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Archive for the ‘Public Records’ Category

Never let it be said that LouisianaVoice isn’t willing to save the state a little money.

Remember that survey of Division of Administration (DOA) employees that revealed severe morale problems throughout state government? Well, in case you don’t, here’s the link to our story on that survey: http://louisianavoice.com/2014/10/02/employee-survey-of-doa-employees-reveals-simmering-morale-problem-no-one-more-popular-than-jindal-in-poll/

It turns out the state shelled out $25,000 to IBM for that survey that showed employees simply are not happy with the administration, scoring it abysmally low in trust, employee recognition, senior leadership values, communication from management, senior leadership vision, opportunity for advancement, employee involvement in decision making, and prospects for positive change.

Basically, the survey showed that state leadership languishes far below the national norm. In a word, it sucks.

But $25,000 to learn that? We could have told the administration that for…oh say, $5.

So who authorized the expenditure of scarce state funds for such a worthless piece of research when the conclusions were long evident to state employees and certainly should have been to the administration?

Well, it turns out that Deputy Commissioner of Administration Ruth Johnson signed off on the contract with IBM on June 24.

Johnson, you might recall, retired on June 21, 2012, from her $130,000 per year job as head of the Department of Children and Family services. She moved out of state but returned on May 27, 2013, as Director of Accountability and Research for DOA at $150,000 and less than four months later, on Sept. 30, 2013, was promoted to Assistant Commissioner at $170,000 per year. As if that were not enough, on Feb. 24 of this year, she was again promoted to the title of Director in the governor’s office at $180,000. Bottom line: in just 16 months, she retired and returned, netting in the process a pay increase of $50,000 per year—more than the average state employee makes in a year.

That will do wonders for employee morale.

LouisianaVoice made a public records request on Oct. 3 for the request for proposals (RFP), the contract and payment history for the survey contract with IBM.

On Oct. 6, DOA responded to our request:

  • Your public records request, dated October 3, 2014, was received by the Division of Administration. We are conducting a search for records.  Once the search is finished, the records will be reviewed for privileges and exemptions.  We will contact you as soon as the review is completed.

Three weeks later, on Oct. 24, DOA finally complied with a six-page document. Apparently, there was no RFP for a vendor—just a sketchy six-page document and even more significant, there were no redactions, no privileges or exemptions. There was only a delay of three full weeks—14 working days—in complying with our request.

Louisiana Revised Statute 44:1 says:

  • All books, records, writings, accounts, letters and letter books, maps, drawings, photographs, cards, tapes, recordings, memoranda, and papers, and all copies, duplicates, photographs, including microfilm, or other reproductions thereof, or any other documentary materials, regardless of physical form or characteristics, including information contained in electronic data processing equipment, having been used, being in use, or prepared, possessed, or retained for use in the conduct, transaction, or performance of any business, transaction, work, duty, or function which was conducted, transacted, or performed by or under the authority of the constitution or laws of this state, or by or under the authority of any ordinance, regulation, mandate, or order of any public body or concerning the receipt or payment of any money received or paid by or under the authority of the constitution or the laws of this state, are “public records.”

Louisiana Revised Statute 44:33 says:

  • If the public record applied for is immediately available, because of its not being in active use at the time of the application, the public record shall be immediately presented to the authorized person applying for it.  If the public record applied for is not immediately available, because of its being in active use at the time of the application, the custodian shall promptly certify this in writing to the applicant, and in his certificate shall fix a day and hour within three days, exclusive of Saturdays, Sundays, and legal public holidays, for the exercise of the right granted by this Chapter.

Louisiana Revised Statute 44:37 says:

  • Any person having custody or control of a public record, who violates any of the provisions of this Chapter, or any person not having such custody or control who by any conspiracy, understanding or cooperation with any other person hinders or attempts to hinder the inspection of any public records declared by this Chapter to be subject to inspection, shall upon first conviction be fined not less than one hundred dollars, and not more than one thousand dollars, or shall be imprisoned for not less than one month, nor more than six months.  Upon any subsequent conviction he shall be fined not less than two hundred fifty dollars, and not more than two thousand dollars, or imprisoned for not less than two months, nor more than six months, or both.

Meanwhile, LouisianaVoice has learned that DOA has launched an intensive witch hunt for our source on the employee satisfaction survey, which apparently was supposed to be a closely-guarded state secret. And while we really hate to even let them know this and spoil the fun, the funniest thing is they are so far off base in their search. They don’t have the foggiest idea that our sources are not even in a single building; they’re scattered throughout state government because apparently state employees place more trust in what we write than what the administration says.

So guys, have fun in your search because every time you think you’ve found one, three more pop up. You can’t stop the truth. Hell, you can’t even slow it down.

Given the results of the survey, it’s easy to understand why DOA wanted to keep the survey from public view. What’s not so easy to comprehend is why the Jindal administration is so hell-bent on keeping everything it does from public scrutiny.

We will make this observation, however: When an administration goes to such great lengths to shield its actions from public view and when that same administration expends an inordinate amount of time and effort in attempting to determine the source of leaks of such benign, non-sensitive information as a simple employee survey, one can only deduce that administration has far more to hide than a simple satisfaction survey.

And paranoia, it seems, feeds upon itself.

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In reading Destiny’s Anvil, a novel about Louisiana politics by New Orleans writer Steven Wells Hicks, one sentence near the end of the story was so profound that it jumped off the page at us:

  • The responsibility for building and maintaining our way of open and honest government belongs in the hands of those who elect our leaders and not the leaders themselves.

The very simplicity of that one sentence, so succinct and straightforward a summation of what our government should aspire to, should be the credo which dictates the acceptance of every campaign contribution, every promise made and every action carried out by every elected official in America.

Sadly, it does not. And most certainly, it does not in Louisiana, especially where generous donors to the campaigns of Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Florida, R-Anywhere by Louisiana) are concerned.

LouisianaVoice has learned that one major donor and its principals not only benefitted from several contracts worth more than $240 million, but also appear to have been given preferable treatment in the purchase of a state building at a bargain price at the expense of taxpayers.

The electorate of this state has capitulated in that responsibility, choosing instead to acquiesce to backroom deals fueled by campaign contributions and to actions concealed in secrecy and carried out for political expedience or personal gain instead of for the common good of the citizenry.

Remember last month when we wrote that Timmy Teepell in 2010 issued a directive to Tommy Teague, then the CEO of the Office of Group Benefits that a request for proposals (RFP) be crafted in such a way as to favor a specific vendor and that then-Commissioner of Administration Angéle Davis resigned shortly thereafter?

At the time, Teepell was Jindal’s Chief of Staff. The RFP was for vendors to provide health care coverage to state workers primarily in northeast Louisiana. Vantage Health Plan of Monroe subsequently landed the 26 month, $70 million contract, effective July 1, 2010. Six months later, on Jan. 1, 2011, a second one-year contract of $14 million awarded to Vantage to provide a Medicare Advantage plan for eligible OGB retirees and on Sept. 1, 2012, Vantage received yet another four-month $10 million contract under an emergency rule to provide an HMO plan to OGB members.

Since Jindal took office in January of 2008, Vantage has been awarded six contracts totaling nearly $242 million.

In addition to the claim of the 2010 directive to Teague to “write a tightly-written” RFP, LouisianaVoice has learned the Jindal administration may have deliberately circumvented the usual procedure for selling state property in order that Vantage could purchase a six-story state office building in Monroe last year.

By legislative fiat, the administration was within its legal rights to sell the State Office Building in Monroe to a chosen buyer without going through the bid process but it may have done so at a cost to state taxpayers.

Senate Bill 216 of 2013 by Sens. Mike Walsworth (R-West Monroe), Rick Gallot (D-Ruston), Neil Riser (R-Columbia) and Francis Thompson (D-Delhi) passed overwhelming in both the House and Senate and was signed into law by Jindal as Act 127, clearing the way for the sale of the former Virginia Hotel at 122 St. John Street.

By law, if a legislative act is passed, the state can legally bypass the public bid process but there are several indications that the administration may well have gone out of its way to accommodate Vantage and its President, Dr. Patrick Gary Jones through the Louisiana Department of Economic Development (LED).

The cooperative endeavor agreement between Vantage and the state was executed by Vantage Executive Vice President Mike Breard and LED Undersecretary Anne Villa on Aug. 28, 2013.

Vantage paid the state $881,000 for the six-story, 100,750-square-foot building and an adjoining 39,260-square-foot lot and one-story office building. The cost breakdown was $655,000 for the hotel and $226,000 for the adjoining property.

The Virginia Hotel was constructed in 1925 at a cost of $1.6 million and underwent extensive renovations in 1969 and again in 1984, according to documents provided LouisianaVoice by DED.

But LouisianaVoice has learned that there was at least one other potential buyer interested in the Virginia Hotel/State Office Building and indeed, documents obtained from LED contained no fewer than three references to fears by Vantage officers that if the building were put up for public auction, the bids might make the costs prohibitive to Vantage.

Melody Olson and husband Kim purchased the nearby Penn Hotel for $341,000 and poured $2 million into converting it into condominiums.

The late Shady Wall, a colorful state representative from Ouachita Parish, lived in the Penn’s penthouse. (Wall once wedged a pencil between a stack of books and the “yes” button at his House desk and went home for the day, officially casting “yes” votes on every matter that came up in the chamber after his departure.) The Olsons now reside in that same penthouse.

Melody Olson told LouisianaVoice that she and her husband wanted to purchase the Virginia and convert it into a boutique hotel but were never given the opportunity.

“It was sold through the Department of Economic Development and never was offered for public bid,” she said. “We never got the chance to make an offer.”

One internal LED memorandum said that Vantage Health Plan (VHP) “approached LED to help arrange the sale in order to avoid typical State surplus real property requirements of public bidding. VHP fears that public bidding would allow a developer utilizing various incentive programs to pay an above market price that VHP would find hard to match.” (Emphasis added.) IMAG0379

(CLICK ON IMAGE TO ENLARGE)

Another document appears to be an internal memorandum that provides an overview of a 2012 meeting about the sale. It indicates that LED Secretary Stephen Moret, Sen. Walsworth, LED Legislative and Congressional Liaison Mandi Mitchell and LED Director of Contract Performance Shawn Welcome were in attendance on behalf of the state and Dr. Jones and his son-in-law Michael Echols, Director of Business Development, representing Vantage.

Under a heading entitled Company Issues/Concerns there were these two notations:

  • “Developers have purchased and converted some downtown Monroe buildings into mixed use buildings (by) taking advantage of federal and state restoration tax credits.”
  • “Concern: Vantage is worried that if SB (state building) is offered through regular channels, developers using federal tax credits could outbid Vantage.” IMAG0377

(CLICK ON IMAGE TO ENLARGE)

Finally, there was a handwritten note which described another meeting on Nov. 1, 2012. Besides the notation that “Sen. Riser supports,” there was this:

  • “Problem is option of auction—if auction comes there is possibility of tax credits allowing a bidder to out-bid.”

IMAG0378

(CLICK ON IMAGE TO ENLARGE)

Finally, there was a hand-scrawled notation at the bottom of a typewritten page containing employment estimates by Vantage through 2024 which directed that an “approach” be written “specific to Vantage.”

And while Vantage repeatedly cited concerns about other potential buyers obtaining state and federal incentives which they might use to thwart their purchase plans for the building, Vantage was not shy about seeking incentives from the state for its own benefit.

Documents obtained from LED show no fewer than 20 applications or notices of applications for various state incentive programs, including Enterprise Zone, Quality Jobs Program and property tax exemptions for renovations to existing offices in Monroe or expansion into new offices in Shreveport, Mangham, West Monroe, New Orleans and even into Arkansas.

Nor were Vantage and its corporate principals shy about flashing cash for political campaign contributions.

Campaign finance records show that Vantage its affiliate, Affinity Health Group, their corporate officers and family members combined to contribute more than $100,000 to various political campaigns, including $22,000 to Jindal and $11,000 to three of the four Senators who authored the bill authorizing the sale of the Virginia Hotel to Vantage: Thompson ($5,400), Walsworth ($4,500), and Riser ($1,000.

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Editor’s note: State Rep. John Bel Edwards (D-Amite) sparred verbally with Commissioner of Administration Kristy Nichols and Office of Group Benefits (OGB) CEO Susan West at the Sept. 25 hearing by the House Appropriations Committee on proposed coverage plans for OGB members. Edwards, the minority leader of the House and Chairman of the House Democratic Caucus, is an announced candidate for governor in 2015.  He wrote the following piece in an effort to display his frustration over his inability to obtain definitive answers or public documents and records from the administration—and to explain how the administration, as a matter of routine, conceals information from legislators.

By State Rep. John Bel Edwards

At a committee meeting convened last month to address the fiscal “emergency,” at the Office of Group Benefits, Commissioner of Administration Kristy Nichols testified that the premium reductions in 2013 and 2014 that drained OGB’s $500 million fund balance were fiscally sound.

At that hearing, I repeatedly asked if OGB’s actuary – Buck Consultants – had recommended those premium reductions and if they recommended reducing the fund balance. Nichols and an OGB CEO Susan West repeatedly refused to answer. I, along with other legislators at the hearing, asked for copies of Buck Consultants’ recommendations.

Weeks later and I’m still waiting for those reports.

What I do have is an email from Buck Consultants to the OGB CEO that clearly states: “We did not recommend a decrease of 7% effective August 1, 2012, or an additional decrease of 1.77% effective August 1, 2013. Further, we were not asked to provide any recommended rate adjustments for any fiscal years beyond what we provided for Fiscal Year 2012/2013.”

Of course the actuary did not recommend cutting premiums by almost 9 % while health care costs are rising by 6% a year. The consultants knew that would be irresponsible and cause claims payments to greatly exceed premium revenue and drain OGB’s fund balance.

Clearly, the OGB premium reductions that ran the fund balance into the ditch were not actuarially driven. Those premium reductions were driven by the Jindal administration’s desire to spend OGB’s fund balance elsewhere in the budget. When OGB reduced premiums, 75% of the savings went to the state and the Jindal administration was able to spend that money wherever they wanted.

Now that the fund balance is drained and still hemorrhaging at the rate of $16 million a month, the Jindal administration called this self-inflicted wound an “emergency” and proposed raising costs to OGB members – those working and those retired – by $189 million. These higher out-of-pocket expenses will not be shared by the state.

Our state workers, school teachers, support workers, and university staff and faculty and retirees cannot afford this. They do not deserve this. About 25,000 of our retired OGB members are not eligible for Medicare, and many active OGB members bring home as little as $700 per month.

I asked the Attorney General’s Office for an opinion about the legality of Jindal’s effort to unilaterally impose new plans with the exorbitant out of pocket cost increases on workers and retirees. The attorney general’s opinion shows Jindal failed to comply with the Administrative Procedure Act.

This entire debacle has thankfully been slowed down to ensure public notice, public input and legislative oversight as legally required. It is critically important that the administration act in good faith and genuinely consider the testimony and the plight of affected OGB members as well as its own culpability in needlessly causing the “emergency.”

The Jindal administration must honestly answer subsequent inquiries from the public and from legislators and seek ways to lessen the impact to OGB members. The administration must ditch the ill-conceived plan changes and start from scratch with a willingness to increase premiums reasonably and share in the costs of restoring the soundness of OGB.

The recently discovered $178.5M surplus provides the means to both shore up the fund balance and reduce the cost increases on OGB members. The illegal cost increase forced on OGB members in August must be refunded without forcing members to formally request or sue for the refund.

The legislature must finally assert itself as an independent and equal branch of government to provide exactly the kind of check and balance on the Jindal administration provided by the Louisiana Constitution and demanded by the people of Louisiana. We now have this opportunity as there will be legislative oversight hearings on both the emergency and ordinary rules. We must rise to the occasion.

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When Jeff Skilling took over as President and Chief Operating Officer of Enron in June of 1990, he did so only after insisting that the company convert from conventional accounting principles to a method preferred by his former employer, McKinsey & Co.

In 2001, hedge fund manager Richard Grubman said to Skilling, “You are the only financial institution that can’t produce a balance sheet or cash flow statement with their earnings.” By October of that same year, Enron had begun its death spiral in a historic collapse that would pull the giant accounting firm Arthur Andersen down with it.

The key to Enron’s failure was the mark-to-market accounting method, where anticipated revenues and profits are entered into the company’s books before they are ever received. The system allowed Enron to conceal losses and to inflate profits for nearly 11 years before its house of cards came crashing down.

On Thursday (Oct. 8), nearly seven years into his administration, Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana) rolled out a new accounting formula with an alarmingly familiar ring to it.

Jindal, like Skilling, is a McKinsey alumnus.

Commissioner of Administration/Surrogate Gov. Kristy Kreme Nichols announced that the state, instead of having a deficit of $141 million as claimed by State Treasurer John Kennedy, will suddenly have a surplus of $178.5 million, a gaping difference of $319.5 million.

Nichols did not reveal how the $178.5 million was arrived at but Kennedy said the administration is switching to a cash balance form of accounting instead of the modified accrual basis employed by state governments. “If we use the methodology we have always used,” he said, “we don’t have a surplus. We have a $141 million deficit.

“The commissioner says the calculation has been inaccurate for years and it needs to be changed,” he said. “They have to explain why we have been doing it wrong all these years and why the Revenue Estimating Conference is doing it wrong.”

Nichols, an appointed state employee, was less than deferential to Kennedy, a statewide elected official when she sniped back at Kennedy, saying, “I’m surprised the treasurer is not reporting this.” She added that Kennedy is obligated to report available revenue. “He should probably do a review of the accounts to ensure there are no more outstanding revenues he is not reporting.”

Kennedy and Jindal have been at odds for years over fiscal policy, so it was no surprise to see Kristy Kreme, with her super-sized ego, get a little mouthy with the state treasurer. After all, she bolted from a House Appropriations Committee hearing on the Office of Group Benefits on Sept. 25 to take her daughter to a One Direction boy band concert at the New Orleans Smoothie King Arena where she watched from the comfort of Jindal’s executive suite.

Just as Enron misrepresented its finances for years, it now appears that the Jindal administration may be attempting the same tactic, prompting one political observer to say, “If cooking the books isn’t malfeasance, what is? The bond rating agencies and others rely on the CAFR (Comprehensive Annual Financial Report), where the year-end position is officially reported in decision making and they are not going to like this.”

Another Jindal critic asked rhetorically, “What happens when a state ends a fiscal year with a deficit of $141 million but the administration of the day pretends that there is actually a surplus of $178 million? I don’t think there is any precedent for such a thing ever happening anywhere. This is starting to sound like Enron!”

Odd as it may seem to make that comparison, the similarities between Jindal and Enron run much deeper than the latest developments surrounding the new accounting methods. Here are some points about Enron lifted from The Smartest Guys in the Room: the Amazing Rise and Scandalous Fall of Enron (Penguin Books, 2003), a probing book by Bethany McLean and Peter Elkind about the failed energy company: http://www.goodreads.com/book/show/113576.The_Smartest_Guys_in_the_Room

  • The Deutsche Bank once described Enron as “the industry standard for excellence.” Jindal boasted of instituting the “gold standard for ethics” in Louisiana.
  • When the chief accounting officer of Enron Wholesale expressed concern about wholesale electricity sales, she was reassigned. When another employee questioned Skilling on his claim that Enron was going to make $500 million, she was laid off that same day. When state employees or legislators complain or do not vote with the administration, they are teagued.
  • Pollster Frank Luntz said instability and chaos were defining features at Enron and the six company reorganizations in just 18 months were a “running joke” and that Enron’s lack of discipline was “destructive and demoralizing.” Jindal’s penchant for reorganization and reform has created a similar atmosphere within state government.
  • Enron sold assets and booked the one-time proceeds as recurring earnings. Nearly 40 percent of Enron’s 1998 and 1999 earnings came from sales of assets rather than from ongoing operations. Jindal over the past several years has sold state property, buildings, and entire agencies and turned state hospitals over to private entities.
  • Both Skilling and Jindal are alumni of the blue-chip consulting firm, McKinsey & Co., which wrote the Enron business plan and as far back as 1986, advised AT&T there was no future in the market for cell phones. McKinsey also was an advocate of mark-to-market accounting practices.
  • Both Skilling and Jindal thought—and think—like a consultant. Skilling felt that a business should be able to declare profits at the moment of the signing of an agreement that would earn those profits. But just because traders were reporting earnings under mark-to-market accounting, it did not necessarily follow that the money was in hand. See this link: http://theadvocate.com/news/10494146-123/jindal-budget-surplus-questioned
  • A Wall Street banker said of Skilling: “He’s either compulsively lying or he’s refusing to recognize the truth.” Another banker worried that Enron executives were not carrying out their fiduciary duties and questioned “sweetheart deals” negotiated by them.
  • Skilling believed that social policies designed to temper the markets were “wrongheaded” and counterproductive. “Wrongheaded” has been a favorite term invoked by Jindal whenever he has suffered setbacks at the hands of the courts on issues ranging from education reform to a revamp of state retirement plans.
  • When asked a question he didn’t like, Skilling, in a tactic learned from his days at McKinsey, responded by dumping “a ton of data on you.” Jindal’s one outstanding skill is to spew statistics and factoids in rapid-fire fashion that can overwhelm and confuse challengers.
  • Skilling, like Jindal, was considered brilliant and extremely articulate. He, like Jindal, always seemed to have the right answer and whenever he was asked about problems it was always someone else’s fault.
  • Skilling displayed no remorse for his own actions, nor did he have any sense that he hired the wrong people or emphasized the wrong values. (See above.)
  • Enron founder Ken Lay saw himself as a business visionary, much as Jindal portrays himself as a policy guru. Lay traveled the world to offer his wisdom on everything from energy deregulation to corporate ethics to the future of business. (Ditto)
  • At the end, Enron employees’ accounts were frozen even as top executives were walking away with fortunes.
  • Efforts by Enron and Arthur Andersen to avoid reporting $500 million in losses “only pushed the problem further off and added another tangle to the fragile web of accounting deceptions.” Do we really need to elaborate here?
  • Enron executives accepted the argument that wealth and power demanded no sense of broader responsibility which in turn led them to embrace the notion that ethical behavior requires nothing more than avoiding the explicitly illegal, that refusing to see the bad things happening in front of you makes you innocent and that telling the truth is the same thing as making sure no one can prove you lied.
  • Enron’s mission was nothing more than a cover story for massive fraud, much as Jindal’s administration is being exposed almost daily as a sham. The story of Enron, like that of Jindal, was a story of human weakness, of hubris and greed and rampant self-delusion, of ambition run amok, of a business model that didn’t work and of smart people who believed their next gamble would cover their last disaster—and most of all, of people who couldn’t—or wouldn’t—admit they were wrong.
  • Enron once aspired to be “the world’s greatest company” but rather became a symbol for all that was wrong with corporate America, exposing Lay’s flaws as a businessman that could no longer be hidden behind Enron’s impressive but misleading façade and Skilling’s glib rhetoric.
  • Despite Enron’s efforts to camouflage the truth, there was more than enough in the public record to raise the hackles of any self-respecting analyst (read: reporter). Analysts (read: reporters) are supposed to dive into a company’s financial records, examine footnotes and even elbow their way past accounting obfuscations. Their job, in short, is to analyze (re: report).

In the end, of course, Enron crumpled under the weight of its own corruption and mismanagement, destroying thousands of lives and even taking down one of the big five accounting firms in the process.

The Jindal administration with each passing day, with every revelation of some new scandal (the Edmonson Amendment, CNSI, the Murphy Painter fiasco, et al) and with each new flawed policy (the Office of Group Benefits debacle), is looking more and more like a train wreck that will adversely affect Louisiana citizens for years to come.

Just call it Enron East.

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If the Retired State Employees Association (RSEA) goes forward with filing a legal challenge to the proposed changes to health care coverage for state employees, retirees and their dependents, it may have a significant hook on which to hang its case in a report submitted by a company contracted by the Jindal administration which attempted to base its plan changes at least in part on that same report.

If you’re confused, you should be for Commissioner of Administration Kristy Nichols laid the decision to make the changes in the Office of Group Benefits (OGB) plan at the feet of Buck Consultants but the firm’s report is in direct contradiction to the testimony of Nichols at the Sept. 25 hearing of the House Appropriations Committee.

The proposed health benefit changes are so radical for some 230,000 OGB members that the RSEA has scheduled a meeting with a law firm which has tentatively agreed to take the case on a pro bono basis, says Frank Jobert, RSEA’s executive director. http://theadvocate.com/sports/southern/10465870-123/retirees-considering-legal-challenge

RSEA is looking at the failure to go through the necessary legal procedures for approval of changes in plan benefits and “diverting” money from the OGB fund balance which has dwindled from a high of more than $500 million to less than half that amount and which is projected to go broke next year if changes are not implemented.

Nichols has consistently blamed the financial condition of OGB on rising costs she attributed to the Affordable Care Act (Obamacare). Critics, however, point to three straight years of decreased premiums that allowed the state to commit fewer state funds to its 75 percent match which in turn allowed the administration to divert those monies to cover budget holes even as the reserve fund continued to shrink.

Nichols was consistently evasive when asked during last month’s hearings of the House Appropriations Committee, three times managing to evade the direct question of who the actuary was who recommended decreases in premiums over three consecutive years.

Finally, State Rep. John Bel Edwards (D-Amite), who had already asked the question once without getting an answer, observed, “In fiscal 2013, there was a 7.11 percent reduction in premiums followed by 1.8 percent even though health care costs were going up by 6 percent.”

In questioning Nichols during the Appropriations Committee hearing, Edwards had accused the administration of taking a “self-manufactured crisis” and turning it into an emergency “because we had a fund balance that was healthy.

“We had OGB members who were relatively happy with the plan and today we have an unhealthy fund balance and OGB members who are very unhappy.”

He then asked again, “What actuary told you these reductions were sound?”

Nichols, who was already halfway out the door—before the committee meeting adjourned—on her way to taking her daughter to a One Direction boy band concert in the New Orleans Smoothie King Arena where she watched from the luxury box assigned to Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana), replied, “Buck Consulting recommended a 2.25 percent decrease for calendar 2012.”

http://louisianavoice.com/2014/10/01/watching-kristy-kreme-nichols-responding-to-legislators-like-watching-jerry-lewis-movie-mixture-of-exasperation-humor/

Well, not exactly. When one reads pages ii and iii of the summary report of the Buck Consultants Actuarial Valuation at 7/1/2013, a starkly different message is conveyed.

http://www.doa.louisiana.gov/osrap/library/afr%20packetts/2014OGB_OPEBValuationReport.pdf

On Page ii, under the CLAIMS AND PREMIUM EXPERIENCE heading, the report says:

  • “Overall, the plan had favorable claims experience, resulting in a gain. The gain was offset by losses associated with premiums not increasing as expected. See Substantive Plan discussions below.”

Under SUBSTANTIVE PLAN on Page iii, the report says:

  • “It is our understanding that the Plan premium rates, used both to determine contributions from the various employer agencies and to set contributions required from the retirees, were set artificially low to draw down the OGB’s reserve fund… (emphasis added.) As noted above, premium rates were again lower than expected for this year’s valuation.”

Moreover, an email from Buck Consultants representative Tom Tomczyk to OGB CEO Susan West dated Sept. 28 (three days after the Appropriations Committee hearing) says, “The 2.25percent (rate decrease) was not a recommendation for January 1, 2012, but only used to validate our projections for the Fiscal Year 2012-2013. We did not recommend a decrease of 7 percent effective August 1, 2012, or an additional decrease of 1.77 percent effective August 1, 2013. Further, we were not asked to provide any recommended rate adjustments for any fiscal year beyond what we provided for Fiscal Year 2012-2013.”

In fact, according to that same email, Tomczyk said Buck Consultants was asked in late 2011 for its projection of the indicated rate increase for Fiscal Year 2012-2013. “At that time, based on the most recent claims information available, we projected a rate increase (emphasis added) of 1.75 percent needed as of July 1, 2012.”

An earlier email, on Nov. 12, 2013, from Tomczyk to West’s predecessor, Charles Calvi, who served as CEO of OGB from Jan. 9, 2012, to Jan 31, 2014, concluded, “We have not been asked to provide recommendations for rate adjustments since calendar year 2012.”

The consulting firm’s report, dated July 2014, noted significant decreases in several areas of net liabilities to OGB and gains in areas that benefitted the agency’s bottom line, according to two financial experts who were shown the report.

“As I see it, the Buck report directly contradicts the way Ms. Nichols has presented this,” one said. “Unless I do not understand plain English, Buck says, ‘Overall, the plan had favorable claims experience, resulting in a gain.’ How can a clear gain be a loss by anybody’s definition?”

He noted the following:

  • The actuarial accrued liability (AAL) for July 2013 was $103 million less than what had been projected in July of 2012, meaning that OGB was in better shape on July 1, 2013, than had been predicted. The AAL also increased by only $157 from last year when it had been projected to increase by $260 million.
  • The amount paid in claims was less than predicted and actually decreased the AAL by $195 million—and would have decreased it even more had premiums not been less than projected.
  • The report clearly attributes a loss to OGB of $388 million—totally a result of reduced premiums through Fiscal Year 2012 and that this loss was increased by additional decreases in premium rates in Fiscal Year 2013.
  • The report, on Page iv, minimizes the effect of the Affordable Care Act (ACA) on these calculations and points out that the ACA provided improvements in Part D coverage.

“I am frankly shocked at this report and what has been said about this whole thing by others,” he said. “Either I am totally stupid or it blows all previous explanations away.”

Edwards, commenting on the contents of the Buck Consultants report, said, “Nothing in this supports Kristy Nichols.”

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Board of Elementary and Secondary Education (BESE) member Walter Lee has been indicted by a state grand jury and the FBI is investigating State Rep. Joe Harrison (R-Gray)—both for double billing for travel.

Investigators may want to take a look at the expense records of State Rep. and Shreveport mayoral candidate Patrick Williams (D-Shreveport).

Lee’s indictment by a DeSoto Parish grand jury accuses him of the felony theft of $3,968 in fuel expenses and $1,578 in lodging in meals charged to both BESE and to the DeSoto Parish School Board at a time when Lee was simultaneously serving as DeSoto School Superintendent and as a member of BESE.

A state audit used as the basis of Lee’s indictment said he collected travel expenses from BESE for attending state board meetings even though he used a parish school system credit card to pay for those expenses and failed to reimburse the school system after receiving payment from BESE.

DeSoto District Attorney Richard Johnson, Jr. said Lee also terminated a lease early on a vehicle which cost the school system around $10,000 and then got a substantial discount on the purchase of another vehicle shortly thereafter.

Williams’ expense reimbursements, however, more closely resemble those of his colleague in the House.

Harrison has been ordered by federal investigators to produce travel expense records after the New Orleans Times-Picayune revealed in a lengthy investigative series that Harrison was reimbursed more than $50,000 by the House for travel in his district from 2010 to 2013—travel that he had also charged to his campaign.

House reimbursement records and campaign expense records reveal that in 2012 alone, Williams systematically doubled his campaign and the House for more than $4,000 for expenses that included postage, subscriptions to the Shreveport Times, travel to and from Baton Rouge, hotel accommodations in Washington, D.C., airport parking, cab fare, and air travel.

LouisianaVoice was alerted to Williams’ expense payments by former Shreveport attorney Michael Wainwright who now lives in North Carolina.

Wainwright said Williams accepts campaign contributions which then pays “thousands of dollars” in travel and other expenses. “Rep. Williams then bills the taxpayer for those same expenses (and) then keeps the reimbursement checks. He has converted the money to his personal use.”

Wainwright said the practice “is conduct which seems to fall squarely within the definition of theft,” which he said is defined under Louisiana Criminal Law as “the misappropriation or taking of anything of value which belongs to another, either without the consent of the other to the misappropriation or taking, or by means of fraudulent conduct, practices or representation.”

He provided us with a detailed itemization which we verified through our own check of Williams’ campaign expense report and House reimbursement records.

The following list includes the month of the House expense report, the amount and purpose. In the case of each expense item listed, Williams also billed his campaign:

  • January: $113.73—Purchase Power Postage;
  • February: $52.88—Shreveport Times Subscription;
  • April: $85.51—Pitney Bowes Postage;
  • May: $53.95—Shreveport Times Subscription;
  • May: $107.99—Pitney Bowes Postage;
  • June: $65.68—Pitney Bowes Postage;
  • August: $17.98—Shreveport Times Subscription;
  • October: $37.04—Shreveport Times Subscription;
  • October: $85.48—Pitney Bowes Postage;
  • November: $17.98- Shreveport Times Subscription;
  • December: $17.98—Shreveport Times Subscription;
  • November 5: $70.00—Fuel & Travel to Baton Rouge;
  • November 29: $50.32—Fuel & Travel to Baton Rouge;
  • December 4-8: $40.00—Shreveport Airport Parking;
  • December 4-7: $838.16—Hilton Hotel, Washington, D.C. (Campaign billed for entire $912.71 amount);
  • December 4-8: $169.94—Washington Travel Expense (Note: Rep. Williams was paid $745.00 in per diem expenses by the State of Louisiana while attending a NCSL conference in Washington, DC Williams also charged his campaign account $169.94 for the following per diem expenses related to this trip: Delta Airlines Travel baggage ($25), Supreme Airport Shuttle ($13), Hilton Hotel ($103), Meals ($28.44);
  • February 1: $158.00—Holiday Inn, Lafayette;
  • March 12-16: $197.00—In Session Fuel & Mileage (This amount was billed to his campaign while the House paid $291.38);
  • March 17-20: $327.04—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • March 31-April 13: $373.09—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • April 14-27: $335.00—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • April 28-May 11: $257.00—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • May 12-25: $262.12—In Session Fuel & Mileage (billed to campaign; House paid $582.75)
  • May 26-June 4: $146.00—In Session Fuel & Mileage (billed to campaign; House paid $582.75);

This is the same Rep. Patrick Williams who in 2011 authored House Bill 277 which would have required the posting of the Ten Commandments in the State Capitol. There’s no word as to whether his bill proposed deleting the Eighth Commandment.

 

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My grandfather had a favorite expression he was fond of saying: “The stuck pig squeals the loudest.”

That may well explain the sudden onslaught of reassurances emanating from the Jindal administration in the form of press releases and op-eds, all telling us that our benevolent governor, expert that he is on health care, is taking care of and we shouldn’t worry about all those looming increased costs and reduced benefits.

But as it turns out, we may be about to see a new development to the controversy swirling around the proposed premium increases and benefit cuts for members of the Office of Group Benefits.

And just in case you might be wondering why your friendly legislator hasn’t been up in arms over the radical changes in health coverage being proposed for some 230,000 state employees, retirees and their dependents through the Office of Group Benefits (OGB) before now, there’s a reason.

If some similar action were taken to adversely affect their per diem, travel, and other perks, it would be quite another story. They’d have been squealing long before now.

But you see, 261 House members and staff and 151 senators and staff are not members of OGB and therefore, don’t have any skin in the game (my grandfather would have said they don’t have a dog in the hunt) being played by the administration and Blue Cross/Blue Shield of Louisiana.

So where do those 412 people get their health coverage?

LSU First.

And now two of those legislators who earlier fell out of favor with Gov. Bobby Jindal when they questioned the wisdom of privatizing OGB at the outset, Reps. Joe Harrison (R-Gray) and Cameron Henry (R-Metairie) are back and the governor can’t be happy about it.

And Henry is even putting out feelers about moving all 230,000 members of OGB to LSU First, saying it is something “we should explore for employees to get into since the Office of Group Benefits is fiscally unsound.”

Meanwhile, House Speaker Chuck Kleckley (R-Lake Charles), normally a wad of putty in Jindal’s hands, has suddenly grown something akin to a spine and called for a special hearing on Sept. 24 to take up the OGB changes. Other legislators also beginning make demands of the administration to have someone present to answer questions about the radical changes.

State Rep. John Bel Edwards (D-Amite), a candidate for governor, said he wanted administration representatives questioned under oath.

It was Edwards who originally requested that Kleckley call a meeting of legislators to discuss OGB. “The OGB fiasco is proof positive that privatization for the sake of privatization is foolish,” he said. “A reserve balance that recently exceeded $500 million is half that now and bleeding $16M per month due to mismanagement and budget chicanery, and the ultimate price will be paid by state retirees and employees through higher premiums, higher co-pays, higher deductibles, and higher co-insurance in exchange for fewer benefits, more forced generic drugs, and more preclearance of needed treatments and other changes that make crystal clear that the OGB beneficiaries will pay more for less.”

“I feel vindicated,” Harrison was quoted as saying by the New Orleans Times Picayune in reference to the depletion of the OGB trust fund which has shrunk from $540 million to less than half that since Jindal’s privatization plan went into effect. http://www.nola.com/politics/index.ssf/2014/09/louisiana_legislators_have_a_h.html#incart_river “Exactly what I said was going to happen is now happening,” Harrison said.

And Henry is even putting out feelers about moving all 230,000 members of OGB to LSU First, saying it is something “we should explore for employees to get into since the Office of Group Benefits is fiscally unsound.”

Jindal had Henry and Harrison removed from their respective committee assignments when the two refused to go along with Jindal’s legislative agenda during the 2013 legislative session.

Administration officials, in an attempt to discourage a mass exodus from OGB said state employees now in OGB may not find the LSU First plans to be a better option, invoking such terms as “better service,” “strike a balance,” “right sizing of benefits,” “wider range of options,” and “it’s all the fault of Obamacare.”

So, just what is LSU first, anyway?

LSU First is the health coverage offered employees throughout the LSU system and back near the end of the Mike Foster administration, a memorandum of understanding (MOU) was approved that allowed legislators and legislative staff members to opt out of OGB in favor of LSU First.

Senate 2003

House of Representatives 2003

The plan presently is not available to employees of Louisiana’s other institutions of higher learning or civil service employees other than those working for the Legislature.

So, why would anyone make the switch?

The answer to that is simple: Even before the pending revamp of OGB which will prove far more costly to members, LSU First was vastly superior in the benefits it offers. And now, with the increased premiums, higher deductibles and co-pays for OGB members (an overall cost increase of 47 percent), the contrast between the two plans is even more stark. http://www.lsufirst.org/wp-content/uploads/2012/01/2014_LSU_First_SPD.pdf

http://www.lsufirst.org/wp-content/uploads/2013/12/2014-SBC-Opt1.pdf

LSU established the plan for the fiscal year July 1, 2002 through June 30, 2003, adopting the “Definity Health Model Health Coverage Plan,” and the House and Senate climbed on board a year later, on July 1, 2003. The original MOU was signed in May of 2003 by then-LSU President William Jenkins, House Speaker Charles DeWitt, Jr. (D-Alexandria), and Senate President John Hainkel, Jr. (R-New Orleans).

No sooner said than done. The ink wasn’t even dry on the signatures on the MOU when legislators and staff members started a mass migration to the LSU plan. Additionally, civil service workers scattered throughout state government who were fortunate enough to have spouses working for LSU also switched.

The language in the MOU was such that any legislator who left the House or Senate and moved on to another state office or appointment was allowed to retain his or her coverage under LSU First. That would include, for example, people like former Gov. Mike Foster, Commissioner of Alcohol and Tobacco Control Troy Hebert, Lt. Gov. Jay Dardenne, and former House Speaker Jim Tucker.

LouisianaVoice made an inquiry of the LSU administrative types as to who pays the employer portion of the premiums and whether or not the governor, the commissioner of administration, and cabinet members were eligible for member in LSU First.

What we got back was less than satisfactory but entirely typical of the mindset of this administration. “We have fulfilled your public record request and any further questions can be directed to our University Relations office,” wrote Stephanie Tomlinson, coordinator, LSU Finance and Administration.

In other words, if one asks a simple question and does not specifically request documents or records, he is out of luck. This administration has no intention of helping someone seeking information and would prefer to toss obstacles in the path of transparency.

But we can play this game, too. We replied with the following email:

Okay, we’ll try it this way:

Please provide any and all documents and/or public records that identify all eligible members of LSU First medical coverage, including the governor’s office, Division of Administration and the various cabinet positions.

Please provide documentation and/or any and all public records that provides a breakdown of premium payments for LSU First, including employer/employee contributions and including which employer, i.e. the state, the House or Senate or LSU, pays the employer contributions.

Now that we have requested actual documents/records, we’ll see how they respond.

We did glean from the MOU, however, that the Legislature most likely is responsible for paying 70 percent of the premiums for legislators, legislative retirees, and staff members.

Meanwhile, Jindal communications officer Mike Reed, a native of Boston (Jindal apparently cannot find qualified Louisiana residents for these jobs), churned out a fact sheet that Commissioner of Administration Kristy Kreme Nichols proudly published verbatim as her own work as via an op-ed piece in today’s (Thursday’s) Baton Rouge Advocate under the heading Changes Good for Insurance Users, Taxpayers. (A hint, Kristy: U.S. Democratic Sen. John Walsh of Montana recently dropped out of his race for re-election after allegations of plagiarism.)

As for Reed, we can only hope that if he returns to Boston he doesn’t offer his services to the Red Sox. Mired in last place in the American League East, the Sox have enough problems without taking on another pitch man who can’t seem to find the strike zone.

Reed’s press release was directed at a recent well-researched column by political writer Jeremy Alford: For Health Care Woes, Jindal Prescribes Confusion. http://lapolitics.com/2014/09/for-health-care-woes-jindal-prescribes-confusion/

Reed sent the “fact sheet,” entitled Setting the Record Straight: LaPolitics Column on Healthcare reform in Louisiana, to state legislators on Wednesday. The four page letter was peppered with what Reed smugly, if inaccurately, described as “myth” followed by “Facts.”

Of course, being from Boston, it goes without saying that Reed is intimately familiar with all the nuances of Louisiana politics, including the sordid history of the administration’s recent health care issues. These include Jindal’s sticking his nose into the OGB operations and firing Director Tommy Teague who had taken the agency from a $60 million deficit to a $500 million fund balance, closing down or giving away state hospitals, the governor’s refusal of Medicaid expansion which led directly to problems at Baton Rouge General which last week announced it was closing its emergency room, forcing the administration to pump $18 million into the private hospital to keep its ER open to indigent patients forced to travel to the mid-city facility after closure of state-run Earl K. Long Hospital.

Undaunted, Reed waded into the fray, dutifully blaming everything on Obamacare just as his absentee boss would have him do. And Kristy Kreme eagerly published the tome under her byline.

https://webmail.east.cox.net/do/mail/message/view?msgId=INBOXDELIM16848

The whole thing evokes images to go with one of our favorite Sinatra songs: http://www.youtube.com/watch?v=K1fVQGESUTo

Bobby Jindal (Gov. R-L)

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