Sen. Butch Gautreaux dropped a bombshell on Tuesday when he revealed that he had learned that Gov. Bobby Jindal planned to proceed with the sale of the Office of Group Benefits (OGB) within days after the legislature leaves town upon adjournment of the current session.
The OGB privatization controversy has been swirling since Wall Street banking firm Goldman Sachs was brought in to the Division of Administration (DOA) last fall to begin preparation of a request for proposals (RFP) for a financial advisor to conduct a market value analysis of OGB and to then market the agency to potential buyers.
Goldman Sachs subsequently was the only company to submit a proposal but withdrew after negotiations broke down over the firm’s demand that the state indemnify it from future litigation.
In hearings before the Senate Retirement Committee and the Senate and Governmental Affairs Committee, Commissioner of Administration Paul Rainwater flip-flopped on whether the agency was to be sold or simply have its operations taken over by a contracted third party administrator (TPA).
The initial RFP specifically referred to the agency’s being sold but Rainwater at one time said the agency was not for sale during testimony before the Senate Retirement Committee, chaired by Sen. Butch Gautreaux (D-Morgan City), who also is a member of the OGB board of directors.
A second RFP was issued with a deadline for June 6 for the submission of proposals and a “probable” date for naming a contractor of June 15. DOA officials appeared at OGB on June 6 and took possession of the submitted proposals and no one from OGB has ever seen the actual proposals.
It was learned, however, that Goldman Sachs was one of three firms to submit proposals on the second RFP.
On June 17, LouisianaVoice asked the identity of the financial analyst but DOA Chief of Staff Dirk Thibodeaux said no one had been selected.
If Thibodeaux was accurate in his answer, that would mean that DOA had less than a week in which to select a financial analyst to conduct an in-depth financial analysis of the billion-dollar agency, have the analyst market the agency to the private sector, and to agree to terms with a buyer, a scenario virtually impossible to execute.
“My understanding is that Jindal will act on the sale Friday or Monday,” Gautreaux said in an email on Tuesday. “The deal is supposedly done. I am still fighting and will be making a statement in the Senate tomorrow.”
An earlier financial report performed by Chaffe & Associates of New Orleans reportedly said the only advantage in privatizing OGB would be if a buyer was able to keep the agency’s $500 million surplus.
A copy of that report was supposedly leaked to the Baton Rouge Advocate last week but that report contained no such wording.
The leaked report, however, was dated June 3 by the two Chaffe & Associates staff members who authored the report. Rainwater testified on May 31that his office had received the report on May 25, nine days before the June 3 date on the Chaffe report. DOA attorney Paul Holmes, in an email to LouisianaVoice on May 27 also said the report was received on May 25.
Adding to the mystery of the discrepancy in the dates was the fact that the report leaked to the Advocate had no date stamps on any of its 42 pages. DOA policy is that every document, including letters and documents, must be stamped in with the time and date of receipt.
A DOA spokesman said that there were reports within DOA that the Jindal administration was planning to move forward with the privatization of the agency.
If Jindal does proceed with the sale of the agency, it would go against the wishes of the Retired State Employees Association, active state employees, the Retired Teachers Association, and the Louisiana District Judges Association. The Louisiana District Judges Association in March approved a unanimous resolution in opposition to the proposed privatization.
There has been some talk of the possibility of a class action lawsuit by one or more of the associations in an attempt to block any privatization move.
If a move to block the OGB privatization is successful, it would be the second major setback to Jindal. He was earlier stymied in his efforts to sale three state prisons in Allen, Winn, and Avoyelles parishes.
Louisiana Voice 
Jindal is a bully and a mean one at that! I have emailed my legislators a copy of this article. I also emailed Senator Gautreaux to offer my support in his fight for the employees of OGB. Everyone else needs to do the same. Let your legislators know how you feel. Stand up and be heard!
Do we have any options left on the table with this “Governor gone wild”? Can we put up a firewall to slow him down – just filing a lawsuit might give us some time or holding up Rainwater’s confirmation as a protest. I will give the first $ 100.00 for litigation cost. – It is hard to sit back and watch Jindal fiddle as Louisiana burns.
I wish the Senate had tacked on an amendment today to one of those funding bills, maybe the one dealing with the retirement system’s unfunded liability. Something like: 10% of OGB’s surplus over $200M will go to retire this liability if, in exchange, OGB is moved from the DoA back to Treasury, under the control of the Board of Trustees.
This administration is a real piece of work. Maybe something will come from a potential Justice Dept. probe.
the Administration is like a cat against the wall and trying anything for apparently funding their political agenda. It is so scary that Jindal will ignore all the request of the legislature, judges, employees and retirees to get what he wants. That is control of the $530 million surplus in OGB and the billions of dollars in premiums that it takes in. This is Louisiana politics at its finest, ignoring the people who voted Jindal in because they believed his lies and doing what they want instead for their evil personal needs.
AGAIN no one is understanding there are 22,000 plus plan members/retirees in OGB that will never qualify for Medicare. OGB is their only insurance till the day they die. If OGB is sold to the devil then that will leave this high liability group with no insurance and they will add to the major problem for taxpayers, they will then be uninsured to the day they die.
It makes no sense to change the only state agency that, due to Tommy Teague, can account for every cent that is in the agency. Oh yea he was fired on April 15th for taking a plan that had a 36 million dollar deficit and turning it into a $530 million surplus, increasing plan benefits, keeping premiums affordable and having his employees give excellent caring customer service. Yea Mr. Teague, you were a terrible employee. We all know you would not do the sneaky acts the Jindal administration asked you to do and that’s why you were fired. We all commend you for your dedication and loyalty to the OGB plan members.
May God help us.
Did you catch the misleading spin Channel 9 put on this? In his interview with David Spunt, the governor said this was not going to happen today. He added that it would be a few weeks before a decision was made. Yet, channel 9’s report last night and this morning made it sound like the whole deal was just a rumor.
Hey, there isn’t that much difference in 1 day and 2 weeks and, besides, he never said they aren’t going to do it. Senator Gautreaux made a speech about this near the end of the session yesterday afternoon, but nobody covered it. My question to channel 9 is, “Why did you even run this story?” There was certainly no news in it, despite the impression they tried to give to the contrary and, if they wanted any kind of balance, they could have shown a few sentences from Senator Gautreaux’s speech.
The filters through which our “news” is reported – sheesh!
[…] And it appears Gautreaux was spot-on in his characterization. No one in the State has covered this story with as much intensity, insight, and clarity as Tom Aswell at The Louisiana Voice. If you care about these issues, then do yourself a favor and read Mr. Aswell’s extensive coverage; it’s illuminating and provocative. You should start by reading this. […]
I agree, praise for all tom’s work.
but the only way you can truly get heard its by writing letters too the legislatures and ranking senate members, not just giving praise on this site.
Tom agrees wholeheartedly with Wes.