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DCFS funding slashed, necessitating ‘driveway visits,’ but overworked caseworker is arrested for falsifying records

Posted in Budget, Campaign Contributions, Civil Service, DHH, Ethics, Fraud, Governor's Office, Health Care, Jobs, Layoffs, Legislature, Legislators, Lobbyist, PACs, Politicians, Taxes, Uncategorized on March 13, 2016| 21 Comments »

(You may enlarge the type by clicking on the plus (+) sign above the image and moving the bar at the bottom to the right to read the entire text.)

On Feb. 15, an arrest warrant was issued for a north Louisiana employee of the Louisiana Department of Children and Family Services (DCFS) following an investigation of more than two months by the Office of Inspector General.

Kimberly D. Lee, 49, of Calhoun in Ouachita Parish, subsequently surrendered to authorities and was subjected to the indignity of being booked into East Baton Rouge Parish Prison on Feb. 17 after being accused of filing false reports about mandatory monthly in-home visits with children in foster care.

As is often the case, however, there is much more to this story.

A month earlier, on Jan. 10, LouisianaVoice received a confidential email from a retired DCFS supervisor who revealed an alarming trend in her former agency:

“I served in most programs within the agency, foster care, investigations, and adoptions,” she wrote. “Over my career I witnessed the eight years of (Bobby) Jindal’s ‘improvements.’

“Those ‘improvements’ endanger children’s lives daily. The blight is spread from the Secretary to the lowliest clerical worker in the agency. People are overworked and underpaid but it’s not just that. People are so distraught from the unrelenting stress that children are in danger. Add to that the inexperience of most front line workers and their supervisors’ inability to properly train new staff.”

She then dropped a bombshell that should serve as a wake-up call to everyone who cares or pretends to care about the welfare of children—from Gov. John Bel Edwards down to the most obscure freshman legislator:

“In the Shreveport Region, the regional administrator (recently) told workers that they may make ‘drive-by’ visits to foster homes, which means talking to the foster parents in their driveway. Policy says that workers will see both the child and the foster parent in the home, interviewing each separately (emphasis added). A lot of abuse goes on in foster homes. Some foster families are truly doing the best they can but they need counseling and guidance from their workers. The regional administrator’s answer to that one? Have the foster parent call their home development worker—another person who can’t get her job done now.”

She wrote that she had heard of two separate incidents “where a child new to foster care was taken to a foster home and left without paperwork, without contact information for the person in charge of the case and without knowing even the child’s name.”

Moreover, she said, vehicles used in the Shreveport Region “are old, run-down, and repairs are not allowed. The last time new tires were bought was in 2014. When one (of the vehicles) breaks down, they just tow it away. No replacement is ordered.”

Could those factors have pushed Lee to fudge on her reports? Did the actions attributed to her constitute payroll fraud or did budgetary cuts force her into cutting corners in order to keep up with an ever-increasing caseload? Lee says yes to the latter, that she was told by supervisors to get things done, “no matter what.” Child welfare experts said her actions and arrest shone a needed light on problems at DCFS: low morale, high turnover, fewer workers handing greater numbers of caseloads, and increasing numbers of children entering foster care.

http://theadvocate.com/news/14909284-31/louisianas-child-protection-system-understaffed-and-overburdened-after-years-of-cuts-child-advocates

To find our own answers, LouisianaVoice turned to a document published on Jan. 5 of this year by the Child Welfare Policy and Practice Group of Montgomery, Alabama.

The 77-page report, entitled A Review of Child Welfare, the Louisiana Department of Children and Family Services, points to:

  • A growing turnover rate for DCFS over the past three years from 19.32 percent in calendar year 2012 to 24.26 percent in 2014;
  • A 33 percent reduction in the number of agency employees to respond to abuse reports;
  • A 27 percent cut in funding since fiscal 2009, Bobby Jindal’s first year in office;
  • An increase in the number of foster homes of 5 percent;
  • An increase of 120.5 percent in the number of valid substance exposed newborns, from 557 to 1,330;
  • A trend beginning in 2011 that shows 4,077 children entered foster care but only 3,767 exited in 2015;
  • A 19 percent decrease in the number of child welfare staff positions filled statewide from 1,389 in 2009 to 1,125 in 2015.
  • Of the 764 caseworkers, 291, or 38 percent had two years’ experience or less and 444 (58 percent) had five years or less experience.

Moreover, figures provided by the Department of Civil Service showed that of the agency’s 3,400 employees, 44.5 percent made less than $40,000 a year and 19 percent earned less than $30,000.

In 2014 (the latest year for which figures are available), the median income for Louisiana for a single-person household was $42,406, fourth-lowest in the nation, as compared to the national single-person median income of $53,657.

http://www.advisorperspectives.com/dshort/updates/Household-Incomes-by-State.php

“The stresses within the system are at risk of causing poorer outcomes for some children and families,” the report says in its executive summary. “…Recent falling outcome trends in some of the areas that have been an agency strength in the past are early warnings of future challengers.”

Despite years of budgetary cuts under the Jindal administration, Louisiana has maintained “a high level of performance in achieving permanency for children in past years and currently is ranked first among states in adoption performance,” the report said.

The budget cuts, however, “have negatively affected the work force, service providers, organizational capacity and increasingly risk significantly affecting child and family outcomes” which has produced a front-line workforce environment “constrained by high caseload, much of which is caused by high turnover and increasing administrative duties and barriers that compromise time spent with children and families.”

And it is that threat to “compromise time spent with children and families” that brings us back to the case of Kimberly Lee and to the email LouisianaVoice received from the retired DCFS supervisor who cited the directive for caseworkers to make “drive-by” visits to foster homes, leaving children with foster homes with no paperwork, contact information or without even knowing the children’s names, and of the state vehicles in disrepair.

It’s small wonder then, in a story about how Jindal wrecked the Louisiana economy, reporter Alan Pyke quoted DCFS Secretary Marketa Garner-Walters as telling the Washington Post if lawmakers can’t resolve the current budget crisis, many Louisiana state agencies will see budget cuts of 60 percent. http://thinkprogress.org/economy/2016/03/07/3757416/jindal-louisiana-budget-crisis/

As ample illustration of Bobby Jindal’s commitment to social programs for the poor and sick, remember he yanked $4.5 million from the developmentally disadvantaged in 2014 and gave it to a Indy-type racetrack in Jefferson Parish run by a member of the Chouest family, one of the richest families in Louisiana—but a generous donor to Jindal’s gubernatorial campaigns and a $1 million contributor to his super PAC for his silly presidential run.

Well, thanks to the havoc wreaked by Jindal and his Commissioner of Administration Kristy Nichols, the legislature did find it necessary to pass the Nichols’ penny tax (not original with us but the contribution of one of our readers who requested anonymity) to help offset the $900 million-plus deficit facing the state just through the end of the current fiscal year which ends on June 30.

Were legislators successful? Not if you listen to Tyler Bridges, one of the more knowledgeable reporters on the Baton Rouge Advocate staff. “Legislators were neither willing to cut spending enough, nor raise taxes enough nor eliminate the long list of tax breaks that favor one politically connected business or industry over another,” he wrote in Sunday’s Advocate (emphasis added). http://theadvocate.com/news/15167974-77/a-louisiana-legislature-that-ducked-tough-budget-decisions-during-its-special-meeting-convenes-again

As is all too typical, most of the real “legislation” was done in the flurry of activity leading up the final hectic minutes of the special session, leaving even legislators to question what they had accomplished. In military parlance, it would be called a cluster—.

But that should be understandable. After all, 43, or fully 30 percent of the current crop of legislators, had to work their legislative duties around their busy schedules that called upon them to attend no fewer than 50 campaign fundraisers (that’s right, some like Neil Riser, Katrina Jackson, and Patrick Connick had more than one), courtesy of the Louisiana Oil and Gas Association, the Beer Industry League, CenturyLink and a few well-placed lobbyists. http://www.nola.com/politics/index.ssf/2016/03/louisiana_special_session_fund.html

It is, after all, what many of them are best at. (Seven of those were held at the once-exclusive Camelot Club on the top floor of the Chase Bank South Tower. We say “once-exclusive” because last week the Camelot announced that it was closing its doors after 49 years. Restrictions on lobbyists’ expenditures on lunches for legislators was given as one cause for the drop in club membership from 900 to 400. Not mentioned was the fact that Ruth’s Chris and Sullivan’s steak restaurants in Baton Rouge have become favorite hangouts for legislators and lobbyists during legislative sessions. One waiter told LouisianaVoice during the 2015 session that one could almost find a quorum of either chamber on any given night during the session—accompanied, of course, by lobbyists who only wanted good government.) https://www.businessreport.com/article/camelot-club-closing-afternoon-can-no-longer-viable-club-owner-says

LEGISLATORS’ FUNDRAISERS

Bridges accurately called the new taxes that will expire in 2018 “the type of short-term fix” favored by Jindal and the previous legislature “that they had vowed not to repeat.”

Can we get an Amen?

In the meantime, he observed that Gov. John Bel Edwards and Commissioner of Administration Jay Dardenne, because the legislature still left a $50 million hole in the current budget, will have to decide which state programs will be cut—again.

Emphasizing the risks to children, Garner-Walters told legislators in a committee hearing during the just-completed special session that state DCFS staff numbers 3,400, down a third from the 5,100 it had in 2008. “You can’t just not investigate child abuse,” she said.

Former Baton Rouge Juvenile Court Judge Kathleen Richey, now heading up Louisiana CASA (Court Appointed Special Advocate), a child advocacy non-profit, has expressed her concern over the budgetary cuts that make DCFS caseworkers’ jobs so much more difficult.

“Our political leaders need to understand that while infrastructure represents a physical investment in our future, our children represent an intellectual investment in our future,” she said. “We have to protect innocent children who have no one else to stand up for them.”

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SLU associate professor says Advocate columnist can only arrive at state expenditure numbers by ‘making them up’

Posted in Budget, Education, Ethics, Finances, Revenue, Transparency on March 1, 2016| 20 Comments »

There are three or four of us who every Sunday morning break out into a round robin email dissection of the latest op-ed column by LSU-Shreveport political science associate professor Jeff Sadow. While we invariably disagree with Sadow’s philosophical position, we have finally arrived at a consensus that The Advocate is striving for balance on its opinion pages.

On Tuesday (March 1) I received a copy of the following blog post by Michael Kurt Corbello, Ph.d. and a former classmate of Sadow. I immediately contacted Dr. Corbello, a political science associate professor at Southeastern Louisiana University, to inquire if he would be willing to post his comments on as a guest columnist on LouisianaVoice. To our delight, he consented. Following is his column:

By Michael Kurt Corbello

Copyright 2016

     Numbers can be pesky things, a great source for truth, or a weapon to mislead.  Scientists like numbers because they are transparent, until human beings interpret them or insinuate that they have done so.  I am a political scientist who teaches my students “math is the language of objectivity!”  Yet, three-plus decades of research and teaching have taught me the pitfalls of data collection and interpretation for someone trying to conduct scientifically valid research, even if it proved me wrong.  In partisan politics, many divest themselves of scientific validity, some accidentally, others purposefully, and still others because they fail to admit their biases.  We all have biases, but numbers have a way of cutting through those most cherished.

Recently, Jeff Sadow for The Advocate (See “Lawmakers should call Edwards’ bluff on TOPS, Medicaid,” The Advocate, February 27, 2016) criticized Gov. John Bel Edwards’ budget plan during the special session of the Louisiana State Legislature, arguing that the governor “refuses to meaningfully pare a state government that ranks well above the national average in per capita spending” [emphasis added].  Sadow didn’t indicate sources supporting these value statements, so I collected the most recent data and examined it. In fact, the only way to arrive at the columnist’s conclusion that Louisiana ranks “well above the national average in per capita spending” is to make it all up!

I looked at the most recent U. S. Census data estimates of state populations for 2015. I combined this with data from the National Association of State Budget Officers, State Expenditure Report (Fiscal 2013-2015) (Table A-1 in the downloadable report). In 2015, total state general fund and federal fund expenditures per capita ranged from a low of $3,724 (Florida) to a high $18,644 (Alaska), with a national average per state of $6,717. Louisiana ranked 22nd out of fifty states, in the middle of the pack, at $6,365 per capita. That’s right! Louisiana was $352 per capita below the state averages nationwide! Among 16 southern states, Louisiana ranked 7th in total state general fund and federal fund expenditures per capita, about $134 per capita above the state averages in the south.

Notice that while Louisiana spent a total of $29.7 billion in 2015, $10.15 billion of this was federal funds, $2,173 per capita (ranked 14th), or about $200 per capita above the state averages nationwide. The Louisiana state portion of total state spending was $19.58 billion. Nationwide, state general fund expenditures averaged $4,744 per capita. Louisiana averaged $4,192 in per capita state general fund spending, placing it 23rd, or $552 per capita below the state averages nationwide!

Now, I don’t mind voters, politicians, and citizens calling into question the spending and priorities of state government. All of us should be vigilant in our efforts to take care of our community of needs, while reigning in the natural and selfish human inclinations to abuse the system! However, looking at this data, it is difficult to make the argument that, compared to other states, Louisiana has a spending problem. Whether we look at per capita spending or gross dollar amounts, Louisiana was in the middle of the pack of fifty states, with one exception: We ranked 14th in State Federal Fund Expenditures! For that matter, Louisiana was one of eight southern states (including Arkansas, Delaware, Kentucky, Maryland, Mississippi, Tennessee, and West Virginia) in which state federal fund expenditures per capita were above the average per state nationwide ($1,973 per capita). In other words, we are dependent upon everyone else for a huge amount of resources in our state budget. Why? Because of our history of poverty, low levels of education, and lack of economic development (regardless of the deadbeat mantra always coming from Bobby Jindal and his apologists)! Imagine if we in Louisiana really did have to pay for our own spending!

The fact remains that we do not live in the 18th century, with the luxury to implement a minimalist government, not if we want to have a competitive position in a world driven more and more by competitive people of high intellect, hard work, creativity, technological knowledge and skill!  Anyway, those pesky numbers, they must be liberals!

For a closer look at the data used to draw my conclusions (and to refute The Advocate’s columnist), please click on the following link to my blog: http://corbellopolitics.blogspot.com/2016/02/an-advocate-writer-does-it-again-why.html

 

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PSC member Foster Campbell enters Senate race, Moody’s downgrades state credit as House passes Edwards sales tax

Posted in Budget, Congress, Economy, Elections, Finances, Governor's Office, House, Senate, Legislature, Legislators, Politicians, Senate, Taxes, Vitter on February 25, 2016| 20 Comments »

Thursday (Feb. 25) was an unusually big day in politics, even by Louisiana standards.

The big news in Baton Rouge on Thursday was House passage of Gov. John Bel Edwards’ one-cent sales tax (minus the assessment on manufacturing) but the action was quickly overshadowed by a credit rating downgrade by Moody’s. http://theadvocate.com/news/14993547-79/moodys-downgrades-louisianas-credit-rating

The state also received a “negative outlook” from Moody’s, meaning the state could be downgraded again.

Coupled with the sales passage, which must now go to the Senate for a vote, was additional cuts of $100 million in state spending and the taking of $128 million from the rainy day fund. With the $60 million already cut by the Edwards administration, Thursday’s action will make up about $700 million of the $900 million needed by the end of the current fiscal year on June 30.

The downgrade was the first for the state since Hurricane Katrina and the lower rating means when borrowing money, the state will have to pay higher interest rates.

And just to add a touch of spice to an already politically volatile state, Public Service Commissioner Foster Campbell announced on the Jim Engster Show on Thursday that he will be a candidate for the U.S. Senate seat being vacated by Sen. David Vitter. http://www.jimengster.com/

Campbell, an outspoken PSC member and a former state senator, is the second Democrat to enter the already crowded field of senatorial hopefuls. So far, U.S. Reps. Charles Boustany, Jr. of the state’s 3rd Congressional District and John Fleming of the 4th District, State Treasurer John Kennedy and U.S. Air Force veteran Rob Maness, all Republicans, a second Democrat, New Orleans attorney Caroline Fayard, and, of course, the former director of Louisiana Alcohol and Tobacco Control, the inimitable Troy Hebert, an Independent.

A debate between all the candidates could be reminiscent of the early debates between the 17 original candidates for the Republican president nomination—but without the charm, sparkle and depth of Ted Cruz and Donald Trump, a lot less fun.

Maness was an unsuccessful candidate for the U.S. Senate seat won by Bill Cassidy in 2014 and Fayard was defeated in a special election for lieutenant governor in 2010 by Jay Dardenne.

Campbell, something of a throwback to the populist candidates of another era, is outspoken on issues, particularly with utility companies and the oil and gas industry, and while in the State Senate, he crossed party lines to lend strong support to then-Gov. Dave Treen’s proposed Coastal Wetlands Environmental Levy (CWEL), a $450 million tax on petroleum and natural gas. Campbell today says had CWEL passed, the state would not be in the financial bind in which it now finds itself. But strong opposition by LABI and the oil and gas lobby defeated the proposal.

In a related but relative minor matter, LouisianaVoice received one of those “independent political polls” that was so obviously commissioned by Rep. Fleming that it may as well have been conducted by the good congressman himself.

The questions were prefaced by glowing stories of Fleming’s humble background and how he pulled himself by the bootstraps to not only become a doctor but to establish “numerous businesses,” one of which just happened to be a payday loan company that preys on low-income citizens, hooking them for exorbitant interest rates.

At the same time, the pollster, a woman, set up other questions about the other candidates with disparaging background stories on Boustany, Fayard and Kennedy (Maness was omitted, possibly in deference to his military service) that stopped just short of labeling them as subversives. Also omitted from the verbal flogging was Campbell, obviously only because he was not a declared candidate at the time Fleming wrote the questions for the poll.

Louisiana’s credit rating was not changed by Fitch and Standard & Poor’s, the other two major financial rating agencies.

But Moody’s move, dropping the state from Aa2 to Aa3 leaves Louisiana with better credit ratings than just two other states, New Jersey and Illinois. The downgrade will be applied to the state’s general obligation bonds and gas and fuel tax bonds. That means in turn that when the state issues bonds to finance construction projects such as roads and public buildings, it will have to pay higher interest rates on the borrowed money.

The move came as a surprise as most observers, including Kennedy, though Moody’s would wait until the Legislature completed the current special session, which is scheduled to end March 9.

Kennedy used the downgrade to take shots at both Bobby Jindal and Gov. Edwards. “You can’t spend more taxpayer money than you take in for seven years in a row and not expect a downgrade to your credit rating,” Kennedy said. “You also can’t make public statements about suspending TOPS, ending LSU football, closing Nicholls State University and closing five prisons without scaring the daylights out of the credit rating agencies that grade our debt and the institutional investors that buy our debt. What we tell our children is true: Acts have consequences.” http://theadvocate.com/news/14993547-79/moodys-downgrades-louisianas-credit-rating#comments

Edwards, meanwhile, blamed the downgrade on the seven years of patchwork budgeting by the Jindal administration, calling it “a disappointing development, particularly since we believed that Moody’s would wait until the conclusion of the special session to make any decision on our rating. Unfortunately, the downgrade confirms what we’ve been saying about the structural imbalance of our budget. The overuse and abuses of one-time money and fund sweeps by the Jindal Administration were a major factor in this decision.”

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After 30 years, Louisiana still pursues its failed industrial inducement policy that only serves to empty state treasury

Posted in ALEC, American Legislative Exchange Council, Broadband, Internet, Budget, Business, Economy, Education, Exemptions, Incentives, Finances, Governor's Office, Higher Education, Incentives, Legislature, Legislators, Politicians, Revenue on February 24, 2016| 11 Comments »

As it turns out, that quote was attributed to Einstein in error but the fact that he never said it doesn’t alter the accuracy of the definition.

And for at least three decades, Louisiana along with the rest of the South, has insisted on following the same outdated industrial inducement policies first warned about in a 1986 report by MDC, Inc. (Manpower Development Corp.) of Durham, N.C.

One of the members of the MDC Panel on Rural Economic Development which produced the 16-page report Shadows in the Sunbelt was Dr. Norman Francis, then President of Xavier University and Chairman of Liberty Bank in New Orleans. https://gri.unc.edu/files/2011/10/Shadows-in-the-Sunbelt-86.pdf

That 1986 report was followed up in 2002 when MDC published a 44-page report entitled The State of the South. http://mdcinc.org/sites/default/files/resources/MDC_StateOfTheSouth_2014.pdf

Both reports said much the same thing: that the market had dried up. There were, the reports said, 15,000 industrial inducement committees in the South chasing 1500 industries—and if they relocated at all, it would be whether inducements in the form of tax incentives were offered or not. “At best, the states have assisted businesses in doing what they wanted to do anyway,” the ’86 report said.

“The factors which once made the rural South attractive (to industry) are now losing relevance,” it said. That’s because the South, which once boasted an abundance of low-cost labor, can no longer complete in the global market. Where American apparel workers would earn $6.52 an hour (remember, this was in 1986, but the numbers are still comparable), their counterparts in Korea and Taiwan earned $1 and $1.43, respectively, and Chinese workers made about 26 cents per hour.

Shadows in the Sunbelt called southern states’ tax incentives to lure business and industry a “buffalo hunt,” an analogy to the great buffalo hunts of the 19th century which nearly wiped out the North American bison population. “Yet the hunters (states) continue in their pursuit, hoping to bag one of the remaining hides,” the report said.

The stampede actually started in Mississippi 80 years ago through a program called “Balance Agriculture with Industry” whereby the state used municipal bonds to finance construction of new plants. That practice evolved into tax breaks offered to prospective industries as states began forfeiting property tax revenues to lure new jobs.

Today, Louisiana gives up about $3 billion each year in tax breaks and credits doled out in various programs, all of which are designed ostensibly to attract industry and raise the standard of living through more and better jobs but which in reality, do little of either.

What we’ve received instead are tax breaks for duck hunters, chicken plucking plants, Wal-Mart stores, fast food franchises and for industries that either (a) get the tax incentives but which soon shut down operations (Nucor Steel, General Motors) or (b) claim the creation of great numbers of new jobs but which actually are far fewer than announced.

In fact, the ’86 report said, a long-term study of job promises in South Carolina revealed that only 52 percent of the jobs promised actually materialized. In Louisiana, when Bobby Jindal ran for re-election in 2011, he claimed in TV ads that the Louisiana Department of Economic Development during his first term handed out incentives that brought 25,425 new jobs to Louisiana. The actual number, however, was only 6,729. That’s only 26.5 percent of the jobs promised. https://louisianavoice.com/2011/09/29/jindal-plays-fast-and-loose-with-jobs-claim-tv-campaign-ad/

The ’86 report said as much. “The costs of inducements offered to attract industry are also heavy—and in some cases counterproductive,” it said. Evidence showed that tax breaks did not significantly affect plant location decisions but states nevertheless open up the state treasury for companies to loot even though the benefits do not offset the costs. “Whatever the effectiveness of industrial recruiting in the past, current trends clearly indicate that its value as a tool for economic development is declining,” it said.

That was 30 years ago and we’re still giving away the store by adhering to a faulty ALEC-backed policy of favoring corporations over citizens.

As an alternative, the report recommended that in lieu of spending millions to attract out-of-state industries, states should implement programs to support local development and to encourage entrepreneurship.

The 2002 report, State of the South, only reiterated the recommendations of the study of 16 years earlier. It also should have sent a clear message to the Louisiana Legislature and to Bobby Jindal six years before he came to power. The latter report’s recommendations included:

  • Refocus state agencies responsible for economic development to pursue a broader, more strategic approach;
  • State governments should not measure success simply by the number of new jobs, but also in terms of higher incomes for people and improved competitiveness of regions within the states;
  • Modernize tax systems so that states have the fiscal capacity to provide excellent educatin, widely accessible job training, necessary infrastructure, and community amenities that enrich the soil for economic development;
  • Tighten performance criteria for industrial incentives—and encourage associations of Southern governors and legislators to reexamine the one-dimensional, incentives-driven recruitment strategy in favor of a comprehensive economic development strategy;
  • Dramatically expand efforts to erase serious deficits along the entire education continuum in the South, and bolster the education, health and well-being of children;
  • Draw on universities and community colleges to act as catalysts for state and regional economic advancement.

The 2002 report said high-poverty, sparsely-populated areas are last to get telecommunications infrastructure. More than 60 percent of the zip codes in the Delta areas of Arkansas, Mississippi and Louisiana have no broadband internet provider which further widens the competitive gap for these areas. Yet Jindal rejected an $80 million federal grant to install broadband in Louisiana’s rural areas. http://www.nola.com/politics/index.ssf/2011/11/80_million_grant_for_rural_bro.html

Because Louisiana, along with the rest of the South, made a commitment to low taxes, low public investment, and low education in return for jobs. That strategy trapped the state in a cycle of low-wage, low-skill industry “begetting more low-wage, low-skill industry,” and thus perpetuating the “Wal-Mart Syndrome.”

Mac Holladay, who served as head of economic development for three Southern states summed up the situation. “If we had put the vast majority of our economic development resources into incubators, small business services, export training, and existing business assistance instead of recruitment and overseas offices, it might have made a big difference.”

Tax abatements and other financial giveaways, the 2002 report said, “inevitably drain resources from schools, community colleges and universities—public investments that are crucial to long-term economic advancement. Incentives provide a better return on investment when they build a community’s infrastructure, provide workers with higher skills and attract jobs that pay markedly more than the prevailing wages.”

Even when Mississippi granted $68 million in incentives for Nissan’s assembly plant in Canton, a small town just north of Jackson, the company’s director of human resources told the Jackson Clarion-Ledger that he could not name any Canton resident likely to be hired for one of the 5,300 jobs starting at $12 per hour. He attributed that to the town’s 27 percent poverty rate, 76 percent of out-of-wedlock births and 44 percent of adults without a high school diploma.

Carley Fiorina, former chief executive for Hewlett-Packard and more recently an unsuccessful candidate for the Republican presidential nomination said, “Keep your incentives and highway interchanges. We will go where the highly skilled people are.”

“Not so long ago,” said the 2002 State of the South report, “the South sought to build its economy by enticing companies from afar to relocate with the bait of cheap land, low taxes, and a surplus of hardworking but undereducated workers. That old recipe no longer works to feed families and sustain communities.

“No comprehensive strategy would be complete without further efforts to bolster public schools,” the report said.

“There must be a recognition that the ultimate challenge lies in the educational and economic advancement of people who have gotten left behind,” it said. “We must get the message out to every household, every poor household, that the only road out of poverty runs by the schoolhouse.

“The line that separates the well-education from the poorly education is the harshest fault line of all.”

Yet, Louisiana’s leaders insist on doing the same thing over and over and expecting different results.

And we keep electing the same failed policy makers over and over and over…

Insanity.

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Dedications: Does eliminating them give Louisiana an easy way out of the state’s fiscal crisis? Is there an easy way out?

Posted in Budget, Ethics, Finances, Governor's Office, Health Care, Higher Education, House, Senate, Legislature, Legislators, Politicians, Taxes on February 16, 2016| 85 Comments »

By Stephen Winham

Every day we hear the same thing: “If we could just get rid of those dedications, we could fix the budget and not have to always hit higher education and health care so hard when times are tough. There are plenty of things we could cut without hurting anybody or anything.”

It sounds so easy. You hear, in very broad terms, how the budget has grown and how out-of-bounds spending has gotten. Our current budget totals about $25 billion, of which $10 billion is federal. I will focus on state funding in the official revenue forecast – about $10.4 Billion in the current year, with strongest emphasis on the $7.9 Billion in state general fund spending we can most readily control. The official forecast numbers for next year are $10.4 billion and $8.2 billion, respectively.

We hear about $4.3 billion in dedicated funds ($3.5 billion in the currently-proposed FY 2016-2017 budget) that could be eliminated and go a long way toward fixing our budget problems. What we rarely hear about is the additional $4 billion in the state general fund that is allocated and/or protected by the State Constitution.

For starters, almost a half billion dollars comes directly off the top of the general fund, but IS NOT APPROPRIATED. That’s right, you don’t see or hear much about this money because it is not appropriated – rather, it is a direct draw on the state’s general fund.

If you go to page 177 of the FY 2016-2017 Executive Budget, you will find Schedule 22, Non-Appropriated Requirements. This schedule allocates $496.5 million from the state general fund in the treasury, pursuant to the State Constitution, for the following:

$404.8 M – General Obligation Bond Debt Service

[IMPORTANT DIGRESSION: G. O. Debt service is increasing by over $211 million (109%) next year due to one-time savings utilized in the current year from defeasance of debt – In other words, this is part of the one-time “fix” in the current budget that has to be covered next year.]

$90.0 M – General Revenue Sharing – goes to local governments as a partial offset for local property tax revenue lost due to the State Homestead Exemption

$ 1.7 M – The Interim Emergency Board – provides emergency funds during the budget year

Now I ask you, which of these would you be willing to vote out of existence? Eliminating or changing them would require constitutional amendments and a vote of the people.

The one of these three I would not cut, for sure, is our $405 million in debt service. Defaulting on our debt would cause immediate loss of a marketable bond rating and send a message to the rest of the country that we are truly bankrupt.

Cutting the other $91.7 million in non-appropriated items would have very serious implications, particularly for local governments. Even if you think local governments shouldn’t get the revenue sharing, how do you think they would make it up, if they didn’t?

In addition to non-appropriated allocations, the State Constitution also mandates general fund spending for a number of appropriations. The state’s Minimum Foundation Program for public elementary and secondary education is required by the constitution and has a $3.4 Billion state general fund appropriation. You might be inclined to cut administration and other programs in the Department of Education, but are you willing to vote for a constitutional amendment eliminating basic state support for our public schools, or even allowing for substantially reducing it? You may not directly use public education, but you have to agree we absolutely have to have it and it should be funded at no less than its current level. The education provided by our public schools is vital and is finally improving. We can’t afford to lose the ground we’ve gained.

So, between just the General Obligation Bond debt service and the MFP requirements for next year, we have $3.8 Billion of General Fund (46% of the total) expenses it would be simply stupid to cut.

In addition to the MFP, another $600 million of our general fund expenditures are currently required by the State Constitution. State supplemental pay for local law enforcement alone is $124 million of this. Also included are salaries of statewide elected officials and the costs of elections. You might not be happy with the salaries of your statewide elected officials, but we have to pay them and I don’t think you could possibly support not having the money to hold elections. If you think locals ought to fully fund the salaries of law enforcement personnel, where do you think they might get the money to do so?

[Digressing again and focusing on local government funding for a moment, what if we decided to cut it all? Except for capital outlay projects, we indirectly fund recurring local services, so we would, in essence, be shoving our problem down to the local level – and we all live somewhere.  If local governments were unable to raise local taxes to support the services, they would be eliminated or significantly degraded.  If they were able to raise local taxes to support them, how would the taxpayers see a difference?]

What other general fund expenditures, currently considered mandated should we consider cutting? How about the $130 million in appropriated debt service (in addition to G. O. Debt)? How about the $400 million plus it costs to incarcerate adult inmates in our state prisons? Or, the $157 million we pay local sheriffs to house state inmates? The $27 million we pay in District Attorney and assistants’ salaries? How much of the $73 million legislative and $160 million judicial general fund appropriations are we and the legislature willing to cut? How much of the $848 million in general fund we consider sacrosanct because of federal mandates should we cut and what will happen if we do? How much can we realistically cut from our Medicaid program and still attempt to meet the health care needs of our citizens?

Finally, how about the elephant hiding behind the sofa, our annual payments via the state payroll system toward the Unfunded Accrued Liabilities of our state retirement systems? I’m no actuary, but using the actuarial reports generated by the Legislative Auditor, I estimate annual payments toward this liability, in state funds, is no less than $600 million and growing rapidly because of the way the amortization is structured. The State Constitution requires this debt to be liquidated by 2029.

We often hear that 67% of our general fund budget is non-discretionary. Let’s pretend we don’t have to do a lot of these things and, just for the sake of argument, say only 55% should not be touched. That still leaves only $3.7 billion of state general fund on the table subject to cut and we certainly aren’t going to cut over half of that to solve a projected $2 Billion problem next year. And, by the way, remember that any of the current year deficit not liquidated this fiscal year will, by law, have to be added to that problem.

Take a look at John Bel Edwards’ first Executive Budget. It is balanced to the official revenue forecast of general fund revenue. Look at what is cut and where. Look closely.

http://www.doa.la.gov/opb/pub/FY17/FY17_Executive_Budget.pdf

For more details, look at the supporting document:

http://www.doa.la.gov/Pages/opb/pub/FY17/FY17ExecBudget.aspx

Now, finally, let’s get back to those dedicated funds. The Legislative Auditor has just released a comprehensive document detailing these dedications. He points out there were 370 dedicated funds in Fiscal Year 2013-2014 (the last year for which complete documentation is available), 344 statutory and 26 constitutional. Let’s see which ones of these we want to eliminate.

How about the $1.4 Billion Transportation Trust Fund? Our roads are in great shape, right? Plus, we blow part of this on public safety rather than roads and public safety certainly isn’t important, is it?

How about the $159 million in Lottery proceeds? Surely we can find a better use than education for that money. The $184 million in the Medicaid Trust Fund for the Elderly? We only have to change a statute to cut the old folks off. The Oil Spill Contingency Fund at $52.7 million? We never have oil spills, do we? And, why should we share $39 million of our severance taxes with the parishes where the minerals are severed? TOPS is draining us dry, so let’s free up that money and spend it elsewhere.

I’m being facetious, but, seriously, don’t you think there is a constituency for every one of those 370 dedications (except maybe the 21 that have no revenue or expenditures)? How many times have dedications been studied and how many have been eliminated so far? The Joint Legislative Committee on the Budget has reviewed 25% of these dedications every other year since 2009, but has made no recommendations for modifying or eliminating any of them.

Whatever we do with dedicated funds can’t and shouldn’t be done overnight. Many of them support local governments, but the Transportation Trust Fund is the largest of them all and, in addition to the Department of Transportation, other state departments and agencies derive substantial operating funds from dedications, most notably the Public Service Commission, the departments of Environmental Quality, Wildlife and Fisheries, Economic Development, Agriculture and Forestry, Natural Resources and Public Safety Services.

Shouldn’t we look at each dedicated fund in depth to determine it source, its purpose, and the extent to which collections exceed needs? Isn’t this just what the Joint Legislative Committee on the Budget should have done? Wouldn’t it have made a lot more sense to examine the historical inflows and outflows of each of these dedicated funds before creating a $442 million Overcollections Fund from their balances in FY 2014? This was yet another statutory dedication and a big reason statutory dedications spending rose so much. Worse, we then used the Overcollections Fund to pay for recurring expenses elsewhere – a significant part of why we are in our current mess.

Obviously, some collections in excess of needs should revert to the general fund. Others, justifiably, should not. In many cases, these funds are created from fees people pay for which they expect certain services. Some dedications to locals are used to service bonds.

Should we continue to look at potential modifications or eliminations of statutory dedication as a partial solution to our problems? Absolutely, but given our history and the realities of today, should we place an inordinate amount of blame for our current problems on them, or expect a miraculous cure to emerge from further study? I frankly don’t see why we would.

I urge you to look at the Legislative Auditor’s report here:

http://app.lla.state.la.us/PublicReports.nsf/0/13D9277344A19B9086257F560076E83A/$FILE/0000CAA1.pdf

It will give you a much better understanding of the dedications and is formatted in such a way as to drill down from a relatively high level to a very detailed level, so you can stop where you’d like and still gain valuable insight.

Let’s face it, as Gov. Edwards has said, if it is so easy to cut the budget, why has it not been cut to size long before now? This is particularly true in light of the fact we had a governor who travelled the United States for the past 8 years professing to be a budget cutter extraordinaire. If he actually cut expenditures to meet revenues and wrought such an economic miracle why do we find ourselves so out of whack? No, Virginia, it’s not just oil prices.

State Treasurer John Kennedy and others point to things the administration should do to eliminate fraud, abuse, and waste in state government. Who can disagree? To the extent these occur, we are all losers – the biggest are the intended beneficiaries of the services.

It is important that citizens believe their tax dollars and fees are being spent as wisely as possible or, at the minimum, that somebody is consistently and comprehensively trying to ensure this is the case. In my opinion, the accountability for this lies with the administration, not the legislative auditor or anybody else.

The administration has not yet provided specifics or even examples of what it plans to do about specific contracts that make no sense, bureaucratic structures that may be bloated, and more effective and efficient delivery of health care services. Gov. Edwards has said he will do something about these things, but he is yet to provide even anecdotal evidence like Kennedy and others to support his claim.

The executive branch needs to hold its appointed officials to the highest standards and demand they investigate dedications and everything else in the departments they are paid well to manage toward doing everything they possibly can to make our government as efficient and responsive as it can be. The public needs to know this is being done. They should not have to see an increasing succession of negative findings by the Legislative Auditor or, worse, disturbing reports of mismanagement and abuse in the media and elsewhere that go largely unanswered.

But, all that said, can these efforts bear fruit overnight? Can they come close to eliminating the gap? Look deeper than the rhetoric and you have to answer “no” and “no.”

One more link is below – an excellent presentation by the Louisiana House Fiscal Division done just a month ago. Check it out:

http://house.louisiana.gov/housefiscal/0112_16_OS_FiscalBriefing2.pdf

There is a lot of really good information out there from a variety of sources inside and outside government. Our decision-makers need to use it.

 

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