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Archive for the ‘Audit Reports’ Category

Public Service Commission refuses to surrender 13 vehicles Jindal wants to auction as band aid for $141 million deficit

Posted in Audit Reports, Auditor, Budget, Commissions, Courts, Finances, Governor's Office, Lawsuits, Legislature, Legislators, Revenue, State Agencies, State Police on December 17, 2014| 22 Comments »

A confrontation reminiscent of the one nearly 50 years ago between the managing editor (yours truly) and the family news editor at the Ruston Daily Leader has arisen between Gov. Bobby Jindal and the Louisiana Public Service Commission (PSC) and if the late Wiley Hilburn were alive today, he might well find the latest one just as amusing.

Hilburn was on hand when I needed a camera to cover a breaking news story. The only problem was, the news camera was broken and the only one available was a cheap one Publisher Tom Kelly had purchased for use by family news editor Virginia Kavanaugh for her section. “Give me your camera,” I said as I hung up the telephone and stood from my chair across from her. “I have to get a picture of a wreck on I-20.”

“No,” said Mrs. Kavanaugh. “You can’t have it. It’s for my use.”

In complete exasperation and more than a little frustrated at this unexpected lesson in humility, I looked over at Hilburn who had just walked in with a news release from Louisiana Tech University. The look I got in return told me I was on my own. “But I’m the managing editor!” I finally blurted. It was the only thing that came to mind in response to her unexpected insubordination. As I write this, I swear I can still hear Hilburn laughing at the absurdity of the scene that unfolded before his eyes. He would repeat that story for my benefit for years to come, laughing just as hard as he did that morning at the very audacity of my naïve belief that in some parallel universe, my managing editor badge trumped her title as family news editor.

And I never got that camera.

Now the PSC has ripped a page from Mrs. Kavanaugh’s playbook and it’s just as funny.

Jindal, in a desperate attempt to scrape together a few pennies to cover what at last estimate was a deficit of about $141 million, is conducting a fire sale of what state assets still remain after he disposed of state buildings and parking garages in years past to patch similar budget holes.

The administration wants to sell some 700 state vehicles, including 13 assigned to the PSC but commissioners voted unanimously Wednesday (Dec. 17) to direct the PSC staff not to relinquish the vehicles because, the commission lacks funds with which to rent cars and to sell them would hinder its work.

Jindal planned to confiscate the vehicles to be sold with the others early next year in yet another cost-cutting move. The administration says the PSC vehicles aren’t used enough to justify their upkeep.

(The same might be said for some of the governor’s highly-paid appointees. And let’s not even discuss the cost of overtime, lodging, travel and meals for state police security details that accompany the governor on all of those trips to Iowa, New Hampshire and Washington.)

It should be noted that the $141 million shortfall was before the latest plunge in oil prices which Jindal conveniently blames for the fiscal mess in which the state finds itself—again. Legislative Auditor Daryl Purpera is scheduled to give a presentation tomorrow (Thursday, Dec. 18) to the Joint Legislative Committee on the Budget and early indications are the governor’s office and Commissioner of Administration Kristy Nichols aren’t going to be very happy.

The $1.4 million anticipated from the sale of the vehicles represents a shade less than 1 percent of the $141 million deficit (which may be even more after the legislative auditor’s report) and is only a tiny fraction of the $25 billion state budget.

“Of the 13 state vehicles at the Public Service Commission, 11 of them are driven less than 15,000 miles a year,” said Jan Cassidy, Assistant Commissioner of Administration for Procurement. “The cost of maintaining underutilized vehicles is greater than the cost of reimbursing employees for travel when it’s necessary,” she said.

The $1.4 million anticipated from the sale of the vehicles would not be net since the state would be required to either pay employees for use of personal vehicles or pay for rental of cars through a contract the state has with Enterprise Car Rentals.

The administration put agencies on notice about the planned sale last week, giving them two weeks to turn over vehicles designated for auction.

“Reducing state expenses requires all state agencies to review their priorities and ensure they are spending taxpayer dollars appropriately,” Cassidy said.

One of those voting to defy the governor was Scott Angelle who once served in Jindal’s cabinet. A dispute between the PSC and the governor’s office has been simmering and the vehicle flap is only the latest issue as things have reached a boiling point.

The PSC has been critical of a recent practice by the administration and the legislature to take over funds paid to the PSC as fees by regulated companies. Members say the action amounts to an unconstitutional tax levy while the governor and legislator argue for the right to use the fees as part of the state budget. That outcome of that argument is now pending in court.

We can only assume that state police vehicles were exempt from the fire sale order. But with this administration, who knows?

Nor was there was any immediate word on whether or not the administration would attempt to seize the PSC vehicles, which would just be another log on that smoldering fire.

But somewhere within the walls of the Governor’s mansion (he’s rarely on the fourth floor of the State Capitol, we’re told), Bobby Jindal must be incredulous as he exclaims perhaps to wife Supriya or, to a curious butler, “But I’m the governor!”

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Jindal, Kristy Nichols draw ‘budget surplus’ criticism from two former commissioners who have been there, done that

Posted in Audit Reports, Auditor, Budget, Corruption, DOA, Ethics, Governor's Office, Legislature, Legislators, Politicians, Revenue on October 18, 2014| 26 Comments »

State Treasurer John Kennedy isn’t the only one who disputes the veracity—or the political motives—of administration claims of a $178.5 million budget surplus for the fiscal year that ended on June 30.

There are a couple of Kristy Nichols’ predecessors, former commissioners of administration and a former state budget officer who have been there, done that and got the T-shirts, who are genuinely perplexed and skeptical of the whimsical claims.

Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana), aka Booby Jindini, through Commissioner of Administration Nichols, is claiming the implausible “discovery” of some $360 million, dating back to 2002 that pulls the state from the jaws of a $141 million deficit in favor of the surplus explained thus far only as Immaculate Discovery.

LouisianaVoice, meanwhile, has learned that the true “discovered” money is more like $500 and that it actually goes back as far as 1998, near the end of Gov. Mike “the Jindal Creator” Foster’s second term. But, says Kennedy, the money has already been spent, which would make the real deficit more like $200 million, instead of the mere $141 hole claimed by Kennedy.

But the devil, as they say, is in the details and the details have not been readily forthcoming from the administration. And members of the Joint Legislative Committee on the Budget (JLCB) sat mutely Friday morning as committee Chairman Rep. Jim Fannin (D/R-Jonesboro) proclaimed that the committee would not be discussing the matter until it received a report from the Legislative Auditor’s office, probably sometime in December.

“What?!!!!!!!” legislators should have sputtered, shouted and otherwise protested.

Sorry, guys, you should have stood as one and protested that the time to discuss this little matter is now and the place is right here. Right here, right now. We want, no, demand an explanation, an accounting of where this money suddenly came from and how it is that the administration did not know of its existence for the past seven years.

And while we’re at it, why is it that Fannin sudden decided to exercise his power to disallow a request by Rep. James Armes (D-Leesville) that a non-member of the JLCB, Rep. Kenny Havard (R-Jackson), be allowed to sit in on the committee as his proxy. Legislative observers cannot recall a time when such a request was denied. Was Fannin afraid Havard might ask some embarrassing questions about the budgetary procedure?

Or was it that Havard was not among the members who had been called in a few at a time in advance of Friday’s meeting to be reminded by the administration that capital outlay projects in their respective districts could suddenly face a lack of funding for their implementation?

Regardless, it is quite obvious from our perspective that the fix is in.

Instead, committee members sat mutely as one as Fannin, desperate to hang onto his chairmanship and reportedly considering a run at the State Senate seat currently held by Sen. Bob Kostelka (R-Monroe), allowed that rather than demanding details and explanations from the administration, there was no urgency to the issue that could not wait until December.

Retired state budget officer Stephen Winham said that in his 21 years in that office, nothing of this magnitude ever occurred.

“The hidden piles of money is a myth,” he said. “There may have been hidden pockets of money before modern accounting and information technology, but it is impossible to hide money in the state treasury today.

“This has to be the most ridiculous thing I have ever seen happen with regard to the state’s financial condition and its reputation,” he said. “How can $500 million simply have been hiding in the state treasury? Do Ms. Nichols and others have any idea how her contention totally undermines the integrity of our financial system? It makes a mockery of our accounting system and our annual Comprehensive Financial Reports for the past 16 years, if not longer, and of our state itself. People already routinely suspected the numbers they were given. Now there is no reason to believe anything.

“I cannot overstate how horrible this is.”

Raymond Laborde and Stephanie Laborde agree.

Raymond Laborde (Stephanie Laborde’s uncle) served as commissioner of administration from 1992 to 1996 under former Gov. Edwin Edwards. Before that, he served five terms in the Louisiana House, serving as Speaker Pro Tem from 1982-1984 and also served as Chairman of the House Ways and Means Committee.

He was re-elected without opposition to a sixth term in 1991 but immediately resigned to become Commissioner of Administration during Edwards’ fourth and final term as governor. In 2003, Raymond Laborde was inducted into the Louisiana Political Museum and Hall of Fame in Winnfield.

“I haven’t seen any details yet and neither, apparently has John Kennedy,” he said.

“We had surpluses each year during my tenure, but they were legitimate surpluses. If the money was there, it should have been seen. If Kennedy’s approach is correct, there is a heck of a difference between what the administration says and what he says.”

Reminded that Kennedy has said any money found from prior years has already been spent, Raymond Laborde said, “It should have been spent.”

Stephanie Laborde served as commissioner of administration during Edwards’ third term (1984-1988) when she was Stephanie Alexander.

Her observations were supportive of Winham’s and were equally critical of the administration.

“If the surplus is real, where were those dollars when the budget was being developed 15 months or so ago?” she asked, perhaps not so rhetorically.

“That is not to say when there was not extra money,” she said. “There were times when there were more taxes collected than anticipated or when the price of oil was higher than expected but for this much in surplus funds to be lying around for years? That just didn’t happen.”

She also said the sources of such revenue would have been considered one-time money and not recurring revenue. “There is a difference of philosophy, a difference of opinion with the character of funds found in the past.

“But it still comes down to where was this money during the budget writing process, where was it, in fact, for all these years?

“If it was there, it speaks to the administration’s competence, its ability—or inability—to give us an accurate budget.

“If the money was not there as is being claimed, it speaks to something else entirely,” she said.

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Shreveport mayoral candidate & State Rep. Patrick Williams an amateur at skimming; manages paltry $4,000 double dip

Posted in Audit Reports, BESE, Campaign Contributions, Corruption, Courts, Elections, Ethics, Finances, Fraud, House, Legislators, Legislature, Legislature, Legislators, Louisiana Purchase, Politicians, Public Records on September 11, 2014| 4 Comments »

Board of Elementary and Secondary Education (BESE) member Walter Lee has been indicted by a state grand jury and the FBI is investigating State Rep. Joe Harrison (R-Gray)—both for double billing for travel.

Investigators may want to take a look at the expense records of State Rep. and Shreveport mayoral candidate Patrick Williams (D-Shreveport).

Lee’s indictment by a DeSoto Parish grand jury accuses him of the felony theft of $3,968 in fuel expenses and $1,578 in lodging in meals charged to both BESE and to the DeSoto Parish School Board at a time when Lee was simultaneously serving as DeSoto School Superintendent and as a member of BESE.

A state audit used as the basis of Lee’s indictment said he collected travel expenses from BESE for attending state board meetings even though he used a parish school system credit card to pay for those expenses and failed to reimburse the school system after receiving payment from BESE.

DeSoto District Attorney Richard Johnson, Jr. said Lee also terminated a lease early on a vehicle which cost the school system around $10,000 and then got a substantial discount on the purchase of another vehicle shortly thereafter.

Williams’ expense reimbursements, however, more closely resemble those of his colleague in the House.

Harrison has been ordered by federal investigators to produce travel expense records after the New Orleans Times-Picayune revealed in a lengthy investigative series that Harrison was reimbursed more than $50,000 by the House for travel in his district from 2010 to 2013—travel that he had also charged to his campaign.

House reimbursement records and campaign expense records reveal that in 2012 alone, Williams systematically doubled his campaign and the House for more than $4,000 for expenses that included postage, subscriptions to the Shreveport Times, travel to and from Baton Rouge, hotel accommodations in Washington, D.C., airport parking, cab fare, and air travel.

LouisianaVoice was alerted to Williams’ expense payments by former Shreveport attorney Michael Wainwright who now lives in North Carolina.

Wainwright said Williams accepts campaign contributions which then pays “thousands of dollars” in travel and other expenses. “Rep. Williams then bills the taxpayer for those same expenses (and) then keeps the reimbursement checks. He has converted the money to his personal use.”

Wainwright said the practice “is conduct which seems to fall squarely within the definition of theft,” which he said is defined under Louisiana Criminal Law as “the misappropriation or taking of anything of value which belongs to another, either without the consent of the other to the misappropriation or taking, or by means of fraudulent conduct, practices or representation.”

He provided us with a detailed itemization which we verified through our own check of Williams’ campaign expense report and House reimbursement records.

The following list includes the month of the House expense report, the amount and purpose. In the case of each expense item listed, Williams also billed his campaign:

  • January: $113.73—Purchase Power Postage;
  • February: $52.88—Shreveport Times Subscription;
  • April: $85.51—Pitney Bowes Postage;
  • May: $53.95—Shreveport Times Subscription;
  • May: $107.99—Pitney Bowes Postage;
  • June: $65.68—Pitney Bowes Postage;
  • August: $17.98—Shreveport Times Subscription;
  • October: $37.04—Shreveport Times Subscription;
  • October: $85.48—Pitney Bowes Postage;
  • November: $17.98– Shreveport Times Subscription;
  • December: $17.98—Shreveport Times Subscription;
  • November 5: $70.00—Fuel & Travel to Baton Rouge;
  • November 29: $50.32—Fuel & Travel to Baton Rouge;
  • December 4-8: $40.00—Shreveport Airport Parking;
  • December 4-7: $838.16—Hilton Hotel, Washington, D.C. (Campaign billed for entire $912.71 amount);
  • December 4-8: $169.94—Washington Travel Expense (Note: Rep. Williams was paid $745.00 in per diem expenses by the State of Louisiana while attending a NCSL conference in Washington, DC Williams also charged his campaign account $169.94 for the following per diem expenses related to this trip: Delta Airlines Travel baggage ($25), Supreme Airport Shuttle ($13), Hilton Hotel ($103), Meals ($28.44);
  • February 1: $158.00—Holiday Inn, Lafayette;
  • March 12-16: $197.00—In Session Fuel & Mileage (This amount was billed to his campaign while the House paid $291.38);
  • March 17-20: $327.04—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • March 31-April 13: $373.09—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • April 14-27: $335.00—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • April 28-May 11: $257.00—In Session Fuel & Mileage (billed to campaign; House paid $582.75);
  • May 12-25: $262.12—In Session Fuel & Mileage (billed to campaign; House paid $582.75)
  • May 26-June 4: $146.00—In Session Fuel & Mileage (billed to campaign; House paid $582.75);

This is the same Rep. Patrick Williams who in 2011 authored House Bill 277 which would have required the posting of the Ten Commandments in the State Capitol. There’s no word as to whether his bill proposed deleting the Eighth Commandment.

 

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New Orleans Saints, owner Tom Benson are undefeated in dealings with State; Benson Tower brings top rental rates

Posted in Attorney General, Audit Reports, Campaign Contributions, Contract, Contracts, Contracts, GOHSEP, Governor's Office, State Agencies on September 10, 2014| 4 Comments »

Two audit reports released this week by Legislative Auditor Daryl Pupera’s office focus on documentation of expenses related to hurricane recovery and costs incurred by the state for vacant office space in downtown New Orleans as part of a costly incentive package to induce Saints owner Tom Benson to keep the NFL team in New Orleans

The first indicates that the Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) has invoices for more than $49 million in exceptions, or undocumented expenses by disaster recovery specialists in the perpetual recovery efforts of hurricanes Katrina, Rita, Gustav and Ike.

The other, which we first wrote about in February of 2013, smacks of the kind of political back scratching for which Louisiana has become famous: the state’s capitulation to New Orleans Saints owner Tom Benson as part of a costly incentive package to induce him to keep his team in New Orleans. Part of that package included the state’s leasing of office space in his Benson Towers office building at inflated rental rates, a deal that appears to border on financial irresponsibility.

The report says that auditors evaluated 4,476 expense reimbursements totaling $711 million submitted by disaster recovery “specialists,” and found 665 “exceptions” totaling nearly $49.6 million.

Pupera explained that the questioned expenses do not necessarily indicate fraud or mismanagement but rather a need for more thorough documentation and justification for the invoices. “The money has been allocated but because it’s federal money, we want to be sure that all invoices are adequately justified before they are paid so we won’t have the feds coming back later and asking for their money back,” he said.

He said the exceptions fall into five different categories: contract work ($42.56 million), force account labor ($3.8 million), force account equipment ($1.3 million), materials ($1.8 million) and rented equipment ($88,000).

Other questionable costs included:

Expense reimbursements of $6.6 million which exceeded cost estimates;

Expense reimbursements of $22.7 million not supported by invoices, receipts, lease agreements, contracts, time records, equipment logs, inventory records of other documentation;

Purchases and contracts totaling $11.6 million which did not comply with federal and state procurement requirements;

Expense reimbursements of $11.6 million which did not comply with federal and state procurement requirements;

Expenses of $2.1 million in work which did not comply with FEMA regulations and guidelines;

Duplicate, omitted and/or miscategorized expenses of $5.7 million.

Pupera said once issues raised by auditors are addressed by GOHSEP, most of the expenses will be properly documented for payment. “There may still be some exceptions at the end, but a large majority are expected to be justified,” he said.

Benson purchased the 26-story Dominion Tower in September of 2009 and re-named it Benson Tower. He made the purchase after entering into a generous—to Benson—agreement whereby the state gave away the store to keep the Saints from moving to San Antonio.

One of the stipulations, which expired a couple of years ago, called for visiting teams’ players, coaches, and support staff to pay state income taxes on one-sixteenth on their annual salaries (because they played one of their 16 regular season games in New Orleans, thus earning a 16th of their income in the state). Once that money was received by the Louisiana Department of Revenue, the department immediately issued a check for an identical amount payable to Benson.

Another obligates the state to pay Benson a cool $1 million whenever the NFL awards a Super Bowl to New Orleans.

Benson Tower is located across the street from the Mercedes-Benz Superdome. As part of the deal struck between Benson and the state, the Jindal administration agreed to a 20-year lease of some 325,000 square feet of office space at $24 a square foot for various state agencies, some of whom were paying as little as $12 a square foot before being forced to move to Benson Tower in 2011.

At the outset, the state’s obligation was about $7 million a year, $2.4 million more than the $4.6 million the state was paying before the move.

Included in the Benson Tower purchase was a 60,000-square-foot plot encompassing a one-block section of LaSalle Street and part of what once was the New Orleans Centre shopping mall. That facility is now known as Champions Square where Saints tailgate parties are held. Anheuser Busch, makers of Budweiser Beer, has exclusive rights for beer concessions at Champions Square after striking a deal with the Louisiana Stadium and Exposition District (LSED), also known as the Superdome Commission.

Benson, the seven LSED members (each of whom is appointed by the governor) and their families, businesses and business associates, the Mercedes-Benz Superdome management firm, and Anheuser-Busch distributor Southern Eagle Sales & Service combined to contribute more than $203,000 to Jindal campaigns between 2003 and 2012.

Prior to the Benson Tower deal, the average cost per square foot for state agencies leasing office space in New Orleans was $17.66. In 2012, the first full lease year in Benson Tower, the cost per square foot was $23.78. Rent at the building is tied to the consumer price index and today the cost per square foot is $25.10.

The Louisiana Attorney General’s offices were never relocated to Benson Tower because of a lack of 24-hour access to parking facilities.

The $7.4 million now being paid does not include $625,000 being paid by the state for 24,900 square feet of vacant office space in the building. That amount bumps the state’s annual rent up to $8 million per year.

The audit report said a survey of current listing information on available office space in New Orleans, the range for lease rates is $16 to $22 per square foot, including parking, or an average of $19 per square foot.

Accordingly, for the 347,849 square feet of Benson Tower, including the 24,872 of vacant office space, the state is paying an average of almost $2.1 million per year in excess rent to Benson.

And the state is locked in until 2025—an additional payment in excessive rent of at least $23 million during the remaining life of the agreement, although the lease agreement could be extended beyond 2025, according to Mark Moses, director of the State Office of Facility Planning and Control.

In his response to the audit, Moses said the Saints were “an import part of Louisiana’s culture as well as an economic driver for New Orleans and the rest of the state.”

He said the incentive package delivered to Benson with appropriate wrapping and bows “saved the state more than $280 million in addition to adding nearly $400 million in revenue expected to be generated over the life of the agreement.”

Moses also said the number of parking spaces included in the lease rate should be included with comparing Benson Tower rental rates with market rates in New Orleans.

“Commercial Class A buildings typically include one to two parking spaces per 1,000 square feet under lease,” he said. “Based on the approximate 323,000 square feet of space under lease (the auditor’s office gives the area as 348,000), the standard commercial lease rate would include between 323 and 646 parking spaces. The rental rate for Benson Tower, however, includes 900 parking spaces in the Superdome garages.”

He added that additional parking is also available for $50 per month in the state-owned Health Education Authority of Louisiana (HEAL) garage a block from Benson Tower.

Moses also pointed out that the audit report’s comparisons of market rates failed to mention that most commercial leases of Class A buildings including “pass through language,” which requires tenants to pay a proportionate share of operations and maintenance expenses that exceed base year expenses established in the lease. Pass through rates, he said, can vary depending on operating and maintenance expenses for individual buildings and according to occupancy rates. Benson Tower, he said , does not include pass through language in its lease with the state.

 

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Here’s how Jindal’s privatization works: OGB fund balance to be broke by fiscal year ’15 after $500M balance in 2012

Posted in Audit Reports, Budget, Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, State Agencies, Transparency on July 17, 2014| 29 Comments »

To probably no one’s surprise except a clueless Gov. Bobby Jindal, the takeover of the Louisiana Office of Group Benefits (OGB) by Blue Cross Blue Shield of Louisiana 18 months ago has failed to produce the $20 million per year in savings to the state.

Quite the contrary, in fact. The OGB fund balance, which was a robust $500 million when BCBS took over as third party administrators (TPA) of the Preferred Provider Organization (PPO) in January of 2013, only 18 months later stands at slightly less than half that amount and could plummet as low as an anemic $5 million a year from now, according to figures provided by the Legislative Fiscal Office.

OGB is one of the main topics to be taken up at today’s meeting of the Joint Legislative Committee on the Budget (JLCB) when it convenes at 9 a.m. at the State Capitol.

OGB is currently spending about $16 million per month more than it is collecting in revenue, said Legislative Fiscal Officer John Carpenter.

The drastic turnaround is predicated on two factors which LouisianaVoice warned about two years ago when the privatization plan was being considered by the administration:

  • Jindal lowered premiums for state employees and retirees. That move was nothing more than a smokescreen, we said at the time, to ease the state’s share of the premium burden as a method to help Jindal balance the state budget. Because the state pays a percentage of the employee/retiree premiums, a rate reduction would also reduce the amount owed by the state, thus freeing up the savings to patch gaping holes in the budget.
  • Because BCBS is a private company, it must return a profit whereas when OGB claims were processed by state employees, profits were not a factor. To realize that profit, premiums must increase or benefits decrease. Since Jindal had already decreased premiums, BCBS necessarily found it necessary to reduce benefits.

That, however, still was not enough and the negative income eroded the fund balance to its present level and now legislators are facing a severe fiscal crisis at OGB.

And make no mistake: this is a man-made crisis and the man is Bobby Jindal.

In a span of only 18 months we have watched his grandiose plans for OGB and the agency’s fund balance dissolve into a sea of red ink like those $250 million sand berms washing away in the Gulf of Mexico in the wake of the disastrous BP spill.

There is no tactful way to say it. This Jindal’s baby; he’s married to it. He was hell bent on privatizing OGB and putting 144 employees on the street for the sake of some hair-brained scheme that managed to go south before he could leave town for whatever future he has planned for himself that almost surely does not, thank goodness, include Louisiana.

So ill-advised and so uninformed was Jindal that he rushed into his privatization plan and now has found it necessary to have the consulting firm Alvarez and Marcel, as part of their $5 million contract to find state savings, to poke around OGB to try and pull the governor’s hand out of the fiscal fire. We can only speculate as to why that was necessary; Jindal, after all, had assured us up front that the privatization would save $20 million a year but now cannot make good on that promise.

In the real world, the elected officials are supposed to be the pros who know that they’re talking about while those of us on the sidelines are mere amateurs who can only complain and criticize. Well, we may be the political novices here, but the results at OGB pretty much speak for themselves and we can rightfully say, “We told you so.”

Are we happy or smug? Hell, no. We have to continue to live here and raise our children here while Jindal will be taking a job with some conservative think tank somewhere inside the D.C. Beltway (he certainly will not be the Republican candidate for president; he isn’t even a blip on the radar and one former state official now residing in Colorado recently said, “No one out here has ever even heard of him.”)

In a five-page letter to JLCB Chairman Rep. Jim Fannin (R-Jonesboro), Carpenter illustrated the rate history of OGB going back to Fiscal Year 2008 when premiums were increased by 6 percent. The increase the following year was 3.7 percent and the remained flat in FY-10. In FY-11, premiums increased 5.6 percent, then 8.1 percent in FY-12 when the system switched from a fiscal year to calendar year. but in FY-13, the year BCBS assumed administrative duties, premiums dropped 7 percent as Jindal attempted to save money from the state’s contributions to plug budget holes. For the current year, premiums decreased 1.8 percent and in FY-15 are scheduled to increase by 5 percent.

OGB Report_July 2014 FOR JLCB

Carpenter said that since FY 13, when BCBS took over the administration of OGB PPO claims, OGB’s administrative costs began to shift to more third party administrator (TPA) costs as the state began paying BCBS $23.50 per OGB member per month. That rate today is $24.50 and will increase to $25.50 in January of 2015, the last year of the BCBS contract.

That computes to more than $60 million per year that the state is paying BCBS to run the agency more efficiently than state employees who were largely responsible for the half-billion-dollar fund balance.

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