County Delivers 5,200 Layoff and Demotion Notices : Government: As health workers get grim news, multifaceted bailout, featuring compromise on transit fund shift, moves toward final passage in Legislature.

The real agony created by Los Angeles County’s worst-ever fiscal crisis made itself felt Friday as nearly 5,200 county health workers--from doctors and nurses to lab technicians and custodians--were handed terse notices saying they will lose their jobs or be demoted within two weeks unless financial salvation arrives from Sacramento and Washington.

As lawmakers at the state Capitol inched toward adjournment in the final hours of this year’s legislative session, a multifaceted state bailout of California’s biggest county--and its bankrupt neighbor, Orange County--was moving slowly toward final passage.

A persistent deadlock over an aid package for Los Angeles was broken Friday as a compromise plan to divert $150 million from the Metropolitan Transportation Authority to the financially strapped county won passage in the Assembly and was awaiting action by the state Senate.

The political whirlwind in Sacramento, coupled with deep uncertainty about prospects of a federal rescue package, left county supervisors, health workers and patients wondering whether the nation’s second-largest public health system would survive this crisis.

In Washington, the Clinton Administration was acutely aware of the crisis and vowed to help if possible. “We very much want to be able to help,” said a senior White House official. “But we’re not there yet.”

But the day of reckoning had arrived for tearful employees who received their pink slips at six comprehensive health centers, 28 community clinics and the outpatient wings of all six county hospitals.

All told, 4,166 county workers received layoff notices, another 1,034 were told they will be demoted and 1,500 others were transferred from one facility to another.

The nation’s largest public hospital--County-USC Medical Center--was hit unexpectedly hard: more than 1,000 health workers were handed layoff notices beginning in the pre-dawn darkness and continuing until midnight.

Hospital spokesman Harvey Kern said the massive Eastside medical complex--which earlier in the budget process was targeted for closure, and still has not escaped that threat altogether--was reeling from Friday’s hit. “In my 31 years of county service, I never dreamed I’d see a day like this,” he said. “It is just awful. What do you say to people? How do you console them?”

Amid heightened security at the sprawling Roybal Comprehensive Health Center in East Los Angeles, nurse Gabriel Centeno was handed the same typewritten letter as thousands of other health workers across the county.

“This is to notify that you will be laid off...at the end of your shift on Sept. 30, 1995. This action...is necessary because of a budget shortfall precipitated by a reduction in state and federal funding.”

After receiving her notice, Centeno returned from her supervisor’s office and was immediately approached by a couple of her nursing colleagues. “I’m gone,” she told them. “It’s hard. But I feel more for the patients than I do for myself.”

A few blocks away, Gloria Molina, chairwoman of the Board of Supervisors, faced a sad and angry crowd of health workers and patients outside her storefront field office.

“Believe me, this is a disappointing day for me as well,” Molina told them from atop a union sound truck. “It’s been a tough decision, but a decision that had to be made.”

Crowd Boos, Jeers Supervisor Molina

Without a state and federal bailout, Molina warned that entire hospitals, along with the county’s health centers and most clinics, may also have to close. “Very frankly, we’re not even sure now we can save the hospitals,” she said. “The situation has gotten worse, and I’m disappointed too.

“Hopefully we can keep the clinics open,” Molina said, by forming public-private partnerships with hospitals or medical groups. But the crowd booed and jeered.

Dr. Jack Kent, a physician at Roybal, wearing a black armband, seized on Molina’s choice of words, and shouted back at her: “Hopefully? You hear that? We’re living on hope!”

To Molina, the crowd chanted: “Fix it, fix it” over and over again.

But there were no easy fixes.

“This is not the result of any kind of rational planning,” said the county’s health czar, Burt Margolin. “This is driven by a budget disaster.”

The county’s current financial predicament comes after years of spending far more than it takes in, supporting a massive work force and a wide array of services in part by borrowing that has included mortgaging the Hall of Administration itself. This year, however, the budget process has taken on added urgency because of decreasing revenue due to a punishing recession, cuts in state and federal funding, a huge shift of county property taxes to help the state out of its fiscal woes, and newfound scrutiny of county fiscal practices after neighboring Orange County declared bankruptcy.

On Friday, those forces came together in the mass layoff notification. “It is a tragic day,” Margolin said. “Some very talented people--a lot of very talented people--are losing their jobs and being demoted and a system that provides vitally needed care is suffering serious damage.”

“It’s a frustration to everybody,” said outgoing county Health Services Director Robert Gates. But he was especially concerned about the patients. “We’re used to treating everybody who comes through our doors...They need our system for care,” he said. “We’re not going to be able to respond unless something improves.”

Gates said he can never recall a year in which the county came close to closing major medical facilities. “We’re out there, right on the edge,” he said.

After 3 1/2 months of ups, downs, rumor and recrimination about what the fiscal crisis might bring, the impact was sweeping.

More than 1,000 health workers in the San Fernando Valley area received layoff notices. At the county’s newest hospital--Olive View/UCAL Medical Center in Sylmar, 746 of about 2,400 employees received notices.

“People are devastated. I am devastated,” said Melinda Anderson, Olive View’s administrator. “But even though we’re in the middle of a curtailment, people are still getting sick, and we have to collect ourselves so we can take care of them.”

At the area’s nine health clinics--five of which are scheduled to close Oct. 1--workers reacted to receiving pink slips with emotions ranging from teary outbursts to tight-lipped silence.

Some expressed relief, saying that after spending their summer relying on second-rate gossip and hinging their hopes on shifting plans to save the health care system, the layoff notices finally brought some resolution.

“It’s done, finally, so now I can move on, decide whether to look for [another] job or go into private practice,” said Shung Cheung, a pediatrician who received a layoff notice at the Canoga Park Health Center.

As the magnitude of the county’s health crisis sank in, Los Angeles area Democratic legislators scored a victory when the Assembly voted to tap the MTA to give the county $150 million.

In a last gasp push on the final day of the legislative session, the delegation had momentum going for passage of legislation authorizing the Board of Supervisors to divert up to $150 million from a reluctant MTA.

Democrats Win Over Important Ex-Foes

Though only a fraction of the money needed to rescue the health care system, the proposed transit fund shift was substantially more than what had earlier appeared possible, and seemed to pave the way for legislative approval of up to $124 million more for the county from other sources.

The Democrats won over important former foes in securing preliminary approval late Thursday for the MTA shift of funds to the county, including Assembly Republicans and Gov. Pete Wilson. The package of bills had the added insurance of being linked to a similar proposal for Orange County that all along has enjoyed broader support.

The transit funding maneuver still faced an unknown reception from the Board of Supervisors because $100 million of it is a loan that must be repaid by the county over the next five years, a continuation of the borrowing that has aggravated the county’s financial outlook for years.

But the new deal represented a drastic scaling down from plans put forth by Democratic legislators in recent days calling for MTA fund shifts of up to $425 million over five years with only partial repayment.

Proponents, however, had just hours to secure final legislative passage from both legislative houses, and were also pushing for other bailout measures, including another $124 million for Los Angeles County with revenue estimates of hundreds of millions over the next five years. Republicans killed the tax plan Thursday in a series of parliamentary maneuvers.

Of the lesser proposals still before the Legislature in its closing hours.

- A trade-off with the state on the costs of jailing juvenile offenders, involving $18 million from the state to the county to run probation camps, but $4 million from the county to state in new costs for accepting county offenders into the California Youth Authority penal system, with county costs rising in future years. Built into the equation would be incentives for the county to send to state confinement only its most violent young criminals.

- Ending the requirement that Los Angeles County provide health services at previous levels in order to receive its share of state tobacco tax revenues collected under Proposition 99. Instead, the county would be obligated only to “exert its best effort” to provide at least 75% of the health services it offered in 1992-93. Estimated benefit to county: $50 million.

- Another $60 million would be coming the county’s way under a bill that would accelerate the payment of federal funds to county hospitals. The federal funds are used to supplement Medi-Cal payments to so-called “safety net” hospitals that serve large numbers of poor patients.

Aid Bills Linked to Orange County

As the day began Friday, except for the hospital fund proposal, all Los Angeles County aid bills with a chance of passage were linked with the Orange County transit fund shift in such a way that all must pass or all must fail to be enacted.

The linkage provided leverage for Los Angeles County on Wilson and conservative lawmakers considered more eager to help Orange County. But some Republicans, both those voting for and against the measures, still voiced doubts over the wisdom of certain elements.

Another controversial feature was a list of “accountability” requirements that came wrapped into the fund shift bill--a component that county officials were reported to abhor and that the MTA and others applauded.

Under the bill, Los Angeles County would be required to submit for review its budget and other financial dealings to the governor, Legislature and state auditor general, who would order up periodic audits on the county’s fiscal condition and report findings to the governor and Legislature. That section of the funding bill, while eliciting strong reactions, was nevertheless mild compared to a bill introduced earlier by Assemblywoman Debra Bown (D-Marina del Rey) that would have essentially removed county finances from county control and placed them under the aegis of the state.

Another component of the transit fund proposal, however, loosens requirements on the method of county repayment to the MTA. Until the last proposal was forged, repayment would have been restricted to use of sales tax revenues the county collects that are dedicated to road maintenance and repair.

Los Angeles area Democrats argued that it would be permissible to use road repair funds for health services on the grounds that, according to state Sen. Richard Polanco, “people’s lives are more important than potholes and choo-choo trains.”

Rabin and Meyer reported from Los Angeles, Vanzi from Sacramento. Also contributing to this story were Times staff writers Jack Cheevers, Timothy Williams and Richard Simon in Los Angeles, Paul Richter and John M. Broder in Washington, and Jenifer Warren in Sacramento.