$3 Billion for California Prison Health Care in This Terrible Year of Budget Deficits Can Be Avoided if Our State Government Acts10 min read

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Kelso Explains and Answers Questions from the Press—Are Our Leaders Listening?

Federal Court appointed Receiver Clark Kelso’s announcement yesterday that he has filed papers with the court seeking $8 billion from the State of California for prison health care construction has received a lot of ink. It is on the front page of the San Francisco Chronicle, in dozens of California papers, and even made the New York Times. There is much gnashing of teeth, excuses of not being told details of the construction plans or just what exactly the minimum level of car is that is required, and expressions of outrage by some of the recalcitrant Republican legislators who refused to pass a bond to deal with this problem. There is hand wringing that Kelso’s requested order would add, by his own admission, $3.1 billion to the state’s budget deficit this year—just as there are signs that our long overdue budget may finally be passed with a deal that is in the works.

But in most of this, what is lost, is the fact that there are over 70 court orders stretching back over a decade that have been issued by the federal courts and there are signs that the judges are beyond losing their patience with the lack of compliance by California with these prior orders. The handwriting is clearly on the wall—there’s a judgment and finding that the medical care we deliver to our inmates is below the constitutional minimum required and that the state will pay to fix it. And most importantly, there is a way to avoid a $3 billion hit this year if a two-thirds majority in both houses of our state legislature would pass a bond to finance what the court is going to order.

But then again, it’s not really news that we have a game of chicken being played with the state budget with a James Dean style racing of cars down the middle of the road at each other waiting for someone to blink. This just adds to our problems and makes the consequences greater if there is a crash.

I had the opportunity at yesterday’s Sacramento Press Club to ask Kelso what the payout would have been had legislation been passed on this rather than what he is seeking to have the court order this. Here is what he said about SB 1665 that was defeated on the Senate floor May 29 when 14 of 15 Republican Senators voted against it:

“The amount if they passed 1665 would have been less than $100 million this year. Because the way bond financing works—and this is going to be a lease-revenue bond, you actually don’t hit the General Fund for lease payments until you have finished your construction which is going to be two-and-a-half to three years down the line.

“So, had they passed a bond, there would have been virtually no financial impact this year and the first impact would have been probably 3 years down the line…

“The General Fund impact would be delayed and when it did hit, if you do a bond, it is probably $500 to $600 million a year.”

Earlier in the day, Kelso held a press conference, and this is part of what he said:

“The court has previously held that California’s prison medical care system constitutes cruel and unusual punishment in violation of the U.S. Constitution due to the lack of access to basic health care.

“We have fully explored and exhausted every avenue for securing this funding in a manner that least affects California’s taxpayers and this year’s budget process, but the state’s leaders have failed to act. Therefore, it is with great reluctance, and yet a sense of firm conviction, that today, I seek the court’s intervention to secure this funding.

“The motion comes after the California Senate twice failed to authorize bond funding for the Receiver’s construction program, a refusal born of the Senate Republican Caucus’s insistence that funding for the Receiver be tied to changes in other legislation.”

Lest you think that Kelso’s action is part of some wooly headed Democratic agenda and that he is being unkind in laying responsibility for failure to act on Republican legislators, bear in mind that he is a registered Republican.

He’s known as “Mr. Fix It.” He described his mission narrowly to the Press Club as: “Our job is to, as soon as practicable provide constitutionally adequate medical care to the inmates of the CDCR in a delivery system the state can successfully manage and sustain. That’s out job. And it’s to turn it back over to the state.”

This is what U.S. District Court Judge Henderson said in appointing him as the second prison receiver:

“J. Clark Kelso is a Professor of Law and, for the last twelve years, has been the Director of the Capital Center for Government Law and Policy at the University of the Pacific McGeorge School of Law in Sacramento, California. He comes to the California Prison Health Care Receivership with over fifteen years of experience in a wide variety of positions in all three branches of state government. Throughout this service, he has successfully improved state programs and operations while developing a well-known reputation for independence, integrity, and collaborative leadership.

“In the 1990s, Kelso worked with the California Judicial Council and Administrative Office of the Courts on a number of task forces and commissions. This work, particularly his efforts in support of unification of the state’s trial courts, led to his receipt of the 1998 Bernard E. Witkin Amicus Curiae Award, the highest honor given to an individual other than a member of the judiciary for outstanding contributions to California’s courts.

“In July 2000, Kelso was selected by then Attorney General Bill Lockyer and Governor Gray Davis as the interim replacement for outgoing Insurance Commissioner Chuck Quackenbush, who abruptly resigned amid allegations of corruption. Kelso’s leadership quickly restored public trust to the Department of Insurance.

“In June 2002, Governor Davis appointed Kelso to serve as the State’s Chief Information Officer and charged him with restoring the state’s crumbling information technology program. After Governor Davis’s recall, Governor Arnold Schwarzenegger retained Kelso in the State CIO position. Focusing on the disciplines of strategic planning, collaborative execution, and workforce development, Kelso turned the state’s information technology (“IT”) program around, in two years moving the state from 47th to 12th in Brown University’s annual e-government report. In his State CIO role, Kelso also supported the development of state policies encouraging health information technologies and data sharing to improve quality, transparency, and accountability in public and private health care delivery systems. In recognition of his accomplishments, he received a “Top 25 Award for 2004 Doers, Dreamers and Drivers” from Government Technology and was named by Computerworld to their list of “Premier 100 IT Leaders for 2007.”

“A 1983 graduate of the Columbia University School of Law, Professor Kelso clerked for Judge Anthony M. Kennedy on the United States Court of Appeals for the Ninth Circuit. Kelso joined the faculty at Pacific McGeorge in 1986 after practicing law briefly in the New York offices of Kaye, Scholer, Fierman, Hays & Handler. A registered Republican, Kelso is married to Kari Kelso, Ph.D., and they have two daughters.”

I checked with Kelso and he’s still a Republican.

Although Kelso’s motion requests that the judge hold Governor Schwarzenegger and State Controller John Chiang in contempt, he made it clear that he is getting cooperation from them and he is trying to work with them. He told the press club that the judge “wants me to work collaboratively with government agencies. He doesn’t want me coming back to court all the time saying ‘help me out here.’ So, I spend a lot of my time using the usual state process to convince the control agencies that they should reduce those obstacles.”

He explained why he brought this action, saying: “The Controller and the Governor’s belief is that absent an appropriation by the Legislature, they have not legal authority to do what I want them to do. So ultimately I had to bring a motion in the Federal Court that would hold the Governor and the Controller in contempt for failing to provide funding and seeking an order directing funding.”

Kelso also noted that the motion would not be heard until about September 22, which he said “give us, frankly, quite a bit of time to see if we can’t work out a settlement, and I’m hopeful that we will be able to work out a settlement fairly quickly.”

Governor Schwarzenegger has said “”Don’t worry about any of that. Let’s get the budget done, and everything will fall into place.”

The problem is, however, that the legislature is scheduled to adjourn the end of this month. A bond, much more preferable to what the alternative is that Kelso is asking the courts to order, has to be approved by the legislature and by two-thirds in each house. Maybe they can take care of this in a special session—or maybe they can suck it up and revive SB 1665.

Controller Chiang had this to say about Kelso’s position:

“I understand Mr. Kelso is taking the steps he believes are necessary to fulfill his court-appointed duties, and I support his efforts to bring the State’s prison health care system up to Constitutional standards.

“However, my office cannot expend funds from the Treasury unless there is a legislatively-approved appropriation or a court order compelling payment. At this time, there is neither.

“One way or another, the State will have to pay for its prison healthcare system. I continue to believe the Legislature should approve lease revenue bonds as the fiscally appropriate way to fund prison bed construction and avoid interfering with my ability to responsibly manage the State’s cash flow and provide the services our State expects and deserves.

“I will continue to work with Mr. Kelso, who has assured me that there will be no immediate effect on the State’s cash flow. Once again, I call on the Legislature and Governor to take the necessary actions to pass a sound, workable budget and provide the Prison Receiver with the necessary resources to complete his charge.”

All of this should come to no surprise. We’ve been writing about this problem most of the two plus years we have been publishing. If you want to check some of our articles for the background on this, click here.

You can also watch a bit of what Kelso had to say in KCRA television coverage of his morning press conference. The Sacramento Press Club should have all of Kelso’s luncheon appearance on line for viewing shortly.

Kelso said about adding $3.1 billion to this year’s deficit: “I suspect it’s going to get some people’s attention by having that litigation pending.” I hope someone is paying attention, too.

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