Feeds:
Posts
Comments

One of the most frustrating things in writing about this administration is obvious wrongdoing is reported and nothing is done.

In Bobby Jindal we have a governor who is constantly bitching about Washington in general and the Obama administration in particular while turning a blind eye to corruption, profiteering and ethical violations within his own administration.

You would think that the man who, upon taking office in 2008, said, “We have zero tolerance for corruption” would make at least a token effort to keep his house in order.

Instead, he gutted the enforcement authority of the State Ethics Board, ran off members of the board, and commenced to allow his political pals to run unchecked.

The sordid episode of State Police Superintendent Mike Edmonson and the manner in which he was allowed to increase his state pension by nearly 70 percent is just the latest in a sorry laundry list of loose enforcement of ethics rules in this administration.

We have already written about some of these:

  • Board of Elementary and Secondary Education (BESE) member Kira Orange Jones simultaneously serves as executive director of Teach for America (TFA), which in turn, has been issued contracts worth more than $3 million with the Department of Education (DOE) since she became a member of BESE in 2012. BESE is the governing board for DOE and as such, must approve all contracts with the department.
  • The resignation of the vice chairman of the Louisiana Board of Ethics only weeks after the Tribune, a newspaper serving the African-American community of New Orleans published a story in its May/June 2013 issue headlined “Kira, Kira on the Wall” which explained Schneider’s own conflict of interests in ruling on an Aug. 21, 2012, conflict of interest decision about Orange Jones.
  • BESE President Chas Roemer consistently votes on issues concerning charter schools even though his sister, Caroline Roemer Shirley, is executive director of the Louisiana Association of Public Charter Schools which much apply to BESE for approval of charters and other matters concerning charter schools, including funding.

And while we have not written about it, BESE member Walter Lee of Mansfield, who recent retired as Superintendent of DeSoto Parish Schools, is currently under investigation for allegations that he billed both the school board and BESE for travel expenses to and from BESE meetings in Baton Rouge and for lodging while in Baton Rouge.

Now, thanks to public records we belatedly obtained from the Division of Administration, we learn that another BESE member’s company has reaped more than $1.5 million from contract work his company performed on behalf of a dozen South Louisiana school boards and the Recovery School District in 2013 and 2014.

Hunt Guillot and Associates (HGA) of Ruston previously held two state contracts since Hurricanes Katrina and Rita that together totaled more than $38 million. The latest, for $20 million, expired on June 30 but is expected to be renewed.

Jay Guillot, of the 5th BESE District, is an HGA partner.

The HGA contract is with the Louisiana Office of Community Development for “grant management activities for infrastructure and other projects undertaken as a result of damages incurred as a result of Hurricanes Katrina/Rita and to a lesser extent, as a result of Hurricanes Gustav/Ike,” the contract details contained on the state’s LaTrac web page which lists active and expired state contracts and contractors.

Though the funds to pay HGA are federal funds allocated through the Community Development Block Grant (CDBG) program, the company’s contract is with the state and the state cuts the checks to HGA from the state’s CDBG funds.

Much of HGA’s work involved other branches of parish governments but in our search of records we found no fewer than 138 billings to school boards and the RSD totaling $1.58 million since January 2013. Of that amount, 17 separate invoices totaling $488,000 (30.9 percent of the total billed) was for the RSD.

The Department of Education has responsibility for the oversight of RSD and cannot be considered separate entities for purposes of say, a lawsuit against the RSD. At the same time, BESE is the governing authority over DOE, thereby creating a straight line of authority between BESE and the RSD as well as the dozen school boards for whom HGA also performed work.

School boards for whom HGA performed services and the amounts billed from January of 2013 through May of 2014 are as follows:

  • Plaquemines: 17 billings for $342,726;
  • Cameron: 16 invoices, $227,126;
  • St. Tammany: 16 invoices, $142,598;
  • Orleans: 17 invoices, $116,507;
  • Jefferson: 17 invoices, $97,598;
  • Calcasieu: 16 invoices, $64,813;
  • St. Charles: 14 invoices, $56,390;
  • St. Bernard: 12 invoices, $29,539;
  • Terrebonne: three invoices, $9,202;
  • Lafourche: four invoices, $2,968;
  • Washington: five invoices, $2,222;
  • Lafayette: one invoice, $50.

Incredibly, with only a month left in its contract, HGA managed to allocate just enough work to almost exhaust the contract amounts for eight of the parish school boards and the RSD.

The last billing made available to us was for work done through May 25, 2014. Following are the total amounts billed through May 25 (with a month remaining on the contract) with the total allocated under HGA’s contract for the corresponding parish in parenthesis:

  • RSD: $786,988 ($817,567);
  • Orleans: $237,766 ($255,519);
  • Jefferson: $205,748 ($205,750);
  • Plaquemines: $831,968 ($826,970);
  • St. Bernard: $195,996 ($196,877)
  • St. Tammany: $377,372 ($382,863);
  • St. Charles: $147,763 ($148,353;
  • Calcasieu: $112,295 ($116,171);
  • Cameron: $629,750 ($639,031).

Section 1113 of The Louisiana Code of Governmental Ethics prohibits public servants and their family members from entering into certain transaction. That section says:

  • “No elected official or public employee or member of such public servant’s immediate family, or legal entity in which he has a controlling interest shall bid on or enter into any contract, subcontract, or other transaction that is under the supervision or jurisdiction of the public servant’s agency.

That’s plain enough but for those wanting further clarification: “controlling interest means any ownership in any legal entity or beneficial interest in a trust, held by or on behalf of an individual or a member of his immediate family, either individually or collectively, which exceeds 25 percent of that legal entity.”

We do not know for certain what Guillot’s percentage of ownership is but inasmuch as his name is listed as a partner on the company letterhead we would assume he would meet that criterion.

And while the HGA contract is not specifically with DOE or BESE, the $1.5 million in work done for the local school boards and the RSD seems at best to skirt the edge of a conflict of interests for Guillot.

 

Editor’s note: House Speaker Chuck Kleckley (R-Lake Charles) has refused a request by Rep. John Bel Edwards (D-Amite) for an investigation into the $55,000 per year pension increase sneaked onto an unrelated Senate bill during the final day of the recent legislative session. State Treasurer John Kennedy, however, thinks such an investigation is not only appropriate but necessary.

 

By State Treasurer John Kennedy

Unless you just parachuted in from Mars, you’ve probably seen media reports about the retirement bill recently passed by the Legislature and signed by the Governor (Act 859) that boosts the retirement benefits for a small number (allegedly two) of Louisiana State Police Troopers.  The benefits-boosting provision, again according to media reports, was added to an unrelated bill on the last day of the legislative session by a six-person conference committee that did not meet publicly.  All six of the conferees say they did not sponsor the amendment.

It’s important we get the facts about what happened, how and why for two reasons.  First, fairness.  Whether you are a prince or a pauper, a king or a pawn, our retirement laws should apply equally to everyone.  Second, cost.  Louisiana’s four state retirement systems have a $19 billion deficit (called an unfunded accrued liability, or UAL, in accounting terms), which according to Standard & Poor’s is the sixth worst in America.  That means the present and projected future assets of the systems are $19 billion less than the retirement payments promised by law and guaranteed by taxpayers and the state constitution.  The Louisiana State Police Retirement System (LSPRS) has a $323 million UAL.

I sit on the Board of Trustees of the LSPRS as State Treasurer.  My fellow board members and I take seriously our fiduciary obligation to protect the system’s assets for the 933 active state troopers, 893 retired troopers and 341 troopers’ survivors.  We have directed our legal counsel to investigate the facts surrounding the passage and signing of Act 859 and report back to us within the month.  We have asked for the answers to the following nonexclusive questions:

  • How many people will Act 859 benefit?
  • Who are the people who will benefit, so they can be invited to speak to the LSPRS Board to explain their side of the story?
  • What is the cost of Act 859 to the retirement system and its members?
  • Is it true that the actuarial note discussing the cost of Act 859 was added three days after the bill passed and, if so, why?
  • What would it cost to give the same retirement benefit increase to all troopers and their dependents who are similarly situated?
  • Who sponsored the benefits-boosting amendment, so they can be invited to speak to the LSPRS Board to explain why they offered it?
  • Does the amendment satisfy the legal requirement of proper notice for a retirement benefits bill?
  • Does the amendment meet the legal requirement of “germaneness”(relevance) to the amended bill?
  • Does the amendment violate the state constitutional prohibition (art. I, §23)against the Legislature passing a law that impairs the obligation of contracts?
  • Does the amendment satisfy the state constitutional requirement (art. I, §3) of equal protection of the laws?
  • Does the process by which the amendment was adopted violate the Legislature’s internal rules?
  • What are the Board’s legal options?

Let’s get the facts.  I do not believe the LSPRS Board of Trustees will tolerate preferential treatment to the detriment of other active and retired troopers and their families, if indeed that is what is found to have happened. 

Editor’s note:

The following is a guest column offered by Baton Rouge teacher Fred Aldrich who, along with thousands of others, listened Monday as Superintendent of State Police Mike Edmonson appeared on the Jim Engster Show to defend the amendment tacked onto an unrelated bill on the final day of the legislative session which will give Edmonson an additional $55,000 (not $30,000 as first reported—we’ll explain at the end of Aldrich’s guest column) upon his retirement—a nice bonus unique to Edmonson and one other state trooper.

 

I am a long-time listener to NPR station WRKF, and I listen to the Jim Engster show whenever possible. I don’t always agree with Jim or his guests, but I usually don’t find my disagreements worthy of a response. Today was an exception.

The comments of Jim’s guests are not the opinions of Jim or WRKF, but unfortunately those comments may be spin and/or misinformation which listeners will take as truth.

State Police Superintendent Mike Edmonson was on the show this morning. I have great respect for the state police, and I have considered Edmonson one of the good guys in the Jindal administration. This morning’s interview, however, was problematical for me in several ways.

Engster congratulated Edmonson for having the fortitude to come on the program at a time when the superintendent is facing a lot of heat statewide. His performance suggested that he has paid attention during the years he has also served as a prop for the governor. He sounded earnest, sounded passionate, and sounded determined to serve his troopers and the people of the state. So far, so good, but that’s not why he’s on the hot seat. No one questions his dedication.

As a teacher with 38 years of experience in Louisiana and one who participated in the Deferred Retirement Option Plan (DROP) about the same time as he did, my understanding and experience with the program are much different from what Edmonson expressed on the program. He wanted to dispel “inaccuracies” with “facts,” but in my estimation he mostly promulgated misinformation, to wit:

  • The retirement systems which offer DROP are not “different” retirement systems than they were at the time he or anyone else went into DROP. DROP was simply a program within these retirement systems which was offered to employees for a few years, theoretically to provide valued employees an opportunity to continue working while putting three years of retirement checks in an interest-earning escrow account that could not be accessed until the employee finally retires, as which time federal laws regarding taxes and withdrawals apply. Though officially retired, the employee continued to draw his regular pay while payments were made into his DROP account. These three years do not count as service credit toward figuring eventual retirement benefits.
  • Despite Col. Edmonson’s casual use of the word, no one was “forced” into DROP. It was a choice for anyone with 30 years of service, or 25 years of service for those 55 years old or older. Those who chose to not enter DROP simply continued to work, with the three years counted as regular service credit, and allowed the employee to draw the retirement benefits he/she accrued upon final retirement. Had Col. Edmonson, and myself, and others, chosen to not participate, his, and our, retirement benefit would have been what it took him a specious legislative effort to attain.
  • The form that each DROP participant had to sign made the options and possible outcomes very clear. It states, in no uncertain terms, that the employee understands that his basic retirement benefit is frozen at that time, that the decision is irrevocable, that service credit past the exit from DROP is calculated in a different manner, and that DROP may not be the best option, depending on future circumstances. It urges employees to consider their decision carefully and seek financial counsel before they choose to enter the program.
  • The articles I’ve read and the radio program in particular fail to mention the three years of retirement pay in Col. Edmonson’s DROP account plus the accrued interest and whether he plans to return that money to the system if he gets his new benefit. In my case, and I was in DROP at the same time as Edmonson, my account balance has nearly doubled in ten years. (And my eventual retirement benefit will be approximately 65% of what it would have been had I not chosen to go into DROP.)
  • Col. Edmonson misstated the application of the $30,000 yearly bump that has been mentioned. No one I know of has claimed that this is a bonus on top of his new yearly retirement benefit. It is the difference between the benefit that he is entitled to as the result of his voluntary participation in DROP and his new benefit, courtesy of a friendly conference committee.
  • Blaming the confusion at the end of the legislative session for the “misunderstanding” is ridiculous. It’s beyond obvious that he and his allies (which could range from the governor down to legislative staffers) gamed the system and took advantage of this dysfunctional process for his benefit, then blamed the process for a misunderstanding.
  • As for the integrity in which Col. Edmonson bathed himself and the commiseration he offered a caller who found herself in a similar retirement situation, he could have demonstrated his concern by including all DROP participants in his legislation. I, and several of my colleagues, (and apparently many others) have tried to lobby for the same remedy that Col. Edmonson and his allies sneaked through (Let’s call it what it is.) We have met the runaround
  • from every source we’ve approached, and we’ve accepted that most of us will have been long dead before anything actually could be done.

Unfortunately, we’re not in the governor’s loop and teachers with 35-50 years of experience who make less than half the salary of Col. Edmonson don’t have the same voice. His assertion that everyone should get the same consideration that he does begs the fact that all troopers, state workers, and teachers don’t have the same political connections and the same willingness to go through this foul-smelling process to enrich themselves.

This is my understanding based on my experiences with DROP and my following of Edmonson’s gift from the conference committee. If anything is factually incorrect, I will readily stand corrected. As a reaction to what happened, I remain convinced that the whole action smells. There are many hard-working, conscientious, productive people in state government, law enforcement and education, who don’t get special treatment through a disgusting legislative process.

            In addition to Mr. Aldrich’s comments, we have some comments and additional information of our own to add:

During his appearance on the Jim Engster Show, Edmonson who last week said he never asked for the legislation and did not know about it, acknowledged that an unidentified” staff member” brought the matter to his attention and he authorized the effort to go forward. He also told Engster that the issue of the special legislation actually arose several weeks before the end of the session.

That being the case, why was it necessary to wait until the last day of the session, when the pace becomes hectic and confusing, to insert the amendment into a benign bill completely unrelated to retirement (the bill, Senate Bill 294, dealt with disciplinary procedures for law enforcement officers under investigation)? That tactic alone smacks of covert intent designed to keep the measure from the prying eyes of the media and public.

Edmonson, during his interview, acknowledged that when he voluntarily (and the word voluntarily should be emphasized here) entered DROP, he was a captain earning $79,000 per year in salary. By entering DROP, his retirement was frozen and would be calculated on that salary. The trade-off was that he earned a higher salary.

But he probably did not foresee his advancement to Superintendent of State Police at a salary of $134,000.

Based on a formula multiplying his salary by the number of years of service by 3.33 percent), he would have retired at 100 percent of that $79,000 salary instead of 100 percent of his higher salary of $134,000 after 30 years.

Until the passage of the secretive-shrouded amendment to SB 294, that is. The amendment will mean an additional $55,000 per year to Edmonson during his retirement years—$134,000 (100 percent of his current salary).

Should Edmonson live for 30 years after retirement, that’s an extra $1.14 million in retirement benefits.

The amendment prompted one retired state trooper, Jerry Patrick, to express his embarrassment “that one of our troopers was so selfish that he would tarnish the badge that I and so many others worked and sacrificed to honor.”

Patrick said that it was “no stretch to believe that the governor’s office was directly involved in requesting this for a member of the governor’s cabinet.”

To that end, LouisianaVoice has made three separate public records requests. The first was to the Louisiana State Police communications director (which was handed off to the agency’s legal team) requesting the opportunity to review “all emails, text messages and/or other communications” between Edmonson, his staff, State Sen. Neil Riser, his staff, and the governor’s office pertaining to any discussion of DROP and/or retirement benefits for Edmonson and any discussion of retirement legislation that might affect Edmonson.

We made similar requests of both the House and Senate for any similar communications between members of the conference committee that approved the special amendment, Edmonson, the governor’s office and Laura Gail Sullivan, legal counsel for the Senate Revenue and Fiscal Affairs Committee. Riser is chairman of that committee and was on the conference committee that inserted the amendment for Edmonson.

Through the grapevine, we have learned that Sullivan has already invoked the sacred attorney-client privilege to prevent releasing any of her emails. But that objection is questionable at best inasmuch as Edmonson is not her client. Neither is the governor. Nor is, for that matter, Riser.

Of course, she will probably include Riser by extension by virtue of his chairmanship of the committee for which she works but Riser, should he have nothing to hide, could always waive the attorney-client privilege.

If he does not, and if Sullivan does resist releasing the contents of her emails, we can only assume the obvious: there is something contained in those messages that the principals would rather we not know.

And to quote my favorite poet and playwright Billy Wayne Shakespeare of Denham-on-Amite from my favorite play, Hamlet Bob: “Ay, there’s the rub.”

But we are confident they would never try to hide anything from the public. This administration, after all, is the gold standard of ethics, openness and transparency. Gov. Jindal himself has said so on countless occasions in his many out-of-state appearances.

Oh, but wait. We also learned on Tuesday that House Speaker Chuck Kleckley (R-Lake Charles) has refused a request by State Rep. John Bel Edwards (D-Amite) for a full investigation of the secretive amendment. Kleckley said that because it was a Senate bill to which the amendment was attached, it becomes a matter for the Senate to investigate. Apparently, Kleckley neglected to note that three members of the conference committee that approved the amendment were House members.

Kleckley’s dancing around the issue, folks, is what is known as the Bureaucratic Shuffle.

 

Someone (and we are not pointing fingers at anyone—yet) has attempted to plant a computer virus on the LouisianaVoice web page which, once you log onto our site, first gives you a virus message, locks you out of the site and then gives you a message that the site cannot be found whenever you attempt to log back on.

We first got the warning from one of our readers earlier today and when we tried to log on a couple of hours later, we got a virus warning. Once we closed the page, we found that we were unable to log back on and we received the “site not found” message.

We solved the problem by re-booting (logging off our computer and then logging back on) and found that the problem was solved.

Should you experience the same problem, simply re-boot your computer and you should be able to access LouisianaVoice without any further problems.

As we said, we are not pointing fingers at anyone, but we will say this much:

Last year, when we were writing a series of stories about the shenanigans of Louisiana Office of Alcohol and Tobacco Control Director Troy Hebert, we were told by one of his agents that Hebert had boasted that it would be a simple matter for him to have his IT people to hack into our computer.

We made a direct email inquiry of Hebert as to the veracity of that report. More than a year later, we are still awaiting his response.

Again, we’re not point fingers. We’re just saying….

“Hopefully the board can—or someone will—challenge the constitutionality of the rogue amendment.”

—State Rep. Kevin Pearson (R-Slidell), chairman of the House Retirement Committee, commenting on the amendment to SB 294 which added $30,000 per year to the retirement income of State Police Superintendent Mike Edmonson.

State Rep. John Bel Edwards (D-Amite) Saturday told LouisianaVoice he will ask House Speaker Chuck Kleckley (R-Lake Charles) on Monday for a full investigation of the 11th hour amendment to an obscure Senate bill that resulted in an additional $30,000 per year income for State Police Superintendent Mike Edmonson upon his retirement.

The amendment, which was quickly signed into law by Gov. Bobby Jindal, allows Edmonson to revoke his decision made years ago to enter into the state’s Deferred Retirement Option Plan (DROP) when he was a captain. That decision, which is considered irrevocable, locked in his retirement at a rate based on his captain’s pay while netting him a higher salary but now he will be allowed to compute his retirement based upon his rank as colonel.

At the same time, blogger C.B. Forgotston revealed that the probable source of the amendment may not have been one of the six members of the Legislative Conference Committee, but a Senate staff attorney.

“I am embarrassed by this entire thing,” Edwards said in an interview with LouisianaVoice. “I voted for the bill without reading it with the amendment attached.

So did 89 other House members and 37 senators.

“I know this is not an excuse, and I would never rationalize my vote this way but the truth is in the final hours most members, including myself, probably were not even at their desks. We were all running around trying to take care of conference committee action on our own bills.”

Edwards, who is an announced candidate for governor in 2015, said he will ask Kleckley to initiate an investigation to determine the origin of the amendment. “Somebody asked for this amendment,” he said. “It didn’t just happen.”

His observation echoed State Treasurer John Kennedy who on Wednesday said at a board meeting of the Louisiana State Police Retirement System, “This amendment didn’t just fall from heaven.”

Edwards said the real irony of the overwhelming vote in favor of the amendment is that similar requests have all been rejected in the past. “I know that in my seven years in the legislature, I’ve had at least 20 constituents ask me to help them revoke their DROP decisions and I had to tell every single one of them that there was nothing we could do for them. And now I end up voting for just such a provision because it was hidden away in an obscure bill that we were told had nothing to do with retirement. I’m embarrassed.”

The bill, Senate Bill 294 by Sen. Jean Paul Morrell (D-New Orleans), dealt specifically with disciplinary procedures for law enforcement officers who are under investigation and had nothing to do with retirement in its original form. And conference committee member Rep. Jeff Arnold (D-New Orleans) did little to shed any light on the true intent of the amendment.

Jindal must share blame

And while much has been said about legislators’ failure to closely examine the last-minute glut of amendments and Conference Committee reports, little has been said about Jindal’s willingness to sign such a fiscally irresponsible bill.

Though legislators may have been pressed for time in the closing hours of the session, Jindal most certainly was not. He and his staff had ample time to examine all bills passed by the legislature and to consider their fiscal impact.

Bottom line is the governor simply does not get a pass on this. He is the same governor who attempted unsuccessfully to gut the retirements of tens of thousands of state rank and file civil service employees two years ago and now he signs a bill sneaked in on the last day of the session to give a raise that exceeds the total annual retirement income for thousands of individual state employees.

Moreover, it was a bill his staff should have informed him, as Pearson, Forgotston and a state attorney told us, is unconstitutional on several levels.

The reality is that Jindal checked out as governor long ago in favor of chasing the presidential brass ring that will never be his—and that makes his signing this bill even more unforgiveable.

It also raises the question of what his role in this debacle may have been.

Senate legal counsel culpable?

Reports surfaced on Saturday that Senate Revenue and Fiscal Affairs Committee legal counsel Laura Gail Sullivan was the person who tacked on the amendment without bothering to inform either of the six members of the Legislative Conference Committee—if they are to be believed.

The Conference Committee report that includes the amendment, dated June 2, the final day of the 2014 legislative session, contains the name “Sullivan” in the upper left corner of the report’s first page. http://www.legis.la.gov/legis/ViewDocument.aspx?d=911551&n

The Conference Committee is made up of three members of the Senate and three from the House. For a bill to be reported out of Conference Committee, two senators and two representatives must vote in favor.

Conference Committee members included Sens. Morrell (the bill’s author), Neil Riser (R-Columbia) and Mike Walsworth (R-West Monroe), and Rep. Jeff Arnold (D-New Orleans), Walt Leger, III (D-New Orleans) and Bryan Adams (R-Gretna).

Riser is Sullivan’s Senate committee boss

Riser, besides serving on the Conference Committee to consider the bill, also is chairman of the Senate Revenue and Fiscal Affairs Committee for whom Sullivan works as legal counsel. As such, she takes her marching orders from him. That being the case, what are the odds that Riser was carrying the water for Jindal? If so, did Edmonson request the favor from the governor? As both Edwards and Kennedy pointed out, the amendment didn’t drop from the sky.

A lot of questions that someone should answer—and soon.

Perhaps we will get some clarification from Edmonson (wink, wink) when he appears on Louisiana Public Radio’s Jim Engster show Monday at 9 a.m. http://wrkf.org/

LouisianaVoice sent separate emails to Riser, Rep. Kevin Pearson (R-Slidell), chairman of the House Retirement Committee; Sen. Elbert Guillory (R/D/R-Opelousas), chairman of the Senate Retirement Committee, and Senate President John Alario (R-Westwego). Our email posed three questions:

  • Do you plan to conduct/request an investigation into how the amendment giving the $30,000 a year raise to Col. Edmonson got added to SB 294—particularly now that our sources are saying it was done by a Senate counsel for the Revenue and Fiscal Affairs Committee?
  • Do you believe, if true, she was acting on instructions from someone further up the food chain and if so, who?
  • Were you aware the amendment was being added?

Pearson was the only one who responded

“I’m planning to look into this next week, as I have already done somewhat,” he said. “As you know the Senate staff is a different body than the House staff, different bosses that I am not as familiar with. But yes, I plan to find what actually happened.”

To the second question on whether or not he thought the Senate counsel was acting on instructions from higher up, he said he was unable to answer. “I really do not know,” he said. “I guess it is possible. I’ve never seen them go directly to my (retirement) staff without my being aware.”

As to whether or not he was aware of the contents of the amendment, Pearson said, “I had no clue the amendment was being added. I’m also fairly confident my (House) retirement attorney was unaware, especially since it was not a retirement bill. I did not vote (on) the Conference Committee report (he was one of 14 who did not vote) and I didn’t even know this happened until your article came out. I wasn’t avoiding the vote since I was unaware of these actions. I can’t even say where I was, possibly working on another Conference Committee report. I just don’t recall.

“I do appreciate you bringing this to our attention,” he said. “Hopefully the board can—or someone will—challenge the constitutionality of the rogue amendment.”

To probably no one’s surprise except a clueless Gov. Bobby Jindal, the takeover of the Louisiana Office of Group Benefits (OGB) by Blue Cross Blue Shield of Louisiana 18 months ago has failed to produce the $20 million per year in savings to the state.

Quite the contrary, in fact. The OGB fund balance, which was a robust $500 million when BCBS took over as third party administrators (TPA) of the Preferred Provider Organization (PPO) in January of 2013, only 18 months later stands at slightly less than half that amount and could plummet as low as an anemic $5 million a year from now, according to figures provided by the Legislative Fiscal Office.

OGB is one of the main topics to be taken up at today’s meeting of the Joint Legislative Committee on the Budget (JLCB) when it convenes at 9 a.m. at the State Capitol.

OGB is currently spending about $16 million per month more than it is collecting in revenue, said Legislative Fiscal Officer John Carpenter.

The drastic turnaround is predicated on two factors which LouisianaVoice warned about two years ago when the privatization plan was being considered by the administration:

  • Jindal lowered premiums for state employees and retirees. That move was nothing more than a smokescreen, we said at the time, to ease the state’s share of the premium burden as a method to help Jindal balance the state budget. Because the state pays a percentage of the employee/retiree premiums, a rate reduction would also reduce the amount owed by the state, thus freeing up the savings to patch gaping holes in the budget.
  • Because BCBS is a private company, it must return a profit whereas when OGB claims were processed by state employees, profits were not a factor. To realize that profit, premiums must increase or benefits decrease. Since Jindal had already decreased premiums, BCBS necessarily found it necessary to reduce benefits.

That, however, still was not enough and the negative income eroded the fund balance to its present level and now legislators are facing a severe fiscal crisis at OGB.

And make no mistake: this is a man-made crisis and the man is Bobby Jindal.

In a span of only 18 months we have watched his grandiose plans for OGB and the agency’s fund balance dissolve into a sea of red ink like those $250 million sand berms washing away in the Gulf of Mexico in the wake of the disastrous BP spill.

There is no tactful way to say it. This Jindal’s baby; he’s married to it. He was hell bent on privatizing OGB and putting 144 employees on the street for the sake of some hair-brained scheme that managed to go south before he could leave town for whatever future he has planned for himself that almost surely does not, thank goodness, include Louisiana.

So ill-advised and so uninformed was Jindal that he rushed into his privatization plan and now has found it necessary to have the consulting firm Alvarez and Marcel, as part of their $5 million contract to find state savings, to poke around OGB to try and pull the governor’s hand out of the fiscal fire. We can only speculate as to why that was necessary; Jindal, after all, had assured us up front that the privatization would save $20 million a year but now cannot make good on that promise.

In the real world, the elected officials are supposed to be the pros who know that they’re talking about while those of us on the sidelines are mere amateurs who can only complain and criticize. Well, we may be the political novices here, but the results at OGB pretty much speak for themselves and we can rightfully say, “We told you so.”

Are we happy or smug? Hell, no. We have to continue to live here and raise our children here while Jindal will be taking a job with some conservative think tank somewhere inside the D.C. Beltway (he certainly will not be the Republican candidate for president; he isn’t even a blip on the radar and one former state official now residing in Colorado recently said, “No one out here has ever even heard of him.”)

In a five-page letter to JLCB Chairman Rep. Jim Fannin (R-Jonesboro), Carpenter illustrated the rate history of OGB going back to Fiscal Year 2008 when premiums were increased by 6 percent. The increase the following year was 3.7 percent and the remained flat in FY-10. In FY-11, premiums increased 5.6 percent, then 8.1 percent in FY-12 when the system switched from a fiscal year to calendar year. but in FY-13, the year BCBS assumed administrative duties, premiums dropped 7 percent as Jindal attempted to save money from the state’s contributions to plug budget holes. For the current year, premiums decreased 1.8 percent and in FY-15 are scheduled to increase by 5 percent.

OGB Report_July 2014 FOR JLCB

Carpenter said that since FY 13, when BCBS took over the administration of OGB PPO claims, OGB’s administrative costs began to shift to more third party administrator (TPA) costs as the state began paying BCBS $23.50 per OGB member per month. That rate today is $24.50 and will increase to $25.50 in January of 2015, the last year of the BCBS contract.

That computes to more than $60 million per year that the state is paying BCBS to run the agency more efficiently than state employees who were largely responsible for the half-billion-dollar fund balance.

Follow

Get every new post delivered to your Inbox.

Join 2,368 other followers