Roy Exum: The Microscope

Friday, June 12, 2009 - by Roy Exum
Roy Exum
Roy Exum

Arnold Schwarzenegger, the governor of California, is threatening to shut down the state’s government rather than approve a high-interest loan to keep it afloat. And while the problems on “The Left Coast” are gargantuan, let’s gather around for a moment to take a look into our microscope at a creature called an “anathema,” which, in this instance, is a non-profit drug treatment center in Los Angeles.

The Tarzana Treatment Center, just a few blocks off Interstate 101, treats more than 6,000 people every year for drug and alcohol abuse. But it appears the biggest abuse of them all has thus far gone untreated at the huge complex. I’m talking about the alleged abuse of money.

A man named Albert Senella, who is Tarzana’s chief operating officer, was paid $428,057 in 2007, which an article in the Los Angeles Times reveals is quite high for a non-profit, particularly when 85 percent of the center’s income comes from taxpayers.

The CEO of Tarzana is a guy named Scott Taylor, who was paid $330,732 over the same period for a 32-hour work week. But Mr. Taylor is also a lawyer and is under contract to provide legal counsel, for which he was paid an additional $237,956. Add the two figures and you’ll see how this is beginning to work.

Now, Senella and Taylor – and two other Tarzana executives - have a stake in the ownership of six sites that Tarzana Treatment Center uses as its headquarters and satellite treatment facilities. In 2007, the four collected rent payment of, oh, a little more than $2.7 million.

Are you following the dollar here? Legally, Albert Senella and Scott Taylor appear to have done nothing wrong. Senella is described by the Times’ article as a high school drop-out and former patient. Taylor was a young lawyer back in 1973 when he joined Senella in founding what is today Tarzana.

What makes the deal “really rich” is that there is a seemingly endless supply of those who want Tarzana’s services for drug and alcohol addiction. For instance, there is one 29-year-old fellow who is now in the residential program who admits, “I don’t think (the treatment) is going to work” and he should know; this is the 14th time he’s been in rehab that is funded by taxpayers.

Further, the plot thickens when you look at the center’s Board of Directors. Six of the nine members receive income from Tarzana. Three have been on the board for over 30 years, three more for over 20 years and one for over 15.

Now, here’s the killer. “Gov. Arnold” said earlier in the budget crisis that he would recommend cutting drug-treatment funding, just like nearly everything else. If so, Tarzana would lose about $10 million and, if that happens, Senella said some Tarzana employees might lose their jobs and others might face pay cuts. “The system is just too underfunded,” he said.

Now that you know about the drug treatment center, let’s go back to the state’s mess. Unless a $24 billion budget shortfall is averted very quickly, California will have no money in its coffers by late July. The governor has proposed deep cuts in public schools, eliminating college grants, health insurance for 930,000 poor kids and the state’s right-to-work program. But, as the Times’ points out in a related story, the Democrats who dominate the legislature vow they’ll not “disassemble California’s safety net.”

The Democrats, instead, would use almost all of the state’s reserves and rely on a revived economy. Schwarzenneger calls such a plan “hallucinatory” and irresponsible because he feels “We have not hit the bottom” of the financial crisis.

Could it be that we, in every corner of America, could study a drug center in Los Angeles, one that runs a $45 million business on government contracts and non-profit tax status, and create a template that might serve the state of California as well?

Steve Winston makes $173,000 as the head of Daytop Village, a non-profit drug-rehab center in New York, and he says the Tarzana executives are making what for-profit people earn. “It’s anathema to what real non-profits and charitable organizations do.”

And when Francis Hill, a professor in non-profit tax law at the University of Miami heard Tarzana’s CEO is also the chairman of the board, the lawyer and the landlord, she cried, “My jaw is dropping over this.”

So, might this help explain to many why America is in the fix we are today? It works for me.

royexum@aol.com


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