CPD IN THE NEWS

This is the third post in a series about ballot measures to raise the minimum wage in Colorado and three other states. The first post introduced a restaurateur in Denver who supports the increase and the national organization that persuaded him to go public with that support, is here. The second looked at how the provision could widen inequality among servers and kitchen workers.

There are 32 mostly state and local business associations that have signed on to Keep Colorado Working, the coalition formed to fight Amendment 70, which would raise the state’s minimum wage through a constitutional amendment. Only one of them, however, has actually contributed money to fight the ballot measure: The Colorado Restaurant Association and its political action committee have spent $359,000, which makes it the single largest Colorado contributor to campaign, which has raised $1.7 million to date.

Indeed, while dozens of local food services businesses have chipped at least $105,000 to the effort, which has raised $1.7 million to date, more than $1 million has come into the coalition’s coffers from out of state, including $850,000 from a shadowy business group called the Workforce Fairness Institute. Other large national contributors include Darden, the Olive Garden’s parent corporation, and the National Restaurant Association.

But all this is far less than the $2 to $3 million that opponents had anticipated spending to try and defeat the amendment. And it is dwarfed by the $5.2 million that advocates for the vote, working under the name Colorado Families for a Fair Minimum Wage, have raised. Most of their money has come from national unions and union-backed organizations like The Fairness Project and progressive philanthropies like the Center for Popular Democracy and the Civic Participation Action Fund.

In a campaign awash with money, the efforts of Business for a Fair Minimum Wage, which has been organizing Colorado businesses to support the amendment, are fairly modest. Business for a Fair Minimum Wage founder and C.E.O. Holly Sklar won’t say how much her group is spending in Colorado, but the effort is being funded by Dr. Bronner’s, the organic soap-maker with a long history of activism. (She declines to further identify its funders, except to say that they comprise businesses and foundations.) Dr. Bronner’s has made raising the minimum wage a top company priority, even relabeling some of its soap bottles with “Fair Pay Today!” “People should be able to make ends meet on the wages they get,” says David Bronner, C.E.O. of his family’s company, which is registered as a benefit corporation. “They should not have to rely on inefficient government programs like food stamps and housing assistance. Taxpayers should not have to subsidize companies using the welfare system to keep wages low.”

Bronner says his company has given about $75,000 to Business for a Fair Minimum Wage. “We really like what they’re doing,” he says. “I think it’s really important that policy makers hear from business owners, that business owners too see value in raising the minimum wage, and it isn’t just about labor groups and worker rights.”

Outside of Colorado, business groups have mounted little more than token opposition. In each of Arizona, Maine, and Washington, where advocates have raised over $1 million to promote their respective ballot measures, opponents have raised $100,000 or less, according to state campaign finance records. The Arizona Restaurant Association sued to try and prevent the minimum wage from making the November ballot, but hasn’t spent any money combating it since then. (The group’s president and C.E.O., Steve Chucri, didn’t respond to requests for comment.) The state chamber of commerce has agreed to kick in $20,000.

In Maine, the state restaurant association has spent nearly $78,000 to fight the ballot amendment through its political action committee, but apart from small contributions from Darden ($7,500) and the National Restaurant Association ($2,500), the opposition has recorded no contributions from out of state.

It’s not clear — even to some of the principals — why Colorado became the battlefield of choice in the fight over minimum wage at the expense of media outlets in Arizona, Maine, and Washington. “Why they’re not putting money to fight it here is a mystery to me,” says Maine Restaurant Association president and C.E.O. Steve Hewins of the national organizations, though he allows that “Maine to a degree is off a lot of radar screens.”

The National Restaurant Association declined to respond directly to Hewins’s charge of neglect. But in an emailed statement, the organization’s spokesman, Steve Danon, wrote, “While we work in partnership, our state restaurant associations take the lead on these issues, as they know what works best for restaurateurs in their state. We’ve been vocal on opposing drastic increases to the minimum wage overall.” The Workforce Fairness Institute and Darden didn’t respond to a request for comment.

But Tyler Sandberg, who is managing the Keep Colorado Working campaign, suggests that perhaps national groups are drawn to the Colorado initiative because, as a constitutional amendment, it “is the worst-written of all of them.” But he also says he’s made a point of soliciting those contributions. “When we saw all the national money coming in on the other side, we realized we would have to fight fire with fire and seek national contributions as well.”

Sklar says her pro-wage-hike business group is focusing on Colorado because the Arizona and Washington measures also include paid sick leave, which is beyond her group’s scope, and in Maine a local small-business coalition is pressing the case.

In any event, the vast sums spent in Colorado appear to have made little difference. Polls in all four states show the wage increase winning by similar margins, with 55 percent to 60 percent of voters backing it.

By Robb Mandelbaum

Source

Federal Reserve policymakers Wednesday voted to keep the central bank’s benchmark interest rate near zero percent and offered no new hints of when it would enact the first hike since 2006.

After a two-day policy meeting, officials released a monetary policy statement that was little changed from June in its guidance about what they would need to see before raising the interest rate.

11:40 a.m.: An earlier version of this article said the Fed's policy statement was identical in its guidance about what officials would need to see before raising the interest rate. The statement contained a small wording change.

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An increase would come when members of the policymaking Federal Open Market Committee have “seen some further improvement in the labor market” and is “reasonably confident” that the low inflation rate will move back toward the Fed’s 2% annual goal in the near future, the statement said.

The statement, approved by a 10-0 vote, left open the possibility of a rate hike after the Fed’s next meeting, in September. But it did not lock policymakers into taking that step in case upcoming economic data, including jobs reports for July and August, indicate the economy isn’t strong enough to handle higher interest rates.

The Fed said recent data suggest the economy “has been expanding moderately in recent months” and that the housing market “has shown additional improvement.” The Fed’s view of the labor market improved, with the statement saying there had been “solid job gains and declining unemployment.”

But Fed policymakers raised concerns about what they called soft business investment and exports.

And the statement noted inflation continued to run well below the Fed’s 2% annual target, attributing that partly to declines in energy prices as well as the lower cost of imports caused by the rising value of the dollar.

For the 12 months ended May 31, the price index for personal consumption expenditures, the Fed’s preferred gauge, was up just 0.2%.

The central bank has kept its benchmark federal funds rate near zero since December 2008 in an attempt to boost economic growth during and after the Great Recession.

As the economy has strengthened, pressure has built on Fed policymakers to start raising the rate.

Fed Chairwoman Janet L. Yellen has said that she expects an interest rate hike this year but that policymakers would continue to keep rates low for “quite some time” to continue providing support for the economy.

A survey last month by financial information website Bankrate.com found that a majority of Wall Street experts expected the Fed to raise its short-term interest rate in September.

Fed policymakers are closely watching economic data to determine when to hike the rate for the first time since 2006.

The economy shrank at a 0.2% annual rate from January through March, largely because of unusually bad winter weather and a labor dispute that slowed activity at West Coast ports.

The Commerce Department is expected to report Thursday that growth returned this spring. Analysts are forecasting that the economy expanded at a 2.9% annual rate in the second quarter.

The job market has shown solid gains in recent months, and the unemployment rate in June dropped to 5.3%, the lowest in more than seven years.

But wage growth has been sluggish. The Center for Popular Democracy has criticized the Fed for not focusing enough on wage improvements as a key factor in deciding when to raise rates.

And even with the overall economy performing better in the second quarter, growth this year is expected to be subpar. The Fed’s most recent projection, made in June, is for overall economic growth of just 1.8% to 2% for the year, which would be the worst since 2011.

Source: The Los Angeles Times

NEW YORK — Over a dozen activists descended on a building where Federal Reserve chair Janet Yellen and her three living predecessors were speaking on Thursday to demand that the Fed bail out Puerto Rico’s cash-strapped government.

The demonstrators, who are affiliated with the progressive Fed Up coalition, distributed Puerto Rican flags and empanadas as Puerto Rican music played outside Manhattan’s International House, a student residence. Yellen was there for an unprecedented panel discussion alongside past Fed chairs Ben Bernanke, Paul Volcker and Alan Greenspan, who participated via videostream.

The activists were joined by Puerto Rican lawmaker Manuel Natal, who was in town to participate in a panel discussion hosted by City Council Speaker Melissa Mark-Viverito on Friday.

“They have two mechanisms under their authority to help Puerto Rico: one is to provide a bailout to Puerto Rico similar to the one they did to banks, the same banks that are now in Puerto Rico making a fortune out of our fiscal situation,” Natal said. “And the second would be to buy our debt” and charge Puerto Rico interest rates that are lower than the market would offer.

The activists claim that since the Fed had the authority to buy trillions of dollars of bad debt from Wall Street banks after the 2008 financial crisis, it can do the same for the debt of Puerto Rico.

Economic observers with knowledge of the Fed’s functions consider that argument dubious. Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who was an economist at the Fed Board of Governors for many years, said that the Fed is not allowed to buy municipal debt — of the kind Puerto Rico owes — that comes due over a period longer than six months. He also said such a purchase would be inconsistent with the Fed’s dual mandate of maintaining price stability and full employment.

The Fed has “never bailed out any insolvent entity as far as I know. They always demand collateral sufficient to cover any loan,” Gagnon said, as the Fed did when it provided aid to major U.S. banks.

Natal, the lawmaker, also believes some of Puerto Rico’s debt has been issued unconstitutionally and can therefore be nullified.

Greg Williams, a spokesman for Jubilee USA, a coalition of faith-based groups that advocates for global debt relief policies, declined to endorse a Fed bailout, but suggested the Fed could broker a deal instead.

“We support a proposal where the Fed facilitates a restructuring process,” Williams said.

More important than the details of the demonstrators’ demands, however, is the protest’s political symbolism in the midst of a heated battle over Puerto Rico’s future. The demonstration was perhaps the most colorful in a series of political moves and counter-moves by the Puerto Rican government and its sympathizers on one hand and the commonwealth’s bondholders and their allies on the other. Both seek to influence a congressional rescue plan that could enable Puerto Rico to restructure its debts.

Members of Congress from both parties are negotiating changes to the draft of a relief bill released last week by the House Committee on Natural Resources, which has jurisdiction over U.S. territories.

But many in Puerto Rico, and some progressives in the mainland United States, object to the Washington-based federal oversight board the bill would introduce to audit Puerto Rico’s finances and recommend reforms. Under the terms of the bill, Puerto Rico would pursue voluntary compromises with its creditors; failing that, the board could greenlight court-supervised debt restructuring that would force bondholders to accept the losses.

Those critics of the draft bill — including lawmaker Natal — view the board as having the trappings of American colonial rule over Puerto Rico.

Critics of the draft House bill say it has the trappings of American colonial rule over Puerto Rico.

They also argue that Puerto Rico should not have to meet any conditions to gain access to court-supervised debt restructuring. Puerto Rico, unlike the fifty mainland states, lacks the power to grant its municipalities and public corporations federal bankruptcy protections.

Puerto Rico is taking a multi-pronged approach to secure debt relief that appears designed to increase its leverage with creditors and win terms that are as favorable as possible.

The island’s governor, Alejandro Garcia Padilla, signed a bill on Wednesday that would empower him to declare a state of emergency and enact a moratorium on the island’s $70 billion debt. Puerto Rico’s next major debt payment — a $422 million tranche — comes due on May 1.

Daniel Hanson, a Puerto Rico specialist for the financial analysis firm The Height, wrote in an email newsletter that Puerto Rico’s creditors will likely challenge the moratorium in court, where Puerto Rico’s “playbook is not likely to be persuasive to American courts adjudicating the contracted rights of creditors.”

Garcia Padilla has said the island is incapable of paying its debts in full. Puerto Rico has enacted spending cuts and tax hikes in recent years that have stifled its economy and depleted its social services, creating a situation that many people already characterize as a humanitarian crisis.

Puerto Rico also argued for the right to enforce a local bankruptcy law that went before the Supreme Court last month after lower courts had blocked the island from putting it into effect. The high court is expected to rule in the case by late June.

In Congress, Democrats sensitive to Puerto Rico’s plight — and solicitous of the votes of former island residents living on the mainland — hope to dilute some of the proposed oversight board’s sweeping powers.

The Height’s Hanson, however, expects subsequent iterations of the House bill to be “more creditor-friendly,” he wrote.

Meanwhile, organizations representing Puerto Rico’s powerful creditors have stepped up their efforts to amend the legislation to limit the restructuring authority that the island would get. The commonwealth’s bondholders include a significant number of so-called vulture funds, which are hedge funds that have bought its debt from other creditors at discounted rates on the promise of recovering the obligations’ original full-dollar value.

A group called Main Street Bondholders, which claims to represent ordinary retirees, has created a web site attacking the draft House bill for granting Puerto Rico “super Chapter 9” bankruptcy protections.

Main Street Bondholders is associated with the conservative seniors group 60 Plus, which played an active role in the fight against the Affordable Care Act. The New York Times reported in December that 60 Plus is funded by a handful of large, anonymous donors and was recruited into the effort by a Republican public relations firm that also represents BlueMountain Capital, a creditor that has been outspoken against federal government help for the island.

The fight over whether to help Puerto Rico has reached the bottom rung of American discourse — cable news ads paid for by undisclosed donors. The ad, which ran on CNN and was paid for by the Center for Individual Freedom, urges Congress to “stop the Washington bailout of Puerto Rico.” The Virginia-based conservative group does not disclose its donors. It was founded in 1998 to combat government restrictions on smoking.

The CFIF did not respond to a Huffington Post question about whether any of its funders have a financial stake in the outcome of the Puerto Rico bailout.

By Daniel Marans & Ben Walsh

Source

LA School Report - March 24, 2015, by Craig Clough - California is extremely vulnerable to fraud at charter schools and as a result can expect to lose $100 million in wasted tax money in 2015, a new report released today finds.

The report from the Center for Popular Democracy, Alliance of Californians for Community Empowerment and Public Advocates found that there are “structural oversight weaknesses” in the state’s charter system.

Among the problems it found:

Oversight depends heavily on self-reporting by charter schools.

General auditing techniques alone do not uncover fraud.

Oversight bodies lack adequate staffing to detect and eliminate fraud.

California has the largest number of charter schools in the nation — 1,184, according to the California Charter Schools Association. The number in LA Unified grew this year to 285, 231 of which are independent.

The report recommends a few solutions, including requiring oversight agencies, such as the State Comptroller’s Office and Fiscal Crisis and Management Assistance Team, to conduct audits on charter schools once every three years, and not only when requested to do so.

“There’s no proactive system for auditing California’s charter schools by state officials… They wait until someone has whisteblowers come forward and the media has put something out, but there’s not a regular system for auditing schools,” said Kyle Serrette, director of education at the Center for Popular Democracy, in a call with reporters.

The report stated that over $81 million in fraud has been uncovered at charter schools to date, but that it is likely the “tip of the iceberg” and estimated the state will lose $100 million this year alone to waste, fraud and mismanagement at charters.

“We have a situation where we are losing millions of dollars to fraud in the charter sector every single year. We now know what the problem is,” Serrette said, adding that the backers of the report will be pushing state lawmakers for policy changes based on the findings of the report.

Serrette also said there are other states that do a better job of applying rigorous oversight of charters.

“Pennsylvania is a great example where the auditor general audits all of Pennsylvania’s charter schools every three to five years and the districts, which tend to be the authorizers there, they do the same thing,” Serrette said.

Click here to read the full report.

Source