Archive for the ‘Revenue’ Category

When Louisiana’s favorite Koch-head Bobby Jindal rejected the Medicaid expansion provided under the Affordable Care Act (ACA), aka Obamacare, he trotted Kathy Kliebert, his third secretary of the Department of Health and Hospitals (DHH) before the legislature to proclaim that the state would have to pay $1.7 billion over a decade for the expansion.

The nonpartisan Legislative Fiscal Officer, however, cut that 10-year estimate by half: $886 million, pointing out that in the first three years, the expansion would actually reduce state spending.

Never mind that his refusal to accept the $16 billion in new Medicaid money would provide health care for nearly a quarter-million Louisiana residents currently without medical coverage.

Never mind that his decision meant that Louisiana residents, like those in the other 20 or so state that rejected the Medicaid expansion, would be paying for its implementation in other states.

Never mind that the $280 million Medicaid expansion would cost the state in 2022 pales in comparison to the $2.2 billion the state is projected to spend on incentive payments to attract private business to the state—some of which would produce no new jobs or at best, low-paying jobs.

Never mind also the $80.6 million Broadband Technology Opportunities Program (BTOP) federal grant to provide high speed broadband internet to rural areas of Louisiana—also rejected by Jindal in lockstep compliance with the wishes of the Koch brothers-run American Legislative Exchange Council (ALEC) agenda.

And never mind the fact that despite Jindal’s disdain for accepting federal funds (remember how he, like Queen Gertrude in Hamlet, protested too much about accepting stimulus funds from the 2009 American Recovery and Reinvestment Act and then helicoptered to all those Protestant churches in North Louisiana to hand out the checks?), Louisiana still ranks as the fourth most dependent on the federal government.

That’s correct; Louisiana is still co-dependent on the federal teat and if Jindal, despite all his anti-government puffery, dared slicing and dicing other federal largesse from an already stressed state budget, he may well have open insurrection on his hands.

Apparently the only area where he can safely reject federal funding to satisfy the far right—especially his benefactors the Koch Brothers, Charles and Bill—is in areas where only the poor and disenfranchised—those unable to fight back—are impacted.

Wall Street Cheat Sheet, an online news service with 11 million monthly readers, notes that despite the ratcheted-up rhetoric between red and blue states, it is the red states (Republican) that are more likely to receive help from the federal government—a fact that helps them keep local tax bills lower and unimaginative politicians like Jindal in power.

In computing its rankings of states’ dependency on federal government, the Cheat Sheet report took three factors into account:

  • Return on taxes paid to the federal government. This statistic reflects how many dollars in federal funding state taxpayers receive for every dollar in federal income taxes paid.
  • Federal funding as a percentage of state revenue. This metric tells what percentage of a state’s annual revenue is provided by the federal government. Without federal dollars, states would have to look elsewhere for revenue, most likely via tax increases, or cut services. The steady influx of federal funds allows executives like Jindal to eschew tax increases while at the same time publicly scorn federal money.
  • Number of federal employees per capita. This illustrates the federal government’s role as a nationwide employer and reveals the percentage of a state’s workforce that owes its livelihood to Washington.

Red states are known for imposing lower taxes than blue states, but it appears they are able to do so because they are more dependent on federal funding, the report says.

The only states more dependent than Louisiana on Washington are (in order) Alabama, New Mexico and Mississippi.

Louisiana’s return on taxpayer investment, for example, if $3.35, meaning the state receives $3.35 for every dollar it sends to Washington. That’s the fourth-highest return in the nation, behind South Carolina ($7.87), North Dakota ($5.31) and Florida ($4.57). That compares to Delaware’s 50 cents return for every dollar paid to Washington and the 56 cents of Illinois and Minnesota.

The 6.76 of its citizens employed by the federal government ranked 14th lowest in the nation.

But that positive was more than offset by the negative metric showing that 44.26 percent of Louisiana’s state budget is funded by federal dollars, second highest only to Mississippi’s 45.84 percent.

That’s correct: the anti-federal government, anti-Washington, more-is-less governor, who preaches the mantra of less government is the best government, serves as chief executive of the state that ranks second in the nation in its voracious appetite for federal dollars.

A quick examination of the bigger line items in the state’s current General Fund and Capital Outlay budgets (which will expire on June 30) is quite revealing—something a little north of $11 billion:


General Appropriations (HB1: FY2013-2014)


  • Governor’s office of Coastal Activities: $1,163,604;
  • (DOA) Community Development Block Grant: $1,481,607,780;
  • Coastal Protection & Restoration Authority: $64,470,311;
  • Gov. Off. Homeland Security & Emergency Preparedness ; $1,275,010,482;
  • Department of Military Affairs: $36,558,254;
  • LA. Commission on Law Enforcement and the Administration of Criminal Justice: $21,430,530;
  • Office of Elderly Affairs: $22,318,669;
  • Louisiana War Veterans Home: $6,837,674;
  • State Veterans Cemetery: $769,767;
  • Northeast Louisiana War Veterans Home: $6,632,146;
  • Southwest Louisiana War Veterans Home: $6,725,639;
  • Northwest Louisiana War Veterans Home: $7,015,855;
  • Southeast Louisiana War Veterans Home: $6,301,319;
  • Criminal Law and Medicaid Fraud: $5,989,344;
  • Gaming: $1,375,911;
  • Lt. Governor: $5,509,255;
  • Agriculture & Forestry: $7,716,818, $4,181,260;
  • Office of Business Development (Business Incentives Program): $4,739,367;
  • State Library: $3,099,513;
  • State Parks: $1,371,487;
  • Cultural Development: $2,059,575;
  • DOTD (Aviation): $26,761,411;
  • Pardons & Parole: $1,480,697;
  • Office of State Police: $10,252,081;
  • Office of Motor Vehicles: $1,090,750;
  • Highway Safety Commission; $34,585,088;
  • Office of Juvenile Justice: $891,796;
  • Developmental Disabilities Council: $1,355,052;
  • Medical Vendor Administration (Medicaid/Medicare): $228,242,058;
  • Medical Vendor Administration (Medicare): $4,794,910,040, $185,066,345;
  • Other Medicaid, Medicare funds: $185,066,345;
  • Office of Public Health: $237,866,451;
  • Office of Behavioral Health: $36,185,361;
  • Disaster Crisis Counseling Services: $2,320,529;
  • Office for Citizens with Developmental Disabilities: $6,376,792;
  • Community and Family Services: $598,538,224;
  • Department of Natural Resources: $27,233,004;
  • Office of Conservation: $1,752,796;
  • Office of Coastal Management: $86,206,980;
  • Office of Charitable Gaming: $883,007;
  • DEQ: $4,913,837;
  • Office of Environmental Compliance: $10,094,810;
  • Office of Environmental Services: $4,572,895;
  • Office of Management and Finance: $3,207,858;
  • Department of Wildlife and Fisheries: $2,781,838;
  • Office of Wildlife: $17,526,411;
  • Office of Fisheries: $50,914,428;
  • Office of Workers Compensation Administration: $165,174,992;
  • Board of Regents: $13,363,873;
  • Louisiana Universities Marine Consortium: $4,034,667;
  • Office of Student Financial Assistance: $67,637,166;
  • Louisiana State University Board of Supervisors: $29,713,934;
  • Huey P. Long Hospital: $945,558;
  • Lallie Kemp Regional Medical Center: $4,800,336;
  • W.O. Moss Regional Medical Center: $7,937,503;
  • Washington-St. Tammany Regional Medical Center: $5,481,167;
  • Southern University Board of Supervisors: $3,654,209;
  • Department of Education: $53,743,617, $1,062,669,284, $4,163,877;

Executive Department:

  • Louisiana Youth for Excellence: $877,185;
  • Juvenile Legal Representation: $328,573;
  • Education Programs: $18,972,982;
  • Medical Vendor Administration: $87,191,390;
  • Payments to Private Providers/Services for Medicaid Eligible Children: $844,368,786;
  • DHH: $148,223,040;
  • Office of Children and Family Services: $426,096,064;
  • Louisiana Workforce Commission: $17,465,074;
  • LSU System: $1,572,622;
  • Department of Education: $1,120,576,778;
  • Community Development Block Grant: $1,828,666,994;
  • Coastal Protection and Restoration: $6,400,000;
  • GOHSEP: $1,275,239,610;
  • Education: $19,072,519;
  • Military Affairs: $17,184,491;
  • Commission on Law Enforcement/administration Criminal Justice: $25,083,035;
  • Governor’s Office of Elderly Affairs: $812,222;
  • Title III, V, VII and NSIP: $21,571,923

Capital Outlay (HB2):

  • Department of Military Affairs: $7,389,000;
  • Department of Veterans Affairs: $6,849,462;
  • DOTD: $30,000,000;
  • Wildlife and Fisheries: $1,660,000;
  • St. Helena Court House: $2,680,000;

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As recently as Jan. 16, a headline on NOLA.com proclaimed, “No mid-year budget cuts will be required as Louisiana revenue dips only slightly.”

For the first time in six years, the ensuing story said, “Gov. Bobby Jindal’s administration will not have to make mid-year budget cuts because of less than projected state revenue.”

Fast forward to last Friday, April 4, (late Friday, that is; the tradition of announcing bad news late on Fridays is known in political circles as “taking out the trash,” according to our friend Bob Mann):

Jindal releases a five-page executive order that, says, among other things:

  • Whereas, to ensure that the State of Louisiana will not suffer a budget deficit…prudent money management practices dictate that the best interests of the citizens of the State of Louisiana will be served by implementing an expenditure freeze throughout the executive branch of state government;
  • Now, therefore, I, Bobby Jindal…do hereby order and direct as follows:
  • “All departments, agencies, and/or budget units of the executive branch…shall freeze expenditures as provided in this executive order;
  • “No department, agency, and/or budget unit of the executive branch…shall make any expenditure of funds related to…travel, operating services, supplies, professional services, other charges, interagency transfers, acquisitions and major repairs.”

There followed, as is the case in all such executive orders, a laundry list of exemptions and escape clauses.

But the bottom line nevertheless is tantamount to mid-year budget cuts; the meaning is the same, no matter how the governor tries to spin it.

Oh, there are those who will, of course, argue that a spending freeze is not a budget cut. Those would be the same people (read: Jindal) who said a couple of years back he would veto a 5-cent per pack cigarette tax renewal because he was opposed to new taxes.

Or, taking to its extreme, the administration could trot out Sen. Elbert Guillory (R-D-R-Opelousas—we never know from one day to the next if the announced candidate for lieutenant governor is Republican or Democrat; he’s been both Republican, Democrat and back again) who so eloquently explained the subtle difference between cockfighting and “chicken boxing” during the current legislative session. And yes, he actually did employ that term in defending the activity that is illegal in every single state, including New Mexico, the last to ban cockfighting.

That’s a quick turnaround: less than three months after Commissioner of Administration Kristy Nichols assured us that a projected $35 million budgetary shortfall could be made up with extra revenue expected to be generated by the state’s recent tax amnesty program.

Apparently not.

House Speaker Chuck Kleckley (R-Lake Charles), a member of the state’s Revenue Estimating Conference, blamed Internet shopping for part of the shortfall, saying Louisiana internet shoppers were not submitting sales taxes on their purchases.

Other states—including Arkansas and Alabama who must not have Internet access for their citizens—have experienced increases in sales tax revenues.

All this voodoo economics (to borrow a term from George Bush the First) boils down to one simple yes-or-no question we all should ask of ourselves:

Would we trust this governor or this commissioner of administration to do our taxes?

Here’s the sobering answer to that not-so-rhetorical question: we already are.

Indeed, we have been for the past six years.


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It’s small wonder that Gov. Bobby Jindal wanted to get out of town quickly—he departed the state for an extended trip to Asia to recruit business and industry investment in Louisiana—given the flak he is receiving from the legislature and radio talk show hosts over his hiring of a consulting firm at a cost of $4.2 million to somehow magically find $500 million in state government savings. http://theadvocate.com/csp/mediapool/sites/dt.common.streams.StreamServer.cls?STREAMOID=sZuDzNJoJK2fudmeRm9FJpM5tm0Zxrvol3sywaAHBAlauzovnqN0Cbyo1UqyDJ6gE0$uXvBjavsllACLNr6VhLEUIm2tympBeeq1Fwi7sIigrCfKm_F3DhYfWov3omce$8CAqP1xDAFoSAgEcS6kSQ–&CONTENTTYPE=application/pdf&CONTENTDISPOSITION=Alvarez%20Marsal%20Government%20Savings%20Contract.pdfhttp://theadvocate.com/news/8045923-123/vitter-super-pac-raises-15

And that contract doesn’t even take into account Pre-Jindal recommendations by the firm that may ultimately end up costing taxpayers $1.5 billion which, of course, would more than offset any $500 million savings it might conjure up that the Legislative Fiscal Officer, the State Treasurer, the administration, the legislature and the Legislative Auditor have been unable to do, largely because of a time honored political tradition affectionately known as turf protection.

One might even ask, for example, why representatives of the consulting firm, Alvarez & Marsal, who somewhat smugly call themselves “efficiency engineers,” were wasting their time Friday at the gutted Office of Risk Management. Isn’t there already a promise of $20 million in savings on the table as a result of Jindal’s privatization of that agency four years ago? For just that one small agency, that’s 4 percent of the entire $500 million in savings Jindal is seeking through the $4 million contract. (The elusive $500 million savings, for the real political junkies, represents only 2 percent of the state budget.)

The Baton Rouge Advocate also got in on the act on Saturday with Michelle Millhollon’s excellent story that  noted that the actual contract contains no mention of a $500 million savings. http://theadvocate.com/home/8131113-125/vaunted-savings-not-included-in

That revelation which is certain to further antagonize legislators, including Senate President John Alario (R-Westwego) whom Jindal will now probably try to teague for his criticism of the governor’s penchant for secrecy.

Hey guys, your contract is only for four months, so why waste your time in an agency that supposedly is on the cusp of a $20 million savings? That ain’t very efficient, if you ask us.

Legislators immediately voiced their displeasure at the contract. “There’s a lot of people who don’t like it,” said Rep. John Schroder (R-Covington), a one-time staunch Jindal ally.

Rep. Tim Burns (R-Mandeville), chairman of the House Governmental Affairs Committee (if he hasn’t been teagued by now), said when the dust settles any cost cutting will ultimately be the responsibility of state officials. “Even the best PowerPoint presentation isn’t going to cut government,” he said. “The trick is to make the political choices.”

The contract raises immediate questions how Jindal, now entering his seventh year in office, could justify the move in light of his many boasts of efficiencies his administration has supposedly initiated.

Ruth Johnson, who is overseeing the contract for the Division of Administration, defended the deal with the simplistic and less than satisfactory logic that “Sometimes you have to spend money to save money.”

And while Jindal has indicated he wants a final set of recommendations in April, the contract runs through 2016, meaning the final cost could far exceed the $4.2 million Alvarez & Marsal is scheduled to receive for its review.

Jim Engster, host of a talk show on public radio in Baton Rouge, on Friday predicted during an interview with State Treasurer John Kennedy that Alvarez & Marsal’s final report will most likely bear an uncanny resemblance to the 400-plus-page interim report of Dec. 18, 2009, by the infamous Commission on Streamlining Government.

The hearings by that commission, you may remember, gave birth to the term teaguing, a favorite tactic employed by the Jindal administration when a state employee or legislator refuses to toe the line. A state employee named Melody Teague testified before that commission and was summarily fired the following day. Six months later her husband, Tommy Teague, was fired as head of the Office of Group Benefits when he was slow in getting on board the Jindal Privatization Express. Mrs. Teague appealed and was reinstated but her husband took employment elsewhere in a less volatile environment.

The Alvarez & and Marsal representatives have pleaded ignorant to questions of whether their report will draw heavily from the four-year-old commission report and even professed to not know of its existence.

A curious denial indeed, given that Johnson was also the ramrod over the streamlining commission during Jindal’s second year in office. Does she not share this information with the firm or was all that commission work for naught? Or part of Jindal’s infamous deliberative process? Curious also in that Alvarez & Marsal is specifically cited—by name—no fewer than six times in the report’s first 51 pages, each of which is in the context of privatizing the state’s charity hospital system. The report quoted the firm as recommending that:

  • “The governor and the legislature authorize and direct the LSU Health System to adopt the recommendations of Alvarez and Marsal for the operation of the interim Charity Hospital in New Orleans. The governor and legislature direct every other charity hospital in Louisiana to contract for a similar financial and operational assessment with a third party private sector consulting firm, such as but not necessarily Alvarez and Marsal, that specializes and has a proven track record in turnaround management, corporate restructuring and performance improvement for institutions and their stakeholders.”

That’s right. That is where the seed was apparently first planted for the planned privatization of the LSU Hospital system, even to the point of directing the LSU Board of Stuporvisors to vote to allow a Shreveport foundation run by one of the LSU stuporvisors to take over the LSU Medical Center in Shreveport and E.A. Conway Medical Center in Monroe. Alvarez & Kelly performed that bit of work under a $1.7 million contract that ran for nine months in 2009, from Jan. 5 to Sept. 30 (almost $200,000 per month).

Alvarez & Marsal also received a $250,000, contract of a much shorter duration (10 days) from Jindal on April 9, 2013, to develop Jindal’s proposal to eliminate the state income taxes in favor of other tax increases. That quickie, ill-conceived plan was dead on arrival during the legislative session and Jindal quickly punted before a single legislative vote could be taken

But Alvarez & Marsal’s cozy if disastrous relationship with state government goes back further than Jindal, even. http://www.alvarezandmarsal.com/case-study-new-orleans-public-schools It’s a relationship that could become one of the most costly in state history—unless of course, the state chooses to ignore a court judgment in the same manner as it has ignored a $100 million-plus award (now in the neighborhood of a quarter-billion dollars—with judicial interest) stemming from a 1983 class-action flood case in Tangipahoa Parish.

In fact, the state probably has no choice but to ignore the judgment as an alternative to bankrupting the state but that does little to remove the stigma attached to a horrendous decision to accept the recommendation of Alvarez and Marsal which subsequently was rewarded with a $29.1 million three-year state contract from April 4, 2006 to April 3, 2009 to “develop and implement a comprehensive and coordinated disaster recovery plan in the wake of Hurricane Katrina.”

In December of 2005, the Orleans Parish School Board adopted Resolution 59-05 on the advice of the crack consulting firm that Jindal somehow thinks is going to be the state’s financial salvation.

That resolution, passed in the aftermath of disastrous Hurricane Katrina was specifically cited in the ruling earlier this week by the 4th Circuit Court of Appeal that upheld a lower court decision the school board was wrong to fire 7,500 teachers, effective Jan. 31, 2006. The wording contained in the ruling said:

  • “In December 2005, the OPSB passed Resolution No. 59-05 upon the advice and recommendation of its state-selected and controlled financial consultants, the New York-based firm of Alvarez & Marsal. The Resolution called for the termination of all New Orleans Public School employees placed on unpaid “Disaster Leave” after Hurricane Katrina, to take effect on January 31, 2006.1 On the day that the mass terminations were scheduled to take place, Plaintiffs amended their petition to seek a temporary restraining order preventing the OPSB from terminating all of its estimated 7,500 current employees at the close of business on that day. The trial court granted the TRO and this Court and the Louisiana Supreme Court denied writs on the issue. The TRO was later converted into a preliminary injunction that restrained, enjoined and prohibited the OPSB, et al, from “terminating the employment of Plaintiffs and other New Orleans Public School employees until they are afforded the due process safeguards provided in the Orleans Parish School Board’s Reduction in Force Policy 4118.4.” Nevertheless, Plaintiffs and thousands of other employees were terminated on March 24, 2006, after form letters were mailed to the last known address of all employees of record as of August 29, 2005.”

The appellate court upheld the award of more than $1 million to seven lead plaintiffs in the case of Oliver v. Orleans Parish School Board but adjusted the lower court’s damage award, ordering the school board and the Louisiana Department of Education to pay two years of back pay and benefits and an additional year of back pay and benefits to teachers who meet certain unspecified requirements.

Immediately following Katrina, state-appointed Alvarez and Marsal set up a call center to collect post-Katrina addresses for a majority of staff members in time for the anticipated layoffs. But when the state began the hiring process for schools that had been taken over, the terminated employees were never called, prompting plaintiff attorneys to charge that the entire procedure was intentional and part of the state’s plan to take over the Orleans Parish school system.

Plaintiffs said that then-State Superintendent of Education Cecil Picard chose Alvarez & Marsal to prevail upon the school board to replace acting parish Superintendent Ora Watson with an Alvarez & Marsal consultant.

So, Watson was replaced, 7,500 teachers were fired, and the teachers sued and won, leaving the Orleans School Board and the state liable for a billion-five and the firm that started it all is hired by Jindal to find savings of an unspecified amount. What could possibly go wrong?

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“A lot of people know they owe money. This gives an opportunity for them to save some money and get the debt cleared.”

—Senate President John Alario (R-Westwego), on the two-month tax amnesty program that goes into effect on Sept. 23 and which will allow delinquent taxpayers to save 100 percent on penalties and half of the interest on their late taxes.

“By creating the Office of Debt Recovery and better collecting funds owed to the state, we can use taxpayer dollars more responsibly and ensure that we continue funding critical services like education and health care.”

—Gov. Bobby Jindal, on signing HB 629 (Act 399) into law, creating the Office of Debt Recovery within the Department of Revenue.

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Some things are just downright difficult to understand;

  • Item: On June 20, Gov. Bobby Jindal signed HB 629 (Act 399) into law. The bill, passed during the 2013 legislative session, created the Office of Debt Recovery within the Louisiana Department of Revenue for the collection of delinquent debts owed to certain government entities—taxes that one source said far exceed the official estimates.
  • Item: A month later, on July 21, Jindal signed HB 456 (Act 421) into law that created a tax amnesty program whereby those owing taxes to the state may have 100 percent of their penalties and half the interest waived. The letters being sent out this week to delinquent taxpayers, however, could provide them with an argument on a legal technicality that also won’t have to pay the tax principal amounts.

As we said, some things just don’t make sense.

On the one hand, the legislature passes and Jindal signs into law a bill creating an agency whose specific purpose is to collect debt—lots of debts—owed to the state.

The new agency, according to the Legislative Fiscal Office will create 23 new state positions (the antithesis of the Jindal philosophy of government) at a cost of $1.7 million per year in salaries and benefits and another $4.4 million in administrative costs.

But with nearly $1.4 billion in payments owed to state government that are at least six months overdue, that would seem to be a good investment in that one estimate says that if the state increases debt collection efforts on such outstanding debts as delinquent college tuition installments and unpaid environmental monitoring fees by as little as 10 percent, it could generate an additional $100 million per year for the state.

On the other hand, Jindal’s new $250,000-a-year Secretary of Revenue and the Louisiana Legislature, by virtue of Act 421, will let delinquent taxpayers off the hook for all penalties and half the interest owed on those back taxes.

The Legislative Fiscal Office estimates about 300,000 persons and businesses who owe some $700 million in delinquent taxes will be eligible for the amnesty program, though only about 30,000 are expected to take advantage of the amnesty date, which will begin on Sept. 23 and end on Nov. 22.

The state anticipates receiving $200 million from the program for the current fiscal year with the revenues earmarked for health care bills. Any shortfall will result in even more health care cuts.

LouisianaVoice, however, has received information that indicates the amount of delinquent taxes, interest and penalties may be far larger than the $700 million estimate—almost three times that much, in fact.

Figures provided us shows that the total owed exceeds $2 billion. That includes taxes of $1.03 billion, interest of $687,000 and penalties of $301 million.

“It is amazing how many taxes are not paid,” said our source. “Amnesty will give us another few years in ‘garage sale’ money and then when it runs out, say four years from now in the middle of the next administration (the) Jindalites can cry foul and push for more of the same type programs.”

The amnesty letters are being printed this weekend and will be mailed out within the next few days. “The letter tells taxpayers what they owe and explains that they owe half the interest and no penalty,” the LDR employee said. “But it doesn’t mention anything about paying the tax. A good lawyer could mount a good argument on this.

“The word is that the error was discovered this week and the change would have been minimal (by) adding the words ‘tax and’ before the interest comment,” the employee said. “The really interesting thing is this form letter was put together some time ago and at the last minute someone decided to proofread it. Still, it seems as though someone, maybe in the legal department, would have been given this to read.”

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Deadline Set for Turnover to Office of Debt Recovery

of more than $4 million Owed to Taxpayers

State Treasurer John Kennedy announced Monday that 36 Non-Governmental Organizations (NGOs) have until August 31, 2013 to fulfill their obligations under the law or be turned over to the Office of Debt Recovery for the collection of approximately $4.452 million owed to taxpayers.

“The Legislature and the Governor made it very clear with the passage of House Bill 629 and the establishment of the Office of Debt Recovery that the days of owing the state money and hiding are over,” Kennedy said. “We now have an agency in state government with teeth whose sole mission is to ensure every penny owed to the taxpayers is recovered.”

Treasurer Kennedy announced that the Department of the Treasury will issue final demand letters this week to 36 entities that have failed to comply with the provisions of Executive Order BJ 2008-30, established by Governor Kathleen Blanco and continued by Governor Bobby Jindal, which requires transparency and accountability from NGOs that have received direct taxpayer support in past appropriation bills.

“Over the last several years, our Audit & Compliance Division has repeatedly sent certified letters, sent e-mails and even made personal call attempts to these particular entities demanding the required ‘progress reports’ and the supporting documentation required under the law with little or no response,” Kennedy said.  “While most NGOs have worked in good faith with our office and have been in compliance, these 36 organizations have become the most flagrant violators of these important requirements.”

Under the regulations, NGOs receiving taxpayer money directly via HB 1 must provide progress reports and corresponding documentation to the Treasury in order to maintain their appropriations. Examples of the required paperwork include a comprehensive budget, detailed description of the public purpose, and detailed cost information outlining the use of the appropriated funds.  Entities failing to comply with the provisions are required to return the full appropriation to the State Treasury.

Should these 36 entities ultimately decide to continue their non-compliance, they will be among the first items on the agenda for the new Office of Debt Recovery.  Treasurer Kennedy has long advocated the establishment of such an office and made it a top priority during Governor Jindal’s Streamlining Commission in 2009.  Now that HB 629 has made that a reality, state agencies will be required to refer unpaid receivables to a centralized unit for collection.

“I’m hoping all agencies across state government will aggressively utilize this new mechanism to maximize revenues,” Kennedy said. “Every dollar that is brought in by this new process is one less dollar we have to raise in taxes or cut in important priorities, such as funding education or aiding the disabled.”

List of 36 Non-Governmental Organizations (NGOs)

Out of Compliance with Executive Order BJ 2008-30

12th   Ward Save Our Community Organization, Inc. $520,000
Algiers   Enterprise Community Council, Inc. $25,000
BASIC   of Louisiana $85,000
Booker   T. Community Outreach Program $25,000
Boys   & Girls Club of Natchitoches $75,000
Children   of the Village Foundation, Inc. $10,000
Community   Awareness Revitalization & Enhancement Corp. $130,000
Community   Services of Richland, Inc. $30,000
Daughters   of Promise $25,000
Desire   Community Housing Corp. $100,000
Emmit   Spurlock Memorial Foundation $10,000
Fourth   District Missionary Baptist Association of Louisiana, Inc. $75,000
Gordon   Plaza Elderly & Handicapped Apartments, Inc. $30,000
Just   Willing Foundation $75,000
Kids   Coupes, Inc. $140,000
Lady   Flame, Inc. $2,000
Life   Economic Development Corporation $100,000
Lower   Ninth Ward Neighborhood Council, Inc. $15,000
Martin   L. King Jr. Neighborhood Association in Shreveport $100,000
McKinley   High School Alumni Association $125,000
Muttshack   Animal Rescue Foundation, Inc. $15,000
National   Empowerment Coalition, Inc. $150,000
Neighbors   for a Better Baker $10,000
Novice   House, Inc. $50,000
Purple   Circle Social Club $50,000
Rapides   Primary Health Care Center, Inc. $550,000
Serenity   67 $150,000
Southside   Economic Development District, Inc. $50,000
Succor,   Inc. $550,000
Tab-N-Action   (Boy Scouts of Ouachita Parish) $30,000
The   Colomb Foundation, Inc. $300,000
The   Olive Branch Ministries $20,000
Treme   Community Education Program, Inc. $325,000
Twelfth   Ward Save Our Community $100,000
Wilbert   Tross, Sr. Community Development & Counseling Center $350,000
Young   Emerging Leaders of LA $55,000

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A week after the Dallas office of the Center for Medicare and Medicaid Services (CMS) confirmed to LouisianaVoice that the state still had not answered questions about the proposed privatization of state hospitals, the Washington, D.C. office has weighed in with similar concerns in a letter to two state senators.

On Monday it was announced that Health facilities in Houma, Lafayette, Lake Charles and New Orleans had been turned over to private operators as part of Gov. Bobby Jindal’s drive to privatize the university-run hospitals and clinics.

A three-page letter from Cindy Mann, Director of the Center for Medicaid and CHIP Services (CMCS), to State Sen. Ben Nevers (D-Bogalusa) addressed seven questions posed by Nevers and State Sen. Karen Carter Peterson (D-New Orleans) and the answers were no more encouraging to the Jindal administration than those of the Dallas office on June 12.

“In your letter, you raise questions concerning plans by the state to enter into public-private partnerships with Louisiana State University (LSU) and University Medical Center in Lafayette and LSU and Louisiana Children’s Medical Center, and questions related to the Affordable Care Act,” Mann wrote in her June 19 letter to Nevers.

The entire privatization deal would appear to revolve around the first question posed by Nevers: “Will CMS approve the large up-front lease payment arrangements as proposed in the attached public-private partnership lease agreements in Louisiana?”

“The Centers for (CMS) has concerns over the large up-front lease payments described in the Louisiana public-private partnership agreements,” Mann wrote.

A spokesperson for Mann’s office said nothing had changed since the June 19 letter.

“However, at this time, the state has not submitted state plan amendments (SPA) proposing to fund Medicaid payments through the agreements and CMS cannot offer formal determination as to whether the arrangements would conflict with the requirements described in (the Social Security Act,” Mann said. “Once the state submits the SPAs, CMS will request necessary supporting documentation and explanations from the state to demonstrate compliance with these provisions of the statute and regulations.”

Nearly 4,000 state employees were laid off because of the privatization of the facilities that care for the uninsured and which provide training for the state’s medical students.

Nevers, contacted in California where he was attending a conference, said he had never seen a situation where policies needing federal approval were undertaken and finalized before that approval was forthcoming. “It’s premature, to say the least, to do this without written approval in hand,” he said. “The private partners won’t stay in this deal if there are no payments and if CMS doesn’t approve the state’s plan, the whole thing falls apart.”

Nevers said his primary concern was continued health care delivery for the state’s poor. “In any business venture, you would not jeopardize services based on ‘maybes.’”

He said Jindal may well have more information than he has, “but the people who make the decisions do not have the information. Moving forward is something we should not be doing at this time.

“Neither should the LSU Board of Supervisors have agreed to a major contract for the transfer of the hospitals that contained 50 blank pages,” he said.

Mann, in her letter said that while the lease agreements themselves would not be subject to CMS approval, “to the extent that the lease agreements contain financing arrangements that are involved in the state’s funding of its Medicaid program, CMS will review the lease arrangements to insure compliance with federal Medicaid laws and regulations.”

She said any SPA request by the state to modify its Medicaid service payments will be reviewed by CMS to insure compliance with federal Medicaid laws and regulations. “This includes the source of non-federal funds used to fund the service payments,” she said.

Nevers, in his letter to Mann, asked if Louisiana were to expand its Medicaid program under the Affordable Care Act (Obamacare) “are there any federal provisions that would prohibit Louisiana from withdrawing from such an expanded Medicaid program at any time, including after participating in the 100 percent federal funding available in 2014, 2015 and 2016?”

Mann responded in the affirmative: “A state may choose whether and when to expand, and if a state covers the expansion group, it may later decide to drop the coverage, without any federal penalty.”

The Louisiana Civil Service Commission approved the contracts for the takeover of four hospitals in Houma, Lafayette, New Orleans and Lake Charles on June 10 despite the lack of CMS approval of the state’s privatization plan.

Commission member Scott Hughes of Shreveport said the approval was based on the state budget approved by the legislature which he said assumed the privatization of the hospital. That action, he said, would leave no money available to operate the hospitals through LSU if the deals had been rejected.

While that is not among the criteria that the Civil Service Commission is supposed to consider when layoff plans are submitted by state agencies, it left unanswered the question of what will happen if CMS does not ultimately approve the state’s plan.

A CMS spokesperson in Dallas said on June 12 that CMS does not play any role in the actual privatization of the hospitals. “However, as part of the privatization, the State of Louisiana is modifying the Medicaid reimbursement to those hospitals. The change in reimbursement requires the submission of State Plan Amendments (SPA). CMS currently has received some of the necessary SPA and they are under review.”

Last Jan. 30, Bill Brooks, associate regional administrator for the CMS Division of Medicaid and Children’s Health Operations in Dallas, sent a six-page letter to Ruth Kennedy, director of the Bureau of Health Services Financing for the Department of Health and Hospitals (DHH) in which he requested additional clarifying information which he cautioned had the effect of “stopping the 90-day clock” for CMS to take action on the proposed SPA which “proposed to revise the reimbursement methodology for inpatient hospital services to establish supplemental Medicaid payments to non-state-owned hospitals in order to encourage them to take over the operation and management of state-owned and operated hospitals that have terminated or reduced services.”

He said a new 90-day clock would not begin until his office had received satisfactory responses to his requests.

One of the requirements that Brooks cited was one which said CMS “must have copies of all signed standard Cooperative Endeavor Agreements.” He also asked the state to provide all Intergovernmental Transfer (IGT) management agreements and “any other agreements that would present the possibility of a transfer of value between the two entities.”

He said, “CMS has concerns that such financial arrangements meet the definition of non-bona fide provider donations as described in federal statute and regulations.

“Detailed information needs to be provided to determine whether the dollar value of the contracts between private and public entities had any fair market valuation. There can be no transfer of value or a return or reduction of payments reflected in these agreements,” he said.

“Additionally, whether the State is a party to the financial arrangement or not, the State is ultimately responsible to ensure that the funding is appropriate.”

Brooks asked, “How many entities does the State anticipate will participate in this arrangement? Please submit a list of all participating hospitals, all transferring entities doing the IGT, and the dollar amount that the transferring entities will IGT. Please describe how the hospitals are related/affiliated to the transferring entity and provide the names of all owners of the participating hospitals.”

In the case of the Leonard Chabert Medical Center in Houma, the lessee is listed as Terrebonne Medical Center of Houma but in reality, Ochsner Medical Center of New Orleans will be taking over operations of Leonard Chabert.

“What is the source of all funds that will be transferred?” Brooks asked. “Are they from tax assessments, special appropriations from the State to the county (parish)/city or some other source?

“The State plan methodology must be comprehensive enough to determine the required level of payment and the Federal Financial Participation (FFP) to allow interested parties to understand the rate setting process and the items and services that are paid through these rates,” Brooks said. “Claims for federal matching funds cannot be based upon estimates or projections. Please add language that describes the actual historical utilization and trend factors utilized in the calculation,” he said.

Brooks also asked if the private hospitals destined to take over operations of the state facilities are required to provide a specific amount of health care service to low income and needy patients. “Is this health care limited to hospital only or will health care be provided to the general public? What type of health care covered services will be provided?” he asked.

The CMS spokesperson on Wednesday said if CMS disapproved an amendment, “there would be no federal dollars provided for the changes proposed in the State Plan Amendment.”

“No federal dollars” could translate to hundreds of millions of dollars for a state already wrestling with suffocating budgetary constraints.

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State Rep. Jerome “Dee” Richard believes he may have found a way in which to cut into the state budget deficit to the tune of about half-a-billion dollars.

HB-73 by Richard would require a 10 percent reduction in the total dollar amount for professional, personal and consulting service contracts under the jurisdiction of the Office of Contractual Review (OCR) for Fiscal Year 2013-14.

The proposed law also would require the OCR to submit reports on the status of the implementation of the law to the Joint Legislative Committee on the Budget on Oct. 1, 2013, Jan., April 1 and July 1 of 2014.
It also would require that the OCR director to submit a monthly report to the House Appropriations Committee summarizing all contracts and dollar values awarded the previous month.

The Legislative Fiscal Office (LFO) said the annual report of the OCR released in January of this year showed there were 2,284 professional, personal and consulting contracts with the state with a combined contract value of approximately $5.28 billion.

The LFO said the bill would result in an “indeterminable decrease” in overall state expenditures in FY-14. “To the extent this bill would have been enacted during the 2012 regular legislative session, the projected 10 percent reduction in the value of OCR approved professional, personal and consulting services contracts for FY-13 would have equated to approximately $528 million less,” the LFO’s fiscal notes said.

Richard’s bill would allow exceptions but only if certain conditions were met, namely:

• There were no state employees available or capable of performing the needed work;

• Required services are not available as a product of a prior or existing contract;

• There be a written plan to monitor and evaluate performance of the contract;

• The proposed contract would be determined to be a priority expenditure by the Commissioner of Administration.

Such a reduction, should it be approved and implemented, would help close a gaping budget hole of hundreds of millions of dollars for the state.

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It was supposed to save the state some $40 million.

It cost more than 100 dedicated, efficient state employees their jobs.

It was supposed to be the best thing for the state even though studies commissioned by the Jindal administration said it was not a good deal.

It was such a great idea that the Office of Group Benefits (OGB) reduced its premium rates by 7 percent last July, six months before Blue Cross-Blue Shield of Louisiana (BCBS) was scheduled to take over as third party administrator for OGB’s Preferred Provider Organization (PPO). And if it was going to save $40 million, why not reduce rates?

Well, for one reason, since BCBS took over in January, that alluring $500 million reserve fund that former OGB Director Tommy Teague had helped the agency build up is now said to be less than half that amount because expenditures (claims payments) have been outpacing revenues (premiums).

Except no one really knows because the administration has not provided the monthly reports.

Our open, accountable and transparent administration has not been forthcoming with financial information on the agency.

We can’t seem to see any early evidence of that $40 million savings.

When revenues don’t keep up, BCBS has been forced to dip into the reserve fund to pay claims. Obviously, when the fund is depleted, there is just one way out for BCBS: increase premiums.

That’s not exactly an unexpected development. In fact, a retired OGB employee said last October the rate reduction was a formula for fiscal irresponsibility. “The program operated at a small deficit for the fiscal year ending June 30, 2010 (before the premium rate reduction), and is almost guaranteed a significant loss for Fiscal Year 2013 with the 7 percent reduction,” he said.

“The only reason that premiums could be reduced was the fact that the program had a significant surplus. For the current fiscal year, the program will be operating on its surplus for significant portion of the current year’s operating expenses…but this cannot go on forever,” he said.

“It is another example of using one-time funds to pay for continuing operations of the state. Once the reserve fund is exhausted, rates will need to be increased significantly to cover continuing operations.”

A member of the OGB board of directors requested copies of February’s monthly financial statement several weeks ago but has met only with frustration.

It can’t be that the report is not ready; word coming out of the agency is that not only is the February report complete, but the monthly report for March as well is complete.

Funny thing about this is that financials has always been provided to board members in the past. Suddenly things have changed.

With that in mind, we decided to submit our own request pursuant to the Louisiana public records laws.

In past requests for records from the Division of Administration, we have encountered delays and stonewalling that would test the patience of the Dalai Lama. DOA consistently offers the lame excuse that DOA personnel are “searching for records and reviewing them for exemptions and privileges.”

Anticipating the usual foot dragging, we submitted the following request:

From: Tom Aswell [mailto:azspeak@cox.net]
Sent: Monday, April 15, 2013 3:55 PM
To: doacommissioner@la.gov

• Pursuant to the Public Records Act of Louisiana (R.S. 44:1 et seq.), I respectfully request the following information:

• Please allow me the opportunity to review the monthly financial statements for the Office of Group Benefits for February and March of 2013.

• And please do not insult my intelligence by giving me your B.S. stock response (below) that you are “searching for records and reviewing them for exemptions and privileges.” You and I both know this is not privileged information and it certainly is not exempt. I will call on you Tuesday to review the documents. Any delays on your part will be met with prompt legal action.

Our most recent public records request to DOA was on March 10. Here is DOA’s response:

From: Joshua Melder [mailto:Joshua.Melder@la.gov]
Sent: Thursday, March 28, 2013 4:53 PM
To: ‘azspeak@cox.net’
Cc: David Boggs (DOA)
Subject: RE: PRR BenefitFocus

Mr. Aswell,

We are still searching for records and reviewing them for exemptions and privileges. Once finished, we will contact you regarding delivery of the records. At that time, all non-exempt records will be made available to you. As of now, we will not be ready to produce records on Monday.


Joshua Paul Melder
Division of Administration
Office of General Counsel

Under Louisiana’s public records laws, public agencies, from town hall to the governor’s office, have three days in which to provide requested records or to respond in writing why the records are not available and when they will be available.

Here is that March 10 request for which we still are waiting for the records:

From: Tom Aswell [mailto:azspeak@cox.net]
Sent: Sunday, March 10, 2013 9:19 PM
To: doacommissioner@la.gov

Pursuant to the Public Records Act of Louisiana (R.S. 44:1 et seq.), I respectfully submit the following request:
Please provide me the opportunity to review the following information dating back to July 1, 2012:

• all written (email and traditional mail) correspondence between the Division of Administration (DOA) or any of its representatives, spokespersons and/or agents and BenefitFocus or any of its representatives, spokespersons and/or agents relative to any contract, Request for Proposal or any other contractual or business relationship between DOA and BenefitFocus or between the Office of Group Benefits (OGB) and BenefitFocus;

• all written (email and traditional mail) correspondence between the Office of Group Benefits (OGB) or any of its representatives, spokespersons and/or agents and BenefitFocus or any of its representatives, spokespersons and/or agents relative to any contract, Request for Proposal or any other contractual or business relationship between OGB and BenefitFocus or between DOA and BenefitFocus;

• all written (email and traditional mail) correspondence between the Division of Administration (DOA) or any of its representatives, spokespersons and/or agents and the Office of Group Benefits (OGB) or any of its representatives, spokespersons and/or agents relative to any contract, Request for Proposal or any other contractual or business relationship between DOA and BenefitFocus or between OGB and BenefitFocus.

We will keep you posted on how this silly, unnecessary drama plays out.

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“When you kick employee’s (sic) butts and make them work, sometimes you get a little crap on your boots.”

—Louisiana Alcohol Tobacco Control Director Troy Hebert, responding to a LouisianaVoice request for a one-on-one interview. (We assume that was our interview.)

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