The Brief

A state audit released Tuesday found that millions of Anaheim public dollars were routed with little oversight to tourism promotion groups. Some of those funds were improperly used for political lobbying and to support candidates friendly to Disneyland resort-area businesses.

The audit of city contracts with Visit Anaheim and the Anaheim Chamber of Commerce is the latest in a series of damning investigations and reports on potentially illegal and unethical activities among some former Anaheim leaders, and the extent of the tourism industry's grip on city affairs and funds.

Former Mayor Harry Sidhu and former Anaheim Chamber of Commerce President Todd Ament were both charged in 2022 with corruption-related federal crimes and later pleaded guilty. Both are awaiting sentencing.

Last year, a city-commissioned investigation found a "potential criminal conspiracy” to divert $1.5 million in federal COVID recovery funds through Visit Anaheim to a nonprofit controlled by the chamber.

The 51-page audit found that over $111 million collected from a 2% city assessment on hotel stays in the city's resort district have been provided to Visit Anaheim since 2010, of which $4.4 million was passed to the Anaheim Chamber of Commerce with little regard for how the public money would be spent and whether it was needed.

"Neither the city’s tourism director nor current Visit Anaheim staff believed that the tourism district assessment subcontract with the Chamber was necessary," auditors reported.

Specifically, auditors found:

• The local tourism bureau, Visit Anaheim, failed to get approval from the city, as required in their contract, to subcontract with the chamber. The bureau passed along $4.4 million in hotel assessment funds to the chamber over a period of 10 years. 
• Through that subcontract, the chamber used the funds for “supporting resort-friendly candidates through its political action committee” and lobbying for legislation that helped hotels near Disney. Auditors said these activities violated city rules. (Visit Anaheim canceled the chamber's subcontract after Ament's 2022 guilty plea.) 
• The chamber was unable to show auditors documentation that it delivered many of the services specified in contracts with the city of Anaheim and the tourism bureau, including a $500,000 contract with the city in 2020 intended to promote local spending and hiring.
• Visit Anaheim "engaged in a questionable transfer of funds" when it gave $1.5 million in pandemic relief funds from the city to a nonprofit affiliated with the chamber. The transfer had been flagged in an earlier, city-commissioned investigation as a possible “theft” of public money. State auditors found that the fund transfer resulted from a "verbal agreement between its former president and the former president of the Chamber" and that there was no formal written contract.  

Responses from the chamber and tourism bureau

The chamber and tourism bureau dispute some of the audit's findings.

In her official response letter to the audit, Anaheim Chamber of Commerce President Laura Cunningham said the chamber had engaged in legislative advocacy since 2015 and that "such activities align with standard operating procedures for tourism improvement districts across the state."

Cunningham wrote that the chamber's engagement in local politics was an appropriate use of public funds from the resort district, and that chamber activities carried out with the money "have demonstrably benefited the tourism and convention industries in Anaheim."

Lawyers for Visit Anaheim, in their response to the audit, said the city was well aware of its subcontract with the chamber and never objected. They noted that two city employees designated by the city manager sit on the tourism bureau's board of directors.

They also said auditors had taken too simplistic a view of the tourism bureau's finances when calculating its spending budget beyond the city contracts.

Last year, Visit Anaheim refused a city request to return the $1.5 million in pandemic recovery funds transferred by the tourism bureau to the chamber, saying the COVID-19 relief funds were "properly used" and that the transfer came from a separate part of Visit Anaheim's budget. State auditors noted the "re-accounting" of these funds, saying it brought up additional questions about the tourism bureau's use of city funds.

Audit recommendations

Auditors recommended the city include performance measurements in its future contracts for tourism and business promotion.

They also recommended the city renegotiate its largest contract with Visit Anaheim to ensure better monitoring of public funds.

And they suggest the city create an advisory board to make recommendations for spending assessments collected from hotels in the resort district.

Anaheim City Manager Jim Vanderpool said in the city's official response to auditors that the city was developing a plan to implement their recommendations, including improving oversight of contracts with Visit Anaheim and exploring whether there are sufficient grounds for the city to ask for its money back from several contracts with the chamber.

LAist’s Nick Gerda contributed to this story.

Doctors and health insurers filed a lawsuit Friday alleging Gov. Gavin Newsom and the Legislature violated the law when they approved a healthcare tax that could substantially increase insurance premiums for Californians.

The lawsuit claims the recently passed tax on health plans, known as the managed care organization tax or MCO tax, circumvents a 2024 initiative that limits healthcare taxes and directs revenue toward specific purposes. The California Medical Association and California Association of Health Plans filed the complaint with the California Supreme Court.

“California voters passed Proposition 35 and made it law. The state does not get to ignore that law simply because following the law is inconvenient,” medical association CEO Dustin Corcoran said in a statement.

Newsom’s office did not immediately respond to a request for comment. H.D. Palmer, a spokesperson for the Department of Finance, said in a previous statement to CalMatters that the state wanted to balance the affordability concerns of privately insured patients against large-scale federal Medi-Cal cuts.

Newsom stopped short of opposing the 2024 initiative when it was on the ballot, but he warned at the time it would “hamstring” the state budget.

For more than 20 years, California has levied taxes on health insurers to help fund Medi-Cal, the state’s insurance program for low-income people. The state historically taxed private health plans at a lower rate than Medi-Cal insurers, but in June, the Legislature passed a bill substantially raising the tax on private plans.

Health insurers said they will pass the cost directly on to consumers, spiking premiums by about $100 per person each year. That means a family of four could pay a $400 annual increase. That would come on top of the rate increases people typically see year to year.

“California is breaking the law by blowing through a tax limit voters put in place to protect Californians and businesses from higher health care costs,” said Charles Bacchi, CEO of the health plans association.

Doctors, hospitals, clinics and Medi-Cal insurers have argued for many years that the revenue from the tax should go toward improving Medi-Cal. They said that the state was inappropriately using the money to replace general fund spending, and that many providers were being paid far less than their services cost. In 2024, they asked voters to approve a limited tax that would be reserved for Medi-Cal improvements.

But Congress last year changed the rules on taxes used to generate revenue for healthcare, including the ones imposed on health plans. Rather than lose the money generated by the tax, Newsom proposed and the Legislature agreed to submit two taxes to the federal government for approval: one that complied with the 2024 initiative but would be rejected by the feds, and one that complied with federal regulations and largely disregarded the initiative.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

California could create its own multi-billion-dollar science and health research agency under a bill signed by Gov. Gavin Newsom Wednesday, helping to fill a gap left by the politicization of science under the second Trump administration. Voters will decide in a year and a half whether to fund the idea, which the University of California has championed.

Approved by state lawmakers at a time when federal science funding has become increasingly unpredictable, the bill places a $7.5 billion bond measure on the March 2028 ballot to pay for the creation of the California Foundation for Science and Health Research. The new state agency would provide grants and loans for projects in public health, climate science, agriculture and other areas. Panels of scientists would review proposals, and the agency would develop rules allowing the state to share in some of the profits from inventions made with its support.

“Scientific advancements are curing and preventing diseases, improving the lives of people living with chronic conditions, protecting our communities from wildfires, lowering the cost of food, and powering our economy,” the bill’s author, state Sen. Scott Wiener, said in a statement. “We cannot allow the federal government to throw away that hope for a better future.”

Newsom joined Wiener to sign the bill Wednesday atop the Golden Gate Bridge, a landmark built with voter-approved bond money in the 1930s that his press office described as a symbol of California ingenuity. He said the proposed science agency “does the opposite of what Donald Trump is doing (and) will allow us to double down on what makes this state great.”

It was a dramatic comeback for a measure that almost died in the Legislature earlier this year, when a more ambitious $23 billion version of the plan failed to make it onto the November ballot despite bipartisan support.

Researchers from UC Berkeley and elsewhere had joined with UC leadership to lobby for the bond, hosting rallies and inviting lawmakers to a science fair highlighting projects that had seen their funding stalled or canceled by the federal government.

There were plenty to choose from: The Trump administration canceled nearly $2 billion in research grants to the University of California beginning in early 2025, later acknowledging in court that officials searched for keywords such as “health equity” and “sexual orientation” in order to decide what to cut. While a court order restored much of the money, the National Science Foundation has since slowed grantmaking nationwide, and President Trump has proposed giving political appointees more power to veto National Institutes of Health grants that don’t align with his agenda.

This spring, the National Science Foundation canceled an additional $21 million in grants to UC Berkeley, accusing the projects’ lead researchers of accepting foreign funding without disclosing it, a charge some of those scientists denied. UC President James Milliken has called the disruption of federal research funding “one of the gravest threats to the University of California in our 157-year history.”

Lawmakers nevertheless declined to move the science bond forward this spring amid worries about competing demands on state funds – including a housing bond on the November ballot and the possible need to backfill other federal cuts. But negotiations among bill supporters, legislative leaders and the governor over the summer led to the scaled-down version that Newsom signed Wednesday.

Along with the University of California, California State University, private universities, and independent labs would all be potentially eligible for grants from the new state fund. A $7.5 billion state fund would not by itself make up for the instability in federal grants – the UC alone received nearly $5 billion in federal research funding in fiscal year 2024-25. But supporters say it could be especially helpful to researchers in fields such as climate science that are critical to the state’s future but have run afoul of Trump administration priorities.

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Berkeleyside partners with the nonprofit newsroom Open Campus on higher education coverage.

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This story was originally published by Berkeleyside and distributed through a partnership with The Associated Press.

A winter of potentially devastating weather driven by what scientists predict to be a massive El Niño event could strain many of California’s TK-12 public schools, experts say, likely damaging aging structures and forcing school closures.

The southern and central parts of the state are expected to be hit hard along with coastal areas, as they were in 2023 when mid-March storms forced the closure of at least 178 schools. Only this time, weather scientists predict El Niño could stress levees to the max, and even bring potential for tornadoes, along with torrential rains, mudslides, storm-driven tides and heavy winds.

While district superintendents in especially vulnerable areas are already planning ahead, some schools may be ill-equipped to handle punishing weather. At least 59 California school districts are seeking voter approval for bonds in the November election, and have identified the need to repair or replace “leaky,” “dilapidated” and “decaying” roofs, an EdSource examination of local ballot language shows.

Gov. Gavin Newsom declared a state of emergency on Sept. 21, ordering pumps and sandbags to be stockpiled near vulnerable areas, among other precautions. Federal flood data show roughly 20% of the state’s schools are located within flood plains. In 2023, heavy storms flooded schools in Alameda and Merced counties as well as one near Watsonville, where a levee ruptured.

“Climate-driven El Niño conditions could mean months of dangerous weather, heavy rain, strong winds, deep mountain snow and flooding,” Caroline Thomas Jacobs, director of the California Office of Emergency Services, said at a news conference, adding that the public shouldn’t underestimate “the power of water.”

Preparing for a severe El Niño

As predictions of severe weather spread, there isn’t a school superintendent in an area that the El Niño is predicted to impact “that hasn’t been thinking about this for weeks already,” said Scott Borba, executive director of the California Small School Districts Association. Many small districts have aging buildings — some as many as 75 years old, Borba said.

“You’ve got leaks and dry rot and all the things that a super wet winter is going to just exacerbate,” he said.

While district leaders work with other local agencies during weather emergencies, they are largely on their own when making major decisions, such as whether to cancel school, Borba said.

“Sometimes you have some county office of emergency services’ support. But when it comes to making that decision, that decision lies with the superintendent alone,” he said.

One small school district leader who may soon be making such decisions is Raven Coit, the superintendent and principal of the 61-student TK-8 Peninsula Union School District on the south end of the Northern Humboldt Peninsula in Humboldt County. It’s perhaps the most isolated coastal school in California, roughly 600 yards from the ocean. Dunes often serve as a play area for students.

Coit took steps this year to try to limit storm damage. She had trees cut back and used money saved by deferring other projects to complete much-needed roof repairs. “There was a big storm that caused leaking. I’m proud to say that it won’t rain inside this year,” she said.

But the likelihood of impacts from El Niño remains. The school’s “in a vulnerable spot,” she said. Flooding could cut off access to the only road leading to the school. There’s a backup generator that she’s “trying to figure out if I can make it work.”

While nearly all the school’s students live nearby, many teachers do not, and may not be able to get to work. Local high school students are bussed to Arcata on the mainland — if buses can get through.

She said the school could also turn to remote learning in a crisis.

How El Niño may impact schools in coastal areas

One of the things that makes El Niños so dangerous in coastal areas like Coit’s is that they are known in California for also causing rising tides known as Kelvin waves.

They are slow moving, and can raise sea levels for weeks. Some could reach shore as early as October. At the same time, an astronomical phenomenon known as super king tides is expected from November to January, Danial Swain, a climate scientist with the University of California Agriculture and Natural Resources, said in an online presentation.

“That would probably bring record-breaking coastal flooding this year.”

A worst-case scenario “would be an El Niño Kelvin, plus a peak king tide, plus a significant storm,” he said.

A Southern California school leader of one of those districts said it’s bracing for storms.

Don Austin, superintendent of Laguna Beach Unified School District in Orange County, said that living on the coast, “I have seen our beaches get washed away with recent storms and homes destroyed.”

His schools have “roof leaks and other issues that will be heavily impacted by an El Niño,” he said.

The most impactful weather-driven damage to a California school in recent years was in March 2023 when a broken river levee caused the Pajaro Middle school near Watsonville to flood, along with the heavily Mexican immigrant and farmworker community it serves.

The school reopened in 2024. A complete replacement of the entire levee by the U.S. Army Corps of Engineers could take a decade, officials said.

Mark Strudley, executive director of the Pajaro Regional Flood Management Agency, said the agency is spending roughly $1 million to strengthen the levee, and that the breach that led to the school flooding has been permanently repaired. El Niño, he said, is the obvious concern, and the work is aimed at protecting the town of Pajaro and the middle school.

Leaders of the Pajaro Valley Unified School District remain concerned about El Niño, but haven’t identified a temporary site to move students to if the school floods again, according to Peggy Pughe, the district’s executive director of teaching and learning.

Asked what the district officials are doing based on their experience with the 2023 floods and the threat of El Niño, Pughe said they are “canvassing local neighborhoods, encouraging families and residents to sign up for emergency alert services.”

Data journalist Daniel J. Willis and staff writer Emma Gallegos contributed to this story.

In August, the Trump administration announced a significant overhaul of the Head Start program, leaving early childhood providers in Los Angeles concerned about their ability to serve low-income children.

The proposed rules strip Head Start of many of its regulations and impose new requirements, like teaching in English only.

The public comment period ends Oct. 6 — after which the administration could finalize the new rule. It’s unclear when that will happen, and experts say it could be caught up in litigation.

Why does the administration want to change the rules?

Federal officials said the deregulation would provide for more local flexibility.

An administration statement said the moves reduce both regulatory burden and administrative costs, allowing for more available slots — as many as 236,000 Head Start slots nationwide — and save $2.2 billion.

“We are removing unnecessary bureaucracy, strengthening nutrition and physical health, trusting parents and local communities, and opening Head Start to hundreds of thousands more children,” said Robert F. Kennedy Jr., the secretary of health and human services. “That’s how we renew the promise of Head Start for the next generation.”

Earlier in the administration, the White House proposed to cut Head Start entirely from the budget but reversed course.

The case against the proposed rules

Head Start providers worry the new rules, if implemented, could be the start of whittling down a program that provides early education and other wraparound services for about 70,000 children across the state.

“It's a holistic program really designed to lift kids out of poverty and to set them up for future success, so what's at risk when the standards are changed are a lot of those elements and guidelines that support the program quality,” said Melanee Cottrill, executive director of Head Start California.

For example, Head Start provides support services beyond education, like developmental screenings and dental care, which would no longer be required under the Trump administration’s plan. The new rules would also require documentation beyond self-attestation for families experiencing homelessness.

“Putting a lot of documentation requirements in place would be very onerous for people who are in really difficult circumstances,” said Donna Sneeringer, president of the Child Care Resource Center, which serves about 2,000 kids in its Head Start programs in northern L.A. County. The program opened up a Head Start center at a family homeless shelter last year.

The administration’s proposal also sets a 5% cap on administrative costs, down from the current 15%, which Sneeringer said will be hard for nonprofits to implement.

“I think many Head Start operators are really going to struggle to even keep their programs open,” she said.