PA says it’s facing ‘worst financial crisis’

The Palestinian Authority is facing its “worst financial crisis” yet, according to a PA official, because of a foreign aid shortfall and the rejection of a $100 million loan by the International Monetary Fund.

Unless the PA finds a way to close its budget gap, PA Labor Minister Ahmed Majdalani said, the delay in aid from Arab donor nations will render the PA unable to pay its employees’ July salaries and its debts to private businesses, according to the French news agency AFP.

In an attempt to help ease the PA’s budget problems, Israel recently asked the IMF for a bridge loan of $100 million on the PA’s behalf. The IMF denied the request, saying it did not want to set a precedent of one state receiving a loan on behalf of a non-state body, Haaretz reported.

PA Prime Minister Salam Fayyad and Bank of Israel Governor Stanley Fischer, both former IMF officials, had decided that Israel would ask for the bridge loan because the Palestinian Authority is not a member state and cannot receive financial support from the fund.

Al-Arabiya reported that a delay in salary payments would be particularly sensitive now with the Muslim fasting month of Ramadan beginning in mid-July.

Vote Yes on 57, 58: They Will Ease Crisis

It certainly is an unusual situation, but we Republicans are encouraging you to vote to increase the debt of the state of California, and we are doing it with a straight face.

As you know, Proposition 57 is asking Californians to commit to a bond issue of $15 billion. This commitment will allow our state budget to be stabilized, so that we can begin the process of moving forward.

If you study the state budgets over the last few years as I have, you would see that we have had a deficit at the end of each year that keeps getting larger each and every year. Even when revenues were perceived to be at a peak, we were outspending those revenues. The state budget began each year in the hole that just got deeper as the months went by.

Now we have a twofold problem. We must deal with the backlog created from prior years and try to balance this year’s budget, where expenses still are outstripping revenues. Proposition 57 will allow us to focus on eliminating the current budget imbalance without the draconian past debt facing us.

As it is, we will face serious cuts in our state budget. The growth in expenditures will have to be eliminated and actual cuts in important programs will have to be made.

As much as some of us would like to effect the cuts now that are necessary to erase this debt, we have come to the conclusion that it would significantly harm our state’s economy. This would stifle the immediate economic growth we need to reach budget equilibrium.

This new debt is not going away. That is understood. We are going to have to pay it back over the next decade. It will be in a fashion that will allow our legislators to craft a budget that will not start wallowed in debt before the opening discussions begin. By our good fortune, this debt will be financed at today’s very low interest rates.

The question then becomes how do we prevent this disastrous situation from re-occurring. We must pass the companion proposition — No. 58. It specifically makes it illegal to create any future bonds to finance a budget deficit again. It requires the Legislature to balance the budget.

Proposition 58, in addition to requiring a balanced budget each year, establishes that there must be a budget reserve in case projected revenues fall short. This is an important part of the measure.

A year in advance, some very smart people sit down and project what the revenues are going to be for the next 12 months for the world’s sixth largest economy. As smart as they are, it is a Herculean task, where it is easy to be off a billion dollars or more. This reserve will recognize that projections are only projections, and we should provide a cushion for dealing with the inevitable changes.

These new budget requirements can only be deviated from when there is a fiscal emergency upon which both the governor and Legislature agree. Some would say that a balanced budget should be locked in stone.

Those feelings are certainly justified after the dismal performance of the last few years. Once we divorce ourselves from those feelings and look at the budgeting process on a long-term basis, it becomes easier to see that this is a necessary clause that allows our elected officials to act responsibly, when a true disaster happens. If, God forbid, another earthquake occurs matching the damage caused by the Northridge quake, we would all want our leaders in Sacramento to do what is necessary to return our lives to normal.

These are the reasons why a broad spectrum of the political and financial universe is supporting both Proposition 57 and 58. It is a reasoned plan of action.

There may be alternative plans that seem good, but this one is worked out and ready to go. Let’s give it a chance and make judgment about its success after we see the full effects.

There are many important votes to cast on March 2, but none is more important for the future stability of our state than to vote yes on Proposition 57 and 58.

Bruce L. Bialosky is the Southern California chairman of the Republican Jewish Coalition.

Centers in Crisis

Shock. Disbelief. Disappointment. Frustration. Anger. Cynicism. Sadness.

All were in large supply among supporters of the Jewish Community Centers of Greater Los Angeles (JCCGLA) during a round of public meetings held this week to break the news of the JCC financial crisis. Parents and other JCC members expressed their dismay over the news that JCCGLA is planning to close five of seven JCCs by June 30, 2002, in order to pay off a $3 million loan.

On Dec. 3, about 100 JCC supporters gathered at the Silverlake-Los Feliz JCC, where executives from JCCGLA and longtime benefactor, The Jewish Federation of Greater Los Angeles, discussed the details and repercussions of JCCGLA’s current financial crisis, and their plans to ameliorate it. The Silverlake-Los Feliz JCC was just the first stop in a series of advisory meetings held over three days and consisting of a panel that included JCCGLA Executive Vice President Nina Lieberman Giladi, Federation President John Fishel and various JCC board members. In addition to this Bates Avenue location, in the heart of Los Feliz, advisory meetings were held at North Valley JCC and Valley Cities JCC on Dec. 4, and the Westside JCC and Bay Cities JCC on Dec. 5. All of these venues on this advisory tour face closure.

The major announcements made at the advisory meetings were:

  • Existing JCC Early Childhood Education and After School Care serving some 900 children will remain in effect at all centers offering such programs through June 30, 2002.
  • After June 30, the Westside JCC, Silverlake-Los Feliz JCC, Bay Cities JCC, Valley Cities JCC and North Valley JCC are scheduled to close.
  • All programming outside of children’s services will be terminated as of Dec. 31, 2001.
  • The Federation, in an arrangement with JCCGLA brass, will help the network of local community centers secure a loan from a lending institution to pay off the $3 million debt by putting the above five JCC properties up as collateral. These moneys are in addition to the Federation’s normal annual allocation of $3.2 million.
  • The Federation will allocate an emergency sum of $901,000 to enable the JCCs to continue its children’s services at Centers through the end of June.
  • Only four JCCGLA entities will stay in business: West Valley JCC, Conejo Valley JCC, the Shalom Institute and the Zimmer Children’s Museum.

The closure of the five JCCs follows this summer’s termination of after-school care programs at Bay Cities JCC and Silverlake-Los Feliz JCC, and the JCCs relinquishing of the reins of Venice boardwalk’s Israel Levin Senior Adult Center and its SOVA program to Federation agency Jewish Family Service.

The announcements come as a big blow to Los Angeles’ Jewish community at a time when morale is already low due to a hurting economy and the recent spate of gruesome terrorism that has hit both America and Israel. The situation is dire for the centers, which operate on a $14 million budget and now faces a $3 million deficit.

Giladi confirmed that 50 people within the JCCGLA system, including center directors, teachers, athletics personnel, and other staff have received their pink slips.

"The very good news is that we’ve been moving closely with The Jewish Federation in order to address problems — our priority is how to meet the needs of the children," said Giladi, referring to the Federation’s $901,000 relief package. "We had to work fast and furious to have The Federation help us and not compromise the child care."

However, members in attendance at the Silverlake-Los Feliz center, many of them young parents with babies, were not heartened to learn that the majority of JCCGLA’s centers and programs would be shut down.

What started out as a very controlled situation, featuring a representative asking the panel prearranged questions on behalf of Silverlake parents, quickly devolved into heated debate between members and panelists. Members expressed frustration and anger over the lack of communication and the failure of both JCCGLA and The Federation to involve JCC constituents until the eleventh hour.

Silverlake parents wanted to know how the JCCGLA’s finances could have gone so sour so quickly. According to a JCC source, the JCC uses The Federation’s own auditor, PriceWaterhouseCoopers, at The Federation’s insistence.

David Djivre, a member of the JCC board for 27 years, defended the actions and intentions of JCCGLA and Federation administrators from the podium: "I have the history that no one in this room has. I did not personally know of the deficit. This deficit was accrued over a long, long period of time."

"I give [JCCGLA administrators] a lot of credit for saying, Look, we recognize there’s a problem," Fishel added. "We’re all trying to find a solution together."

"We have a bankruptcy lawyer" to sort out the JCC’s finances, added Randy Myer, JCCGLA’s board vice president.

At present, there is no ongoing official investigation into JCCGLA’s fiscal history, but Giladi promised the members that "we’re going to need to look back" and determine factors "after we get through this crisis in the next couple of weeks." She added that children’s care programming would absolutely continue through the end of June and that weekly meetings would be held with Silverlake-Los Feliz Center Director Ruthie Shavit, who replaced Pamela Boro a few weeks ago.

Fishel assured members that all facilities would absolutely remain open until the end of June, and urged parents to devise their own "creative solutions." "I would encourage this group over the next seven months to sit down and look at its options. Don’t wait until June before engaging us in this discussion. There’s obviously a lot of brain power in this room. If there is the will on the part of the people tonight to look how to organize as a grass-roots body and take control of the facility, why not? You have nothing to lose!"

"The fact that we’re out here to communicate with all of you is a sign that we want to keep the dialogue going," Fishel continued. "Let’s keep the lines open. Let’s see where this goes."

Reacting to the news, JCC parents and supporters have already undertaken efforts to deal with the crisis.

Former Federation Planning and Allocations research coordinator Pini Herman, now a principal of Phillips and Herman Demographic Research, started a Web site ( on Dec. 1 to inform, galvanize and consolidate efforts. At press time, an ad-hoc meeting for concerned JCC members was scheduled for Dec. 5 at the Westside JCC as a result of the flood of e-mails Herman’s site received.

"There have been discussions for people to help. Maybe they’ll be some incredible angels to come along," said Giladi, in an effort to assuage upset Silverlake parents.

Giladi and Fishel explained that the situation is grave, and that JCCGLA needed The Federation to step in to secure a loan against the agency’s security assets. Those assets, the centers themselves, will likely be sold off in order to raise the money to pay off JCCGLA’s debt.

Emotions ran high among members, many of whom felt as if they had been left in the dark by JCCGLA administration and shut out of the troubleshooting process.

"By mortgaging our building, you mortgage on our entire future. We could’ve become involved in this a long time ago," said a mother, drawing enthusiastic applause from the audience.

"They wait until the last minute to discuss this with us," said another parent.

"We’re sorry you if you feel that you were excluded from the process," Giladi said. The audience volleyed back a chorus of "We were!"

The advisory meetings were the latest round in what appears to be an ongoing communication gulf between JCCGLA’s central board and its constituents. Last year, JCC members clashed with executives over the Westside JCC’s administration, poor facilities and slow-moving building renovation process. This past summer, parents from Silverlake-Los Feliz JCC and Bay Cities JCC tried but failed to revive after-school care at their respective centers after being surprised with notice that the program would be terminated come September.

At the Silverlake-Los Feliz meeting, Giladi mentioned that JCCGLA’s woes were the product of years of "mismanagement" that preceded her term as the organization’s executive vice president. However, Fishel downplayed this aspect.

"It’s not mismanagement when a group of people with good Jewish values are trying to assure the viability of services in a rapidly changing community," Fishel said, adding that The Federation has an "obligation" to try and rescue the JCC system, "but I’m a very pragmatic person and I realize that the JCC’s have spent the last 10 years trying to play catch-up."

A parent asked whether The Federation could waive JCCGLA’s $3 million debt.

"I wish I could," said Fishel, who went on to explain that The Federation "can not dip into the limited corpus" of moneys reserved to fund agencies and social services, such as Jewish Family Service and Jewish Vocational Service, for the 2002 calendar year. Adding to The Federation’s woes are a number of other factors — its ongoing goal to raise another $5 million to complete this year’s campaign goal, recent lay-offs and tightening of resources in the aftermath of a post-Sept. 11 slowing economy (see sidebar).

Giladi and Fishel were reluctant to detail the causes of JCCGLA’s crisis, which, by their account unraveled in mid-October when officials discovered that JCCGLA was operating in the red on a $1.8 million deficit. That number has since swelled to $3 million.

"This is a very sad situation," Fishel said. "I don’t have any answer."

This comment did not satisfy members, who wanted to know what led to the financial fiasco and why they weren’t notified of it when it was developing.

"It’s very complicated," Fishel told the audience.

"It’s not complicated," shouted out an audience member. "Just tell us."

Giladi insisted that the situation came as a complete surprise, to which parents began shouting out, "Why?"

Giladi alluded to problems created by "the chief financial officer of 22 years." Insiders told The Journal that Gayle Floyd, JCCGLA’s former CFO, was fired last month in the wake of the financial revelations. Both Federation spokesman Craig Prizant and JCCGLA crisis consultant David Novak said officials could not openly discuss Floyd because of legal issues surrounding her departure.

"We were surprised that only in October we found the position it’s in," said Giladi.

With the help of their post-Floyd hire, crisis management consultant Roni Fischer, Giladi said that "we will now get our books in order where they know dollar for dollar what’s happening. Our agency knows very well what money is coming in and what our expenses will be."

It was Fischer who determined a $180,000 shortfall for the month of November.

"It is probably true that a long time ago the JCC board should have recognized that the decrease in allocations each year could no longer support the services," Fishel said, citing "the last year and a half" as particularly problematic for the agency. In nonprofit organizations such as the JCC and The Federation, lay board members are charged with ultimate responsibility for fiduciary oversight.

Some JCC members present at Silverlake-Los Feliz and other meetings charged that the latest developments are part of a larger, long-in-the-works agenda to use moneys reaped from the sale of the centers to apply toward other means, such as a proposed $40 million Brentwood facility.

Silverlake-Los Feliz parents pointed out that about a year and a half ago, the JCCGLA’s central board began stripping away at the participatory powers of individual centers.

At the Westside JCC advisory meeting, Fishel responded to this suspicion: "No properties have been purchased in Brentwood or anywhere else, for that matter."Both Fishel and Federation Chairman Todd Morgan have stated that plans for the Brentwood facility were shelved several months ago because of the sluggish economy.

The Silverlake-Los Feliz members, which included lawyers and business people, had no shortage of troubleshooting ideas. One audience member suggested turning to The Federation’s philanthropic arm, Jewish Community Foundation of Greater Los Angeles, for financial assistance. Fishel explained, "It isn’t their money. They just hold it and invest it."

Supporters at Silverlake-Los Feliz and Westside also came armed with Internal Revenue Service documents detailing the six-figure salaries of top JCC officials. Giladi said she offered to take a salary cut as part of the restructuring.

But it is unclear that the restructuring will leave Giladi with any position at all. "You have to give that woman a lot of credit," one insider said. "She’s basically stepping up to the plate, dealing with these long-term problems, and she’s probably restructuring herself out of a job."

Holding his baby in his arms, John Carogozian blasted the Silverlake-Los Feliz panel for closing down the centers. He accused administrators of throwing out the baby of Jewish continuity with the bath water: "For many secular Jews, this is the only opportunity they have to be exposed to Jewish life. We may not see it in one year, or five years, but 10 or 15 years from now, that’s when you’ll all see the mistake of what I’ve been hearing all evening."

Towards the end of the Silverlake-Los Feliz meeting, Layne Murphy, former Silverlake-Los Feliz board’s vice president of membership, urged the panel "to be open with numbers of our community during this critical crisis or else it will engender an enormous amount of hostility if the community is not involved."

The tension, dismay and outrage among JCC membership that pervaded the Silverlake-Los Feliz JCC was evident at every facility on the panel’s advisory tour, including the packed house at the Westside JCC’s advisory meeting on Wednesday morning, where center-users lined up with questions to pitch at Giladi, Fishel, and JCCGLA board members Michael Kaminsky and incoming JCC/GLA President Marty Jannol. Addressing the question regarding the status of donations that were earmarked for Westside JCC’s building campaign, Giladi replied that JCCGLA would examine the direction of the $4 million in pledges and $1 million in capital, amassed over a two-and-a-half year period toward the renovation of the now impermanent center, once the current crisis was sorted out. According to Westside JCC members present, there was absolutely no reference to the status of the building campaign or related donations in the JCCGLA cover letter informing parents of the current crisis.

Fishel added that attorneys were currently looking into whether or not the Westside Jewish Center Apartments, a complex for seniors, would be part of the property used as JCCGLA collateral.

Giladi and Fishel invited Westside members to raise money toward preserving their center, which many members interpreted as a hollow gesture.

"We need a commitment that you’re not going to sell this building as collateral," Westside parent Amy Raff replied.

"You can’t go and sell our building underneath us," another Westside JCC mother cried.

"This is a horrible, painful experience," Giladi said. "It’s taking a terrific toll on all of us. It is incumbent upon all of us to make sure the JCC is a fiscally viable agency. It’s our responsibility to the community."

Flourish, Not Fail

The financial crisis facing Jewish Community Center (JCC) programs and locations this week will come as an awful shock to tens of thousands of area Jews, and it should (see story, page 14).

JCC officials and Federation lay leaders and staff stress there is no cause for panic. They believe they can work out a way to save the majority of JCC programs and locations. (The Federation is the largest donor to the JCC system.) But there is no question that without immediate community response, the JCC system faces severe cutbacks.

Other organizations have already offered to step in and help those immigrants, seniors, children and others who would be most affected by cutbacks. And JCC supporters are working to make sure that what looked like inevitable closure last week can be avoidable by next.

The writing has been on the wall for some time now: years of accumulating deficits have led to a series of controversies over JCC closures of centers and services from Santa Monica to mid-Wilshire. "Maybe they should have sold the Westside J," an insider told me. "Maybe they should have sold Silverlake. But they always deferred the tough decisions."

What seems clear even now is that the JCC’s present executive director, Nina Lieberman-Giladi, has done a magnificent and largely thankless job since taking over the helm last year. Giladi inherited the accumulated financial woes — and errors — going back a dozen or more years. The hot potato of debt landed in her lap. Credit her with at least not passing it on.

That the JCCs of the second largest Jewish population in the Diaspora face this crisis raises serious questions about this community’s present priorities and future possibilities.

The centers were incorporated in Los Angeles in 1932. After World War II, Judge Irvin Stalmaster provided the lay leadership to establish the centers as a strong, autonomous institution.

"My dad cared so much about the centers," the judge’s son, Lynn Stalmaster, told me from his home in Santa Fe, N.M. Stalmaster, who went on to create a premiere film industry casting agency, remembered how his father devoted almost every evening to nurturing the center. "He felt the community needed places to parti-cipate in Jewish life other than the synagogue," said Stalmaster.

Stalmaster and the activists, staff workers and donors who followed him shared a vision of JCCs as a place where Jewish Americans could be Americanized, and, later, where American Jews could be Judaized. That is, the centers provided generations of immigrants with a familiar foothold in American society. These days, they provide generations of Americans with a way to reconnect with their Jewishness.

JCCs are as important and as effective today as they ever were. In San Jose, Boston, New Orleans, Orange County and elsewhere, communities are spending millions investing in state-of-the-art Jewish center facilities.

What about in Los Angeles? A Federation-funded study based on the 1997 Los Angeles Jewish Population Study revealed that, while only 11 percent of households belong to a Jewish Community Center, an estimated 133,000 households reported contact with a Jewish Center in the course of a year.

Visiting the Westside JCC — as I do about twice each week — provides a clue as to why centers work, even if the system that supports them is broken. On a given afternoon, moms and dads are picking up kids from swim practice, seniors are kibitzing in the activities room, men wearing kippot are playing basketball alongside men whose only connection to Jewish life is the weekly pick-up game. Centers are the gathering place of the great swath of Jewry, religious and nonreligious, male and female, young, old, somewhat wealthy and downright poor. How can we call for Jewish unity but not support the system that physically makes it possible?

Do we really want our children and grandchildren to grow up in an L.A. Jewish community that has more Holocaust museums and memorials than Jewish Community Centers?

This crisis need not leave the JCC in ruins. As the L.A. Jewish community has shifted and changed, centers have changed with it. In 1952, there was a bitter fight over closing a JCC in the West Adams section near downtown, as most Jews had moved west. But the JCC moved west, and grew as L.A. Jewry did.

This crisis too is an opportunity for more growth and change. But for that to happen, JCC and Federation leaders have got to show creativity and leadership. Centers provide a spawning ground for Jewish identity, which in turn strengthens every Jewish institution here. "This is a time to get everyone around the table — Marvin Hier, Uri Herscher, every rabbi, everyone — and figure out how to save the centers. Are those calls even going out?" said someone close to the process.

On Tuesday, I called Herscher, founder and president of the Skirball Cultural Center, and told him what was happening at the JCCs. "I feel like I’ve just been told someone has died when I wasn’t even told he was sick," he told me. "Are we so divided as a community we can’t ask one another for help? I wouldn’t say no."

When he immigrated to America, Herscher had relied on the centers in Cincinnati and San Jose. "They embrace a lot of people," he said of JCC.

We should extend that embrace into the future: a vision of a new, state-of-the-art center, such as the one outgoing Federation Chairman Todd Morgan has promoted, is a place to start. Add to it the brilliant redesign of the Westside JCC that members there have been struggling to bring into fruition. Add to that other visions, along with better financial oversight and better outreach, and there can be a renewed dedication to a system that deserves to flourish, not fail.