The Assn. of California Water Agencies Joint Powers Insurance Authority has recommended to its board that it drop the district's employment liability coverage due to 'dysfunction' and increasing lawsuits.
By Hector Becerra
April 19, 2014, 8:10 p.m.
A controversy-riddled water district involved in a federal corruption investigation is in danger of losing its insurance, a political black eye that could have implications for the agency and its 2 million customers.
The Assn. of California Water Agencies Joint Powers Insurance Authority has recommended to its board that it drop the employment liability insurance for Central Basin Municipal Water District, citing the circus-like atmosphere at the agency.
The authority insures hundreds of water districts across the state, and this would be only the second time in its 35-year history that it canceled coverage for a water district.
"It appears to an outsider that there is a sense of dysfunction on the district's board," the insurance authority wrote in a letter to Central Basin. "This dysfunction is resulting in an inordinate increase in litigation against the district."
The insurer noted that Central Basin had an usually high number of legal claims against it, and said that, more important, the ongoing threat of more litigation posed too great a risk for other members of the insurance pool.
Central Basin, or its members, has been the subject of several investigations in recent years. Its own lawyers say it violated state law by secretly creating a $2.7-million fund for a groundwater storage project. The district has been accused of doing favors for the family members of politicians. And its elected leaders have faced their own troubles, including one suspected of impersonating his brother, a fellow politician, to get out of a DUI conviction, and one accused of sexually harassing a district employee.
Losing its insurance could hurt Central Basin's standing in financial markets and its ability to get loans, and would mean the district would have to find another insurance provider, possibly at a much higher rate.
Gary Milliman, a municipal insurance expert who once served as South Gate city manager, said Central Basin would be hard-pressed to find replacement insurance without paying considerably more. Losing its insurance could make it harder to secure loans and grants, and even to proceed with projects.
"The general fund of your agency would be at risk for losses that would normally be insured." Milliman said. "Reputation really does matter when you're going into the financial markets."
Central Basin serves a largely working-class area of southeast Los Angeles County. The district has been criticized in the past for raising water rates.
The agency's finance director, Richard Aragon, said he was confident the insurance situation would not lead to rate hikes.
In 2010, the troubled city of Maywood laid off virtually all of its employees soon after another provider dropped its insurance as a result of a history of lawsuits. The city ended up contracting its operations to neighboring Bell, which was soon engulfed in a corruption scandal that culminated last week with its former city administrator, Robert Rizzo, being sentenced to 12 years in prison.
The water district was also enmeshed in a federal investigation of a state senator and his brother, Tom Calderon, a former assemblyman and Central Basin consultant.
One longtime board member, Robert Apodaca, is the subject of a $1-million sexual harassment lawsuit against Central Basin filed on behalf of a former employee, who alleged that he had a well-known pattern of "improper sexual actions and conduct with subordinates." Apodaca declined to comment through a water district spokesman.
Last year The Times reported that another one of the directors, Art Chacon, may have impersonated his brother — a Montebello school board member — after being arrested on DUI charges in 2011 in Whittier.
Another board member, James Roybal, is spending his workdays at a Los Angeles Unified School District facility for teachers who are under internal investigation for accusations of poor performance or improprieties. LAUSD spokesman Thomas Waldman confirmed Roybal was there but would not elaborate on why. Roybal has declined to comment.
Central Basin has made some efforts at reform. Earlier this year it reached a peace agreement with a rival water agency in a conflict that had cost the organizations nearly $5 million in legal fees combined.
Last year it also ended the contract of a longtime consultant and former assemblyman, Tom Calderon. He and his brother, state Sen. Ronald S. Calderon (D-Montebello), were indicted earlier this year in a massive federal fraud case. The FBI subpoenaed large amounts of documents from Central Basin in the case.
Paul Dyson, a director at Standard & Poor's, said Central Basin's new management made some recent moves — including cost-cutting — that will give the agency a projected $16 million in reserves by the end of the fiscal year in June. The bond-rating agency will monitor the water district, but Dyson said he believed the reserves would help it weather the potential loss of its insurance for a while.
Still, the district remains a political battleground, with board members attacking each other in the local media, from the dais and at news conferences.
The water agency insurance authority has complained that the agency is in the news a lot but usually doesn't come out in a "favorable light."
The insurer has proposed several steps the district can take to preserve its coverage, such as bearing the financial cost of some of the claims against it, including the Apodaca case, and forgoing some insurance coverage for six months. The Central Basin board has discussed the insurer's proposal and is weighing other options, including finding another insurance provider.
Phil Hawkins, a former state assemblyman who is the president of Central Basin's board of directors, said the elected leaders needed to try to put aside their differences for the good of the public agency.
"We need to get the emotion out of this and get back to the business of water issues only," he said.
Tony Perez, Central Basin's general manager, said the district hoped to find a compromise, which could include the water district taking financial responsibility for some of the claims instead of passing them off to the insurance authority.
As for ending the political infighting, that's a work in progress.
"There's the business of the district, then there's the relationship the directors have with each other," Perez said. "The relationship between the directors? Staff is working really hard to compartmentalize that and go ahead and do the good work of the district, which I think for the most part we're succeeding at."
Copyright © 2014, Los Angeles Times
A group of intoxicated Tomales High School students busted through locked gates and spun donuts on the football field’s new grass late one night in February, causing an estimated $20,000 in damage. Eight of the students were suspended from classes. One girl, a freshman suspended for five days, later said she regretted being there. She fell behind in a backlog of time-consuming work she had missed, and recently finished making up assignments.
A new (Marin County) Civil Grand Jury report released last month questions whether such disciplinary action may cause more long-term harm to the student and the school environment than the wrongdoing a suspension is intended to correct.
One in every 14 students at Tomales High School was suspended during the last school year, almost twice as high as the county’s total rate and slightly higher than the state’s. Tomales Elementary also suspended seven students the last year, putting it slightly above the county average. San Geronimo Valley Elementary and West Marin Elementary each suspended one student, and Lagunitas Elementary suspended three. The region’s other elementary schools—Bodega Bay Elementary, Inverness Elementary and Bolinas-Stinson Elementary—did not have any suspensions last year.
While the county as a whole dropped suspensions by 14 percent during the last school year, Lagunitas and Shoreline both slightly increased their suspension rates.
Across the state, school districts have begun to adapt their disciplinary policies to more progressive ideas of restorative justice. After the state banned corporal punishment in schools—as late as 1986—many school officials did not want to appear weak and instituted zero-tolerance policies with harsh penalties for misbehavior.
Only recently have schools responded to a growing body of research that shows punitive policies disproportionately affect minority students, often fail to change behavior and can lead to heightened drop-out rates.
“What we know for certain is that in order for students to achieve their goals related to school, they have to be present,” said Mary Jane Burke, the county’s superintendent of schools. “In some very limited instances, in fact, the option of a suspension might be the right option, but it should be in limited cases. The goal is to keep kids in school, keep them engaged and do everything we can to meet them where they are.”
The state legislature has attempted to remedy the problem by revising the education code—which sets out 20 behaviors that can qualify for a suspension or expulsion—to discourage suspensions except when “other means of correction fail.” But even though the new law has been in place for more than a year, few of the county’s school boards have formalized the change in their own student handbooks or district policies.
“The popular explanation behind discretionary power has to do with the uniqueness of every locale. Who better to understand what is appropriate than those on site?” the grand jury report states. “Others argue, however, that such profound power is a recipe for inconsistency, with every school having its own mix of solutions and consequences.”
Tomales High’s student handbook lists 31 violations—from brandishing a knife or committing sexual assault to speaking profanities or arriving tardy to class—along with minimum and maximum punishments.
At minimum, more than half of the violations automatically qualify for a suspension and often a police report that could land the student in juvenile hall. Most of the suspensions at Shoreline last year were related to illicit drugs, with 11 out of 24 suspensions drug-related.
Two Tomales High staff declined to comment for this story, and another three administrators—Superintendent Tom Stubbs, Principal Adam Jennings and Counselor Steffan O’Neill—did not respond to repeated requests for comment.
The lack of specificity in the education code over how to punish wrongdoing gives school administrators leeway in deciding the best way to respond. “If a student violates the items listed in that code section, suspension or possible expulsion is the course of action,” said Jane Realon, the principal at Tomales Elementary. “Luckily we rarely have to go there with our kids,” she added.
But where theft of personal property could mean a police report and a several-day suspension at Tomales High, according to the student handbook, Lagunitas Elementary School might resolve the problem differently, said Principal Laura Shain.
“We do try to use the restorative justice model when feasible and practical,” she said. “For us, at the K-8 level, a lot of it involves discussion and looking at the consequences of behavior.”
Ms. Shain put the principle into action a few weeks ago when one child was secretly stealing food from other students’ lunchboxes, an ongoing problem they could not solve for weeks. After a culprit was finally identified, the students sat on the floor of the library and told how they felt to have something stolen and to distrust their classmates. The boy who had been stealing was so emotionally moved that he wanted to make it up to the other students by bringing them pizza, cookies or other treats.
“The students who originally felt harmed were so incredibly forgiving. They said, ‘You don’t have to do anything. Your apology is enough,’” Ms. Shain recounted. “Not only did the behavior change, it never happened again. It made the community closer. Often when a student is misbehaving, it is because they are not connected to the community in some way. To actually send them away is counter-productive.”
Ms. Shain said she would consider suspensions when a law has been broken or family involvement is necessary. Keeping a child home from school can often be a hardship for working parents, so she said she tries to restrict the use to those times when parent involvement is sorely needed.
At West Marin Elementary, Principal Matt Nagle said the environment of a small school and an actively involved community allows more resources to be devoted to prevention, rather than
“I consider it to be rather a failure when we have to suspend a student. We do everything we can to prevent having to get to that point. That’s a luxury at most schools,” he said. “We try to really develop these relationships from the get-go and grow that relationship through the whole year before you get to that point were you have something that warrants a suspension.”
At his former jobs, with three or four times as many students, Mr. Nagle said he became more accustomed to suspending students for fighting. Often, the students who were acting out felt marginalized, perhaps because they did not have care from their parents and felt they were not receiving enough attention at school.
At his current job, he hosts monthly assemblies to foster a positive environment by recognizing student’s achievements and to address a few areas for improvement. The last meeting focused on preventing cyber-bullying.
“While we have made great progress in the last five years, we still have a ways to go,” Ms. Burke said. “What were trying to do is look at the best practices countywide, see which parts fit in a different community and then adapt to keep that cycle of learning.”
Judith Bravo contributed to this article.