Cupertino Facts

Category: City Finances

  • Non Profits: Not All are Charities

     

    As we get to the end of the year, we wish all of you a happy and relaxing holiday season. It is also the season of giving, where we contribute to our favorite causes, often represented by charities we donate to. We often use the words non-profit organizations and charities interchangeably. However they are NOT the same. 


    Did you know that the National Football League (NFL) was classified as a non-profit organization for almost five decades?


    While most charities are non-profits, not all non-profits are charities. Organizations become non-profits when they are classified by the IRS as exempt from paying taxes on the contributions and investment income they receive. 


     In fact many tax-exempt nonprofits are organized for the explicit purpose of advocating for the interests of the members, and NOT for social causes and the greater good which we associate charities with.

     

    In this post we go into the differences between nonprofits and also focus on a nonprofit (not charities) whose dealing with the City of Cupertino, and the use of our tax dollars raises serious questions.


    Different Kinds of Non-Profit Organizations 

     

    The IRS has published guidelines describing the tax treatment for various kinds of nonprofits. 


    Charities or 501 (c)(3) exempt organizations are typically what comes to mind when we think of nonprofits. 501 (c)(3) exempt organizations can be large organizations like the American Red Cross or local organizations like the West Valley Community Services who assist those in need in our neighborhood.


    Another class of non-profit are business and trade leagues whose tax exemption is covered under IRS Section 501 (c)(6). These organizations are organized to advocate for the interests of their members. The National Football League (NFL) was a 501 (c)(6) exempt non-profit for about five decades before giving up its non-profit status in 2015!


    Locally, the Cupertino Chamber of Commerce is a 501(c)(6) exempt non-profit, which advocates for its members. Out of the about 2400 registered businesses in Cupertino, less than 10% are dues-paying members of the Cupertino Chamber of Commerce.

     

    Cupertino Chamber of Commerce & the $16,000/year Ghost Contract

     

    For as far as anyone in the City Offices can remember, the Cupertino Chamber of Commerce has been sending a bi-annual invoice for $8000 ($16,000 per year) to the City of Cupertino. Under normal business practices the invoices are paid by the City for services delivered under a contract agreed upon prior to the delivery of the services.

     

    However, the City staff is unable to locate any such agreement or contract against which the Chamber of Commerce was invoicing the city and getting paid for many years! After further investigation, the City Council was informed that the payments were made under a verbal agreement which no-one can reproduce. 

     

    To summarize, there is:

    • NO Definition of the service the Cupertino Chamber of Commerce performs for the city
    • NO Criteria to determine whether the Chamber is fulfilling the terms of the contract for their invoices to be paid
    • However the City has paid hundreds of thousands of dollars to this organization whose charter is to lobby for its dues-paying members, without any contract in place.


    Councilperson Kitty Moore ‘s scrutiny of a  line-item during the review of the City’s spending led to the discovery of these payments. These annual payments are in addition to the membership dues which the City pays to the Chamber, or the more than $60,000 paid by the City to the Chamber to run the ILoveCupertino website, or other concession the city provides like the free use of City facilities. 

    City Elections & the Chamber of Commerce PAC


    As an organization created to lobby for the interests of its members, the Chamber of Commerce sponsors PACs during elections. During the 2016 election cycle, the Cupertino Chamber of Commerce PAC committed campaign finance violations and was fined by the FPCC.


    During the 2018 election the Cupertino Chamber of Commerce sponsored a PAC, to influence the results of local city council elections in the favor of certain candidates sponsored by the coterie of ex-mayors, The PAC used the name and the logo of the Cupertino Chamber of Commerce to solicit votes.

    For many years, the city was paying $16,000 of our tax dollars, annually, without a locatable contract, to an organization which ran a PAC in support of city council candidates backed by the coterie of ex-mayors.

     

    The Coterie of Mayors & Their Web of Influence

     

    One challenge the residents face is that the coterie of ex-mayors have a well entrenched web of influence among local organizations which they have cultivated over the decades.

     

    These networks have been built over the years via both soft favors like memberships in committees, endorsements & awards, and hard benefits, like the annual transfer of our tax-payer dollars to the Chamber of Commerce which then runs PACs to favor the coterie.


    Whether it was shutting down already overcrowded CUSD schools in the middle of a 100 year pandemic or granting their favorite developer the unheard of privilege to build without any height limits, or sending our tax dollars to lobbying organizations which then advocate to get them get elected, the coterie of mayors does not have the residents’ best interests in mind.

     

    Please stay alert and continue acting as a watchdog to keep them in check.

  • CUSD: Dispelling Disinfo with Data

    This email will debunk disinformation about CUSD with data. We also include video clips from Jerry Liu, a CUSD trustee who opposed school closure, who shares his experience and goes into more details.

    Disnfo #1: CUSD Budget Shortfall? No we have surplus!


    The big reason cited for the shutdown of schools was a projected budget shortfall. CUSD’s own projections show that it will end up with a surplus (revenue less expenditure in the table below) of $39.5 Million over the next five years.


    Please listen to current board member Jerry Liu who voted against school closure, who tells us that even this year CUSD will have a surplus of $16M!


    Savings from closing school campuses? It is like saving 50 cents while we have a $200 budget,, a reminder that the projected savings from closing a school campus was minimal

    Then why close schools during a once-in-a lifetime pandemic?
    Video

    This table is from Page 18 of CUSD Budget Adoption Report 

    Disnfo #2: Collapsing Child Population? No Its Stable!

    For the past decade, we have been repeatedly being told that CUSD enrollment is declining because the population of children in CUSD is declining.

    That is incorrect.


    The children population in CUSD has been fairly stable, fluctuating in a narrow band. The overall population is at the same point as it was about a decade ago.

    From kidsdata.org

    CUSD enrollment though is declining since parents are preferring private schools due to mismanagement by the CUSD board including the deeply unpopular decision to shut down school campuses.

    From kidsdata.org

    For those interested in more granular analysis, the date from the ACS Survey is available here including age-wise breakdown within the under-18 age-group

    The Future is in Your Hands


    To reiterate, a lot of disinformation which has been spread in the community, is debunked by data.


    Disinfo #1:  CUSD shut Schools because of lack of money

    => No. CUSD is projected to have a $39M surplus over next 5 years


    Disinfo #2:. CUSD enrollment is falling because number of Children in CUSD is dropping

    => No. Children population in CUSD is around the same level it was a decade ago

    We can only speculate why the coterie of ex-mayors and their protege who they get sponsor via endorsement and campaign finance support misled us. We do know CUSD has hired professional real-estate consultants to evaluate the desirability of CUSD land for investors. 

     



    In order to save our schools, and preserve our home values, it is critical that the City Council of Cupertino opposes any rezoning of school land  and preserves it for public usage. 

    VOTE WISELY

    To save our schools and preserve home values, please VOTE for Govind Tatachari, Liang Chao, and Steven Scharf for Cupertino City Council, and Darcy Paul, Satheesh Madhathil & Jerry Liu for CUSD Board. They have taken a public stand to keep school closure off the table and roll back the past decisions. They are not funded by external special-interests and will keep the interests of residents foremost.

    Please do NOT vote for JR Fruen, Sheila Mohan for Cupertino City Council, and Ava Chiao (CUSD).  They have been supportive of school closure and giving the land to developers, and have strong endorsements from the three CUSD trustees who closed the schools.  They have also receive extensive funding from construction interests, who covet the land our schools stand on, and not signed the City of Cupertino voluntary spending limit on election expenses.

     

    Your fellow neighbors from Cupertino

    (Some more videos with Jerry speaking are attached below)

     

    Video
    Video

  • Restoring Financial Accountability in Cupertino

     

    Do you know that an employee swindled nearly $800,000 from the City of Cupertino, running an embezzlement scam which lasted from 2000-2014, and was finally addressed in 2018. 

    What is surprising is that a coterie of ex-Mayors of Cupertino, who were in the council prior till 2018, have been sending extremely inflammatory mails about the resident focussed council, which was elected for the first time in November 2018. This is the coterie which presided over this period of embezzlements and weak financial controls!


    In order to avoid such scams, the residents focussed Cupertino City Council,  instituted an external audit (via Moss-Adams) of the financial operations of the City. The audit identified serious gaps in the City’s Processes, and a plan to fix them has been put in place. You can read the report here

    As the Moss-Adams report shows, the coterie of ex-Mayors presided over serious gaps, including what the auditors called a Full Gap in the most critical portions: the Accounts Payable, Revenue and Accounts Receivable, and Payroll & Timekeeping.

    Please continue to support your resident oriented city leaders who are working hard to steady the ship in Cupertino since being elected in 2018, after many years of mismanagement. They are putting in financial controls to ensure transparency and prevent scams. (Learn more here).

     

    Please vote for Govind Tatachari, Liang Chao, and Steven Scharf for Cupertino City Council

    Restoring School System (CUSD) Vitality


    Our school system, CUSD is being run into the ground with 33% of all eligible studentsnow choosing to attend non-CUSD schools. The recent closing of three campuses has accelerated this flight. This coterie of mayors also exerted a lot of influence in the board of the CUSD with cross endorsements and campaign finance support.

     

    Please vote for Darcy Paul, Satheesh Madhathil & Jerry Liu for CUSD Board. They have taken a public stance against school closures, and will work towards rolling them back.

    Coterie of ex-Mayors backed Candidates

     

    Please do NOT vote for the candidates backed by this coterie, who are also endorsed and supported by the three CUSD trustees who spear-headed the effort to close schools. These candidates, supportive of school closures, are JR Fruen, Sheila Mohan (City Council) and Ava Chiao (CUSD) are a risk to our home values and should be actively opposed. 

    Note that the three trustee of CUSD who led the school closing efforts are facing their own recall by CUSD parents living across multiple cities.


    Getting things in Order

    In order to fix the problems the coterie of mayors have left behind, it is important that both the City Council and CUSD work together to address residents’ interests, including putting an end to school closures, reopening closed campuses and adding school capacity for the thousands of new homes in the development pipeline.

    Please vote for Govind Tatachari, Liang Chao, and Steven Scharf for Cupertino City Council, and Darcy Paul, Satheesh Madhathil & Jerry Liu for CUSD Board. They will enhance the dignity and respect of our Council and School District, and ensure that the local agencies work for the betterment of the residents

  • Restoring Financial Accountability in Cupertino

    Do you know that an employee swindled nearly $800,000 from the City of Cupertino, running an embezzlement scam which lasted from 2000-2014, and was finally addressed in 2018. 

    What is surprising is that a coterie of ex-Mayors of Cupertino, who were in the council prior till 2018, have been sending extremely inflammatory mails about the resident focussed council, which was elected for the first time in November 2018. This is the coterie which presided over this period of embezzlements and weak financial controls!
    In order to avoid such scams, the residents focussed Cupertino City Council,  instituted an external audit (via Moss-Adams) of the financial operations of the City. The audit identified serious gaps in the City’s Processes, and a plan to fix them has been put in place. You can read the report here