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Archive for October, 2012

Editor’s note: LouisianaVoice would like to acknowledge and thank Kay Prince of Ruston for contributing much of the research that went into this article. She has worked tirelessly with former Sen. Butch Gautreaux on this issue and was gracious enough to share this information with us for our use.

A former employee of the Louisiana Office of Group Benefits OGB) has taken issue with several points in the proposed contract between the Division of Administration (DOA) and Blue Cross/Blue Shield of Louisiana (BCBS) that calls for BCBS to take over the operations of OGB’s Preferred Provider Organization (PPO) plan as the plan’s third party administrator (TPA) in January.

The former employee, who is now retired, examined the contract which is scheduled for consideration by a special joint meeting of the House Appropriations and Senate Finance committees on Thursday, Nov. 1 and found several areas in which he said the state will be getting a bad deal if the contract is approved.

Gov. Piyush Jindal has pushing for the transition for nearly two years now in what he insists will be a cost-cutting measure but which will result in the loss of 177 positions at OGB and 111 actual jobs. The other 66 positions are currently vacant.

One of the things the former employees warns about is an obscure clause on page 8 the contract which says the maximum amount to be paid BCBS shall not exceed $1.1 billion for any one year “unless the director of the Office of Contractual Review approves a contract amendment.” (emphasis ours.)

That is an important provision considering what happened with the privatization of the Office of Risk Management (ORM) in September of 2010. Under terms of that contract, the state was to pay F.A. Richard and Associates (FARA) of Mandeville $68 million to be the TPA for ORM but only a few months into its contract, FARA asked for and received a $6.8 million amendment to its contract, increasing the over contract cost to just under $75 million.

Legislators were upset to learn that the amendment was legal because the law allows a one-time contract amendment of up to 10 percent with only the approval of Contractual Review. The FARA contract amendment was exactly 10 percent and legislators had no say in the matter.

The Jindal administration claims that allowing BCBS to become the TPA for OGB will save the state $20 per year. But if BCBS should seek a similar 10 percent increase in its contract, the $110 million in additional contract costs would wipe out any savings.

Administration projects of OGB’s spending 100 percent of budgeted amounts in several areas whereas the agency historically has spent between 65 and 80 percent of budgeted amounts on administrative costs. “This inflates the projected savings by approximately 20-35 percent,” the retired OGB official said.

Projected savings on building rental may also be overstated, he said, because OGB is locked into a 10year lease for its Baton Rouge office space. The cost of that lease is $100,000 per month and will not be reduced unless OGB can renegotiate its lease.

He said it was misleading to compare Louisiana to other states. First, the only other state that self-administers its health benefits program is Utah which has a smaller population. “You cannot compare staffing patterns for completely different ways of doing business” as the administration did with Florida and Mississippi, for example. “You need to compare total administrative costs for the other states, not just (the) number of employees,” he said.

But of even more importance, he said, is the misconception that it was a sound move to reduce premiums by 7 percent last July.

“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 in premium that was approved by the Division of Administration,” 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.

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

State health insurance programs have varied over the years and remained pretty much in a state of flux until the administration of OGB CEO Tommy Teague, who was fired on April 15, 2011. It took a major political scandal involving a top state administrator and underworld boss Carlos Marcello to pull the state’s health and life insurance programs out of the doldrums.

OGB itself is relative new as a state agency, having been created on Sept. 1, 1979, as a result of the FBI’s Brilab sting operation which resulted in Commissioner of Administration Charles Roemer’s conviction of conspiracy to violate federal racketeering laws over accusations that he and Marcello took part in a scheme to win a multi-million dollar state group insurance contract through bribery.

Roemer served 15 months of a three-year prison term before his conviction was overturned.

Prior to July 1, 1970, each state agency was responsible for procuring its own insurance contract for its employees. This created a multitude of problems since each contract had different dates, coverage, premiums, etc. Plus, when an employee transferred from one agency to another, it forced the employee to switch coverage which resulted in considerable confusion and in some cases, loss of coverage because of different waiting periods among the various contracts.

The Uniform Insurance Act was passed and went into effect on July 1, 1970 and all Executive Branch agencies were brought under one consolidated health/life insurance contract, which was awarded to Blue Cross for health and Pan American Life for life insurance.

In 1973, when Blue Cross proposed a significant rate increase, the contracts with both Blue Cross and Pan American were terminated and the state’s health and life insurance programs became self-funded by the state. Continental Assurance (CNA) was retained as the TPA to handle claim payment functions, an arrangement that remained in effect for the remainder of the seventies.

It was during this time that the FBI began its sting operation after learning of alleged bribes and the legislature subsequently passed Act 749 of the 1979 regular session which created OGB and placed it under the State Treasurer’s office.

On May 1, 1981, the CNA contract was terminated and all employees who were working for CNA were offered an opportunity to become Civil Service employees, effective May 1. The agency operated under this arrangement until 1998 when the legislature was forced to make a supplemental appropriation of $77 million to cover an unfunded accrued liability (UAL) in the program because the OGB trustees had failed to increase rates to keep up with the program’s claims experience.

The program continued to operate with an UAL until the mid-2000s at which time it began generating a surplus each year through FY 2011, going from a $105 million deficit to its current $500 million surplus in about five years.

Here are the links to the committee memberships:

http://house.louisiana.gov/H_Cmtes/H_Cmte_AP.asp
http://senate.legis.louisiana.gov/Finance/Assignments.asp

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There’s an old joke about an honest congressman who refused to take advantage of his position to enrich himself and was defeated for re-election because his constituents considered him too stupid to hold elective office.

If that is the case for Louisiana’s redrawn 3rd Congressional District, voters are going to be in a real quandary next Tuesday when it comes time to choose between the two incumbents. Not to trivialize the campaign of Democrat Ron Richard, but realistically, this race is between Republicans Ron Landry and Charles Boustany.

Campaign contributions certainly bear that analysis out: Boustany has received about $3 million in contributions to Landry’s $1.8 million while Richard has pulled in only $53,000, according to figures provided by OpenSecrets.org, an online campaign tracking organization.

But the real story may lie in how both Landry and Boustany have seen their fortunes grow while serving in Congress.

The Washington Post and the Center for Responsive Politics recently published an analysis of the financial health of each of the 535 members of the House and Senate and the report showed that all but two of Louisiana’s eight-member congressional delegation (six Congressmen and two Senators) saw their bottom lines increase significantly since taking office.

In the 3rd Congressional District, the two Republican frontrunners saw their wealth increase much more dramatically—262 percent for Boustany and 233 percent for Landry.

But Landry did it in much shorter time—from $2.5 million in 2009 to $8.2 million just a year later.

Boustany’s wealth was listed at $1.4 million in 2010, up from $400,000 in 2004.

Put another way, Boustany had a $1 million increase in his estimated wealth over a six-year period compared to an increase of $5.7 million in a single year for Tea Party incumbent Landry.

Both men are pitted against each other in the redrawn district that resulted in the loss of one seat in Congress.

Boustany serves on the House Ways and Means Committee which, among other things, handles commercial matters that include trade agreements, revenue measures and transportation of durable goods. It also oversees social security, Medicare and Medicaid, and passage of highway and farm bills.

His five largest contributors, by industry, include health professionals, $284,725; insurance, $151,700; oil and gas, $127,550; health services/HMOs, $115,300, and lobbyists, $95,067.

Landry serves on the House committees on Natural Resources, Transportation and Infrastructure and Small Business.

His five biggest contributors, by industry, include sea transport, $128,550; oil and gas, $124,416; retired, $52,600; crop production and basic processing, $44,600, and general contractors, $34,250.

The Washington Post story said investments by members of Congress range from riskier, high-growth funds to safer municipal bonds. While lawmakers range from the super-rich to the deep-in-debt, they generally don’t get rich simply by virtue of their membership in Congress. On the other hand, wealthy candidates who go to Congress seem to get richer while serving.

The wealthiest one-third of members were for the most part immune from the recent recession. They took the fewest financial hits and saw their investments recover rather quickly, even rising to new heights, the report said. Another 121 were worse off in 2010 than they were six years before and 24 actually reported their wealth in negative numbers.

The seamier side of congressional wealth is reflected in the fact that 73 members (almost 14 percent) either sponsored or co-sponsored legislation that benefited businesses or industries in which either they or family members had a financial interest.

Others leveraged their positions to lucrative positions in the private sector upon leaving Congress.

Two such congressmen were from Louisiana.

Richard Baker of Baton Rouge was a former chairman of the House Financial Services Committee Capital Markets Subcommittee before resigning in January of 2008 to accept a hedge fund lobbying position with the Managed Funds Association.

Billy Tauzin of Chackbay helped ram through the Medicare Prescription Drug Bill which, among other things, prohibited Medicare from negotiating prices on prescription drugs set by pharmaceutical companies. He did not seek re-election in 2004 and the following year took a job as head of the Pharmaceutical Research and Manufacturers of America (PhRMA), a power lobbying group for the pharmaceutical industry.

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Whenever I see a story about some stupid criminal I find myself wishing I could be alone in a room with the poor sap just so I could ask him three questions:

• What was your thought process?

• Did you think this through to its logical conclusion?

• Did you ever, at any point in time, think this would end well for you?

That’s all. Just those three questions.

Until now, I had always limited this wish to stupid criminals:

• Like the guy who pulls up at the drive-through window of a bank and slips a note in it saying “This is a holdup.” The teller, pulls the drawer in, reads the note, flips it over and writes on the back, “I don’t see a gun,” and sends note back to the guy who obligingly puts his gun in the drawer and sends it in to the teller;

• Like the guy who writes his holdup note on any piece of paper with his name and address on it or who is wearing a work uniform with his name tag fully visible;

• Like the guy who tries to outrun police on the interstate;

• Like any idiot who tries to resist a half-dozen police officers;

You get the picture.

But now I have expanded my sentiments to wishing I could pose the same question to some of our bumbling state politicians—particularly our self-promoting, egocentric, ambitious, absentee governor who insists—with a straight face, no less—that he has the job he wants even as he ignores a multitude of problems at home while auditioning for any job that will promote his shameless career goals.

But there are others:

• Any legislator (like Noble Ellington or Jane Smith) who runs for office on the promise of looking out for the folks back home but then accepts a six-figure salary in some department for which he or she has zero qualifications. What were you thinking?

• Any agency head (like Louisiana Workforce Commission Executive Director Curt Eysink) who sends out an email saying there will be no merit raises for employees because of budgetary constraints while almost simultaneously approving a 41 percent increase for a single employee. What were you thinking?

• Any agency head (like Department of Health and Hospitals Secretary Bruce Greenstein) who would attempt to withhold the name of the winner of a $300 million contract with DHH from a legislative committee charged with confirming his appointment as secretary. What were you thinking?

• Any agency head (like Department of Natural Resources Secretary Scott Angelle) who would resign in the middle of a major crisis involving a potentially toxic sinkhole in order to selfishly run for a public office that he thinks will set him up for a run for governor in 2015? What were you thinking?

• Any agency head (like Alcohol and Tobacco Control Office Commissioner Troy Hebert) who would send a uniformed agent to inspect bars where she had recently worked undercover and purchased drugs from dealers. What were you thinking?

• Any agency head (like Superintendent of Education John White) who, on the night before he was to testify before a legislative committee about the New Living Word school in Ruston, sent emails to the governor’s office that he would try to “take some air out of the room” and to “muddy up” the narrative over the his approval of 315 vouchers for the school that had no classrooms, no desks and no teachers. What were you thinking?

• Any agency head (like White) who, within a matter of a few weeks, would hire a $144,000 part-time public relations officer from Florida and a consultant from Los Angeles to serve as a shill for the Department of Education’s (DOE) computer Course Content at a salary of $146,000—both of whom are allowed to commute and/or work from their homes. What were you thinking?

• Any agency head who, while giving no merit increases for three years and while even laying off rank and file employees, continues to give healthy salary increases to employees already earning in excess of $100,000 per year. What were you thinking?

• Any legislator who sees nothing wrong with private Christian schools receiving vouchers but who goes ballistic when it is learned that an Islamic school applied for vouchers under the same program. What were you thinking?

• Any governor who, while busy traveling all over the country promoting his aspirations for a cabinet position should Mitt Romney be elected president, approves closures of and budgetary cutbacks for state hospitals where cutbacks and closures result in the loss of treatment availability for indigent citizens. What were you thinking?

• Any governor who, while spewing outright lies in his many out-of-state visits about how he has the most ethical, most transparent and accountable administration in the country, continues to hide his office behind a veil of secrecy, refusing to provide public records or to grant media interviews. What were you thinking?

• Any inaccessible, unreachable, unavailable, unaccountable governor who, in an attempt to further shroud public agencies from having to answer directly to Louisiana citizens, attempts to force disputes with state agencies to be handled via telephone hearings instead of face-to-face hearings. What were you thinking?

• Any legislator who allows this governor and these bureaucrats to snub their collective noses at the citizens of this state with their arrogant actions and their attitude of defiance and mockery.

• Any citizen of Louisiana who would rather watch Dancing with the Stars than hold these sorry excuses for public servants accountable.

What the hell are any of you thinking?

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Editor’s note: The information contained in this story was received via printouts from the Louisiana Department of Civil Service of those earning $100,000 or more for the years 2009 through 2012. Each year was listed separately. Accordingly, when the name of Patti Gonzalez of the Office of Risk Management did not appear until the 2012 printout, the indication was she had received a pay increase. This was not the case and there was no explanation as to why she did not appear in prior years but Ms. Gonzalez says she has not received an increase since March of 2010.

Likewise, no state elected officials received pay increases as their salaries are set in statute. Civil Service printouts did indicate pay increases for all but two statewide elected officials but this apparently was in error.

Rank and file state civil service employees have gone without pay increases, merit or otherwise, since 2009 but at least 104 managers, directors, supervisors and five statewide elected officials already making in excess of $100,000 a year have received increases over the past three years.

Not included in the tabulation were doctors, nurses, pharmacists, higher education professors or, with one exception, those who were promoted from one job to another and got raises.

Altogether, more than 3,200 state employees earning more than $100,000 per year accounted for an annual payroll of approximately $432 million—an average of about $135,000 each.

The average pay of a state civil service employee is approximately $39,600.

In most cases—but not all—the pay increases were 4 percent increases. A 4 percent increase for one making $100,000 would be $4,000. That would fund four such increases for workers earning only $25,000 a year.

There were those, however, who did better. Much better.

Michael Diresto went from $103,792 in 2011 to $118,792 this year, a $15,000 (14.5 percent) bump. He was listed by the Department of Civil Service as a “director” in the Division of Administration (DOA) for both years. On the DOA web page, he is identified as an assistant commissioner for policy and communications.

Bruce Unangst, executive director of the Real Estate Commission, also saw his annual salary balloon from $109,000 in 2011 to $125,000 this year, a 14.7 percent increase.

In the governor’s office itself, Executive Counsel Elizabeth Murrill did extremely well for herself. Her 2011 salary of $110,000 grew to $165,000 this year—before her transfer to DOA where presumably, it will remain the same. Her one-year pay hike was a whopping 50 percent, according to Civil Service records.

In the Department of Insurance, 14 employees earning $100,000 or more received 4 percent increases from 2011 to 2012 while four others, including an attorney supervisor, did not. Insurance Commissioner James Donelon this year also hired former state legislator Noble Ellington, who had no experience in insurance, as deputy commissioner at a salary of $149,900.

Five of 14 employees of the Port of New Orleans Port Commission who earn $100,000 or more were awarded pay raises ranging from 5.5 percent to 7.5 percent.

At the Department of Health and Hospitals (DHH), several employees received pay increases from 2011 to 2012 despite the pay freeze. They included Executive Director Robert Marier, who went from $196,102 to $205,899 (5 percent); Associate Director Cecilia Mouton, from $185,640 to $194m916 (5.1 percent); Executive Director John Liggio, from $119,044 to $125,068 (5 percent), and Executive Director Lisa Schilling, from $107,702 to $134,638 (25 percent).

None of the four changed job classifications, according to the Civil Service report. One who did change classifications got a 14.8 percent increase, a lower percentage than Schilling. Courtney Phillips was promoted from a Medicaid Program Manager 4 at $102,814 per year to Chief of Staff at $118,019.

One other executive director, six DHH attorneys, a deputy director, a deputy secretary, a budget administrator, an economist and a program director received no salary increases from 2011 to 2012.

Debra Schum, listed as an executive officer in the Department of Education (DOE), got a 20 percent pay raise, from $110,000 in 2011 to $132,000 this year while Kerry Lester, also an executive officer with DOE, got a $5,000 increase, from $150,000 to $155,000 during the same time frame.

But what is particularly interesting about the DOE payroll is the seemingly inordinate number of new hires of people at six-figure salaries, especially in the Recovery School District.

State Superintendent of Education John White has brought in no fewer than 10 new employees at salaries in excess of $100,000 this year alone—and that’s not even counting Deirdre Finn, a part time contract employee who will be paid $144,000 a year to work as communications manager for the department—from her home in Florida.

The idea of hiring a commuting employee, apparently borrowed from DHH and Carol Steckel, who is being paid $148,500 a year as a “confidential assistant” to DHH Secretary Bruce Greenstein to commute back and forth from her home in Alabama, seems to be catching on.

David “Lefty” Lefkowith is being paid $146,000 to commute back and forth from Los Angeles to work at DOE as a “director,” according to Civil Service records. He describes himself in a DOE video, however, as a “deputy superintendent.”

Other new, six-figure employees added by DOE this year include:

• Gary Jones, Executive Officer, $145,000;

• Melissa Stilley, Liaison Officer, $135,000;

• Michael Rounds, Deputy Superintendent, $170,000;

• Hannah Dietsch, Assistant Superintendent, $130,000;

• Francis Touchet, Liaison Officer, $130,000;

• Stephen Osborn, Assistant Superintendent, $125,000;

• Sandy Michelet, Executive Director, $120,000;

• Kenneth Bradford, Director, $110,000;

• Heather Cope, Executive Director of the Board of Elementary and Secondary Education, $125,000.

For the Recovery School District (RSD), both the high turnover and six-figure salaries are significant. That’s because there is substantial turnover despite the high salaries and that turnover has stymied any progress the already troubled RSD might have realized.

No fewer than 20 employees earning six figures have left the RSD since 2009, records show.

For the three years from 2010 to 2012, there was a turnover rate among those earning $100,000 or more ranging from 29 to 44 percent from the previous year Civil Service records indicate.

Of 24 RSD employees earning six figures for the current year, 15, or 62.5 percent, are new hires, records show. These include:

• Stacy Green, School Nurse, $145,000;

• James D. Ford, Administrative Superintendent, $145,000;

• Dana Peterson, Administrative Superintendent, $125,000;

• Adam Hawf, Administrator, $120,000;

• Mark Comanducci, Executive Director, $115,000;

• Helen Molpus, Administrative Chief, Officers, $115,000;

• Kizzy Payton, Administrative, Business Office, $110,000;

• Hua Liang, Administrative Chief, Officers, $110,000;

• Nicole Diamantes, Administrative, Other Special Programs, $105,000;

• Isaac Pollack, Administrative, Principal, $105,000;

• Desmond Moore, Administrative, Principal, $105,000;

• Betty Robertson, Other Business Services, $105,000;

• Robert Webb, Administrator, Other Special Programs, $105,000;

• Sametta Brown, Administrator, Regular Programs, $100,800;

• Ericka Jones, Administrative, Principal, $100,000;

• Eric Richard, Administrative, Principal, $100,000.

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