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Alvarez & Marsal, Gov. Bobby Jindal’s favorite consulting firm, has submitted invoices totaling more than $2.1 million thus far, accounting for a tad more than the firm’s $5 million contract to ferret out $500 million in savings to the state, according to documents provided by the Division of Administration.
And so far, all taxpayers have to show for that is a 2 ½ page preliminary report provided to legislators earlier this month recommended $74 million in spending cuts, some of which have already been rejected by the administration.
A&M’s invoices included an $80,000 charge for an assessment of the Office of Group Benefits (OGB) conducted in December at the specific request of Commissioner of Administration Kristy Nichols.
But…but…but didn’t the administration conduct a full blown assessment of OGB before it made that decision to privatize the agency a couple of years ago? Is this administration determined to study and consult this state into financial oblivion?
And speaking of OGB, that $500 million reserve fund it had when Jindal came up with the bright idea of privatization—an economy move, he said; it would save the state gazillions—has shrunk like hemorrhoids in a Preparation H commercial and both the Legislative Fiscal office and the Legislative Auditor’s office are projecting an end of year balance of only $55 million or so.
And Jindal’s ploy of reducing premiums—the by-product of that action being that it would also reduce the state’s portion of premiums by 9 percent, freeing up money Jindal would use to patch yet another state budget—has now done a 180 with the word going out this week that premiums for state employees and retirees and their dependents will be increased by 5 percent, effective July 1.
Talk about your voodoo economics…
So why blow $80,000 to conduct the OGB “assessment when the Legislative Fiscal office and/or the Legislative Auditor’s office would probably have performed the same service for free.
Wait…they did already.
Yep, both conducted their own separate assessment and came up with remarkably similar numbers for the anticipated reserve fund reduction by the end of 2014. The picture isn’t pretty and no consultant’s study is going to change that.
Legislative Auditor Daryl Purpera said the reserve fund is currently being reduced by about $17 million a month and even with the 5 percent premium increased announced by the administration, the drawdown will be reduced by less than half—$7 million, leaving the monthly deficit at $10 million a month.
Nichols, in typical fashion, continues to spout the party line, assuring us that everything is peachy and the fund is in no danger of going broke. So now with this prediction coupled with previous pronouncements, we now know her to be a legal authority, an economist, an actuary and a wellness expert. Given her track record, we should be worried, very worried.
But we digress. Back to those A&M invoices and the firm’s recommendations.
In case there may be those whose memories are short, A&M is the same firm that Jindal hired last year to come up with his brainstorm of eliminating state income taxes, a plan that crashed and burned before ever lifting off.
It’s also the same firm that advised the Orleans Parish School Board to fire 7,500 teachers after Hurricane Katrina, an action that prompted a class action lawsuit which in return produced a judgment in favor of the teachers that could end up costing the state $1.5 billion.
So, what did that 2 ½ page preliminary report contain? Oh, great things, like requiring women on Medicaid to use midwives or doulas for delivery (these would be women who often go without prenatal care), finding jobs for prison inmates, cutting the thickness of asphalt in future highway overlays, and cutting back hours of operation for the Cameron Parish ferry.
It didn’t take Jindal long to cave to pressure to keep the ferry open.
Scratch that big savings.
Then Jindal decided against a plan not part of the A&M recommendations, that of closing 18 motor vehicle offices throughout Louisiana.
Out with that savings plan.
Now, having already been paid 40 percent of its contract amount, A&M still has not submitted the overall plan for saving $500 million—a plan originally given the deadline of April 30 but extended to the end of May.
That gives A&M three days to come up with an additional $426 million in savings.
Could it be that the one-month extension was timed to have A&M submit its savings plan only hours before the legislature adjourns on Monday, thus giving lawmakers no opportunity to review the plan or to offer any input of their own?
With this governor, stranger things have happened.