The $500 million savings report by Alvarez & Marsal (A&M) was finally released on Monday only minutes before adjournment of the 2014 legislative session—and, conveniently for the administration, too late for critical feedback from lawmakers.
http://doa.louisiana.gov/doa/PressReleases/LA_GEMS_FINAL_REPORT.pdf
So, what makes this one any different than the others, given the fact that the A&M report acknowledges that Louisiana “has a long history of performance reviews, dating back to one performed by the Treen administration in the early 1980s?” Well, for one, the punctuation, spelling and grammatical errors contained in the report indicate that it was thrown together rather hastily to satisfy a state-imposed deadline for completion.
Of course the report was cranked out by “experts,” and as an old friend so accurately reminded us, an expert is someone with a briefcase from out of town.
The 425-page report, produced under a $5 million contract, while projecting a savings of $2.7 billion over five years (an average of $540 million a year), the substance of the report was sufficiently ambiguous to render the document as just so much:
(a) Useless trendy jargon and snappy catch phrases like synergy, stakeholders, and core analytics to give the report the appearance of a pseudo-academic tome;
(b) Eyewash;
(c) Window dressing;
(d) Regurgitation of previous studies by previous administrations that are now gathering dust on a shelf somewhere;
(e) All of the above.
Three things were immediately evident with only a cursory review of the report:
- Two offices that have been privatized by the administration as a means of savings and efficiency—the Office of Risk Management and the Office of Group Benefits—were subjected to rather close scrutiny by A&M which identified a host of ideas to make both offices more cost efficient. And we thought all along the administration had assured us of great cost savings and efficiency as its reasons for privatization in the first place. Yet A&M, in its report, claims its recommendations can save OGB another $1.05 billion while ORM can save an additional $128 million through implementation of recommendations contained in the report.
- While A&M met extensively with and took suggestions from state employees who were tasked by the administration with coming up with savings ideas as far back as last September, not one word of acknowledgement is given to those employees in the report, prompting one employee to wonder, “Why the hell can these New Yorkers take my ideas and work and resell them to the state?” Of course the report did give a tip of the hat to Commissioner of Administration Kristy Nichols for her assistance in overseeing “all aspects of the state’s participation.” We suppose that will have to suffice.
- Though virtually every office operating under the auspices of the Division of Administration came under the watchful eye of the A&M suits, not a single recommendation for increased efficiency and/or cost savings was offered up for the Governor’s Office itself. The closest A&M got to the governor’s office was the Office of General Counsel, the legal office of the Division of Administration. The obvious conclusion to be drawn from that is that the Governor’s Office is already operating at peak efficiency and minimum waste.
Most of the projected cost savings were based on assumptions for which A&M offered little or no supporting data other than arbitrary estimates and suppositions that could have been produced at a fraction of the report’s $11,760 per-page cost.
The report acknowledged that Louisiana already has the highest Medicaid recovery rate in the nation with $124 million in improper payments recovered but nevertheless listed as one of its recommendations that the Department of Health and Hospitals (DHH) “reduce improper payment in the Medicaid program.”
Seriously? Who would’ve thought that might be a way to save money?
Other suggestions included in the study by agency and projected savings (in parentheses):
DHH ($234.1 million)
- Establish more cost-effective pediatric day health care programs and services;
- Maximize intermediate care facility (ICF) bed occupancy rates;
- Shift the administrative management of uninsured population from state management organization to local governing entities (Municipal and parish governments better take a long, hard look at that recommendation);
- Improve the process and rate of transition of individuals with age-related and developmental disabilities from nursing facilities and hospitals. (So just where are those age-related and those with developmental disabled individuals being transitioned to? Are they to be removed from state facilities as a cost-saving move? And they accused Obama of creating death panels with the Affordable Care Act?)
Department of Transportation and Development (DOTD) ($99 million)
- Expand advertising revenue for roads, bridges and rest stops;
- Reduce the construction equipment fleet;
- Convert some of vehicle fleet to natural gas (for this we needed a consultant?)
- Reduce cost overruns with quality assurance/quality control engineering firm (another consulting contract);
- Utilize one-inch thin asphalt overlay (and after reducing the construction equipment fleet we can change the names of our state routes from highways to obstacle courses).
Department of Corrections: ($105.3 million)
- Expand certified treatment and rehabilitation program;
- Expand re-entry program;
- Increase use of self-reporting.
Department of Revenue and Taxation ($333.4 million)
- Re-build audit staff positions depleted because of retirements and hiring freezes;
- Increase compliance efficiency and reduce backlog of litigated cases
Department of Public Safety ($45.4 million)
- Centralize state police patrol communications
- Consolidate state police patrol command position;
- Optimize state police patrol shifts
- Expand Department of Public Safety span of control.
Office of Juvenile Justice ($44.2 million)
- Increase probation and parole officers’ caseloads (Seriously? Do these clowns have even a remote idea of what these officers’ job is like? The caseloads have increased steadily and there have been no pay raises for what, five years now? For even suggesting that, those A&M suits should be horse whipped with a horse.);
- Relocate youth from Jetson Center to other Office of Juvenile Justice (OJJ) facilities (so, just how out of touch was A&M to have not known the Jetson Center was closed in January?);
- Increase OJJ span of control.
Department of Children and Family Services ($2 million)
- Continue to implement innovative strategies intended to reduce;
- Safely decrease the time children spend in state custody.
Louisiana Economic Development ($142.9 million);
- Adjust fees for inflation;
- Enhance review process for Motion Picture Tax Credits;
- Enterprise Zone benefits and audit review process;
- Consolidate Louisiana Economic Development (LED) offices into one government-owned facility (What? No privatization?).
Human Capital Management ($65.9 million)
- Creation of agency workforce and succession plans;
- Redesign of job families through creation of a competency model;
- Improve the administration of Family and Medical Leave (FMLA) across agencies;
- Review overtime policies;
- Increase span of control for agency supervisors.
Office of General Counsel ($3.825 million)
A&M noted that the Office of the General Counsel (that would be the in-house legal counsel—they hate being called that—for the Division of Administration) “is responsible for ensuring that the commissioner’s statutory duty to respond to public record requests in a timely and legal manner is carried out.”
This was a favorite part of the entire report for us. The DOA Office of the General Counsel has historically delayed responding to public record requests of LouisianaVoice far beyond any reasonable—or legal—time limits. Louisiana’s public records statutes require an immediate access to public records unless they are unavailable in which case the custodian of the record must, according to law, respond in writing as to when they will be available within three working days. It is not at all unusual for the Office of the General Counsel to drag his feet for weeks on end before producing requested records.
But A&M has solved that knotty little problem by pointing out that as the custodian of the DOA’s public records, “it is the commissioner’s (Kristy Nichols) responsibility to receive and process public records.”
A&M’s recommendation that the Office of the General Counsel can generate its five-year cost savings simply by:
Increasing the organization efficiency of the office, ($1.975 million) and
Increasing the efficiency of document review process and reducing internal and external attorney costs ($1.85 million).
That, of course, raises the burning question of what will happen to Jimmy Faircloth?
Other suggested savings came under:
- Procurement ($234.8 million);
- Facilities Management and Real Estate ($70.9 million), and
- Provider Management ($2.2 million).
“I am so proud of this report,” gushed Nichols. “These are real, common sense solutions that will not only save money for the people of Louisiana, but will improve the way we operate.”
Question, Kristy: If they are such “real, common sense solutions,” why has this administration in six-plus years experienced this epiphany before now?
Another question: If these suggestions, which you say were “thoroughly vetted,” are going to save money for us and make our lives better through better operations, where has Jindal, his cabinet secretaries, undersecretaries, deputy secretaries department heads, managers and great legal minds been all this time? Wasn’t it their job to give us the biggest bang for the buck? (Oops, that’s three questions.)
Oh, well, let’s go for broke here. Fourth question: Who “vetted” these wonderful ideas? If the vetting was done by those already on the state payroll, why didn’t those employees perform the task in the first place instead of blowing $5 million on this report that a second year economic major at LSU could have written?
Fifth question: Does the administration—and by extension, A&M—hold employee morale in such low regard that it was not considered as a factor in facilitating more efficient job performance across the board? Improved employee morale would seem to be conducive to cost savings, yet it was never addressed even once in the entire 425-page document. That omission speaks volumes.
And finally, if you are “so proud of this report,” why was it that you reportedly tossed an A&M representative out of your office with the admonishment that he’d better find something after he initially reported to you that his consulting firm was having trouble coming up the $500 million savings?
Could this explain why some of the “savings” appear to have been plucked out of thin air?
Wonder what exactly they mean by improving the rate of transition of age related and developmentally disabled individuals from hospitals and nursing facilities? Seems to me that these transitions, at least in the elderly populations, are pretty permanent. I shudder to think of their plan to improve this.
This is an excellent summation. Nothing in the newspapers approaches the informational value of this article. The slick language of the A&M report hides future horrors – we can be sure. Reading between the lines I see the word “dissolution”- of the weak, the poor, state employees, the environment… Odd nothing was mentioned about Jitler’s travels and security costs – guess that’s off limits since it is so freakin’ important that the rest of the world is introduced to his brand. You rock, Tom.
Tom;
As always, this is reporting at its best. I am hollowed out and filled with: 1. shock, and 2. The question that I have wanted to ask so many times but am embarrassed by my limited knowledge of government and process, but I’m feeling desperate, so: What can I do and what can we do to make it better? How do we respond to these issues?
Tom – you probably put more effort into your “cursory review” of the document than A&M did in creating it, and certainly more than the administration will in following it. Thank you for doing all of this for us.
At a cost of $11,764.70 per page, this report is not worth the paper it’s written on. It is outrageous [in the pre-millennial sense]. The press jumped quickly into the fray when money was cut [temporarily] from programs for the developmentally disabled and diverted to a private raceway, but they have a ho-hum attitude about this total waste of about the same amount of money. Sheeeeeeeeesh!
When I read Kristy Nichols press release, I found it humorous that she listed one of the recommendations as “creating a disease management program to support patients with chronic conditions at DHH.” The LSU Hospital System centered its care around Disease Management of Chronic Illnesses, but DHH downplayed its significance every time the subject came up. So now it’s a good idea. Too bad DHH will have to start from scratch.
I want to hire a consultant to tell us how to save money by avoiding worthless consultant blather disguised as a report.
I’m glad the governors office was untouched—it’s the moocher employees in state government making all thses wasteful decisions—not.
*insert clever comment here*
>
On behalf of Louisiana taxpayers, I respectfully request a refund.
Sir, I laughed out loud when I read the suggestion to the Juvenile Probation and Parole Agents was to ‘increase (their) caseload.’ I did Adult P&P for three years, last in 2003 and I remain in contact with my former co-harts on the Adult side and Juvenile side. They state that their caseloads have been increasing since I left and from 2009 to 2013 their salaries were stagnated because of the pay freeze authorized by Governor Jindal. This report is only good for one thing and before I would use it for that, I’d have to rub the sheets together in order to make it softer. Some of you more ‘experienced’ people probably know what I’m talking about…
OK, this is meant to be sarcastic. The reason the governor’s office was “exempt” from the report is due to the “fact” is that everybody just knows that Herr Jindal is absolutely perfect. One does not cut nor look critically at perfection.
Your opinions may vary.
I am reminded of the famous words so often used by Gomer Pyle,” Surprise! Surprise! Surprise! Do you suppose Jindal believes the people in Louisiana are clueless to his antics? I don’t think he gives a damn—nor do the legislators. I believe this legislative session was the biggest waste of money and more damage was done due to the meeting of the mindless who follow Jindal which must have been really difficult this session since he wasn’t in Louisiana.
I only wish the state he is lying to right now will keep him there. The citizens can cancel all the waste by not paying the consultants nor the state employees with large salaries who work for Jindal in his presidential campaign. Put John White on a Greyhound bus home and clean this state up. I see a few leaders out there who are standing up and fighting the final passage of the bill which if Jindal signs will eventually destroy this state and if left to the present governor and legislators, Louisiana will be nothing more than a toxic dump site.
According to The Advocate;
“Alvarez and Marsal said it spent more than 15,000 hours looking at agency operations and produced 72 recommendations”.
Let’s use some “Common Core Math”:
$5,000,000 / 15,000 hours= $333.33 per hour
Good gig if you can get it!
$5,000,000 / 72 recommendations = $69,444.44 per recommendation
Seems sort of pricey.
15,000 hours/72 recommendations = 208.33 hours per recommendation.
Of course, I consider this an aveage. Some recommendations may take more time than others. Still, 208.33 hours / 24 hours/ day = 8.7 days.
So there you have it. Each recommendation took a cummulative (not necessarily consecutive) total time of about 8.7 days.
This “study” brings to mind Treasurer John Kennedy’s plea to cut the number and size of state contracts. At an average salary of $34.60 per hour for an A&M consultant those 15,000 hours would have spent slightly more than a half million. Marking up those billed hours 57% would raise the billing rate to $800,000+. It begs the question: Where’s the beef?
I find it interesting that one of the suggestions for DPS to reduce cost is to centralize State Police communications. The reason I find it interesting that A&M suggest it is because State Police has been in the process of that very thing for the last two years. And A&M’s suggestion of “optimizing” the patrol shifts is simply laughable as I’m sure anyone who has worked in law enforcement in a patrol capacity would agree.
Did the report really suggest that all pregnant women on Medicaid should be required to give birth at home??????
Yes, and it recommended the use of midwives and doulahs both in the home and in birthing centers staffed by them. Their basis was that other states do this more than us.
http://wrkf.org/post/insight-inside-cost-saving-report
Amy Jeffries interviews Robert Travis Scott about this.
In the interests of civility (I guess) the ridiculous report is treated seriously in this interview, but its weaknesses leak out. Worth reading/listening.
[…] This report reminds me of the one conducted in Louisiana. […]