCSF Board of Trustees in November 2012.

Mandelman says he began his tenure under the impression that there were problems that needed fixing at City College. But, he tells Capital & Main, he began to have serious doubts about the accrediting process after an unusual conversation with ACCJC president Beno in May 2013. Mandelman says he ran into Beno at a community college trustees conference held at the Ritz-Carlton in Lake Tahoe.

“I introduced myself and she congratulated me on being elected to the CCSF board,” Mandelman recalls. “Then she described CCSF as a ‘classic good versus evil battle’,” Mandelman says. “It was surprising to me. I wouldn’t have thought that the kind of language an accreditor would use.”

Beno has been known to rub state legislators the wrong way – and on a bipartisan basis.

“In all my career,” State senator Jim Nielsen, a Republican, testified about his dealings with Beno, “I have never dealt with a more arrogant, condescending and dismissive individual.”

Democratic Assemblyman Tom Ammiano has said Beno’s commission was “guilty of [having] no transparency and limited accountability, but also a conflict of interest with the director, Ms. Beno.”

This last reference was to Beno’s 2012 appointment of her husband to ACCJC’s evaluation team. According to an email from Beno’s office, the ACCJC was cleared of the conflict of interest charge by the U.S. Department of Education.

Mandelman says he was too shocked by Beno’s comment at Lake Tahoe to pursue the matter at the time. Looking back, he says that one way of interpreting Beno’s remark is, “They [the ACCJC] live in a good versus evil world. They feel the faculty and the teachers’ unions have their hands on the throats of City College and they are on a mission to save City College from the faculty.”

Mandelman says that while the accrediting board may have correctly identified certain problems, the solution is “you fix it, you don’t close it.” And he adds that the threat of a shutdown of the college has already had a negative impact on enrollment and revenue.

Community colleges enroll the state’s lowest-income students, according to the Foundation for California’s Community Colleges. Full-time students have an annual median income of $16,223 — with one-fourth having incomes of less than $5,544 per year. And more than 60 percent of Community Colleges are people of diverse ethnic backgrounds.

Shanell Williams, the student trustee on the CCSF board, epitomizes those demographics in her story of redemption.

“Community college is a lifeline,” she says. “It provides a way for people in poverty who are working class to get higher education at an affordable cost. I wouldn’t be able to go to a four-year college if I didn’t go to City College.”

Then, addressing the ACCJC’s sanctions, she adds, “It’s unfathomable that they would go this far and try and take away this invaluable resource.”

The California Chamber of Commerce represents more than 13,000 businesses, from companies such as Microsoft and Walt Disney, to local companies with small numbers of employees. From its K Street headquarters in Sacramento, the “Cal Chamber,” as it’s colloquially known, analyzes some 3,000 pieces of legislation every year. In the past 10 years, 341 of 353 — nearly 97 percent — of the bills opposed by the California Chamber of Commerce failed to become law. The vast majority of these were never passed by the Legislature and sent to the Governor. Instead, they were killed in committee or voted down by the Legislature or amended to take out provisions opposed by the chamber.

The chamber’s weapon of choice is its highly publicized “Job Killers List,” a roll call of bills the chamber claims threaten the interests of business, though its press releases tend to stress the bills’ menace to California’s economy and its workers’ jobs.

The chamber’s job killers list has nearly been as effective under the governorship of the Democrat Jerry Brown as under that of the Republican Arnold Schwarzenegger, begging the question, How can the chamber stop so many bills in a state Legislature in which Democrats enjoy supermajorities in both houses? Despite repeated requests for interviews, representatives of the Cal Chamber did not to speak to Capital and Main. A spokesperson did, however, provide requested statistics on its job killers project and offered this explanation of the chamber’s success in an email:

The reason the Chamber has been so successful over the years with our Job Killer campaign is that we have done an excellent job of educating legislators and Governors about how these bills will hurt job creators and California’s competitiveness.

Exactly how that is accomplished will be a subject for discussion in a later feature. For now, we offer a survey of bills that were shot down over the last two years, thanks in part to the chamber branding them as job killers. (Read about more targets of the job killers list in Bill Raden’s “Capitol Punishment” sidebar.)

The Walmart Loophole

This year Los Angeles Assemblyman Jimmy Gomez, a Democrat, thought he had found a solution to a vexing problem involving medical coverage for low-wage workers. The federal Affordable Care Act requires large employers to pay a penalty to offset the costs of public subsidies for their employees’ healthcare. But under a loophole, there is no penalty for the employers whose approximately 250,000 California workers are enrolled in Medi-Cal, the state’s Medicaid program for the poor. That is because large companies that pay low wages can shift full-time workers to part-time status. For Walmart employees that shift would mean they are no longer eligible for company health benefits and would instead become eligible for Medi-Cal.

Gomez proposed to close the loophole by imposing stiff penalties on large companies that push their employees onto the Medi-Cal rolls. Assembly Bill 880 would have done that by fining companies with at least 500 employees about $5,000 for each employee who became eligible for Medi-Cal.

AB 880 seemed like a winner in an Assembly controlled by a Democratic supermajority, and it also enjoyed a powerful ally in organized labor. But then one of the state’s most effective business lobbies swung into action on behalf of the country’s biggest private employer.

Gomez’s bill, the Chamber of Commerce claimed, would discourage the hiring of entry or re-entry workers, harm California’s fragile economy and unfairly punish state employers. The chamber wasn’t alone in fighting Walmart’s war: Other business groups piled on, including the California Retailers Association, the California Grocers Association, the California Hotel and Lodging Association, the International Council of Shopping Centers and the Orange Council Business Council. The chamber released a video that opened with a montage of California workers picking fruit, labeling boxes at a distribution center and driving trucks. Those hardest hit by AB 880, the video claimed, would be farmers, restaurants, students and nonprofit organizations, such as the California Community College Foundation. Nowhere was Walmart’s name heard or seen in the two and a half minute clip, which stated that violating companies would be on the hook for fines ranging from $6,000 to $15,000.

AB 880 made it onto the chamber’s Job Killer list on April 25; on June 27 it was declared dead after it failed to win a supermajority in the assembly. It received 46 Yes votes, with 27 lawmakers voting against it and six abstaining. A total of 54 Yes votes, or a two-thirds majority, was required.

Paid Family Leave: A Mega Job Killer?

Does the chamber really believe its own rhetoric about nearly any new regulatory law being a job killer? A recently published book that details the chamber’s opposition to California’s landmark paid family leave law — despite being on the chamber’s job-killer list – suggests it doesn’t. The book, Unfinished Business, is based on original data from fieldwork and surveys of employers, employees and the larger California population. It challenges the chamber’s claims of job loss and economic disarray.

California passed the nation’s first comprehensive paid family leave program in 2002. The law, which provides employees with up to six weeks of paid leave to care for a new baby or seriously ill child, parent or spouse, was approved by the Legislature and signed by then Governor Gray Davis in September, 2002.

At the time, the bill was bitterly opposed by business groups led by the California Chamber of Commerce, which placed it on its job killer list. After it passed, Cal Chamber president Allan Zaremberg said, “We’ve opposed a lot of bills, but this is one of the worst.” And in an opinion column in the San Diego Union-Tribune after its passage, Zaremberg and the presidents of the California Manufacturers and Technology Association, and the California Business Roundtable denounced the new family leave law as a “mega job-killing bill.”

Have, nearly a decade after the law went into effect in 2004, any of those job killing predictions come true? Not according to Unfinished Business’ authors, Ruth Milkman, a professor of sociology at the City University of New York Graduate Center, and Eileen Appelbaum, senior economist at the Center for Economic and Policy Research in Washington, D.C.

“These widely expressed fears regarding [the bill’s] potentially negative effects on business have not materialized,” the authors write. They say that large majorities of employers reported that its impact on productivity, profitability and performance was negligible or positive. “Most of the managers we interviewed felt that the positive benefits of [the law] outweighed its negative features and some were positively enthusiastic,” they conclude.

While their results show that the family leave act hasn’t been a job killer after all, Milkman says that the California Chamber is quick to put that label on bills it simply doesn’t like.

“That’s the rhetoric,” she says in an interview. “People want growth. If they can link a proposed bill and say it retards growth and kills jobs, that can be very persuasive. They take that approach. They basically oppose anything that affects their members. They don’t want to be told what to do.”

A decade after the family paid act successfully went into effect, the California Chamber continues to fight against expansion of the law. Its 2013 job killer list targeted a bill from state Senator Mark DeSaulnier (D-Concord) that would have prevented California businesses from firing or otherwise retaliating against employees who take advantage of the paid family leave program.

Supporters said Senate Bill 761 was needed since many people did not seek the program’s benefits because they were afraid of being fired or retaliated against in other ways. The California Chamber branded the bill a job killer because it would transform the family leave program from a wage replacement program to a new protected leave of absence that would burden businesses. DeSaulnier’s bill failed to pass the Legislature.

Killing the Sugary Drinks Tax

The chamber’s efforts to stop a bill intended to curb childhood obesity shows how it uses its job-killer label to fight legislation that could help millions of Californians – in order to protect a narrow spectrum of business interests.

Last February, state Senator Bill Monning (D-Carmel) introduced Senate Bill 622, which would have raised $1.7 billion annually by imposing a penny per ounce tax on soda and other sugary drinks. The money was intended to help solve the childhood obesity and diabetes epidemics in California by funding school and community programs, according to California Center for Public Health Advocacy, a nonprofit organization and the bill’s sponsor.

The group noted that obesity rates have more than doubled among children and tripled among adolescents in the past three decades; the center claims that unless the obesity epidemic is reversed, one in three children born after 2000 — and nearly half of Latino and African-American children — will develop Type 2 diabetes in their lifetime.

Elizabeth Velten, state and national policy coordinator for the center, says that soda and other sugary drinks play a “unique role in development of obesity and diabetes and obesity,” and that the bill called on the manufacturers of those products to “take responsibility.”

Genoveva Islas-Hooker, program director of the Fresno-based Central California Regional Obesity Prevention Program, adds, “A soda tax would have tremendous benefits in helping to provide resources to the communities such as the one I work in.” Islas-Hooker’s motivation is fueled in part by her own history: As a sixth grader, she gave her aunt insulin injections for diabetes.

SB 622 targeted sugary drinks and no other junk food because sugary drinks are the worst culprits, supporters said. Dr. Thomas Frieden, director of the federal Centers for Disease Control and Prevention, has stated that taxing sugary drinks could be the “single most effective measure to reverse the obesity epidemic.”

The soda tax wasn’t favored solely by health-care advocates. A 2012 Field poll of likely California voters found that 68 percent would support a sugar-sweetened beverage tax to fund childhood obesity prevention programs, such as healthier school menus and more physical education.

The chamber vehemently disagreed. In an April letter to the state Senate Committee on Governance and Finance, it stated, “The California Chamber of Commerce OPPOSES SB 622, as introduced on February 22, 2013, which has been labeled as a JOB KILLER, as it is a targeted tax on one industry that will ultimately harm consumers or workers within the beverage industry.”

Opposition to the bill also came from more than a dozen other groups, including PepsiCo, the California Distributors Association, California Grocers Association, California Nevada Soft Drink Association, California Restaurant Association, the Howard Jarvis Taxpayers Association and the National Organization of Theater Owners of California and Nevada.

Nonetheless, the bill was approved by the Senate Governance and Finance Committee in April and by the Senate Health and Appropriations committees in May. But it never came up for a floor vote because it was held on the Senate Appropriations suspense file in late May. (Placing a bill in the suspense file is a maneuver that allows legislative leaders to quietly kill or place on hold bills that a majority of legislators might support if the bills were allowed to be voted on in public sessions.)

Prior to SB 622’s introduction, studies conducted by the Institute for Health Research and Policy at the University of Illinois at Chicago discredited beverage industry claims that sweet-drink taxes would kill jobs. An April 2013 letter, sent to the California state Governance and Finance Committee, specifically addressed industry charges against AB 622. The letter, signed by four senior researchers at the institute, first attacked the methodology of business-hired research “proving” the bill’s devastating effect on jobs, then concluded that the institute’s own research showed that the opposite was true:

Results from this non-industry sponsored research estimate that the net impact of a 20 percent SSB tax revealed increased employment of approximately 6,000 jobs in California, representing about a 0.03 percent change in employment. Declines in employment within the beverage industry of approximately 2,000 jobs occurred but were offset by larger new employment in non-beverage industry and government sectors. Therefore, SSB taxes would have a negligible though slightly positive net impact on overall state-level employment in California.

“It makes me mad on a number of levels,” Genoveva Islas-Hooker says of the chamber’s work on SB 622. “We should be doing better by our children and using every resource to promote their health instead of putting profits over people.” As for the argument made by the chamber and beverage industry that the soda tax is a job killer, she says, “This is just tactics meant to mislead. In fact, it’s a life saver.”

No Overtime for Farm Workers

Farm workers have long been excluded from many of the same protections granted to workers in other industries, including the right to collect overtime pay. The problem was partially corrected when Governor Jerry Brown signed a bill into law that established overtime pay for farm workers after 10 hours a day or 60 hours a week.

But that was back in 1976 — the last time California granted overtime rights to farm workers, who toil daily in back-breaking jobs and often in blistering heat. In 2010, the state Legislature passed a bill to ensure overtime for farm workers after eight hours a day or 40 hours a week – which then-Governor Arnold Schwarzenegger promptly vetoed.

In 2012, Assemblyman Michael Allen (D-Santa Rosa) introduced AB 1313 to grant farm workers the same overtime rights as other types of workers. “Seventy-five years of waiting is long enough,” he said.

The 2010 and 2012 bills had two things in common. First, they were both included on the California Chamber of Commerce job killer list. And the second is that neither became law.

In a letter sent to members of the California State Senate on August 8, 2012, the chamber said that Allen’s bill has been “labeled as a JOB KILLER, as it imposes costly new mandates on California farmers that will limit their ability to maintain their operations and will place them at a competitive disadvantage.”

On its job killer website, the chamber crowed that the bill never made it to the governor for consideration because the “Assembly refused to concur in Senate amendments.”

Fighting Fracking Moratoriums

One of the most contentious issues in California today involves hydraulic fracturing or “fracking,” the high-pressure injection of water mixed with sand and chemicals to fracture rock in order to unlock oil or gas. Petroleum companies are particularly eager to use this method in the Monterey Shale, an area in the Central Valley that stretches from Bakersfield to Monterey, and that might contain 15 billion barrels of shale oil.

Environmentalists have warned that fracking will increase pollution and that it causes serious risks to public health and the environment. They have called for a moratorium on use of the process until the risks are studied, as New York State has done. The energy industry disputes the need for moratoriums.

“Any kind of public policy that suppresses employment and economic development in the absence of need is simply bad policy,” says Tupper Hull, a spokesman for the Western States Petroleum Association, a powerful oil industry lobbying group. The association opposed several fracking moratorium bills in California, claiming there was no evidence that fracking was harmful to the environment.

Hull said that some studies have projected that new fracking operations could result in as many as 200,000 new jobs in the job-starved San Joaquin Valley. Environmental lobbyists say that the Western States Petroleum Association is a tough opponent that works closely with the California Chamber.

This past year, several bills calling for a fracking moratorium were introduced in Sacramento. The bills all figured prominently on the California Chamber of Commerce job killer list and were fought bitterly by the chamber, the Western States Petroleum Association and individual oil companies, including Chevron. All three bills failed to become law.

One bill, from Assembly member Holly Mitchell (D-Los Angeles) called for a moratorium on fracking until at least January 1, 2019, while a moratorium bill introduced by Assembly member Adrin Nazarian (D-Sherman Oaks) would have similarly curtailed fracking operations. Assembly member Richard Bloom (D-Santa Monica) introduced a third bill that called for a moratorium until the Legislature passed new laws determining under what circumstances fracking could be used.

“I am a big proponent of economic development,” Bloom told Capital and Main, “but I also am an environmentalist and we have to balance environmental concerns. We don’t really know the effects of the chemical mixture [utilized in fracking]. There’s some evidence fracking contributes to earthquakes. All of that argues for a moratorium — we need to slow down rather than rush forward.”

Bloom’s bill, like Nazarian’s, failed to even make it out of the Appropriations Committee, while Mitchell’s was voted down on the Assembly floor.

The state Senate, however, did pass a bill written by Fran Pavley (D-Agoura Hills) that sets up a permitting system and requires companies to give notice of fracking operations. Many influential environmental groups, including the California League of Conservation Voters and the Natural Resources Defense Council (NRDC), at first supported Senator Pavley’s bill, but pulled their support after it was substantially weakened at the last minute. Governor Jerry Brown signed the bill into law in September.

One measure of the resources thrown into the ferocious lobbying against the bills can be found in figures from the California Secretary of State’s office. They show that in the first half of 2013 alone, the Western States Petroleum Association spent $2.3 million to influence legislation and government regulation — more than any other group. The California Chamber ranked third at $1.8 million and Chevron Corp. ranked sixth at $1.3 million. All three were heavily involved in lobbying against bills to impose a moratorium on fracking.

“We’re continually in touch with them,” Tupper says of his group’s close relationship with the chamber.

The fracking moratorium bills failed despite the fact that 56 percent of likely state voters polled by the Public Policy Institute of California said they favor stricter regulation. Fifty-one percent of Californians were completely opposed to the expansion of fracking in the state.

Today Richard Bloom says he wasn’t surprised by the chamber’s opposition. And David Pettit, director of the NRDC of Southern California’s air program, says that studies cited by fracking supporters are full of unproven assumptions.

“There’s still a lot of uncertainty,” Pettit says about how much oil would be available and how expensive it would be to extract and refine it. “Until we really know all of the numbers, it’s just a total crapshoot.” He adds that there is also considerable doubt surrounding the oil industry’s claims that fracking would create large numbers of jobs.

In characterizing the moratorium bills as job killers, the chamber said that a moratorium on fracking would impede California’s economy.

“While we fully appreciate the desire of lawmakers to better understand this well-stimulation technique and make sure it is being conducted in a safe manner,” the chamber wrote Holly Mitchell on April 9, 2013, “imposing a moratorium without evidence that the practice poses an immediate threat to public health or safety unnecessarily and substantially undercuts state production of oil and natural gas, raising energy costs for businesses and consumers and harming California’s economy.”

Annie Notthoff, NRDC’s California’s advocacy director, says that the chamber’s “job killer label is often more hyperbole than reality.”

She adds, “The California Chamber of Commerce has definitely not gotten the memo that the citizens of California support clean air, clean energy and a healthy environment. The fact that the chamber is wielding such influence with the Legislature and is preventing bills the public says they support shows [the chamber] has out of proportion influence with the Legislature.”

Homeless and Powerless

To Assemblyman Tom Ammiano, the job killer list is not simply a lobbying tool but reflects a chamber out of sync with the majority of Californians on matters of social conscience. In December 2012, the San Francisco Democrat introduced a bill, the Homeless Person’s Bill of Rights and Fairness Act, which gave sweeping protections to the homeless – and which the chamber added to its hit list.

“Aside from the inhumanity, it’s very shortsighted,” Ammiano says of the state chamber. “Frankly, the chamber needs to catch up with the current dynamic in California with regard to social justice issues.”

Ammiano’s bill was intended to prevent municipalities from harassing homeless people who were engaging in “life sustaining” activities on public property.

Supporters, including Paul Boden, who is the organizing director of the Western Regional Advocacy Project, which co-sponsored the bill, say it was needed to prevent cities and communities from arresting or citing homeless people for sleeping, loitering or simply sitting in public spaces.

“This country has a long history of using local laws to criminalize the presence of people that the government wants to get rid of,” Boden says, citing the Jim Crow laws in the South during the segregation era and anti-Okie laws of the 1930s, which made it a misdemeanor to bring poor Dust Bowl immigrants into California. Boden wasn’t surprised that the chamber put Ammiano’s measure on its job killer list.

“That’s the chamber’s way of saying these are priority bills. It’s all about public relations – they use the phrase ‘job killer’ whether a bill is an actual job killer or not. It’s a nicer way of saying, ‘This is our hit list.’”

Initially, Boden says, the chamber’s opposition to AB 5 was fairly restrained. The chamber sent a letter to the state Assembly Judiciary Committee in April announcing the bill “has been identified as a JOB KILLER as it places overly broad and onerous requirements on every business in California, which will ultimately expose them to frivolous and excessive litigation.”

The Assembly Judiciary Committee passed AB 5 by a vote of 7 to 3.

Boden says the chamber and other business groups seemed somewhat caught by surprise after the bill passed. Making up for lost time, the chamber and the League of California Cities lobbied hard against Ammiano’s bill. Boden claims that the chamber began telling legislators that “if the bill passed, local governments would have to supply housing and services to all homeless people, even though that’s not what the bill said.”

In May, AB 5 was effectively killed when it was placed in the Appropriations Committee’s suspense file. To Boden, the homeless bill’s defeat was a sign of business as usual.

“We didn’t expect passage in one year – we’re not naïve,” he says. “The chamber did its job. They killed our bill. We spent three minutes licking our wounds and we’re right back into it.”

Boden adds, “When it comes to government and who it responds to, [the bill’s defeat] shows that business interests trump human interests.”

To Ammiano, there was little suspense about the chamber’s role in stopping his work.

“The chamber is very shortsighted.” Ammiano says. “They see the homeless as a problem that hurts business.” He adds that rather than help to find solutions to the pervasive problem of homelessness in California, “they go for the jugular immediately.”

Last week San Jose Mayor Chuck Reed delivered his usual speech about the benefits of slashing the retirement benefits of his city’s public employees – and why he is now pushing for a statewide ballot measure that could dramatically change the lives of hundreds of thousands of Californians. Reed’s initiative – which he characterizes as a bipartisan effort and which hasn’t yet qualified for the 2014 ballot — would allow the state and local governments to reduce retirement benefits for current employees for the years of work they perform after the measure’s changes go into effect. What was not usual about Reed’s speech was its setting: The Roosevelt Hotel in New York City, 3,000 miles from California.

Reed was a keynote speaker at a “Save Our Cities” conference sponsored by the Manhattan Institute, a conservative think tank co-founded by Ronald Reagan’s CIA director, William Casey. There was another California presence at the gathering: The video-streamed image and voice of former Los Angeles mayor Richard Riordan who, like the ghost of Hamlet’s father, seemed to demand revenge – in this case, for the ignominious implosion of his own $800,000 effort in 2012 for an L.A. ballot measure that would have forced city employees into 401(k) plans.

New York wasn’t Reed’s only port of call last week. The following day he spoke again — on a panel at the Mandarin Oriental Hotel in Washington, D.C. There he discussed firefighter and police pensions as part of a conference on state and local retirement systems sponsored by the Pew Charitable Trusts, the Urban Institute and the Laura and John Arnold Foundation.

Reed was invited to both events, says Michelle McGurk, Reed’s spokesperson. She says the Manhattan Institute and Pew Charitable Trusts each paid for one flight, and the city of San Jose also paid some costs, based on the amount of city work Reed did while on the East Coast.

“It was a mixture of him being invited to speak and city business,” McGurk says.

Reed’s message at both venues was the same: Cutting pensions of public employees is needed to stave off cuts in public services and even possible bankruptcy. That, and the fact that his initiative is part of a bipartisan or even largely Democratic-led effort.

This last statement has raised eyebrows.

“Mayor Reed’s East Coast junket shows exactly where his bread is buttered,” says Jordan Marks, executive director of the Washington, D.C.-based National Public Pension Coalition. “The Manhattan Institute and Pew Charitable Trusts are both aligned with right-wing ideologue John Arnold, who has funded a massive effort to gut public pensions all across the country.”

On October 15, Reed filed papers with the California Attorney General for his ballot initiative, known as the Pension Reform Act of 2014. Democratic mayors Bill Kampe of Pacific Grove, Pat Morris of San Bernardino and Miguel Pulido of Santa Ana, along with Anaheim’s Republican mayor, Tom Tait, joined Reed in filing the papers. Since then Reed has become a national spokesman for slashing the retirement benefits of public employees.

In a statement released during the October 15 filing, Reed said that “skyrocketing retirement costs are crowding out funding for essential public services and pushing cities, counties and other government agencies closer to insolvency.”

The money Reed has raised for his bipartisan effort has come from mostly partisan conservative policy advocates. He has drawn $200,000 from the Action Now Initiative, a nonprofit affiliated with Texas billionaire and former Enron trader John Arnold; $25,000 from Basic American Foods heir George Hume; $25,000 from venture capitalist Michael Moritz and his wife, novelist Harriet Heyman, and $50,000 from Richard Riordan. Reed disclosed the payments in behested payment reports filed with the city of San Jose.

“Californians,” says Jordan Marks, “should be wary of what Texas billionaires are selling for its firefighters, police officers, teachers and thousands of other public workers.”

Those supporting the current ballot measure are seasoned advocates for what they call pension reform. They include Dan Pellissier who, like Riordan, abandoned his own 2012 statewide ballot crusade after California Attorney General Kamala Harris wrote ballot language describing its efforts to gut constitutional pension protections in unusually frank terms. Moritz and Heyman also helped finance San Francisco’s defeated Proposition B, a 2010 measure that would have cut pension benefits for that city’s employees, with a $245,000 check that bought the signatures to qualify that measure for the ballot. Hume also contributed to this lost cause with $50,500.

As Reed’s New York appearance shows, the effort to cut pensions in California is being closely watched by conservative activists nationwide. Which might explain why, as the battle over his ballot initiative heats up, Reed and his supporters seldom cease repeating the mantra that his proposal is a bipartisan effort.

“I’m a Democrat,” Reed told his Manhattan Institute audience last week. “We’re a Democratic city in a very blue Democratic state. So why would a Democrat in those circumstances take on pension reform over the objections of not only our 11 bargaining units in the city of San Jose but statewide bargaining units as well?

“That’s because the alternatives were worse,” he continued. “The alternative of doing nothing put us at risk of service delivery insolvency and ultimately, bankruptcy.”

Union activists and their supporters disagree.

“The reality is that this is a right-wing driven effort with Chuck Reed as the puppet,” says Steven Maviglio, a publisher of the California Majority Report and a Sacramento-based political consultant whose clients include Californians for Retirement Security, a labor coalition representing 1.5 million public employees and retirees. “If you peel back the veneer, you can see that the money, the energy and the reasoning for this is all driven by Republicans.”

(Frying Pan News reporter Bill Raden contributed to this article.)

Sandy Hellebrand was concerned. She needed to find a school that could educate her son Gabriel, who has autism and was about to enter high school.

Hellebrand thought she had found the perfect solution: She would enroll Gabriel and her two younger children in Sky Mountain Charter School, one of a rapidly-growing number of virtual schools in California and across the country.

After all, she reasoned, the school would provide excellent online instructional materials and instructors to guide Gabriel’s individual needs. Since Sky Mountain is a publicly funded school – although not a traditional brick-and-mortar one – the state of California would pay for her children’s education. And Hellebrand and her husband Rob, a public high school teacher, would receive about $1,800 a year for each of their children to help defray their costs of educating them at home.

“The idea is fantastic,” she says in an interview with Frying Pan News. Hellebrand, who lives in Oak Hills, in the northern high desert of San Bernardino County, ticks off the benefits of virtual schools and the education specialist she knew Sky Mountain would provide for Gabriel: “The resources, the supplies, another brain and another set of eyes. It gives the ability to tailor [an education program] to each kid.”

The only problem was that Sky Mountain never accepted Gabriel.

“We have received your Student’s Enrollment Application, and are honored that you are considering our school for your child’s education,” Sky Mountain wrote the Hellebrands in February 2012. “Unfortunately, we were not able to place your student with an Educational Specialist for the school year.”

Hellebrand says that this was just the latest brush-off Sky Mountain had given her efforts to enroll Gabriel during two years and believes Gabriel’s autism played a role in the school’s decision.

“I feel very disappointed and burned,” Hellebrand says. “It’s a school that takes tax money. If you do that, you need to serve the community. I don’t know how they can pick and choose like that.”

When asked about Hellebrand’s comments, Randy Gaschler, founder and president of Innovative Education Management, which manages Sky Mountain and other virtual schools, said he didn’t have the specifics on her son’s case. Gaschler denies his schools bar students with disabilities.

“We don’t have any sort of policy like that,” Gaschler says. “We have hundreds of special-education students in our schools. We do everything we can do to make sure we are in compliance. We don’t deny any student admissions to our schools because they are a special education student.”

According to the National Education Policy Center, there are 311 full-time virtual schools nationwide with an estimated 200,000 students. Supporters claim online schooling will revolutionize teaching and learning, reducing the cost and increasing the availability of high-quality education. Virtual education has grown rapidly over the past decade to become an integral part of the education reform movement.

It has also emerged as a tool of choice in the bitterly partisan campaign to privatize education. One key player in this campaign has been the American Legislative Exchange Council (ALEC), a corporate-controlled generator of far-right legislation, including Florida’s controversial Stand Your Ground gun law and a 2012 Michigan law that hobbled unions’ ability to collect membership dues. The expansion of virtual schools has been made possible by numerous bills passed by state legislatures across the country and has been fueled partly by ALEC. According to the Center for Media and Democracy, ALEC-crafted legislation promoting virtual schools has been adopted in Tennessee and Florida.

Virtual education has many formats. They include full-time kindergarten through 12th grade schools, as well as single courses that allow students to explore a subject not available in their brick-and-mortar schools – say, a high school student who wants to take calculus in a rural high school that doesn’t otherwise offer the subject.

Some virtual education programs require students and teachers to be online at the same time; others allow students and teachers to visit online courses at their own convenience. Another format, known as blended education, combines online work with traditional in-person classroom education.

Sandy Hellebrand’s disappointing experience with virtual schools is far from unique and questions are increasingly being voiced about the performance and accountability of virtual schools. Adequate Yearly Progress – or AYP – is an accountability measure required by the No Child Left Behind Act of 2001 that determines how every public school and school district in the United States is performing academically. In California, only six of 31 virtual schools met the Adequate Yearly Progress measure.

Interviews with people who have studied the performance of virtual schools have revealed concerns about their performance and accountability, and about whether some of their operators are making big profits while failing to deliver a good education. Particularly damning are charges that such schools either refuse to accept children like Gabriel Hellebrand or troll for disadvantaged students in order to pad out enrollment.

“The virtual schools are gaming the system,” says Gary Miron, a professor of education at Western Michigan University whose expertise is evaluating school reforms and education policies. “They get [public] funding based on the number of students they get in the door. Then many of these students struggle and fail and leave.”

Miron was one of the authors of an exhaustive 2013 study of virtual education published by the National Education Policy Center, an influential research center located at the University of Colorado, Boulder.

Luis Huerta, an associate professor of education and public policy at Teachers College, Columbia University, says that in their efforts to drive up profits, many cyber schools target high-risk students who will benefit the least from a virtual education.

“The existing structure simply does not work for high-risk kids,” he says. “They demand the least in services. That yields the highest profit margin for providers.” In other words, some virtual schools covet high-risk and inner city students because they bring in revenue from states while typically requiring fewer teaching resources.

The NEPC report said that in the 2011-2012 school year, K12 Inc., the largest for-profit operator of virtual schools, enrolled 77,000 students. Yet as the number of virtual schools nationwide continues to grow, so do questions about their performance and practices. “On the common metrics of Adequate Yearly Progress, state performance rankings and graduation rates, full-time virtual schools lag significantly behind traditional brick-and-mortar schools,” the NEPC report states.

“Across the board, we found very poor performance,” says Miron.

Susan Patrick, president of the International Association for K-12 Online Learning, a Vienna, Virginia-based organization that supports online and blended learning, agrees that more accountability is needed.

“Some students are being served really well and find [virtual schools] a lifeline,” says Patrick, a former director of the Office of Education Technology at the U.S. Department of Education. “Some are not being served well. The programs not doing a good job should be shut down.”

She adds, “We are calling for highest measures of accountability and performance metrics that look at outcomes based on individual student learning.”

In most states, virtual schools are funded at a similar level to that of traditional brick-and-mortar public and charter schools.

Luis Huerta and others say there is a need to examine whether those funding formulas are fair – or whether they unduly enrich the operators of virtual schools.

“There’s a significant difference in overhead in running a traditional brick and mortar school and running a virtual school,” says Huerta.

Nearly everyone who has studied virtual education agrees on two points. Virtual education, in some format, is likely to expand in the years ahead. And as it does, there is a crucial need for better research, accountability and transparency.

“It’s an exciting model that not going to disappear,” says Miron of Western Michigan. “We need to stop the growth so we can figure out why performance is so bad, and so we can get the right funding and accountability [mechanisms] in place.”