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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.

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“The two largest prison companies, Corrections Corporation of America (CCA) and GEO Group (formerly Wackenhut), are poised to strike, in what Judith Greene, director of Justice Strategies calls, ‘an unprecedented’ expansion of the use of private prisons that no other state has undertaken.”

–Donald Cohen, founder and executive director of In the Public Interest, a national resource center on privatization and responsible contracting.

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So far Gov. Bobby Jindal, flush from his re-election last fall, has chosen two pro-business groups to announce sweeping reform efforts for his second term, unveiling his education reform at the annual meeting of the Louisiana Association of Business and Industry and proposed state employee pension plan changes to the Baton Rouge Rotary Club.

Selecting friendly venues for major announcements seems to be the preferred method for Jindal who wisely eschewed teachers groups and state employee gatherings to unveil his agenda. Louisiana Public Service Commission (PCS) Chairman Foster Campbell observed that had he revealed his proposed pension program to state employees, “they’d have booed him out of the room.”

And while he has yet to address state corrections, you can be certain he has state prison privatization squarely in his crosshairs. All those private prison companies did not contribute to his election campaign just for the fun of it.

Only last Wednesday, the Florida Senate Budget Committee, at the urging of Jindal’s fellow Republican Gov. Rick Scott, passed a bill to privatize 29 South Florida prisons—to turn them over to for-profit companies that would be required to produce cost cuts of 7 percent below the cost of state-run facilities.

But there’s a more ominous undercurrent to that bill that gives the Florida governor far-reaching powers to expand privatization to other agencies. Under the latest proposals, an agency would not have to report its privatization of a program until after a contract is signed. The bill also will eliminate the legal requirement to perform a cost-benefit analysis before privatizing any governmental function.

Doing away with the cost-benefit analysis reveals in no uncertain terms just how little concern Scott and his allies have about real savings. Don’t for a minute think that Jindal is not in constant contact with Scott on that particular nuance. After all, Jindal did travel to Florida to campaign for Scott’s election. And don’t for one minute think that Jindal is concerned about savings or of the welfare of state employees. It’s all about money—campaign money.

Jindal’s second effort at privatization is a certainty but it is nevertheless worthwhile to take a look at the dollars and cents of privatizing prisons.

Of the 50 states, Louisiana sits alone at the top with the highest prison incarceration rate in the nation at 858 per 100,000. Mississippi is second at 749 per 100,000.

In absolute numbers, Louisiana ranked 11th in the nation in actual prison population in 2007 (37,341) even though the state was 25th in population. Those numbers likely have only increased in the past five years. From 1990 to 2004, Louisiana’s prison population nearly doubled, increasing by 98.6 percent, from 18,600 to 36,900, federal records show.

The U.S., with more than two million prisoners, ranks highest in the world, nearly half-a-million more than number-two China. The U.S. also has the highest per capita number of prisoners with 715 per 100,000. Russia is a distant second with 584 prisoners per 100,000 population.

So, if the U.S. has the highest rate of imprisonment in the world and Louisiana has the highest rate in the U.S. that gives Louisiana the highest rate of imprisonment in the world.

So, what does all this mean in the terms of costs to house, feed and care for all these prisoners? That, after all, would appear on the surface to be the consideration uppermost in Jindal’s mind: saving the state beaucoup money.

In August of 2011, the Vera Institute of Justice, with offices in Washington, D.C., New Orleans and New York City, conducted a survey to determine the total cost of prisons in fiscal year 2010. Thirty-nine of the 50 states responded to the survey which provided some rather interesting figures. That cost is computed on the basis of what the state spends over and above the amounts budgeted for prisons. The additional costs include, but are not limited to, pension liabilities, medical care, inmate education and training, capital construction, legal and administrative costs.

Louisiana had a per prisoner cost of $17,486 in 2010 ($47.91 per day), fourth lowest of the 39 responding states. By comparison, Kentucky’s annual cost per prisoner was $14,603 and Alabama’s was $17,285.

Louisiana’s annual cost per prisoner paled in comparison to several other states. Florida ($20,553), Georgia ($21,039), Texas ($21,390, Missouri ($22,350), Arkansas ($24,391), Arizona ($24,895), Ohio ($25,814), and North Carolina ($29,965) all had higher annual per-prisoner costs.

But five other states’ annual costs per prisoner really soared. Illinois had an annual per-prisoner cost of $38,268, followed by Pennsylvania ($42,339), California ($47,421), New Jersey ($54,865) and New York ($60,076), nearly three-and-one-half higher than Louisiana’s.

The one statistic that Jindal is almost certain to roll out when he makes his inevitable push to privatize Louisiana’s prisons will be the cost per taxpayer. So, let’s take a look at those numbers as well.

Of the 39 responding states, 21 did in fact have lower costs than Louisiana’s per-taxpayer cost of $698.40 per annum, putting the state almost squarely in the middle of the pack. In North Dakota, for example, the per-taxpayer cost was a paltry $58.10. Others, like Oklahoma ($453.40), Alabama ($462.50) and Missouri ($680.50) were closer to Louisiana’s figures.

But then there are states like Arizona ($1,003.60), Georgia ($1,129.90), North Carolina ($1,204.70), Michigan ($1,268), Ohio ($1,315.50), New Jersey ($1,416.70), Illinois ($1,743.20), Pennsylvania ($2,044.30), Florida ($2,082.50), Texas ($3,306.40), New York ($3,558.70), and California ($7,932.40).

Let those last few numbers sink in: Florida’s annual per-taxpayer cost of housing and caring for prisoners is three times Louisiana’s cost. The yearly per-taxpayer rate for Texas is 4.7 times Louisiana’s rate and New York’s rate is five times Louisiana’s per-taxpayer rate. And then there is California where the per-taxpayer rate of $7,932.40 per year is a whopping 11.3 times that of Louisiana.

So, just how will Jindal sell his economic plan for prisons when so many states have both higher per-prisoner and per-taxpayer costs associated with housing, feeding and caring for prisoners?

That should be the number-one question for anyone to ask of Jindal who by now is so caught up in his own brilliance as to think himself infallible. How do you propose to save money when the state’s costs are already a mere fraction of many other states? It’s a question that demands an answer.

The answer, of course, is for the private companies to cut costs by slashing salaries and benefits, reducing the number of guards and taking a page from the charter school playbook: take only the best of the crop (best being a relative term).

A betting man could make a few bucks by making a wager that sick prisoners requiring expensive medical care and violent prisoners requiring tighter security (read: more guards) will not be taken by the private operators. Those will be left to the state’s care. Bet on it.

Below are the rankings in terms of per-prisoner cost and per-taxpayer cost for the 39 responding states:

ANNUAL PER PRISONER COST (BY STATE)
Kentucky $14,603
Indiana $14,823
Alabama $17,285
Louisiana $17,486
Kansas $18,207
Oklahoma $18,467
Idaho $19,545
Florida $20,553
Nevada $20,656
Georgia $21,039
Texas $21,390
Missouri $22,350
Arkansas $24,391
Arizona $24,895
Virginia $25,129
Ohio $25,814
West Virginia $26,498
Michigan $28,117
Utah $29,349
North Carolina $29,965
Montana $30,227
Iowa $32,925
Delaware $32,967
New Hampshire $34,080
Nebraska $35,950
Wisconsin $37,994
Illinois $38,268
Maryland $38,383
North Dakota $39,271
Minnesota $41,364
Pennsylvania $42,339
California $47,421
Rhode Island $49,133
Vermont $49,502
Connecticut $50,262
Washington State $51,775
New Jersey $54,865
Maine $56,269
New York $60,076

ANNUAL PER TAXPAYER COST (BY STATE)

North Dakota $56.20
Montana $76.00
New Hampshire $80.30
Vermont $111.30
Maine $132.90
Idaho $144.70
Kansas $158.20
Nebraska $163.30
West Virginia $169.20
Rhode Island $172.10
Utah $186.00
Delaware $215.20
Iowa $276.00
Nevada $282.90
Kentucky $311.70
Arkansas $326.10
Minnesota $395.30
Oklahoma $453.40
Alabama $462.50
Indiana $569.50
Missouri $680.50
Louisiana $698.40
Virginia $748.60
Maryland $836.20
Washington State $838.40
Wisconsin $874.40
Connecticut $929.40
Arizona $1,003.60
Georgia $1,129.90
North Carolina $1,204.70
Michigan $1,268.00
Ohio $1,315.50
New Jersey $1,416.70
Illinois $1,743.20
Pennsylvania $2,055.30
Florida $2,082.50
Texas $3,306.40
New York $3,558.70
California $7,932.40

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“The idea that creating ‘competition’ for low performing schools (that in fact are serving high poverty communities) will somehow force improvement is wrong. It has not been shown to work anywhere in this country. Such a scheme is based on the assumption that low performance is caused by lazy or incompetent teachers and administrators. The reason for low performance is, to paraphrase Carville; It’s the poverty, stupid!”

–Michael Deshotels, executive director of the Louisiana Association of Educators, commenting on Gov. Jindal’s education reform proposals.

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A politically astute friend who shall remain nameless has been quick to challenge last week’s suggestion that Gov. Bobby Jindal may have lost his Midas touch. He described, in so many words, the notion that Jindal’s luck may have been pushed to the breaking point as about as realistic as Newt Gingrich’s chances of capturing the GOP presidential nomination.

“Don’t believe it,” our friend, longtime political observer, cautioned. “The governor got exactly what he wanted with the committee assignments in the House and Senate. Those (who) dared criticize him in the past have been removed from the money committees and banished to Labor or cultural Affairs and other backwater committees.”

Strong words indeed. But he wasn’t finished. “He has a hand-picked Education Committee in both chambers to do his bidding, not to mention the rubber-stamp BESE. And speaking of education, the governor finally announced his agenda for the 2012 session.”

He went on to say of that education plan released by Jindal on Jan. 17 that if people read it carefully and also read between the lines, they will understand that it is nothing more than a blueprint “to destroy public education in Louisiana.”

“If he can pull off even half of what he is proposing for education, it will be the most sweeping changes in the history of public education in Louisiana,” he said. Note that he never said that he thinks the plan is good.

“Teachers are going to be furious,” he said. His (Jindal’s) strategy to drive a wedge between superintendents, principals and school boards is ingenious. Divide and conquer!

“I’m not sure the public will see this plan for what it is: to destroy public education in this state and replace (it) with state-controlled charter schools and the like. I am not in favor of that but I’d say he has set himself up for a lot of success.

“The main problem is the teachers unions are their own worst enemies and I’m not sure they understand what approach they need to take to counteract the governor. If they set themselves up as simply opposed to any change just to be opposed to change, the governor will eat them alive. The public realizes that the education system is broken and they want change. Jindal will use that to get what he wants.”

Never one to be labeled as a one-trick pony, our friend dug the knife in a little deeper with his observations about the flare-up between Jindal, aka Booby Jihad, and Attorney General Buddy Caldwell, a flare-up that sputtered and died a quick death once Caldwell got a quick lesson in political realities.

Caldwell had earlier had the temerity to challenge Jindal’s decision to pay attorneys representing the state in the BP Gulf spill litigation a percentage of any recovery as opposed to an hourly rate favored by Caldwell.

Caldwell, supposedly the state’s top legal expert (excluding judges, who always have the final say), accused Jindal of interfering with his (Caldwell’s) handling of the case. Jindal further outraged Caldwell by signing off on a legal document in which Jindal agreed not to appeal any awards made for legal fees, and Caldwell, who doubles as a part time Elvis impersonator, said so.

You’ll just have to forgive us here, but Jindal thought Caldwell’s Suspicious Mind was Too Much and got All Shook Up. The governor, through an intermediary, sent Caldwell the message that it was all about the Money Honey and by the time it was over, Caldwell was singing Don’t Be Cruel.

Okay, that’s enough of that. In reality, our friend said, “Caldwell forgot a fundamental rule of politics: he who pays the fiddler calls the dance. Caldwell (and most of the other statewide elected officials) thinks he can do what he wants because is independently elected. But he forgot that the governor controls the purse strings (read: agency budget allocations). Oops!’”

Pension Plan Changes Proposed

On Wednesday of this week, Jindal released his plan to overhaul Louisiana’s state employee pension system that would increase retirement contributions for about 54,000 current employees while reducing benefits and extending the eligible retirement age for many of them.

Jindal also wants to move away from the present system for new hires, doing away with the monthly pension check to a lump sum retirement payment based on contributions and earnings. This would abolish the present defined benefits system in favor of a defined contribution one whereby employees no longer would be guaranteed a set monthly retirement payment but instead would make a guaranteed contribution to the pension system with no guarantee of return, much like a 401K program.

Oddly, Jindal’s proposal would apply only to the Louisiana State Employees Retirement System (LASERS), which has an unfunded liability of $6.45 billion. He exempts the state’s other three systems—teachers, school employees and state police. The Teachers Retirement System alone has a debt of $10.8 billion.

He said he prefers to leave teachers and school employees alone for the time being because of proposed educational changes on the horizon.

He said legislation will be pre-filed this week for consideration during the upcoming 85-day legislative session that opens on March 12.

Education Fight Looms

In his press conference last week, Jindal chose to unveil his education plans at the annual meeting of the Louisiana Association of Business and Industry (LABI), a virtual slap in the face to teachers, the group that he should have been addressing. But a virtual slap is probably appropriate considering his penchant for charter schools and virtual schools.

Just what is a virtual school anyway? Does it provide a virtual education? Do graduates get virtual jobs? Do they pay virtual taxes and give virtual campaign contributions?

Jindal, as is his custom, continues to paint all teachers with the same broad brush, a tactic that is patently unfair and grossly inaccurate. He talks about failing schools and poor teachers and giving students—the better students, to be sure—into better schools (read: charters).

To say a student fails because of a poor teacher is not only callous, but stupid. For example, in a class of say, 25 students, there are 23 students from poor economic backgrounds. Still, six of these students excel in classroom work and make top grades. Nineteen make Cs, Ds, and Fs. This same scenario is repeated throughout the school so the school is a failing school and the teachers are labeled as poor teachers and fired under Jindal’s plan.

But how does one explain those six students in that class who excel? Did they make top grades without the benefit of good teaching? No, Mr. Jindal, they did not, any more than the nineteen did poorly because of bad teaching. All 25 students were exposed to the same classroom material, had access to the same textbooks and took the same tests.

In my own school, Ruston High School, I sat in the same classroom with students who slept during class, never turned in homework assignments, never participated in classroom discussions, and consistently made D’s and F’s on tests. I also sat in the same classroom with Joel Tellinghusen who would go on to pioneer laser surgery, and Bill Higgs who would one day become an acclaimed heart surgeon in Mobile, Alabama. A couple of years ahead of me was Patricia Wells who would go on to a stellar career as a soprano with the Metropolitan Opera.

So, were the teachers at Ruston High School graded on the basis of those who did poorly or on the basis of the Joel Tellinghusens, Bill Higgs and Pat Wells? We will never know because that absurd method of grading schools wasn’t around then. They just let teachers teach. Wow. What a concept.

When kids come from poor economic backgrounds and parents take little or no interest in the children’s educational progress, kids generally reflect those demographics with poor grades. Motivated students listen to teachers, read assignments, do homework, and do well on tests. Period.

Yet, we have an outfit called Educate Now in this state that lists schools in New Orleans only by whether or not they are Recovery School District (RSD) schools or voucher-accepting private schools. The organization then lists the percentage of students who score above basic on English and math in grades 3-5.

That’s it. There is no attempt to take into account students’ prior achievement, no consideration of demographic variables like economic background, and no consideration of whether or not students are eligible for vouchers only if they had been attending a failing public school.

In short, there is no statistical analysis whatsoever—a pitiful method of judging the merit of voucher schools.

“The governor wants the new untested teacher evaluation program to form the basis for firing or demoting large numbers of teachers based on student test scores,” said Michael Deshotels, a retired educator.

“Never have I seen such a misguided and wrong-headed attempt to implement change in our educational system as was announced by Gov. Jindal on Tuesday,” he said. “If you study the governor’s proposals you can only come to the conclusion that he believes that the teaching profession in Louisiana is rife with incompetent or lazy teachers and administrators, and that if we simply fire and replace them our students will magically start doing much better on the state tests. Almost everything in the governor’s plan is based on this incorrect assumption,” he said.

Ron Clark, a teacher who started his own academy in Atlanta, had an interesting perspective on teaching and so-called failing schools: “It’s usually the best teachers who are giving the lowest grades because they are raising expectations. The truth is, a lot of times it’s the bad teachers who give the easiest grades because they know by giving good grades everyone will leave them alone. Parents will say, ‘My child has a great teacher! He made all A’s this year’ and the teacher (parents) are complaining about is actually the one that is providing the best education.”

The problem with Jindal’s plan for education, says Deshotels, is that “it is based upon an untested value-added model similar to one that is already failing in Tennessee and New York. In Louisiana the two chief architects of the new value-added model have resigned from their roles in the program, passing this potential monster on to other staff,” he added.

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