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Here’s how Jindal’s privatization works: OGB fund balance to be broke by fiscal year ’15 after $500M balance in 2012

Posted in Audit Reports, Budget, Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, State Agencies, Transparency on July 17, 2014| 29 Comments »

To probably no one’s surprise except a clueless Gov. Bobby Jindal, the takeover of the Louisiana Office of Group Benefits (OGB) by Blue Cross Blue Shield of Louisiana 18 months ago has failed to produce the $20 million per year in savings to the state.

Quite the contrary, in fact. The OGB fund balance, which was a robust $500 million when BCBS took over as third party administrators (TPA) of the Preferred Provider Organization (PPO) in January of 2013, only 18 months later stands at slightly less than half that amount and could plummet as low as an anemic $5 million a year from now, according to figures provided by the Legislative Fiscal Office.

OGB is one of the main topics to be taken up at today’s meeting of the Joint Legislative Committee on the Budget (JLCB) when it convenes at 9 a.m. at the State Capitol.

OGB is currently spending about $16 million per month more than it is collecting in revenue, said Legislative Fiscal Officer John Carpenter.

The drastic turnaround is predicated on two factors which LouisianaVoice warned about two years ago when the privatization plan was being considered by the administration:

  • Jindal lowered premiums for state employees and retirees. That move was nothing more than a smokescreen, we said at the time, to ease the state’s share of the premium burden as a method to help Jindal balance the state budget. Because the state pays a percentage of the employee/retiree premiums, a rate reduction would also reduce the amount owed by the state, thus freeing up the savings to patch gaping holes in the budget.
  • Because BCBS is a private company, it must return a profit whereas when OGB claims were processed by state employees, profits were not a factor. To realize that profit, premiums must increase or benefits decrease. Since Jindal had already decreased premiums, BCBS necessarily found it necessary to reduce benefits.

That, however, still was not enough and the negative income eroded the fund balance to its present level and now legislators are facing a severe fiscal crisis at OGB.

And make no mistake: this is a man-made crisis and the man is Bobby Jindal.

In a span of only 18 months we have watched his grandiose plans for OGB and the agency’s fund balance dissolve into a sea of red ink like those $250 million sand berms washing away in the Gulf of Mexico in the wake of the disastrous BP spill.

There is no tactful way to say it. This Jindal’s baby; he’s married to it. He was hell bent on privatizing OGB and putting 144 employees on the street for the sake of some hair-brained scheme that managed to go south before he could leave town for whatever future he has planned for himself that almost surely does not, thank goodness, include Louisiana.

So ill-advised and so uninformed was Jindal that he rushed into his privatization plan and now has found it necessary to have the consulting firm Alvarez and Marcel, as part of their $5 million contract to find state savings, to poke around OGB to try and pull the governor’s hand out of the fiscal fire. We can only speculate as to why that was necessary; Jindal, after all, had assured us up front that the privatization would save $20 million a year but now cannot make good on that promise.

In the real world, the elected officials are supposed to be the pros who know that they’re talking about while those of us on the sidelines are mere amateurs who can only complain and criticize. Well, we may be the political novices here, but the results at OGB pretty much speak for themselves and we can rightfully say, “We told you so.”

Are we happy or smug? Hell, no. We have to continue to live here and raise our children here while Jindal will be taking a job with some conservative think tank somewhere inside the D.C. Beltway (he certainly will not be the Republican candidate for president; he isn’t even a blip on the radar and one former state official now residing in Colorado recently said, “No one out here has ever even heard of him.”)

In a five-page letter to JLCB Chairman Rep. Jim Fannin (R-Jonesboro), Carpenter illustrated the rate history of OGB going back to Fiscal Year 2008 when premiums were increased by 6 percent. The increase the following year was 3.7 percent and the remained flat in FY-10. In FY-11, premiums increased 5.6 percent, then 8.1 percent in FY-12 when the system switched from a fiscal year to calendar year. but in FY-13, the year BCBS assumed administrative duties, premiums dropped 7 percent as Jindal attempted to save money from the state’s contributions to plug budget holes. For the current year, premiums decreased 1.8 percent and in FY-15 are scheduled to increase by 5 percent.

OGB Report_July 2014 FOR JLCB

Carpenter said that since FY 13, when BCBS took over the administration of OGB PPO claims, OGB’s administrative costs began to shift to more third party administrator (TPA) costs as the state began paying BCBS $23.50 per OGB member per month. That rate today is $24.50 and will increase to $25.50 in January of 2015, the last year of the BCBS contract.

That computes to more than $60 million per year that the state is paying BCBS to run the agency more efficiently than state employees who were largely responsible for the half-billion-dollar fund balance.

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Alternative fuel tax credit just won’t go away; Tax Appeals Board has 700 appeals pending; potential $2.1 million cost

Posted in Boards, Budget, Governor's Office, House, Senate, Legislature, Legislators, Taxes on July 15, 2014| 4 Comments »

Remember the Ted Mack Amateur Hour on the old DuMont television network?

If not, don’t worry. Now that the administration of Gov. Bobby Jindal is more than six years into its very own amateur show, it’s doubtful that even the most nostalgic among us would prefer watch those old grainy black and white, out of focus shows.

Not when you have this bunch bumbling and stumbling through botched polices in health care, education, environmental matters (remember those $250 million sand berms Jindal insisted on during the BP spill, the ones that washed away before they could even be completed?). And then there have been questionable contracts and one fiscal disaster after another as Jindal attempts each year to patch together the state’s operating budget with Bond-O and duct tape.

Ah, yes, those fiscal snafus.

And now there may be another looming on the horizon though granted, it probably won’t be on the magnitude of a quarter-billion dollar disappearing berm in the Gulf of Mexico or the massive budget cuts inflicted on higher education.

But it could turn into another of those pesky problems that Jindal just does not seem to be capable of handling. He reminds us of actor Chevy Chase, master of the pratfall where he just keeps falling and falling, wrecking everything in his path.

Remember when the alternative fuel tax rebate enacted by the legislature and signed by Jindal in 2009 went into effect two years ago this month?

When the bill was passed and signed as Act 469 of 2009, it was to give tax credits to purchasers of vehicles which used alternative fuels such as propane, butane and electricity and was projected to cost the state $900,000 over five years.

But then the flex fuel vehicles began hitting the market, catching everyone unprepared for the onslaught of buyers seeking the tax credits and the cost suddenly mushroomed to $100 million. When the true impact of the new law became apparent, Jindal immediately rescinded the act but not before 5,456 returns had been received by the Department of Revenue claiming total tax credits of a tad north of $18 million. Senate President John Alario (R-Westwego), who owns a tax preparation service, filed stacks of applications on behalf of his clients—without, of course, informing the administration of the financial consequences.

Another senator alerted Alario to the potential problem—after purchasing a vehicle and claiming his own tax credit—but neither informed Jindal. And neither did Rep. Jim Fannin (R-Jonesboro), chairman of the House Appropriations Committee—not even after he had filed for the $3,000 tax credit on each of the two vehicles he purchased.

The administration, in finally awakening from its apparent slumber and during one of the few days Jindal was vacationing in Louisiana, voided the law and announced that any new car buyer who had already submitted his or her application to the state would receive the maximum allowable tax credit up to $3,000 but subsequent purchasers would not be eligible.

And therein lies the problem.

The Louisiana Board of Tax Appeals, an independent quasi-judicial entity comprised of three attorneys who are tax law experts who must decide on the merits of appeals, currently has 700 appeals from car buyers who were denied the tax credit.

If all 700 applicants were to be approved for the $3,000 tax credit, the state would be on the hook for $2.1 million.

The next scheduled meeting of the board is in August, though the date was not available because the board’s web page has not been updated since 2013.

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Generous retirement benefit boost slipped into bill for State Police Col. Mike Edmonson on last day of legislative session

Posted in Ethics, Exemptions, Incentives, Governor's Office, House, Senate, Legislature, Legislators, Retirement, State Police, Transparency on July 11, 2014| 7 Comments »

He is on the cover of Gov. Bobby Jindal’s ghost-written book Leadership and Crisis. In case you don’t remember that very forgettable book, it’s the one purportedly written by Jindal but in reality, hastily slapped together by Hoover Institute flak Peter Schweizer.

You’ve seen him standing solemnly (never smiling) in the background at virtually each of those rare Jindal press conferences as well as during the governor’s staccato briefings whenever he pretended to exhibit leadership, usually during a hurricane or oil spill.

One of those events may have even been when the governor pitched his ill-fated state pension reform legislation a couple of years ago that, had it succeeded, would have slashed retirement income for thousands of state employees—by as much as 85 percent for some.

But the next time you see Louisiana State Police Commander Mike Edmonson, you may see a trace of a smile crack that grim veneer.

That’s because a special amendment to an obscure Senate bill, passed on the last day of the recent legislative session, will put an additional $30,000 per year in Edmonson’s pocket upon retirement.

Talk about irony.

SB 294, signed into law by Jindal as Act 859, was authored by Sen. Jean-Paul J. Morrell (D-New Orleans) and appeared to deal with procedures for formal, written complaints made against police officers.

There was nothing in the wording of the original bill that would attract undue attention.

Until, that is, the bill turned up in Conference Committee at the end of the session so that an agreement between the different versions adopted in the House and Senate could be worked out. At least that was the way it appeared.

Conference Committee members included Sens. Morrell, Neil Riser (R-Columbia) and Mike Walsworth (R-West Monroe), and Rep. Jeff Arnold (D-New Orleans), Walt Leger, III (D-New Orleans) and Bryan Adams (R-Gretna).

That’s when Amendment No. 4 popped up—for which Edmonson should be eternally grateful:

http://www.legis.la.gov/legis/ViewDocument.aspx?d=911551&n=Conference

Basically, in layman’s language, the amendment simply means that Edmonson may revoke his “irrevocable” decision to enter DROP, thus allowing his retirement to be calculated on his higher salary and at the same time allow him to add years of service and longevity pay.

The end result will be an increase in his annual retirement benefit of about $30,000—at the expense of the Louisiana State Police Retirement System and Louisiana taxpayers.

The higher benefit will be paid each month over his lifetime and to any beneficiary that he may name.

Edmonson makes $134,000 per year and has some 34 years of service with the Department of Public Safety.

The Actuarial Services Department of the Office of the Legislative Auditor calculated in its fiscal notes that the amendment would cost the state an additional $300,000 as a result of the increased retirement benefits.

In the Senate, only Karen Carter Peterson (D-New Orleans) voted against the bill while Sen. Jody Amedee (R-Gonzales) did not vote.

Over on the House side, there were a few more dissenting votes: Reps. Stuart Bishop (R-Lafayette), Raymond Garofalo, Jr. (R-Chalmette), Brett Geymann (R-Lake Charles), Hunter Greene (R-Baton Rouge), John Guinn (R-Jennings), Dalton Honoré (D-Baton Rouge), Katrina Jackson (D-Monroe), Barbara Norton (D-Shreveport), Kevin Pearson (R-Slidell), Eric Ponti (R-Baton Rouge), Jerome Richard (I-Thibodaux), Joel Robideaux (R-Lafayette), John Schroder (R-Covington), and Jeff Thompson (R-Bossier City).

The remaining 127 (37 senators and 90 representatives) can probably be forgiven for voting in favor of what, on the surface, appeared to be a completely routine bill, particularly if they did not read Conference Committee amendments carefully—and with the session grinding down to its final hours, there was the usual mad scramble to wrap up all the loose ends.

Here’s what the bill looked like when originally submitted by Morrell and before the Conference Committee members slipped in the special favor for Edmonson:

http://www.legis.la.gov/legis/ViewDocument.aspx?d=878045&n=SB294 Original

But while the sneaky manner in which this matter was rammed through at the 11th hour is bad enough, it is especially so given the fact that numerous bills have been brought before the House and Senate retirement committees in the past few years which would have allowed a revocation of a DROP decision and without exception, each request has been rejected.

“This was done in Conference Committee and was done on an obscure bill with obscure references to old acts in hopes that the conferees would never have to answer any questions about why this was done,” said one observer.

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The news just keeps getting worse for Supt. of Ed. John White; State Auditor investigating possible payroll fraud

Posted in Audit Reports, Auditor, BESE, Contract, Contracts, Education, Governor's Office, Legislature, Legislators on June 30, 2014| 14 Comments »

The news just keeps getting worse for Superintendent of Education John White.

Gov. Bobby Jindal has put White on a short leash with Executive Order BJ 2014-7 on June 18 and last Wednesday (June 25) Internal Audit Administrator Marsha Guidry issued an extensive laundry list of documents information relating to the Department of Education’s (DOE) contract with Data Recognition Corp.

At the same time, LouisianaVoice has learned the Legislative Auditor’s office is conducting an investigation of DOE that could involve payroll fraud, according to sources inside the department.

White, as we have reported several times in the past, has loaded up the department with unclassified appointments at bloated six-figure salaries.

There are apparently three major problems with that:

  • Many of these appointees seldom, if ever, show up for work and apparently are required to perform few, if any, duties to earn their keep;
  • The department did not have enough money in its budget to pay their salaries so they are reportedly being paid from federal funds earmarked for specific purposes;
  • The appointees are not assigned to areas for which the federal funds are allocated.

If true, these are serious allegations and even more serious violations that could prompt a federal probe in addition to the investigation already underway by the Legislative Auditor.

Of course, no one really knows who works where at DOE because no one has ever managed to obtain an organization chart for the department.

Oh, the Legislative Auditor, among others, has tried but with each request over the past couple of years now, the response has always been that the department is “undergoing reorganization.”

So, no organization chart and no determination of who works where in DOE.

And now, on top of that sticky wicket, up crops the controversy over Common Core and the testing by Partnership for Assessment of Readiness for Colleges and Careers (PARCC).

Short version: Jindal, White and the Board of Elementary and Secondary Education (BESE) back Common Core and legislation is introduced for state implementation of Common Core.

But then, somewhere along Jindal’s way to the White House, someone whispered in his ear that path of least resistance to the Oval Office would be for him to oppose Common Core on grounds that he didn’t want the big bad old federal government dictating how we teach our kids in Louisiana. He may even have waved a little American flag when he said it.

But White and BESE continue to back Common Core and the legislature passes it.

Jindal vetoed it but White and BESE said they were going ahead with it, and Jindal jumped onto his Nautilus Nitro Plus workout station to prepare for battle. He announced he was canceling the contract for the testing because, he said, DOE had issued the contract without taking competitive bids.

And now, the Office of Contractual Review (OCR) is reviewing the contracts.

Meanwhile, Guidry sent this letter to White:

Executive Order BJ 2014-7, issued June 18, 2014, directed the Division of Administration (DOA) “to conduct a comprehensive accounting of all Louisiana expenditures and resources related to PARCC.”  Pursuant to the Executive Order (EO) and the auditing authority of DOA over consulting contracts, I have been asked by the Commissioner to collect and review certain information.  Please provide the following information to carry out the EO to ensure DOE is complying with Louisiana law.

 Please identify and provide documentation for the following:

 1.      All documentation related to contracts with DRC or other testing or academic assessment tools, including both paid and outstanding invoices.

2.      Please provide an accounting of the cost of the PARCC Technology Readiness Tool survey, the method and documentation related to the procurement of this survey, and documentation of the funds used to pay for it, including all receipts and accounting paperwork.

a.       Please provide information related to the price of PARCC assessments as a total cost to the State of Louisiana and as an individual cost of each assessment to be provided in the State of Louisiana. This should include:  any cost information related to an increase or decrease in cost as a function of the number of states withdrawing from PARCC or other reasons.

3.      Please provide documentation related to negotiations on the price of any new assessment tool(s) including any negotiations or communications related to the cost of individual assessments, the total cost to the State of Louisiana of new assessments, or any breakdown of the cost negotiated or discussed by or with DOE. This should include communications conducted in writing (emails, letters, and memos) as well as any meeting minutes and calendar entries.

a.       Please also provide documentation of how DOE’s negotiations met the statutory requirement for the lowest-cost bidder, for a competitive procurement process, and the statutory authority of DOE to conduct such negotiations.

4.         Please provide evidence of DOE’s process to ensure during any Request for Proposal (RFP) conducted by PARCC or by a member state on behalf of PARCC that such RFP was a fair, competitive, price-sensitive proposal and was conducted using a fair, transparent process in accordance with Louisiana revised statutes. Please provide all files relative to these procurements.

5.         Please provide evidence that John White affirmed in writing to the Governing Board Chair of PARCC the State’s continued commitment to participation in the Consortium and to the binding commitments made by John White’s predecessor as Chief State School Officer as required by the Memorandum of Understanding establishing the PARCC Consortium.

 In addition to providing the above documentation, please provide a written response to each of the following questions:

a.       What contracts or other agreements are in place or in negotiation for the purchase of an assessment?  Please provide a list of these along with copies of all related documentation.

b.      What steps have been taken by DOE to procure any Common Core aligned assessment product?

c.       What steps have been taken by PARCC to procure any Common Core aligned assessment product?

Please provide these items by June 30, 2014. I may identify other documents or information necessary to complete this review and request your cooperation pursuant to the Executive Order.  Please identify any additional individuals within DOE who will be available to respond to any questions I may have during the course of the review.

 The documentation requested should be delivered to the Office of the Commissioner to my attention at 1201 N. Third Street, Baton Rouge, LA, 70802, Suite 7-210, on the 7th floor of the Claiborne Building.

http://www.myarklamiss.com/story/d/story/division-outlines-next-steps-in-doe-contract-revie/34643/LOilN9i14EaHl0wQ9zrGuA

You will note that White was given until today (Monday, June 30) to provide the information.

The problem with the governor’s request, as LouisianaVoice, Crazy Crawfish and others have learned, is that Jindal may not have followed proper procedure in seeking the information.

You see, when we ask for information, we are required to ask for specific documents, not simply information.

In fact, both DOE and the Division of Administration (DOA) have in the past simply refused to comply with our requests with the stock response that we requested information as opposed to specific records and therefore, both DOE and DOA felt comfortable informing us (somewhat condescendingly, we might add) that they were not required under the state public records act to respond.

Now if White only had the stones to tell DOA and Jindal that, we might yet have that epic Niles-Sheldon grudge match on Pay per View.

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Brouhaha in Baton Rouge over Common Core, aka Sheldon vs. Niles, could rival Rumble in the Jungle, Thrilla in Manila

Posted in BESE, Contract, Contracts, Courts, Education, Governor's Office, Lawsuits, Public Records on June 28, 2014| 6 Comments »

There’s a new fight brewing between Gov. Bobby Jindal and Chas Roemer over the simmering Common Core standoff between the governor’s office and the Board of Elementary and Secondary Education (BESE).

And if it were done right, it would be a memorable encounter. Sadly, it shapes up to be just another faceoff between lawyers.

BESE will consider retaining a special legal counsel in its efforts move forward with the Common Core test plans, according to BESE’s revised agenda released on Friday.

http://theadvocate.com/home/9577083-125/possible-legal-action-on-revised

Such a legal battle would pit BESE against the governor’s office after Jindal issued an executive order to discontinue Common Core tests being prepared by the Partnership for the Assessment of Readiness for College and Careers (PARCC).

Jindal, in his best imitation of John Kerry, was for Common Core before he was against it and now sniffs he will never let that big bully, aka Washington, D.C., dictate to Louisiana which, by golly, will devise and administer its own tests. That prompted former State Superintendent of Education Paul Pastorek (before he was shoved out the door by Jindal who wanted current Superintendent John White who he now opposes on the Common Core issue) to rebuke his former boss when he proclaimed that the feds have nothing to do with setting Common Core standards. That point remains debatable.

Got that? Didn’t think so. Neither do we.

Jindal ordered BESE (an independently elected, autonomous board, by the way) to initiate a competitive bid process for a new assessment process so the state can come up with its own academic standards. He also suspended a contract between the Louisiana Department of Education (DOE) and PARCC.

In a real test of wills, Jindal’s office also has demanded that DOE produce volumes of test-related documents by Monday.

We at LouisianaVoice can offer our own experience with that seemingly innocuous request for public records.

On Monday, June 23, I submitted a request for “all itemized invoices and records of payments” to a DOE vendor. What I got in return was simply a list of payments. No invoices at all, let alone itemized invoices.

My patience already stretched to the breaking point with recurring delays by DOE on other public records requests, I snapped. I sent White a second demand which said, in part:

“The information you provided me is insufficient. I specifically requested itemized invoices from (vendor name). The vendor history you provided me does not list what the charges were for nor the dates incurred.

“I want every specific invoice submitted with itemized listing of what each and every expenditure was for, i.e. supplies, utilities, rent, salaries, travel, etc.

“John White, I don’t know what kind of game you are playing but I know you possess (or at least should possess) sufficient intelligence to know what I asked for and that what your office provided does not come close to a sufficient response. What do you think the term “itemized invoice” below (highlighted) implies? What part of “itemized invoice” don’t you understand?

“If you want to play games, we will let a judge be the referee. I am weary of your stalling, delaying, and playing ignorant. You have until noon Friday or you will be served with a lawsuit Monday. Itemized invoices, John,….ITEMIZED.“

I received a call around noon Friday informing me the requested documents were ready for our inspection.

The revised agenda released by BESE includes an executive session but Roemer says that may not be necessary. “I anticipate there may be given potential legal questions and that is why the executive session must be on the agenda,” he said.

It could be Jimmy Faircloth vs. ATBA (attorney to be announced) if it comes down to a fight between proxies—as it probably would.

But wouldn’t it be better if we just put Jindal and Roemer in a ring together and let them duke it out?

That would be an epic battle worthy of Sheldon of The Big Bang Theory vs. Niles of Frasier.

Forget about the Rumble in the Jungle (Muhammad Ali vs. George Foreman) or the Thrilla in Manila (Ali vs. Joe Frazier). Those were just preliminary bouts for what would truly be a battle of the ages.

Jindal vs. Roemer. Sheldon vs. Niles. Collision in the Classroom. Clown Clash. Common Core Conflagration. Capital City Smack Down. Brouhaha in Baton Rouge. Call it what you will, that’s something Louisianians would pay top dollar to watch.

No matter what you would call it, if it could be arranged, I would take whatever steps necessary to obtain the legal rights to telecast the bout over statewide closed circuit television or Pay Per View.

We’ll hype it as Brawl on the Bayou.

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