Money for Nothing

State auditors say managers of the Children's Health Insurance Program let about $20 million slip away in the form of "unnecessary or excessive payments to Clarendon National Insurance Co.," the company that had a provider contract for CHIP. The payments, the auditors wrote, "constitute an abuse of the commission's fiduciary responsibility to oversee and manage" the contract. CHIP is administered by the Health and Human Services Commission, which is in the midst of a massive reorganization and an investigation of lapses in protective services for adults and children.

Clarendon had the contract for health care services in rural areas, or about 28 percent of CHIP's overall business, and according to the state auditor, was the biggest single contractor.

The auditors made a point in their report of distinguishing "abuse" from crimes, fraud or breaches of contract. They said the agency simply failed to do what a prudent person would have done. For instance, after deciding to self-insure part of the program, the agency continued to pay Clarendon, auditors said. And rather than rebidding the contract, the agency decided to amend it, losing out on whatever savings might have been reaped by introducing some competition.

Auditors said the agency's contract controls were below grade and said the agency didn't have control over whether the company used CHIP funds as intended. The $20 million includes $5.5 million paid by Clarendon to a program manager who "had no employees and did not provide a service with readily identifiable, measurable outputs that directly benefited CHIP," auditors wrote. That manager paid an unnamed consultant and a lobbyist $2.2 million, auditors said, which was more than the manager's own contract rate. The lobbyist worked on contingency, getting paid only if Clarendon got the contract, which it finally did.

Audit targets get to respond, and the agency disagreed with auditors on several points. Problems resulted from speed and uncertainty, they said: State leaders wanted the program set up in a hurry and to do so in a state where no preexisting plans or information told them what to expect. Few companies bid, and only Clarendon agreed to reach all of the 170 counties in question. And patches are in place: A new insurer takes over in two months, and new controls are in place to keep the contractors and payments in line. The agency is asking Clarendon to return disputed payments, too. Meanwhile, the governor's office is asking the attorney general to see whether any of the $20 million can be recovered, and a vetting of Clarendon's books was recommended by state auditors as well.

The head of CHIP, Jason Cooke, abruptly quit in late May, giving two weeks notice at about the same time Thomas Chapmond, who headed the protective services unit, was resigning. Chapmond left as the agency started an internal investigation of protective services that is still underway and that intensified this month, after child abuse cases in San Antonio and in South Texas prompted lawmakers to call for reforms.

Cooke's departure was more surprising, but he said some things at the time that, in retrospect, illustrate the pressures at the agency, compounded by an audit. "Now that we have set the stage for restoring confidence in Medicaid and CHIP, I have concluded that the best way for me to assure the success of that restoration is to step aside for fresh leadership." Cooke was replaced on an interim basis by Dave Balland, who had been with the agency's office of inspector general.

Although the auditors had been working on their report for some time, the draft of the audit wasn't in the agency's hands until June — after Cooke quit — according to a spokeswoman. They prepared the response included at the back of the final audit at that point.

Unhappy 100-Percenters, on Both Sides

A month after clarifying her position on abortion regulation at the state GOP convention, Kay Bailey Hutchison was one of only five Republicans in the U.S. Senate to vote against confirmation of J. Leon Holmes, an Arkansas lawyer appointed to the federal bench by President George W. Bush. Both sides heavily lobbied the vote, with the pro-choice folks working against the nomination and the pro-life folks working for it. If nothing else, the emails and phone calls from both sides made it clear that activists were counting the vote as a binary event: It was a vote for or against them on their issue alone, no matter where else the arguments might lead.

The Senate consented to the nomination, 51-46. It was mostly a party-line vote, but the exceptions were the difference. Both of Holmes' home senators are Democrats, and voted for and said nice things about him. They were among the six Democrats who took his side, including two women. Hutchison was one of three Republican women who voted against him.

After that vote, Hutchison told reporters in Washington that the vote wasn't necessarily about abortion. "He doesn't have the fundamental commitment to the total equality of women in our society," she was quoted as saying. Aides said later that Hutchison interviewed Holmes and decided, essentially, that "he doesn't believe in equal rights for women." They say her vote was not based on abortion, religion, or any of the other labels that people have tried to attach to it.

Things Holmes has said weighed against him and made the vote close. He wrote in 1997 that "the woman is to place herself under the authority of the man" in a marriage. He wrote a letter in 1980 arguing in favor of a constitutional ban on abortion and included what became a notorious line: "concern for rape victims is a red herring because conceptions from rape occur with approximately the same frequency as snowfall in Miami." He later apologized for that remark, but Democrats hammered him on it, saying 20,000 to 30,000 rapes result in pregnancies each year.

At home, the Texas Christian Coalition was emailing supporters in the days leading up to the vote, telling them to call Hutchison and ask for her support. After the vote, they asked those same supporters to call and register their dismay with the vote. Likewise, the Texas Alliance for Life weighed in after the vote, too, asking people on their email list to complain to Hutchison and to thank U.S. Sen. John Cornyn, who voted for Holmes.

And former Texas Republican Party Chairman Tom Pauken — a Hutchison foe for years — put out a statement blasting the vote and promising to work against her if she decides to run for governor in 2006, as has been speculated. "For Hutchison to side with the abortion lobby to try to defeat the Holmes nomination will not be forgotten by Texas conservatives," he wrote.

At the state Republican convention last month, Hutchison told reporters that she believes in freedom of choice until a fetus becomes viable. That made some anti-abortion advocates nervous. But abortion rights advocates say she's been a reliable vote for the other side, and that makes them nervous. The Holmes vote is a microcosm. She didn't make the pro-life folks happy, but in defense, her staff points out she's voted for 197 of 198 judicial nominations from Bush, that prior to this vote, she was 35 for 36 on the voter tally maintained by National Right to Life, that she has voted for other pro-life judges and led the charge on behalf of Texas Supreme Court Justice Priscilla Owen, whose nomination for a federal judgeship was shanghaied in a Senate committee.

Pauken brought up the governor's race in 2006 (but we probably would have). The prevailing theory among many Republicans is that a candidate has to take a hard line position against reproductive choice to win a GOP primary. Both Rick Perry and Carole Keeton Strayhorn have taken the standard stance, opposing legal abortions except in cases of rape, incest, or when the life of the mother is at stake. If they and others are right about the primary, Hutchison could have a problem here. Interestingly, one Republican who's not sure about that sounding is Pauken. While he says Republican primary voters are strongly pro-life, he's not sure it's an issue that would turn an election.

Never Shoot a Bear Unless You Can Kill It

Remember the WD-40s? That was the appellation for increasingly rare Anglo Democrats over 40 years old. Many of them are in rural districts, and many of them are on the list of endangered — or at least threatened — politicians in Texas. Many are also reliable votes for business groups that usually side with Republicans. Even though they're Democrats, they've found themselves in the cross hairs of the trial lawyers, one of the primary sources of money for candidates of the donkey persuasion.

The trials are going after them (and in some cases, went after them in the primaries). So the Democrats are kicking back with a newly formed finance operation called the Texas 20/20 PAC. Rep. Allan Ritter, D-Nederland, apparently came up with the idea after surviving a primary challenge from former Sen. David Bernsen, D-Beaumont. Bernsen, a trial lawyer himself, was credited with recruiting Ritter into state politics in the first place. He gave up his Senate spot for what proved to be an unsuccessful run for land commissioner. Ritter angered the trial lawyers with his vote in favor of last year's limits on lawsuit awards for medical malpractice and other torts. The trials supported Bernsen. Bernsen fell short, and Ritter was in the position of the wounded bear. Ritter decided a PAC that could help Democrats in those particular gun-sights would be a good idea, and the new group was born.

Ritter and several lobsters met this week to talk about it and agreed to center their efforts on seven House seats that are held by Democrats who voted for the medical malpractice bill. They'll be defending Reps. Robby Cook of Eagle Lake, Dan Ellis of Livingston, David Farabee of Wichita Falls, Mark Homer of Paris, Chuck Hopson of Jacksonville and Patrick Rose of Dripping Springs. Ritter is on the list, but doesn't have a general election opponent. Rose, who's been wildly successful raising money (reports are due out next week), might not need the help. And there are a couple of House candidates who could be added to the list later, like Jim McReynolds of Lufkin, who split his votes on the medical malpractice package (for the bill, against the constitutional amendment that expanded the limits beyond med mal). It could also go to Republicans in some situations; one participant mentioned Rep. Mike "Tuffy" Hamilton of Mauriceville, who's got a tough reelection race.

The candidate list doesn't include anyone who is openly on the wrong side of House Speaker Tom Craddick, the Republican who led campaign efforts over the last decade to grab GOP control of the House. Craddick's not out endorsing Democrats, but he's not actively working against this particular half-dozen. If the PAC meets its goal, it'll have about $500,000 to spend on races this year.

A Rude Accounting

Most of the money contributed to Texas state senators for their campaigns goes instead to living and office expenses. Campaigns for People, an Austin-based group that wants to tighten the state's campaign finance laws, tallied up spending by state senators over the 2001-03 period. They found that 40 cents of every dollar spent went for campaigning, while "lifestyle" and office expenses ate up 55 cents. That shouldn't be allowed the group says, because it gives the officeholders and their employees (whose state pay is often supplemented from campaign funds) mixed loyalties between taxpayers on one hand and contributors on the other. Their full report is online at www.cleanuptexaspolitics.com.

The group didn't blame the senators, instead blaming lax ethics and campaign finance laws and enforcement. The current system "partially privatizes" state lawmaking and creates conflicts of interest. Senators spent $6.1 million running for office during the period in question, $2.1 million on their offices, about $1 million on food and gifts, almost that much on travel, about $818,000 on staff salaries, and $742, 691 on contributions from their political funds to other politicians. Senators spent a combined $657,000 on Austin lodging and about the same amount on charity. They spent $452,000 from their officeholder accounts on cars, and the same amount on telephones and Internet services.

Campaigns for People recommends several reforms: abolish officeholder accounts and have the state fund state work or at least account for campaign expenses separately from other stuff; prohibit personal use of campaign funds; prohibit contributions to other candidates; limit campaign contribution amounts, and increase pay for lawmakers so they won't have to live off the lobby.

Call it a Premonition

Jim Hopson, the Republican running for Congress in CD-28, has been overshadowed by the counts and recounts on the Democratic side of that race, which features former statehouse colleagues Henry Cuellar of Laredo and Ciro Rodriguez of San Antonio. When last we left those two, they were waiting for the 4th Court of Appeals to set a date for a hearing on whether the courts should hear Rodriguez's complaints about the counting that, at the moment, has Cuellar 58 votes ahead in the Democratic primary. If the court says it's over, Cuellar is the nominee and has knocked his former pal out of Congress; otherwise, Rodriguez has another chance to convince the courts that some of the Cuellar votes are odoriferous (that's at least $2 worth of smelly) and should be tossed.

The court hasn't set a date as we write. Hopson, however, is not waiting. He's going after Cuellar: "We now know that our opponent will be Henry Cuellar" is the beginning of a press release that also calls the former Texas Secretary of State a "man without a party." That's a reference to Cuellar's appointment to SOS by Gov. Rick Perry and the ulcers that gave other Democrats. Hopson says Republicans should stick with him now that he's with George W. Bush and Cuellar — as Hopson contends — is supporting John Kerry.

Dan Cuellar Martinez, an aide to Hopson who says he's also a cousin to Cuellar, says the campaign is confident his cousin will be his candidate's opponent. "We have ears all over the place, and we got a call last night," he said. "We know our opponent is Henry." He wouldn't say who called, but it was at that point in the conversation when he pointed out the familial ties. Whoever the Democrat is, that district is full of obstacles for a Republican candidate. They openly aim at a repeat of the Victor Morales campaign, where a little guy almost caught then-U.S. Sen. Phil Gramm.

• Another political junkie's toy: The Los Angeles Times has an interactive electoral map on its website that lets you look at polling info and call states for Bush/Cheney or Kerry/Edwards, and in the end gives you a better idea of what they're fighting over. It's the next best thing to being in a battleground state (we're not one, but we're adjacent to three of them). The map is available through this link: www.latimes.com/news/politics/la- polldatapage. htmlstory.

Congratulations, and Here's Your Parachute

How's this for drinking straight from the fire hydrant? The Department of Family and Protective Services is advised by a nine-member council that went to work for the first time this week, starting with a day of training and then a day of business. A week earlier, that agency was indicted by a Hidalgo County grand jury, which said the state didn't do enough to protect three girls abused physically by their mother and sexually by their stepfather. And the Health and Human Services Commission — at Gov. Rick Perry's urging — is investigating the department's regulation of both child and adult protective services after a string of failings came to light. If that weren't enough, the agency is in the middle of the state's rollup of several agencies into the HHSC, an undertaking that involves nearly a third of state government. If they weren't putting out fires on their services, they'd be putting out fires from that realignment.

The members of that newly formed council, all appointed by Perry: Attorney Richard Hoffman of Brownsville; Ronald Brandon of Georgetown, the clinical director of Mesa Family Services; attorney and former EDS exec John Castle Jr. of Dallas; Mary Kay exec Anne Crews of Dallas; state District Judge Faith Johnson of DeSoto; community volunteer Nancy Lund of Texarkana; attorney and volunteer Catherine Mosbacher of Houston; Imogen Papadopolas, a Houston lawyer; and Christina (Ommy) Strauch of San Antonio, a consultant. Other departments — the new name for the state agencies being pulled into the HHSC megalith — are also getting advisory councils like this one. But the head of HHSC is named by, and answers to, the governor and not to other appointees.

Flotsam & Jetsam

The Texas Medical Association decided to endorse "all forms" of stem-cell research, which puts the group on the wrong side of President George W. Bush, any number of Republicans, and the pro-life groups that oppose that use of embryonic material. The Texas Christian Coalition went big: "It could easily be said that the Texas Medical Association is the leading anti-life group in Texas." They want their folks to ask their own doctors about it. TMA, with about 39,000 members, says it supports research involving stem cells from embryos, from adults, and from [umbilical] cord blood. The doctors' group decided on the science involved, which points to possible treatments and cures for diseases and ailments that aren't treatable now. Not everybody in TMA is for it, and the group even quoted some of its internal opponents in announcing the new policy.

• Since hardly anyone running for president runs commercials in Texas these days, you have to go to a museum or the Internet to get your fix. The Sixth Floor Museum at Dealey Plaza in Dallas has a great exhibit for political junkies and history nuts, called The Living Room Candidate: Presidential Campaign Commercials, 1952-2004. They've got something like 200 commercials there to watch. Not in Dallas? Get it online. The exhibit was assembled by the American Museum of the Moving Image, which put the spots on the Internet at http://livingroomcandidate. movingimage.us. The exhibit in Dallas is up now and will be there through the end of January.

• UT prof and documentarian Paul Stekler's new film — Last Man Standing: Politics, Texas Style — gets its national debut in a couple of weeks. It'll be on the P.O.V. series on PBS on July 20 (check local listings, etc., etc.). It touches on several of the state's contests in 2002, but drills in on a Dripping Springs statehouse race between Rep. Rick Green, a Republican, and Patrick Rose, the Democrat who beat him by 360 votes (out of 38,112 cast). We've seen it, and it's a hoot. Stekler was one of the guys behind Vote for Me: Politics in America, a documentary famous in these parts for its depiction of the Texas Legislature and for scenes where Sen. Rodney Ellis, D-Houston, worked the floor wearing a hidden microphone. Both the Senate and Ellis survived that episode, and political fanatics were richer for it.

Political People and Their Moves

Former Texas prison czar Wayne Scott signed on with the Austin office of MGT of America. He'll join the consulting firm's criminal justice group, with clients in Puerto Rico and several states. Scott, who started as a Texas prison guard in the early 1970s, rose to the head of that system before retiring three years ago. He's also been on the state's Board of Pardons and Paroles. The MGT gig grew out of contract work he's been doing with the firm in Puerto Rico, where a prison overhaul has been underway for several years...

Carrie Collier left the state's Public Utility Commission for Austin Energy (it's a municipal outfit not regulated by the PUC), where she'll work in the government relations office. The state's utility regs, which do affect municipally owned power companies, are up for Sunset review next year...

Brian Pendleton leaves the offices of state Sen. Rodney Ellis, D-Houston, for the Texas Democratic Party, where he'll work in field operations...

Bill Bragg will manage the Supreme Court election campaign of Scott Brister, appointed to that court by Gov. Rick Perry. Bragg worked on Mike McCaul's congressional race and for the GOP's coordinated campaign in 2002...

Deborah Reyes left the Texas Water Development Board, where she was director of special projects, for Advance America, where she'll direct government affairs in Texas, New Mexico, and Colorado. She'll be based in Austin...

David Pore, who'd been running government relations for the Association of Texas Professional Educators, has joined the Hance, Scarborough, Wright, Woodward & Weisbart law firm in Austin, where he'll work on administrative and lobby law. That's the firm headed by Kent Hance, who held state offices as both a Democrat and a Republican. Important, probably: Pore went to Texas Tech's law school, as did the boss...

You might have heard that David Beckwith is the new chief of staff for U.S. Sen. Kay Bailey Hutchison. You can't tell it by him. He admits to being the "senior guy" in that shop, but the title on his card is "Helper."

More Political People, More Moves

Gov. Rick Perry named Keith Morrow of Southlake, an executive with 7-Eleven, to the board of the Texas Department of Information Resources for a stub term that expires in February...

The Guv named Mike Bradford of Midland and William White of Georgetown to the Finance Commission of Texas, which oversees banks and other institutions with state charters. Bradford is a Midland County Commissioner and president of the Natural Resources Foundation of Texas; White is vice president of public affairs for Cash America International, which owns a mess of pawnshops...

Perry named Penny Angelo of Midland to the Texas State Board of Examiners of Psychologists. She was on the State Board of Medical Examiners for 12 years...

The governor put state District Judge Cheryl Shannon of Cedar Hill on the Texas Juvenile Probation Commission for a term that runs for four more years...

Press Corps Moves: Karen Brooks, who's been reporting for the Fort Worth Star-Telegram for the last seven years, is leaving that paper's Laredo bureau to join The Dallas Morning News in Austin. She's been around Austin quite a bit during the last several legislative sessions, and will cover the House, UT and whatever else arises here that's of interest to North Texas. Dave Michaels, whose name you might know from a series of stories on Dallas County Sheriff Jim Bowles and his ties to (and gifts from) a county contractor, has been at the paper since 1998. He also covered Mayor Laura Miller's last race, which could be handy if she gets the bug for state office. Michaels will cover criminal justice and gaming, among other things...

Deaths: George Samuel Phillips of Dallas, a retired insurance executive, volunteer mediator, former state champion bass horn player, and father of Texas Supreme Court Chief Justice Tom Phillips. He was 88... Veronica "Ronnie" Moomaw, mother of Texas political consultant Kevin Moomaw. Her husband — his father — died earlier this year. She was 73.

Quotes of the Week

Patrick Palmieri, a member of the Hidalgo County grand jury that indicted the state agency that didn't protect three girls from an abusive mother and stepfather, quoted in the Houston Chronicle: "We're going to have a situation that this is kind of going to be swept under the carpet. Now all the politicians are scrambling like cockroaches because light's been shed on this issue."

Gov. Rick Perry, quoted by the Associated Press on mounting problems in the state's protective service programs: ''There is enough evidence from various parts of the state to suggest that some of our most vulnerable children are not receiving the protection they need from abusive situations. The evidence leads me to believe we have a systemic breakdown in the safety net."

Charles Miller of Houston, who recently left the board of regents at the University of Texas, in the Houston Chronicle, on school finance and the state's aversion to an income tax: "I don't know that we can do long-term public school finances without changing the tax system more than they want to change it... Republicans can't put [income taxes] on the table, and Democrats aren't to be trusted. That's how people look at it: "The Democrats are wanting an income tax, because they can raise a lot of money and spend it on anything." There's some truth to that. And Republicans have just gotten into power after more than a century, so how can they put an income tax on the table? I respect that problem. But it may be a solution, and it's not on the table.

The Governors Highway Safety Association, on cell phones: "Hands-free devices, while perhaps offering some added convenience to the driver, do not mitigate the intellectual distraction — the conversation. Drivers are similarly distracted when using either a handheld or hands-free phone."

Lobbyist and former U.S. Rep. Charlie Wilson, D-Lufkin, telling the Houston Chronicle how he wanted to cap his efforts helping run the Soviets out of South Central Asia: "If I could just have gotten the only liquor license in Afghanistan and a nice comfortable hotel catering to trekkies and reporters. That was going to be my only request to the Afghan government — just give me a liquor license."

U.S. Supreme Court Justice Antonin Scalia, in a dissent (on a ruling allowing foreign tort claims in U.S. courts) that was part of a surprising package of rulings ending the court's most recent term: "This court seems incapable of admitting that some matters — any matters — are none of its business."

June Seabers, a citizen who attended a Bandera hearing on highway needs, quoted in the San Antonio Express-News: "What you need is a program that teaches people how to drive."

Texas Weekly: Volume 21, Issue 6, 12 July 2004. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2004 by Printing Production Systems, Inc. All Rights Reserved. Reproduction in whole or in part without written permission from the publisher is prohibited. One-year online subscription: $250. For information about your subscription, call (800) 611-4980 or email biz@ texasweekly.com. For news, email ramsey@ texasweekly.com, or call (512) 288-6598.