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Archive for the ‘Governor’s Office’ Category

It’s one thing when a news reporter encounters resistance from a state agency in obtaining public records. It’s quite another when the legislative auditor’s office cannot get its hands on crucial documents when conducting an audit of that agency.

Yet, that’s precisely what happened with the “most ethical, most transparent administration” when state auditors tried to examine the Discretionary Incentive Programs of the Louisiana Department of Economic Development (LED).

The audit report focused on three discretionary incentive programs of LED: Mega Project Development (Mega Fund), Rapid Response Fund (RRF), and the Economic Development Award Program (EDAP)/Economic Development Loan Program (EDLOP).

The Mega Fund is a special fund created to fund large-scale economic development projects to secure the creation or retention of jobs.

The RRF is also a special fund created within the State Treasury for the immediate funding of economic development projects that may be necessary to secure the creation or retention of jobs. RRF project funding requires the approval of the governor and the LED.

EDAP’s purpose is to finance publicly-owned infrastructure for business development projects that require state assistance. EDLOP is a program that provides loans for site and/or infrastructure improvements for projects. Its purpose is to assist in financing privately-owned property and improvements to promote economic development.

The audit report did not cite any financial irregularities, but five pages into the report the problem of obtaining needed documents from LED was addressed.

“R.S. 24:513(I) states that the legislative auditor’s authority to audit extends to all documents, records, and files, whether confidential or otherwise,” the report said. “However, throughout the audit, LED resisted fulfilling some of our document requests and never gave us complete, unfettered access to all documentation. For example, LED reviewed files for all three programs before allowing us to see them. For RRF and Mega Fund files, LED would not provide some of its internal analyses used in decision-making processes concerning whether to offer awards to specific businesses.”

Auditors said two meetings were held with LED Secretary Stephen Moret. In addition, the legislative auditor sent two letters requesting unfettered access to records. “However, LED cited workload issues and legal concerns in not wanting to provide us with documents,” the report said. While unfettered access to records was never granted, LED eventually provided auditors with specific documents but only in response to specific questions on each objective, a practice auditors said limited the effectiveness of their audit. “For example, problems with programs may exist at LED that we were not able to identify because of lack of access to information in files. Also, we cannot know to what extent documentation furnished us may have been compromised or is incomplete,” auditors said in their report. “In addition, these access problems also affect the efficiency of our work as the audit took longer than planned.

“According to state law (R.S. 24:513), LED should furnish all documents and files requested by the legislative auditor. LED officials should work to ensure that LED provides requested information in a timely manner when requested by the legislative auditor,” the report said.

Moret, the $320,000-a-year LED secretary, said in his response to the report that requested information should be provided but he did so with a caveat: “LED agrees that it should provide requested information, including documents and files, in a timely manner when requested by the legislative auditor in accordance with state law, including…constitutional separation of powers, and lawful privileges, as recognized in Kyle v. Louisiana Public Service Commission (LPSC).”

In that case the Public Service Commission withheld documents from state auditors in 2003 until documents could be reviewed “to determine whether or not they contained privileged communications,” Moret said. “This action taken by the commission’s counsel was reasonable, and probably required. Our review of the cases leaves no doubt that the LPSC has the right to assert both the attorney-client and the deliberative process privileges to prevent access to its records.”

Moret added that LED “acted per state law in providing requested information to the legislative auditor for this audit, and made it a priority to provide information to the legislative auditor as quickly as possible. Specifically, LED worked diligently to provide the legislative auditor with files on over 40 EDAP/EDLOP, Mega Fund, and Rapid Response projects identified as part of the audit.

“In summary,” Moret said, “the legislative auditor had access to all pertinent LED documents and a detailed body of publicly available information for the projects included in its audit. LED worked to ensure that the files were made available to the audit team in a timely manner,” he said.

The furor might well mean little were it not for Gov. Bobby Jindal’s repeated insistence at fundraisers throughout the U.S. that he has created the most transparent administration in the nation and that he has strengthened the state’s ethics laws.

The otherwise obscure controversy might give one pause to wonder what it is the administration does not want the legislative auditor—or the public—to know. How sensitive can economic development efforts really be, after all?

In fact, the LED web page touts what it considers to be three major reasons for an industry or business to relocate to Louisiana and one of those is that the state is “First in ethics disclosure laws.”

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He insists he has the job he wants.

He insists he does not plan to run for president in 2012, though he has not mentioned the vice presidency or even the U.S. Senate.

There is no Democratic opposition anywhere on the horizon to his re-election to the governor’s office next fall. Republican State Treasurer John Kennedy, though, is sounding more and more like a candidate with each passing day.

Part of the reason for the lack of opposition is the massive war chest Jindal has at his disposal. To date, he has $9 million and counting.

Running for governor of Louisiana is not cheap. In 2007, some $26 million was spent by three candidates with Jindal accounting for $11 million of that.

So perhaps that is the reason that Jindal has been traveling all over the country to attend fundraisers instead of staying in Baton Rouge and focusing his attention to the looming $1.6 billion deficit facing the state.

Campaign expenses, as any political observer knows, long ago removed government policy decisions from the best interests of the rank and file citizenry to the New York corporate boardrooms of oil and pharmaceutical companies and Wall Street bankers.

The office of the governor of Louisiana, sadly, is no exception. It’s for sale just like any other political office.

For proof of that, one need only look at the correlation between contributions to the Supriya Jindal Foundation for Louisiana’s Children and fat state contracts.

While the motives of Jindal’s wife may well be above reproach, any corporate CEO worth his bonus can readily see the advantage of making a generous contribution to the foundation. Take Northrop Grumman, for example. Northrop Grumman made a generous contribution of $10,000 to the foundation. Was it coincidence that Northrop Grumman soon received a three-year, $11.4 million contract with the Department of Social Services to provide support services for the statewide software network.

Blue Cross/Blue Shield of Louisiana got an even better return on its investment of $100,000. Blue Cross/Blue Shield subsequently was awarded a $400 million contract to provide health coverage for state employees and retirees in a bidding process that attracted the attention of a Baton Rouge judge.

Humana had held the contract and promptly filed suit, saying that the contract awarded Blue Cross/Blue Shield was not what was bid on. Mike Caldwell, a judge in the 19th Judicial District, agreed and ordered the state re-bid the contract.

AT&T also reaped benefits from its contribution, getting several contracts for providing cellular phone service for state-issued cell phones and for telecommunication services for the state’s land line system.

All these factors make campaigning for office a high-stakes game and leaves politicians beholden to their benefactors. And that runs up the costs of running for office. That, in turn, leaves small contributors out of the loop when it comes to policy making. It certainly gives credence to the old but bitter joke about having the best government money can buy.

Just last week, Jindal was out of state once more to attend yet more fundraisers.

Attempts by Louisiana Voice to obtain travel records for Jindal during 2010 were at first ignored for nearly two months. Emails to Jindal spokesman Kyle Plotkin went unanswered. Finally, earlier this month, the governor’s office responded that it did not keep records on campaign travel costs. Those records are kept by Jindal’s campaign, his office said.

The only problem with that response is financial records were never a part of the request–not that they won’t be at some point in the future. But this time, the only thing being sought was the number of days the governor spent on travel. Those records have yet to be made available.

So much for his claims of having the most-open, most-ethical administration in Louisiana history. So much for his claims of strengthening the state’s political ethics.

The latest fundraisers, in Dallas and Houston, are part of a continuing trend of out-of-state fundraising by the governor that has left some clearly dissatisfied with Jindal’s repeated absences from the state. It might even appear that some of the luster has faded from the Jindal image of boy wunderkind.

One person, responding to the latest soiree into another state to raise campaign funds, said, “I can’t wait to learn who is running against him so I know who I am voting for.”

Said another: “So nice that Texans care so much about Louisiana to donate.”

A third asked the rhetorical question, “Who knew Texans cared who is our governor? Here’s an idea: they can have him.”

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Gov. Bobby Jindal’s Privatization Express keeps rolling along. This time he has set his sights on one of the most financially stable state agencies, the Office of Group Benefits (OGB).

One has to wonder however, if his motivation is really in a more efficient, more streamlined state government or does he perhaps have an eye on OGB’s $552 million surplus as a means of making himself look like a financial genius by using the money to plug one-third of the looming $1.6 billion deficit.

A couple of coups like that, coupled with the recent dramatic upturn in the price of a barrel of oil, which always enriches the State Treasury, and Jindal the Boy Wonder would take on the aura of financial wizard and (he hopes) give his presidential aspirations a needed boost with the national media other than Fox, Rush Limbaugh, and the Washington Times, who already adore him to the point of nausea.

The deadline to respond to a Request for Proposals (RFP) for the services of “a qualified financial adviser” preparatory to the private takeover of OGB is Monday with finalist interviews scheduled to take place a week later, on March 14, according to DOA’s Feb. 4 RFP.

The financial adviser to be selected will be charged with assessing the market value of the tangible and/or intangible assets of OBG and to negotiate for and on behalf of OGB to help the agency “explore alternative methods of providing health coverage through contracts” with a private administrator, the RFP said.

In March of 2010, it was announced that the Office of Risk Management would be taken over in phases by F.A. Richard and Associates (FARA) of Mandeville at a cost to the state of $68 million. The Worker’s Compensation section was transferred to FARA last July and the last sections are scheduled for transfer by July of 2013.

Proposals were received for the privatization of the state’s Buildings and Grounds Department but each of those proposals were ultimately rejected.

There appears to be more opposition to the privatization of OGB because of its financial stability and its low (4 percent) administrative costs. State Sen. Butch Gautreaux (D-Morgan City) has gone on record as opposing the privatization of OGB.

“I am very concerned about the governor’s efforts to sell off OGB,” Gautreaux said. “I sit on the (OGB) board and attend the meetings. We’ve developed a reserve of over $500 million and again the governor is looking at raiding those funds for short term and recurring expenses. This will be a catastrophic move,” he said.

OGB presently maintains a self-insured and self-administered health and accident benefit plan (PPO plan) with its own network of contracted providers. OGB also has a contract with Blue Cross/Blue Shield of Louisiana to administer a self-insured HMO plan and United HealthCare administers a self-insured consumer-directed (high deductible) health plan with a health savings account. Vantage Health Plan is also contracted with OGB for a pilot program to provide a fully-insured medical home HMO plan in the northeast region of the state, the RFP says.

In addition, the LSU System, through an interagency agreement with OGB, administers a separate consumer-directed health plan with a health reimbursement account available to employees and retirees of LSU and the Louisiana Legislature.

The RFP also stipulates that the financial adviser provide recommendations to OGB for contracting in light of the assessment and negotiations and will also assist in the drafting and final execution of any contract resulting from the assessment and negotiations. The financial adviser who is ultimately chosen will also be called upon to provide testimony before any committee of the legislature conducting hearings on the proposed privatization.

Those submitting proposals will be required to have a minimum of 10 years experience in the valuation and sale of entities in the health insurance market with enterprise values exceeding $150 million, the RFP said.

OGB ended Fiscal Year 2009-2010 with total assets of $552 million, including $529.5 million in cash and $22.5 million in premium receivables, according to the RFP. Such a financial windfall would be tantamount to a Jindal slush fund.

If OGB is ultimately privatized, the state would enter into a contract with an administrator much as it did with FARA for the ORM privatization. The state would pay the amount stipulated in the winning proposal and in return the administration would have access to the $552 million surplus, ostensibly to help plug an anticipated $1.6 billion budget deficit.

Like the proposals for privatization, when that RFP is issued, the proposals by financial advisers submitting proposals would be graded on a point basis. In the case of the financial advisers, a 1,000-point system will be employed with service approach and coordination strategy having a potential maximum of 350 points. The highest possible score for qualifications and experience of the proposer will be 300. The qualifications and experience of assigned staff carries a maximum possible score of 200 and cost of services 150 points.

No timetable has been set for the issuance of an RFP for the actual privatization of OGB.

The agency has more than 450 employees who could be affected by the privatization through the loss or interruption of retirement and their own health benefits.

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Could it be mere coincidence that the word privatize sounds a lot like privateer?

Remember the clamor to privatize Social Security? Advocates wanted Americans to be allowed to control their own retirement money by investing it in the stock market. To many, it seemed like a good idea at the time.

Fortunately, calmer heads prevailed and all the privatization rhetoric quieted, its disappearance pretty much coinciding with the collapse of several Wall Street investment banking firms and the subsequent trillion-dollar congressional bailout. Millions of Americans saw their 401k funds evaporate. Suddenly, social security privatization didn’t seem like such a hot idea.

Despite that, Gov. Bobby Jindal espouses what he considers a panacea to the state’s fiscal woes: privatization. Even if state property must be sold and the fate of thousands of state workers, along with their retirement and health benefits, are thrown into jeopardy, privatize. In that regard, he is in lock-step with Republican governors all over the U.S.

The answer to every fiscal ill that beleaguers the state is privatization, according to Jindal. Sometimes privatization can even extend into the already private sector, especially if state help for private enterprise through Jindal’s economic development air program happens to benefit campaign contributors.

LaShip, owned by Gary Chouest, was the direct beneficiary of Jindal’s $10 million investment in state funds for expansions to the Port of Terrebonne in 2008. Chouest, his businesses, which also include Chouest Offshore and C-Logistics, and his family members made a minimum of 18 campaign contributions to Jindal totaling $85,000. The funds came from a $1.1 billion state surplus. Ironic, given that the state today is faced with a $1.6 billion deficit.

Then, of course, there is the infamous chicken plant in Union Parish.

When Pilgrim’s Pride decided to close its plant in Farmerville, Jindal scurried to find a buyer for Pilgrim founder Lonnie “Bo” Pilgrim. California-based Foster Farms eventually purchased the plant after the state put up $50 million. Lonnie Pilgrim and Foster Farms both contributed generously to Jindal’s campaign.

Anyone who has followed Jindal should not be surprised. More than 200 key Jindal appointees combined to contribute more than $784,000 to his campaign.

Coincidence, says Jindal Press Secretary Kyle Plotkin who added that those contributors supported Jindal’s plans for reforming Louisiana and for improving the state’s image.

Nor does Jindal consider his repeal of the Stelly Plan in 2008 to be detrimental to the state’s financial well-being even though experts said the action would create a $350 million revenue loss in the first year, 2009. The Stelly Plan was approved by a majority of Louisiana voters but Jindal repealed it, saying his action would save single income tax filers as much as $500 a year and joint filers $1,000. That sounded great until one peeled back the layers and found that the $500 savings would be realized only by single filers making as much as $90,000 a year and to save $1,000, joint filers would have to make more than $150,000 per year.

Louisiana’s median household income was $43,635 in 2010.

It was little more than a year ago, in January 2010, that then-Commissioner of Administration Angelé Davis released the highlights of the administration’s “streamlining measures implementation plan.” Among those highlights were a 10 percent reduction in the numbers of cars in the state’s automobile fleet, sale of unneeded state property, better contractor oversight, and the establishment of a “Privatization and Outsourcing Unit” within the Division of Administration (DOA) “to serve as a resource for all departments and agencies for identifying and implementing appropriate privatization and outsourcing initiatives.”

To that end, the report said a Request for Proposals (RFP) had already been issued by the Office of Risk Management (ORM) “to evaluate the potential cost savings and/or service improvements with outsourcing the claims management and loss prevention services for all lines of coverage to a private company.”

The privatization of ORM was, in fact, accomplished when Mandeville-based F.A. Richard and Associates (FARA) was awarded the contract to take over operations of the agency, beginning with its Workers Compensation unit. The phased-in takeover is scheduled to be complete in 2013 at a cost of $68 million under terms of FARA’s contract with the state.

Proposals were taken on the privatization of at least one other agency but none of the proposals were attractive enough to gain administration approval.

No matter. Even without waiting to see if the privatization of ORM proves to be a wise move, Jindal is plunging ahead in his efforts to privatize other agencies, including state prison facilities, the Office of Group Benefits (OGB), and, if you watch what’s been going on with charter schools, public education.

As was the case of ORM, the privatization of any state agency would require the concurrence of the State Legislature. With recent party switches by several legislatures, Jindal now enjoys a Republican majority in both the House and Senate.

Privatization has already been tried once with less than satisfactory results.

OGB, beginning on July 1, 2003 offered state employees the option of selecting a Managed Care Option (MCO) administered by FARA, the same firm that is in the process of taking over ORM. A state audit later revealed that FARA was paid $8.6 million more than its $20 million limit, a 43 percent cost overrun.

OGB has since terminated its contract with FARA.

State Sen. Butch Gautreaux (D-Morgan City) has gone on record as opposing the privatization of OGB.

“I am very concerned about the governor’s efforts to sell off OGB,” Gautreaux said in an email. “I sit on the (OGB) board and attend the meetings. We’ve developed a reserve of over $500 million and again the governor is looking at raiding those funds for short term and recurring expenses. This will be a catastrophic move,” he said.

The privatization of state prisons also is also a matter of concern.

DOA recently published a request for information on the privatization of state correctional facilities in Allen and Winn parishes. Both facilities, while state-owned, are presently managed by private firms from Nashville, TN., and Boca Raton, FL.

Figures obtained from DOA show that it presently costs the state about $17.5 million per year to pay the two firms to operate the facilities in Allen and Winn. Avoyelles Correctional Center, which was built from the same architectural plans as those in Winn and Allen and which is state-operated, presently costs about $26 million per year.

The obvious questions then become how can a private company in business to make a profit do so without charging a higher per diem and how can the private companies operate Winn and Allen at one-third less cost than the state spends to run Avoyelles?

Simply put, the private firms pay their employees much less than the state pays its corrections officers. That alone is a major cause for concern among employees of facilities run by the state that might be privatized sometime down the road.

Private firms also offer less in the way of rehabilitation and educational programs. Basically, they operate on the concept of lock and feed. Moreover, because the prisoners will still be the state’s responsibility, the state would continue to bear the cost of prisoners’ medical care. Tough-on-crime types might question the need of rehabilitation and educational programs, being of the “lock-‘em-up-and-throw-away-the-key mindset but medical care can’t be denied.

That might be good for the hard-liners but that philosophy wouldn’t seem to do much to discourage repeat offenders and that flies in the face of Jindal’s highly-touted press release a couple of weeks ago when he boasted that the state’s recidivism rate for first- and second-year prisoners dropped by 33 percent under his administration. It’s the moral equivalent of Jindal’s having his cake and eating it, too.
Privatization necessarily goes against the grain of his stated objective of assimilating prisoners back into society through education and occupational training. He can’t privatize and expect lower recidivism rates, too.

Projecting the current rate of $31.51 per-day per-prisoner now paid parish sheriffs to house state prisoners over the 20-year contract sought by the Department of Public Safety and Corrections, the state would pay a private firm upwards of $700 million. Jindal appears ready to trade that obligation for $66 million in up-front cash sought from the sale of the Allen and Winn facilities.

That $700 million is roughly the same amount the state would pay if it continued to pay the two private firms to operate the facilities. But at least the state would still own the facilities.

But there remains one other factor to toss into the equation that no one has talked about.

While the state is paying $31.51 per day to house its prisoners in the local jails, the federal government is paying upwards of $50 per day to house illegal immigrants.

Given the choice of earning an extra $18.49 per day, a 58.7 percent bump, a lot of sheriffs will opt for the economic consideration of tossing out the state prisoners in favor of dealing with the feds. Where would that leave the state if it has no facilities of its own?

There’s no reason to think that a private firm, once it purchases the state facilities, would not do the same thing when its contract with the state comes up for renewal and the state would have no choice but to acquiesce.

Jindal has also mentioned the possibility of selling several state buildings—buildings that, ironically, were constructed less than a decade ago in an effort to get state offices out of paying rent on privately-owned office space—and of drawing on future State Lottery proceeds.

That would put the state in the position of paying for the buildings twice—all for the sake of obtaining one-time revenue for recurring expenses, according to House Appropriations Committee Chairman Jim Fannin (D-Jonesboro). “We would still have to pay off the mortgage on the buildings while we paid rent to the new owners,” he said.

Privatization has become Jindal’s addiction and he is acting like a desperate street junkie willing to do just about anything to get a quick fix.

And as with the case of all addicts, that can be a dead-end street.

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Louisiana Voice/Capitol News Service has made three separate formal public records requests of the “most transparent administration in Louisiana history” and so far, not a peep has been received in response. Only silence.

Nothing.

Nada.

Zilch.

The most ethical administration ever has been strangely quiet when asked to give an accounting of its own actions.

We requested documentation of the number of days Gov. Bobby Jindal was out of the state during calendar year 2010. We even went so far as to stipulate the purposes for his extended absences for him: campaign appearances for fellow Republicans, fund raisers for his own re-election campaign, and promotional appearances to hawk his self-serving book, Leadership and Crisis, the autobiography that he hopes will catapult him into the U.S. presidency. Or not.

We can only assume the Louisiana public records law, R.S. 44:1 applies to the governor’s office. After all, the definition of a “public body” is clearly spelled out in the statute as “any branch, department, office, agency, board, commission, district, governing authority, political subdivision, or any committee, subcommittee, advisory board, or task force thereof, or any other instrumentality of state, parish, or municipal government, including a public or quasi-public nonprofit corporation designated as an entity to perform a governmental or proprietary function.”

The definition also includes “all books, records, writings, accounts, letters and letter books, maps, drawings, photographs, cards, tapes, recordings, memoranda, and papers, and all copies, duplicates, photographs, including microfilm, or other reproductions thereof, or any other documentary materials, regardless of physical form or characteristics, including information contained in electronic data processing equipment, having been used, being in use, or prepared, possessed, or retained for use in the conduct, transaction, or performance of any business, transaction, work, duty, or function which was conducted, transacted, or performed by or under the authority of the constitution or laws of this state, or by or under the authority of any ordinance, regulation, mandate, or order of any public body or concerning the receipt or payment of any money received or paid by or under the authority of the constitution or the laws of this state, are ‘public records’, except as otherwise provided in this Chapter or the Constitution of Louisiana.”

The statute does exempt “any documentary material of a security feature of a public body’s electronic data processing system, information technology system, telecommunications network, or electronic security system, including hardware or software security, password, or security procedure, process, configuration, software, and code.”

“To be ‘public,’ the record must have been used, prepared, possessed, or retained for use in connection with a function performed under authority of the Louisiana Constitution, a state law, or an ordinance, regulation, mandate, or order of a public body,” according to the Public Affairs Research Council (PAR). “This definition covers virtually every kind of record kept by a state or local governmental body,” PAR says.

We thought perhaps we did not meet the criteria to request the records or maybe our request was for the wrong reasons. But, it turns out, we qualify on all counts. “In Louisiana, any person at least 18 years of age may inspect, copy, reproduce, or obtain a copy of any public record. La. R.S. 44:32. The purpose for the document request is immaterial, and an agency or record custodian may not inquire as to the reason,” PAR adds.

To be completely fair, we know these things take time.

We only began our requests in January, after all.

But wait. It turns out that the statute also covers that, or in current parlance, there’s an app for that. If the public record being requested is available, “it must be given to you immediately” and if it is not available, the custodian of the public record “must let you know this in writing.” And if it is not deemed to be a public record, the custodian “must respond within three business days,” according to PAR.

Maybe Jindal’s office simply did not receive our request. But wait! That can’t be because with the first request we submitted, we also asked for the number of state-issued cell phones assigned to the governor’s office and that information was provided.

Well, then, the only other logical explanation for the most transparent, most ethical administration in Louisiana history to not produce the requested records is we waited too long and the records possibly have been shredded or deleted.

Oops. It turns out the statute also covers that contingency. Public records “must be kept for at least three years,” it says.

What to do?

PAR says if five or more business days pass from the time the written records request was made and there is no response, one should contact the Attorney General’s office or the local district attorney, or both. Another option is to retain an attorney and sue the custodian and the public body.

“Custodians (or their public body) who violate the law may have to pay legal fines, damages, and the suing person’s legal fees,” PAR said, adding, “Custodians who violate the law also may be required to serve time in prison.”

Oh, well. Maybe the custodian will be sent to one of the governor’s privatized prisons. No rehabilitation programs. No educational courses. Just lock and feed.

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