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Special Report: Education Funding




S.F.-based Acteva lacks cash to repay nonprofits PAGE B1

Public Schools, Private Money Parents ramp up fundraising, widening the rich-poor divide


very year for the past five years, the San Francisco Unified School District has been forced to chop millions of dollars from its budget. To buffer schools from the shortfalls, parents raised lots of money — managing to more than quadruple the collective budgets of the district’s parent-teacher associations. Our research shows that during that period, poverty rose in the student population in many San Francisco schools. As student needs increased, most schools were tightening their belts. But the pain was not felt equally among the district’s 71 elementary schools. Ten PTAs raised more money than all the others combined, and they appear to have been able to largely protect their children from the effects of the cuts. In short, growing reliance on private dollars has widened the gap between rich and poor in San Francisco schools. With an expected influx of state money this year, however, the school district will have new resources to address classroom funding inequities.


LOTTERY BOOSTS BUSINESS FOR LOCAL SHOPS Record ticket sales benefit schools



Stories begin on page A3.

ONE SOLUTION: SCHOOLS SHARE DONATIONS Albany starts pooling money to equalize schools


FIGHT OVER NEW STATE EDUCATION DOLLARS Teachers want raises, activists focus on poor children


TWO PARENTS, TWO REALITIES PTA resources vary greatly


Chart: How S.F. Elementary Schools Rank in Giving

Top school raises $1,500 extra per child for programs








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Karen Curtiss takes a donation at the annual Halloween-Día de los Muertos celebration at Junipero Serra Elementary School. An architect and homeowner in Bernal Heights, she been active with the parent-teacher association since her son Argus started at the school three years ago. Though her family’s culture, language, education and income make them a minority at the predominately poor and Latino school, Curtiss said she feels intense loyalty to its community: “We are at J. Serra because it is a caring, small school with amazing teachers and staff. We believe in our family being part of a complete community, and not a socioeconomic bubble.”  Photo: Tearsa Joy Hammock // Public Press

Public Schools, Private Money Parent fundraising for elementary education in S.F. skyrocketed 800 percent in 10 years. The largesse saved some classroom programs, but widened the gap between rich and poor.


velyn Cheung is the principal of Junipero Serra Elementary School in Bernal Heights. Matthew Reedy is the principal of Grattan Elementary in the Haight. Both San Francisco public schools faced five straight years of districtwide budget cuts — which hit hardest in 2010 with a $113 million shortfall and last school year came to a more manageable $13 million. But the belt tightening did not hurt the two schools equally. Cheung was forced to lay off staff and take other drastic steps, like freezing supply purchases for a year. By contrast, Reedy hired Story: new staff and expanded his school’s Jeremy Adam academic programs, helping raise Smith standardized test scores. // Public Press Why? The difference lay in the ability of their parent-teacher associations to raise money. The Grattan PTA has raised hundreds of thousands of dollars a year, amounting to almost $1,000 per pupil. At Junipero Serra, where most students come from poor and immigrant families, the PTA raises approximately $25 per pupil. “Every principal knows which schools have it and which schools don’t,” Cheung said. “We know who are the haves and who are the have-nots. The system just isn’t equitable.” In an era of shrinking public investment in schools, parents have struggled to hold the line one school at a time. Since the pre-recession year 2007, elementary school PTAs in San Francisco collectively managed to more than quadruple their spending on schools. With this money, some schools have been able to pay teachers and staff, buy computers and school supplies, and underwrite class outings and enrichment activities. These expenses, previously covered by the taxpayers, are increasingly the responsibility of parents. But school district finance data, PTA tax records and demographic profiles reveal an unintended byproduct of parents’ heroic efforts: The growing reliance on private dollars has widened inequities between the impoverished majority and the small number of schools where affluent parents cluster. Unlike some California school districts, which centralize and redistribute funds raised by parents, San Francisco so far has permitted all money raised at a school to stay there. This gives some schools an enormous advantage. School district data show that in 2011 (the most recent year tax records available), parents of children at just 10 elementary schools raised $2.77 million — more money than those at the other 61 (see graphic, page A5). By bringing in as much as $1,500 per student, the top fundraising schools appear to have been largely insulated from the effects of budgets cuts. Meanwhile, parents at high-poverty schools such as Junipero Serra are seeing shrinking resources for their children. This means laid-off staff, dilapidated libraries, outdated computers and a dearth of essential supplies like pencils and paper. Rachel Norton, president of the San Francisco Board of Education, said she and her colleagues were aware of

significant disparities in the fundraising capacities of PTAs in the district. But administrators do not track donations, nor do they attempt to interfere with school fundraising. “I’d never ding parents for raising money to provide more services and extras for their schools, especially in a state like California that has chronically underfunded schools,” Norton said. “The more economically diverse students the schools attract, the better off the schools will be.” But fewer and fewer schools in San Francisco are attracting economically diverse students. The number of children from poor families is rising across the district, and there are more schools with high concentrations of poverty than there were 10 years ago. Meanwhile, the number of mixed-income schools is shrinking. The district’s “lottery” system is supposed to keep schools racially and economically diverse by giving preference to students from disadvantaged backgrounds and neighborhoods when assigning spots. But data suggest it has largely failed at that task, since affluent parents have had the time and skills to game the system, and tend to cluster in certain schools. Critics of rising income inequality say school districts across the country, in a rush to save public schools with private dollars, created a system in which education is improving for the affluent and declining for the poor. “Parent fundraising has become more important as state and local funds have dwindled,” said Robert Reich, a former U.S. secretary of labor and now a political science professor at the University of California, Berkeley, who advocates for policies to close the gap between rich and poor. “If we take the ideal of equal opportunity seriously,” Reich said, “we’ve got to commit ourselves to creating a system of public education in which kids from poor and working-class families have a genuinely equal opportunity to succeed. And we’re falling far short.” In an effort to address unequal parent fundraising

head-on, some Bay Area school districts have pioneered novel solutions that might be instructive to San Francisco. One is aggregating private dollars, and directing them to the schools that need the most help. Other California districts prohibit PTAs from paying for teacher salaries or training, a common practice that can significantly widen inequities among schools. But with an expected influx of state money this year, San Francisco will have new policy options to address the growing inequities in the district. The city’s schools stand to bring in as much as $21.7 million more as soon as September, through Gov. Jerry Brown’s newly enacted Local Control Funding Formula, which provides extra funds to districts with many disadvantaged students. If student populations remain stable, this new money could grow to $184.6 million annually in eight years. With a current school district budget $667 million, the new funds would represent an increase of 27 percent. As San Francisco’s Board of Education prepares to hold public meetings this spring on how to spend the extra funds, the fate of increasingly unequal public schools could be in the hands of parents themselves. That may mean endorsing reforms to ensure more equitable local funding, or agreeing to share fundraising proceeds among schools. SOME SCHOOLS DODGED CUTS Matthew Reedy started working as a teacher at Grattan Elementary in the Haight in 2002. That was the year the district’s Weighted Student Formula took effect. The policy, devised as a way to help disadvantaged children, provides schools with a base rate of funding for each student, currently $2,896, and adds dollars based on need, such as the number of children receiving special education services, free and reduced-price lunches and lessons in English as a second language. So per-capita

About This Reporting Project The San Francisco Public Press examined tax records from PTAs and compiled 10 years of budget and academic data from the city’s school district. The research focused only on elementary schools to make easy comparisons. Our research shows that while a small number of schools were able to avoid the worst effects of recent budget cuts, belts continued to tighten at schools with more economically disadvantaged students. Read more online: Research assistance by Jeffrey Thorsby, Jason Winshell, Adriel Taquechel and Shinwha Whang. Tim Redmond, editor of, inspired the project’s focus. We are indebted to for advice on education policy. Thanks to Rodolfo Mendoza-Denton at the U.C. Berkeley Greater Good Science Center for data analysis. This article was made possible by a grant from Rebecca Moyle and Tyler Lange, and donations from hundreds of other Public Press members.

funding for schools is highly variable but generally biased toward schools with disadvantaged students. The goal is not strict equality, but rather equity, meaning preferential funding for schools that need it most. San Francisco schools with many poor and immigrant students have bigger budgets on a per-pupil basis than do affluent schools, whose students are less expensive to educate. When the formula went into effect in 2002, Reedy said, affluent schools such as Grattan lost funding, and parents felt compelled to make up the difference. That year, elementary school PTAs in San Francisco brought in a total of just $592,000. But through 2011, their combined budgets had ballooned to $5.32 million, an increase of about 800 percent. (The Public Press examined data from elementary schools only based on the tax records of legally recognized PTAs.) As parent fundraising increased, so did the gap between the richest and poorest schools. In 2010, Reedy became Grattan’s principal. Today, only 21 percent of 359 students there qualify for free and reduced-price lunch. That is one-third the district average, making it one of the wealthiest schools in a district whose students overall have gotten poorer. Not surprisingly, the Grattan PTA is one of the most successful fundraisers in the district. In the 2012–2013 school year, the PTA at Grattan raised $353,000, about $983 per pupil, on top of the base $2,896 the school receives from the district for each student. The parents rely on an array of laborintensive fundraising methods: “Count Me In!” parties with ticket prices up to $75, wine raffles and auctions, foundation grants, “Dine Out for Grattan” nights at participating restaurants, and a sophisticated e-newsletter and website. Reedy said Grattan has been spared the sting of budget cuts, thanks entirely to these parent fundraising efforts. “We’ve been able to take PTA money and donate it to our general fund to prevent layoffs,” he said. Not only did the PTA protect jobs, it expanded Grattan’s academic programs by hiring reading specialists and a technology teacher, and adding a bilingual clerk and a parent liaison to the staff. The PTA also funds an extra teacher, helping Grattan actually reduce its average class size. In all, this school year the Grattan PTA is paying all or part of the salaries of six staff, totaling nearly $224,000. PTA money also supported the library, a garden that doubles as a science lab and a computer lab that is often cited as one of Grattan’s key strengths, among other programs. Like many principals, Reedy sets spending priorities in consultation with a school site council, which includes parents, teachers and neighbors. Their decision to invest PTA funds in academics has paid off. From 2008 to 2013, Grattan improved standardized test scores

Front Cover Photo by Tearsa Joy Hammock: A child buys tickets at the Halloween-Día de los Muertos fundraiser for Junipero Serra Elementary in Bernal Heights. The event netted $3,000 for the PTA.

Continued on next page.


S.F. Parent Fundraising Accelerates as Elementary School Budgets Are Cut Continued from previous page.

from 787 to 923 points on a scale of 1,000, making it one of the district’s academically best-performing elementary schools. While the sums raised by Grattan’s PTA may seem tiny compared with a district budget of $667 million, Grattan’s example reveals how small — but concentrated — amounts of private money can keep an entire school afloat. For schools with the means, parent fundraising is a solution to budget cuts. But our analysis finds that the majority of San Francisco schools are unable to raise money at the same level. Indeed, reliance on parent fundraising appears to undermine the equitability goal of the district’s own funding methods. HOW CUTS CREATE INEQUITY Junipero Serra Elementary is situated between Holly Courts, a low-income housing project, and the hilltop Holly Park in Bernal Heights. Visitors hear more Spanish than English in the school’s hallways — 90 percent of the 269 students are immigrants or the children of immigrants, mainly from Latin America. As principal, Evelyn Cheung has had to make hard choices in the past five years, in consultation with teachers and parents. One year they stopped buying supplies. The budget for the library fell to $500. Cheung was forced to lay off classroom aides, the nurse, the social worker and all “consultancies” — mainly arts teachers. The layoffs hurt morale more than other cuts, Cheung said, “because it’s people.” “They have emotional ties, and there are bad feelings when someone is laid off,” she said. Why can’t Junipero Serra fundraise its way around budget cuts? In part, because the parents have less to give, at least as measured by free or reduced-price lunches. At Junipero Serra, 86 percent of students qualify, more than four times as many as at Grattan. To qualify for reduced-price lunch in California, a family of four must make less than $42,643 a year. To qualify for free lunch, less than $29,965. Researchers use these markers as proxies to measure poverty. But those incomes are more meager in San Francisco, which in the past two years has had the most expensive housing in the country, straining the ability of poor families to pay for basic necessities. In San Francisco, the average rent for a two-bedroom apartment is now $3,942 a month — a stunning rise of $1,000 since the start of 2013. The desperate situation faced by most of Junipero Serra’s families is, in fact, shared by 63 percent

of families throughout San Francisco’s public school system. This represents a 10 percent increase since the start of the recession, which coincided with the start of the budget cuts. This poverty has also become more concentrated. Data from the district show that the number of schools in which more than threequarters of students are eligible for subsidized lunch has more than tripled in the past decade. Schools in which fewer than one-quarter qualify increased slightly. Meanwhile, the middle class is disappearing: The portion of schools in between those extremes of poverty and wealth fell, from 66 percent to 52 percent. While Cheung lauded the ideals behind the weighted student formula, and similar federal programs such as Title I, she said current funding levels were not enough for schools with large numbers of disadvantaged students. “Many of my parents don’t have the resources that many middleclass families have,” Cheung said. “We have to provide a computer lab and technology training for the kids because they don’t have computers at home. And they will go to middle school very far behind if we don’t provide that support.” The disadvantages do not stop with electronic devices. “Many of our Spanish-speaking families work two jobs,” Cheung said. Inflexible schedules that often come with working-class jobs make it hard for parents to volunteer in the classroom, which might otherwise make up for the layoffs of classroom aides, or help kids stay on top of homework — assuming the immigrant parents can read assignments in English. Hectic schedules create barriers to getting involved in the PTA, hurting the school’s chances to raise money and buffer against shortfalls. (See sidebar, “Two PTA Presidents, Two Realities,” pages A6 and A7.) “They care a lot and they’re involved, but not in the traditional ways,” Cheung said. THE TWO SIDES OF FUNDRAISING This is how budget cuts perpetuate inequity: Affluent families are able to make up for lost funding by donating both time and money, whereas schools with poor families struggle to fill the gap. School district data show that as the number of students getting free and reduced-price lunch rises, PTA budgets fall. At the 44 elementary schools where a majority of the students live in poverty, fundraising is insufficient to offset budget cuts. Those cuts add stress to communities already struggling with low wages, financial instability and discrimination. Despite these challenges, Junipero Serra has improved its academic

Volunteers gathered on a Saturday in November at Grattan Elementary for the first campuswide greening work day. They unloaded two tons of sand, painted, hauled, cleaned up and gardened. Photo:

Luke Thomas // Public Press

performance. It saw its standardized test scores rise by 36 points in the past two years, to 752. But that is still below what the state deems “adequate yearly progress” and almost 200 points behind Grattan. Cheung attributes the modest gains to “superhuman” efforts by teaching staff, doing more with less. “It’s a waste of time to be frustrated,” she said. “We just need to build on the strengths that we have.” For Cheung, the problem is not that other schools have more money — it is that the needs are so different. After including PTA contributions, per-pupil expenditures for Grattan and Junipero Serra come to within a few hundred dollars of each other. But this equivalency is misleading. Under the district’s weighted student formula, Junipero Serra is supposed to receive more money than Grattan. The “extra” money going to Junipero Serra through the funding formula is for basic necessities: subsidized lunches, special education, English-language instruction and computers, to which the kids have little access at home. So Cheung’s expenses are higher than Reedy’s, and parents are not as able to help in the classroom to make up for layoffs. While the kids at Junipero Serra start life on first base, most of Grattan’s are already on third. It is not hard to see why education inequal-

ity, as Robert Reich describes it, persists. Grattan does not need to cope with the same chronic insecurities confronting Junipero Serra, where families struggle with the stresses of living on the financial edge both at school and in the home. “We shouldn’t have to fight so hard to provide kids with a strong foundational education,” Chueng said. PARENTS NOT TO BLAME Alvarado Elementary in Noe Valley is, in a way, an exception to this trend toward inequity, and might represent the best-case scenario in a system that overall is rigged against poor students. The school draws poor and working-class Latino students from the Mission, as well as affluent white and Asian families from Noe Valley and the Castro. As a result, it is more diverse than both impoverished schools like Junipero Serra and affluent schools like Grattan. Forty-two percent of Alvarado students qualify for free or reducedprice lunch. Carl Bettag, a product designer and father of twin fourth-graders, leads fundraising efforts for Alvarado’s PTA, which this year aims to raise $375,000, or about $721 per pupil. That is considerably more than Junipero Serra, but less than Grattan. With this money, the Alvarado

PTA has staved off layoffs, supported literacy programs and launched and maintained a regionally famous arts program. It has initiated environmental programs, such as solar panels, that also provide learning opportunities. Bettag said the low-income students at Alvarado benefit most from the fundraising prowess of middleclass families in an income-diverse school. “If you were to walk into Alvarado, you would find a vibrant, functional school, but you would not find a gold-plated school,” he said. “The science room does not have a sink! Some of the computers don’t work. Alvarado needs all the money and support it’s getting. We have 500 students at the school. It’s the 200 students who are on free and reduced lunch that benefit most from all the effort and money that goes into the school.” Bettag said he could not ask parents at Alvarado to contribute for other schools, and he was not sure that he should. “The fundamental problem is that the public schools are woefully underfinanced, and nothing that the PTAs do is going to fix that problem,” he said. “The real problem is not at the local level. It’s at the state level.” Reich agrees. After serving as secretary of labor in the Clinton administration, he has campaigned against economic inequality through books, articles, speeches,

TV appearances and most recently the film “Inequality for All.” “Parents should not be blamed for school inequality,” Reich said. “They should be thanked for making donations to their children’s schools. The problem is not with them. The problem lies much deeper. The problem is that we have a system of school finance that is topsy-turvy. Poor kids tend to end up in the worst schools, with minimal facilities, when they should be getting the best we as a society can offer.” Unlike School Board President Norton, Reich said he does not believe that a hands-off approach is best for tax-deductible parent donations. Donations by parents to their children’s schools are not charity, Reich argued. It is the opposite — helping one’s own offspring instead of the less fortunate. These tax deductions diminish government revenues that could have gone to rich and poor schools alike. NO EASY SOLUTIONS Can the system be improved, or are we doomed to perpetuate the cycle of inequality? This problem is not unique to San Francisco. As anti-tax sentiment in recent years has reduced school funding nationwide, parents are increasingly

Continued on next page.

Albany School District Levels Parent Fundraising Playing Field Concerned about equity, 3 elementary school PTAs pool money for daytime enrichment


he tiny Albany Unified School District in the East Bay was, until 2011, like many others in the state: Schools with the best parent fundraising were able to reap all the benefits for their own kids. Superintendent Marla Stephenson said the Story: disparities had Emilie Raguso been immedi// Public Press ately apparent when she began working for the district in 2008. Three years later she led the switch to a single annual campaign for all three schools — one that could provide an example for San Francisco and other districts struggling with inequities made worse by parent fundraising. “If you were to walk onto all three elementary campuses, you would find vastly different programs within the school day,” Stephenson said. “I would walk onto the Marin school site, and I would find that chess classes were being offered to students during school time. I would go to Cornell, and I would see music lessons by professional vocalists being offered during school time.” The third school, she said, was notably different: “I would go to Ocean View, and I would see nothing happening.” Albany is a city of about 18,500 people northwest of Berkeley in

Alameda County. Many families move there because of the reputation of its school district, which has three elementary schools — Marin, Cornell and Ocean View — that feed into a single middle and high school. The elementary schools are roughly the same size but have different demographics. According to the most recent data, 29 percent of the ethnically diverse Ocean View student population qualified for free or reducedprice lunches. There, parents raised about $40,000, a PTA representative said. At Cornell, 14 percent qualified for lunch subsidies, and parents raised an estimated $64,000. Marin, considered the wealthiest of the three with the most active PTA, had just 10 percent of students getting subsidized lunch. Parents there planned to spend more than $90,000 on school-day activities. Critically, most of the money raised at Ocean View paid for costs such as buses for field trips, which parents in the wealthier schools were able to support with volunteer drivers and personal vehicles — another sign of affluence. Stephenson urged the school board to consider more uniform programming across the schools during the school day. Those programs, she said, should be within

the purview of the school board. This would ensure all the district’s children had equal access to enrichment. In the fall of 2010, Stephenson agitated many parents when she tried cutting back on some schoolday programs, given the disparity among campuses. Parents and teachers attended standing-roomonly school board meetings to advocate for their schools. Those at

“I think people just have a good feeling about making contributions that are split evenly among kids, which benefits the entire community.” the two wealthier campuses were upset that their children would not get programs that were already planned and financed. And those at the school with fewer resources tried to provide insight into why the disparity existed and needed to be addressed. Some parents at the wealthier schools argued that their children

were being penalized for what they perceived as a lack of investment from families at Ocean View. And Ocean View parents and staff said they felt misunderstood, wrongly pigeonholed as a campus with uncaring families. Ocean View allies, some nearly in tears, offered testimonials about the economic challenges their families faced. After the meetings, Stephenson convened a task force of parents, teachers, administrators and principals. The group met for more than 20 hours over eight sessions to find a solution agreeable to everyone. “There were two schools that really didn’t want to change,” Stephenson said about Marin and Cornell. At Ocean View, initially teachers led the charge for reforms. They expressed outrage that Ocean View students were deprived of the rich programming available at the other two schools. Stephenson told task force members that the PTAs would not be allowed to continue funding school-day activities if Ocean View continued to be excluded. The task force agreed on a joint $75,000 annual giving campaign, which included seed funding from the district, individual PTAs and a citywide community fundraising group called SchoolCARE. Other donations came from individuals. The money was split equally on a per capita basis among the elemen-

tary schools. The PTAs are still able to fundraise on their own, for projects such as site improvements, assemblies and teacher support. But school-day programming — art classes, field trips, chess clubs or sex education — is off limits for private funds. Parents, principals and teachers meet each spring to plan for fall programs. In late summer, the school board approves the contracts. The annual fundraiser is complete around November. The district manages the money. Board member Paul Black said the districtwide campaign has “gone a long way” toward addressing equity issues. It has ensured that students in all three elementary schools receive equivalent programs during the school day. And, he said, it also brought the three PTAs together. “They know each other on a personal level,” Black said. “I think that will always help people to avoid making false assumptions and keep them more understanding across the schools. If one is lacking something, other schools will understand why and be more cooperative.” When districtwide discussions about equity began in 2010, some parents said a pooled solution would be catastrophic, leading to a drop in donations. They claimed parents would be less willing to

give money if they did not know where it would end up. But so far, Black said, that has not been a problem: “There’s always the danger of donor fatigue, but so far it’s been pretty good.” The school board now keeps better track of donations to individual PTAs so it can balance any inequities. If one PTA buys new computers or iPads for a classroom, the board might fund something equivalent at other campuses. Marin Elementary School PTA vice president Kim Trutane said the Albany Elementary Giving Campaign has been so successful over the past two years that the parent committee is considering raising its goal to pay for more school-day activities. She noted that as the state budget situation improves (due to the passage of Proposition 30 last year), parents hope the district itself may be able to pay for some enrichment activities. In the meantime, the pooled fund is a solution that has worked for Albany. “It’s led to more collaborative projects between the PTAs, and I think people just have a good feeling about making contributions that are split evenly among kids, which benefits the entire community,” Trutane said. At Marin Elementary, she added, “it has not hurt fundraising in other areas. I look at it as a real positive.”


2. Parents can match contributions they make to their own child’s school with additional gifts to a poorer school. 3. PTAs at affluent and low-income schools can voluntarily become sister institutions, sharing knowledge and resources. 4. The San Francisco Unified School District could create a standard Web platform for making donations, available to all schools, to correct for huge imbalances in the schools’ Web presences. 5. The school district could prohibit PTA funds from paying and training teachers.

Jeremy Adam Smith is a fellow with the Institute for Justice and Journalism. He edits the website of U.C. Berkeley’s Greater Good Science Center and is author or coeditor of four books, including “The Daddy Shift,” “Rad Dad” and “The Compassionate Instinct.” His son briefly attended both Junipero Serra and Grattan.

6. The school district or regional PTA can collect part of or all parent-raised funds and redistribute them through a local education foundation.

7. With new money coming from the state next year, San Francisco could reweight its student funding formula to raise the floor for all schools, making fundraising less necessary. 8. The federal government could create levels of charitable status for school-based PTAs, awarding double deductions for gifts to poor schools and no benefit to those who give to affluent schools. 9. Local and state governments could raise tax rates for the wealthy, decouple school budgets from property taxes or target specific poor schools (not just whole districts with many poor schools) with more resources. 10. Local educators and policymakers could foster a sense of camaraderie across barriers of social class, citizenship status and race so that taxpayers and parents see San Francisco’s children as all in the same boat. — J.A.S.

MORE THAN JUST BAKE SALES San Francisco PTA fundraising increased since 2002 ... but most of it paid for programs at just a handful of schools. T O P - F U N D R A I S I N G E L E M E N T A R Y P T A S I N 2 0 11 5 million

A small number of parent-teacher associations in the San Francisco Unified School District have become fundraising powerhouses in the past decade. The wealthiest enable their school to hire new teachers and other staff. This is not true at the poorest schools, which have been beset by layoffs and belt-tightening during the past five years of budget cuts. These data are from 2011, the most recent available.

4 million

Top 10 PTAs These organizations raised the most money overall: Friends of Harvey Milk, Grattan, Alvarado, Alice Fong Yu, Francis Scott Key, Sherman, George Peabody, Dianne Feinstein, Rooftop, and Claire Lilienthal.

3 million

26 Schools: Smaller Donations

2 million

These organizations each raised money, but not as much as the top 10: Miraloma, Lafayette, Starr King, Clarendon JBBP, Chinese Immersion School at DeAvila, Parents Club West Portal School, William McKinley, Lakeshore, Commodore Sloat School Fund, Jefferson, Sunnyside, Leonard Flynn, Argonne Council of Empowerment, Alamo, Daniel Webster, Sunset, Jose Ortega, Robert Louis Stevenson, Fairmount, Lawton, Ulloa, Longfellow, Monroe, Hillcrest, Marshall and S.F. Public Montessori.

1 million











The remaining 35 elementary schools in San Francisco Unified either did not have any PTA fundraising in 2011 or raised so little that they did not need to report it. Schools with higher numbers of poor students usually fundraise less.

$2.55 Million

The most effective solutions may be political, not charitable. Reich counsels parents troubled by growing publicschool inequities to turn their energies from giving to advocating for reform. He said they should work to raise tax rates for the wealthy, decouple school budgets from property taxes and target state and local resources to the poorest schools. In a Sept. 4 op-ed for The New York Times, Stanford political science professor Rob Reich (no relation to the coincidentally named Robert Reich) went a step

1. Individuals can donate to or urge their employers to do so, channeling money to the neediest schools.

$2.77 Million


10 Solutions to Inequality in Fundraising

TOTAL - $5.32 Million

fundraising to keep their own kids’ schools afloat. In response, some California districts created centralized PTA foundations to redistribute funds to schools based on need (see story on the solution used in the East Bay city of Albany, page A4). Others prohibited PTAs from raising funds for personnel or professional development. The Santa Monica-Malibu school district embraced both solutions in 2011, under Superintendent Sandra Lyon. Today the district’s education foundation is the only way parents can donate money to support teachers and staff. The key worry about such systems is that they will reduce the incentive for parents to support public schools beyond what they already pay in taxes. Lyon said her district struggled with the transition: “There are still some who believe parent money should stay at their children’s schools, and they are strongly against the change.” The reform caused some affluent Malibu residents to try to break off from more working-class Santa Monica to create a separate school district. At least one Malibu school refused to participate in revenue sharing. Overall, the district’s PTAs are struggling to raise as much as in previous years, Lyon said. Still, she sees progress. The foundation launched a $4 million campaign last spring, and by late fall 2013 it had raised $2.4 million. “Some of our wealthiest Santa Monica schools have the greatest participation,” Lyon said. “Indeed, across Santa Monica schools, some of the loudest opponents have become the biggest champions and are leading the charges at their schools.” Lyon has seen a culture change in a district heavily divided by social class. “Schools are collaborating in ways they had not done before,” she said. “The inequity in schools had bothered many for years, and so there has been support for the notion that we are working to create a better education for all students.” The Santa Monica-Malibu district is one-fifth the size of San Francisco Unified. Every education leader interviewed dismissed the idea that such a system would work in San Francisco, largely because of the district’s size and diversity. Most defended the status quo. If San Francisco moved to such a system, Carl Bettag said, “I think you’d get a lot of parents pulling their kids out of public schools and putting them in private schools. I’d pull my kids.” Many educators fear losing support from affluent parents, who have the option to quit the public schools altogether and enroll their children in private schools — or flee to suburban schools. Harvey Milk Elementary principal Tracy Peoples said fundraising can create that kind of parental engagement. “For schools like ours that do not qualify for additional funding based on test scores or student demographics, we depend on the parent community to step in to help raise additional funds for our students,” Peoples said. Because the San Francisco Unified School District does not keep track of donations to PTAs, parents and educators have not had an accurate picture of how they factor into inequities among individual schools. But as California moves this year to pour millions of dollars into diverse, high-poverty districts like San Francisco, parents and educators must ask themselves hard questions about which students were hurt most by five years of budgets cuts — and who was rescued by PTA fundraising. Some parents have led a grassroots movement to counteract the inequities. Alvarado parent Todd David worked with peers in 2008 to launch EdMatch, a Webbased volunteer effort to enlist corporations and philanthropists to match funds raised for San Francisco public schools. The money was distributed to the most impoverished. “EdMatch is a good system,” board president Rachel Norton said, “because it encourages people to voluntarily opt in, without penalizing parents who are working really hard.” But EdMatch, while noble in intent, has struggled more than five years to increase participation, raising only $100,000 last year — well short of its $6 million goal.

further, proposing that the federal government create a special charitable status for school-based PTAs, so that those who give to poor schools get double deductions and those who give to affluent schools get none. Norton said the changes in state funding have sparked other possible reform ideas specific to San Francisco. “We desperately need to reweight the student formula,” she said. This may be the most decisive battle to be waged in the next year on behalf of poor and immigrant schools such as Junipero Serra. “A well-educated populace is the key to a healthy democracy,” said David, the Alvarado parent, who turned to full-time education activism after a successful Wall Street career. “Public education is an investment, not an expenditure. My grandparents were immigrants. They came to the United States, they got a public education, they lived the American dream. Education is the one way we know that can help each person rise, generation after generation. If you care about the future of America, education for all kids is in all our interests.”

Combined spending of all active PTAs

Continued from previous page.

No record of significant fundraising


Source: IRS form 990 from registered nonprofit PTAs in San Francisco Research: Jeffrey Thorsby Jason Winshell and Justin Slaughter // Public Press Graphic: Tom Guffey // Public Press

Debate in 2014: Use State Windfall for S.F. Schools To Aid Poorest Students, or Raise Teacher Pay?


ew state dollars will begin flowing into the San Francisco Unified School District in the fall — and policymakers and activists have already begun arguing over how to spend them. Should the San Francisco Board of Education use the $22 million from a new funding scheme to increase teacher salaries districtwide? Should it hire more classroom aides? Or should it adjust its decade-old equitable funding policy Story: that gives a leg up to schools with Justin Slaughter // Public Press many children from poor families? The new money — which would grow to $185 million eight years from now if today’s enrollment numbers remain stable — comes from the Local Control Funding Formula, which the state Legislature passed last summer. The plan reroutes more resources to California’s school districts with the most disadvantaged students. The law also gives districts greater freedom to spend funds previously difficult to access due to rigid guidelines. Civil rights groups and advocates for low-income students say San Francisco’s Board of Education should direct the windfall to programs and support staff for students with the greatest educational challenges. These include language barriers, disabilities or low

family incomes. But Dennis Kelly, president of the United Educators of San Francisco, a union representing 6,000 San Francisco public school teachers and employees, said the money should go to boosting salaries districtwide. He said this would ultimately benefit disadvantaged students through retaining qualified staff and creating better learning experiences. “By supporting teachers, salaries buy you the services students need to learn,” he said. “This is not just greedy adults with their hands out.” As chair of the Board of Education’s Budget and Business Services Committee, Jill Wynns will lead the debate about how to spend the money this spring. If the board decides to give teachers widespread raises, little would remain for anything else. But she agreed with Kelly that an across-the-board salary hike would benefit students. “I’m in total agreement with the unions that all employees need to have raises,” Wynns said. More than half the city’s $667 million public education budget comes from state coffers. The new funds would amount to a 27 percent increase. That would represent a 5 percent bump to what the state invests in San Francisco schools. In essence, it would restore the state contribution to a level of funding not seen since

the recession began in 2008 — $7,957 per student — after dipping to a low of $4,945 in fiscal year 2009–2010. The state money is expected to keep rising for nearly a decade. By 2021, the new state law could funnel a net additional $185 million into the city’s public education system, increasing per-student subsidies to more than $11,000, according to calculations by the California Department of Finance. Though some details of the new law still need to be ironed out, San Francisco Unified can pursue several strategies to get state dollars. It could spend them on programs targeting low-income students, Englishlanguage learners and children in foster care. It might also hire teacher aides specifically for English-language classes. More broadly, the district could develop a plan promising to improve those students’ “educational outcomes” without specifying where the money goes. This last criterion has alarmed the American Civil Liberties Union and other activists across the state. John Affeldt, managing attorney and director at Public Advocates, a San Francisco-based law firm dedicated to anti-poverty reform, said the law’s spending guidelines were potentially vague enough to allow districts to exclude the students it was written to help. “Districts can spend some, much or all on non-needy

students, which doesn’t meet the statutory requirement,” Affeldt said. The district had yet to prove that raising teachers’ salaries would be the best thing for these students, even though it could argue that doing so would eventually improve overall student learning, he added. Regardless of the district’s approach, Wynns said the state’s new guidelines were an improvement on the previous complex and inherently unfair 40-year-old system. Under that formula, California gave an equal base subsidy to all of its nearly 1,000 public school districts, and more based on a complex calculation that includes roughly 50 measures, such as the number of Englishlanguage learners and students with special needs. Wynns said the state formula was so rigid that it led to absurd restrictions on the use of everyday supplies and office equipment. Fifteen years ago, Wynns said, state auditors deemed San Francisco “out of compliance” because someone unaffiliated with a state-funded bilingual program drank from a water cooler dedicated to its exclusive use. “Imagine how stupid it was to have a water cooler for each program,” Wynns said. “The Local Control Funding Formula lets us recognize that all students need that water.”


1 Photo: Luke Thomas // Public Press

Two PTA Presidents, Two Realities


na Hernandez and Barry Schmell come from very different backgrounds, but they have at least one thing in common: They both lead their schools’ parent-teacher associations — Ana Hernandez at Junipero Serra Elementary in Bernal Heights, Barry Schmell at the Harvey Milk Civil Rights Academy in the Story: Castro. Jeremy Adam Smith Once upon a time, PTAs held bake sales to pay for field // Public Press trips and annual gifts for the teachers. Those days are gone. Today, after five years of severe budget cuts in the San Francisco Unified School District, PTAs are being asked to pay for teachers, reading specialists, social workers and school psychologists, computers, basic school supplies, staff training and more. But not all PTAs can afford those things. Parents at just 10 elementary schools raise more than half the PTA money that all 71 elementary schools in the district take in. Many of the rest raise nothing, or almost nothing. Parents at some schools have personal wealth and other advantages, such as better language and organizational skills. Fundraising has become an essential part of public-school finance in San Francisco — and that is triggering far-reaching changes in the culture of the schools. DIFFERENT FAMILIES, DIFFERENT SCHOOLS


Barry Schmell’s daughter, Jonesy, attends fourth grade at Harvey Milk Civil Rights Academy, which raised more than any other elementary school in the district in 2011 — but in subsequent years lost funding. Schmell is divorced from his adopted daughter’s other father, and works from his home in the Castro as Google’s senior technical instructor and course developer. The job gives him flexibility to be deeply involved in his daughter’s life and education. Schmell was raised in Baltimore, the youngest of five in an Orthodox Jewish family, and studied at the Applied Physics Lab at Johns Hopkins. “I grew up in a home where my mother was the PTA president,” Schmell said. “I grew up stuffing envelopes in our living room, and so I kind of feel like that’s part of school. I was surprised that public schools in San Francisco required so much fundraising.”


Ana Hernandez, seated second from left, is PTA chapter president at Junipero Serra Elementary in Bernal Heights, where her daughter Jasmine (far right, next to her big sister) goes to school. Hernandez emigrated from Guatemala in 2004, fleeing poverty and a society shattered by 50 years of civil war. Today, she supports the entire family working 42 hours a week as a cook in Burlingame. Her husband, Byron, lost one of his fingers in an accident on his job as a laundry mechanic, and as a result he is out of work. Despite her inflexible and demanding schedule, Hernandez said she stays involved with the PTA because it gives her life meaning and community. But for the family to make ends meet, she needs a second job. If she succeeds in finding one, she said she would have to quit leading the PTA.


3 Photo: Luke Thomas // Public Press



During “morning circle” at Harvey Milk Civil Rights Academy, Schmell shows off invitations to a roller-skating party fundraiser. He and members of the Parent-Faculty Club aim to raise $50,000 for supplies, field trips and arts programs this year. “It isn’t just the fundraising — this is my community,” Schmell said. “I have amazing relationships and experiences through the school.” The families are diverse, and Schmell and daughter Jonesy know others who are like theirs: multiracial, with gay parents and adopted children.


Ana Hernandez serves food at a monthly dinner party hosted by Junipero Serra’s PTA. She first got involved by working on the school’s food bank, distributing food to hungry families. This school year, the PTA aims to raise around $7,000 to support field trips, buy computers, get gifts for the teachers and underwrite the fifth-grade graduation project. The PTA also sets aside part of that fund to support Junipero Serra families facing economic emergencies. Because almost all the school’s families live in poverty, their financial contributions tend to be modest. “They can help with one dollar, two dollars,” Hernandez said. “Even when they have no money, people help in different ways.” Photo: Luke Thomas // Public Press

4 Photo: Luke Thomas // Public Press





Schmell shows off the school library to a group of parents who are considering sending their children to Harvey Milk Civil Rights Academy. By giving tours and organizing frequent “fun raisers,” Schmell is working to revitalize a school that has struggled around issues of funding equity, race and social class, as well as management. A nonprofit organization, Friends of Harvey Milk, was one of the top fundraisers in the city, spending $380,000 a year, almost exclusively on before-school and after-school enrichment programs. But that collapsed in 2011 after key supporters withdrew, leaving the school with little fundraising infrastructure. “If we had everyone at Harvey Milk give $250 for the year, then we wouldn’t have to do severe fundraising,” he said. “I’m very concerned about technology. I’d love for us to have a computer lab, and we need to do a targeted fundraising campaign for that.”

6 Photo: Tearsa Joy Hammock // Public Press


After years of cuts, the Junipero Serra library now has an annual budget of just $500. Many parents said the library was actually improved in recent years, thanks to book donations and volunteer efforts. Even so, the shelves feel underpopulated, and the room under-used. With a limited budget, Principal Evelyn Cheung had to make hard choices, so she prioritized the computer lab and technology training for the kids ahead of other costs. Hernandez supports Cheung’s priorities, and the PTA has been able to buy computers for the lab. “Some people think the government pays for everything at school, but it’s not like that,” she said. “I try to explain to the parents: We have to make fundraising, because that is how we can help the school.”

Photo: Luke Thomas // Public Press

7 Photo: Luke Thomas // Public Press



Harvey Milk Civil Rights Academy is named after California’s first openly gay elected politician, honored by a shrine in the hallway. Milk briefly worked as a teacher and made his name successfully campaigning against the 1978 Briggs Initiative, which would have required California schools to fire gay and lesbian teachers. Though the school named after him has experienced internal divisions and incidents of homophobia (Barry Schmell was once forced to delete anti-gay comments from the school’s Facebook page) today it is a key institution for the Castro’s diverse families and is a financial beneficiary of the annual Castro Street Fair. When the school was vandalized, neighborhood businesses and residents donated $15,000 through its well-designed website to help repair the damage and buy school supplies.



A Central American indigenous dance troupe from the University of California, Berkeley, leads a “friendship dance” at Junipero Serra’s annual fundraiser, which this year netted $3,000 — almost half the PTA’s budget. Most of Junipero Serra’s students are immigrants or the children of immigrants, mainly from Latin America. So all gatherings are conducted in both Spanish and English; parents and staff said bonds between immigrant and native-born communities are strong. Parents in both groups make a conscious effort to build community across cultural and linguistic barriers, Principal Evelyn Cheung said. “These are not isolated groupings,” she said. “They work together and they’ve built trust.”

Photo: Tearsa Joy Hammock // Public Press

9 Photo: Luke Thomas // Public Press



“I waited tables in college, and I hated pooling the tips,” Schmell said. This memory makes him reluctant to support a system in which San Francisco schools would share the money raised by parents and redistribute some of it to lower-income schools. His connection to Harvey Milk Civil Rights Academy and to the Castro is strong, and that is what motivates him to give. The same is true for Castro businesses that support the school. They might not give as much if they thought their money was going to children in other communities. “But maybe it would be better for us,” he said. “If other people are able to do more, then we’ll benefit from that as well.”


Sometimes, at the Italian restaurant where Hernandez works, a customer comes to the kitchen to give a tip directly to her, in appreciation for a delicious meal. She always shares the tip with the other line cooks. “Everybody’s working hard,” she said, “so we share.” Waiters also pool their tips, she said, because “the bus boy, the person working at the bar, the cooks, they are all working hard.” All the families at Junipero Serra Elementary School work hard, she added, even if they make very little money. If schools shared, she said, everyone would benefit. “I think it’s good, because you give opportunity to all the kids.”

10 Photo: Tearsa Joy Hammock // Public Press


Winning the PTA Funding Game

District spending per student In 2002, the San Francisco Unified School District implemented its Weighted Student Formula, which currently gives schools a base of $2,896 for each student, and then extra money based on a complex formula that accounts for the number of families living in poverty, the prevalence of English-language learners, the need for special education services and other factors. These figures represent projected per-school budget divided by projected enrollment for fall 2011.

Some school PTAs add hundreds of dollars per student


he San Francisco Unified School District aims to spend its funds equitably, not necessarily equally. That means giving more to schools with the highest needs, based on a complex formula. But in the past decade, parents at some schools have developed sophisticated fundraising operations to make up for years of tight districtwide budgets. The result: parents at a few schools are able to significantly supplement their children’s education, while most are not.

PTA spending per student

Research: Jeffrey Thorsby, Jason Winshell and Justin Slaughter // Public Press

San Francisco Unified does not track private donations to public schools. But officially registered nonprofit parent-teacher associations that raise more than $50,000 a year must file detailed returns with the IRS. Taken together, these records show that schools with top-fundraising PTAs are able to increase per-student spending — by as much as 29 percent. These figures represent money spent by each parent group divided by projected enrollment in fall 2011.



Harvey Milk Civil Rights Academy



George Peabody






Chinese Immersion School at DeAvila












Alice Fong Yu (K-8)



Francis Scott Key




Dianne Feinstein




Starr King









Rooftop (K-8)



Commodore Sloat




Claire Lilienthal (K-8)




S.F. Public Montessori



Clarendon Alternative



Daniel Webster



Lakeshore Alternative




West Portal







Jose Ortega












Leonard R. Flynn








SFUSD Parent Fundraising $113 million


The number of schools where more than threequarters of students qualify for free or reduced-price lunch in 2000.

The shortfall the San Francisco Unified School District faced in 2009-2010, the worst of five straight years of cuts. The gap between the district’s projected needs and the final budget last school year was only $13 million.


The number of schools where more than three-quarters of students qualify for free or reducedprice lunch in 2012.


The increase between 2002 and 2011 in spending by elementary school parent-teacher associations, to make up budget cuts. In 2011 the PTAs spent a total of $5.32 million.


The maximum income a family of four can earn to qualify for reduced-price lunch in California. (To qualify for free lunch, that family must earn less than $29,965.)


Total PTA fundraising in 2011 by the top 10 elementary schools. That was about half of what all 71 elementary school PTAs in the district took in.


The average annual rent for a two-bedroom apartment in San Francisco ($12,000 more than it was at the beginning of 2013).


Portion of San Francisco elementary school students who qualify for free or reduced-price lunch.

More Schools See Poverty Rise Poverty, as measured by the number of students receiving subsidized food, has increased in the San Francisco Unified School District. The portion of schools with more than 60 percent low-income students (red and orange) rose from 26 percent in 2000 to 37 percent in 2012.















Free and reduced-price lunch rates San Francisco public schools remain economically stratified despite years of district efforts to integrate classrooms along income lines. One of the best ways to measure this is the number of students in a school receiving subsidized food. To qualify for reduced-price lunch in California, a family of four must make less than $42,643 per year. To qualify for free lunch, they must make less than $29,965 per year.


$5,224 $4,687 $4,334 $5,201 $4,536 $4,264 $5,162 $4,337

$4,956 $4,528 $4,101 $4,378

$6,645 $4,105 $5,681

$4,471 $4,939 $4,247 $4,191 $4,298 $5,018 $5,095 $4,176




Robert Louis Stevenson









Lawton Alternative (K-8)





$5,629 $4,272 $4,439 $5,096 $4,299 $4,544 $5,902



New Traditions




Yick Wo




Rosa Parks



George Washington Carver






Paul Revere

$5,685 $5,783 $4,876 $7,033





Bessie Carmichael



E.R. Taylor


Spring Valley


Visitacion Valley


Junipero Serra




Malcolm X

$4,753 $4,922 $4,755 $5,496 $5,427 $9,380



Frank McCoppin



S.F. Community Alternative (K-8)






Glen Park



El Dorado

$4,855 $5,159


$0 †

William L. Cobb

$0 †



$0 †

Charles Drew College Prep.



John Yehall Chin




Jean Parker


Cesar Chavez

$0 †

John Muir

$0 †

George R. Moscone

$0 †

Gordon J. Lau


$5,057 $5,362 $5,030 $5,233 $7,151 $4,945 $4,643


= fewer than 20% of students get free/reduced lunch

$0 †



= 20-40% of students




= 40-60% of students




= 60-80% of students

$0 †

Chinese Education Center


= 80% or more of students


Bret Harte


Mission Education Center


$0 † Sources: San Francisco Unified School District, PTA organizations’ IRS form 990s.

* Too little raised to require detailed tax return

$5,734 $4,903 $4,841

† No registered PTA at this school

Notes: Schools with no recorded PTA funding are ranked from low to high by free and reduced-price lunch rates. Buena Vista Horace Mann is excluded because it is the product of a recent merger, making finances hard to track.

Graphic: Tom Guffey // Public Press









Plans to Ease State Climate Regulations Enrage Environmentalists Proposals would give businesses possibly hundreds of millions of dollars worth of free allowances to pollute


alifornia regulators are weighing plans to make it easier and less expensive for oil refineries and other big industries to comply with the state’s new cap-and-trade system for cutting greenhouse gas emissions, and environmentalists are alarmed. At a hearing in Sacramento in October, the California Air Resources Board Story: heard staff proBarbara Grady posals to amend and Lisa the year-old Weinzimer cap-and-trade // Public Press program to extend “transition assistance” to industry through 2018. The change, coming on the heels of lobbying from industry, would give businesses possibly hundreds of millions of dollars worth of free allowances to pollute and alter the economics of the emerging auction market for carbon. The Air Resources Board also considered a controversial proposal to reward the capture of methane emissions from coal mines by including it as a tradable “offset” credit under cap-and-trade. Environmentalists said this plan could

Environmental advocates worry that the proposal to allow methane capture from coal mines as an offset could spur expansion of coal mining in other states where regulations are less extensive. encourage the expansion of coal mines, undercutting federal air quality and climate goals. The cap-and-trade system is a key piece of California’s closely watched Global Warming Solutions Act of 2006, which requires the state to reduce its greenhouse gas emissions to 1990 levels by 2020. The law requires utilities, refineries, manufacturers, farms and other industries that emit large

amounts of carbon dioxide and other greenhouse gases to abide by a cap on those emissions, or trade pollution allowances and offsets to meet their caps. Over time, the cap is scheduled to be tightened, currently at a rate of 2 percent per year, and later at 3 percent per year. The exact regulations have changed over time, and the process has been subject to lobbying. Under cap-and-trade, an “allowance” represents permission to emit 1 ton of carbon dioxide or the warming equivalent of other greenhouse gases. Covered companies, government agencies and regulated utilities can trade allowances at auction. Businesses that cannot easily reduce emissions can buy allowances from those that have cut beyond their mandated cap. Regulated entities can also buy offsets — credits preapproved for greenhouse gas reduction activities such as reforestation. To get the cap-and-trade system started in 2012, the Air Resources Board gave large industries allowances covering 100 percent of their current emissions, anticipating that they would start planning and retrofitting operations to reduce emissions at a rate of 2 percent per year, matching the gradually declining cap. Several industries lobbied furiously for more free allowances. Some environmental groups said the proposed extension of free allowances through 2018 would diminish cap-and-trade’s ability to cut greenhouse gases. “We are deeply troubled by the staff’s proposal to extend transition assistance for the industrial sector in the absence of evidence indicating continued assistance is needed,” wrote the Greenlining Institute in a letter objecting to this proposal. Alex Jackson, an energy attorney for the Natural Resources Defense Council, estimated that the extension “is in the neighborhood of $1 billion in allowance value by 2020, with the lion’s share earmarked for the cash strapped oil industry.” Jackson noted that the oil industry in California, while complaining about cost of the program, “somehow had $43 million to lobby Sacramento” about cap-and-trade. A letter from the Environmental Defense Fund to the board called the oil industry hypocritical. “Certain sectors like the petroleum refineries simply don’t need continued assistance,” the letter said. Representatives from the Sierra Club also spoke against the amendment. The oil industry argued for months that California refineries would be at a competitive disadvantage under cap-and-trade in part

California regulators are considering a plan to allow companies that capture methane from coal mines to sell carbon “offset” credits to major polluters in the state. One of the first projects using this technology is a facility in Alabama installed by a company called Biothermica. Photo courtesy of

because they would have to spend money to change operations to emit less carbon, while out-of-state competitors would not. Not only could refineries in other states sell cheaper petroleum, they also could wind up selling more of the dirtier petroleum. The staff of the Air Resources Board appeared to have agreed with that economic assessment. Representatives from Chevron, Shell and the Western States Petroleum Association at the hearing thanked the Air Resources Board for the amendments. “Chevron is very pleased with many of the proposals,” and assistance should recognize the competitive landscape, Chevron spokeswoman Julia Bussey said. Environmental organizations also expressed alarm about the proposal to allow methane capture from coal mines as an offset for California polluters under cap-andtrade. They said the change could spur expansion of coal mining in other states, where environmental regulations are less extensive. The proposal “would create a new, previously unavailable revenue stream for mining companies,” the Sierra Club warned. “This has the potential to make coal mining profitable in places where it would otherwise

not be economically viable.” Methane is the second-largest source of greenhouse gas emissions after carbon dioxide in the U.S. Nationwide, coal mines released 89.3 million metric tons of methane in 2011, according to the federal Environmental Protection Agency. Just over one-fifth of the methane was captured and destroyed, while the rest was vented into the atmosphere. The regulation of the burning of coal for power is less contentious. Over 10 years, California has set stringent limits on greenhouse gas emissions from new power plants, a move that essentially bans new coal plants. In-state coal-fired electricity generation amounted to less than 2 percent of total supplies in 2010. Under California cap-and-trade, regulated industries will be able to use offsets from non-regulated companies to cover up to 8 percent of emissions. But analysts say offsets could potentially far exceed that figure under some economic projections. (See “California’s Market for Hard-to-Verify Carbon Offsets Could Let Industry Pollute as Usual.”) Methane capture proponents said revenue from the offsets would go primarily to technology and energy companies that develop and

manage the projects, not to big coal companies. But environmentalists said giving coal companies a new revenue stream from methane capture could encourage them to grow their mining operations. The protocol would capture methane released from underground mines for safety reasons, and would not encourage additional venting, Michael Cotes, president of Colorado-based Ruby Canyon Engineering, told the board. Environmental groups and academics said more research needed to be done to confirm that the protocol would not make coal production more profitable. Air Resources Board member John Balmes said he was conflicted about the plan. He endorsed the American Lung Association’s opposition to coal production. “Coal kills tens of thousands of people a year around the world,” he said. But Balmes said he would likely support the mine-methane protocol because the capture technology would help reduce overall emissions. Saying that there were “a lot of numbers flying around,” Mary Nichols, chairwoman of the board, said the proposal needed to be refined. Among other things, the staff need to provide more evidence the plan would not encourage coal min-

ing expansion. An updated proposal is expected this year. In yet another concession to energy companies, the Air Resources Board will consider changing the way it measures carbon emissions from oil refineries. The plan is to use a proprietary formula created by a consultant to the Western States Petroleum Association, the major petroleum industry group in California. Instead of each ton of carbon dioxide emitted, refinery emissions would be measured as “complexityweighted barrels,” an intricate formula that takes processing into account. It was devised by the Dallas-based consulting firm Solomon Associates. But few in attendance at the hearing said they understood how the new measurement would really work. “We do have concerns about a formula which relies on proprietary data we don’t have access to,” said Jackson of the Natural Resources Defense Council. In a May report to the petroleum association, the consultant wrote that the new formula was originally developed in 2008: “Both the ComplexityWeighted Barrels methodology and the Complexity Weighted Tonnes methodology are proprietary to Solomon.” The formula calculates CO2e — carbon dioxide equivalence — emissions based on what the consultant calls “detailed energy balance data.” That differentiates energy types for fuel components such that some may be imported, exported or produced, and the data take into account the process for producing the fuels. The board will vote on the proposals in the spring.

MORE ONLINE: For reporting on top-polluting industries’ appeals to the California Air Resources Board regarding cap-and-trade, see: “Years of Lobbying Helped Transportation Fuels Industry Win Exemptions From California’s Climate Rules”

For an explanation of how the carbon offset market will work, see: “California’s Market for Hardto-Verify Carbon Offsets Could Let Industry Pollute as Usual”

See the entire summer 2013 edition cover story on climate change, plus updates: climatechange

Online Payment Firm’s Bumpy Ride

Acteva acknowledges multimillion-dollar debt to charities, blames cash-flow problem


he top executive of Acteva, a San Francisco-based payment processing company, said he has a plan to dig out of $4 million to $5 million in debt and repay online donations owed to nonprofit organizations across the country. Still, some creditors — including a community college, an environmental group, an agricultural cooperative and Story: a regional jourAlex Kekauoha nalism organiza// Public Press tion — said they were owed tens of thousands of dollars each, and questioned whether the business will ever refund the money. Some are now taking legal action. CEO Pankaj Gupta said that Acteva’s financial woes were due to a cash-flow problem, and that he would be able to pay back the funds by taking on additional paying clients and developing new software products. But he complained that high legal fees and bad publicity from a website created to criticize the company were making it hard for him to fix the finances. “The plan is to avoid bankruptcy and keep the business going because we don’t have liquid assets,” Gupta said. “I have some nice deals that I’m in the process of sealing that could potentially give me nice cash.” But irate customers across the country said they were doubtful about being repaid. Some non-

profit organizations that have used Acteva’s services claimed that they had not received their checks for months. Lori Weisberg, a board member of the San Diego chapter of the Society of Professional Journalists, told ABC7-TV in October that her group had not been paid thousands of dollars raised in a fundraiser earlier in the year. “This is a company that caters mostly to nonprofit organizations that can least afford to have this kind of financial hit,” Weisberg said. The complaints have led to at least one criminal investigation and several civil claims. The San Francisco District Attorney’s Office confirmed that it had opened an investigation, and said that it was accepting reports about the company by phone at (415) 551-9558. Although it is not one of the top online payments processing firms nationwide, Acteva, which was founded in 1998, is a popular choice for businesses and nonprofit groups raising money for event registration or online donations. By 2010, the privately held company claimed that it had more than 17,500 customers and processed $800 million in registration receipts. The firm also provides office management services for events, fundraisers, conferences, meetings and training programs. After collecting and processing credit card information, Acteva

said it keeps a small percentage for itself before returning the rest to the customer. The process is supposed to take up to six weeks, depending on the size of the event, number of tickets sold and credit

“This is a company that caters mostly to nonprofit organizations that can least afford to have this kind of financial hit.” card cancellations. Clients are given the option of collecting online credit card payments through their own Internet merchant accounts at an additional cost, or saving money and collecting payments through Acteva’s default merchant account. Many of those customers saw delays in payment. Now it appears that the payment

problems have led Acteva to disable some of its services. A notice on its website reads: “Acteva Payment Management Services are currently unavailable.” The company did not respond to questions about who, if anyone, was still using the company’s payment and registration services. Clients and online activists who have complained loudly about the company said they doubted Acteva’s plan to resolve the payment delays. “At this point, it’s more beneficial to have them completely shut down,” said Jason Brown, who created, a gathering place for customers to compare notes and vent their frustration at the company. Brown said his wife’s organization, which he declined to name, signed up for Acteva in October 2012 to handle registration for an event in April 2013. The company was obligated to process credit card payments, keep a portion of the income and forward the rest. But the money was slow to arrive, and, at one point, Acteva owed the group $65,000, according to Brown. Now, he said, his wife’s organization is still owed $18,000. Gupta said Brown’s website and the bad press were killing Acteva’s brand and its ability to repay creditors. But he said that if he could figure out how to manage the negative publicity and grow the business at the same time, then organiza-

tions would get their money back. He said Acteva was seeking to hire a professional public relations consultant. But the company has had to fend off multiple claims from creditors, and legal fees were higher than its revenues of roughly $5 million to $6 million in 2013, Gupta said. Acteva’s lack of cash led it to miss rent payments on its downtown San Francisco office, which employed roughly 40 people as recently as November 2012. After downsizing, Acteva’s five remaining part-time employees now work remotely. The company said in promotional material on its website that it is committed to customer service: “Acteva specializes in ‘actively listening’ to its customers.” But aggrieved customers say Acteva has ignored numerous phone and email inquiries about their money. The failure to respond to complaints led the Better Business Bureau to revoke Acteva’s accreditation as a reputable business. (Acteva’s file on the bureau’s website does not give a date, and the organization said it could not provide a timeframe for the reviews.) Gupta, who has run the company since 2001, offered several explanations for the debacle. He attributed the firm’s woes to economic recession, Hurricane Sandy and a sick executive. When asked where the payments Acteva was processing ended up,

Gupta said the money was used to run the business and to refund money owed to other customers. “We got caught up in a tsunami,” Gupta said. He insisted that he never meant to cheat his clients and that he intended to rectify the problem. Many current and past customers are not convinced. Susan Soergel’s organization, the Boston Chapter of the Power and Energy Society, held an event in fall 2012. By February 2013, it was still owed $19,000. With the help of a lawyer, her group got all its money back. Soergel said in an email that she was “aware that Pankaj is blaming others (including Mother Nature) for Acteva’s problems, but I’m not buying it. They drove that company into the ground by not responding to their customers and/or feeding them misinformation as to what was going on and when they would get paid.” Acteva’s former vice president of sales, Dave Ghosh, said that he was not responsible for client collections or reimbursements. But he said he was part of a failed internal effort to repair the backlog. “I learned in early 2013 that some Acteva clients were not being properly reimbursed,” Ghosh said. “I attempted to remedy the situ-

Continued on page B7.


Marin Environmentalists, Major Waste Company Fight Over Landfill Expansion


hen you drive north from San Francisco and through most of Marin County, then turn east from Highway 101 after Novato, you run into the San Pablo wetlands, now being restored after more than a cenStory: tury of infill. Karina Ioffee Egrets, storks // KALW Crosscurrents and other birds fly overhead, making the area a popular destination for nature lovers. Nearby, the Petaluma River winds through the hills before connecting to the San Pablo Bay. It is an idyllic scene. But just steps away, at the Redwood Landfill, lie mountains of trash. It is trucked in from Marin and southern Sonoma counties every single day. Alisa McCutcheon, who oversees the landfill’s composting operation, said, “We get 500 to 600 tons per day of garbage. That would be equivalent to about 22 big-rig loads, or tractor-trailer loads, of garbage.” McCutcheon said the site, owned by Houston-based Waste Management, will run out of space in about 10 years. Its solution: Take in 6 million cubic yards of material and build up. If that happens, at full capacity, piles of garbage will be as tall as a 16-story building, making it the tallest structure in all

of Marin. The company contends it won’t make a bigger footprint because the trash will be piled at a steeper angle. Marin County approved the expansion in 2008. The project includes building a methane power plant to turn garbage into energy and a recycling facility for construction materials. Redwood Landfill district manager Daniel North said, “The county has set forth a zero waste goal by 2025, and we need to support that goal.” North said his company is trying to do the right thing by the environment. “If Redwood Landfill were allowed to reach capacity, Marin County’s waste would have to be long-hauled out of the area, which would result in increased costs to the ratepayers and an increased carbon footprint due to the longer haul,” he said. But a group of residents opposes the plan and has filed a lawsuit to stop the work. They say the landfill is located below sea level and prone to flooding, meaning that waste from the site can leach into and contaminate the water. Brent Newell is an attorney for No Wetlands Landfill Expansion Alliance, the group that filed the lawsuit in 2009. “When it comes down to it, the

Redwood Landfill is a 1950s-era, unlined landfill that’s located in the largest tidal marsh on the West Coast,” Newell said. “It’s literally located in the marsh.” Newell’s group is concerned about how rising sea levels will affect the site. San Pablo Bay is projected to rise 16 inches by 2050. That may not sound like much, but it means that areas close to the water will be much more likely to flood. In December 2012, a judge agreed with many of the Alliance’s arguments, and rejected an environmental impact report on the expansion. That prompted Waste Management to file an appeal, calling the concerns without merit. “The fears that have been expressed by the petitioners are not founded on any fact,” said Osha Meserve, an attorney representing Waste Management. “And it’s probably based more on NIMBYism, in that they would rather see their waste go to other locations than keep the waste locally.” Meserve said landfill employees constantly monitor the site to make sure all standards are being met. It also has three levees, which can be raised as needed. And, she said, there is no alternate site for the landfill in Marin County. That means the trash would have to be trucked to the East Bay, increasing greenhouse

Marin County approved the expansion of the Redwood Landfill in 2008. The project includes building a methane power plant to turn garbage into energy and a recycling facility for construction materials. Photo:

Karina Ioffee // KALW Crosscurrents

gas emissions and consumer rates. To opponents, like Newell, those added emissions are worth it, if it means keeping trash out of the bay. “There is no question that global warming is occurring and that sea level will rise in the future,”

he said. “The question for Marin County is ‘is it appropriate policy to put more garbage in a place where we’re going to have rising sea levels and increased flooding?’ ” If the expansion is granted, it will mean 25 more years of opera-

tions for one of the last landfills on the San Francisco Bay. If not, Marin’s trash will be transported out of the county. Because despite our best efforts, some trash will always exist. And it all has to go somewhere.

SPUR Researcher: Bay Area Needs to Organize to Fight Sea-Level Rise


important because you can’t just come down and issue some kind of regional policy if you haven’t prepared local government and actually used their input to create such a plan. Then you get what the Bay Conservation and Development Commission experienced in 2009 and 2010, which is all this furor over the idea of planning for climate change — when really the idea was to be helpful.

aura Tam, who has done environmental sustainability research at the San Francisco Planning and Urban Research Association for six years, says climate change adaptation planning is one of her most important Interview by: responsibiliAnnie Sneed ties. She helped // Public Press shape the Bay Plan, a controversial policy that answered complaints about guidance recommending restrictions on bay-front development issued by the Bay Conservation and Development Commission in 2010. The following year, she published “Climate Change Hits Home,” listing the ways the Bay Area could be more prepared for changes in weather, freshwater supply and sea-level rise. The following is an edited transcript of our interview with her.

What exactly is the plan for the Bay Area for sea-level rise?

Public Press: What are some of the sea-level-rise planning projects now in the works? Laura Tam: A few years ago, a

chunk of Ocean Beach fell into the sea. It restarted the dialogue on what has been going somewhat unsuccessfully for many years, around what should be done to prepare the western shore of San Francisco for erosion and sea-level-rise events. There are a huge number of federal, state and local agencies that have jurisdiction there. And there’s a lot of recreational use, a lot of infrastructure and endangered species. So we did a master plan for that. We’re working on two implementation studies right now, one on coastal management, one on transportation and circulation.

The view of Corte Madera Marsh and Sir Francis Drake Boulevard could change as seas rise. Charles Kennard // Bay Nature

Many levels of government are involved in sea-level-rise planning, but how are local governments responding to the most up-to-date models and predictions?

My sense is that local governments aren’t necessarily doing a lot on their own, but they’ve demonstrated a lot of willingness to be engaged and to recognize the issue. And that’s a lot better than we were five years ago.

State and regional agencies are doing some of the thought leadership here, in terms of understanding sea-level rise in the Bay Area. There’s a whole spate of studies that the state has funded on Bay Area vulnerability. I think they published 10 of them in 2012. Whose responsibility is it to plan for sea-level rise in the Bay Area?

It’s nobody’s job to plan for sealevel rise, really. Agencies for

which sea-level rise is a big concern generally pay attention to the issue of climate change. And the Joint Policy Committee is a group of concerned people who would like to help prepare guidance and recommendations for what local planners can do. They have done a bunch of county-by-county policy dialogues to bring together local stakeholders, to raise awareness and to understand the state of planning at the county or sub-regional level. I think those things are really

There isn’t one plan for sea-level rise. There are a lot of different groups and, in their areas of responsibility, there’s been a lot of work to recognize the potential future effects of sea-level rise. And the Bay Conservation and Development Commission uses their new sea-level-rise amendment when considering whether to approve or not to approve a project. Before, there was no requirement or guidance for the commission to consider sea-level rise. The amendment gave the commission the power to ask those questions and to be protective of the shoreline area. How do resources available to cities and counties in the Bay Area affect their ability to plan and prepare for sea-level rise?

Now, we’re not experiencing the recession we were two years ago, at least in San Francisco. At the time, people were less receptive to the idea of planning for climate change, and it was not perceived to be as urgent of an issue. It actually gave people who are planners a little bit of time to be thoughtful about what

guidance they would recommend. But I don’t think there are any cities or counties in the area that have adopted some kind of climate change sea-level-rise policy. What is the most important thing the Bay Area should do to prepare for sea-level rise that is not being done right now?

There are a couple of really exciting pilot projects that look at vulnerabilities and do in-depth assessments, and try to cobble together adaptation strategies. And those are really raising awareness of sealevel-rise planning. Are there any forward-thinking projects under way, then?

There’s just a lot of exciting things being tried around the region in different places, and we’ll see more of that. And eventually, we’ll do enough of multi-jurisdictional projects — like Mission Creek or the Alameda Shoreline or the Oakland Airport — that we’ll be able to put together a regional strategy from what we learned on the ground in 30 places. But we’ve still only started with four. So we have a lot to do. More Online: San Francisco Planning and Urban Research Association (SPUR):

Bay Conservation and Development Commission: Plan Bay Area:

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The Antioch Dunes National Wildlife Refuge is the last remaining piece of a riverine sand dune ecosystem that once blanketed present-day Antioch with dunes towering more than 120 feet and stretching some 800 feet inland from the banks of the San Joaquin River. Photo courtesy of U.S. Fish and Wildlife Service

Restoring Antioch Dunes National Wildlife Refuge At center of project are two plants and one butterfly


eaning on the hood of his pickup truck parked just inside a chain-link fence, Louis Terrazas rustles through a thick folder of documents that describe the parcel of open space he is trying to restore. The hum of machinery echoes from a yellow bulldozer moving about the industrial lot next door. Under the glaring sun, Terrazas turns through the plastic pockets, Story: narrating each document inside. Alessandra Bergamin There’s a graph of butterfly health, //Bay Nature a series of orange bar lines that diminish as they run off the page. There’s a Technicolor bathymetry map that plots the bumps and canyons of the nearby river. And then a black-and-white crosshatched plan of the area that divides the area in two, labeling one “Stamm” and the other “Sardis” in square speech bubbles. In isolation, each of these documents is a standard part of conservation, outlining projects and presenting photographs that remind us of what we are trying to conserve. But as a whole, they tell the story of the rise, fall and possible rise once more of Antioch Dunes National Wildlife Refuge. Nestled between a gypsum processing plant and the Fulton Shipyard — where workers built military vessels during World War II — the refuge could be said to reside between a rock and a hard place. It is the last remaining piece of a riverine sand dune ecosystem that once blanketed present-day Antioch with dunes towering over 120 feet and stretching some 800 feet inland from the banks of the San Joaquin River. What remains of it today is a 55-acre plot of land that was set aside in 1980 by the U.S. Fish and Wildlife Service to save three endangered and endemic species — two plants and one butterfly — that had thrived in this habitat of shifting sands. At the time of its creation, it was the smallest national wildlife refuge in the nation and the very first dedicated to the preservation of plants and insects. Now it is the smallest and easternmost unit of the San Francisco National Wildlife Refuge Complex, and it is the site of an ambitious experiment in ecosystem restoration. The diminutive characters at the center of this ecological drama are the Antioch Dunes evening primrose, a short-lived perennial plant with large white flowers; the Contra Costa wallflower, a yellow flowered herb in the mustard family; and the Lange’s metalmark butterfly. About the size of a quarter, this

burnt orange, black and white butterfly is closely tied to its host plant — the naked stem buckwheat, a native plant that also grows in the refuge. In the past, several smaller restorations were undertaken by Fish and Wildlife Service staff, thanks to sand donations from companies such as PG&E. In 1991, about 7,000 cubic yards of sand were contoured to mimic the historic, open sand dune environment and replanted with endemic and native species. For a time, the native flora and fauna flourished: Following restorations in the early and mid-1990s, there was a spike in the population of Lange’s metalmark butterfly, which numbered at 1,079 in 1999. However, the good times did not last, as nonnative flora overwhelmed the replanted vegetation. Just 28 butterflies were found in this year’s peak count in the Sardis Unit — the 14-acre eastern section of the refuge. Even worse, in the larger Stamm unit, there have been no butterflies counted for the past two years. The butterfly’s absence at Stamm and low numbers at Sardis prompted the Fish and Wildlife Service to undertake more dramatic and concerted action to keep the butterfly from extinction. At the same time, the absence of the butterfly at the

of it. By introducing vast amounts of sand, the Fish and Wildlife Service will be able to cover and smother the invasive mats, and then, it is hoped, reconstruct an environment able to support healthy populations of native species. Terrazas’ search for sand struck gold when the California Department of Fish and Wildlife partnered with the Port of Stockton and the U.S. Army Corps of Engineers to move dredged sand from the San Joaquin River to the Stamm unit. Each year, the river has to be dredged to clear the channel for large ships bringing cargo to the Port of Stockton. In the past, the spoils were offloaded on nearby Sherman Island or used for levee restoration projects. This partnership means that for the next 10 years or so, dredged sand will be pumped on to the refuge. “It’s been my goal to find projects that will benefit from reusing the dredged material,” said Jeff Wingfield, the Port’s director of environmental and government affairs. “We were thrilled to have the opportunity to place the material at the refuge for the restoration project.” As he walks toward the river, Terrazas explains

“It’s a total learning process for us. We’re basically figuring things out as we go.” Stamm unit has given the Fish and Wildlife Service a window of opportunity to take a more all-out approach to habitat restoration than would have been possible if the butterfly were still present. Yelling over the rattle and whistle of a passing freight train, Terrazas explains that the natural sand dune system is “broken,” its formerly shifting sands locked in place by a mat of invasive plants that include winter vetch, a legume that smothers the endemic wallflower and evening primrose. “With the invasive grasses and without an influx of natural sand, the dunes have been stabilized,” he said. “So we have to try and provide them with disturbance.” The defining feature of a sand dune system is, of course, the sand, and since early last year, Terrazas — a wildlife refuge specialist with the Fish and Wildlife Service — has been in the market for large quantities

that prior to the dredging, the unit was divided into four sections of roughly 10 acres each to allow the Fish and Wildlife Service staff to comprehensively restore each area. Over 10 days, workers from the Corps of Engineers moved approximately 40,000 cubic yards of sand from the bottom of the river to the refuge using a hydraulic cutter-suction dredger. The sandy slurry was pumped through a series of large pipes, bringing it out of the river and separating most of the sand from the water before spewing any excess water back into the river through an outfall pipe. A month after the first stage of the dredging was completed, the Stamm unit resembled a large sandbox with bulldozer tracks crisscrossing the area like footprints on a beach. “We’ll probably start getting a lot of those guys,” Terrazas said, gesturing to the killdeers — medium-

size birds that gravitate to open sandy habitat — perched amid a tire ridge. Over the coming months, the Fish and Wildlife Service is planning to dump sand on a smaller adjacent 2-acre area, to smother the remaining invasive plants and keep them from recolonizing the target area. Terrazas said that Fish and Wildlife Service staff will then begin planting this small area with native species, including the two endangered plants. Later in 2014, more sand will be offloaded in the first 10-acre section to further build the dunes before they are manipulated and a more extensive replanting takes place. The results from that effort will then guide work on the remaining 10-acre sections. Will this work allow the remnant sand dune system to finally move away from its past as a series of sand bumps and nonnative plants and become an ecosystem able to support its endemic species? “It’s a total learning process for us,” Terrazas said. “We’re basically figuring things out as we go.” Terrazas suggests that they will start building in the west to prevent the sand from being blown off the property by the prevailing eastward winds. Fish and Wildlife Service staff may also take into account the endemic species’ preferences: While the Antioch evening primrose prefers open areas, the Contra Costa wallflower grows best on shady north facing slopes. Lange’s metalmark butterfly is the most finicky of the species, but Terrazas hopes a plentiful supply of its host plant will shepherd the population back to the area. The return of the butterfly to this newly restored habitat will get a boost from a captive rearing program undertaken by Fish and Wildlife Service and the Southern California-based Urban Wildlands Group in 2007. “The butterfly propagation project is kind of like our insurance policy,” Terrazas said. “It goes hand in hand with the sand dune restoration as we want to keep the butterflies around and then also have a site to release them in the future.” At the chain-link fence at the edge of the refuge, Terrazas packs his truck, ready to move to the Sardis unit. From the other side of that same fence, looking in, it can be hard to imagine the refuge thriving once again. But in this tiny preserve, there is Terrazas — a dedicated Fish and Wildlife Service biologist; there are the refuge’s three endemic species clinging to what is left of their home; and there is the possibility that not only a landscape, but an ecosystem, can be rebuilt, with every grain of sand.


S.F. Stores Cash In on Growing Lottery Sales State program meant to aid schools, with money doled out based on enrollment, student needs


ore than 40 stores in the Tenderloin and on Market Street sell lottery tickets — from the multi-million-dollar games Powerball, Super Lotto and Mega Millions to an evolving selection of assorted staples such as Daily Derby, Scratchers and Hot Spot. Lottery ticket sales are as vital to corner-store economics as cigarettes and liquor. Day-in-day-out mania for lottery prizes drives customers into the stores and generates a steady source of income with a minimum of fuss. The state handles the marketing, spending large in nearly every arm of the media — including TV spots, radio jingles and transit placards — advertising lottery games. And when major jackpots rise, the fever of ticket buyers churns free publicity on the nightly news. The more than $4 billion in statewide lottery sales for the 2011-12 fiscal year set a record. Since it started in 1985, Story: through 2012, the lottery pulled Jonathan in more than $70 billion in ticket Newman sales, according to Lottery Commis// Central City Extra sion data. Nearly half was paid to prize winners and $25 billion-plus distributed to school districts and educational institutions. The rest — more than $9 billion — covers the state’s lottery operation. For store owners, each lottery ticket sold generates a 6 percent commission, and their payoff for winning tickets up to $600 generates a 3 percent commission. For a winning ticket more than $600, the lucky retailer who sold it gets paid by Sacramento directly into the store’s account when the winning ticket is redeemed. At Lucky One Mini Mart, at 1010 Market St., customers are greeted with a bright yellow and red sign proclaiming, “Believe In Something Bigger,” a promotion for Super Lotto. The store stocks sodas and tobacco, and a small deli counter sits along one wall, but the real action is on lottery tickets and games. In one corner, a TV screen flashes winning numbers for the day’s Hot Spot payoffs. Six Super Lotto and Powerball buyers sit at Formica-topped tables, hunched over their tickets, trading thoughts on winning combinations. In 2012, Lucky One sold more than $1 million in lottery tickets, but for owner Charles Ahn, the real money comes from selling a big-ticket winner. His eyes soften when he describes the luck of the New Jersey store owner who sold a $700 million Powerball winner in 2012. “That’s $3.5 million for the store. At least $1.8 million in cash after taxes,” Ahn said. “Look,” he said, pointing to a screen readout showing the current Mega Millions jackpot at $40 million. “I’d like to sell that winner — $200,000 for me.” If a store sells a winning ticket of $1 million or more, the commission is one-half of 1 percent of the winnings. A $10 million lottery winner earns $50,000 for the store. And there is no overhead, since the state supplies the tickets and the terminals to the retailer without charge. Bill Multani has owned Daldas Market at Eddy and Taylor streets for six years. Before that, he worked at

a slew of markets in the Bay Area. “I remember when there was an $84 million jackpot. The computers got overloaded. You couldn’t buy a ticket in the last hour. We almost had a riot from the customers. Now, a $200 million jackpot seems like nothing. The computers are better now. They don’t break down,” he said. He ran a tally from his lottery ticket terminal. It showed he had earned about $200 by 3 p.m. that day, nearly equally divided between sale proceeds and redemption commissions. Sal Saleh, who works at G&H Market at Turk and Jones streets, downplays the money that lottery ticket sales bring to the store. “What, 6 cents on every dollar? We’ve got to keep these computers and screens running 24/7,” he says, sweeping his hand over the lottery ticket terminals. “Costs $200 to $300 every month for electricity for these alone,” he noted. A large Scratchers vending machine sits at the entry of G&H. You can buy Scratchers up to 20 bucks a pop. “That’s nothing,” Saleh said. “You can see those at every Safeway.” Still, Saleh is a fan of the lottery. “I got kids in the schools. I used to think it was a fraud, but I know the schools get money from the lottery. They’d be closing schools without that money,” he said. In 1984, voters amended the state Constitution to allow for a state lottery, ostensibly to raise supplemental money for all public schools — from kindergarten through high school, adult education and trade schools and the state university systems. The commission’s latest public report said San Francisco schools received more than $333 million from the lottery in the 27 years covered by the report, with the unified school district getting the lion’s share — more than $192 million, averaging about $7 million a year. San Francisco Unified lumps lottery money together with sales tax revenues, lease revenues and state apportionments into its Weighted Student Formula allocation. Schools get these funds based on student enrollment and student body needs. For example, funding for special textbooks or tutors might be allocated for students whose primary home language is not English. Average daily attendance is the key to the district’s allocation: The more students attending classes daily, the more funding the district gets. In 2012, with an average daily attendance of 96,059 students in K-12 schools, including 15 charter schools and City College of San Francisco, the result was nearly $16 million in lottery distributions. San Diego County — with four times San Francisco’s population — had an average daily attendance of 637,430 students — seven times the city’s average daily attendance — and received more than $100 million from the lottery. Money can’t always buy success. Five years after the lottery started, California ranked 41st among all states in the rate of high school graduations. In the last figures from 2012, California ranked 42nd. And San Francisco, graduating 82 percent of its high school students, was eight points above the state’s 74 percent, and four percentage points better than San Diego.

Eldor Togaymurotov awaits the next customer’s ticket choice from a wall of lottery games at Lucky One Mini Mart near the corner of Market and Taylor streets. Photo by Jonathan Newman // Central City Extra

City Boosts Block Parties to Combat Crime


implicity. It’s the maxim behind many a success, and now San Francisco’s transportation agency has followed suit, streamlining the permit application for single-block party events and watching them multiply. With some help from a nonprofit, the San Francisco Municipal Transportation Agency trimmed the 13-page application down to three pages in 2011. Since then, the city has seen its highest number of block parties yet, with applications Story: rising by more than 25 perCourtney Quirin cent in the last two years. // Mission “It’s a vast improvement, Local not only for San Francisco communities and neighborhoods working to build communities, but for the entire city,“ said Kearstin Krehbiel, executive director of the nonprofit SF Beautiful, referring to changes to the block party application. But making it easier to give a party does not just mean more citywide fetes. It also conjures up stoop-to-stoop cohesion that leads to coordinated community efforts to reshape neighborhoods into more livable and safer places. Though the length of the block party application has changed, the actual permitting process has not, said Cindy Shamban, the sole agency officer to issue block party permits in a job she has held for 21 years. Twice a month, a conglomerate of city agencies, called the Interdepartmental Staff Committee on Traffic and Transportation, reviews block party applications on a case-by-case basis, tailoring permit requirements to the individual needs of each block. Whereas the old 13-page application intimidated applicants and caused many to turn away, the new, slimmer version appears to be a swift process, attracting more applicants, Shamban said. Krehbiel said that easing the use of public spaces is key to kindling community. Once crystallized, a community then does “the work of the city” by increasing safety, creating better places for kids and families and even stimulating local economies, she said. The Elsie Street block party in Bernal Heights is a case in point. Elsie Street resident Michael Nolan started it seven years ago. The success of the first Elsie Street block party prompted residents to form a block party committee, which now has its own bank account and Facebook group. This committee, Nolan said, has “helped inspire communication,” creating a platform for

orchestrated conversations that have allowed residents to take charge of their neighborhood. For example, to residents’ dismay, Elsie Street was once a popular hangout for feral cats. So as conversations of the feral cat issue trickled down the lane, several committee members stepped forward to institute a trapand-neuter program that solved the problem. The committee also took the lead when speeding traffic at a nearby intersection reverberated concerns of safety down the block. Taking charge, several other committee members organized neighborhood meetings with local police about how to calm traffic. “There’s a high level of social capital on this block,” Nolan said. “People are more likely to look out for one another.” Similar situations are playing out across other San Francisco neighborhoods. The North of Panhandle Neighborhood Association hosts two block parties a year. Combined with the association’s bimonthly newsletter, the community created and reinforced at their block parties has been instrumental in cutting down crime and in getting the Grove Street Farmers Market up and running, members said. The corner of Grove and Divisadero, now the site of the farmers market, had been a crimeridden spot. A string of shootings on that corner over a few months’ span in 2007 was the last straw for neighbors. Wanting to bring “something positive” to the space as well as more eyes on the street, residents put their heads together and decided a community market could be a solution. They were right. Since the farmers market began, crime at that corner has been minimal. Although the NoPa area isn’t necessarily a hotbed of crime, block parties have helped cleanse other neighborhoods that are. This year, Sunday Streets, a San Francisco nonprofit and street-party organizer, launched a series of single-block events called Play Streets. With the goal of helping neighborhoods with little resources, Sunday Streets held a Play Streets event on Ellis Street, between Hyde and Leavenworth. Unbeknownst to Susan King, the executive director, the stretch of block sits at the heart of drug deals in the Tenderloin. However, as kids and families poured out into the streets on the block party’s debut, residents couldn’t help but notice that something was missing — the crack heads. “This was the first time they were gone,” residents kept telling King about the absence

of shady characters and drug deals during the Play Streets event. With the second-highest population of children and the second-lowest number of open spaces per resident, King’s block party activated one of the few available public spaces in the Tenderloin — the streets. “It really did create a space where people could come out and bring their kids,” King said. While much of the praise of block parties rests on anecdotes like Elsie Street, NoPa and the Tenderloin, the San Francisco Department of Public Health has been quantifying the pros of block parties in a more scientific way. Listing block parties as one of 91 indicators in its Sustainable Communities Index — a system that guides anyone from city planners to community associations in developing “equitable and prosperous cities” — the department reports that the social cohesion block parties promote helps reduce crime and violence, thereby improving individual health. “This is just one data point to describe healthy communities,” said Meg Wall, a public health epidemiologist who leads the analysis of indicators. “And it’s not to say that people aren’t gathering in community settings without closing off streets.” However, a neighborhood’s absence from the transportation agency’s block party database could be a clue into a larger issue: cost. Let’s say you want to hold a block party in the Tenderloin, as did Sunday Streets. You better be prepared to fork over much more than just the application fee, which ranges from $154 to $473, depending on how early you apply before your event. Whereas some blocks need nothing more than street barricades and road closure signs to host an event, the traffic and transportation committee requires communities on busier or dodgier blocks to hire off-duty police officers (who are paid overtime) and/or parking control officers to keep events safe. “That’s where the costs really started stacking up,” King said, referring to the Tenderloin event that required a police officer. Both King and Krehbiel see the fluctuating requirements and costs of block party permits as problematic. Neighborhoods with limited resources that are ridden with crime need community events like block parties the most, King said. However, those areas also tend to be the ones where the committee requires police officers — additional costs that community members often can’t afford.

San Francisco Looks to Curb Smartphone Thefts on Muni


iting an overall spike in smartphone robberies and a high-profile shooting on Muni, San Francisco city officials launched a multilingual Story: campaign to enBryan Goebel courage transit // KQED riders to get off News Fix their phones and pay attention to their surroundings. “We think we can get to zero crime on Muni,” said Mayor Ed Lee. “I know that sounds almost impossible to do, but we need to have a goal like that in order to challenge everybody to pay attention.” During a press conference last fall, Lee, Police Chief Greg Suhr and San Francisco Municipal Transportation Agency Director Ed Reiskin announced a new anti-crime awareness campaign called “Eyes Up, Phones Down.” It includes adding more officers on buses and trains. “Nobody’s stealing books. If people would read a book while they’re on Muni instead of looking at their electronic device, we could get our robberies down to nothing,” said Suhr. “Be smart, don’t make it available.” Suhr would not confirm how many additional officers are being deployed, only that “they’ll be everywhere.” A KTVU reporter tweeted that the detail will amount to about a dozen officers, or roughly 10,000 hours, according to a Muni spokeswoman. The extra patrols are being funded through a $1 million federal homeland security grant. Suhr said San Francisco Police Department officers already have a very visible presence on Muni. Every officer is required to ride a Muni vehicle twice a shift, and

there are uniformed and plainclothes officers who are assigned to Muni full time. Suhr says the heightened police presence has led to a dip in robberies on Muni over the past two months. “We have better than a thousand officers assigned to patrol,” he said. Transportation agency officials say fare inspectors will start a special outreach program, handing out safety tip cards, especially to “customers that appear vulnerable

“We think we can get to zero crime on Muni.” to these crimes of opportunity.” At the Embarcadero station, Muni rider Audrey Le said the September slaying of 20-year-old Justin Valdez, who was shot when he exited a train, has made her more self-conscious about using her smartphone on transit. Surveillance video shows riders glued to their phones while the suspect was brandishing a gun. “I always look up, especially near the doorway of a train because I know that’s when people can grab my phone and run out the door,” said Le. “I’m definitely more aware, but it’s really hard not to look at your phone.” Apple and other companies have launched anti-theft programs, and “bricking” technology that locks phones to prevent anyone from using them. Suhr said it was too early to tell whether that had contributed to the recent decline in smartphone thefts on Muni.


Tenants convened last November to press for a citywide ballot measure to fight tenant displacement. They debated accountability for landlords who neglect repairs, the Ellis Act, local protections against evictions and vacancy control. Attendees marked where they lived on a map of San Francisco displaying average housing prices. A citywide convention was scheduled for February. Photo: Lynne Shallcross // Mission Local

Eviction Protections Key to Housing Crisis Response Other proposals would create incentives for developers to build affordable apartments


upervisor Eric Mar says he has a plan to help tenants by clamping down on rampant real estate speculation in today’s hyper-inflated housing market. But his idea might have an unintended Story: consequence: Josh Wolf raising the entry // Public Press price for tenancies in common — one of San Francisco’s least expensive homeownership opportunities. In January, Mar proposed preventing tenant evictions when property owners sell to a group of individuals who will own the property jointly with the intention

of controlling units separately. This would apply only to some tenancies in common, in which home owners technically share a mortgage, though each receives a separate bill for a portion of the loan. This is distinct from traditional condominiums, where each condo owner has a separate mortgage. “Greedy speculators are reaping millions of dollars,” Mar said. “The city does not even measure or track these types of conversions.” Under Mar’s proposal, the sale of homes under these types of mortgages, which are known as “fractics” — short for fractional interest tenancies in common — would need to be approved by the city and

be subject to other development fees. The houses would need to be brought up to current code before they can be sold, Mar said. But the added fees and regulations — intended to stifle speculation — would inevitably drive up the cost for such units, which tend to be among the more affordable options for prospective homeowners. “I support home ownership, and want to ensure that there will continue to be housing,” Mar said. “We think it will begin to bring a balance to this unregulated market.” Mar’s legislation is the latest in a series of attempts to reduce displacement and increase housing opportunities in San Francisco. At

the Jan. 14 board meeting, Supervisor David Campos called on Mayor Ed Lee to join him in writing legislation to regulate “buyouts” of tenants. The cash incentives are routinely offered by property owners as a way to get them to agree to leave without invoking the Ellis Act, a state law that allows for evictions in the case of a property sale in which housing units are removed from the rental market. Supervisor Scott Wiener unveiled a separate plan to encourage developers to build affordable units. Lee, who decades ago worked as a tenant-rights lawyer, said he supported the idea of regulating tenant buyouts. But he pointed out

that courts have struck down three previous attempts by the Board of Supervisors to limit them. “Tenants who accept buyouts often do so with the looming threat of an Ellis Act eviction,” Lee said. He noted the city had a limited supply of affordable housing. “Your buyout money will be gone before you know it.” The effects of displacement through the Ellis Act are aggravated by the lack of affordable housing being built, Wiener said, despite the accelerated growth of new construction. Wiener’s proposal could change that dynamic. Developers frequently choose to pay a fee to help finance affordable housing elsewhere, rather than

set aside units on site for people who could not otherwise afford to live there. As a result, the city has more money allocated for affordable housing than is being built. Under Wiener’s plan, developers would be rewarded for building more affordable units than the 12 percent required to avoid fees. He would allow developers to exceed normal housing density limits when at least 20 percent of units are affordable. “One of the things that we can all agree on is that we have a housing crisis — and particularly a housing affordability crisis,” he said. “Creating more affordable housing is one of the key things we need to do to address this crisis.”

High-Performing Schools Lose Out on Technology Funding Desktop computers, laptops, iPads needed for students to take new national tests


tudents at Marshall and George Moscone elementary schools have scored well on state standardized tests with an unintended consequence: doing so has put the schools behind in acquiring the latest technology — new computers and tablets. Better test scores meant they lost out on a share of the $45 million, three-year federal School Improvement Grants that added computers, iPads and laptops to the Mission District’s struggling schools. But being tech deficient has not been a problem — until now. Starting in the fall of 2015, all students will take the national standardized tests known as the Common Core on Story: computers. Andra “If we can’t get more money from Cernavskis the school district, we won’t be // Mission Local ready for the Common Core,” said Marco Bianchi, the curriculum technologies integrator specialist at Marshall. Beyond that test, those schools with more computers report that the earlier their students are introduced to computers at school, the better. “The skills the kids are going to need to have beyond their school years are going to involve technology,” Bianchi said. “They are going to suffer if they don’t have that.” Jacinto Noriega, who began working as a computer teacher at Cesar Chavez Elementary School only a few weeks ago, put it this way: “It’s like literacy.” Getting the money to fund computer equipment and programs at Moscone and Marshall is particularly difficult because the schools serve low-income students. Some 90 percent of the students at Moscone and 80 percent at Marshall are on free or reduced lunch programs. “Parents can’t donate,” said Valerie Hoshino, the principal of George Moscone. Said Michele McMahon-Cost, president of Marshall’s parent-teacher association: “A lot of our kids are living at the poverty line. The only time these kids get to use a computer is at school.”

At Marshall, 250 students share 23, 7-year-old Mac Minis. One teacher has managed to acquire an iPad for her classroom. Bianchi describes the computers as “a little antiquated.” “Lots of times, people say we will have the money and will buy computers, but that never happens. It’s an abysmal situation,” said Bianchi. “The kids can’t use [the computers we have] effectively.” In 2009, Cesar Chavez Elementary, Bryant Elementary, Everett Middle School and Buena Vista Horace Mann were all named struggling schools and received a $45 million federal school improvement grant that ended in 2013. The grant allowed them to spend between $25,000 and $40,000 to improve their technology. Cesar Chavez, for example, spent $31,262 on Apple MacBook Pros. Each teacher who wanted an Apple laptop received one. In addition, the school now has 30 Apple computers that are available to the students and two mobile carts — one with 30 iPads and another with 20 laptops. “The other day, I was in a kindergarten classroom and showing an iPad,” said Noriega, the computer teacher. “Within 20 minutes, they got it.” When it comes to technology, “kids are fearless,” she said. Bianchi agreed. He said that he is not just concerned about the necessity of computers for the Common Core but also about the students learning about technology generally. Students, he said, will need to know how to use computers in middle school for research papers and homework. Introducing computers early, local teachers said, made a big difference in their comfort level with technology. The students at Buena Vista Horace Mann are more comfortable around computers than they used to be, according to James Canales, the school’s computer and technology specialist. “Even the kindergarteners can use computers,” he said. At Marshall and Moscone, however, there are trade­ offs.

“A lot of times it comes down to keeping a teacher or buying equipment. That’s an unfortunate decision to have to make,” Bianchi said. “It’s whether we bite our leg or arm off.” McMahon-Cost, the president of Marshall’s parentteacher association agreed. “[Technology] is one of those things, as parents, that we think there should be room in the budget for, but the funding isn’t there,” she said, adding that the same goes for arts and physical education programs at the school. The Marshall PTA has taken steps to improve the situation. This is the first time that they have included a $5,000 line in their fundraising objectives. Whereas Marshall has a computer teacher, George Moscone has never had one. “There is no money,” said Hoshino, Moscone’s principal. “Our money is spent on a reading teacher, not a computer teacher.” Hoshino said the kindergarten through fifth grade school of 362 students has 20 outdated computers in its computer lab. “We have no money in the budget for computers.” Hoshino said. “Basic supplies are the priority.” Last October, Marc Benioff, chairman and CEO of, promised $2.7 million to improve technology at the city’s 12 middle schools. The only school in the Mission that will benefit from this donation is Everett Middle School. The San Francisco Unified School District does not directly fund technology for its schools, and the Mission’s elementary schools are rarely able to budget for computers. The mayor and superintendent hope to improve the situation by developing more relationships with businesses like, according to Gentle Blythe, the spokesperson for the school district. “This is just the beginning,” Blythe said of the donation. “The mayor and superintendent continue to work closely to bring in more partnerships that will ultimately help us improve all of our schools for all of our students. They have every intention of reaching every middle school student over the course of time, and ulti-

Access to gadgets, such as the iPad, is becoming more important in education. But at Marshall Elementary school, 250 students share 23 Mac Minis that are seven years old. Creative Commons image by eltpics via Flickr

mately every student in the district.” At Marshall, budget constraints have prompted the parent-teacher association to become creative in fundraising for supplies and programs. Through, a crowd-sourcing website, the PTA has been able to raise money for about five new projectors to be put in classrooms, according to McMahon-Cost. The website works by allowing corporations to match donations made by parents, friends of the school or others. The website shows that on Oct. 7, Marcelle Poulos, a third grade teacher at Marshall, was able to raise $699 to buy an iPad for her classroom. In the website’s description of the project, Poulos wrote: “My students love multimedia presentations. We have a projector, and I would love to be able to utilize the many education apps that are available on an iPad.”


Are networked ride-service drivers covered if they get into an accident while driving a paying passenger? It depends on whom you ask. The rise of services such as Lyft have called the question. Photo: Deborah Svoboda // KQED

If Ride-Sharing Vehicle Gets Into Wreck, Who Pays?

Popular new services create confusion about insurance for riders and drivers


eteran San Francisco cab driver Ed Healy said he would never, ever drive for Lyft, Sidecar or any of the other smartphone-driven rideservice companies operating in the city. It doesn’t matter that many of those driving for what state regulators call “transportation network companies” say they’re making better money than old-school taxi drivers. It doesn’t matter that many cabdrivers have moved over to those services. Healey said his Story: decision comes Jon Brooks down to one // KQED News Fix issue. “I wouldn’t ever drive in one because of the insurance,” Healey said. “I wasn’t going to leave my car exposed to an accident.” Healy’s sentiments echo those of many in the taxi industry and point to a big unknown at the heart of the popular new ride-service companies: If a driver gets into a wreck, who pays? More specifically, what insurance is in place to cover injuries, property losses and damage to passengers, passers-by and the driver’s own car? Lyft and the other services point to the $1 million-per-incident excess liability coverage that the California Public Utilities Commission requires them to carry. The policies are designed to deal with liability claims a driver’s insurance doesn’t cover. But the policies won’t cover drivers’ cars. That means the drivers must rely on their personal auto insurance policies — which still may leave them uncovered since insurers typically, though not always, bar claims if a driver’s vehicle was in commercial use when an accident occurred. And that’s not the only uncertainty surrounding insurance coverage for ride-service drivers and passengers. The companies’ terms of service require users to waive liability claims. Lyft’s founder said that is just a standard bit of contract language, whereas the taxi industry and San Francisco’s chief taxicab regulator said the terms could raise questions of who will pay in case of an accident. All of these issues, ride services’ opponents say, amount to incentives

for people to keep their status as ride-sharing drivers secret from their insurance companies. I found that to be the case with at least some of the drivers I spoke to. I spent the last couple of months talking to drivers, the ride services, their competitors in the taxi trade and insurance industry representatives to try to get answers about insurance coverage. What I found was a thicket of contradictions and complications in figuring out who will pay if something goes wrong during a ride-service trip. For instance: Ride-service companies like Lyft and Sidecar said drivers’ personal insurance policies will cover some claims. The insurance industry said the policies wouldn’t provide any coverage. The insurance industry said rideservice drivers would have to buy commercial insurance to be covered when they are driving for hire and maybe even when they are not. At least some ride-service drivers are keeping their status secret from their insurance companies because they are afraid of losing coverage. The insurance issue is definitely a topic of discussion among Lyft drivers, said Alice, who has been driving for the company since April. Most ride-service drivers spoke to me on condition I would not use their full names. “There’s a lot of conversations going on [about insurance] in the Lyft Driver’s Lounge,” she said, referring to a company Facebook page. She said some Lyft drivers have quit over the issue. “Some people are like, ‘Yeah, I’m really bummed, but until the insurance thing is settled, I’m not going to drive for Lyft anymore.’ A lot of the new drivers have asked multiple times on the Facebook page, ‘What do we do about insurance?’ Lyft’s answer is you have to figure that out.” Alice said she and about a dozen other drivers were invited to lunch with Lyft CEO John Zimmer over the summer to discuss the issue. “I got a phone call from Lyft, they were doing damage control,” she said, adding that Zimmer told the drivers the company was working on getting an insurance carrier that would cover them for both personal use of their car and for

ride-service work. Zimmer told me the company is now in discussion with insurance companies to offer “expanded types of coverage.” The insurance industry has stated clearly that a driver’s personal policy is not going to cover any accident in which the insured was using his or her vehicle for commercial purposes. In a filing with the California Public Utilities Commission in 2012, the Personal Insurance Federation of California, an industry group made up of State Farm, Farmers, Progressive, Allstate, Liberty Mutual, Mercury and Nationwide, said it asked its members to determine how they would treat liability claims in ride-service accidents. To help understand the commission’s inquiries, KQED surveyed members regarding coverage issues in the above-described situations. It appears that the industry standard for personal auto insurance policy contracts is to exempt from insurance coverage claims involving vehicles used for transporting passengers for a charge. Thus, in situations where a vehicle is insured as a private vehicle and is used to transport passengers for a fee, no insurance coverage would exist. In a press release after the commission ruling, the Association of California Insurance Companies, a trade association and lobbying group, said, “Both drivers and riders must understand that an accident in a ride-sharing vehicle will not be covered under a personal auto insurance policy.” The California Department of Insurance also weighed in on the issue in an advisory letter it sent to the California Public Utilities Commission before its final decision: “Based on informal conversations with TNCs” ­— transportation network companies — “and auto insurers, we understand that personal lines auto insurers have both paid claims and denied claims when drivers with personal lines insurance were transporting a passenger referred by a TNC.” Despite such statements, the

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DeSoto Cab Company driver Corey Lamb protests outside City Hall against app-based ride-service companies. Photo: Alex Emslie // KQED


Popular Services Raise Insurance Questions Continued from previous page.

ride-service companies insist drivers’ insurance companies will cover claims arising from their paid work and, in fact, have already done so. Margaret Ryan, vice president of communications at Sidecar, said in an email that the company has yet to see an incident in which a driver’s personal insurer has denied a claim. Erin Simpson, director of communications at Lyft, said she is aware of “multiple instances” in which an insurer has known that drivers were working for Lyft and still approved a claim under the driver’s insurance policy. And indeed, one Lyft driver I talked to said that when he got into an accident in 2012 while carrying a paying passenger, his insurance company was aware of the circumstances and still approved the claim. Things may be different now that the utilities commission has issued regulations for the ride-sharing industry. One of the commission’s major findings: the transportation network companies are commercial enterprises. Pete Moraga, a spokesperson for the Insurance Information Network of California, an industry group, said personal auto policies typically exclude coverage for vehicles when they are in commercial use. If you are driving for a transportation network company and you have your own personal policy, Moraga said, “the minute you pick up your rider, that policy will cease to cover you.” Lyft, Sidecar and UberX instituted excess liability insurance policies of $1 million per incident for their drivers, a level of coverage that the state utilities commission now requires. The commission found that coverage to be more than adequate for the transportation network companies and noted that the San Francisco Municipal Transportation Agency also requires the $1 million amount for cab companies. The excess liability policies are supposed to supplement a driver’s individual coverage, providing coverage at the point where personal policies leave off — which is interesting, considering that the insurance industry said that a driver’s personal policy would exclude ride-service claims. Kara Cross, general counsel for the Personal Insurance Federation of California, said that is a potential problem. “Their coverage kicks in after any other coverage is paid first,” Cross said. It is possible, she said, that insurance carriers for transportation network companies might “find more and more situations that the personal carriers are not covering, and then you can have a problem.” Lyft’s Erin Simpson said even though the company’s policy is called excess insurance, it has been custom-designed to “drop down” and cover any amount that a driver’s personal policy does not. And the utilities commission’s regulations specifically state “the insurance coverage shall be available to cover claims regardless of whether a TNC driver maintains insurance to cover any portion of the claim.” Moraga, from the Insurance Information Network of California, said he was skeptical that the drop-down feature would resolve questions about coverage. “There was little involvement if any from the insurance industry in these regulations,” he said. “In real-life situations, you may find there are a lot of gray areas where there’s going to be disputes, claims aren’t honored, and probably litigation at some point.” As the utilities commission hammered out its rules for transportation network companies, the California Department of Insurance said its preferred option would be to require the companies to carry $1 million in primary insurance for each driver — meaning policies that pay first if there is a claim. The insurance department said excess insurance would be

Continued from page B1.

One taxi driver says more company money is spent on insurance than on payroll. Photo: Sara Bloomberg // KQED

acceptable as a lower-cost option. But it added such a dual system of insurance, depending on both a driver’s insurance and a company’s excess liability coverage, could result in confusion to consumers who need to file claims. In a written statement, the utilities commission said its Safety and Enforcement Division is reviewing the transportation network companies’ policies to “make its independent assessment as to whether the existing coverages conform to the CPUC’s insurance requirements.” John Zimmer said that Lyft’s policy has already been tested a few times and that there have been no problems getting claims through. Questions about insurance coverage also extend to the terms of service that the ride-service companies require drivers and passengers to accept. Among those raising that issue is Christiane Hayashi, director of taxi services for Muni. “If there happens to be an accident involving the Lyft or Sidecar service, there’s the uncertainty of how the terms and conditions that people have to sign in order to participate in these services will affect the insurance coverage, because it disclaims all liability for anything whatsoever,” she said. The state Department of Insurance is not fond of the terms either. The department wrote to the utilities commission that “a disclaimer of liability in the TNCs Terms of Service could mislead a consumer into thinking that they do not have a recourse against a TNC, when, in fact, the TNC will be required to maintain $1 million in coverage. The CPUC should prohibit waivers that will prevent consumers from having recourse to the insurance.” The commission did insert language in its final ruling to address this issue: “Nor

In the Key Of ACROSS 1. Jericho features 6. Newspaper section 10. (The) majors, in baseball slang 14. For the birds 15. Plumbing problem 16. Exude 17. “The Sopranos” hit actor 19. Seizes 20. Bionic woman, for example 21. License plates 22. “...___ for Superman!” 24. X, Me or Pepsi group 28. “Pawn Stars” estimate 30. “The Bathers” painter Paul

Acteva CEO: Bad Publicity Worsened Cash Woes

31. Apple cider cookie 35. Doctor’s order 36. “The Earth,” to a Frenchman 38. Critters in litters 42. Gilbert and Sullivan boatsmen 47. “Peekaboo!” follower 49. “Slumdog Millionaire” setting 50. NRA bugaboo 54. “My Heart Will Go On” singer 55. Prefix before business or forestry 56. Stuck and not going anywhere 58. Down in the dumps 59. Literally, “The science of women” 63. Disembarked 64. “¿Qué ___?”

can any Terms and Conditions in a TNC’s Terms of Service be used or relied on by the TNC to deny insurance coverage, or to otherwise evade the insurance requirements established in this decision.” Zimmer, Lyft’s CEO, said the issue is a red herring concocted by ride-service opponents. The disclaimer language used by his company and others, he said, is “legal protection that any website will have, completely standard practice.” Even for a ride-service driver covered through the company’s liability policy, that covers only damage to the other vehicle and passengers. If the accident is judged to be the ride-service driver’s fault, the liability coverage will not help pay for damage to the ride-service driver’s car. That would require collision coverage, and the transportation network companies do not offer that. Erin Simpson of Lyft said drivers “would need to check with their personal carrier and check on their specific policy” to make sure their collision coverage applies while working as a Lyft driver. Kara Cross of the Personal Insurance Federation said there is a gap in coverage for transportation network drivers, but added that that could change. She said it is possible that an insurance carrier would consider offering a policy tailored for these scenarios, “so you still have your personal coverage but there would be some language to cover these situations. As far as I know, this product has not come out yet.” One cabdriver I spoke to who’s considering driving for UberX said when he tried to get collision coverage through his insurance company, he was told he had to go through a commercial carrier and get livery insurance. He called one up and was able to get a quote. That, coupled

with the $1 million liability insurance requirement, has made him more comfortable about making the switch. Moraga, of the Insurance Information Network of California, said drivers need commercial insurance, which is more expensive than a personal auto policy, if they want to be covered for anything more than basic liability on their ride-service vehicle. For most of the ride-service drivers I talked to, though, these issues are somewhat abstract. But Brad Newsham, a 28-year veteran cabdriver, said he once worked a yearand-half in an underground mine, and he puts cab driving “right up there with it” in terms of stress, much of it due to being wary of “not killing somebody, not killing yourself.” “Sometimes when I’d have a close call, I would lose my nerve for a while. You come to realize how dangerous it is,” Newsham said. Just how dangerous, you can see in the case of the flying San Francisco fire hydrant. In that accident last March, a black town car on an Uber call collided with another vehicle while turning left on Divisadero. One of the cars hit a fire hydrant, sending it flying through the air. It struck a pedestrian, who sustained severe injuries. Uber is fighting a lawsuit over the incident, essentially arguing it bears no responsibility for the driver’s actions. The ride-service drivers I talked to aren’t focusing on that risk. Right now, they seem to be enamored of the good pay, flexible schedule and social aspects of their jobs. Any insurance concerns they may have are not serious enough to spur them to quit, with many citing the transportation network companies’ $1 million liability policies as a mitigating factor.

Crossword Puzzle: Andrea Carla Michaels & Michael Blake // Public Press

65. Jibe 66. A little force? 67. “A Boy Named Sue” songwriter Silverstein 68. Zero out DOWN

11. 12. 13. 18. 21. 22. 23.

1. 2.

Quipster Gardner of ‘The Barefoot Contessa’ 3. With 18-Down, Lego predecessor 4. Colorful beetle 5. Highbrow 6. “Crooklyn” actress Woodard 7. Period of power 8. Whup 9. Crosscountry trip? 10. “We Belong” rocker Pat

25. 26. 27. 29. 32. 33. 34. 37. 38. 39.

John Lennon classic Iconic guitars City map abbrs. See 3-Down Looney Tunes nickname Ballpark figure: Abbr. “___ Ho” (2008 Best Original Song) Animated holiday greeting Copy, for short Surfing site? Sushi fish Taunt Stocky Palindromic Giants reliever Robb Connecticut Ivy Leaguer Pen pal? As a rule

40. Antarctic waddler 41. Conceal in a hiding place 43. Mollycoddle 44. Magazine bigwigs 45. Carnaval city 46. ___ Francisco 48. “___-hoo!” 51. Dental or salon activity 52. Shaq or Tatum 53. Booker Prize winner “Hotel du ___” 57. Hubbub 58. Michael Jackson hit 59. Auto gizmo that talks, for short 60. “Boo” follower, in a triumphant shout 61. ‘Wow!’ 62. Nevertheless Stumped? Answers on page B8.

ation but resigned from the company when it became apparent my efforts were unsuccessful.” Another former employee said that in the spring of 2012, Acteva had about 50 employees in San Francisco and 80 in India, but disorganized management and customer complaints resulted in a high employee turnover rate and many layoffs. The employee, who asked not to be identified for contractual reasons, also described the working relationship between Gupta and Ed Lemire, the company’s vice president, as “weird,” saying the two argued constantly. Acteva’s clients may never get their money back, even if an investigation discovers criminal wrongdoing. Karen Gebbia, a law professor specializing in bankruptcy and corporate law at Golden Gate University, said that if a business has few or no assets, little or nothing is left to refund to creditors. “A business with a viable business structure may file Chapter 11 bankruptcy in an effort to restructure its obligations and pay its creditors, at least in part, over time,” Gebbia said. But, she said, the process breaks down when cash reserves have disappeared: “Attempting to compel equitable distribution is not particularly useful if there is nothing to distribute.” Gupta’s plan to avoid bankruptcy by taking on more clients does not sit well with Brown, who said the strategy could cause more customers to get caught up in Acteva’s cash-flow problem. For now, Gupta and his employees are not talking in any detail about their new business plan. Gupta said most creditors are nonprofit organizations, and some clients in the sector speculate that they were targeted by Acteva for nonpayment. Not everyone agrees with that assessment. Some experts in nonprofit management say smaller organizations, in general, are more vulnerable to delays in repayment. “Getting into a situation like this, I don’t think, is related to the nonprofit structure,” said Jan Masaoka, CEO of CalNonprofits, a California membership organization that advocates on behalf of charities. “But maybe the consequences are more far-reaching for nonprofits than they are for a private business of the same size.” Web comment: Let’s not

overlook the fact that universities are included in the list of groups not being paid. The Acteva Sucks site was not started to, “criticize the company.” Pankaj either ignores or is blind to the fact that this website was started to apply pressure to get Acteva to contact the people they were ignoring. They killed their brand by not paying people back and coming up with countless excuses. The bad press is a byproduct of Acteva’s actions and lack of payment. — Jason Brown


Gentrified: Tech Land Grab Has Nonprofits Crying for Help Skyrocketing rents in Tenderloin and mid-Market areas forcing out neighborhood organizations


community in crisis brought its tales of woe to City Hall at a special hearing of the supervisors’ Budget and Finance Committee last fall. Dozens of nonprofit executive directors lined up to describe how difficult, if not impossible, the tech boom’s pressure on commercial real estate is making it for them to do their work. “We serve the Tenderloin community,” said Cindy Gyori, Hyde Street Community Services executive director, whose organization, Story: at 134 Golden Mark Hedin Gate Ave. for 10 // Central City Extra years, “is at risk of ceasing to exist.” Its lease is up in September, and the landlord says he will double its rent. “He has a tenant all lined up that’s gonna take over. I can’t compete with that,” she said. In September, “we’ll be as homeless as the people we serve.” Dr. Dawn Harbatkin is the executive director of Lyon-Martin Health Services, at 1748 Market St. for 22 years. Despite some recent financial setbacks, the clinic’s staff maintained “a very good relationship with our landlord, who informed us a few months ago that he was putting our building on the market. . . . It went into escrow yesterday, ” she said. Lyon-Martin, a community health clinic started in 1979 by the venerable pioneering couple, Phyllis Lyon and Del Martin, is on a month-to-month lease and could “lose our space within the next month or two.” Harbatkin said she expects the rent to triple or quadruple, and the clinic will be forced to move. The clients are mostly uninsured and impoverished, she said. A health clinic faces unique challenges, Harbatkin said, such as zoning restrictions on where one can operate and stringent rules on equipment that will cost up to $1.5 million to install in any new space the clinic might find. Once everything is in place, getting licensed will take three months to a year, she said. For almost two hours, representatives of dozens of nonprofits lined up to tell the committee members — Supervisors Jane Kim, Eric Mar and Mark Farrell — of predatory real estate practices nonprofits are being subjected to by building owners terminating leases and exponentially raising rents. More organizations would have joined the procession, but the execu-

tives were unable to wait hours for a turn to speak and left early, as Kim noted at the end of the hearing. Mark Burns, deputy director of In-Home Supportive Services Consortium, testified at the hearing that, in May, Essex Properties acquired Fox Plaza at Ninth and Market streets, where the Consortium had been for 18 years. In that time, the Consortium had delivered 8.5 million hours of in-home services to clients, now numbering 1,500, who otherwise would be at “extreme risk for being permanently institutionalized,” Burns said. “Our new landlord,” he said, “exercised its right to prematurely terminate our lease at $18 per square foot and offered us a new lease at $45 per square foot — a 250 percent markup,” unaffordable to the nonprofit provider. The Consortium, he said, wound up on Market Street near Sixth Street, in a building that Seligman Western Enterprises purchased at the peak of the tech bubble in 2000, and for years had been unable to keep fully occupied. However, the move “comes at a steep cost in the quality of life for our staff. While

“We’ll be as homeless as the people we serve.” demand for our services grows, we are reducing our office space by 17 percent and moving our full-time staff of 63 workers into a windowless basement,” Burns said. Yet he feels “both successful and fortunate to remain at a location vital to both our transit-dependent workforce and to our client base.” Teresa Friend, director and managing attorney of the Homeless Advocacy Project at 1360 Mission St., said it pays $1.90 per square foot monthly, and “the landlord has made clear even before they gave us an extension through 2014 that they wanted us to find new space.” The landlord is nonprofit developer Mercy Housing, which holds an expensive long-term master lease on the building. The Homeless Advocacy Project, which moved from Sixth and Mission streets in 2000, serves about 2,000 clients annually, Friend said, helping with legal and social services for the homeless, eviction

defense, Supplemental Security Income advocacy and immigration policy work. In the same building is the Senior and Disability Action Network — a merger of Planning for Elders in the Central City and Senior Action Network — which arrived from 965 Mission St. in 2012 when that landlord started renovating the building and increased its rent by 150 percent. One by one, all the nonprofits in that building were forced out, said Sarah Jarmon, the Network’s spokeswoman. District 6 Supervisor Kim requested this hearing after meeting last August with members of the Human Services Network, a trade association of more than 100 city contractors, some of San Francisco’s largest nonprofit human services providers. Last September, the Human Services Network surveyed its members about the status and cost of its operating space, and 90 groups responded. Twenty-nine organizations said that 45 leases they hold had expired in 2012 or will before the end of 2014. For the 14 that had renewed or signed new leases since 2012, average rent jumped by a third for spaces that, on average, were 8.5 percent smaller. One nonprofit’s rent nearly doubled on 800 square feet. Another’s 17,771-square-foot space went up 49.3 percent. According to a policy analysis report by the supervisors’ legislative analyst, the city pays 1,425 nonprofit contractors more than $500 million a year to provide a significant portion of the social safety net for San Francisco’s most vulnerable citizens. “Nonprofits greatly enhance our city, fulfill our city’s mission and actually help combat some of our most challenging issues,” Kim said. “The city relies on nonprofits as an integral part of our service delivery system,” said Debbi Lerman, director of the Human Services Network. She cited a recent Stanford study that puts 23 percent of San Francisco’s population below the poverty level, “if we look at the actual costs of living here in the midst of all this wealth.” But the city is now finding that important pieces of that multimillion-dollar investment are “at risk as community-based nonprofits can’t afford to stay in the neighborhoods they are funded to serve,” Lerman said. “Property owners are doubling rents, terminating leases and offering only short-term leases as they speculate on future opportunities.” She also cited the “hundreds of millions” for moving and renovation costs that “nonprofits are forced to pay when they’re lucky enough to find new spaces.” The reality for nonprofits is that office space in central San

Dr. Dawn Harbatkin of Lyon-Martin Health Services talks with Ivette Vazquez at the clinic’s Upper Market offices, where Harbatkin is bracing for a whopping rent increase that she expects will force the clinic out after 22 years.

Photo: Mark Doneza // Central City Extra

Francisco is dwindling, with most building owners on Market Street refusing to lease to human services providers and upping space costs in western SoMa to $3 per square foot and beyond, which translates to $3,000 monthly for a modest office of 1,000 square feet. Tech companies have gobbled up most of the desirable locations, forcing the nonprofits to move out of the neighborhood or rehab run-down units in the Tenderloin where the tech startups are reluctant to go. “We need some help to manage this crisis,” said Nancy Nielsen, deputy director of SoMa’s Lutheran Social Services. She described how her organization, which helps thousands of clients remain housed through a money-management program, was told by its landlord that, despite being an exemplary tenant, it would not have its lease renewed in April because a tech company was offering twice as much for the space. Although the organization has found a space to lease, the building is “in very bad condition,” requiring $400,000 in improvements, which her organization will have to borrow money to pay for, Nielsen said. Ironically, its new space is at the hard-core Tenderloin corner of Golden Gate Avenue and Leavenworth Street, which Lutheran Social Services left eight years ago. Bill Hirsch, executive director of the AIDS Legal Referral Panel that provides free and low-cost legal as-

sistance to clients living with HIV/ AIDS, said its long-term Mission Street lease will expire in February, and he’s “hopeful” that rent will only more than double to $28 per square foot. “We will be going from paying about $35,000 per year in rent to over $80,000,” Hirsch said. “That’s at the mercy of our landlord who’s been bringing in tech folks and talking about the amenities in our building. I can assure you there are no amenities in our building. We’re lucky if the elevator works.” Brad Erickson, executive director of Theater Bay Area, which serves 300 dance and theater organizations throughout the Bay Area and 2,500 individual artists, said it has been in the city for 37 years at six different facilities, “sometimes (moving) because we’ve grown, sometimes because we had to because of rising rates. Our rent went up 18 percent last year and was going to go up an additional 21 percent this year.” “We were lucky to find really great space above American Conservatory Theater’s Costume Shop at 1119 Market St. But I tell you, it was the only space after looking for many, many months that we could afford and that was central, which is so crucial to our work in serving artists and arts groups in the city,” Erickson said. “We’re not alone. You’ve heard from these other organizations. It’s affecting small ones and even large

Cindy Gyori, executive director of Hyde Street Community Services, tells the supervisors at the hearing that the nonprofit’s rent is being doubled: “We’ll be as homeless as the people we serve.” Photo courtesy of SFGovTV Brad Erickson, below, of Theater Bay Area is ensconced in a new office he recently found after “many, many months” of searching for affordable space in the central city. Photo: Mark Doneza // Central City Extra

ones like ACT, which has had to reduce its classroom and administrative space by one-third because of rising rates,” he said. The displacement problem is most acute in the central city, where so many human service organizations reside to be near their needy client base. But the tech land grab also exists in southern SoMa, Potrero Hill and beyond. “Our rent is about to quadruple at the end of 2014,” said Terri Winston, executive director of Women’s Audio Mission, which is at Bryant and Mariposa streets. “We are looking to move pretty much anywhere in San Francisco, even though we are going to lose the really strong ties that we have to the schools that we serve in the area. “Anybody that’s looking right now can tell you it’s nearly impossible to compete with the tech and the wealth that’s coming into these neighborhoods,” Winston said. “Almost any property that we put a bid on, it’s almost immediately a cash transaction that we can’t compete with. Most nonprofits are making a pretty sizable investment in our capital infrastructure for any space that we move into, and we’re having trouble finding leases that are long enough to make that sustainable for us. So it really affects our growth long term.” Kim said that as San Francisco sees increasing revenue from its success in attracting businesses to stay or relocate here, “we need to really think about how we share that with the rest of our city. I know that when I co-authored the mid-Market tax exclusion and I promised jobs and increased tax revenue, I also said that this would go back into our community and we really need to have a discussion about that.” Almost half of the supervisors have experience working in the nonprofit sector, she noted, “so we need to recognize that you are also job creators and we need to support that community.” At the beginning of the budget committee hearing, Mar said that “we’re in danger of not only losing the heart of the city like the artists and the arts organizations, but the conscience of the city with nonprofits and the social justice groups.” Speaking with Central City Extra after the hearing, Mar said that although he and Kim had voted for the tax incentives that helped initiate the tech boom, “it’s very clear we didn’t put near enough protections for tenants, seniors, nonprofits and artists.” “It’s heart-wrenching,” Kim said.

Geoff Link, editor and publisher of Central City Extra, contributed to this report.

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