Gov. Bobby Jindal’s Privatization Express continues to roll on at the expense of 47 employees of the Louisiana Office of student Financial Assistance (LOSFA) scheduled to lose their jobs next June.
The State Civil Service Commission is scheduled to consider the layoff plan of LOSFA Executive Director Melanie Amrhein when it meets Tuesday and Wednesday of next week.
The Civil Service Commission in January rejected a plan to lay off about 60 information technology employees at the Department of Health and Hospitals (DHH) because of questions about a proposed privatization contract for those services.
Similar action by the commission could throw the LOSFA schedule off just as it did with DHH.
Certain administrative positions are scheduled to be retained but Amrhein said her agency does not yet have a complete list of those who will be retained.
The cover letter to Civil Service Director Shannon Templet, however, did say that two unidentified student financial aid administrators have been exempted from the layoffs and will remain on a temporary basis.
“Because we are moving all operations under a contracted vendor, the experience and guidance of these employees, who have combined 40 years of experience, will be essential to the smooth and successful transition of these operations,” Amrhein said in her letter.
LOSFA administers several programs, including the state’s Taylor Opportunity Program for Students (TOPS), TOPS Teacher, Go Grants, State Matching Funds Grants and the Guaranty Agency which handles the Federal Family Education Loan Program (FFELP), among others.
Nineteen employees in the FFELP Outstanding Loan Portfolio, which administers loans totaling more than $1.6 billion, are among the 47 who will lose their jobs. The remaining 26 to be laid off work with the FFELP’s Outstanding Default Portfolio which has more than $251 million in defaulted loans.
New originations of FFELP ceased on June 30, 2010 and all new federal Stafford and PLUS loans have been originated under the federal William D. Ford Direct Loan Program since July 1, 2010.
The proposal to be considered by Civil Service says that loan processing and issuance fees paid on new loans have resulted in a $1.4 million per year loss.
Following the invitation to bid that went out in February, bid submissions for a new privatizing contract are scheduled to be reviewed in April and the contract awarded sometime after that with layoffs scheduled for June 30.
“We have a contract with Sallie Mae Guarantor Services for utilization of software to operate the loan program in compliance with federal laws,” Amrhein said. “This contract will be terminated once the transition to the successful bidding contract is complete.”
The proposal that will be submitted to Civil Service next week notes that the agency has “finite revenues” because no new loans are being originated.
In attempting to justify the privatization contract, the proposal said that:
• a reduction of overhead was necessary to maintain support to state programs;
• an attrition of staff leads to ineffective administration and further strain on generating revenue;
• contracting services will potentially result in higher performance on portfolio while allowing the agency to retain a higher net income with reduced overhead;
• the timeline provides an orderly conversion from in-house functions to managed contractor operation;
• adversely affected employees will be given time to fine new employment.
Just as with the Office of Risk Management—the only state agency to actually be privatized thus far—and the Office of Group Benefits, none of the justifications given for privatization provided any specifics as to how contracting services will benefit anyone other than the contractor.
In the case of Risk Management, the state paid F.A. Richard and Associates (FARA) more than $68 million to take over that office. About seven months into its contract, FARA sought and was approved for a $6.8 million contract amendment, bringing its fee to just under $75 million.
Two weeks later, it was learned that FARA had been sold to an Ohio company. Last fall, a third company took over the contract in apparent violation of the state contract that specifically prohibited any transfer of contractual services without “prior written consent” from the Division of Administration (DOA).
A public records request by Capital News Service for a copy of written approval on either transfer resulted in an email from DOA saying that no such document existed.
Following Civil Service’s rejection of the proposed contract calling for the University of New Orleans to take over information technology services from DHH, UNO President Peter Fos said he was disinclined to sign the proposed contract until his concerns “are addressed and resolved to my satisfaction.”
The IT workers were informed in a December meeting that their jobs would be gone in January. Upon returning to their work stations, they found they had been locked out of their computers. Access to the computers was restored after the Civil Service Commission’s actions but the IT employees then found that their requests for leave were receiving blanket denials by supervisors.
Louisiana Voice 
Again, Louisiana workers are put out to pasture. Where will this contractor get his employees from? Out of state?
http://www.thenation.com/article/167050/states-went-red-2010-massive-public-sector-job-losses-came-next
I can tell you who else stands to receive benefits other than the contractors. Bobby Jindal. Watch his campaign contributions and see if the contractors aren’t big contributors.
What venue do taxpayers and voters have to express outrage at the despotic actions of this governor? I have written legislators, gubernatorial aides, and the governor himself voicing my concerns at the arbitrariness of these privatization initiatives. I am at a loss. Do we just wait until this term ends, and pray that the collateral damage to the state and its citizens can be corrected?
You think these private companies will get a “do more with less” lecture from the administration or legislature each time a new requirement comes down the pipeline? Or do you think they put in a contract change order to do more only if they get more? Problem is, once you privatize and outsource, it’s very difficult and very expensive to rebuild. Add to that the loss of institutional knowledge that will occur with the premature retirements and exodus of mid-career professionals once the retirement changes get ramrodded through, and there will be a serious degradation in the scope and quality of government services provided. Taxpayers may not notice until they call the Dept of Revenue or the DMV to ask a question and get someone from India on the other end.
Very doubtful that the private company will get the “do more with less” message. My agency has been outsourced, although some units remain here awaiting the actual move to the contractor. But what is seen coming back through the pipeline seems to be doing less with more. Isn’t that a surprise?