Louisiana Voice

Commissioner of Administration Paul Rainwater holds a bachelor’s degree in government, a master’s in international relations, and is certified as a local government manager. But there are still things he needs to learn.

For example, keeping a secret at any level of government is about as easy as trying to whisper in a sawmill.

Rainwater, under considerable duress from legislators, including Sen. Butch Gautreaux (D-Morgan City), Sen. Karen Peterson (D-New Orleans) and Sen. Ed Murray (D-New Orleans) finally provided Senate President Joel T. Chaisson, II (D-Destrehan) with a copy of the long sought report on the Office of Group Benefits (OGB) provided by Chaffe & Associates of New Orleans.

Chaffe had been retained in March to produce a financial overview of OGB in time for Gov. Bobby Jindal to plug his anticipated sale of the agency into his executive budget. The budget was submitted on March 19 but with no mention of OGB or the study, leading observers to believe Chaffe’s findings did not support Jindal’s agenda to sell OGB and cut OGB staff by 149 employees.

After negotiations with Goldman Sachs on an initial request for proposals (RFP) fell through (Goldman Sachs submitted the only proposal), a second RFP was issued and proposals were taken from three firms last week. Goldman Sachs again submitted a proposal, one of three firms to do so.

Both RFPs invited proposals from financial analysts to conduct a full-blown financial assessment of OGB and then to assist in marketing the agency on the private sector market.

When Rainwater finally did submit the Chaffe report, after first going back on his word to produce it, he did so with an unusual caveat: that senators refrain from making the report public.

“A critical part of this effort will entail issuing a competitive Solicitation for Offers (SFOs) from health insurance companies, which the financial advisor will help devise,” Rainwater wrote. “It’s essential that we protect the taxpayers’ interest by not prejudicing the outcomes of the SFO process and contract negotiations by giving the Chaff’s preliminary analysis to potential bidders. In other words, we want the best offer we can get.”

Oops. Too late. Remember: you can’t whisper in a sawmill.

An unknown senator released the report late Monday. The Baton Rouge Advocate published the full report on its website on Tuesday.

“Again, we have significant concerns that premature disclosure of the report will prejudice the SFO and negotiation process,” Rainwater said in his letter to Chaisson. “This is not a matter of secrecy, but a basic component of our ability to make decisions that are within our purview, to protect the integrity of a successful procurement, while providing the legislature full details at the appropriate time.”

Not a matter of secrecy? Protect integrity?

What part of integrity does Mr. Rainwater not understand after first promising Sen. Peterson a copy of the report and two days later instructing OGB CEO Scott Kipper not to make the report available to anyone?

What part of integrity does he not get after letting Kipper suffer under the withering questioning of Senate and Governmental Affairs Committee members while he, Rainwater, sat at the same table texting?

Kipper did the only honorable thing he could under the circumstances. He resigned, effective June 24, giving him tenure of just over two months.

Chaisson, for his part, tried to play along. He forwarded the report to Sen. Robert W. “Bob” Kostelka (R-Monroe), chairman of the Senate and Governmental Affairs Committee. Along with the report, he attached a three-paragraph letter saying the delivery of the report eliminated the need for a subpoena which had been requested by Murray and approved unanimously by the committee.

He also attached a copy of the statute he said protected the document from disclosure. To the layman’s eye, however, the statute seemed to do nothing of the sort.

Both Rainwater’s letter to Chaisson and Chaisson’s letter to Kostelka were initially posted on the Advocate web page along with a copy of the Chaffe report. The letters, however, were quickly removed from the Advocate website.

The report, just as had been speculated, said premiums paid by the state and by state employees would increase should the agency be privatized.

That conclusion flies in the face of Rainwater’s oft-repeated claims that the privatization of OGB would have “no negative effect” on services now provided. Some would consider premium increases at a time when state employee salaries have been frozen for two consecutive years a negative effect.

The report noted that under the current format, the state does not seek to make a profit and OGB does not have shareholders. A private company’s number one objective would be to make a profit for its shareholders.

Another point brought out in the report said that the state does not pay any taxes on its premium income but a private company would be subjected to taxes, forcing it to raise premiums even higher in order to make a pre-tax profit of 4.5 to 7 percent.

Rainwater testified before the Retirement Committee that he would not support a spike in premiums.

The report’s conclusions also appeared to answer a key question: Why would the administration be so determined to prevent the release of the report if its contents supported the position of the administration?

Much of the 42-page report, which was done under a $49,999.99 contract, appeared superfluous. Besides biographical information on Chaffe associates who compiled the report, it contained boilerplate data that could easily be downloaded from the internet. Those included stock market performances, public, industry and statistical information, consumer spending, consumer prices and inflation, business and manufacturing inventory, housing market and affordability, industrial production, unemployment and personal income, and health care industry statistics.