Janet Yellen is in the running to become chairwoman of the Federal Reserve and that has many bankers and Wall Street titans worried.

The diminutive vice chairwoman of the U.S. central bank — an academic economist who is married to a Nobel Prize-winning economist — is known to be a formidable intellect and a force on the interest rate-setting Federal Open Market Committee. Her views on financial market regulation — an area where she’d have tremendous power as leader of the central bank — are less well-known.

“Her strengths are as an economist and thinking about macroeconomic policy and monetary policy,” said Tony Fratto, a former Treasury assistant secretary under President George W. Bush. “There’s no question that’s where the bulk of her experience is.”

The Center interviewed Yellen and reviewed her career through two stints on the Federal Reserve Board and as president of the San Francisco Fed Bank  — including speeches, meeting transcripts, government testimony and reviews of bank failures.

The picture that emerges is of an overseer who tried to point out dangers in the banking system before the situation came to a crisis in 2008, but who didn’t act forcefully against banks that she saw taking excessive risk because she didn’t believe she had adequate authority.

After working through the depths of the crisis and having a hand in closing more than a dozen failed banks  — including Washington Mutual, the largest bank failure in U.S. history  — Yellen now appears determined to ensure that banks fortify themselves against financial shocks and that regulators have the power to police the system.

Yellen is unlikely to push for revolutionary change, such as breaking up the biggest banks.

The Fed so far “has taken the view that we need the rules not to change too much,” said Simon Johnson, a professor at the Massachusetts Institute of Technology, who supports making banks smaller.

However, many expect her to be a tougher regulator than the current Fed chairman, Ben Bernanke, and she appears more willing to take strong action to stop banking giants from putting taxpayers at risk. But even so, the power of the Fed has its limits.

“They can’t stop all future crises, but it’s up to the Fed to make these crises more or less severe,” said Johnson, author of "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown."

Bernanke’s term ends at the end of this year and President Barack Obama has suggested that he may replace him.

Yellen wants to require big banks to hold more capital, to boost the margin requirements on derivatives trades and to require foreign banks that do business in the U.S. to hold capital in the U.S.

“We would expect her to toughen rules for the biggest banks,” said Jaret Seiberg, analyst at Guggenheim Strategies in New York, in a client report. “We believe her elevation to chairman would be negative for the mega banks.”

Dealing rare loss to Greenspan

Yellen was first appointed to the Federal Reserve Board in 1994 when Alan Greenspan was chairman. She was at the Fed less than a year when she dealt Greenspan his first and only defeat in a vote over his 18 years at the helm.

The Fed’s Board of Governors was set to vote at a rare open meeting in 1995 to require banks to use a uniform formula to inform consumers of the true rate of return on bank certificates of deposit. Yellen and then-Vice Chairman Alan Blinder were opposed.

“The formula was wrong. It was just wrong,” Yellen said in an interview in her office. “I couldn’t stand it.”

On her way to the meeting, she complained to another governor about the faulty formula, invoking the image of her mother whose savings was in CDs. When it was time to vote, Greenspan had three yeas to Yellen’s four nays.

That Yellen dealt the notoriously laissez-faire chairman his one defeat in a vote on bank regulation is both amusing and telling.

“On the pro-regulation, anti-regulation spectrum, if we imagine such a thing, she is miles away from Alan Greenspan,” said Blinder.

Yellen left the Fed board in 1997 to become chairwoman of President Bill Clinton’s Council of Economic Advisers, and then she returned to academia.

In 2004, she was tapped to be president of the Federal Reserve Bank of San Francisco  when the housing boom, especially in California, Nevada and Arizona, was in full swing. In that role, she had oversight of bank holding companies in nine Western states  as well as smaller state banks that were members of the Federal Reserve System.

The Federal Reserve System is made up of the Washington, D.C.-based Board of Governors and 12 Reserve Banks located across the country. The seven-member board in Washington writes bank regulations and the reserve banks have supervisors to enforce the rules in their districts.

Countrywide Financial — based in Calabasas, Calif. — had announced its mission was to “dominate real estate finance.”  Smaller regional banks were lending like crazy to real estate developers. Yellen was alarmed by what she saw, she said in testimony to the Financial Crisis Inquiry Commission in 2010.

She and her team brought their concerns to the Federal Reserve Board in Washington, she told the commission. It’s the board — then led by Greenspan — that sets regulatory policy, and the reserve banks carry it out. Under Greenspan, that policy became known in the banking industry and inside the Fed as “Fed-Lite.”

Trouble in California

“We felt that, in San Francisco, supervision is a delegated activity and we operate under the guidelines of supervision that are given to us by the Board of Governors,” she testified to the FCIC. “Could we have used our own discretion? I don’t think we felt we had the power to do that.”

Leaders at the Fed board in Washington weren’t inclined to rein in banks when they were making loads of money on a rising real estate tide.

“A lot of the economists at the Fed thought that things were pretty good, and that supervisors shouldn’t meddle in financial markets,” said Richard Spillenkothen, who was head of bank supervision at the Fed until 2006.  Many of the regional bank presidents were of the same view, he said.

Yellen was among the handful that showed an interest in bank oversight, Spillenkothen recalls, and was one of a small group of regional presidents who met with the Fed board’s regulatory policy and supervision staff when she was in town for meetings of the Federal Open Market Committee. The FOMC sets interest rates and includes the governors based in Washington and a rotating roster of presidents of the Fed’s 12 reserve banks.

Even with the constraints she felt, Yellen appears to take pride in how stringent San Francisco was under the circumstances. Countrywide Financial CEO Angelo Mozilo in late 2007 converted his company from a bank holding company to a thrift in what experts said was a case of regulator shopping. The Office of Thrift Supervision had a reputation as a light regulator.

“I like to think that we were tough in our supervision, so they wanted to be supervised by someone else,” Yellen said in her 2010 testimony.

Mozilo flew his company’s jet from the company’s Calabasas headquarters to San Francisco to tell Yellen personally that he was taking his business to the OTS.

Critics say she could have done more.

“There is little evidence that she took steps to contain the out-of-control housing bubble in the district of the San Francisco Fed when she presided over that bank from 2004 to 2010,” said Linus Wilson, a professor at the University of Louisiana, who studies and writes about bank bailouts. “Her current, long record at the Fed indicates that she will preside over a Fed that lets the Wall Street banks gamble unchecked at the expense of U.S. taxpayers.”

Yellen herself acknowledges she didn’t see risks to the overall financial system, even as she was concerned about some banks in California.

“I did not see and did not appreciate what the risks were with securitization, the credit rating agencies, the shadow banking system, the SIVs,” she told the FCIC, referring to the offshore “structured investment vehicles” used by some financial institutions to move mortgage securities off their balance sheets. “I didn’t see any of that happening until it happened.”

But she was worried about the fast and loose financing that was going on at the time.

Risky piggyback loans

Transcripts of speeches and FOMC meetings show that Yellen was among those who raised concerns about risky mortgages, including interest-only loans and adjustable rate mortgages, as early as 2005.

“One of the things we’re seeing in California and elsewhere in our District—and maybe this is true nationwide—is a growing use of piggyback loans. Loan-to-value ratios of 90 to 95 percent are common in California, and we’ve even seen combination loan-to-value ratios and piggyback loans going up to 125 percent,’’ she   told the FOMC in June of that year. She said such loans could threaten Fannie Mae and Freddie Mac, the housing finance giants that were taken over by the U.S. government in the summer of 2008 because of massive mortgage losses.

It took more than another year before the Fed and other regulators warned banks of the dangers of such mortgages .

Yellen, in the interview, said the guidance was inadequate. “After all these years and with the commercial real estate problem now about to start blowing up, we get a piece of guidance that focuses on risk-management practices.”

She was more candid in her FCIC testimony. “You could take it out and rip it up and throw it in the garbage can. It wasn’t of any use to us.”

By early 2008, Yellen could see firsthand how the deterioration of California’s real estate market was harming its banks. IndyMac, a bank that was deep into subprime lending and was supervised by the Office of Thrift Supervision, came to the Fed to borrow at the discount window.

All depository institutions have to have reserves at the Fed to ensure they can pay when customers want to withdraw their cash. If the reserves fall short at the end of a business day, they take an overnight loan from another bank. If other banks refuse to lend, the bank can borrow from their regional Fed’s discount window at a higher interest rate. The Fed also lends to troubled banks to allow them to function for a short time while regulators prepare to shut them down.

When banks borrow from the Fed — which is known as the lender of last resort — the central bank demands high quality collateral.

During the financial crisis, banks became unwilling to lend to one another because they feared they wouldn’t be repaid, so borrowing at the discount window became routine. As IndyMac’s condition worsened, Yellen sent her top examiners in to get a better look at the collateral the bank had posted — mostly mortgage and home equity loans.

“We were really disgusted,” she recalled in the interview. “This collateral was worth far less than face value.”

In July 2008, IndyMac failed and was seized by the FDIC.

Biggest bank failure ever

By then it was also apparent that Washington Mutual, another OTS-regulated bank in Yellen’s district, was struggling to survive. With more than $300 billion in assets, WaMu was an order of magnitude larger than IndyMac. It had been borrowing from Yellen’s Fed bank since December 2007 and by August it owed $2 billion, according to data released by the Fed and compiled by Bloomberg News.  Depositors were withdrawing their money and borrowers were defaulting.

Yellen took the matter into her own hands. She called CEO Kerry Killinger and told him that if he wanted access to her discount window, he would have to allow Fed examiners into the bank to see the files on all loans he intended to post as collateral.

“We didn’t trust the OTS,” she said. “The OTS never told us what the state of these institutions was.”

When WaMu was seized by the FDIC on September 25 and sold to JPMorgan Chase, the Fed was repaid in full.

Supervision at the San Francisco Fed wasn’t without its faults.

The 12th district saw 13 of its banks fail from the day that Lehman Brothers declared bankruptcy in 2008. In almost every case, the banks had huge concentrations of construction and commercial real estate loans on their books, loans that defaulted disproportionately when the real estate markets in the Western states collapsed.

The Fed’s inspector general issued reports on most of those failures. When Merced, Calif.-based County Bank collapsed, costing the FDIC $135.8 million, the inspector general said the San Francisco Fed supervisors could have done more.

“We believe that the magnitude and significance of County's asset quality deterioration and credit administration deficiencies that emerged in the summer of 2007, coupled with management's disagreement with regulators, warranted a more direct and forceful supervisory response by FRB San Francisco,” the report said.  The inspector general went on to say that because of the collapse of real estate values, the bank might have failed anyway.

Overall the San Francisco Fed Bank had the third-highest number of bank failures during the crisis of all the Fed district banks, after Chicago and Atlanta.

And Wells Fargo, the biggest bank under the supervision of the San Francisco Fed, borrowed $25 billion under the 2008 bank bailout known as the Troubled Asset Relief Program.

“Looking back, I believe the regulatory community was lulled into complacency by a combination of a Panglossian worldview and benign experience,” Yellen said in a speech in Denver in 2010.

“This experience has strongly inclined me toward tougher standards and tighter rules,” she testified in 2010.

When Obama asked Yellen to come back to Washington to serve as the Fed’s vice chairwoman in 2010, she was fresh from the trenches of dealing with the real estate crash and collapsing banks. She saw for herself where bank regulation and supervision failed.

Systemic risk

She says the crisis made it clear that regulators weren’t simply too lenient, they also weren’t looking at the system in the right way.

At the Fed board in Washington, Yellen leads the group that does research on systemic risk in the overall financial system. She said she sees the current strategy — strengthening banks and ensuring there’s a way to deal with them if they collapse — as a “belt and suspenders” approach.

“We don’t want these entities to fail. We want to make them much more robust and less likely to come under pressure,” she said. ”Then if something did happen, we would have a way to deal with it that we were not able to do during the financial crisis.”

And while the vast majority of her public speeches still focus on the U.S. and global economies, she has occasionally addressed the financial system and regulation.

She said in the interview that she doesn’t favor breaking up too-big-to-fail banks, but would demand they hold more capital than international regulators now propose. The so-called Basel committee of global regulators has suggested a capital ratio 2.5 percentage points higher for financial institutions deemed systemically important.

And she supports the Fed’s proposal to require foreign banks that operate in the U.S. to organize U.S.-based holding companies that meet U.S. capital requirements, a plan that foreign banks and European Union officials oppose.

In a letter to Bernanke, the EU Commissioner for Internal Markets Michel Barnier called the proposal a “radical departure” from previous rules that could “result in a competitive disadvantage” for foreign banks.

In a January speech, Yellen got on the wrong side of derivatives traders.

Derivatives are financial contracts that investors use to bet that the price of a certain equity, commodity or other instrument will rise or fall as of a future date. Traditionally derivatives are used to hedge against price swings in commodities such as oil, corn or interest rates.

Before the financial crisis, however, investors created derivatives to bet on almost anything, from changes in the weather to the likelihood that Lehman Brothers would default on its debt. The face value of derivatives reached $596  trillion in 2007, about four times the value of all the financial assets in the world. Derivatives of mortgages played a role in the financial crises, and credit default swaps — a type of derivative — caused the collapse of insurance giant American International Group.

Post-crisis rules now require standard derivatives be traded through an exchange, where investors will have to provide capital to guard against losses during the term of the contract. They can get around the rules, however, by creating custom contracts.

Yellen says she wants to require companies that trade derivatives over the counter to post initial margin to ensure they can meet future losses, as well as posting interim margin if the value of the trade falls. Making the contracts more expensive might also encourage traders to go back to the exchange.

“Even in light of the significant costs of initial margin, it seems clear that some requirements are needed,” she said.

“We still harbor grave concerns about the initial margin requirements,” four trade associations wrote in a letter to global bank regulators.  “The IM requirements do not appear to meet any objective cost-benefit analysis.”

Industry objections might actually boost Yellen’s chance of being nominated.

“It would be hard to envision President Obama naming anyone as fed chair who wouldn’t be tough on the banks,” Seiberg of Guggenheim Partners said in an interview. “All the political pressure in the world remains in favor of making sure the biggest banks have lots of capital and have changed their business practices so we don’t get another crisis. Yellen fits the mold.”

The U.S. Treasury has agreed to consider hiring a new vendor when a controversial deal with Comerica bank to issue debit cards to beneficiaries of federal programs expires in 2015.

Comerica has an exclusive contract to issue Direct Express cards, which Treasury uses to deliver Social Security and other benefits to people who do not directlly deposit benefits into a bank account.

Treasury decided to solicit fresh bids and consider changing bank partners because of concerns that were first raised publicly in a report last week by The Center for Public Integrity, according to two people with direct knowledge of the matter. They spoke on condition of anonymity to avoid souring their relationships with Treasury.

CPI reported that Comerica won the original deal in 2008 by offering to provide the cards at no cost to taxpayers. About two years later, Treasury quietly amended the contract to add tens of millions in new payments to Comerica. The bank had complained that it was having trouble profiting under the financial terms to which it originally agreed.

Treasury’s inspector general, its independent, internal watchdog, is probing the deal. One core concern: Treasury failed to consider other banks when it added the compensation for Comerica. Comerica has received about $30 million in direct payments from Treasury, according to testimony at a congressional hearing. The amount will likely increase as more people sign up for Direct Express cards.

The deal also attracted scrutiny from the Senate Special Committee on Aging. At last week’s hearing, Democrats on the committee grilled Richard Gregg, Treasury’s Fiscal Assistant Secretary, about the deal’s lack of transparency and open competition.

Treasury’s special contracts with banks rarely are put out for competitive bidding—especially when a program is as new as Direct Express. A more typical example is Navy Cash, a system of stored-value cards and kiosks on ships and other closed government locations. JPMorgan was picked to run the program on a pilot basis in 1999. The Wall Street behemoth still holds the contract, worth roughly $18 million per year, after routine renegotiations and one “re-designation” by Treasury in 2003.

CPI found that Treasury has pressured people to use Direct Express, even if it exposed them to higher fees. The report also detailed the Treasury’s decision to give Comerica tens of millions of dollars in compensation that was not part of the original deal.

Ahead of the 2012 election, the Direct Selling Association reported spending more than $50,000 on advertisements touting two of its favorite politicians.

And in new disclosures filed Wednesday with the Federal Election Commission, the organization confirmed what’s widely assumed but rarely confirmed about trade associations: that the money it spent on electoral politics came specifically from “corporate funds,” although the group isn’t naming names.

According to a Center for Public Integrity review of federal records, the Direct Selling Association used $32,500 of this corporate cash to make so-called “independent expenditures” supporting the re-election of House Commerce Committee Chairman Fred Upton, R-Mich., in 2012.

And the group also reported spending about $18,000 calling for the re-election of Sen. Robert Menendez, D-N.J.

The expenditures, which could not be coordinated with either candidate, included radio ads, newspaper ads and billboards.

Notably, both Upton and Menendez have criticized the Supreme Court’s 2010 Citizens United v. Federal Election Commission decision, which allowed corporations to use treasury funds to advocate for the election or defeat of federal candidates — either directly or through an intermediary group.

Shortly after the 2010 ruling came down, Menendez said it represented a “dark day for democracy” during an interview on CNN, adding that “the last thing we need is Big Oil, big health insurance companies, big banks being able to spend unlimited amounts of money from their treasury to influence the results of elections.”

Last year, Menendez continued to rail against“unlimited, secret, big-money corporate donations” influencing “elections at every level.”

And during a debate ahead of his 2012 re-election, Upton, who was targeted by a conservative super PAC during the GOP primary, said he was “very disappointed” by the Supreme Court’s Citizens United decision.

Representatives for Menendez and Upton declined to comment for this story.

Such corporation-fueled political activity by the Direct Selling Association would have been illegal prior to the U.S. Supreme Court’s Citizens United decision.

Now, however, companies are free to spend money urging people to vote for candidates — or give to other organizations that do, organizations such as the Direct Selling Association, which is registered as a nonprofit under Section 501(c)(6) of the U.S. tax code.

While political committees, including super PACs, must publicly disclose the names of people who contribute more than $200, federal law only requires nonprofit groups to disclose donors who give contributions earmarked for specific advertising efforts.

Adolfo Franco, the group’s executive vice president, told the Center for Public Integrity that none of its members made such earmarked contributions, adding that the ads were financed using “100 percent of our own resources.”

That reiterates what the trade association told the FEC in twoletters Wednesday, which stated that the Direct Selling Association “does not receive contributions from members or other parties for purposes of making independent expenditures.”

Roughly 200 companies are members of the Direct Selling Association, which has posted annual revenues between $6 million and $7 million in recent years, according to filings with the Internal Revenue Service. Few of its members disclose how much they contribute to the trade group.

Avon Products Inc., for instance, voluntarily revealed that it gave the Direct Selling Association at least $100,000 in 2012, according to a Center for Public Integrity review of company documents.

Of that sum, $18,000 was used for “internal DSA lobbying expenses” and about $2,000 went toward contributions to political groups such as the Democratic Attorneys General Association and Republican Attorneys General Association.

It’s unclear whether the Direct Selling Association used any portion of the Avon money to fund its ads supporting Menendez and Upton.

Avon spokeswoman Lindsay Blaker Fox declined to answer questions from the Center for Public Integrity, saying “all I can share with you is a link to Avon's political contributions.”

Dave Levinthal contributed to this report.

Aetna made the wrong kind of headlines in California a few days back. The health insurance giant said it plans to stop selling individual coverage in the state and would not renew the individual policies it currently has in effect. That decision means about 50,000 Californians will have to find another insurer by the end of the year.

State Insurance Commissioner Dave Jones said Aetna’s decision was disappointing because it will reduce competition, but Aetna — the third largest insurer nationally — has never been able to muster much of a market share in California’s individual insurance market. Three other insurance companies with a much longer history in the state — Anthem Blue Cross, Blue Shield of California and Kaiser Permanente — collectively control about 90 percent of the Golden State’s individual insurance market.

Aetna didn’t make a big effort to increase its share of that market because, like other big national insurers — most notably UnitedHealthcare and Cigna — it prefers to sell coverage to employers, not individuals. So Aetna’s decision didn’t come as a surprise to anyone who has followed the recent trends in health insurance.

In fact, it is a stretch to even call the big companies insurers these days. The number of people whom those companies actually “insure” has been dwindling for a decade. Their preference is to encourage employers and other large groups to “self insure” and then hire the insurance companies as administrators. If you look closely at the big insurers’ books of business, you will see their revenue from “administrative services only” (ASO) customers has been growing while cash from the selling of actual insurance has been falling.

Most Americans who have coverage get it through the workplace, but chances are very few of them realize that it is actually their employer assuming the risk of insuring them, not the company whose name is on their insurance card.

In an ASO arrangement, the employer pays a substantial fee to a company like Aetna or Cigna to negotiate contracts with doctors and hospitals and make decisions about whether or not an employee will actually get coverage for potentially life-saving procedures like transplants.

The trend toward ASO contracts shows that the big companies have become increasingly risk averse. It also explains why they are deciding not to participate in a lot of the online health insurance marketplaces — called exchanges — that will begin operations Oct. 1, as mandated by the health care reform law. Not only is Aetna passing on the California exchange, so are UnitedHealthcare and Cigna. And it’s not just California. These big firms have decided to participate in only a few state exchanges.

Some critics of the reform law are suggesting that if the big companies aren’t willing to sell policies on all the exchanges, Obamacare is somehow fatally flawed and will surely fail to live up to the promise of lower premiums through more robust competition among insurers.

But I think we’ll all be just as well off if the big companies stay out of the individual and small group market, which the exchanges are designed to serve. Those companies have overhead costs and are under constant pressure from their shareholders and Wall Street financial analysts to spend as little of their premium revenue paying claims as the law will allow. (Under the Affordable Care Act, insurers must now spend at least 80 percent of their policyholders’ premiums on health care.)

That means most of those who are selling policies to individuals and small businesses will primarily be nonprofit companies, including the new co-op health plans that have received start-up loans from the federal government. Without the need to price their policies to cover a substantial profit and pay executives millions of dollars every year, the nonprofits should be able to sell coverage that is more affordable.

That dynamic — along with greater transparence in pricing — already seems to be driving down the cost of policies that will be available beginning Oct. 1. I wrote recently about two insurers in Oregon that resubmitted lower rates to the state after seeing that their competitors would be charging considerably less for the exact same policies.

The same thing happened in the District of Columbia last week, where UnitedHealthcare has said it will sell coverage on the exchange. After seeing what competitors plan to charge, especially the nonprofits, the company quickly submitted new rates that were much lower.

The exchanges will do more to transform how insurance is sold in this country — and how much it costs — than any of us can imagine today. This time next year we’ll wonder why we waited so long to set them up. And we won’t miss those companies that refuse to take part. Believe me.

Citing massive budget and staff cuts, federal officials are set to scale back or drop a host of investigations into Medicare and Medicaid fraud and abuse — even though cracking down on government waste and cutting health care costs have been top priorities for the Obama administration.

The Department of Health and Human Services Office of Inspector General is set to lose a total of 400 staffers that are deployed nationwide as a primary defense against health care fraud and abuse. Though agency officials have yet to decide which investigations will be shelved as staff dwindles, the existing staff is already stretched so thin that the agency has failed to act on 1,200 complaints over the past year alleging wrongdoing — and expects that number to rise. The OIG began shedding staff at the beginning of the year.

The budget crunch surfaced during questioning at a June 24 hearing of the Senate Committee on Homeland Security and Governmental Affairs. The hearing was called to examine prescription drug abuse in Medicare.

Gary Cantrell, Deputy Inspector General for the OIG Office of Investigations, said at the hearing that his unit “is shrinking” even as the federal Medicare and Medicaid programs grow in size and complexity. “We’re set to lose roughly 400 bodies out of a total of 1,800 at our peak in 2012. That’s really limiting our ability to expand our oversight in some of these areas,” he said.

Stuart Wright, Deputy Inspector General for the OIG Office of Evaluations and Inspections, added that 200 of those staffers will have departed by the end of this year and 200 more are out the door by the end of 2015.

Federal agencies employ inspectors general who work independently to ferret out fraud and abuse. The HHS unit has three branches that examine payment issues and investigate complaints of criminal wrongdoing lodged by whistleblowers and the public. Cantrell said that the HHS unit won’t be able to act on many complaints it logs in.

“We’re operating with a reduced budget in the face of the growing program. And just last year alone, our office closed down 1,200 complaints due to lack of resources. Those are complaints that came through the door that we didn’t have the resources to investigate further to determine whether it was a viable criminal case or not.”

Cantrell added: “And that number doesn’t appear to be going down.”

Predictions of disastrous service cuts have been common in Washington in the wake of the  sequester— automatic spending reductions caused by Congress and the White House failing to reach a budget deal. For the most part, though, these predictions have elicited little more than a shrug from the general public.

The shortfall at the HHS office has deeper roots, however. Cantrell said sequestration hasn’t helped, but he blamed a mix of budgetary issues which he called “expiring funding streams.”

Nobody at the agency would agree to discuss the situation. However, in a statement released late Friday the agency said the OIG has “significantly reduced” [funds] due to the expiring of a $30 million per year appropriation from the Deficit Reduction Act of 2005 and the end of stimulus funding and other budget cuts.

The inspector general’s “greatest resource” is its staff of auditors, evaluators, investigators, and attorneys, the statement said, noting: “These funding reductions have fundamentally impacted the agency’s ability to conduct its mission. Reduction in staff and resources will result in decreases across all of OIG’s oversight activities.”

Though their findings can embarrass or infuriate agency brass, inspectors general more than pay for themselves by exposing waste and recommending fines or prosecution of wrongdoers, officials said.

Wright said that fraud investigations “returned $8 for every dollar invested in us.” Medicare, which serves the elderly, is paid for by federal tax dollars. Medicaid, for low-income people, is jointly funded by the federal and state governments. Medicaid is set to expand by as many as 20 million people starting next year under the Affordable Care Act.

In a statement, Sen. Tom Carper, D-Del., who chairs the homeland security committee, called the cuts “a penny-wise, pound foolish approach that will end up costing our country in the long run.”  

Carper said the inspector generals’ work “helps us save money, reveals and prosecutes wrongdoing, and promotes the integrity of government.” The IG’s are being cut back “just when we need their skills to keep our federal programs as efficient and effective as possible,” Carper said.

The inspector general reported expected recoveries of about $5.2 billion from audits and investigations in fiscal year 2011. The office also identified about $19.8 billion in waste and launched more than 1,000 criminal and civil investigations of individuals or health care businesses accused of cheating Medicare or Medicaid.

Estimates of annual losses to fraud and waste in the health care industry run into the tens of billions of dollars annually. Federal agencies reported an estimated $115.3 billion in improper payments in fiscal year 2011, and more than half that figure was attributed to Medicare and Medicaid, according to the Government Accountability Office.

The cuts at HHS OIG are triggering a review of dozens of projects and audits which are spelled out in the agency’s 2013 “work plan.” But officials could not say at this point which ones would be scrapped or ratcheted back.

The OIG’s annual work plan serves as a kind of barometer of where government officials suspect fraud or billing abuse may be occurring and a warning to the industry to clean up its act. That’s often necessary because Medicare and Medicaid billing policies lack clarity on precisely what constitutes improper conduct.

One major project that’s likely to be scaled back is an ambitious plan to “identify fraud and abuse vulnerabilities” in electronic health records. The federal government is spending about $36 billion in economic stimulus funds to help doctors and hospitals purchase the digital technology in the hopes that it will ultimately reduce waste from duplicative tests and make health care more efficient and less costly.

Criticism from Republicans in Congress has mounted in the wake of the Center for Public Integrity’s "Cracking the Codes" series published last September. The investigative project documented that thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees — and strongly suggested that the rapid growth in the use of electronic health records and billing software has contributed to the higher charges.

The Obama administration has often touted its record for cracking down on health care fraud, pointing to recoveries of more than $10 billion since 2008, and pointed to criminal cases that busted major fraud rings.

For instance, one operation in October 2012 in seven cities led to charges against 91 individuals — including doctors, nurses, and other licensed medical professionals — for alleged fraud schemes that involved some $432 million in false billing.

State governments from the Rocky Mountains to the Atlantic seaboard are attempting to blunt the influence of free-spending super PACs and nonprofits by allowing people to contribute more money to political candidates.

Six governors — three Republicans and three Democrats — have signed bills increasing campaign contribution limits so far in 2013, while lawmakers in nearly a dozen other states have introduced similar legislation, a Center for Public Integrity review found.

The increase in limits follows the recent explosion of election activity by outside groups in the post-Citizens United v. Federal Election Commission era, which has led to candidates being attacked by super PACs and 501(c)(4) nonprofit organizations that often spend more money on advertising than the candidates themselves.

In hopes of gaining greater control over their campaigns, some state lawmakers are pushing to allow candidates and parties to raise more funds while, in a few cases, imposing new restrictions on independent groups.

In March, Wyoming became the first state to ease restrictions on campaign contributions, raising limits from $1,000 to $1,500 for local candidates and to $2,500 for statewide candidates. The legislation also placed a cap on donations to candidates from political action committees, which previously had no limit. 

 “What we tried to take was a balanced approach,” Republican state Rep. Tim Stubson said. “We were really trying to incentivize individual giving, which is more transparent.”

Florida and Maryland lawmakers also sought to bring more transparency to their states’ respective campaign finance systems, using higher political contribution limits as a tool to forge bipartisan compromise.

The bill Florida Republican Gov. Rick Scott signed into law May 1 increased caps on individual donations to legislative candidates from $500 to $1,000 and to statewide candidates from $500 to $3,000.

Soon after, Democratic Maryland Gov. Martin O’Malley approved legislation bumping up limits from $4,000 to $6,000 per election cycle.

Both laws also impose more frequent reporting deadlines for political candidates and groups, while Maryland’s measure gives its state elections board more power to penalize campaign finance violators.

Campaign finance bills in Arizona and Minnesota, meanwhile, focused strictly on contribution limits.

Arizona Republicans raised contribution limits in April to $2,500 per election to legislative and statewide candidates — up from $488 and $1,010 respectively. The legislation also raised political action committees’ limits on donations to candidates and committees from $2,000 to $5,000.

“I realize people don’t like money going to politicians but at the end of the day I suspect they like money going to special interest groups even less,” said Arizona Rep. J.D. Mesnard, the Republican sponsor of the bill.

In Minnesota, donors may now give twice as much to statewide candidates — $4,000 — and local candidates — $1,000 — during an election year. The Democrat-sponsored bill, which passed with bipartisan support, originally included provisions requiring greater disclosure from outside groups, but lawmakers dropped the language.

Democrats in Connecticut were initially reluctant to raise limits.

Still, they approved a measure this month doubling the amount individuals may contribute to political parties. The law allows parties to spend unlimited amounts of money on candidates participating in the state’s public financing system. Lawmakers also forced all groups making independent expenditures close to the date of an election to disclose their top five donors.

“No bill is perfect,” Democratic Gov. Dannel Malloy said in a statement after signing the bill into law. “But this bill makes Connecticut a national leader in requiring disclosure and transparency.”

Proponents of increased limits say candidates need more money to fight off attacks from outside groups

But Ed Bender, the executive director of the National Institute for Money in State Politics, argues that candidates still won’t come close to competing financially with money pouring in from outside groups, and that this type of legislation will only further empower a small group major campaign donors.

“It’s further shifting the mandate for candidates to spend more time with the few people who give them more,” Bender said.

Wisconsin appears poised to become the next state to enact higher contribution limits.

The state Assembly overwhelmingly approved a measure this month that increases the amount — from $10,000 to 20,000 — that a donor may give to statewide candidates.

Limits for Senate candidates would rise from $1,000 to $2,000 and for Assembly candidates from $500 to $1,000. It’s unclear, however, whether the Senate will take up the bill before the end of the legislative session.

Both chambers in Montana’s state legislature considered increasing contribution limits, but the House-initiated measure was vetoed by Democratic Gov. Steve Bullock who said he would have accepted higher donation limits if they were coupled with measures requiring greater transparency.

In Tennessee, the state’s House of Representatives in mid-April narrowly rejected a Republican-sponsored bill that would have nearly doubled the amount political parties could donate to statewide candidates.

The legislation would have also eliminated the requirement that corporations disclose their political contributions. Insurance companies would have also been permitted to make campaign donations — activity illegal under current Tennessee law.

“The people of Tennessee don’t want this because they know that money corrupts,” said Mike Turner, the chairman of the state’s House Democratic Caucus, in a press release following the vote.

The Vermont legislature came close to reaching a deal that would have slightly increased donation limits for statewide candidates while also expanding reporting requirements for super PACs and making campaign finance data more accessible to the public.

But elected officials couldn’t agree on all the details before the session ended in May.

Vermont Sen. Jeanette White, a Democrat who co-sponsored the legislation, said she expects lawmakers to revisit the issue next January.

Six other states — California, Kansas, Maine, New Hampshire, New Jersey and Rhode Island — have seen lawmakers this year introduce legislation that would allow state candidates to raise more funds for their campaigns. But in each case, the bill did not make it out of committee. 

Seven states – Iowa, Missouri, New York, Oregon, Pennsylvania, Texas and Utah – have attempted to lower limits and failed. In every state but Utah, the legislation was brought forward by Democrats.

The Obama administration is moving toward final implementation of new job protections for disgruntled intelligence employees who keep their complaints about wrongdoing within government channels.

Some advocates for whistleblowers have hailed the move, which comes as Edward Snowden — who has claimed to be a U.S. national security whistleblower — accelerates his search for foreign asylum from a Moscow airport waiting room.

By July 8, dozens of federal agencies are required to tell the White House in detail how they plan to implement an order the president signed last October that prohibits retaliation against those who flag “waste, fraud and abuse” in intelligence programs to approved officials.

Obama signed the directive after Congress twice dropped intelligence workers from legislation meant to strengthen whistleblowing protections throughout the government. The lawmakers were responding in part to longstanding intelligence agency claims that those with access to highly sensitive national secrets must be treated differently than other U.S. employees and that they already had adequate redress for any grievances.

An administration spokesman, speaking on condition he not be identified, said agencies are “on track” to meet Obama’s implementation deadline. Moreover, even though Obama’s order generally applies only to government employees — not intelligence contractors like Snowden — the administration is looking closely at how to protect contractors who claim their access to intelligence information was withdrawn as punishment for telling authorities about wrongdoing.

“The Executive Branch is evaluating the scope” of protections for such contract workers as it implements Obama’s order, according to an unsigned, undated statement supplied to the Center for Public Integrity by the Office of the Director of National Intelligence.

The options for redressing improper retaliation, which Obama said will now become available to any U.S. intelligence agency officials and employees, include reinstatement, reassignment, attorney’s fees, back pay, and compensatory damages.

More than 50 government agencies and departments will be subject to the new rules, including the CIA, the Office of the Director of National Intelligence, and the departments of Defense, State, Energy, and Homeland Security. The precise number of workers covered by the president’s directive is classified, but a spokesman for the Office of the Director of National Intelligence said the number of intelligence community workers is around 100,000.

The Federation of American Scientists says the number of those with access to classified information — including contract employees and workers throughout the government — is actually 4.8 million.

Snowden, a former Booz Allen Hamilton and CIA contract employee who gained access to extraordinarily sensitive National Security Agency data, claimed in a Guardian newspaper interview last month that his disclosures were provoked in part by the failure of colleagues to take his complaints about U.S. surveillance actions seriously. “The more you talk about the more you're ignored,” Snowden said. “The more you're told it’s not a problem until eventually you realize that these things need to be determined by the public and not by somebody who was simply hired by the government."

His stature as an alleged whistleblower is controversial, however. Some U.S. lawmakers and officials have cited his disclosures — including his flight to Russia — as evidence of an intent to harm the country or help its historic antagonists.

But Sen. Chuck Grassley, R-Iowa, a longtime supporter of enhanced whistleblower protections, referred to the Snowden case when he told a June 21 Judiciary Committee hearing that “I continue to believe that a major problem causing the leaking of classified information is the lack of whistleblower protections for members of the Intelligence Community.”

“The final version of the Whistleblower Protection Enhancement Act that was signed into law last year failed to include protections for the Intelligence Community that I authored,” Grassley said, adding that he blamed House lawmakers for blocking them. “It would have provided a protected method for employees to report concerns through a protected channel within the Intelligence Community.”

ODNI’s public affairs office said agencies must detail their new policies and procedures in letters to the White House now, and by October 10, notify their employees about the procedures , including a description of which disclosures are protected.

Steven Aftergood, director of the Federation of American Scientists’ Project on Secrecy, called the president’s action “unprecedented,” adding it would “provide new channels for people to challenge abuse or to allege mistreatment.” There may turn out to be gaps in the new rules, he said, but they reflect recognition at the highest levels of government that whistleblowers need to be protected rather than harassed.

Angela Canterbury, director of public policy for the Project on Government Oversight, expressed caution about the new rules, however. Even for U.S. employees, the review process for complaints of retaliation against whistleblowing is "all internal," she said. "There’s no independent process rights or truly independent appeal rights." Instead, the new rules call for cases to be reviewed and adjudicated by inspector generals at each agency, or on appeal, by a panel of three such inspector generals.

A spokesman for the CIA confirmed that the agency has drafted a new regulation for implementing the directive, and is on track to meet the July 8 deadline.

“Right now, intelligence community employees proceed at their own risk if they go through institutional channels,” said Tom Devine, legal director for the Government Accountability Project. “They have no free speech rights.”

Snowden, Devine said, “could have sparked an investigation and Congressional oversight of the propriety of, the legality of blanket surveillance. He could have been making charges to law enforcement officials rather than being a fugitive from them. We can’t read his mind as to whether he would have taken that option. But it doesn’t exist currently.”

Devine and others have said that Rep. Mike Rogers, R-MI., a former FBI special agent who chairs the House Select Intelligence Committee, played a key role in removing protections for intelligence workers from the Whistleblower Protection Enhancement Act in 2012.

Rogers did not respond to phone messages and emails requesting comment. But this week, Rogers told the TV program “Meet the Press” that Snowden “went outside all of the whistleblower avenues that were available to anyone in this government including people who have classified information. We get two or three visits from whistle blowers every single week in the committee, and we investigate every one thoroughly. He didn’t choose that route.”

“That’s why this is so serious and why we need to be so aggressive about making sure that people understand the difference between someone who betrays their country” and a genuine whistleblower, Rogers said.

Gabriel Schoenfeld, a senior fellow at the Hudson Institute and author of “Necessary Secrets: National Security, the Media and the Rule of Law,” told the Center for Public Integrity that he believes protecting national security whistle blowers is “a good idea and a necessary step to protect the integrity of intelligence organizations that operate in secret and where congressional oversight is somewhat limited.”

Good protections could help make it harder for leakers whose motives may be suspect win sympathy from the public, he said, “since they did not go through channels before they compromised government secrets.”

Like a lot of young people caught up in our nation’s juvenile justice systems, Termaine D. and Elijah C. (not their real names) suffer with serious mental health problems. And like a lot of emotionally-troubled juvenile justice kids, for a long time no one in the juvenile courts (nor anyone else) offered them what mountains of evidence show are the best and most cost-effective kinds of treatment. 

Fortunately, that changed last year. 

Termaine, now 18, who suffers with bipolar disorder and has been under psychiatric care on-and-off since he was 10, got arrested in the fall of 2011 for assaulting a fellow student at school. Quickly, he was locked up for the sixth time in his young life inside the Gwinnett Regional Youth Detention Center in Lawrenceville, Ga. 

On each of the previous occasions, Termaine was held for a few days or weeks, referred to a psychiatrist, and then released on probation. This time, instead of continuing the revolving door cycle, authorities placed Termaine into a program overseen by Youth Villages, a Tennessee-based agency that provides services for troubled young people in 11 states and the District of Columbia. Termaine spent four months in a residential care facility at Youth Villages’ campus in Douglasville, west of Atlanta. Then he was sent home to begin a program of innovative and intensive family-focused therapy.

Like Termaine, Elijah, 18, was diagnosed at an early age with serious mental health conditions — in his case, Attention Deficit Hyperactivity Disorder (ADHD) and bipolar. According to his father, Elijah has been taking medications since first grade. He has been arrested and detained several times, and has spent time at the Rome Regional Detention Center near his home in Northwest Georgia, two state-funded residential treatment facilities, and a county jail.

Then last November, Elijah’s probation officer assigned him a second stint in a rigorous “wraparound” program operated by the Lookout Mountain Care Management Entity in Fort Oglethorpe, Ga.  

Termaine and Elijah have each stayed out of trouble and made significant progress since enrolling in their respective treatment programs. Both programs work with young people in their own homes, rather than placing them in institutions, and both concentrate on resolving family problems and other underlying issues that trigger young people’s problem behaviors.

The two boys’ stories help illustrate the potential for home-based treatment methods to turn around the lives of troubled youth while simultaneously reducing crime and saving taxpayers money.

In Georgia, consensus for change has developed among leaders in both parties, in the courts, and across the state government. Carol Hunstein, the chief justice of Georgia’s Supreme Court, who has emerged as one of the state’s leading advocates for reforming juvenile justice, addressed these issues in a speech this February.

“What does a judge do with a chronic runaway girl who comes before him with untreated mental health problems and a history of being sexually exploited while living on the streets?” Hunstein asked. “What does a judge do with the boy who repeatedly is charged with shoplifting but whose family is seriously dysfunctional? Most juvenile judges say they do not want to send these children to locked facilities, but with no community resources, and fearing for the children’s safety, they feel they have no alternative.”

This spring, the state Legislature overwhelmingly approved landmark juvenile justice reform legislation aimed at reducing over reliance on incarceration for low-risk youth, particularly those with mental health issues. However, a close look at Georgia’s budgets for juvenile justice and interviews with key leaders and service providers reveal that — even after the new law’s passage — serious imbalances continue. 

Less than 2 percent of the Georgia Department of Juvenile Justice’s $300 million annual budget funds the kind of intensive, evidence-based at-home care for youthful offenders supported by research. Moreover, significant barriers to the widespread adoption of effective programming remain unaddressed in the state, and some model programs now operating in Georgia — including those serving both Termaine and Elijah — are being eliminated in 2014.

A New Consensus for Reform In Georgia

Known as “House Bill 242,” the new juvenile justice law was widely hailed as a fundamental step toward reform. “We worked hard, and we found ways to keep low-risk offenders out of detention centers and save taxpayer dollars, nearly $85 million over five years, while also eliminating the need for two new facilities,” said Georgia’s governor, Nathan Deal. “We did all this while not only maintaining but improving public safety.”

The foundation for these reforms was detailed in two recent reports — a 2011 “Best Practices” study commissioned by the Georgia Department of Juvenile Justice and the Governor’s Office of Children and Families, and a December 2012 study from the Special Council on Criminal Justice Reform, an influential blue-ribbon panel convened by Deal, a former juvenile court judge. 

Both studies highlighted the state’s heavy overreliance on secure custody, particularly for low-risk youth. For instance, one quarter of the nearly 2,000 youth held in residential facilities by DJJ in 2011 were not felony offenders, and even many youth held for felonies were rated as low-risk. Overall, nearly as many youth confined in prisons known as Youth Development Campuses (YDCs) from 2005 to 2010 were rated as “low-risk” (30 percent) as high risk (32 percent). Meanwhile, 60 percent of incarcerated young people were receiving treatment for serious mental health disorders.

It costs the state $91,000 per year to confine young people in a YDC, and $88,000 in a short-term detention facility (called Regional Youth Development Centers or RYDCs). Yet nearly two-thirds released from the YDCs were convicted of new offenses within three years. “These rates of recidivism are unacceptable,” the Special Council report argued, “especially given the high costs to taxpayers.”

Meanwhile, the studies found, Georgia was lagging behind many states in adopting evidence-based treatment methods that scientific evaluations have shown cost loss and produce better results. A national study released in December 2012 ranked Georgia eighth from the bottom in the use of evidence-based family treatment programs among the 35 states for which data were available. However, only a handful of states have invested heavily in these new treatment models. 

Enacted with a near-unanimous support in the state legislature, Georgia’s new juvenile justice law prohibits juvenile courts from committing youth to state custody for status offenses like running away from home and for misdemeanor offenses except when committed by chronic offenders with at least one prior felony conviction. The reforms also allow DJJ to reduce lengths of stay for youth guilty of several designated felonies that were previously subject to rigid sentencing rules.

To give juvenile court judges useful information, the new law requires that all youth entering the juvenile court system receive a standardized risk and needs assessment. And the reform law creates a new $6 million-per-year grant program providing funding for counties to expand access to evidence-based community programs — precisely the type serving Termaine and Elijah — provided the counties reduce the number of youth they commit to state custody.

Two Types of Treatment

In Georgia (and nationwide), two modes of at-home treatment show significant promise for delinquent and emotionally disturbed youth. First is intensive family therapy delivered by carefully trained and closely supervised therapists, such as Termaine received. Second is “High Fidelity Wraparound” care, like Elijah received from Lookout Mountain, which mobilizes a team of caring adults in each child’s life and connects youth to a menu of available treatment services and youth development activities.

Currently, DJJ contracts with a pair of agencies to provide intensive at-home therapy services for youth committed to state custody. One is Community Solutions, Inc., an Atlanta-based organization offering Multisystemic Therapy (or MST), an elaborate, highly calibrated treatment modality designed by scholars at the University of South Carolina in the 1980s. 

Over the past 30 years, MST has been evaluated in 32 outcome studies, including 22 random trials, nearly all of which have found it more effective than alternative services in reducing subsequent arrests and out-of-home placements for youth with serious offending histories and/or serious behavioral disorders. According to MST Services, Inc., a nonprofit agency established by MST’s originators to support effective dissemination of the model, these studies find that MST lowers re-arrest rates by 39 percent on average, and reduces out-of-home placements by 54 percent when compared to other treatment, punishment and supervision alternatives. 

With funding from DJJ, Community Solutions began running MST programs in 2002, working with delinquent youth referred by local juvenile courts. Two years ago, DJJ retargeted the program and required Community Solutions to begin serving youth committed to state custody rather than youth referred by the counties. The current contract, which totals $2.2 million per year, funds 100 MST slots in 14 of the state’s 159 counties — enough to serve about 350 youth per year. 

Community Solutions reports that through the end of 2011 it had served 3,265 Georgia youth in its MST programs. The agency says that 88 percent of these young people were living at home at the time they were discharged from the program, and 88 percent were enrolled in school. Just 20 percent of these youth were re-arrested during the course of treatment, which typically lasts three to five months. 

Youth Villages is DJJ’s other provider of intensive at-home treatment, and its “Intercept” program shares many commonalities with MST. Both programs offer intensive and highly regimented family therapy treatment delivered by carefully trained and closely supervised therapists. Youth Villages operates MST programs in several states. 

In Georgia, Youth Villages provides at-home care to 40 youth at any one time, plus another eight youth at the agency’s residential campus. Residential care is often used as a first step to calm a youth down before starting home-based care, or to provide a respite if problems arise or the parent or caregiver needs a break.

The Intercept program is reserved for youth under Department of Juvenile Justice supervision whose behavior is in crisis and who are at imminent risk for placement into (or return to) residential custody, reported program director Kate Cantrell. As of September 2012, two-thirds of youth in Youth Villages’ Georgia program had multiple presenting issues such as behavioral disorders, abuse or neglect and substance abuse. Yet Youth Villages reports that 72 percent of youth participants were living at home the day they were discharged from Youth Villages’ care, and 64 percent were still living safely at home six months later.

“We feel strongly that our program is able to achieve those types of long-term results because of the work we do with families,” said Cantrell. “We operate from a very structured, analytical model that allows us to get the results we get.”

A Second Promising Approach

Wraparound does not revolve around a highly structured therapy regimen. Instead, wraparound programs assemble a team of supporting adults in the troubled young person’s life — including parents or guardians, other relatives, teachers, neighbors, coaches and clergy. This team is empowered to choose from an array of Medicaid-funded services suited to the young person’s needs and goals — anything from anger management to psychiatric care, tutoring to karate. 

Designed to work with disturbed youngsters involved in multiple human service systems — including child welfare, mental health and developmental disabilities and special education, as well as juvenile justice — wraparound programs aim to ensure holistic care for young people in the their own homes.

Rigorous versions of this model, known as “High Fidelity Wraparound,” have achieved impressive results in terms of controlling mental health symptoms, improving behavior and reducing delinquency, and they cost only a fraction as much as placements into psychiatric residential treatment facilities or youth correctional institutions.

Recently, Georgia was one of nine states to participate in a federal demonstration project to test the impact of wraparound care as an alternative to placement in residential treatment for troubled youth, or as a step down from residential treatment. A national evaluation published in December 2012 found that youth receiving wraparound care made at least as much progress in behavioral health as youth remaining in residential treatment, yet wraparound’s total cost was one-third as high. 

In Georgia, wraparound programs are primarily overseen by the Department of Behavioral Health and Developmental Disabilities. The state’s main wraparound program, launched in 2009 and delivered by four private agencies, has capacity to serve 480 young people with severe behavioral health needs and high risk for placement into psychiatric facilities. 

An independent evaluation of DBHDD’s wraparound programs, published in July 2012 by MStar Research, found that that 429 youth of the 1,043 youth (41 percent) who enrolled in wraparound in the previous year had been adjudicated in the delinquency courts. Of these court-involved youth, just 22 percent re-offended within one year — well below the statewide recidivism rate of 34 percent for all adjudicated youth. Nearly half of youth participating in wraparound (44 percent) showed statistically significant improvement in behavioral functioning, versus just 11 percent whose behavior deteriorated. MStar estimated that wraparound reduced annual Medicaid expenses by $44,000 for each young person enrolled, plus an additional savings of $3,180 annually per youth due to lower costs for juvenile confinement.

The DBHDD wraparound programs are open to youth referred from DJJ. However, in recent years, DJJ has also been funding a handful of additional slots in the wraparound program for youth in the northwest corner of the state who are committed to state custody, but whose needs are not quite as severe. This program funded Elijah’s second dose of wraparound care which, unlike an earlier stint in Georgia’s DBHDD-funded wraparound program that proved unsuccessful, has enabled Elijah to stabilize his behavior and steer clear of further delinquency charges.

Based on the encouraging statistical results, nationally and in Georgia, as well as encouraging anecdotal examples like those of Termaine and Elijah, Georgia’s new reform law aims to de-emphasize confinement and expand evidence-based community treatment. 

According to Judge Hunstein, who served on the special commission that framed the juvenile justice reform package, careful study of Georgia’s juvenile system revealed that “there were communities that did not have any other alternative other than putting a child in juvenile jail,” she said. “Our reliance on incarceration for young people does not reduce their likelihood to reoffend. Indeed, it may do just the opposite, exposing low risk young people to violence and abuse, and putting some on the path to adult criminality.”

State Representative Wendell Willard, a Republican who also served on the special commission, concurs. “We've all seen the heavy expense in not only dollars but also lives lost because of the failure of the state to keep these children in their communities, where they can be best cared for," Willard said.

Yet, despite this seeming consensus, DJJ’s budget remains heavily tilted toward incarceration — and increasingly so. For the fiscal year 2013, which ends on June 30, the department’s $307 million budget included $189 million for short-term detention centers (RYDCs), and youth prisons (YDCs), but only $40 million (13 percent) for community-based services, and roughly three-fourths of that funded residential facilities.  

Less than $10 million was devoted to home-based services, and less than half of that amount — under 2 percent of the total — was used to fund intensive at-home treatment through MST, Youth Villages, or high-fidelity wraparound care.

This spring, just as it was voting on the state’s sweeping juvenile justice reform law, the Georgia Legislature amended DJJ’s budget and cut $6 million from DJJ’s community programs budget — primarily to eliminate wilderness programs. Then in May, the Legislature voted to sustain the reduced funding level for community services in the fiscal year starting on July 1 (FY 2014) while increasing spending for state detention centers and youth prisons by $7.5 million. 

These budget changes apparently will not reduce DJJ’s modest investments in intensive at-home programming for emotionally disturbed youth in FY 2014. For unspecified “business reasons,” DJJ has eliminated funding for Youth Villages at-home treatment program, and it has also dropped its limited funding for the Lookout Mountain wraparound care program. However, DJJ spokesman Jim Shuler said the department will soon solicit bids to fund additional evidence-based at-home treatment slots to take their place.

Shuler also confirmed that the state will sustain its MST contract with Community Solutions at the FY 2013 funding level. Sedgrid Lewis, Community Solutions’ MST director, said that with additional funds his agency could effectively serve many more of the state’s court-involved youth.  

State budget documents suggest that the added funding for secure facilities is intended to resolve a bed shortage currently plaguing the department. The vast majority of YDC beds are filled with designated felony offenders, many of them low risk, serving mandatory sentences in secure custody. And roughly 200 RYDC beds per day are filled with youth committed to the state’s Short-Term Program — a 30-day shock incarceration sentence often imposed on low-level youth offenders, despite poor recidivism results.

Once it goes into effect in January 2014, Georgia’s juvenile reform law will substantially ease both of these pressures: DJJ will have new freedom to shorten or eliminate incarceration stays for many designated felons, and local judges will no longer be permitted to send low-level offenders to state custody. Experts at the Pew Charitable Trusts estimate that the new rules will cut the daily population in DJJ’s secure facilities by 467 over the next five years, and will save the state $85 million.

To date, DJJ has not announced any specific plans to re-invest these savings into evidence-based at-home treatment, or for other community-based programming. Shuler, the DJJ spokesman, explained in an email that it is impossible to forecast future budgets, however “the Department of Juvenile Justice expects to provide increased services across the entire spectrum of evidenced based services in the community as this agency moves to implement the new requirements in the recently enacted Juvenile Justice Reform Act.”

Uncertainty over Future Funding for County-Run Programs

The recently enacted funding cuts to DJJ’s community programming almost exactly offset the most widely heralded provision of Georgia’s juvenile justice reform law — the new grant program to support new evidence-based treatment in counties, which will total $6 million in FY 2014.

Joe Vignati, who is helping design the grant program at the Governor’s Office for Children, acknowledges that the state’s $6 million commitment “doesn’t sound like a lot for a big state like Georgia,” but he argues that “it represents, especially in tough times, a significant investment in juveniles and reforms.” Vignati, formerly a juvenile probation officer, expects that the grant program will expand with time. “We’re moving from bankrolling activities to actually funding outcomes,” he said. “We’re trying to be able to reduce the reliance on deep-end system beds.”

Wendall Willard, the Republican state legislator, expects the grant program will target about 20 counties in FY 2014 that send the highest numbers of youth into state facilities. "We can't do everything we'd like to the first year," said Willard, who chairs the judiciary committee in the Georgia House of Representatives and also sits on the appropriations committee. "I call the legislation and other steps the end of the beginning. This will be a growing program.”

Ken Parks, director of the Lookout Mountain Care Management Entity, a wraparound provider, also expects that state funding for home and community-based treatment will grow. Given the high costs and poor outcomes of incarceration, he said, “There just isn’t the money in the state for it not to happen. If there wasn’t that money yesterday, there sure isn’t gonna be that money tomorrow.”

Yet, as Parks concedes, no commitments have been made. “There are any number of side conversations going on where people are saying the dollars will be shifted,” he said, “but the folks who have the authority to make that happen haven’t said that.”

Restricting Wraparound

Linda Henderson-Smith, coordinator of the Department of Behavioral Health’s wraparound programming, reports that the state’s main wraparound program will continue to support 480 treatment slots in 2014. But the state recently had to narrow its eligibility criteria for wraparound services because it had too many needy youth applying for too few slots. 

Meanwhile, a federal waiver program that provided especially generous version of wraparound care for the neediest cases — part of the 9-state demonstration project — ended last September. A different federally funded wraparound program began in May, but with far more restrictive entry criteria. 

Eric Bruns, a University of Washington psychiatry professor who coordinates the National Wraparound Initiative, said that Georgia deserves credit for mobilizing a statewide infrastructure for wraparound programming and for participating in the federal demonstration project. 

“That is rare among states, and they should be commended for it,” Bruns said. “The question for Georgia and other states is, how many kids are they serving? Are they actually diverting kids from deep end placements when they could be served in the community? Have they gone to scale?” 

Henderson-Smith concedes that, unlike a handful of states with particularly ambitious wraparound efforts, Georgia has not yet tapped existing funding from juvenile justice, child welfare, children’s mental health, and Medicaid to create an ongoing funding stream that enables the state to divert many more troubled youth away from expensive institutional placements and into wraparound care.

“From a Georgia systems perspective, we are all in the process of looking at how we get those evidence-based practices that we know can be effective for those special populations we serve,” said Henderson-Smith. “We’re trying to catch our system up quickly.”

Unfortunately, Henderson-Smith and her counterparts in the state’s juvenile justice system still have a long distance to travel.

“We're in the infant stages," said Appellate Court Judge Michael Boggs, who co-chaired the Special Council on Criminal Justice Reform crime that formulated the state’s new juvenile justice law. "We know that other states that have implemented these strategies have seen [good] results. We didn't have to reinvent the wheel." 

On the other hand, Boggs adds. "It's too early to tell whether what we have just passed in the General Assembly, most of which hasn't taken place yet, whether what we've enacted will effectuate the changes we expect.”

Editor's Note: Dick Mendel, one of the co-authors of this article, has written frequently in recent years for the Annie E. Casey Foundation, which is currently working as an unpaid consultant in Georgia to help state and county officials implement the state's new juvenile justice reform law. The Casey Foundation played no role in suggesting, formulating, or framing JJIE's coverage of this issue. 

Over the past three decades, adolescent development scholars, criminologists and mental health practitioners have achieved a breakthrough – or rather two breakthroughs. They have developed two different approaches to the care and supervision of troubled and delinquent children that consistently work better and cost less than correctional confinement and other commonplace services.

One approach, which involves intensive and highly-regimented family therapy delivered to young people in their own homes, has been rigorously tested in scientific evaluations and repeatedly yielded substantial and statistically significant reductions in recidivism and treatment/confinement costs. The second – known as wraparound – targets youth with serious emotional disturbances, and it assembles a team of caring adults to devise an appropriate mix of community-based services in lieu of placing the child into a residential facility. Numerous studies show that wraparound, too, improves behavioral health and reduces involvement in the justice system – and does so at a fraction of the cost of confinement or residential treatment.

This spring, JJIE interviewed two young men who recently participated in these types of programs, as well as their caregivers and service providers. Following are their stories.

EDITOR’S NOTE: To protect the privacy of the youth and their families, all names in the story are fictitious.

A Turnaround for Termaine

Before Termaine came to Youth Villages, a Tennessee-based agency that specializes in serving delinquent and emotionally disturbed youth, his aunt and guardian, Bernice, would get a phone call “almost every day” from his school telling her that Termaine was “flipping desks over, throwing books, yelling, cursing, not paying attention, not being cooperative,” she remembered.

On the day of his most recent arrest, Termaine recalled, “I came to school angry because I didn’t take my medication” for bipolar disorder and schizophrenia. “So I just walked in the classroom … and I decided to hit one of my [fellow] students because I was angry and I was going through a lot at the time.”

As with his previous arrests, Termaine was quickly whisked away and locked up in the Gwinnett Regional Youth Detention Center in Lawrenceville, Ga., repeating what had become a recurring cycle.

Though he was sometimes prescribed psychotropic medications such as Ritalin or AMBLIFY, Termaine had never received intensive counseling to address his mental health conditions. No one had ever been assigned to help him or his aunt figure out what was wrong and what could be done to keep Termaine under control and engaged in school. 

When he acted up – a frequent and entirely predictable occurrence given his mental health status – Termaine was first detained and then placed on routine probation supervision, only to return to detention a few weeks or months later, the next time he got off his medications and/or suffered a triggering event.

This time, Termaine was given a choice: remain in detention, or enroll in an entirely different kind of program operated by Youth Villages, which employed an intensive family-focused counseling and treatment program. After choosing Youth Villages, Termaine spent four months at the agency’s residential campus in Douglasville, Ga., west of Atlanta, then went home to begin working with one of the Youth Village’s specially trained family counselors. 

At first he wasn’t thrilled, Termaine said. “I wanted to be home and to spend time with my family. I didn’t feel like going to no program,” he said. When he first met with a counselor, “I felt uncomfortable because I was told that I had to share my feelings and tell them exactly about my life and what I’ve been through.”

Unlike conventional psychotherapists who wait for patients to show up for office visits, however, the Youth Village counselors are trained to reach out and engage young people and their families, and to form a therapeutic alliance.

“These are not necessarily mandated services. The family has a right to refuse,” said Kate Cantrell, who directs Youth Villages’ programs in Georgia and Alabama. “It’s our job to help them see the benefit of participating in the program, and we really work to partner with the families to help them achieve their goals.” Once the therapy begins, Cantrell added, “We spend a lot of time trying to figure out what is driving a youth’s negative behaviors.” Specialists draw up treatment plans for their cases every week, and they develop safety plans patterned around high-risk behaviors like aggressiveness, running away or any suicidal thoughts.

Over time, Termaine and his aunt came to embrace the program. They met with Leenessa Landor, a Youth Villages Intervention Specialist, roughly three times a week, usually at home or Termaine’s school, and frequently focused on helping Termaine control his verbal and physical aggression, and to improve his attendance and behavior at school. 

“Naturally, when you’re coming into someone’s home, on a consistent basis like that, there’s always questions,” Landor said. “But the family was very receptive.” Landor also connected Termaine with a new psychologist to manage his medications, and they conducted new psychosocial and sexual health assessments, after which Termaine’s earlier schizophrenia diagnosis was discarded.

During the treatment, Termaine’s behavior improved steadily. He hasn’t been arrested since the fall of 2011. He stopped skipping school and was soon able to transfer out of an alternative school for special-education students and into a regular high school. Termaine is on track to earn his high school diploma in 2014.

Termaine, who wants to major in criminal justice in college and become a police officer, said that without the Youth Villages program, “I would’ve been incarcerated. There wouldn’t have been no change in my behavior. I would have kept on fighting. I would have kept on not listening. I would’ve kept on doing bad in school. And I definitely wouldn’t have been on track to graduate like I am now.”

“He’s gotten past that hump,” added Termaine’s aunt. “That mountain, I should say.”

Second Time’s a Charm For Elijah in Wraparound

Elijah C. has benefited from “wraparound” care offered by Lookout Mountain Care Management Organization, which puts together a team of parents, teachers, coaches and others engaged in a youth’s life to help control their behavior problems and get them on the right track.

Elijah’s father said his son’s behavioral problems have been severe since the second or third grade. He was prone to outbursts at elementary school, after which he would frequently flee the school and run out dangerously into the street, jumping in front of cars. “They had to restrain him, hold him down,” his father recalled.

Elijah was seen by local mental health specialists, but “we didn’t have real good results,” his father recalled. “One of them would say it’s ADHD, one would say that he’s bipolar, it was just kind of up and down, it was like a rollercoaster. … He was just a number in the system, they just herded him through.”

Meanwhile, Elijah’s behavior problems escalated, and he continued to have frequent confrontations with authority figures at school, after which he often bolted and disappeared. He was also kicked out of after school programs.

This inattention to Elijah’s mental health needs finally changed in 2010, when the family was first referred to Lookout Mountain’s wraparound program by child welfare authorities, following an incident in which his father lost his temper and beat Elijah with a hickory stick, leaving strike marks on his leg. 

“[Elijah’s father] accepted the services,” recalled Monty Davis, the Lookout Mountain Care Coordinator who worked with the family. “We come out and do an initial face-to-face, we explain to him what we’re about, and what wraparound is, and we proceed with what we call a plan of care, which includes needs, outcomes, strategies that help the youth and the family remain in the community.”

Getting to know Lookout Specialists was kind of fun and interesting, Elijah’s father recalled. “They become a part of the family,” he said. “There was a couple of times they came in, and they brought little things for Elijah, and we invited them to come out to our house and eat dinner,” he said. “We just become friends, and I told them ‘this means a lot.’ They can come out anytime they want, I don’t care what time it is.”

Both father and son received training in anger management, which included simple techniques such as counting to 10 when something upsetting occurs. At first, “We both thought it was stupid,” said Elijah’s father. They also met with a counselor weekly, where they focused on sociability. “I ain’t one to be out in public,” Elijah’s father said. To overcome the family’s isolation, Lookout Mountain began providing meal tickets for the family, so they could go out to dinner occasionally. “They done a lot,” he said. “We still go out quite a bit, sometimes.”

Although Elijah made progress in wraparound, he was arrested and detained for fighting in the spring of 2011. After that, Elijah’s behavior improved for several months, but once again spiraled out of control in the fall of 2011 when he was arrested, detained, and placed into a residential treatment facility. Elijah didn’t take to the facility, got into an altercation and fled. After he was caught, detained, and sent to a second facility, Elijah again had a blow-up and ran. This time Elijah, who had turned 17, was sent to the county jail. 

In November 2012, after 80 days, Elijah was transferred back to the juvenile court system and placed in custody of the Department of Juvenile Justice. That’s when Elijah’s probation/parole officer, Wade Thomison, offered Elijah and his family the chance to re-enroll in wraparound. 

Ever since, Elijah and his family have been thriving. Elijah began taking classes toward his GED in May. Although Elijah doesn’t know what career he wants to pursue, he said he’s interested in mechanics.

“I’m telling you, he’s come a long way in his behaviors,” said Monte Davis, Elijah’s Lookout Mountain care coordinator. “He used to be so hyper you couldn’t control him.”

“He’s kind of matured a little bit,” his father said. “He’s kind of figured out, ‘Hey, my freedom can be [taken] at any time.’ And he’s learned to control himself better.”

Recently, when the two were working on a car together, putting in a transmission, his father suggested that Elijah move his fingers, which were in a dangerous spot. “He got really mad,” Elijah’s father recalled. “You could see it on him.” But Elijah controlled his anger and said, “All right, dad, my fingers are in a bad position, and I’m sorry. Now what can I do?”

“A year ago, he wouldn’t have done that,” his father said. “He would’ve took off to the house and left me.”

Freshmen Sen. Kelly Ayotte found herself under serious political fire.

The New Hampshire Republican’s vote in April against enhancing firearm background checks prompted withering ads from a gun control group. Then another. And another.

But shortly thereafter, a conservative nonprofit — funded in part by some of Ayotte’s own Senate colleagues, according to a Center for Public Integrity review of campaign finance filings — sprang into action on Ayotte’s behalf.

On May 8, the leadership PAC of Sen. Tom Coburn, R-Okla., contributed $15,000 to the American Future Fund, records show. A day later, the PAC of Sen. John Barrasso, R-Wyo., gave the same amount.

In the following weeks, the leadership PACs of Senate Minority Leader Mitch McConnell and Sen. John Cornyn, R-Texas, eachcontributed $30,000 to the American Future Fund, a 501(c)(4) “social welfare” nonprofit that’s not required by law to publicly reveal its donors.

Meanwhile, the leadership PACs of Sen. Orrin Hatch, R-Utah, donated $10,000 to the American Future Fund, while the PAC of Sen. Johnny Isakson, R-Ga., gave $5,000.

These six GOP leadership PACs combined to give a total of $105,000 to the American Future Fund in May, according to the Center’s analysis of Federal Election Commission filings.

It is highly unusual for a group of leadership PACs to make sizeable contributions to politically active nonprofits, let alone during a matter of weeks, at a time when the beneficiary is airing ads in support of one of their own.

And the actual number of lawmakers whose leadership PACs gave money to the American Future Fund may be larger, as numerous political committees won’t file their first campaign finance reports of the year until July 31.

On May 10, the Iowa-based American Future Fund took to the airwaves touting Ayotte’s “courage and independence.” The initial advertising buy was reportedly in the range of $250,000, but within the next month, that figure would grow to more than $1.3 million, according to a press release from the group.

A spokesman for Ayotte did not respond to requests for comment, but in a fundraising email in May, the former attorney general-turned-senator was unapologetic for her vote. She vowed to not let a “smear campaign” by gun control groups pressure her into changing her vote.

“I am 100 percent dedicated to fighting gun violence,” she wrote. “But I also have the experience to know that expanding an already broken background check system will not prevent a deranged individual or criminal from obtaining and misusing firearms.”

Matt Harakal, Hatch’s press secretary, declined to comment for this story. Representatives of the other senators mentioned did not respond to repeated queries from the Center for Public Integrity.

Officials with the American Future Fund also did not respond to messages or emails.

The trend of GOP leadership PAC giving to the American Future Fund was first noted by the New York Times’ Derek Willis onTwitter.

Since it was created in 2008, the American Future Fund has become one of the top-spending politically active nonprofits. During the 2012 election cycle alone, the group spent at least $29 million on political advertisements, as the Center for Public Integrity previously reported.

Little is known about the group’s donors.

In 2008, Iowa businessman Bruce Rastetter provided an unspecified amount of “seed money” for the organization. And between 2009 and 2011, records filed with the Internal Revenue Service indicate that another nonprofit, the Arizona-based Center to Protect Patient Rights, gave the American Future Fund more than $14 million — half of the $27 million it raised during the three-year period.

The Center to Protect Patient Rights was founded by Republican operative Sean Noble, who has close ties to the political network of billionaire industrialist brothers David and Charles Koch.

Campaign finance reform organizations have long questioned whether the American Future Fund’s primary purpose is truly something other than influencing elections — a charge with the conservative nonprofit denies.

Complaints have been filed in recent years with both the IRS and FEC, which have not, to date, issued rulings.

This year, the American Future Fund has also urged President Barack Obama to “fire” Lois Lehrer, the IRS official at the heart of the scandal about the agency’s treatment of groups applying for tax-exempt status. And Nick Ryan, a GOP consultant who founded the American Future Fund has advocated that the government “shutter the IRS.”

I’m delighted to announce a major new investment in international investigative journalism from an Australian benefactor. Internet entrepreneur, businessman and philanthropist Graeme Wood from Queensland has pledged $1.5 million to The Center for Public Integrity over the next three years to help build capacity for our International Consortium of Investigative Journalists (ICIJ). 

These funds — the largest gift from an individual in ICIJ’s 15-year history — will be used to bolster cross-border investigations, help launch a new research desk and create an international investigative journalism fellowship program. 

Graeme Wood is the founder of the online publication The Global Mail. He is also the key backer of The Guardian newspaper’s new digital edition in Australia, and founder of Wotif.com, Australia’s leading travel website. An environmentalist and advocate of government transparency, Wood has launched Wild Mob, a not-for-profit, non-political organization focused on environmental conservation. He was also elected a member of the Center for Public Integrity’s Board of Directors at our June 21 meeting in New York. 

The Global Mail will become the first institutional member of ICIJ as part of an initiative to link other media outlets with the consortium. ICIJ plans to add about ten such institutional memberships from around the world over the next two years. 

ICIJ has been recognized most recently as the journalistic organization that cracked open the historically impenetrable world of offshore tax havens with its massive offshore leaks project, Secrecy for Sale: Inside the Global Offshore Money Maze, based on a cache of 2.5 million leaked files. The project has already had an enormous global impact, along with the release of the ICIJ Offshore Leaks Database, which allows users to search through more than 100,000 secret companies, trusts, and funds created in offshore locales such as the British Virgin Islands, Cayman Islands, Cook Islands, and Singapore.

ICIJ is made up of 160 investigative reporters in 60 countries. The year-long ICIJ Global Investigative Journalism Fellowship program, launched thanks to Wood’s gift, will provide investigative training for international journalism fellows beginning early next year.

And, the ICIJ research desk is expected to be up and running this fall. The desk and associated data library will be a go-to resource for ICIJ reporters and its new institutional members. 

On behalf of The Center for Public Integrity and ICIJ, I can truly say we are tremendously motivated by Mr. Wood’s gift. A new research desk, fellowship program, and above all more reporting capacity will fortify ICIJ’s unique cross-border investigative work. I believe this level of investigative journalism is more vital than ever, with a larger audience than ever before, too, but it is not free to produce. Support from dozens of foundations and thousands of individuals, from small gifts to large ones such as Graeme Wood’s, are what keep us in business. We couldn’t do this without you. Thank you.

Until next week,

Bill  

“Obscene amounts of cash.”

“Off to their fastest start ever.”

“Spending more than ever before to defend Boehner's Tea Party House.”

These are among the politically charged phrases Democratic party committees used last week in numerous fundraising emails to describe the actions of David and Charles Koch, the billionaire oilmen who rank among conservative interests’ top bankrollers.

The Democrats don’t generally cite a source when making such assertions. 

But they immediately follow a June 20 article by the Center for Public Integrity about the spending habits of KOCHPAC, the political action committee sponsored by Koch Industries Inc., which the Koch brothers run. The Center's article also appeared in the Huffington Post, which one DSCC email does cite.

The following slideshow shows how Democrats, in a bid to raise big bucks themselves before 2013’s mid-year campaign finance reporting deadline, repeatedly used the Koch brothers as fundraising tools:

In a pair of feature stories published this week, JJIE described two modes of intensive at-home treatment that show great promise to improve outcomes for emotionally disturbed youth in the delinquency system, both of which cost far less than incarceration or treatment in a residential treatment center.  

As our stories documented, use of these models has been expanding slowly in Georgia and remains limited, despite a growing consensus among state leaders that Georgia’s current approach to juvenile justice is yielding poor returns due to over reliance on secure confinement and lack of investment in community-based treatment backed by research.

This dynamic is not limited to Georgia, however. Most states are also making only limited progress toward revamping their juvenile justice and adolescent mental health systems to take advantage of these promising new treatment approaches.

Evidence-Based Family Therapy

The first promising approach involves intensive and highly regimented family therapy delivered by carefully trained and closely supervised therapists. A variety of models — Multisystemic Therapy, Functional Family Therapy, Brief Strategic Family Therapy, Multidimensional Treatment Foster Care, Multidimensional Family Therapy — have all been tested in random trials and repeatedly proved more effective than traditional programs and services in improving outcomes for delinquent teens and those with serious substance abuse or mental health issues. Cost-benefit analyses suggest these programs save $7 to $10 for every dollar spent to deliver them.

Yet, a 2011 study co-authored by Scott Hengeller, the originator of Multisystemic Therapy (MST), estimated that only about 15,000 youth receive intensive evidence-based family therapy each year — about 5 percent of the population who could benefit. 

Last year, a team led by former RAND Institute scholar Peter Greenwood examined states’ progress in implementing MST and two other prominent evidence-based treatment models. Their study found that “Although there are sufficient resources currently invested in juvenile justice programs to provide [an evidence-based treatment program] for every youth who could use one, less than 10 percent of youths in need actually receive these programs.” A few states are “taking explicit steps to facilitate the implementation of these proven programs,” the Greenwood study found, but “many others have not taken any but the most rudimentary steps.”

Despite the slow progress nationwide, a handful of states are realizing promising returns by aggressively implementing at-home family-focused treatment models.

Connecticut: Since 2000, Connecticut has expanded its annual investment in evidence-based, family-focused adolescent treatment programs from $300,000 to $39 million. According to a recent Justice Policy Institute report, the state provided evidence-based family therapy to 955 probation youth in 2012, plus thousands of other young people in the state’s child welfare and children’s mental health systems. These investments have helped Connecticut reduce the number of juvenile offenders committed to state custody by 70 percent since 2000.

Ohio: Since 2009, Ohio has launched two programs offering intensive at-home treatment in lieu of incarceration for serious youth offenders in the state’s six most populous counties. The Targeted RECLAIM program offers evidence-based at-home therapy programs, while the Behavioral Health Juvenile Justice program offers intensive at-home or community-based psychiatric and counseling services to delinquent youth with serious mental health problems. Together, these counties reduced commitments to state custody by 65 percent in just three years. A recent evaluation found that youth served in Targeted Reclaim were less than half as likely to be incarcerated for subsequent offenses as a matched comparison group of comparable youth committed to state correctional facilities.

Louisiana: In 2006, after a decade of litigation and federal supervision to address abusive conditions in its juvenile corrections facilities, Louisiana signed on as a pilot state in the John D. and Catherine T. MacArthur Foundation’s Models for Change initiative. By that time, the state had made significant progress improving conditions within its facilities and reducing facility populations. However, state leaders saw an unmet need to expand use of evidence-based community programs for justice-involved youth. Since then, Louisiana has expanded its evidence-based family programming from six treatment teams serving 199 youth in 2006 to 44 treatment teams serving 2,235 youth in 2011. (Editor’s note: The MacArthur Foundation is a funder of the JJIE.)

Florida: Through its $15 million per year Redirection Program, Florida diverts more than 1,000 youth every year into evidence-based at-home family therapy who would otherwise be incarcerated or placed into residential treatment facilities. Several evaluations have found that youth served in these programs are less likely than comparable youth placed in residential or correctional facilities to be arrested, adjudicated or incarcerated for subsequent offenses, and the program has saved Florida taxpayers an estimated $170 million since 2004 through lower treatment/confinement costs and reduced recidivism.

Wraparound Care

The second promising strategy, wraparound care, is targeted to youth with severe emotional disturbances at high risk for placement into residential treatment facilities or correctional institutions. Wraparound programs mobilize a team of caring adults in a troubled child’s life — including parents or guardians, other relatives, teachers, neighbors, coaches and clergy — and empower the team to choose from an array of Medicaid-funded services suited to the young person’s needs and goals. Several studies show that intensive programs adhering carefully to core wraparound principles are effective in reducing delinquent conduct and are at least as effective as residential treatment in improving the behavioral health of troubled youth, and at far lower cost. 

Data is more limited on the utilization of intensive high-fidelity wraparound care for troubled and delinquent youth. The most recent national survey of wraparound programs, conducted in 2007 by the National Wraparound Initiative, found that 819 wraparound programs of varying quality and intensity across the country served roughly 100,000 children per year. Eric Bruns, coordinator of the National Wraparound Initiative, estimates that 30 to 40 percent of these programs served youth in the juvenile justice system, though no estimates are available on the number of youth referred to wraparound directly from juvenile justice.

As with evidence-based family treatment models, the scope of wraparound replication efforts are highly uneven across states. Programming remains quite limited throughout much of the country, particularly for delinquent teens. Yet a number of jurisdictions have built expansive wraparound care systems that serve large numbers of youth with severe emotional disturbances and achieve impressive outcomes.

Milwaukee County, Wisc.: Wraparound Milwaukee, which pools funding from child welfare, Medicaid, juvenile justice and mental health budgets, has long been one of the nation’s largest and most effective wraparound programs, serving 1,400 children and youth each year. With an annual budget of nearly $50 million, Wraparound Milwaukee has dramatically reduced the county’s use of psychiatric hospital and residential treatment centers. A recent study found that just 15 percent of delinquent teens participating in Wraparound Milwaukee — about half of the total program population — re-offended during their period of enrollment. 

New Jersey: Since 2002, New Jersey has erected a statewide “system of care” providing integrated services for emotionally disturbed children and youth, including intensive wraparound care for more than 2,000 high-risk children and youth on any given day. A recent study calculated that the wraparound programs have saved the state $40 million since 2004 through reduced use of residential care.

Oklahoma: Since 2004, Oklahoma has created local systems of care — including intensive wraparound services for the highest-risk youth — in 55 of the state’s 70 counties. According to the state’s Department of Mental Health And Substance Abuse Treatment, a study of 800 program participants in 2012 showed substantial reductions in truancy (51 percent), school suspensions (64 percent), arrests (67 percent) and out of home placements (35 percent).

Massachusetts: In 2006, a federal court ruled that Massachusetts was not providing adequate care to children with serious emotional disturbances. Since then, the state has erected a statewide system of care — the Children’s Behavioral Health Initiative— that is overseen by six care management entities and delivered through 32 community service agencies across the state. Together, these agencies provide intensive wraparound care to roughly 4,000 children and youth in any given month — about half of them adolescents — giving Massachusetts’s the largest wraparound care system in the nation. In a recent survey, 98.6 percent of families with children participating in intensive wraparound care expressed satisfaction with the program.

As the Greenwood study explained, “There is a long history, stretching from Copernicus and Galileo in the 16th century to professional baseball managers in present day, of practitioners taking a very long time before accepting the practical implications of scientific discoveries. Juvenile justice fits right into this pattern.”

Fortunately, a handful of pioneering jurisdictions are beginning to act on the evidence and blaze a path out of the dark ages and into a more enlightened era.

Mexico and other Latin American nations may be the central players in the roiling, months-long congressional debate over how to legislate immigration reform.

But a little-known cast of organizations representing an array of ethnicities and nationalities are pressing the federal government on the issue, too.

One such organization is Cambridge, Ma.-based company Cultural Care Au Pair, which places foreign au pairs, hailing from countries that include Australia, China, Italy, Poland, Sweden Switzerland and Thailand, with American families.

The firm last week hired two well-connected lobbyists from Thorsen French Advocacy to try to sway lawmakers on the immigration bill, according to federal documents filed Friday.

One is Carlyle Thorsen, a former general counsel for ex-House Majority Leader Tom DeLay, R-Texas, and a former deputy assistant attorney general. The other is James French, a former House Judiciary Committee counsel.

Their lower-chamber connections come to bear as immigration reform action moves to the House following the Senate’s recent 68-32 passage of legislation overhauling the country’s immigration system.

A Cultural Care Au Pair spokeswoman did not respond to requests for comment, although Politicoreports the company wants to ensure lawmakers don’t further regulate the au pair industry.  

The Irish Lobby for Immigration Reform committed $40,000 to lobbying on the legislation in the year’s first three months. According to the ILIT’s website, the group supports the Senate’s bill because it provides a path to citizenship for Irish immigrants and 10,500 renewable work visas annually to individuals from Ireland.

The Asian American Justice Center also attempted to influence members of Congress on immigration reform, but only spent less than $5,000 doing so from the beginning of January through the end of March.

Erin Oshiro, an immigration attorney for the AAJC, said the group has been most concerned with the 4.3 million people waiting for family visa approval, a backlog that disproportionately affects Asian-American families. She said the Senate properly addressed the issue and that the AAJC will continue to press the House to ensure immigrant families can stay together when immigrating.

“We’re hopeful the House can take the lead of the Senate and keep this moving forward,” Oshiro said.

Several religious and cultural groups are also lobbying lawmakers on immigration legislation.

A coalition of Jewish organizations, for instance, has made enacting immigration reform a top priority this year.

“This issue speaks to the core of our moral being and our Jewish values,” said Sammie Moshenberg, the director of Washington operations for the National Council of Jewish Women. “For many of us, the immigrant experience isn’t that far removed.”

Moshenberg said the National Council of Jewish Women, which spent $10,000 lobbying Congress on the bill and other issues during the first quarter of the year, has focused mostly on providing a path to citizenship to immigrants in the country illegally, family reunification and ensuring women have an equal opportunity to come to the U.S. from other countries.

HIAS, formerly known as the Hebrew Immigrant Aid Society, has specifically lobbied on the refugee and asylum provisions of the bill. HIAS spent less than $5,000 lobbying on the bill during the first three months of the year.

The Senate’s legislation lifts the one-year deadline those seeking asylum in the U.S. face to apply for a visa, a move HIAS applauded.

Melanie Nezer, the senior director for policy and advocacy at HIAS, said the group also supports the extension of an amendment originally introduced by the late Sen. Frank Lautenberg, D-N.J., which provides refugee status for persecuted religious minorities in other countries.

Both Moshenberg and Nezer acknowledged the Senate’s immigration bill has its flaws, but that their organizations would continue to push the House to pass similar legislation.

“As with any compromise, it’s not perfect,” Moshenberg said, adding the Senate bill was still “a tremendous step forward.”

The American Jewish Committee also put $40,000 into its immigration lobbying efforts through March, federal records show.

Overall, hundreds of interest groups have lobbied the federal government on the comprehensive immigration reform measure this year.

That list includes some of the heaviest hitters in Washington, such as the U.S. Chamber of Commerce, AFL-CIO, Facebook, Google, Microsoft and Intel, as well as various smaller operations.

What’s the secret a top-spending super PAC kept from Missouri voters before a special congressional election last month?

None of its bankrollers are from the Show-Me State.

New federal documents show the Conservative StrikeForce super PAC, which lists its address as a mailbox at a UPS store in northern Virginia, hauled in $14,000 from eight non-Missouri residents and a Florida-based contracting company through June of this year.

The group had spent more than $12,000 in an 11th-hour effort to help elect Republican Jason Smith in Missouri’s 8th Congressional District special election.

But because Conservative StrikeForce did not make its first expenditure in the race until days before the election, it wasn’t required by the Federal Election Commission to publicly disclose its donors until after voters already cast their ballots.

Although $12,000 isn’t a huge expenditure in super PAC terms — some groups spent into the millions of dollars during the 2012 election cycle — Conservative StrikeForce spent more money on the Missouri special election than any other independent group, as the Center for Public Integrity previously reported. Conservative StrikeForce launched its super PAC arm in March.

Smith, for his part, went on to handedly defeat Democratic state Rep. Steve Hodges in the June 4 election, winning 67 percent of the vote.

Most of the Conservative StrikeForce’s eight individual donors have established political contribution histories, with seven donating to Republican candidates and groups during the 2012 election, according to Center for Responsive Politics data.

The group’s biggest donor is Aspen, Colo., resident Tatnall Hillman, who gave $5,000 to Conservative StrikeForce. Hillman donated more than $175,000 to dozens of Republican candidates and conservative outside groups throughout the 2012 campaign.

Hillman, a retiree, gave $70,000 to the conservative super PAC Club for Growth for Action and $1,000 to the Susan B. Anthony List, a 501(c)(4) nonprofit organization that supports candidates who oppose abortion. He also contributed $5,000 to a super PAC called Coalition of Americans for Political Equality PAC, a group some Republicans have called deceptive because of its fundraising practices.

Two of Conservative StrikeForce’s donors also cut checks for FreedomWorks for America, the super PAC arm of a nonprofit group formed by conservative benefactor David Koch that advocates for limited government.

Jerome Powell, a retiree from Kinston, Mass., gave $4,000 to Conservative StrikeForce in April following a $9,800 contribution to FreedomWorks for America last fall. San Diego retiree Edward Wong, who donated $725 to Conservative StrikeForce, also gave $9,000 to the FreedomWorks super PAC in 2012.

The lone corporation to contribute to the Conservative StrikeForce was W.W. Gay Mechanical Contractor Inc., which gave $500 in May. The Jacksonville, Fla.-based company’s employees gave $56,950 to Republican candidates in 2012, while the corporation itself dished out more than $55,000 to various political committees.

The Conservative StrikeForce’s traditional political action committee, which may make direct donations to political campaigns, has also served as a boon to conservative causes. The group contributed $127,000 to GOP candidates in 2012 and made nearly $50,000 worth of independent expenditures benefiting Republicans. 

Conservative StrikeForce officials could not immediately be reached for comment Wednesday.

According to its website, the Conservative StrikeForce’s goal “is to organize, motivate and mobilize the conservative voters of America to help elect and support candidates who share our same goals and values.”

Following the Missouri campaign, the Conservative StrikeForce super PAC has less than $2,000 cash on hand, federal records show.

The Obama administration’s decision to postpone for a year the requirement that large employers offer health insurance to their workers has been characterized by pundits on the left as a capitulation to big business and on the right as the latest evidence that Obamacare isn’t working.

Actually, it’s neither, although the lefties have reason to be annoyed. Even so, I’m willing to cut the administration some slack on this one. The health care reform bill passed by Congress made implementation of the employer mandate unnecessarily complicated, for both employers and the administration, as former Obama health policy aide Ezekiel Emmanuel pointed out in a recent New York Times column. The House version of the reform bill, which would have required employers with 50 or more workers to contribute a portion of their payroll to covering their employees, would have been less challenging to implement than the Senate version that became law, which requires companies to offer coverage to employees who work 30 hours or more a week.

Although I believe employers — especially large ones — should feel an obligation to help ensure that all Americans have access to affordable health care, the reality is that the vast majority are already doing their part. CEOs of most big companies decided long ago that offering subsidized coverage is one of the easiest ways to recruit the best and the brightest.

According to the Kaiser Family Foundation, 98 percent of companies with 200 or more workers provide coverage, and 94 percent of those with 50-199 workers do. This means that the part of the reform law the administration is postponing until 2015 — the requirement that employers with 50 or more workers offer coverage — affects only a very small percentage of companies and between 1 million and 1.5 million people.

While it’s unfortunate those folks will have to wait an extra year before their employers offer subsidized coverage, it doesn’t mean that they will will necessarily be uninsured. That’s because of other, more important provisions of the Affordable Care Act that are still scheduled to go into effect January 1, 2014.

In less than six months, for instance, insurance companies will no longer be able to refuse to sell coverage to anyone because of a preexisting condition, and they won’t be able to charge someone who has been sick in the past — or born with a birth defect or chronic condition — more than anybody else. 

Another important provision set for January 1 will prohibit insurers from charging people in their 40s, 50s and 60s more than three times as much as people in their 20s and 30s. Today they can charge up to five times as much and in some states as much as they want, which is why so many older Americans are counting the days until their 65^th birthday when they will be eligible for Medicare. Many of them simply cannot afford to buy private coverage because of the discriminatory practices of insurance firms.  

In addition, in less than three months, people who can’t get coverage through their workplace can shop for it in a way that finally makes sense. They’ll be able to buy it on the online marketplaces that every state and the District of Columbia must have up and running on Oct. 1. Gone forever will be the days when we couldn’t compare one health plan with another or figure out how much our out-of-pocket expenses might be if we get sick or injured or have a baby. Insurance companies will at long last have to provide us with information to enable us to do that — in concise language we can actually understand. Imagine that.

Also gone forever on January 1 will be an obstacle unique to America in the developed world — job lock. An untold number of Americans for all practical purposes are indentured servants in large corporations, locked into jobs they don’t like but won’t dare quit because of their employer-subsidized health coverage.

By making the discriminatory practices of insurance firms unlawful, which will bring to an end their ability to cherry pick only the policyholders they want — the young and healthy — the Affordable Care Act will give American workers the key to that lock.

I’m confident that this newfound freedom — taken for granted in every other developed country — will usher in an era of entrepreneurship and new business development, the likes of which we’ve never seen before. Our best and brightest will be able walk away from the jobs they’ve been shackled to and go into business for themselves or go to work for a smaller company — even one that doesn’t offer health care benefits — without fear of being uninsured.

The postponement of the so-called employer mandate, which won’t affect many employers in the first place, will not delay the end of job lock or the implementation of the long-awaited consumer protections that will go into effect in a few months. If it did, we’d have reason to march on the White House. It doesn’t. So let’s chill.

Quietly at first, and now quite publicly, the city of Tampa has courted Cuba in hopes of becoming its future trading partner. Business owners in Tampa talk of how they’ll capitalize when the island opens up, and politicians make trips there and have come out against the embargo.

Things are far different across the state in Miami. Elected officials there favor the trade embargo. Business leaders, fearful of retribution, rarely speak about future trade with the island nation.

Miami may seem poised to benefit most when the embargo ends, with its close proximity and much larger Cuban-American population. There are 982,758 people of Cuban ancestry in the Miami metro area, compared to 81,542 in the Tampa Bay area.

But Tampa has spent the past decade on a careful plan to build relationships with Cuban officials. It began more than a decade ago, with a trip in 2002 from Tampa’s mayor. A city councilwoman followed with multiple trips over the last decade, and in May, the Greater Tampa Chamber of Commerce organized a group of 38 politicians and business leaders who traveled from Tampa to Cuba.

Tampa politicians talk of expanding direct flights to Havana. They want Tampa to be home to cruise ships that call to Cuban cities. And they imagine the Port of Tampa becoming the main hub of goods heading to the island once the embargo is lifted.

José Gabilondo, the Cuban-born director of the Cuban Research Institute at Florida International University, said Tampa city leaders hope to exploit Miami’s reluctance to trade with Cuba. “Ironically Miami may be the only major city in Florida that’s not actively preparing for more engagement with Cuba,” Gabilondo said.

It’s unclear how much Miami’s reluctance to talk about doing business with Cuba will hurt the city once the island opens up, Gabilondo added. Anti-Castro groups in Miami have created bad blood with the island that could make it harder for the city’s businesses to forge alliances. As Miami continues to speak only of the embargo, Tampa prepares to exploit longstanding ties with Florida’s communist neighbor.

Tampa’s Cuban Courtship

Patrick Manteiga paused in the hallway of the offices of La Gaceta, the Cuban-focused newspaper he owns in Tampa. His grandfather founded the paper in 1922 after spending years as a reader in the Ybor City cigar factories, shouting out the day’s stories to the workers. Manteiga said he circulates 18,000 copies a week in 44 states.

“Here’s our wall of fame or shame, depending on how you want to look at it,” Manteiga said, grabbing a photo off the wall. “Here’s a picture of my grandfather with Fidel Castro, and this is in 1956. And on the table is cash for the revolution. Then there’s another picture here of myself and Fidel Castro.”

Manteiga has published editorials in favor of lifting the embargo. He’s traveled to Cuba. He even met with Fidel Castro and had him sign a photo -- it shows Manteiga’s grandfather sitting with Castro at a table overflowing with money raised for the revolution.

“By now a lot of the punches aren’t nearly as hard when you say America’s position with Cuba is wrong,” he said. “Fifteen years ago, if we would have said this in Miami, we would’ve had our building firebombed.

It’s difficult to imagine such photos hanging on the wall of a Miami-based newspaper, but this is Ybor City, home to a Cuban population considered far more moderate to the rule of Fidel and Ramón Castro.

The moderate politics are rooted in history. Tampa’s Cuban population is made up largely of descendants from cigar factory workers who came from the island in the 1800s and a new influx of immigrants who arrived in the last two decades, said Arturo Lopez-Levy, a Cuba expert at the University of Denver. Both groups support lifting the Cuban embargo in greater numbers than the exiles of Castro’s revolution, who most lively in or near Miami and are more likely to have seen loss of property, mass murders, and torture at the hands of the dictator.

“Tampa isn’t pro-Castro, but it’s a population that’s more realistic about the effectiveness of the embargo,” Lopez-Levy said. “Even those who oppose the Castro brothers don’t make the embargo a litmus test.”

In 2002, then-Tampa Mayor Dick Greco and 19 business leaders traveled to Cuba. Greco, the son of an Italian immigrant, grew up in Ybor City. His trip was the first by a Florida mayor to Cuba in 40 years. Cubans in Tampa flooded Greco’s office with angry phone calls and emails, especially after the mayor admitted to spending five hours with Castro.

But Tampa has become far more moderate since, according to City Councilwoman Mary Mulhern. She has traveled to Cuba three times, most recently with the chamber’s trip in May.

“It’s true that the backlash has been loud and vitriolic,” Mulhern said. “But I could count the number of people who have objected on one hand – and with not many fingers.”

Mulhern’s interest came from a meeting with Albert A. Fox Jr., a former congressional aide who now runs the Alliance for Responsible Cuba. His group advocates for lifting the embargo, and he picked Tampa for its headquarters because of its moderate politics.

“Miami is almost irrelevant to U.S.-Cuba relations,” Fox said. “If the embargo is lifted tomorrow, Tampa has a leg up on every other city in America because of this historical cigar connection.”

Fox has helped convince several Tampa-area politicians to come out against the embargo. In April, U.S. Rep Kathy Castor, D-Tampa, became the first member of the Florida delegation to call for an end to the decades-old policy. Castor, who did not return phone calls for this article, also traveled to the country in May.

In an article published on her website, Castor said the country has made reforms that remind her of “the historic economic changes since the 1980s in the former Soviet bloc countries, and in China and Vietnam over the past 25 years.”

Now, Tampa International Airport is putting on a series of Cuban heritage events, including sandwich tastings and Cuban bands, to promote its direct flights to the island.

Business leaders discuss plans to expand one day to the island. Those who traveled to Cuba as part of the Greater Tampa Chamber of Commerce’s recent trip include the president of the Tampa Bay Lightning, executives from several area hospitals, and the president of Tampa’s University of South Florida.

When asked if Tampa is in a better position to invest in Cuba after the embargo, Greater Tampa Chamber of Commerce President and CEO Bob Rohrlack responded: “Hands down. Absolutely.”

Rohrlack said the chamber’s governing board has been planning for trade with Cuba for seven years now. Chambers of commerce are typically forbidden from getting involved in politics, but Rohrlack said he saw an opportunity for Tampa.

“People here understand that this 50-year-old policy is outdated,” he said. “It’s time we start thinking about what happens after the embargo.”

Originally the chamber planned to send one of its own with five others from the community. Hundreds of people expressed interest. Dozens signed up. Rohrlack said they had to cut the number off at 38. “Interest kept growing, and we just finally had to cut it off,” he said.

During the trip, Rohrlack recalls conversations with locals who referred to Miami as a city of anti-Castro politics, while they saw Tampa as place that grew up around Ybor cigar factories.

“In Tampa, there’s a celebration of diversity of Cubans, while in Miami there’s less acceptance,” Rohrlack said “This is going to bode well for us when Cuba opens.”

Tampa will add “at least 5,000 jobs overnight” when it happens, estimated Manteiga as he sat in front of a painting of his grandfather in the newspaper’s Ybor City office.

Cuba doesn’t have warehouses to handle mass shipping, so supplies will have to be brought in from a nearby port until they can be built. Florida strawberries, for instance, can’t be kept in bulk in Cuba, meaning weekly shipments from the Port of Tampa.

“Tampa has been the safety valve for Cuba for over 100 years,” Manteiga said, noting that Ybor settlers helped fund the Cuban independence from Spanish. “It’s going to be the same way after the embargo is lifted.”

Miami’s Hard Line

Blaine Zuver’s Coral Gables-based business advertises that it can set up adventure travel “from pole to pole.” Blaine calls his company Arctic Tropic — but he’s quick to note the one place he won’t go.

“I don’t want to say I’d be blacklisted if I went to Cuba, but it’s highly discouraged,” he said. “My company has good connections here in Miami, and I would lose them overnight.”

It’s a common refrain among companies in Miami, where the official political opinion seems to be that nobody should do business with the island until there’s widespread democratic reforms.

But that’s unlikely to happen anytime soon, said Gabilondo of Florida International University. Instead, Cuba is likely to open up through a gradual lifting of the embargo and a slow progression to capitalism. Think the reforms of Vietnam rather than the near overnight conversion of Russia.

That slow march toward democracy is likely to benefit cities such as Tampa, Jacksonville, Fort Lauderdale and New Orleans — and not Miami. Exiles in Miami insist that the Castro government shouldn’t be engaged until there are widespread democratic reforms and land is returned to those who had title before the revolution. That could hurt Miami’s chances of cashing in if Cuba opens slowly to U.S. investment.

Miami remains a place where companies fear reprisals for doing business with the Castro government. A Coral Gables travel agency that arranged trips to Cuba was firebombed last year, for example. Nobody has claimed responsibility for the arson, but Miami has a long history of companies meeting the match for even talking about an end to the embargo.

Less than a month after the Tampa chamber returned from Cuba, Greater Miami Chamber of Commerce Chairman Alberto Dosal declined to speak about the issue, instead issuing an emailed response that read in part: “Once Cuba is a free and democratic country, the Greater Miami Chamber of Commerce would be more than happy to comment on doing business with the Pearl of the Caribbean. Until then, any conversation on the issue is moot and would be premature.”

The politics of Cuba was evident in Miami last year at a groundbreaking for Miami International Airport’s new train station. When Gilberto Neves, president and CEO of construction giant Odebrecht USA, stood to speak, three members of Congress in attendance walked out. U.S. Reps Ileana Ros-Lehtinen, Mario Diaz-Balart, and David Rivera left in protest over the fact that Odebrecht’s Brazilian parent company has contracts in Cuba.

Adherence to that hard line is common among leaders in Miami. Anti-Castro groups remain major donors to Florida political campaigns. The most influential remains the US-Cuba Democracy PAC, known simply as the Cuba PAC in Tallahassee and Washington, D.C. Based in the Miami suburb of Hialeah, US-Cuba Democracy PAC spent more than $400,000 last year, mostly in donations to federal candidates — two-thirds of them Republicans. Nearly all of Florida’s congressional delegation receives money from the PAC. The only one who doesn’t report contributions from the Cuba PAC: Tampa’s Kathy Castor.

Perhaps Miami’s most consistent critic of the Castro government is Javier Souto, the 74-year-old Miami-Dade county commissioner. Souto was born in the historic Cuban village of Sancti Spiritus, the son of an accountant and a lawyer. Souto worked for a year in Fidel Castro’s government before becoming disillusioned with the revolution. He left for Miami and then took part in the failed Bay of Pigs invasion. Souto served in the Florida House and Senate before being elected to the Miami-Dade County Commission in 1993.

When asked about Tampa’s courting of the Cuban government, Souto compared the city to countries that have ignored the U.S. embargo, such as Canada and Germany. “They don’t care about human rights, they don’t care about freedom of expression, they don’t care about any of that, these other countries of the world,” he said. “They only care about money.”

Tampa might think it will profit from doing business with Cuba, Souto continued, but he predicted the city would suffer instead. The Cuban government is known for ignoring debts, and it’ll likely ignore invoices from Tampa companies. “What Tampa is going to get from Cuba is a lot of aggravation and a lot of problems,” he said.

While Miami politicians publicly support the embargo, many speak privately about their desire to see it lifted, said Kathy Sorenson, a former Miami-Dade commissioner and head of the nonprofit Good Government Initiative, which educates elected officials on ethics. Behind the scenes, Miami businesses are quietly planning for an open Cuba, she said.

“There are lots of smart business owners in Miami, and believe me, they’ll figure out how to do business there once it opens,” Sorenson said.

Like many in Miami, Mike Vidal objects to any dealings with Cuba until the island makes major reforms. Among them, Vidal wants back the land the government seized from his family, including his grandfather’s castle-like home, a copper mine, a cattle ranch, and a mile of pristine oceanfront property.

Vidal, a 57-year-old computer technician, comes from a politically connected family — his grandfather was speaker of the house and a United Nations ambassador in President Fulgencio Batista’s government. His father was an advisor to Batista.

“I consider myself pretty moderate when it comes to Cuba,” Vidal said. “But when it comes to doing business with Castro, or traveling there, I don’t want to see it happen until they return the land they took from families, mine included. Pay for it, or give it back to us.”

Cuba experts believe that’s unlikely to happen, and it’s a major issue that may keep Miami from profiting on Cuba’s slow reform -- to the benefit of cities like Tampa.

The Florida Center for Investigative Reporting is a nonprofit news organization supported by foundations and individual contributions. For more information, visit fcir.org. The Public Insight Network contributed to this report and can be found online at publicinsightnetwork.org.

Florida businesses have been planning, largely in secret, for the lifting of the U.S. embargo for decades. Among the potential opportunities:

A Boon to Ports

Cuba lacks warehouses that could accommodate widespread shipping. That means importers would need to send smaller and more frequent shipments from nearby ports. Miami would seem to be the best fit for proximity, but larger ports in Tampa, Fort Lauderdale and Jacksonville will offer competition, as well as the nation’s largest port in New Orleans.

Shipping and Cruises

The Cuban Democracy Act of 1992 forbids any shipping or cruise vessel that has traded goods and services in Cuba from visiting a U.S. port within 180 days. An easing of that restriction would allow major cruise and shipping companies to add stopovers in Cuba. First, though, the Cuban government would need to show interest, since Fidel Castro in 2005 turned away most Cuba-bound cruise ships after complaints of trash.

Infrastructure Upgrades

All of Cuba’s basic utilities -- including electric, water and sewer -- rely on decades-old grids that would likely see an entire overhaul after the embargo. The electrical grid especially has suffered from a lack of upgrades and hurricane damage, with blackouts 125 days a year, according to a University of Miami study. Roads, ports, and airports also haven’t seen much construction since the Soviets pulled funding for the island two decades ago.

Maintenance Contracts

After the embargo, U.S. companies will seek contracts to run services in Cuba. But that business prospect is fraught with questions, especially since Cuba unexpectedly canceled a contract with an Italian company to run the port in Havana. International companies have also had little success challenging the details of contracts in Cuban courts.

New Wheels

Cuba’s 1950s-era vehicles make great photo ops, but a post-embargo run on new cars would be a boon to the port in Jacksonville, already a major hub for imported vehicles. 

AUGUSTA -- Maine’s "F" grade from the State Integrity Investigation has led to a number of reforms in the state's ethics rules this year, including a bipartisan transparency bill proposed by Gov. Paul LePage that he signed into law last week.

The reforms also include two bills signed by the governor to stop the so-called “revolving door” at the statehouse, where lawmakers and executive branch officials leave government service and go directly to work as lobbyists.

The governor’s bill, LD 1001, is “a major departure from what we do now,” said Democratic Senator Emily Cain, who sponsored the bill after LePage proposed it. “It will increase transparency and disclosure and will ultimately improve the integrity of the legislature and the public’s access to important information.”

The bill has four major provisions:

• Ownership interests of five percent or more held by lawmakers, executive branch officials or immediate family members in businesses must be reported. Current law requires disclosure only if a majority share is owned.

• Lawmakers or executive branch officials must now disclose if they or immediate family members are in a responsible position in a political party. Current law requires disclosure only if the lawmaker or executive branch official is a responsible officer in a political action commttee (PAC) or ballot question committee.

• The Commission on Governmental Ethics and Election Practices must draft rules to require reporting of income of $2,000 or more in ranges that will be determined by the legislature during its next session. Current law only requires that the source of the income be reported, not the amount or range.

• Legislators and executive employees are required to file their disclosure statements electronically and those statements must be available immediately on a publicly accessible website. Current law allows those disclosure statements to be handwritten and an electronic image of the statement is posted on the ethics commission website.

The requirement for electronic forms, said Cain, represents “the beginning of fundamentally changing the public’s ability to access those disclosure records.”

The current handwritten responses are often unreadable and provide little detail. Records will now contain more information about legislators’ business and financial relationships, will be searchable and will allow citizens “to make sense of them in a way that is not cumbersome,” said Cain.

LePage issued a statement Monday saying, “These new laws will play a role in ensuring public trust in government and addressing some inadequacies in the current ethics system….These efforts are good for the health of our democracy and Maine people.”

Rep. Jarrod Crockett, R-Bethel, sponsor of the bill to establish a one-year cooling off period between legislative service and lobbying, said he had tried to pass a similar bill two years ago, “but nobody would bite.”

This legislative session, he said, “I was amazed it actually happened.”

Crockett’s bill was passed and so was a related one that set a one-year cooling off period for high-level executive branch officials before they could begin work as a lobbyist. 

The difference this time around, Crockett said, was “the light shed upon the subject” by the State Integrity Investigation, a first-in-the-nation assessment of accountability and transparency across the 50 states that was published in March, 2012. The project was a collaboration of the Center for Public Integrity, Global Integrity and Public Radio International.

Maine got an “F” and ranked 46th in the investigation. The score was based on research into 330 indicators of both the laws and practices in 14 categories, from procurement to campaign disclosure to lobbying. The Maine Center for Public Interest Reporting conducted the research on which Maine’s score was based.

Stung by the black eye the report gave Maine, lawmakers were eager to support reform. “Neither party wanted to be the reason it failed,” said Crockett.

Ann Luther, advocacy chair at the Maine League of Women Voters, said legislators “made a big dent in some areas that desperately needed reform here in Maine.”

Stopping lawmakers and executive branch staffers from going directly into lobbying jobs will have little effect on those officials’ careers, says Luther.

“But while you’re doing the people’s business, you can’t be simultaneously attending to your own self interest,” she said.

Lawmakers failed to pass a bill to study further ethics reform, as well as a bill to stop high-level state executive branch officials from moving directly into jobs in industries those officials regulated, said Luther.

“That’s one area that requires further action,” said Luther, who said the League of Women Voters plans to bring a new proposal to lawmakers to regulate the practice.

Disclosure: Ann Luther, advocacy director for the Maine League of Women Voters, is also a board member of, and donor to, the Maine Center for Public Interest Reporting. The Maine Center for Public Interest Reporting is a nonpartisan, non-profit news service based in Hallowell. Email: mainecenter@gmail.com. Web: pinetreewatchdog.org.

Conservative campaign finance attorney Jim Bopp today lambasted watchdog group Citizens for Responsibility and Ethics in Washington for filing a complaint with the Internal Revenue Service that accuses him of improperly channeling money from a nonprofit to his law firm.

CREW, Bopp told the Center for Public Integrity, is an organization “paid to smear conservatives by filing complaints” that are “rarely found meritorious.” The organization’s complaint against him “completely lacks merit," he added.

“They just seem to be in business to smear people,” Bopp said.

As if to underscore his point, Bopp crashed a conference call CREW conducted this morning to announce its complaint.

CREW’s complaint states that Bopp has improperly diverted nearly all the assets of the James Madison Center for Free Speech, a 501(c)(3) charitable organization he co-founded in 1997, to the Bopp Law Firm for personal financial gain.

“Mr. Bopp is well-known for pushing the legal envelope, but you’d think he’d be more careful to comply with incontrovertible law,” CREW Executive Director Melanie Sloan said in a press release. “No matter how just Mr. Bopp believed his cause, there is no excuse for end-running the tax code.”

The James Madison Center for Free Speech, which provides free legal services to those pursuing free speech causes, shares an address and contact information with Bopp’s law firm and does not have any salaried employees, according to the group’s IRS records.

As general counsel, Bopp said he has provided the Center with pro bono services worth millions of dollars.  

All of the James Madison Center for Free Speech’s contributions, gifts and grants — totaling more than $255,000 — went to Bopp’s law firm in 2011, IRS documents show. The group reported just $338 in assets at the end of that year.

Bopp has argued against campaign finance regulations all over the country and is perhaps best known for representing the winning side of the Supreme Court’s landmark 2010 case Citizens United v. Federal Election Commission.