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Jindal hires Morgan Keegan to market OGB; Regions hires Goldman Sachs to sell M-K; SEC fines G-S, M-K $800 million for fraud; can it possibly get any better than this?

Posted in Contract, Contracts, Ethics, Governor's Office, OGB, Office of Group Benefits, Transparency on July 16, 2011| 7 Comments »

BATON ROUGE—Follow closely because this gets complicated.

Retired state employees haven’t gotten through to Gov. Bobby Jindal.

Retired teachers likewise failed in efforts to get his attention.

Not even state district judges by adopting a unanimous resolution have managed to convince Jindal that the sale of the Office of Group Benefits is a bad idea.

It is easily the most universally opposed proposal by Jindal since he took office but yet he plunges ahead, apparently oblivious to the will of the electorate. On Friday, the day of the week any savvy politician takes controversial action because of the lack of media coverage, he quietly approved Morgan Keegan & Co. of Memphis to determine “the proper administrative structure” of OGB.

Morgan Keegan was the low bidder of the three firms submitting proposals to conduct the financial analysis of the agency with a bid of $900,000, far below the $6 million the state was prepared to pay Goldman Sachs on the basis of an earlier request for proposals (RFP).

Goldman Sachs was brought in last October to help draft the initial RFP and subsequently was the only bidder at a reported cost of $6 million. Negotiations broke down over demands by Goldman Sachs that the state indemnify the Wall Street banking firm from any potential litigation.

Goldman Sachs submitted a bid of $3.5 million on the latest RFP and Barclays Capital had a bid of $5.5 million.

Commissioner of Administration Paul Rainwater said no changes will take place before Jan. 1, 2013, but that Morgan Keegan will include contract offers from health providers in the final evaluation.

But wait. Reuters News Service is reporting that Regions Financial Corp. may sell Morgan Keegan after agreeing to pay $210 million to settle allegations that its Morgan Keegan brokerage fraudulently marketed mutual funds filled with subprime mortgages and artificially inflated the funds’ prices.

What’s more, Regions has hired Goldman Sachs to explore “strategic alternatives” for Morgan Keegan, sending signals that Regions may be trying to unload Morgan Keegan.

So, what we have is this incredibly incestuous tangle whereby the Jindal administration has hired Morgan Keegan to explore the possible sale of OGB even as Regions has retained Goldman Sachs to explore the possible sale of Morgan Keegan even though Goldman Sachs less than a year ago was fined $587 million over claims that the bank misled investors in collateralized debt obligations linked to subprime mortgages.

What the hell is this administration thinking?

Well, it just stands to reason. After all, the only real job that Jindal has ever held in his 40 years is a brief stint with McKinsey & Company of Washington, D.C.

McKinsey & Company’s crowning resumé-padding achievement was its work as a consultant for Allstate Insurance. The consulting firm trained Allstate in how to minimize its losses after Hurricane Katrina by denying policyholders’ claims and to treat its policyholders with “boxing gloves” rather than its trademark “good hands.”

That should shed some light on what this administration is all about.

The latest development is another in a growing pattern that defines the Jindal administration: privatize state services in favor of private businesses, some of whom have become generous contributors to Jindal’s political campaign, as well as to key legislators and the Republican Party.

Corrections Corp. of America (CCA), for example, has contributed $13,000 to Jindal, $1,000 to House Appropriations Committee Chairman Jim Fannin (D-Jonesboro), $1,000 to Rep. Gerald Long of (R-Winnfield), and $6,000 to the Republican Party of Louisiana.

Jindal may have dropped his efforts to sell off state prisons, but he isn’t likely to ignore CCA’s generosity. You can expect him to renew those efforts nest year once he is re-elected in October.

He privatized the Office of Risk Management (ORM) a year ago but rather than sell that agency, the state actually paid F.A. Richard & Associates (FARA) $68 million to take over ORM. FARA then came back earlier this year and got approval on a $7 million amendment to that contract, bringing the state’s cost to $75 million. A week later, FARA announced it had been purchased by an Ohio firm.

One condition of the ORM takeover was that FARA was required to take ORM’s employees for a minimum of one year. Two ORM employees who went over to FARA were terminated long before that one-year moratorium and a third, the only Baton Rouge employee of the Ohio firm, was also terminated shortly after the sale.

That’s what state employees have to look forward to when their agencies are sold out from under them. The only way a private entity can justify taking over a state agency is to set fees high enough to realize a profit. State agencies do not pay taxes, something a private firm will have to do, nor are they required to turn a profit.

So how will a private firm turn a profit with a takeover of OGB? Two ways: increased premiums and massive layoffs. Rainwater has already said 149 OGB employees will be terminated.

In the ‘50s, ‘60s, and ‘70s, management would not dare trifle with employees’ lives they way they do in such a cavalier manner today. Men like Victor Bussie, Gordon Flory, and John “Red” Bourg and the AFL-CIO simply would not have allowed it.

Those were men of honor who knew what it meant to struggle or to fight for what was right. The so-called leadership ensconced on the fourth floor of the State Capitol has never had to labor for anything. The Gang of Jindal has never faced the prospect of unemployment, or having to make a mortgage payment, a car payment, or tuition payment with no income. They’ve never had to feed a family when there was no job.

With the present administration, there is no honor—and that’s about the worst thing that can be said of anyone. The slight cuts even deeper when it’s true.

What’s worse is state employees have brought it upon themselves; they let it happen, even encouraged it. They have become fat and lazy (read: comfortable and complacent), willing to sit back and allow the administration to chip away one brick at a time (ORM, OGB, state prisons), thinking it won’t happen to them.

But let’s turn the clock back just a year to 2010.

Remember those five bills introduced by Rep. John M. Schroder (R-Abita Springs)? Probably not, because people by their nature, have short memories. But they represented still another brick being chipped away by the administration. Here they are, just in case you need a reminder going into the October elections:

HB-752 called for a constitutional amendment to grant the legislature sole authority to provide for pay increases for persons in state civil service. Remember that one?

What about HB-755? That one called for a constitutional amendment that would have required the legislature to determine prior to each fiscal year if a pay increase may be granted to persons in state civil service and if so, the manner and amount of the increase. Can you say “Political Patronage?”

HB-757 would have required that reports regarding state civil service employees be submitted to the legislature instead of the Department of Civil Service. Can you say “Big Brother?”

Then there was HB-754, which would have prohibited pay increases to state civil service employees when there is a budget deficit.

Like this year? When there was a projected deficit of $1.6 billion? When the legislature nevertheless managed to pass a balanced budget? We’ll just call it the smoke and mirrors deficit.

That would mean that in any given year, the administration could “project” a deficit, and just as was the case for the past two years, there would be no pay raise for state civil service workers.

Finally, there was HB-753 which would call for a constitutional amendment to abolish the State Civil Service Commission altogether, as well as the Department of State Civil Service, effective Jan. 9, 2012.

If you think for one minute that Schroder was acting on his own with these half-baked proposals, think again. Never doubt that he got his marching orders from Jindal. And Jindal gets his orders from the National Republican Party. All you have to do is look around and see what other red states are doing to employee and teachers unions.

And even though neither of the bills passed, if you think the issue is dead, you tend toward self-deception or naiveté. If Jindal wins re-election and carries a Republican majority back into the legislature, you can bet some, if not all of these bills will back on the table next spring.

It’s all part of Jindal’s “do more with less” mantra.

Layoffs mean more responsibility for state workers. Of course, the governor’s office is exempt from being called upon to make painful sacrifices.

No pay raises for two years, coupled with increases in the prices of fuel, food, housing, clothing, college tuition, medical care, electricity, and other essentials, certainly translates to less in terms of net pay and job security.

Jindal’s policies are not unique by any means. They’re all part of a national Republican plan explained in minute detail in Naomi Klein’s eye-opening book The Shock Doctrine. But that’s another story for another day.

Perhaps state employees are finally beginning to awaken from their slumber and to say, in the immortal words of Peter Finch in the movie Network, “I’m mad as hell and I’m not going to take it anymore.” The American Federation of State, County, and Municipal Employees (AFSCME) recently paid a visit to OGB to recruit members. Several employees reportedly signed up with the union, affiliated with the AFL-CIO.

State law does not prohibit civil service employees from unionizing, though it does prohibit strikes.

Nor does state law allow civil service employees to participate in partisan politics or to participate in political action committees. But Louisiana Attorney General Opinions have ruled that it is permissible for civil service employees to participate in Committees on Political Education (COPE).

There is no prohibition against the formation of a Positive Action Coalition, Professional Assistance Cooperative, or some other organization with the PAC acronym.

Such a PAC would keep state employees abreast of developments affecting them in both the administration and the legislature. There would be no political endorsements, just ongoing educational bulletins and updates. There would be no membership dues, just voluntary contributions.

But there would be quite a few frustrated, concerned politicians who would think twice before trying to steamroll policies adverse to the welfare of state employees.

And that could only be a good thing.

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Can Jindal be right and all those Fortune 500 corporation CEOs somehow be wrong on the benefits of self-insurance?

Posted in Campaign Contributions, Contract, Contracts, Governor's Office, Health Care, Privatization, Transparency on July 13, 2011| 4 Comments »

Most of what has been written here in recent months about the proposed privatization of the Louisiana Office of Group Benefits (OGB) has been in the nature of political discourse laced with emotional banter.

Such is the nature of the beast when people’s lives are being toyed with by elected and appointed officials insulated in their detached bubble of infallibility—even in the face of growing evidence that their grandiose plans are skewed with false data.

This time, though, Gov. Bobby Jindal may well have overplayed his hand. It’s one thing when the rank and file employees, helpless to fight back, are opposed to his proposed sale of OGB. It’s quite another when you raise the hackles of the state district judges who voted unanimously to approve a resolution in opposition to the sale.

Perhaps it’s time for the State Inspector General, the East Baton Rouge District Attorney, and the Legislative Auditor to begin investigating the very real possibility of the existence of two separate reports by Chaffe & Associates of New Orleans.

That’s the report, in case you don’t recall, that Commissioner of Administration Paul Rainwater and Division of Administration (DOA) attorney Paul Holmes both said on separate occasions was received by DOA on May 25. When Rainwater first balked on his promise to make the report available to legislators, it was subsequently “leaked” to the Baton Rouge Advocate. The only problem with that was the “leaked” report was signed by its authors on June 3—ten days after Rainwater and Holmes said it was received by DOA.

Lending even greater credence to the theory of the existence of two reports is the fact that all documents are date stamped when they are received at DOA. The “leaked” report contained not a single date stamp on any of its 42 pages.

Did the original report, received on May 25, not say what Jindal wanted to hear?

That’s a question for investigators to ask.

In the meantime, DOA and Jindal are moving forward—but oh, so quietly. A second request for proposals (RFP) was issued when the first one fell through after LouisianaVoice broke the story about the administration’s intent to sell the agency that presently carries a $500 million surplus.

That story said that Goldman Sachs was recruited in October of 2010 to help draft the RFP and then was the only company to submit a proposal to conduct a financial analysis of OGB and then market the agency to a private sector buyer. Goldman Sachs subsequently withdrew when negotiations over legal indemnification broke down.

Rainwater and Brady were called before the Senate Retirement and Senate and Governmental Affairs committees. It was before the Retirement Committee that Rainwater said the state would maintain control over OGB because it was not selling the agency despite the first RFP that clearly said otherwise.

Rainwater said the administration was seeking a third party administrator to run the PPO, thus necessitating a second RFP seeking a firm to conduct a financial analysis and find a buyer.

A strange sense of déjà vu set in when it was learned that Goldman Sachs again submitted a proposal, one of three firms to do so. DOA, in that second RFP, said a contractor likely would be named on June 15—nearly a month ago—but as yet, no one has been awarded a contract.

Meanwhile, LouisianaVoice has been doing a little research of its own since the Division of Administration has chosen to operate secretively, in violation of the state’s public records law by ignoring numerous inquiries from us.

Even as Jindal, Rainwater, and Deputy Commissioner of Administration Mark Brady plunge ahead with their privatization plans for the OGB Preferred Provider Organization (PPO), perhaps it is time to take a look at national trends in the health insurance industry, something this administration, like a spoiled child who prefers tantrums as a means of getting its way, has refused to do.

Self-funded health insurance plans continue to grow in popularity in the U.S., according to the Society for Human Resource Management which said that 64 percent of workers in PPOs are in a self-funded plan, compared to those in conventional “fully insured” plans in 2008. That compared to only 5 percent in 1974.

With major incentives that include exemption from state taxes on insurance premiums, the ability to design their own plans, and invest money previously paid as premiums until it is needed to pay health expenses, it’s no wonder that Fortune 500 corporations have long been self-insured.

“The largest insurer in America is not Blue Cross/Blue Shield, but the nation’s employers,” said Jon R. Gabel, associate director of research and statistics at the Health Insurance Association of America. Gabel called the self-insurance trend “a quiet revolution in health care.”

Just who are some of the Fortune 500—and other companies—that have opted for self-insured health plans? Well two dozen of those have contributed $224,000 to Jindal’s political campaign and two have nine contracts with the state totaling $46.4 million.

Here is a partial list with contributions to Jindal in parenthesis:

• Johnson Controls—six contracts totaling $37.4 million;

• CH2M Hill ($8,500), plus three contracts with the state totaling $9 million;

• Pinnacle Entertainment ($8,000);

• Wal-Mart ($24,000);

• Delta Airlines ($1,000);

• Walgreen’s ($5,000);

• U.S. Marine, Inc. ($14,100);

• United Parcel Service ($15,000);

• Eli Lilly & Co. ($18,000);

• Citigroup ($15,000);

• McKesson Pharmaceuticals ($15,000);

• Georgia Pacific ($11,700);

• Hospital Corp. of America ($10,000);

• United Health Care ($10,000);

• Comcast ($3,500);

• Waste Management ($10,000);

• ExxonMobil ($6,330);

• Chevron ($5,000);

• Coca Cola ($5,000);

• Hewlett Packard ($5,000);

• Pepsico ($5,000);

• GMRI Food & Beverage ($2,500);

• Microsoft ($2,500);

• Amgen Pharmaceuticals ($2,000);

• Occidental Chemical ($2,000);

• Target;

• AT&T;

• Bank of America;

• Starbucks.

So, just what is that Jindal, Rainwater, and Brady know that the CEOs of these corporations are not smart enough to know–many of whom had sufficient wisdom to contribute to his campaign and two of whom are apparently intelligent enough to have multiple contracts with the state? That’s the question that the administration should answer, and soon.

Oh, we almost forgot. There was one more Fortune 500 corporation that has chosen to go the self-insured route as the most financially desirable method of providing health insurance for its employees.

The company?

Goldman Sachs.

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Even in fiscal hard times, state cell phones still abound

Posted in Computers, Contract, Contracts on July 11, 2011| Leave a Comment »

BATON ROUGE (CNS)—State agencies paid nearly $3.4 million, an average of more than $282,000 per month for cell phone usage for more than 3,900 state employees during FY-2010, according to public records obtained by LouisianaVoice.

LouisianaVoice initiated the inquiry into state cell phone usage when it was learned that California Gov. Jerry Brown ordered state employees to turn in some 48,000 cell phones.

Only one state agency, Louisiana Tech University in Ruston, was found to have issued no cell phones to university employees, though it did issue four air cards for campus police, three for Rehabilitation Science field engineers for off-campus use, and one for an employee whose job duties require extensive travel.

Louisiana State University in Baton Rouge more than made up for Tech’s lack of communication devices, however.

LSU shelled out more than $492,000 for 688 taxpayer-funded cell phones, Blackberries, Smart Phones, I-Phones, and air cards from June 30, 2009 through May 31, 2010, records show.

One has to wonder how LSU can justify the need for 688 university employees to have cell phones at taxpayer cost.

The $41,038 average monthly cost for LSU cell phones was more than the $40,624 annual costs for the University of Louisiana at Lafayette ($12,920), Grambling State University ($10,859), Southern University New Orleans ($10,797), and Louisiana Tech’s eight air cards ($6,048) combined.

LSU’s monthly cell phone costs also compared with the annual rates of eight other institutions of higher learning: Southeastern Louisiana University ($33,885); Baton Rouge Community College ($32,167); University of New Orleans ($36,733); Southern University ($52,728); McNeese State University ($33,333); Nicholls State University ($27,776), University of Louisiana-Monroe ($57,978) and Northwestern State University ($35,240).

The governor’s office and the Division of Administration (DOA) combined to spend $245,969 for cell phones for 402 employees of the governor’s office (61), DOA (107), the Office of Telecommunications Management (32), the Office of Risk Management (18), and the Office of Group Benefits (6).

DOA, it should be noted, while keeping the same number of phones, cut its cell phone costs by more than $100,000 from Fiscal Year 2010 ($250,000) to FY-2011 ($145,000).

Along with the request on the number and costs of agency cell phones, LouisianaVoice also asked agencies to justify the need for the number of cell phones being used. While most agencies were quick to provide date on numbers and costs of the phones, only a few attempted to justify their usage.

Michael Ferrell of LSU-Shreveport said the university operates a police department that uses cell phones only as part of the university’s emergency notification system. He also said computer maintenance and information technology personnel need the cell phones in case of any technical problems.

Likewise, Louisiana Educational Television Authority (LETA) operates a network of six transmitters on a 24-hour basis, making it essential that LETA be able to contact engineers in the event of transmitter problems, according to Steve Graziano, chief operating officer for Louisiana Public Broadcasting.

Lt. Col. Louis Thompson said the Office of Alcohol and Tobacco Control employees 50 law enforcement agents who are assigned throughout the state and that it is crucial that each agency have access to instant communication.

The lieutenant governor’s office appeared to have the most creative explanation: law enforcement, personal safety, and public welfare—duties more often assigned to the Department of Public Safety than the lieutenant governor’s office.

The issuance of a cell phone in the lieutenant governor’s office apparently would depend on whether or not “the job duties of the individual require the performance of duties that could impact the protection of life and property,” said Julia George Moore, general counsel for the lieutenant governor’s office.

Since the lieutenant governor heads up the Office of Culture, Recreation and Tourism, it’s conceivable that that office would have the responsibility for the safety of tourists during, say, a hurricane. It’s also conceivable that those duties would require 60 cell phones.

Jan Jackson, responding for the Louisiana Community Technical College System, said, “All employees with LCTCS issued mobile devices are expected to be in communication with this office while traveling to our sites around the state and to be available by phone or Blackberry on a 24/7 basis. We conduct a considerable amount of business with our employees remotely by phone or email,” she said. “It is necessary for our employees to travel to our many sites around the state to conduct audits, to troubleshoot IT problems, to manage construction projects, to oversee our adult education and grant programs and to provide assistance and training for our college and grant personnel.”

The University of New Orleans, with 15 cell phones, nevertheless is picky in issuing the devices to personnel. “No department head, dean, vice chancellor or like position has a university-paid cell phone or wireless connection,” said Deborah K. Bridges, director of purchasing for UNO.

Other state agencies, the number of cell phones, Blackberries, Smart Phones, or I-Phones and the annual cost to each of the agencies include:

• Department of Public Safety—865 ($349,080);

• Department of Corrections—304 ($249,842);

• Department of Education—236 ($273,160);

• Department of Revenue—154 ($138,102);

• Department of Transportation & Development—489 (337,435);

• Department of Economic Development—48 ($37,447);

• Treasury Department—56 ($22,016);

• Lieutenant Governor—60 ($54,017);

• Louisiana Public Broadcasting—20 ($15,060);

• Inspector General—2 ($1,534);

• Office of Financial Institutions—16 ($13,769);

• Wildlife & Fisheries—80 (40,000);

• Department of Justice (Attorney General)—71 ($44,815);

• Department of Insurance—20 ($13,559);

• Secretary of State—9 ($3,720);

• Department of Natural Resources—16 ($12,300);

• Department of Agriculture—22 ($13,543);

• Department of Environmental Quality—144 ($56,113);

• Office of Alcohol and Tobacco Control—55 ($48,900);

• State Board of Ethics—4 ($3,244);

• House of Representatives—20 ($12,904);

• State Senate—17 ($16,795).

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ORM TPA downsizes only long time Baton Rouge employee

Posted in Contract, Contracts, Governor's Office, ORM, Office of Risk Management, Transparency on June 30, 2011| Leave a Comment »

Chalk up another casualty to Gov Bobby Jindal’s drive to privatize.

It was one year ago on July 1 that F.A. Richard & Associates (FARA) began its phased-in takeover of the Louisiana Office of Risk Management under a contract whereby the state was to have paid FARA an amount “not to exceed $68,119,710” to assume operations of the agency. Normally, we would round that off to $68.1 million in the interest of brevity but the reason we don’t here will become evident soon enough.

Approximately 10 months later ORM and FARA came before the House Appropriations Committee to explain the Division of Administration’s approval of a contract amendment of $6,811,971, bring the new contract total to “a maximum amount of $74,930,868.

For those adept at math, that equates to precisely 10 percent of the original contract amount. ORM Assistant Director Patti Gonzales, when questioned as to why approval of the Appropriations Committee was not sought for the amendment, informed members that The Office of Contractual Review may approve a one-time amendment of up to 10 percent without committee approval.

That was bad enough, but then Gonzales let slip that it was anticipated that only about $2 million of that $6.8 million amended amount would actually be spent.

Apparently no one on the committee had the presence of mind to ask why the contract would be amended by $6.8 million if only $2 million was to be spent. The answer became apparent a week later when it was learned that FARA had been bought by an Ohio company named Avizent.

Could it be that $6.8 million amendment bolstered FARA’s bottom line sufficiently to make the company more attractive to Avizent?

Better yet, why did ORM Director Bud Thompson and FARA CEO Todd Richard sit in that committee hearing with Gonzales and never open their mouths about the pending sale that had obviously been in the works for weeks, if not months? With another $6.8 million at stake, lawmakers deserved to know that.

A plea of confidential negotiations is a cop-out. By the time of that hearing, the sale was all but final, needing only the extra $6.8 million to sweeten the deal.

Avizent has 35 offices in 25 states but its Baton Rouge office had only one employee at the time of the purchase of FARA.

That employee was Ramsey Horn, a claims adjuster with both adjusting and supervisory experience dating back 19 years to when he was originally employed by ORM in 1992.

On several occasions, Horn informed Avizent’s home office that he needed more personnel in the Baton Rouge office to assist him with the office workload. His pleas went unanswered. On Thursday, one day before the one-year anniversary of FARA’s takeover of ORM, Horn was sacked.

No reason was given for Horn’s being given his walking papers other than the pending merger of FARA with Avizent. In short, his salary, likely higher than those being offered incoming ORM employees, was a distraction the new owners didn’t need. After all, why pay Horn X dollars when he can be replaced by an incoming ORM adjuster at X minus 15 or 20 percent?

Perhaps FARA and/or Avizent were listening when Jindal said state to “do more with less.” Perhaps they wish to carry that philosophy over into the private sector. After all, with two years of frozen salaries, the Jindal administration has certainly made the idea work in the public sector.

With more of ORM’s coverage lines due to be taken over by FARA/Avizent, it would seem there would be a need for more, not fewer, employees to efficiently make the transition.

But, if one adheres to the administration mantra of doing more with less and doing it without salary increases for two consecutive years, perhaps Ramsey Horn was simply expendable.

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Kipper out, Goldman Sachs back, Rainwater breaks word, Chaffe Report says bad deal, & transparency now opaque

Posted in Contract, Contracts, Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Politicians, Privatization, Public Records, Transparency on June 6, 2011| 22 Comments »

BATON ROUGE (CNS)—Paul Rainwater is welshing on a promise, Scott Kipper is out as the CEO of the Office of Group Benefits (OGB), Goldman Sachs is back in the mix, the Chaffe report on the privatization of OGB doesn’t say what the administration wanted to hear, and OGB employees have been placed under a gag order.

LouisianaVoice learned that, in a nutshell, is what has transpired only days after Rainwater promised the Senate and Governmental Affairs Committee on Tuesday that committee member Sen. Karen Carter Peterson (D-New Orleans) would be provided a copy of a report done by Chaffe & Associates of New Orleans.

The most bizarre of a series of bizarre developments in the ongoing saga of Jindal’s efforts to privatize the agency that provides health coverage for more than 250,000 state employees, retirees and dependents is the apparent decision to take Kipper out of the decision-making loop until after adjournment of the current legislative session whereupon he will resign.

Deputy Commissioner of Administration Mark Brady and Kipper became involved in a standoff on Thursday after Kipper defied instructions to go back on Rainwater’s promise to make the Chaffe report available to legislators, according to sources.

The latest developments have prompted immediate reaction from State Sen. D.A. “Butch” Gautreaux (D-Morgan City), chairman of the Senate Retirement Committee.

“I intend to submit a joint resolution in the Senate on Monday or Tuesday urging Gov. Jindal not to privatize the Office of Group Benefits,” Gautreaux said Sunday. He said if the Senate approves his resolution it would go to the House for concurrence.

A resolution, as opposed to an actual bill, has no effect of law. Instead, its purpose would be to display a united front on a particular issue. But Gautreaux said he is also working on other action that might be legally binding.

He said the Senate legal staff is looking into a possible course of legislative action to block efforts by Jindal to sale or privatize OGB. He did not specify what type of action he is planning to block the administration.

Chaffe was awarded a $49,999.99 contract to do its report, apparently in an effort to develop figures in time for Jindal’s proposed state budget that was submitted on March 19. The contract amount was one penny less than the amount that would have required approval by the Office of Contractual Review, giving the appearance that Jindal was attempting to circumvent contract regulations.

Rainwater also assured the committee that the Chaffe report merely “validated” information that the Division of Administration (DOA) already had, thanks to Goldman Sachs, the Wall Street banking firm that assisted in the drafting of the original Request for Proposals (RFP) for a financial analyst to conduct a financial assessment of OGB and to help market the agency to potential buyers.

Rainwater may have fudged a bit in telling the committee during that same hearing that the report contained no significant information. It was learned Friday that the Chaffe report indicated the only advantage to privatizing OGB would be if the buyer retained the entire agency surplus of $500 million.

Some might consider that significant, especially in light that Rainwater first said the surplus would be attractive to a buyer but then denied the agency was for sale. Instead, he said the administration was simply seeking a third party administrator for the agency’s Preferred Provider Operation. He later added that the agency’s HMO, presently administered by Blue Cross/Blue Shield, might be included in the RFP.

Sen. Ed Murray (D-New Orleans) had posed the very scenario contained in the report last Tuesday when he asked why Kipper had not been provided a copy of the report. “What if that report says privatizing Group Benefits is not a good idea?” he asked. Kipper was provided a copy of the report following the hearing.

Rainwater, through Deputy Commissioner of Administration Mark Brady, instructed Kipper two days after Tuesday’s committee meeting to give the Chaffe report to no one, “not even legislators,” according to DOA sources.

Rainwater may have had his change of heart as a result of persistence on the part of LouisianaVoice, which had been refused access to the report on four separate occasions prior to Tuesday. The first three times, Rainwater’s office simply said there was no report. When it became known that DOA received the report on May 25, DOA attorney Paul Holmes responded to a fourth request that the report was exempt from the public records law.

When Rainwater promised the report would be made available to Peterson, however, LouisianaVoice immediately fired off a fifth request for the report under the state’s Public Records Statute.

When Brady instructed Kipper to hold the report back, Kipper balked, saying that Rainwater had made a promise in an open committee meeting. Kipper even offered to resign.

At that, Brady made a brief telephone call, and then informed Kipper that his nomination for confirmation as OGB CEO would be withdrawn and that Kipper would remain on the job until June 24, the day after the current legislative session adjourns at which time he would tender his resignation.

Kipper was appointed to the OGB position on April 15, the same day his predecessor, Tommy Teague, was fired for a “lack of leadership,” according to Rainwater. Teague, in five years at the helm of OGB, had taken the agency from a $60 million deficit to a $500 million surplus.

Rainwater now apparently has found Kipper lacking in leadership, or more accurately perhaps, followship. Kipper previously had worked for the Louisiana Department of Insurance and prior to that, worked for insurance regulatory agencies in several other states.

Kipper will be out of the office Wednesday, Thursday, and Friday on vacation, a fact that further irritated Gautreaux, who said he does not like the timing of Kipper’s trip. “I am concerned and upset about the lack of answers from the administration and I particularly don’t like the idea of Mr. Kipper leaving the state at such a critical time,” he said. The deadline for proposals from financial advisors to conduct a financial assessment of OGB is Monday with selection of the contractor scheduled for June 15.

“I will instruct my staff to attempt to contact Mr. Kipper and have him call me. I want him to answer questions and I will keep attempting to reach him every day,” Gautreaux said.

LouisianaVoice also has learned that Goldman Sachs is back in the picture and is one of four companies which have indicated an interest in submitting proposals on the financial assessment project. The deadline for proposals is Monday with selection and notification of a contract award scheduled for June 15.

When Goldman Sachs, which assisted in drafting the original RFP was subsequently the only one to submit a proposal, Goldman Sachs withdrew after an impasse was reached over the company’s insistence on indemnification against any future litigation.

The proposed privatization has met with opposition from several different fronts. The most significant objection came from the Louisiana District Judges Association which adopted a unanimous resolution in opposition to the privatization at its annual spring judges’ conference in Lafayette on April 7.

Legislators also have received hundreds of phone calls, emails and letters as well, virtually all in opposition to the OGB privatization.

All this comes at a time when the Senate and Governmental Affairs Committee still must make its recommendation on confirmation of Rainwater, Brady, and ostensibly, Kipper to the full Senate. The Senate would then have to approve each of the Jindal appointees by simple majority votes.

Anyone who watched the debacle unfold at the Senate and Governmental Affairs Committee confirmation hearings On May 31 saw the callous manner in which Rainwater allowed Kipper to be hammered by committee members for his evasive answers, most likely at the behest of Rainwater himself. Friday’s action by Rainwater was merely the crowning display of arrogance that seems to have permeated the Jindal administration from the top down.

As bad as that performance was, the beginning of the end for Kipper most probably occurred on May 10. Kipper, testifying before the Senate Insurance Committee, was asked by Sen. Eric LaFleur (D-Ville Platte) how many OGB employees he would cut if OGB was not privatized.

“Let’s assume this RFP doesn’t go anywhere and we’re right back where we are right now, who…how many people would you cut from OGB.”

“If we continue to operate as we do now, there would be no significant cuts,” Kipper responded, visibly upsetting Rainwater seated next to him. “There’s not a lot of excess now,” Kipper said. Rainwater has insisted that the agency needs to cut at least 149 positions.

Now the question must be whether or not Kipper will have the courage to step up to the plate on behalf of his OGB employees, half of whom could lose their jobs if the agency is privatized, and make the contents of the Chaffe report public.

Or will he choose instead to protect his career and sacrifice his integrity by going quietly into the night?

He could refuse to resign and force the administration’s hand. In that event, whatever course of action Rainwater would take almost certainly would prove embarrassing and leave Jindal with egg on his face. In the event Rainwater and Brady end up firing Kipper, what would that say about the administration’s vetting of its choices to run OGB?

Firing two CEOs of OGB within six weeks, all in the middle of attempts to privatize such a large agency would not look good under any circumstances.

It’s a call only Kipper can make.

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