Feeds:
Posts
Comments

Archive for the ‘Campaign Contributions’ Category

Jindal “reform” is a reflection of ALEC national agenda; Legislation being spoon-fed by corporate puppetmasters

Posted in ALEC, American Legislative Exchange Council, Campaign Contributions, Education, Governor's Office, House, Senate, Legislature, Legislators on March 13, 2012| 12 Comments »

Gov. Bobby Jindal’s education reform package has some interesting bedfellows, including a national organization that writes legislation which it spoon feeds to state lawmakers throughout the U.S. and a local organization with ties to Jindal political campaigns past and present.

The American Legislative Exchange Council (ALEC), which boasts that its membership comprises about a third of all state legislators in the U.S., regularly holds conferences and seminars at which it unveils proposed legislation for its members to take home for enactment.

Believe in Louisiana, a Baton Rouge Political 527 non-profit corporation, has been running television ads throughout the state in support of Jindal’s education reform legislation.

Believe in Louisiana is headed by Rolfe McCollister, publisher of the Baton Rouge Business Report and former chairman of Jindal’s 2007 transition team and treasurer of his most recent campaign for governor. McCollister also made five separate contributions to Jindal’s first two gubernatorial campaigns totaling $17,000.

Also making five contributions totaling $8,500 was Business Report President Julio Melara. Melara also is president of two other Baton Rouge publications, 1012 Magazine (for Interstates 10 and 12 that run through Baton Rouge) and 225 Magazine (Baton Rouge is in telephone Area Code 225).

Before entering the publishing business Melara worked as an advertising salesman for a New Orleans radio station.

Within weeks of becoming governor in January 2008, Jindal appointed Melara to the Louisiana Superdome Commission.

At the same time, Jindal appointed six other members to the Superdome Commission. They included Chairman Ron Forman of New Orleans, David Chosen of Lake Charles, Bill Windham of Bossier City, J.E. Brignac of Prairieville, Tim Coulon of Harvey and Robert Bruno of New Orleans.

Most of those contributed to various Jindal gubernatorial campaigns. Forman gave $2,000 in 2011; Bruno, his wife, and law firm gave $28,500 between 2007 and 2010; Windham and his wife made six contributions between 2003 and 2011 totaling $30,000; Brignac, his wife and business gave $22,200 between 2007 and 2011, and Coulon’s own political campaign for Jefferson Parish President and his consulting company gave Jindal $7,500 in 2007 and 2009, records show.

Coulon, as an agent of Lagniappe Industries, was implicated in 2010 in the federal investigation into the parish’s $160 million contract with the River Birch Land Fill, owned by Fred Heebe and his stepfather Albert Ward. Heebe also made a $2,500 in-kind contribution to Jindal in 2008.

Coulon, while serving as parish president, appointed Ward to the board of West Jefferson Hospital. Ward subsequently voted to replace the hospital’s insurance carrier with Lagniappe.

Though there is nothing to link Melara directly to the land fill or insurance deals, Jindal never returned any of the donations from those individuals.

Former State Rep. Noble Ellington of Winnsboro is the immediate past national president of ALEC and hosted the organization’s annual convention in New Orleans last August.

Ellington, who did not run for re-election following a 24-year career in the Louisiana Legislature, was recently appointed to the number two position at the Louisiana Department of Insurance at a salary of $150,000 per year.

Besides Ellington, at least 52 current and former House members and 18 current or former members of the Senate are affiliated with ALEC, either as members or attendees at ALEC events.

As recently as last month, ALEC hosted a secretive “education academy” on Amelia Island off the coast of Florida. The meeting was “invitation only” and closed to the pubic and the media—especially the media.

That meeting followed closely on the heels of the release of ALEC’s 17th annual Report Card on American Education.

The report was authored by Matthew Lardner and Dan Lips, both of whom are affiliated with the right-wing Republican organizations the Goldwater Institute and the Heritage Foundation. The two gave overall grades to every state’s public schools based on how they rated in 14 categories.

ALEC has been drafting and promoting education bills for more than two decades in its effort to privatize public education through a growing network of school voucher systems that divert taxpayer dollars away from public schools. Those public dollars are used to create new private charter schools in the name of reform.

The ALEC 130-page report card is sorely lacking in any real evidence that school choice, charters, or firing teachers improves student performance.

The National Assessment for Education Progress (NAEP) exam is the largest and most accepted national, standardized assessment of student knowledge in several subject areas.

Massachusetts, Vermont, New Jersey, Colorado, Pennsylvania, Rhode Island, North Carolina, Kansas, New Hampshire and New York are listed as the top 10 states in NAEP performance.

Yet, from those 10, only Colorado was among the 13 states the ALEC report card gives a B or better. Vermont, which scored number two on the NAEP, tied for dead last for policy with a D+ on the ALEC report card. Conversely, Missouri, ALEC’s standard-bearer with an A- grade, scored 47th on NAEP.

John Underwood, dean of the School of Education at the University of Wisconsin, said the ALEC agenda has nothing to do with educating students. He said tables ranking states according to the NAEP performance of low-income students, students of color and students with disabilities, potentially the most interesting, revealing and useful data in the ALEC report, was not factored into ALEC’s final grade.

“Why is that not part of the states’ A to F grades?” Underwood asked. Missouri, he said, ranked 43rd in low-income students’ fourth grade reading score improvement and 34th in math improvement, but still got ALEC’s top grade. Maryland was number one in reading improvement and number two in math improvement, but got a C- from ALEC.

The answer is quite simple: someone is skewing the numbers—and NAEP’s testing procedures have been around a lot longer than ALEC’s.

But then, numbers can be tweaked to advance just about any theory. Someone once said, “There are lies, there are damned lies, and there are statistics.” At this juncture, ALEC appears to be the one playing with the statistics and tweaking the numbers.

For that “Education Academy” on Amelia Island, Florida, last month, ALEC’s invitation said the organization’s goal was “to ensure the successful and productive education for all American students.”

The invitation even offered to pick up the tab for attendees: “You are cordially invited to attend ALEC’s K-12 Education Reform Academy, February 3-4, 2012 at the Ritz-Carlton in Amelia Island, Florida. For invited legislators like you, ALEC will cover your room for up to two nights at the host hotel. ALEC will also reimburse up to $500 for travel expenses, which includes coach airfare, cab fare, and a reimbursement of 55.5 cents per mile driven.

“This event will address the top reforms in K-12 education that ALEC believes each state must have to ensure the successful and productive education for all American students. We will discuss what you as a state legislator can do to address a variety of issues surrounding K-12 education reform, including charter schools accessibility, accountability and transparency standards for teacher excellence, open enrollment, vouchers, tax credits and blended learning options.”

It’s ironic how ALEC—and Jindal—toss around those two words accountability and transparency in their rhetoric to reinforce their respective public images, yet run and hide when asked to deliver. It would seem they want those principles applied to others, but not themselves.

With apologies to The Wizard of Oz author Frank Baum, they’d rather remain behind the curtain where they can pull the levers and push the buttons while luring the metaphoric Dorothy (voters) down the Yellow Brick Road.

There you have it. Jindal’s education reform package is not his own any more than prison privatization or the overhaul of state employee retirement can be claimed by him as original ideas.

He has his marching orders and ALEC is calling the shots.

And you may be assured that any member of the Louisiana Legislature who goes along with these “reforms” is likewise listening to the corporate powers behind the curtain that shields ALEC from public view.

Does anyone remember the economic collapse and political chaos that came about when we allowed Wall Street to write the rules?

Does anyone see the damages already done by the U.S. Supreme Court’s Citizens United decision?

Read Full Post »

Toledo Bend water sale proposal just gets curiouser and curiouser; common thread is Jindal campaign donations

Posted in Campaign Contributions, Contract, Contracts, Governor's Office, House, Senate, Legislature, Legislators, Toledo Bend, Water Sale on March 5, 2012| 4 Comments »

Much like Alice’s observation in Lewis Carroll’s Alice in Wonderland, details surfacing about the proposed sale of 600,000 acre-feet (196 billion gallons) of water from the Toledo Bend Reservoir just gets curiouser and curiouser.

In attempting to follow the time line leading up to the issuance of a request for proposals (RFP) by the Sabine River Authority (SRA) and the sudden shelving of the water sale plan to private investors, events appear to be grotesquely out of sequence.

Sufficient questions exist to raise concerns over whether the SRA, at best, may have gotten the proverbial cart ahead of the horse and, at worst, the possibility that backroom deals may have been cut in anticipation of a financial windfall for investors and the SRA alike.

Toledo Bend Partners (TBP) initially approached SRA more than a year ago about purchasing the water for resale to Texas municipalities and at the SRA’s Water Sales Committee meeting on Jan. 19, 2011, SRA Executive Director Jim Pratt informed the committee that he had received a proposal for “an out-of-state water sales agreement from the Toledo Bend Partners, LLC.”

Pratt told the committee that TBP was offering to pay $3 million up front to reserve the water rights using a graduated pay scale over four years until the project was on online to actually take water. He added that TBP’s proposal was seeking to reserve 600,000 acre-feet of water from the reservoir and that the partnership would pay a $50,000 non-refundable application fee to help defray SRA legal costs.

Pratt also informed the committee that he had already spoken with attorney Marjorie McKeithen of the New Orleans law firm of Jones Walker about representing SRA during the sale negotiations with TBP.

TBP is a Delaware-chartered entity comprised of trusts and entities owned by Billy Joe “Red” McCombs of San Antonio, Donald T. “Boysie” Bollinger of Lockport and Aubrey Temple of Coushatta and their respective families. The principals and their families and business interests have combined to contribute more than $75,000 to the political campaign of Gov. Bobby Jindal.

Jones Walker, a firm with hundreds of attorneys in at least 14 offices in eight states and Washington, D.C., is also a big supporter of Jindal. The firm itself had eight contributions totaling $22,000 and Paul Cabon of Washington, D.C., the firm’s Director of Government Relations, and wife Susan had 12 more contributions to the Jindal campaign that totaled $28,300. Various other law firm partners also contributed between $500 and $1,000 each.

The committee voted unanimously to accept the $50,000 from TBP and to enter into a professional services contract “not to exceed $50,000” with Jones Walker “for legal counsel for the out-of-state water sales project.

Eight days later, at the Jan. 27, 2011 meeting of the full SRA Board of Commissioners, the Water Sale Committee’s actions were ratified, again unanimously and without discussion.

The board on Feb. 24, 2011, unanimously approved paying out-of-town travel expenses for commission Chairman Robert Conyer and Water Sale Committee Chairman Larry Kelly to attend negotiations for the out-of-state water sale.

That was six months before a letter from Jindal Chief of Staff Stephen Waguespack informing SRA that the governor’s signature would be required for the sale of water “outside the boundaries of the state of Louisiana.” Waguespack added that any sale would not be considered “unless it is, at a minimum, the product of a competitive RFP.”

Waguespack’s letter was dated Aug. 25, the same date that the SRA board voted unanimously to approve the water sale contract with TBP and to forward the signed contract to Jindal for his signature.

Those two documents apparently crossed in the mail because a month later, on Sept. 22, the SRA board, in a sudden reversal, unanimously authorized Water Sale Committee Chairman Larry Kelly, Pratt and SRA staff to prepare and issue the RFP—a month after first agreeing to and signing a contract to sell the water to TBP.

Several individuals and firms expressed an interest in purchasing the water and each was provided a copy of the RFP by mail except for TBP which had a representative pick up a copy of the RFP at SRA offices.

Despite the expressed interest of other entities, TBP subsequently was the lone bidder on the purchase of the water at a price of 28 cents per thousand gallons or $91.24 per acre-foot. That price is substantially lower than other localities where water sale prices range from $5.20 per thousand gallons ($1,700 per acre-foot) to $8.88 per thousand gallons ($2,903 per acre-foot).

Such a spread in the purchase price by TBP and market prices elsewhere would seem to set TBP principals up for substantial profits as middlemen, leaving unanswered the question of why the SRA could not issue an RFP and negotiate directly with the end users in order to enhance its financial bottom line.

If all this is not confusing enough, there is the business of a $10 million bond issue approved by the SRA in which the time line also appears to be out of sync.

The SRA ran the requisite legal advertisement on its intent to issue $10 million in revenue bonds on Sept. 7, 2011 even though the State Bond Commission had already approved the measure at its June 16 meeting in Baton Rouge—nearly three months before.

The legal advertisement said that the $10 million in revenue bonds to finance the acquisition of “any property or facilities which the Authority is authorized to acquire,” would be secured by the sale of water to industrial customers by the Sabine River Diversion System. The Diversion System sales water to the petrochemical industry in Southwest Louisiana and those sales are separate from the proposed purchase by TBP, according to SRA management consultant Carl Chance.

Read Full Post »

Notable Quotables (in their own words)

Posted in Campaign Contributions, Governor's Office, Notable Quotables, Toledo Bend, Water Sale on February 1, 2012| Leave a Comment »

“There’s talk of a January vote and I think that is way too fast.”

–Stephen Waguespack, Gov. Bobby Jindal’s Chief of Staff, in backtracking last month on his August letter giving the Sabine River Authority the governor’s tacit approval to move forward with a request for proposals (RFP) for the sale of surplus water from Toledo Bend Reservoir to a partnership comprised of Louisiana and Texas businessmen who also happen to be major contributors to the campaigns of Jindal and Texas Gov. Rick Perry. The partnership was the only entity submitting a proposal.

Read Full Post »

Jindal in need of deniability in Toledo Bend water sale issue; à la John Kerry, he was for the sale before he was against it

Posted in Campaign Contributions, Ethics, Governor's Office, Toledo Bend, Water Sale, Transparency, Water Sales on February 1, 2012| 4 Comments »

There is one intangible asset that is absolutely essential to the survival of any politician: deniability.

Gov. Bobby Jindal would dearly love to have that deniability right now.

The Sabine River Authority (SRA) has decided, for the time being, at least, to hold up on its proposal to sell up to 600,000 acre-feet (196 billion gallons) of water from the Toledo Bend Reservoir.

The action came after Jindal’s chief of staff Stephen Waguespack announced on Dec. 29 that the administration opposes a proposed sale of water from Toledo Bend reservoir by the Sabine River Authority of Louisiana (SRA) to a group of Texas and Louisiana investors.

The only problem with the administration’s stated opposition is that just four months earlier, an Aug. 25 letter, from Waguespack informed the SRA that the governor’s signature is required for the sale of water “outside of the boundaries of the state of Louisiana.” He added that no such concurrence would be considered “unless it is, at a minimum, the product of a competitive RFP.” In other words, the governor, through Waguespack, gave his tacit approval to the sale provided there was a “competitive RFP.”

Reminiscent of John Kerry, Jindal was for it before he was against it.

The board, thus empowered by the administration’s implied approval, on September 22 authorized by unanimous vote the preparation of the RFP for the out-of-state water sales contract. The result was a proposal from Toledo Bend Partners (TBP) that would lock the state in to a 50-year contract with an option to renew for an additional 49 years.

RFPs were sent to five separate firms or individuals who expressed an interest. A sixth was picked up at SRA offices by a representative of Toledo Bend Partners (TBP). The TBP proposal was the only one submitted pursuant to the RFP.

Public opposition to the proposed sale was such that Jindal, through Waguespack, quickly backtracked. “There’s talk of a January vote and I think that is way too fast,” Waguespack said. He said he was reviewing the proposal which he said would need Jindal’s signature.

That was quickly followed by a Jan. 12 vote by the SRA board to suspend any proposed out-of-state water sales until a comprehensive water plan for Louisiana has been completed.

But the issue is far from dead. There is too much revenue at stake and with another potential budget deficit looming, the state desperately needs revenue. With Jindal’s dogged insistence on no new taxes, coupled with his push for even deeper tax cuts, that revenue has to come from other sources.

That’s where his agenda for privatization comes in and the sale of water to private investors is part of that agenda: rather than selling the water directly to consumers, Jindal instructed the SRA to take proposals from private investors—a middle man, as it were.

And that is precisely why this issue demands a closer inspection to consider not only how the sale would affect the local area but also to see who the principals are and how much money is involved—on both ends of the sale.

While considerable emphasis has been placed on the potential revenue of $54 million per year for the state, little has been said of the potential windfall to the investors if the sale ultimately goes through or of strong political connections on the part of the individual investors.

And while most assume the water will be resold to municipalities in Texas, nothing definitive has been said about the investors’ potential market.

Toledo Bend, which sits astride the Louisiana-Texas border and is jointly-owned by the states of Louisiana and Texas, was created in the 1960s at a cost of $70 million for the purpose of water supply, hydro-electric power generation and recreation. It is the only public water conservation and hydro-electric power project to be undertaken without federal participation.

In order to express large volumes of water use, terms are generally expressed in acre-feet. One acre-foot equals 43,560 cubic feet and is equivalent to 326,700 gallons.

The reservoir covers about 185,000 surface acres, giving it a storage capacity of nearly 4.5 million acre-feet. The reservoir’s annual surplus water supply—water that may be sold—is slightly less than 2.1 million acre-feet with Texas and Louisiana each apportioned half of that total.

That gives Louisiana more than a million acre-feet per year in surplus water.

To put these numbers in perspective, imagine one acre of land covered by one foot of water; that’s one acre-foot of water. There are 7.48 gallons in a cubic foot and 748 gallons in 100 cubic feet.

An Analysis of Proposed Water Sale Agreement between Sabine river Authority, State of Louisiana and TBP says the Sabine River Authority of Louisiana “has the express statutory power” to enter into any and all contracts and other agreements with any person, but “in the case of contracts or agreements involving the sale and/or consumption of water outside the boundaries of the state of Louisiana, written concurrence of the governor is required.”

Louisiana’s counterpart, the Sabine River Authority of Texas, has been selling water to Texas municipalities and other water systems, including 600,000 gallons per day to Houston. Louisiana currently sells its water only for hydroelectric generating, historically tapping less than 3 percent of its annual allocation of surplus water.

Water supply demands in Texas are expected to grow. The 2007 State Water Plan for Texas anticipates that municipal demand will increase by 92 percent between 2010 and 2060—from 1.5 million acre-feet to 2.9 million acre-feet.

The water sale analysis calls for SRA to sell up to 600,000 acre-feet—196 billion gallons—of water per year to TBP at a price of 28 cents per thousand gallons ($91.24 per acre-foot).

Under its proposed 50-year contract, TBP would pay SRA the $91.24 per acre-foot on top of an annual “reservation fee” that begins at $1 million and gradually escalates to $25 million after 35 years. In addition, SRA could choose between taking 1 percent of gross revenues from water sales or 20 percent of net profits.

That price is substantially higher than the current sale price of one cent per thousand gallons ($3.27 per acre-foot) currently paid by Entergy to operate its hydroelectric generator that straddles the Louisiana-Texas border at Newton County, Texas, and Sabine Parish.

Should the sale to TBP eventually be approved, it is anticipated sales to Entergy will be terminated when the current contract expires in 2018.

And while it is generally assumed that TBP will purchase the water for re-sale to municipalities, there is no guarantee of that. Consider the development of the Haynesville shale formation in northwest Louisiana and east Texas and the Eagle Ford shale formation in south Texas, said to contain rich oil and natural gas deposits. The method of extracting the oil and gas is expected to be hydro-fracturing, or fracking, a procedure that takes millions of gallons of water to break up the rock formations and release the oil and gas.

The going price for water for fracking is considerably higher. In Anadarko, Pennsylvania, a community near State College, drillers are paying $6 per 1,000 gallons. In Shalersville, Ohio, near Akron, the price for potable water to perform fracturing runs between $5.20 ($1,700 per acre-foot) and $8.88 ($2,903 per acre-foot) per thousand gallons, depending on the volume.

In California, the state’s water-distribution and pricing systems vary widely and are highly complex. More than 2,800 local agencies provide water service to 35 million people and 8.7 million acres of irrigated farmland.

While about 75 percent to 80 percent of the state’s water goes to agriculture, all users must vie for the limited resources available in the state, with diversions from the Sacramento-San Joaquin and Colorado systems being the most important. Water prices vary widely by jurisdiction, ranging from less than $10 per acre-foot to more than $100 per acre-foot at the retail level.

Because of stipulations that limit water availability based on reservoir and ground water levels, depending on wet or dry years, there are no guarantees of unlimited access from those myriad systems.

At a purchase price of 28 cents per 1,000 gallons, the sale of tens of millions of gallons of water at those prices represents a significant markup and an eye-popping return on investment for the TBP that could approach 2,000 percent.

All of which begs the question that if the SRA has surplus water to sell and there is the potential of a seller’s market, why can’t the sales be made directly to the end-users without a middle man? Why is it necessary to involve TBP?

To get an answer to that, it is important to know just who the players are and they would be principals of TBP. It is also important to know that campaign cash has a way of flowing almost as freely as, well…, as water.

TBP is a Delaware chartered entity comprised of trusts and entities owned by Billy Joe “Red” McCombs of San Antonio, Donald T. “Boysie” Bollinger of Lockport and Aubrey Temple of Coushatta and their families.

McCombs, who presides over the Koontz-McCombs Development Co., a string of automobile dealerships and radio stations, is a major player on the political stage. Between June of 2007 and August of 2010, he made 21 political contributions totaling $280,000 to Texas Gov. Rick Perry. He also made a $5,000 contribution to Jindal in November of 2010.

Jindal endorsed Perry for the Republican presidential nomination immediately after Perry announced his candidacy. He campaigned vigorously for Perry in Iowa, New Hampshire and South Carolina, leading to speculation that Perry would reward Jindal with a choice appointment if he were to win the presidency.

Bollinger is chairman and CEO of Bollinger Shipyards, a family-owned business established by his father, Donald Bollinger, in 1946. Donald Bollinger, Sr. served as Secretary of Public Safety under Gov. Dave Treen.

Bollinger, his family and businesses combined to contribute $10,350 to Jindal in 2003 and 2007. Tidewater, Inc., and Bank One of Louisiana, on whose boards he serves, also contributed another $7,000 to Jindal in 2007.

Tidewater, Inc. Political Action Committee (TIDEPAC) also made five contributions totaling $25,000 to Jindal in 2003 and 2004.

Temple, a banker and founding chairman of Louisiana Workers Compensation Corp., is a former chairman of the SRA. He and his wife made six contributions totaling $25,000 to Jindal between September 2006 and March 2011.

Steve Cummings, TBP CFO and treasurer, contributed $1,000 to Perry in October of 2010, and board member James Weaver contributed $1,000 to Jindal in December 2010 and $15,000 to Perry in June 2009 and December 2010. Both men are from San Antonio.

Rep. Gerald Long (R-Winnfield), in a Jan. 4 letter to the Sabine Index, pledged to meet with Jindal to discuss the issues surrounding the proposed sale. “As you may know,” he said, “any decision to sell water will be made by Governor Jindal and not the local SRA or the Louisiana Legislature.”

Long was the recipient of a $2,500 campaign contribution from Bollinger Shipyards last Aug. 4. Six days prior to that, he received a $2,500 contribution from the Jindal campaign.

In its proposal submitted to SRA, Toledo Bend Partners included nine letters of endorsement from Texas and Louisiana residents and political leaders, including former governors Buddy Roemer, Mike Foster and Kathleen Blanco.

Two of those letters, from Blanco and Texas Lt. Gov. David Dewhurst, supported the proposal to sell water but neither mentioned TBP by name. The remaining seven letters, including those from Roemer and Foster, specifically endorsed TBP for the contract.

Several of the letters were suspiciously similar in their wording, almost as if their letters were drafted from a template and presented to the presumed authors for their signatures. Two called the proposed sale a “win-win” opportunity.

Letters from Corbin Robertson, CEO of GP Natural Resource Partners; Paul W. Hobby, founding chairman of a Houston-based private equity business, and Texas State Senator-elect Ronnie Johns each submitted letters with identical wording: “Toledo Bend Partners encompasses a group of individuals whose business and civic leadership in Texas and Louisiana span many decades.” Robertson and Hobby went even further to say, “Specifically, B.J. “Red” McCombs’ track record of successful collaboration involving business and government entities in Texas is long-standing and distinguished.”

Both men also said in their respective letters, “I believe Toledo Bend Reservoir is an outstanding resource that should be managed with an eye towards the benefits that will be realized by current and future generations of Texas and Louisiana residents.”

Foster and Johns also had identical wording in their letters, each saying “Because power generation is heavily concentrated between May-September, Toledo Bend Lake levels are oftentimes strained during the summer months. Further, downstream residents may experience flooding as a result of the water releases” (from the hydroelectric generating plant).

Read Full Post »

Jindal’s retirement agenda mirrors that of ALEC, but blindsided state employees should have seen it coming

Posted in ALEC, American Legislative Exchange Council, Campaign Contributions, Governor's Office, House, Senate, Legislature, Legislators, Retirement on January 31, 2012| 12 Comments »

State employees who were blindsided by Gov. Jindal’s announcement last week of proposed sweeping changes to the state’s retirement system have only themselves to blame; they simply haven’t been paying attention.

It’s been a long time coming and while the jury is still out on what will and what won’t be approved in the upcoming legislative session or what is or is not fair to longtime state employees is irrelevant at this point. There is a much larger problem to be addressed: a problem of nearly $6.5 billion in unfunded liabilities for the state employee retirement system, to be precise.

This is an issue that has been punted repeatedly by legislators past and present who were unwilling to make a hard decision and now change is no longer on the far horizon: it is upon us and it is inevitable.

As far back as 1989 a constitutional amendment was passed by the legislature and approved by voters to amortize the state’s unfunded accrued liability (UAL) payoff over 40 years on a level payment plan (adjusted for inflation and payroll growth projections).

That amendment, however, had one fatal flaw: it allowed the legislature to change the payment schedule by statute. One may as well have turned a fox loose in the henhouse or a child in a candy store.

The latter may be more appropriate since the legislature has a greater propensity to act like the adolescent when the state coffers are rife with revenue. Lawmakers wasted no time in tinkering with the schedule in order that they might fund local projects in the annual budget. The folks back home, after all, don’t care about what’s going in Baton Rouge as long as they get their community centers and golf courses funded.

Now, as we approach the 2029 deadline imposed by that amendment, the state is staring down the barrel of huge balloon payments.

Whether one likes Jindal or not, the problem with the state’s UAL for the various pensions for employees, teachers, school employees and police is no more his doing than the state’s next governor, whoever that may be.

But neither was the problem caused by state workers who now are being called upon to change their retirement plans in mid-stream to accommodate those legislators who in past years shirked their fiscal responsibilities in order to more easily facilitate their own political careers. It is patently unfair to ask rank and file state employees to pay the penalty for past legislative moral malfeasance.

That’s not to say that Jindal has the right solutions in his proposals; we have no way of knowing that at this point. It’s just that it is now his problem to wrestle with in the upcoming legislative session.

It is not likely that Jindal or his staff conceived of these reforms independently.

The American Legislative Exchange Council (ALEC), a conservative coalition of state legislatures, includes the reform of state pensions as one of its “Tools to Control Costs and Improve Government Efficiency” on its state budget reform web page: http://www.alec.org/publications/state-budget-reform-toolkit/.

Other tools specifically recommended by ALEC include the restructuring of state retiree health care plans, delaying “automatic” pay increases, adopting a state hiring freeze, embracing the expanded use of privatization and competitive contracting, establishing a state privatization and efficiency council and selling state assets.

Any of those sound vaguely familiar?

Several corporate members of ALEC have been identified as major contributors to Jindal’s political campaigns.

Of the 126 bills already pre-filed in the House and Senate as of Tuesday, 84, or fully two-thirds deal in some fashion or another with retirement. The breakdown shows that 36 retirement bills have been filed in the House and 48 in the Senate.

Some of the bills in both chambers are different versions of the same proposals, so some of the duplicate bills will be withdrawn before consideration.

Many of those deal with local clerks of court, assessors, sheriffs and municipal employees but just as many—or more—deal specifically with state employees.

Jindal said for now he is addressing only state employees and not teachers, school employees or state police.

Many of his proposals break long-standing promises made to state employees relative to retirement benefits and eligibility.

HB 53 by Rep. Kevin Pearson (R-Slidell), for example, stipulates that employees hired prior to June 30, 2006 may retire after 10 years and upon attaining age 67. Those hired after June 30, 2006 may retire after five years and attaining age 67.

The present law allows a state worker to retire after 10 years at age 60.

HB 56, also by Pearson, chairman of the House Retirement Committee, would increase employees’ retirement contributions from 7.5 percent to 10.5 percent for those employed on or before June 30, 2006 and from 8 percent to 11 percent for those employed on or after July 1, 2006.

But perhaps the bill that would sting the worst is SB 17 and SB 26, both by freshman Sen. Barrow Peacock (R-Bossier City). Each of those bills would change state pensions from a defined benefit to a defined contribution.

That means that instead of employees being guaranteed a set pension based on the current formula of three-year average salary times 2.5 percent times years of service, employees would contribute a predetermined amount to retirement with no guarantee of benefits. Such a program, which would react to market conditions, is similar to the 401K plan common in the private sector.

One bill, HB 55 by Pearson, would alter the formula for computing retirement from a three-year average salary to a five-year average, thus reducing in theory, at least, the employee’s monthly retirement check.

HB 61, also by Pearson, would require a one-time, lump-sum payment to employees with five or more years’ credit upon retirement. The employee may opt to take the lump sum or leave his account balance with the system and draw an annuity.

Because state employees do not contribute to, nor do they qualify for, social security, their retirement income would hinge solely on the uncertainty of their state retirement.

Read Full Post »

« Newer Posts - Older Posts »