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Archive for the ‘Contract, Contracts’ Category

The seventh floor of the Bienville Building on North 4th Street in Baton Rouge became a beehive of activity recently when employees of a temporary personnel service moved in to begin shredding “tons of documents,” according to an employee of the Louisiana Department of Health and Hospitals (DHH).

DHH is headquartered in the Bienville Building and the source told LouisianaVoice that the shredding, undertaken “under the guise of being efficient and cleaning,” involves documents that date back as far as the 1980s.

“The significance of this is that this is occurring in the midst of a lawsuit (that) DHH is filing against Molina in relation to activities that go back to the ‘80s,” the employee said. “Everyone is questioning the timing. Westaff temporary people have been in the copy room of the seventh floor for approximately two weeks now, all day, every day, shredding documents.”

https://www.westaff.com/westaff/main.cfm?nlvl1=1

The employee said so many documents were being shredded “that the floor is full of dust and employees have been ordered to clean on designated cleaning days” and that locked garbage cans filled with shredded documents “are being hauled from the building daily.”

LouisianaVoice submitted an inquiry to DHH that requested an explanation “in light of the current litigation involving DHH, Molina and CNSI”—two companies the agency contracted with to process Medicaid claims.

CNSI (Client Network Services, Inc.), which replaced Molina as the contractor for those services in 2011, had its $200 million contract cancelled by the Jindal administration after allegations of contact between then-DHH Secretary Bruce Greenstein and CNSI, his former employer, during the contract selection process. Investigations by the Louisiana Attorney General’s and the U.S. Attorney’s offices ensued but little has been heard since those investigations were initiated. Meanwhile, CNSI filed suit against the state in Baton Rouge state district court in May of 2013, alleging “bad faith breach of contract.” http://theadvocate.com/home/5906243-125/cnsi-files-lawsuit-against-state

Molina, meanwhile, was reinstated as the contractor to process the state’s Medicaid reimbursements but last month the state filed suit against Molina Healthcare and its subsidiary Molina Information Systems, alleging that the state paid Molina “grossly excessive amounts” for prescription drugs for more than two decades because the firm engaged in negligent and deceptive practices in processing Medicaid reimbursements for prescription drugs.

Prescription drugs account for about 17 percent of the state’s annual Medicaid budget, the lawsuit says.

The state’s lawsuit says that Molina has processed the state’s Medicaid pharmacy reimbursement claims for the past 30 years but from 1989 to 2012, Molina neglected to adhere to the state formula for payments and thereby committed fraud and negligence, violated the state’s consumer protection and Medical Assistance Programs Integrity laws. http://theadvocate.com/news/business/9579038-123/la-sues-medicaid-drug-payment

Olivia Watkins, director of communications for DHH, told LouisianaVoice by email on Wednesday that the Division of Administration maintains a contract with Westaff for temporary workers which can be used by different state departments. “DHH requested temporary workers through the existing contract to assist with various projects, including shredding,” she said.

A search of LaTrac, the state’s online directory of state contracts, failed to find either Westaff or Molina listed as contractors among either its active or expired contracts.

“With regard to the shredding,” Watkins said, “those documents that were shredded were old cost reports, statements and facility documents that were outside of their document retention period (anywhere from 5-10 years). The files being shredded were in no way related to the department’s previous contract with CNSI.”

Watkins, while denying any connection to the CNSI contract, failed to mention whether or not the shredded documents involved Molina’s contract or the state’s litigation against the company even though the LouisianaVoice inquiry specifically mentioned both companies.

In June of 2002, the nation’s largest accounting firm, Arthur Andersen, was found guilty of unlawfully destroying documents relating to the firm’s work for its biggest client, the failed energy giant, Enron.

And while that conviction was eventually overturned, the damage from its actions doomed the company and it ultimately shut its doors for good.

In the weeks leading up to the Enron collapse, Andersen’s Houston practice director Michael Odom presented a videotaped talk—that was played many times for Andersen employees—on the delicate subject of file destruction.

In that video, Odom said that under Andersen’s document retention policy, everything that was not an essential part of the audit file—drafts, notes, emails and internal memos—should be destroyed immediately. But, he added, once a lawsuit was filed, nothing could be destroyed. Anything could be lawfully destroyed, he advised Andersen employees, up to the point when legal proceedings were filed (emphasis ours). http://www.mybestdocs.com/hurley-c-rk-des-law-0309.htm

“If it’s destroyed in the course of the normal policy and litigation is filed the next day, that’s great,” he said, “because we’ve followed our own policy, and whatever there was that might have been of interest to somebody is gone and irretrievable.”

In a matter of days, Andersen’s Houston office began working overtime shredding documents, according to authors Bethany McLean and Peter Elkin in their book The Smartest Guys in the Room (The Amazing Rise and Scandalous Fall of Enron).

Perhaps the DHH shredding had nothing to do with the CNSI contract with DHH or with the litigation filed by CNSI over cancellation of its contract.

And it may be that the shredding was in no way connected to the Molina contract, even though Watkins failed to address that specific question by LouisianaVoice.

It could well be, as Watkins said, the document destruction was purely a matter of routine housekeeping.

But the timing of the shredding flurry, coming as it did only days following the July 10 filing of DHH’s lawsuit against Molina, and DHH’s murky and adversarial relationship with the two claims processing contractors do raise certain questions.

And Watkins’ assertion that the shredded records consisted of “old cost reports, statements and facility documents,” the dates of which fall within the time frame of the allegations against Molina, would seem to make those questions take on even greater relevance.

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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.

 

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“The amendment impedes an existing contract. Col. Edmonson entered into a binding contract when he entered DROP and that is irrevocable. We have had a constant parade of state employees who wanted out of DROP and every single one has been denied.”

—State official, commenting on the 11th hour amendment to SB 294 which would give State Police Commander Mike Edmonson a $30,000 per year increase.

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State Treasurer John Kennedy told fellow members of the State Police Retirement System (LSPRS) Wednesday that he wants answers to a laundry list of questions pertaining to legislative passage of an amendment to an otherwise minor senate bill that increased State Police Commander Mike Edmonson’s retirement benefits by $30,000 per year.

http://www.auctioneer-la.org/Kennedy_LSP.htm

In asking for a thorough investigation of the amendment that was slipped on Senate Bill 294 on the final day of the legislative session, Kennedy said his main concern was with New York bond rating agencies, though he also questioned the fairness of the amendment’s applying only to Edmonson and one other Master Trooper from Houma.

“I was in New York when this story first broke (LouisianaVoice ran the first story about the amendment last Friday) and we had discussions about the $19 billion unfunded accrued liability (UAL) of the state’s four retirement systems,” he said. “These rating agencies read our newspapers and our blogs and they know more about Louisiana than we do.”

As State Treasurer, Kennedy sits on some 30 different state boards, including the State Police Retirement System Board but he said his interest in attending Wednesday’s meeting was in protecting the state’s bond rating. “If our rating goes down, our interest rates go up,” he said. “I spent 12 or 13 hours with them and they are worried about our Medicaid situation, our use of non-recurring revenue and our retirement systems’ UAL.”

Another state official, an attorney, told LouisianaVoice that he had another constitutional violation to add to C.B. Forgotston’s list of five constitutional violations of the amendment: “The amendment impedes an existing contract,” he said. Col. Edmonson entered into a binding contract when he entered DROP and that is irrevocable. We have had a constant parade of state employees who wanted out of DROP and every single one has been denied.”

Kennedy said there are two sides to every story. “I’d like to talk to Charles Hall (of Hall Actuaries, which did a study for the legislature earlier this year). I’d like Sen. Jean-Paul Morrell (D-New Orleans) who authored the original bill to come speak to us.”

Kennedy said the two men benefitting from the amendment also have a right to address the board. “They have every right to due process,” he said.

Other answers he said he would like include:

  • How many people are impacted by this amendment?
  • Who are they? (The identities of the beneficiaries of the amendment);
  • Who sponsored the amendment in committee? (so they might come before the board and explain their motives);
  • What is the total cost of the amendment? (so he can report back to the rating agencies);
  • What are the remedies, litigation or legislative relief, allege the bill is illegal or simply refuse to comply?
  • What are the legalities of the bill? (Can an amendment be done dealing with retirement issues that is supposed to be advertised?);
  • Has special treatment been given?

“Years ago, we had anywhere from 10 to 15 bills introduced each year to give special treatment to one, two or three individuals without appropriating any money,” he said. It was wrong then and it’s wrong now.

“Gov. (Mike) Foster finally said ‘Enough, we will do this no more.’ And now here we are again. The rating agencies are appalled at that.”

Kennedy, in a private interview after the meeting, said he was concerned with everyone being treated equally. “I don’t believe in special treatment for those who have the political power or (who) know the right people. I think it’s stupid economically and it is what has contributed to the UAL. This amendment has implications far beyond the two men affected. I want to see how much it would cost to give everyone the same treatment.

“We have the sixth worst-funded retirement systems in America and the rating agencies have told us over the past two years to get our business straight or they will downgrade us. If that happens, we’ll be paying higher interest on our bonded indebtedness.”

Kennedy saved his harshest criticism for the legislature when he said, “Someone didn’t read this bill or they’re not being candid. They should be doing these amendments in a more transparent way. These last minute amendments are done and no one know what they’re adding and suddenly, it’s an up or down vote.

Kennedy asked LSPRS Executive Director Irwin Felps, Jr. if the board could meet before the next scheduled meeting on the third Wednesday of September. “It’s important that we address this issue,” he said.

“There’s no excuse for this. This amendment didn’t just fall from heaven. Somebody has a lot of explaining to do and if I find preferential treatment, I will vote to rescind the amendment.”

Kennedy’s claim of a lack of transparency and the sudden “up or down vote” was illustrated when Rep. Jeff Arnold (D-New Orleans) explained the amendment on the floor of the House during the final hectic hours when lawmakers were hurrying to wrap up business:

“The new language to the bill applies to those paying more into the system since 2009 for benefits they cannot use,” he said. “It makes people whole but does not give them a larger benefit.”

Don’t believe us? Watch and listen for yourself as Arnold explains the new legislation in all of 15 seconds.

Then you can decide for yourself if the amendment’s sponsors were being completely up front with their colleagues—and with Louisiana taxpayers.

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The news just keeps getting worse for Superintendent of Education John White.

Gov. Bobby Jindal has put White on a short leash with Executive Order BJ 2014-7 on June 18 and last Wednesday (June 25) Internal Audit Administrator Marsha Guidry issued an extensive laundry list of documents information relating to the Department of Education’s (DOE) contract with Data Recognition Corp.

At the same time, LouisianaVoice has learned the Legislative Auditor’s office is conducting an investigation of DOE that could involve payroll fraud, according to sources inside the department.

White, as we have reported several times in the past, has loaded up the department with unclassified appointments at bloated six-figure salaries.

There are apparently three major problems with that:

  • Many of these appointees seldom, if ever, show up for work and apparently are required to perform few, if any, duties to earn their keep;
  • The department did not have enough money in its budget to pay their salaries so they are reportedly being paid from federal funds earmarked for specific purposes;
  • The appointees are not assigned to areas for which the federal funds are allocated.

If true, these are serious allegations and even more serious violations that could prompt a federal probe in addition to the investigation already underway by the Legislative Auditor.

Of course, no one really knows who works where at DOE because no one has ever managed to obtain an organization chart for the department.

Oh, the Legislative Auditor, among others, has tried but with each request over the past couple of years now, the response has always been that the department is “undergoing reorganization.”

So, no organization chart and no determination of who works where in DOE.

And now, on top of that sticky wicket, up crops the controversy over Common Core and the testing by Partnership for Assessment of Readiness for Colleges and Careers (PARCC).

Short version: Jindal, White and the Board of Elementary and Secondary Education (BESE) back Common Core and legislation is introduced for state implementation of Common Core.

But then, somewhere along Jindal’s way to the White House, someone whispered in his ear that path of least resistance to the Oval Office would be for him to oppose Common Core on grounds that he didn’t want the big bad old federal government dictating how we teach our kids in Louisiana. He may even have waved a little American flag when he said it.

But White and BESE continue to back Common Core and the legislature passes it.

Jindal vetoed it but White and BESE said they were going ahead with it, and Jindal jumped onto his Nautilus Nitro Plus workout station to prepare for battle. He announced he was canceling the contract for the testing because, he said, DOE had issued the contract without taking competitive bids.

And now, the Office of Contractual Review (OCR) is reviewing the contracts.

Meanwhile, Guidry sent this letter to White:

Executive Order BJ 2014-7, issued June 18, 2014, directed the Division of Administration (DOA) “to conduct a comprehensive accounting of all Louisiana expenditures and resources related to PARCC.”  Pursuant to the Executive Order (EO) and the auditing authority of DOA over consulting contracts, I have been asked by the Commissioner to collect and review certain information.  Please provide the following information to carry out the EO to ensure DOE is complying with Louisiana law.

 Please identify and provide documentation for the following:

 1.      All documentation related to contracts with DRC or other testing or academic assessment tools, including both paid and outstanding invoices.

2.      Please provide an accounting of the cost of the PARCC Technology Readiness Tool survey, the method and documentation related to the procurement of this survey, and documentation of the funds used to pay for it, including all receipts and accounting paperwork.

a.       Please provide information related to the price of PARCC assessments as a total cost to the State of Louisiana and as an individual cost of each assessment to be provided in the State of Louisiana. This should include:  any cost information related to an increase or decrease in cost as a function of the number of states withdrawing from PARCC or other reasons.

3.      Please provide documentation related to negotiations on the price of any new assessment tool(s) including any negotiations or communications related to the cost of individual assessments, the total cost to the State of Louisiana of new assessments, or any breakdown of the cost negotiated or discussed by or with DOE. This should include communications conducted in writing (emails, letters, and memos) as well as any meeting minutes and calendar entries.

a.       Please also provide documentation of how DOE’s negotiations met the statutory requirement for the lowest-cost bidder, for a competitive procurement process, and the statutory authority of DOE to conduct such negotiations.

4.         Please provide evidence of DOE’s process to ensure during any Request for Proposal (RFP) conducted by PARCC or by a member state on behalf of PARCC that such RFP was a fair, competitive, price-sensitive proposal and was conducted using a fair, transparent process in accordance with Louisiana revised statutes. Please provide all files relative to these procurements.

5.         Please provide evidence that John White affirmed in writing to the Governing Board Chair of PARCC the State’s continued commitment to participation in the Consortium and to the binding commitments made by John White’s predecessor as Chief State School Officer as required by the Memorandum of Understanding establishing the PARCC Consortium.

 In addition to providing the above documentation, please provide a written response to each of the following questions:

a.       What contracts or other agreements are in place or in negotiation for the purchase of an assessment?  Please provide a list of these along with copies of all related documentation.

b.      What steps have been taken by DOE to procure any Common Core aligned assessment product?

c.       What steps have been taken by PARCC to procure any Common Core aligned assessment product?

Please provide these items by June 30, 2014. I may identify other documents or information necessary to complete this review and request your cooperation pursuant to the Executive Order.  Please identify any additional individuals within DOE who will be available to respond to any questions I may have during the course of the review.

 The documentation requested should be delivered to the Office of the Commissioner to my attention at 1201 N. Third Street, Baton Rouge, LA, 70802, Suite 7-210, on the 7th floor of the Claiborne Building.

http://www.myarklamiss.com/story/d/story/division-outlines-next-steps-in-doe-contract-revie/34643/LOilN9i14EaHl0wQ9zrGuA

You will note that White was given until today (Monday, June 30) to provide the information.

The problem with the governor’s request, as LouisianaVoice, Crazy Crawfish and others have learned, is that Jindal may not have followed proper procedure in seeking the information.

You see, when we ask for information, we are required to ask for specific documents, not simply information.

In fact, both DOE and the Division of Administration (DOA) have in the past simply refused to comply with our requests with the stock response that we requested information as opposed to specific records and therefore, both DOE and DOA felt comfortable informing us (somewhat condescendingly, we might add) that they were not required under the state public records act to respond.

Now if White only had the stones to tell DOA and Jindal that, we might yet have that epic Niles-Sheldon grudge match on Pay per View.

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There’s a new fight brewing between Gov. Bobby Jindal and Chas Roemer over the simmering Common Core standoff between the governor’s office and the Board of Elementary and Secondary Education (BESE).

And if it were done right, it would be a memorable encounter. Sadly, it shapes up to be just another faceoff between lawyers.

BESE will consider retaining a special legal counsel in its efforts move forward with the Common Core test plans, according to BESE’s revised agenda released on Friday.

http://theadvocate.com/home/9577083-125/possible-legal-action-on-revised

Such a legal battle would pit BESE against the governor’s office after Jindal issued an executive order to discontinue Common Core tests being prepared by the Partnership for the Assessment of Readiness for College and Careers (PARCC).

Jindal, in his best imitation of John Kerry, was for Common Core before he was against it and now sniffs he will never let that big bully, aka Washington, D.C., dictate to Louisiana which, by golly, will devise and administer its own tests. That prompted former State Superintendent of Education Paul Pastorek (before he was shoved out the door by Jindal who wanted current Superintendent John White who he now opposes on the Common Core issue) to rebuke his former boss when he proclaimed that the feds have nothing to do with setting Common Core standards. That point remains debatable.

Got that? Didn’t think so. Neither do we.

Jindal ordered BESE (an independently elected, autonomous board, by the way) to initiate a competitive bid process for a new assessment process so the state can come up with its own academic standards. He also suspended a contract between the Louisiana Department of Education (DOE) and PARCC.

In a real test of wills, Jindal’s office also has demanded that DOE produce volumes of test-related documents by Monday.

We at LouisianaVoice can offer our own experience with that seemingly innocuous request for public records.

On Monday, June 23, I submitted a request for “all itemized invoices and records of payments” to a DOE vendor. What I got in return was simply a list of payments. No invoices at all, let alone itemized invoices.

My patience already stretched to the breaking point with recurring delays by DOE on other public records requests, I snapped. I sent White a second demand which said, in part:

“The information you provided me is insufficient. I specifically requested itemized invoices from (vendor name). The vendor history you provided me does not list what the charges were for nor the dates incurred.

“I want every specific invoice submitted with itemized listing of what each and every expenditure was for, i.e. supplies, utilities, rent, salaries, travel, etc.

“John White, I don’t know what kind of game you are playing but I know you possess (or at least should possess) sufficient intelligence to know what I asked for and that what your office provided does not come close to a sufficient response. What do you think the term “itemized invoice” below (highlighted) implies? What part of “itemized invoice” don’t you understand?

“If you want to play games, we will let a judge be the referee. I am weary of your stalling, delaying, and playing ignorant. You have until noon Friday or you will be served with a lawsuit Monday. Itemized invoices, John,….ITEMIZED.

I received a call around noon Friday informing me the requested documents were ready for our inspection.

The revised agenda released by BESE includes an executive session but Roemer says that may not be necessary. “I anticipate there may be given potential legal questions and that is why the executive session must be on the agenda,” he said.

It could be Jimmy Faircloth vs. ATBA (attorney to be announced) if it comes down to a fight between proxies—as it probably would.

But wouldn’t it be better if we just put Jindal and Roemer in a ring together and let them duke it out?

That would be an epic battle worthy of Sheldon of The Big Bang Theory vs. Niles of Frasier.

Forget about the Rumble in the Jungle (Muhammad Ali vs. George Foreman) or the Thrilla in Manila (Ali vs. Joe Frazier). Those were just preliminary bouts for what would truly be a battle of the ages.

Jindal vs. Roemer. Sheldon vs. Niles. Collision in the Classroom. Clown Clash. Common Core Conflagration. Capital City Smack Down. Brouhaha in Baton Rouge. Call it what you will, that’s something Louisianians would pay top dollar to watch.

No matter what you would call it, if it could be arranged, I would take whatever steps necessary to obtain the legal rights to telecast the bout over statewide closed circuit television or Pay Per View.

We’ll hype it as Brawl on the Bayou.

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Holy New Living Word, Bat Man!

John White’s Department of Education just can’t seem to keep tabs on all these pop-up private for-profit education facilities that have proliferated under his and Gov. Bobby Jindal’s sweeping educational reform programs.

Questionable expenditures by an organization under contract to the Louisiana Department of Education (DOE) have been flying under the radar, overshadowed as it were, by corruption charges against internal auditors with the Louisiana Department of Children and Family Services.

Remember New Living Word up in Ruston? That’s the school that was approved for some 300 vouchers even though there were no instructors, no computers, and no facilities—and obviously, no vetting. Just an application from the school was all that was needed, and BAM! Instant approval.

Not that New Living Word was the only one; there were others, including one in which the director had a long of history of legal problems and another in which the director referred to himself as a “prophet.” And there was the charter school that decided it could conduct random pregnancy tests on female students after one girl was expelled when it was learned she was pregnant, though no punishment was meted out for the dad, a member of the school’s football team. Only threatened legal action by the ACLU reversed the ill-considered policy.

Still, New Living Word became the instant poster child for DOE’s bureaucratic ineptitude.

Until now.

Now we have Open World Family Services, Inc. a New Orleans education “nonprofit” established ostensibly to “strengthen the family through education and training,” and paid through grants under the 21st Century Community Learning Center, a federally-financed program funded through a $1.4 million contract with DOE that ran from May 1, 2009 through April 30, 2012.

Or perhaps we should have said had Open World Family Services, Inc. It closed its doors on May 31, 2012, a month after its contract with DOE ran out.

But not before its administrator managed to misappropriate, misspend, mishandle, mismanage, fold, staple and mutilate more than $300,000, according to Legislative Auditor Daryl Purpera’s office.

To read entire audit report, click here: 000011D0

Included in that amount were $116,323 in expenses which Open World did not incur, $148,596 in unapproved purchases and expenses that included debit card withdrawals ($16,758) airfare to Monrovia, Liberia ($7,204) and payments to the immediate family of Executive Director Kim Cassell ($18,414).

Cassell’s attorney assures us it was all just your basic “lack of knowledge of grant management” that led to a number of “errors in funds management.”

That would be the usual errors, like requests for reimbursements listing 129 specific checks (all payable to vendors) totaling $221,624 when only 74 of those checks totaling $105,301 actually cleared Open World’s bank accounts. But what of the remaining 55 checks? Well, Cassell’s former administrative assistant told state auditors that Cassell instructed her to pull blank checks and use or record the blank check numbers on reimbursement requests for “projected” vendor expenses.

“By submitting reimbursement requests that included false information, Open World improperly received $129,402 in reimbursements from DOE and may have violated state and federal laws,” the audit report said.

Just an error in funds management.

Kinda makes you wonder about those seven contracts worth a combined $430,000 that the Department of Health and Hospitals (DHH) has awarded to Open World Family Services since 2008 to combat asthma and tobacco use. Did that money go up in smoke as well?

Open World, the audit says, submitted requests and received reimbursements for employee benefits totaling $13,079 for which no expense was incurred.

Another simple error in funds management.

From May 2009 to October 2011, Cassell improperly used public funds totaling $11,108 for veterinary bills and pet supplies, a homeowner’s insurance payment, personal travel and college tuition payments, according to the audit report.

Ditto on the error in funds management.

Cassell’s time sheets from Sept. 18, 2010, to Oct. 19, 2010, indicate that she was on vacation and traveling. But during that same time period, the audit says, she made debit card withdrawals in Monrovia, Liberia, totaling $4,576 and that she incurred airfare charges totaling $200 on Oct. 17, 2010.

She explained to auditors that she traveled to Liberia for the purpose of registering Open World as a Non-Government Organization (NGO) in West Africa.

She also incurred charges on the organization’s debit card totaling $1,099 in Brooklyn Center, Minnesota, while on travel to that state in November of 2010.

In all, the audit says that from May 2009 to February 2012, only a couple of months before her grant contract with DOE ran out, she used $148,596 in grant funds for puchases and expenses not included in approved grant budgets. That amount included $97,961 for rent, utilities and building improvements; $16,758 in undocumented debit card withdrawals; $7,204 in undocumented airfare charges; $15,340 for insurance policies, and $11,333 for vehicle expenses. “By using grant funds for unauthorized purposes, Open World appears to have violated its grant agreements and may be required to reimburse funds improperly spent,” the report says.

New Orleans attorney Jauna Crear wrote a five-page letter of response to the audit’s findings but basically defended her client’s actions in a single sentence:

“An overall review of the allegations, along with Ms. Cassell’s explanations, clearly shows a lack of understanding of the non-profit governance rules as opposed to a willful disobedience thereof.”

All of which raises several questions:

  • Does DOE customarily hand out multi-million dollar contracts to non-profits with inadequate experience in handling public funding?
  • What safeguards does John White have in place to prevent abuse, theft, and misapplication of public funds by other organizations under contract to DOE?
  • Does John White believe it might be worthwhile to conduct a review of other such contracts/grants?
  • Is it possible that DOE, like DHH, may have eliminated the position(s) of internal auditor as a cost-cutting measure?
  • Will DHH review the seven current and past contracts it has awarded to Open World Family Services totaling $430,000?

Sometimes you just gotta scratch your head and wonder…

Other times you look at who is running this state and then you know…

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Another survey is out that ranks Louisiana as number one in the nation but it’s not very likely that the results will appear on Gov. Bobby Jindal’s feel-good blog and perhaps not on the web page of his biggest cheerleader, the Baton Rouge Business Report.

Liz Farmer and Kevin Tidmarsh, writing for Governing magazine penned an eye-opening story which we apparently failed to properly attribute. Though we did make a point of including the link to their article, which we felt made it abundantly clear that we were not claiming the work as our own and were citing them—through inclusion of the link to their story—as our source, they nonetheless felt we should have done more to identify them as the authors. By simply including the link to Governing, we apparently did not go far enough in proper attribution and for that we apologize because they did a superb job in identifying the problem of money and politics.

In their story, they cited a report by the Public Administration Review that details states’ corruption risks, accountability practices and related laws puts Louisiana at the top of the list of states for public corruption. http://www.governing.com/blogs/by-the-numbers/state-public-corruption-convictions-data.html

The report, released on Monday (June 9), also shows that states with higher levels of corruption are able to shape budget allocations and that they have a propensity to spend more money on capital outlay projects than for health and education.

Construction projects provide greater opportunity for the misappropriation of public funds for personal gain than expenditures on health, education and welfare, the study says.

The report provides an in-depth review of how some states showed progress while others remain behind the curve in mitigating corruption. Louisiana, with 384 public corruption convictions between 2001 and 2010, is far ahead of the pack both in terms of convictions per 100,000 population (8.5), and convictions per 10,000 public employees (10.5).

By contrast, Oregon (1.2) and Kansas (1.3) had the lowest rates of convictions per 10,000 public employees.

And though Pennsylvania and New Jersey had more convictions (542 and 429, respectively), their rate of corruption convictions per 10,000 public employees was less than Louisiana (7.1 for Pennsylvania and 6.7 for New Jersey). Neither Pennsylvania nor New Jersey appeared among the worst 10 states for the number of convictions per 100,000 population, the report shows.

Louisiana’s 384 total convictions during the 10-year period ranked behind Texas (697), California (679), Florida (674), New York (589), Pennsylvania (542), Ohio (495) and New Jersey (429), but with a considerably smaller population base than those states, Louisiana’s conviction rate was much higher.

“If levels of convictions are high, that’s a sample of the climate of the state, said Indiana University’s John Mikesell, who co-authored the report with Cheol Liu of the University of Hong Kong. “The convictions are just the ones who got caught. If there’re a lot of convictions, there’re probably a bunch that haven’t been caught.”

Among the higher profile convictions in Louisiana during the first decade of this century were former New Orleans Mayor Ray Nagin, former Sen. William Jefferson, former Jefferson Parish President Aaron Broussard, and Mandeville Mayor Eddie Price.

In what should have been of particular embarrassment to the state, in December of 2010, the U.S. Senate closed out the decade by convicting Judge G. Thomas Porteous Jr. of Federal District Court in Louisiana on four articles of impeachment and removed him from the bench, the first time the Senate has ousted a federal judge in more than two decades. http://www.nytimes.com/2010/12/09/us/politics/09judge.html?_r=0

 Judge Porteous, the eighth federal judge to be removed from office in this manner, was impeached by the House in March on four articles stemming from charges that he received cash and favors from lawyers who had dealings in his court, used a false name to elude creditors and intentionally misled the Senate during his confirmation proceedings.

Additionally, Orleans Parish District Attorney Eddie Jordan announced his resignation in November of 2007 after what one observer called “almost five insufferable years in office.”  His resignation ended a tenure marked by a perceived failure to prosecute violent criminals, a jury verdict ruling that he racially discriminated against white employees, a seizure of the office’s assets and disruption of his staff’s salaries—all capped off when a robbery suspect fled to Jordan’s Algiers house only to then become a suspect in the shooting of a New Orleans police officer. http://blog.nola.com/times-picayune/2007/10/sources_talks_underway_for_jor.html

U.S. Sen. David Vitter dropped out of the 2003 gubernatorial race after reports surfaced of a relationship with a prostitute. He was elected to the Senate two years later but in 2007, his number appeared on telephone records belonging to Deborah Jeane Palfrey who was convicted in 2008 for running a high-end prostitution ring. He is an announced candidate for governor in the 2015 race.

And then there is Mr. Clean himself, Gov. Bobby Jindal, who attracted huge monetary contributions for a foundation run by his wife, Supriya Jindal, many of those from oil and gas companies. http://www.nytimes.com/2011/03/03/us/politics/03jindal.html?pagewanted=all

Those investments—and make no mistake, political campaign  contributions are just that: investments—paid off in spades last week when Jindal signed SB 469, pushed by another recipient of mega-contributions from oil and gas interests, Sen. Robert Adley (R-Benton). SB 469 killed a lawsuit by the Southeast Louisiana Flood Protection Authority-East (SLFPA-E) that sought to force 97 oil, gas and pipeline companies to restore the damage they inflicted on Louisiana’s wetlands through decades of abuse to the Louisiana coastal lands.

Farmer and Tidmarsh interviewed several sources for their story that says what we all know but which too often goes unreported.

“Legal corruption” they wrote, is even greater, according to Chuck Thies, a Washington, D.C., political consultant who said the “wink, wink, nod, nod” culture of campaign finance often runs right up to the line of bribery. http://www.governing.com/topics/politics/gov-corruption-politics-spending-study.html

Thies said an example of that would be a contractor who is lobbying a politician for approval of his project. The politician, who is running for reelection, approaches the contractor to ask for a campaign contribution.

“It’s that simple,” Thies said. “It happens all the time. The savvy person knows not to say, ‘If I do my ($5,000), will you authorize my (contract)?’ But (both) know exactly that’s what just transpired.”

When one follows the money into the campaign coffers of Louisiana’s most powerful politicians, it becomes a simple matter to understand in unmistakable terms just how much money runs—indeed, corrupts—the political process. The $10 and $25 contributor has little chance in being heard over the roar of the $5 million that oil and gas companies poured into the campaigns of the state’s 144 legislators and another $1 million that was funneled to Jindal.

Easily available campaign contributions allow legislators to enjoy the perks of eating at the finest restaurants, buy gasoline for personal vehicles, hiring family members as campaign “workers,” and purchasing luxury boxes at LSU, Saints, and Pelicans games, ostensibly for “entertaining” constituents.

So when those contributors come calling, as they most surely will, what legislator—or governor—is going to stand up to the special interests?

When lobbyists outnumber legislators by a 5-1 ratio, it becomes difficult for John Q. Citizen to squeeze his way into the conversation.

It all comes down to who our elected officials really represent, and the answer is obvious—and not pretty.

Louisiana fits the profile perfectly in that it killed Medicaid expansion that would have provided expanded health care access to the state’s indigent citizens while the legislature passed a $5.6 billion construction budget that includes sports complexes, golf courses, local road projects, fish hatcheries, and non-government agencies—all at a time when the state is in dire financial straits.

The classic shakedown can also encourage the culture of corruption while discouraging those who attempt to play by the rules.

A north Louisiana contractor has a lawsuit pending against the State of Louisiana and the Department of Transportation and Development for just such an alleged shakedown attempt by state employees that he said ultimately put him out of business because he refused to go along with the efforts to extract payoffs from him.

And there’s no incentive in spending time and money on a bid when the winning bidder has already bought political sufficient influence to “win” the contract or when the bid specifications have been written in such a way as to qualify a single bidder.

Several years ago in north Louisiana, a parish police jury wanted to purchase a used bulldozer. But not just any used bulldozer; police jury members had already spotted the one they wanted. The answer? The police jury advertised for bids in its legal journal, the local newspaper. Included in the bid specifications along with the make, year and horsepower was….the serial number.

It’s all part of the process that we call Louisiana politics.

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From our anonymous cartoonist (with our eternal gratitude)

From our anonymous cartoonist…(Click on image to enlarge).

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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?

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