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Archive for the ‘State Agencies’ Category

Former Gov. Edwin Edwards said on Tuesday that he intends link his opponent to Gov. Bobby Jindal just as Congressman Bill Cassidy has linked U.S. Sen. Landrieu and President Obama.

“Representative Cassidy has built his entire campaign on running against Obama instead of Mary Landrieu and though I believe in running on issues instead of personal attacks, I will launch my television ads next week by showing that Garret Graves will be nothing more than an extension of the Bobby Jindal administration,” Edwards told LouisianaVoice.

That shouldn’t be too difficult to do, given that Garret’s former assistant and more recently his successor has publicly endorsed Garret in his campaign against Edwards to succeed Cassidy as Louisiana’s 6th District congressional representative.

Jerome “Z” Zeringue, who once served as Garret’s assistant and then was named to succeed him as Gov. Jindal’s coastal advisor, has endorsed his old boss in the Dec. 6 runoff against Edwards.

That action brought instant criticism from another former coastal advisor to the governor. Len Bahr, Ph.D., wrote on his internet blog:

“As a former holder of Graves’ and now Zeringue’s position in the governor’s office, I’m offended that neither of these gentlemen is concerned that the person who oversees state coastal policy should be involved in a highly partisan political struggle. I realize that the law that restricts state civil servants from political activities does not apply to unclassified positions but the basis for the law is obvious, going back to the days of Huey Long when state employees were pressured to support specific elected officials. http://lacoastpost.com/blog/?p=47063

Bahr’s indignation notwithstanding, Edwards already had a pretty good arsenal to unload on his opponent.

He previewed one of his upcoming TV advertisements for LouisianaVoice. As expected, he zeroed in on the $130 million in contracts that Graves’ father’s company received from the U.S. Army Corps of Engineers during the younger Graves’ tenure as president of the Coastal Protection and Restoration Authority (CPRA) and director of the Governor’s Office of Coastal Activities.

Edwards, at a Monday appearance before the Baton Rouge Press Club, also noted that the Graves’ father also subcontracted $66 million of that $130 million to some 18 other companies who have since contributed $250,000 to Graves’ campaign and $360,000 to Jindal.

Those points were brought by another candidate in the first primary, State Sen. Dan Claitor (R-Baton Rouge) but Edwards added a new twist during the press club appearance when he revealed that Graves’ brother-in-law stood to gain financially from a deal involving CPRA.

He said the Water Campus office complex and research center under construction in Baton Rouge, will house the agency Graves once headed. The leasing agent for office space in the facility, Edwards said, is Randy White, Graves’ brother-in-law. “They’re going to lease one million square feet of office space at probably $25 to $50 per square foot,” he said. “At a commission of 2 or 3 percent, that’s a $1 million a year.”

The former governor also expressed his disappointment at Graves’ tactic of sending out letters leading up to the Nov. 4 first primary in which he hinted that Republican candidate Paul Dietzel, III was gay. “He (Graves) repeated over and over that Dietzel had never married, lives with his grandmother, and had performed work on behalf of gay organizations,” Edwards said. “There is no place in today’s society for that type of attack.”

Edwards said the motive for Graves’ attack was obvious. “Up to the time those letters went out, he and Dietzel were neck and neck for the second spot in the runoff against me. It was the act of a desperate man and a man who was hand-picked by our governor to continue the policies put in place by Jindal.

“Jindal’s approval rating is every bit as deplorable as Obama’s,” Edwards said. “And a vote for Graves is a vote to continue down the same road that Jindal has taken the state during his administration. Personally, I don’t think this state can afford a continuation of those policies.”

Bahr, his blog, included a link to Louisiana Civil Service rules on public employees’ participation in political campaign and though the rules are different for classified and unclassified employees like Zeringue, Bahr said he nonetheless felt it wrong for Zeringue to interject himself into partisan politics. http://www.civilservice.louisiana.gov/files/general_circulars/2011/gc2011-020.pdf

One of Bahr’s readers added this comment to his blog:

“A key part of Graves’ legacy is the degrading of CPRA’s standing as a supposedly objective body. Pushing them to pass a resolution opposing the SE La Flood Protection Authority lawsuit was a key step. Using the meeting for theatrics attacking the feds every month was another. CPRA has continued on this path in his absence by passing a resolution opposing the EPA’s proposed “Waters of the U.S.” designation, with no real discussion of the actual rule/regulation. In the bubble that Louisiana inhabits, no one is supposed to see this for what it is. That bubble will be popped when the state sees how national support for restoration has been eroded.”

So while Edwards has been relatively quiet up to this point (as opposed to the incessant barrage of attack ads from both Landrieu and Cassidy), that will change beginning next Tuesday—just in time for his only scheduled head-to-head debate with Graves in Denham Springs that same day.

If he is successful in linking Graves to his former boss, Jindal’s low poll numbers coupled with the animosity Jindal has single-handedly created between himself and teachers, state employees and higher education officials during almost seven years as governor, it could spell trouble for Graves. And Edwards, the sly old warrior that he is, might yet have a trick or two up his sleeve.

To paraphrase actress Bette Davis in the movie All About Eve, Fasten your seatbelts, it’s going to be a bumpy ride.

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Two legislative committees charged with oversight of the Office of Group Benefits (OGB) are expected to demand that OGB roll back dramatic increases in health care co-payments and deductibles the agency is attempting to impose on hundreds of thousands of state employees to make up for the Jindal administration’s mismanagement of the agency when they meet in tandem on Friday.

The Senate Finance Committee and the House Appropriations Committee will meet at 10 a.m. on Friday but will not take testimony from the public.

The two committees are expected to instruct Nichols and OGB CEO Susan West to slash the increases in deductibles—some couples’ deductibles increased from $300 to $3,000 under the new plan being proposed by OGB–and co-pays.

OGB has already announced a two-month delay in the implementation of steep increases in prescription drug costs and will refund about $4.5 million in overcharges to state employees.

The Jindal administration is attempting to impose the co-pay and deductible increases as a way to recover hundreds of millions of dollars the administration managed to squander as a cost-savings to the state’s own contributions to employees’ premiums as a means to cover huge gaps in Jindal’s state budget.

The entire scenario reads like the script from an old I Love Lucy sitcom as everything the administration had done with OGB has blown up in its face in an improbable comedy of errors. How more insulting to legislators could it get than for Commissioner of Administration Kristy Nichols to provide false testimony to the Joint Legislative Committee on the Budget on Sept. 25 shortly before abruptly leaving the JLCB meeting to take her daughter to a boy band concert in New Orleans?

When asked point blank by State Rep. John Bel Edwards at that Sept. 25 hearing–before heading out to the Smoothie King Arena to settle into the governor’s luxury box seats for the concert—which actuary recommended that OGB reduce premiums by nearly 9 percent, she testified that Buck Consultants made the recommendation.

But Buck reportedly responded by email within days that it never made any such recommendation and that Nichols’ testimony was in direct contradiction to its recommendations.

A July report from Buck reinforces its claim that it never made any such recommendation. “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,” the report says.

When witnesses sign cards prior to speaking before a legislative committee, they are certifying that they understand that their testimony is considered as being given under oath.

Edwards also asked at the hearing that Nichols or West provide him with a copy of that recommendation but he said on Wednesday (Nov. 5) that he still had not received that information. “I still have not received any actuarial recommendations for the 2013 and 2014 premium reductions at OGB,” he told LouisianaVoice. “Nor have they told me that such recommendations do not exist. Clearly, they do not.”

If someone were to set out to demonstrate how incompetent an administration could be, he would be hard pressed to find a better example than the manner in which it has handled the Office of Group Benefits—from firing an effective CEO who built up a $500 million reserve fund in favor of a revolving door approach to subsequent CEOs, to firing experience claims handlers with whom OGB members were comfortable, to hiring a California firm with no knowledge of Louisiana’s medical coverage program to handle telephone inquiries because experienced OGB staff were also fired, to attempting to implement emergency rules to enact the cost increases in co-pays and deductibles without the legally required public hearings, to having to refund $4.5 million in prescription drug overcharges for the same violation of the emergency rules procedures, to first claiming that it was not necessary to invoke the emergency rule and then deciding to do just that, to lying to legislators about actuarial recommendations of premium reductions.

The FUBARs and SNAFUs of OGB are so many and so irreversible that they should give pause to anyone who would entertain even the fleeting notion that Gov. Bobby Jindal is capable of leading the free world when, through his inept surrogates, he has, in less than two years, destroyed a relatively small but viable, efficient state agency.

Jindal and Nichols, of course, have a ready explanation for the OGB financial woes: medical costs have risen and it’s all Obamacare’s fault—never Jindal’s.

It’s the same arrogance level as that was demonstrated by Nichols in another appearance before a legislative committee when, trying to explain budget figures, she said somewhat condescendingly, “Let me dumb it down for you.”

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Given the chance, a reality TV show profiling our state elected officials and political appointees would surely eclipse Duck Dynasty in the ratings—except viewers outside Louisiana would swear the stories were nothing but lowbrow fiction.

When Gov. Bobby Jindal announced the appointment of Butch Browning as State Fire Marshal shortly after taking office in 2008, for example, it turned out to be one of a series of appointments that have come back to embarrass the administration [aside from the fact that the administration appears immune to embarrassment]. Yet, as with almost all the other poor choices, he is resistant to making needed changes in leadership—thereby solidifying his image as a Stand by My Man governor.

The lone exception to that mindset is Bruce Greenstein, former Secretary of the Department of Health and Hospitals—but that dismissal came only after word leaked out of a federal investigation of possible improprieties surrounding a contract Greenstein awarded to his former employer.

While Troy Hebert, Director of the Office of Alcohol and Tobacco Control (ATC) and State Police Superintendent Mike Edmonson have garnered the lion’s share of negative attention, Browning, for the most part, has managed to fly beneath the radar despite several events that occurred during his watch that probably should have demanded closer examinations and, in just about any other administration, dismissal.

Over the next few days, LouisianaVoice will be conducting the scrutiny that Jindal obviously eschews as we look at some of the eye-opening events and practices within the State Fire Marshal’s office.

Browning was appointed on March 8, 2008, barely a month after Jindal began his first term. “Ensuring the safety of Louisiana children and families is an incredibly important mission and the state has benefitted from his leadership, knowledge and service,” Jindal said in a canned press release at the time.

Browning began his public career as a deputy sheriff for East Baton Rouge Parish in 1986 and was named Gonzales Fire Chief in 1998.

“I passionately share the vision of Gov. Bobby Jindal and Col. Mike Edmonson to come together as one,” he said somewhat prophetically at the time of his appointment.

Browning managed to keep his nose relatively clean for a couple of years but in mid-April of 2012 Browning resigned, albeit briefly, in the midst of a pair of simultaneous investigations of his office to accept a job in an area plant, saying the offer was “too good to pass up,” only to return—with a substantial raise in pay—less than two weeks later.

His brief retirement and return just happened to coincide with an investigation launched that, oddly enough, Browning claimed later to be unaware of and which prompted efforts in the Legislature to abolish the investigating agency, a subject to which we will return later in this series. It’s all part of the surreal Louisiana political atmosphere to which we seem to have become inured.

His problems actually originated when the Metropolitan Crime Commission in New Orleans forwarded allegations of mismanagement and fraud against Browning in late 2011.

Among those allegations were claims that Browning’s employees traveled to Tuscaloosa, Alabama, in May of 2011 as one of many recovery teams dispatched there following a series of deadly tornadoes. Those employees, the accusations said, were instructed to bill the Federal Management Emergency Administration (FEMA) for 18-hour work days. The complaint said the hours were billed even though the employees took two days off to attend LSU-Alabama baseball games. It also said that while FEMA did not pay the firefighters, the state did. FEMA, however, was unable to confirm whether or not it had paid the firefighters.

Two other allegations accused Browning of suppressing a finding that a certificate should not have been issued by one of his inspectors for a carnival ride on which two teenagers were subsequently injured and that he paid two members of his office to serve as drivers and security for attendees to a National State Fire Marshal’s conference in New Orleans.

Meanwhile, it was learned that Browning was making public appearances in his dress uniform, complete with military medals from World War II and the Korean War—except for one inconvenient little oversight: he never even served in the military, much less served in either of the two wars. In fact, he wasn’t even born until well after the conclusion of both wars.

BUTCH BROWNING

Browning proudly wears military medals in this file photo.

There also is the pesky federal law called the Stolen Valor Act, which makes it a federal misdemeanor for anyone to wear military commendations they did not earn.

That brought the wrath of veterans down upon Browning. “We take pride in what we wear,” said one Marine officer. “Marines don’t hand out ribbons like candy. You have to earn it.” A couple of others called his wearing the medals and ribbons “disrespectful” and U.S. Rep. Steve Scalise (R-New Orleans) said, “There’s nothing more disgraceful than trying to present yourself as someone who served in the military when you didn’t.”

“We’ve been informed that Mr. Browning never served in the military, yet he was wearing military ribbons awarded to every branch of the military service that span World War II, the Korean war and the Kosovo campaign,” said Rafael Goyeneche, President of the Metropolitan Crime Commission who called Browning’s wearing the ribbons “problematic.”

Every branch of the military service? Well, at least he was an equal opportunity fraud, though he did explain that he received the ribbons from the Gonzales Fire Department where he served as chief before his appointment to the State Fire Marshal’s post by Jindal.

On April 18, 2012, Browning, while denying that he was the target of any investigation, suddenly announced his “retirement,” saying he was accepting a job offer as a superintendent at a petrochemical plant in Ascension Parish that he described as “too good to pass up.” His resignation was effective immediately, he said.

But passion apparently trumped too good to pass up for on April 30, just 12 short days later, he was reinstated as he gushed, “my passion is public service.”

But his return reportedly presented a problem. Sources told LouisianaVoice that when he resigned, he was paid for 300 hours of unused annual leave, or about $13,000. When he returned, he was required to repay the money but those same sources said he no longer had the money.

But records show that State Police Superintendent Mike Edmonson, who doubles as Deputy Superintendent of the Department of Public Safety (DPS) and apparently as DPS problem solver, simply bumped Browning’s salary by $8,000 per year, from $92,000 to $99,000 even though he returned at the same Assistant Secretary position as before—apparently so he could afford to repay the $13,000. How many of us would quit our jobs for 12 days in exchange for an $8,000 raise in pay?

Problem solved.

Well, not quite.

While Edmonson was laudatory in welcoming Browning back into the fold, Goyeneche was not nearly so forgiving of Browning—or of Edmonson, for that matter—and the political fallout was almost instantaneous.

Edmonson, metaphorically spreading rose petals in Browning’s path, said the DPS Internal Affairs Section had investigated the allegations and found “no factual evidence” to support the claims. “That investigation has shown me that Butch did not abuse his power or violate the public trust,” he added.

This from a man who, only two years later, would attempt to engineer a lucrative $55,000 a year increase to his own retirement through a furtive, last-minute amendment to an otherwise unrelated Senate bill steered past an unsuspecting and distracted legislature in the closing hours of the 2014 session—with the abetting of Gov. Bobby Jindal and the author of the amendment, State Sen. Neil Riser (R-Columbia).

Edmonson said Browning’s worst sin was to sign papers as a matter routine but which he did not thoroughly read but which were done with no criminal intent or fraud. He said he told Browning he wanted him back on the job—apparently sans military decorations—after an “outpouring” of public support.

Goyeneche, meanwhile, was livid and described the expedited exoneration of Browning as “Louisiana politics at its worst” (see the LouisianaVoice masthead) and unconscionable. “I think this is a political decision and not a decision based on its merits as Fire Marshal,” Goyeneche said. “If the standard is going to be whether Butch Browning broke the law then this is a sad day in Louisiana. State police make decisions every day to discipline officers on administrative issues and this is someone who has made several managerial blunders.”

Browning, for his part, said he welcomed input that would result in positive changes. “The integrity of the Office of State Fire Marshal is one of my top priorities,” he pontificated with self-puffery. “It’s what the public expects.”

In the coming days, we will examine how Browning, with a little help from his friends, manages to continue to survive integrity breaches and how a critical report by one state investigative agency result in a legislative effort to abolish the agency—kill the messenger, as it were—rather than consider correcting deficiencies investigators cited in Browning’s office.

 

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The controversy surrounding the sweeping changes being proposed for the Office of Group Benefits just got a little dicier with new information obtained by LouisianaVoice about the departure of Division of Administration executive counsel Liz Murrill and the possibly illegal destruction of public records from the Office of Group Benefits (OGB) and the involvement of at least two other state agencies.

While it was not immediately clear which OGB records were involved, information obtained by LouisianaVoice indicate that Murrill refused to sign off on written authorization to destroy documents from OGB.

We first reported her departure on Oct. 14 and then on Oct. 22, we followed up with a report that Murrill had confided to associates that she could no longer legally carry out some of the duties assigned to her as the DOA attorney.

But now we learn that the issue has spilled over into two other agencies besides OGB and DOA because of a state statute dealing with the retention of public documents for eventual delivery to State Archives, a division of Secretary of State Tom Schedler’s office.

Reports indicate that Schedler became furious when he learned of the destruction or planned destruction of the records because records should, according to R.S. 44:36, be retained for three years and then delivered to the state archivist and director of the division of Archives, records management and history. https://www.legis.la.gov/legis/Law.aspx?d=99704

Schedler reportedly became so upset with the decision to destroy the records that he copied Attorney General Buddy Caldwell with a letter he wrote to Nichols directing that DOA comply with the statute but Caldwell for his part, refused to intervene, saying he did not want to become involved.

If that indeed is the case, then LouisianaVoice goes on record here and now as contending that Caldwell is unfit to serve in that capacity and should resign immediately.

We made every effort to allow Caldwell to respond. We called his office and asked to speak to Buddy Caldwell or his son, Assistant Attorney General David Caldwell. We were told, “We don’t put calls through to them; we take a message and they may call you back.” They never did. We also spoke with AG Press Secretary Laure Gerdes and explained the story we were working on and told her if we did not hear back from Caldwell, we would suggest that he was unfit to serve as AG. Again, we never heard back from either Caldwell.

The attorney general simply cannot cherry pick which laws he feels should be enforced and to allow the destruction of vital public documents, particularly at a time when so much raw emotion has erupted over changes to the OGB benefit structure. To sit idly back and allow the administration to flout the law in the faces of 230,000 OGB members, retirees and beneficiaries is unconscionable and if Caldwell allows such action without at least advising DOA of the consequences he is not worthy of calling himself a public servant. He should take his Elvis impersonation act back to Tallulah.

And if Caldwell is reluctant to give legal advice to DOA, then Hillar Moore, as District Attorney for the 19th Judicial District, has all the statutory authority required to prosecute state officials should he ever decide to exercise that authority. The state government, after all, is domiciled in East Baton Rouge Parish.

Too much is at stake and those records could hold the key to the motives behind the administration’s decision to dramatically increase co-pays and deductibles. LouisianaVoice made requests for certain OGB records on Oct. 14 and those records have yet to be produced by DOA. We have no way of knowing if the records we requested are part of those documents which were ordered destroyed but if so, we plan to initiate legal action against the state promptly.

DOA has been habitually reluctant to produce public records at our request in a timely manner and this action could be the proverbial straw that breaks the camel’s back. Without the support and backing of the state’s highest legal authority, we are powerless to force compliance other than through the courts.

But the question that should be uppermost in the minds of Louisiana’s citizens is this: If those records were important enough to fire an attorney over her refusal to sign off on their destruction or for that attorney to place her career in jeopardy over that same issue, we are more curious than ever to know the contents of those documents—and we have the right to know.

And even more significant in this entire affair, if Liz Murrill did in fact refuse to compromise herself and her reputation by refusing to sign off on an illegal act, then we can only say good for her! She has shown far more integrity than our attorney general.

 

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Our October fund raiser enters its final five days and we still need assistance to help us offset the cost of pursuing legal action against an administration that prefers to conduct its business behind closed doors and out of sight of the people to whom they are supposed to answer.

We also are launching an ambitious project that will involve considerable time and expense. If Gov. Bobby Jindal does seek higher office as it becomes more and more apparent that he will, the people of America need to know the real story of what he has done to our state and its people. Voters in the other 49 states need to know not Jindal’s version of his accomplishments as governor, but the truth about:

  • What has occurred with CNSI and Bruce Greenstein;
  • How Jindal squandered the Office of Group Benefits $500 million reserve fund;
  • The lies the administration told us two years ago about how state employee benefits would not be affected by privatization;
  • The lies about how Buck Consultants advised the administration to cut health care premiums when the company’s July report said just the opposite;
  • How Jindal attempted unsuccessfully to gut state employee retirement benefits;
  • How Jindal attempted to sneak a significant retirement benefit into law for the Superintendent of State Police;
  • How Jindal appointees throughout state government have abused the power entrusted to them;
  • How Jindal has attempted a giveaway plan for state hospitals that has yet to be approved by the federal Center for Medicare & Medicaid Services (CMS);
  • How regulations have been skirted so that Jindal could reward supporters with favorable purchases and contracts;
  • How Jindal fired employees and demoted legislators for the simple transgression of disagreeing with him;
  • How Jindal has refused Medicaid expansion that has cost hundreds of thousands of Louisiana’s poor the opportunity to obtain medical care;
  • How Jindal has gutted appropriations to higher education in Louisiana, forcing tuition increases detrimental to students;
  • How Jindal has attempted to systematically destroy public education in Louisiana;
  • How Jindal has refused federal grants that could have gone far in developing internet services for rural areas and high speed rail service between Baton Rouge and New Orleans;
  • How Jindal has rewarded major contributors with appointments to key boards and commissions;
  • How Jindal attempted to use the court system to persecute an agency head who refused to knuckle under to illegal demands from the governor’s office;
  • How Jindal has manipulated the state budget each year he has been in office in a desperate effort to smooth over deficit after deficit;
  • And most of all, how Jindal literally abandoned the state while still governor so that he could pursue his quixotic dream of becoming president.

To this end, LouisianaVoice Editor Tom Aswell will be spending the next several months researching and writing a book chronicling the Jindal administration. Should Jindal become a presidential contender or even if he is selected as another candidate’s vice presidential running mate, such a book could have a national impact and even affect the outcome of the 2016 presidential election.

This project is going to take time and involve considerable expense as we compile our research and prepare the book for publication in time for the 2016 election.

To accomplish this, we need your help.

If you are not seeing the “Donate” button, it may be because you are receiving our posts via email subscription. To contribute by credit card, please click on this link to go to our actual web page and look for the yellow Donate button: http://louisianavoice.com/

If you prefer not to conduct an internet transaction, you may mail a check to:

Capital News Service/LouisianaVoice

P.O. Box 922

Denham Springs, Louisiana 70727-0922

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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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