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Archive for the ‘Privatization’ Category

WikiLeaks reveals Jindal’s ambitious plans for second term

Posted in Campaign Contributions, Charters, Contract, Contracts, Economy, Exemptions, Incentives, Governor's Office, Higher Education, House, Senate, Layoffs, Legislature, Legislators, Privatization, Supriya Jinda Foundation, Taxes on April 1, 2011| 10 Comments »

Gov. Bobby Jindal has outlined an ambitious program for his second term of office, including the privatization of the Louisiana Legislature, state colleges and universities, the sale of all state roads and highways and bridges to private concerns, and rapid expansion of the state’s charter school system, all to be controlled by private entities.

His plans for the state, which he calls the “Piyush Push,” were revealed by WikiLeaks which published a series of emails between Jindal and corporate campaign supporters who have contributed millions of dollars to Jindal’s wife’s charity, the Supriya Jindal Foundation for Louisiana’s Children. Upon learning of the WikiLeaks report, the governor called a press conference to explain his programs.

The privatization plan calls for the takeover of the Louisiana Legislature by a corporate board made up of the CEOs of Louisiana’s larger corporations and Wall Street bankers, including AT&T and Goldman Sachs.

The operating boards of state colleges and universities would be merged into a single governing board with board members serving at Jindal’s pleasure. An obscure clause in his plan would allow him to retain control of appointments even after he leaves office. The so-called super board would be comprised of major contributors who would purchase stock shares in the universities. Board members would be allowed to send their elementary- and high school-age children and grandchildren to state charter schools.

“We are not going to raise taxes on the people of Louisiana,” Jindal said at the hastily called press conference attended only by reporters from the Baton Rouge Business Report. “We are going to run these universities like a business. Tuition will be adjusted to a level comparable to that of our nation’s finest institutions, the Ivy League schools, of which I am an alumnus. The board members will not draw per diem or salaries for their services but we anticipate they will profit from their sacrifice and hard work through stock ownership and lucrative stock options in the universities,” the governor said.

“Again, I want to reiterate that we are not going to increase taxes but the new owners of state roads, highways, and bridges will certainly be free to charge a modest usage fee for travel on their byways and bridges,” Jindal said. “People who drive cars should understand that use of roads and bridges is a privilege, not a right and that a usage fee is not the same as a tax; it’s a fee. We believe that these usage fees will offset the need for any increase in gasoline taxes.”

As for the future of the legislature, Jindal said it will be downsized from the current membership of 144 to 12 white males who will inherit all current campaign contributions remaining and accruing to the 144 outgoing legislators. The only way an African-American would be appointed would be in the event of a class action lawsuit by representatives of minority groups. “It almost worked with the Board of Regents,” the governor said in defending his legislative plan.

A few legislators voiced reservations with the manner in which Jindal is moving to privatize their institution, but after having gone along with the governor in other privatization endeavors, most indicated they would not resist the new austerity moves by the governor. Nor was there any immediate indication that legislators would attempt to invoke the separation of powers doctrine under which the legislature has heretofore been largely independent of the governor’s office.

Sen. Carl Spackler of Bushwood, however, was one who vowed he will not vote in favor of privatization of the legislature. “I believe the legislative branch of government is protected in the Constitution somewhere and I’m going to read up on that,” Spackler said. “If I’m correct, I’m not going to sit still for him putting me out of a job. Who does Jindal think we are, state employees? I worked hard for my GED.”

But Jindal was emphatic about pushing for complete passage of his austerity package, saying there would be no compromise. “I want to emphasize that these moves are in keeping with my ‘more is less’ philosophy for all government,” he said. “For those who may question these actions, I would say to them, ‘Quit whining and work smarter.”

Neither is Jindal considering an increase in tobacco taxes. “Smoking is a private decision, an individual right, and smokers should not be penalized for exercising that right,” he said. “We are, however, imposing a significant surcharge for abortions to encourage the notion that life is sacred and women should not make such decisions too lightly. Again, I want to emphasize this is not a tax.”

He said he is also planning to sharply reduce the number of state employees. One example of his layoff plan would require every Louisiana citizen who is unwilling or unable to complete the process on-line to appear at a central location in Baton Rouge, Shreveport, Monroe, New Orleans, Alexandria, Lafayette, or Lake Charles for driver’s license applications and license renewals. “I don’t see why we can’t get by in each office with one or two persons,” he said. “How difficult can it be to issue a driver’s license?”

He also announced plans to double the size and the salaries of the state’s Homeland Security Office while at the same time saying he would cut staff at state hospitals to a single physician and nurse per specialty at each facility. “I believe with fewer doctors, people will find a way to stay healthier,” Jindal said.

“Again, I want to say we are not going to raise taxes,” he said. “That is not an option. We are, however, going to raise the annual deductible on medical care to $12,500 per year, increase co-payments to $50, and at the same time, we’re asking state workers to kick in another 75 percent on employee premiums on health care coverage and retirement benefits.”

Jindal used the press conference to take yet another swipe at big government in general and President Obama in particular. “The bloated federal government should take a look at Louisiana and say, “That’s how things should be done,” he said. “We’re proving in our open and transparent administration that our ethics are above reproach and we’re wiping out our deficit with good, open and honest government,” he said as the CEOs of AT&T, Northrop Grumman, Worley Catastrophe Response, and Blue Cross/Blue Shield stood behind him.

“I would once again call upon the Obama administration to repeal its drilling moratorium in the Gulf of Mexico so that our oil companies can make a decent living,” Jindal said.

Jindal said he would sell all public schools to private entities so that they could be converted to charter schools. He said the move would be a model of efficiency for the rest of the nation. “I believe the 25 percent loss in Detroit’s population over the past decade, for example, could be reversed simply by converting to my proposed system for Louisiana schools,” he said.

“I fully anticipate there will be a bidding war for acquisition of schools as public finance will guarantee a solid return for investors,” Jindal said. “Of course my administration will invest the funds derived from the sale so that cash flow will support scholarships to the schools or such other General Fund needs as might arise in the budget balancing process.”

He said those children unable to take advantage of the improved educational opportunities will be housed in dormitories near the Nucor Steel Mill in St. James Parish, the Tournament Players Club golf course in Jefferson Parish, and the Foster Farms chicken processing plant in Union Parish. “There, they will be given hands-on training to meet the plants’ needs,” he said. “If all else fails, they would certainly be qualified to become slag haulers, caddies at state-run golf clubs, or chicken pluckers.”

To insure that the schools will succeed and will demonstrate high test scores, students will be carefully pre-screened before being accepted for enrollment, Jindal said. The schools will be run by boards comprised of members selected by the owners. Owners and board members, along with the college and university Super Board members, will be given first choice of the available seats in the school for their children, as will those of select employees.

“I am fully aware that all this will require Constitutional amendments but I fully expect the voters of Louisiana to continue to support our programs. But just in case, beginning here and now, I am stepping up my schedule of visiting churches to garner popular support for my proposals. Beginning Sunday and continuing through Election Day, I will be visiting churches all over north Louisiana. My agenda will consist of three things: Sunday morning and Sunday evening services as well as Wednesday night prayer meetings.”

And that’s the way it is on Friday, April 1, 2011.

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Would Jindal outsource his mom’s job? Not a chance!

Posted in Campaign Contributions, Civil Service, Education, Governor's Office, Higher Education, Layoffs, ORM, Office of Risk Management, Privatization, Retirement, Transparency on March 29, 2011| 3 Comments »

If Gov. Bobby Jindal is serious about his suggestion that state employees “do more with less,” he has an excellent opportunity to lead by example: he could ask his mom to step down from her state job.

The governor has been up front with his plans to outsource state agencies, thereby forcing employees of those agencies to retire (if eligible), seek other employment, or hope to catch on with the private sector company taking over the state agency.

The lucky ones get to retire. But many—some of whom have 20 years or more with the state—are still too young to retire and thus must scramble for a new job in a depressed market where jobs are scarce and when filled at all, go to much younger applicants. Don’t believe for a nano-second that there is no age discrimination.

Those are the ones who are truly caught up in the classic Catch-22 scenario.

When F.A. Richard and Associates (FARA) took over the Office of Risk Management (ORM) last July, its contract stipulated that it take all ORM employees for at least one year. There is nothing in place to protect the state employees after that 12-month period. The privatization of ORM, by the way, was supposed to save the state $50 million over five years but FARA already is asking that its $68 million contract be amended by $7 million, to $75 million.

Jindal also is seeking to privatize state prisons and the Office of Group Benefits (OGB) but as yet has said nothing about outsourcing the Louisiana Workforce Commission (formerly the Louisiana Department of Labor).

Perhaps that is because that is where his mother is employed.

Perhaps not, but a $45,000 per year state employee being outsourced (read: laid off) has to smart just a tad when doing a cursory web page search (link), clicks on “Louisiana State Payroll” on the top menu bar, and then types in “Jindal” in the box “Search by Name,” only to find that Gov. Jindal is paid $130,000 per year to campaign for out-of-state candidates, attend fundraisers for himself, and to promote his book—all while ostensibly serving as the governor of Louisiana.

The resentment must really smolder when the name Raj G. Jindal appears beneath that of the governor. Raj G. Jindal is the governor’s mother and she pulls down a cool $117,915 per year as an Information Technology (IT) Director 3 in charge of workforce support and training. We assume she is a valuable, capable employee. But that’s not the point here. It’s the perception, stupid (with apologies to Bill Clinton).

One might think the governor, as a show of good faith, would ask his mom, an employee of 30-plus years and certainly eligible for retirement, to lead by example, and step down to benefit someone who really needed a job. Even if she were not eligible for retirement benefits, what a PR move it could be for the governor.

One might think so. After all, should she opt for retirement, her retirement income in excess of $90,000 would be more than double that of the average salary of state employees still working full time ($44,338).

But then Gov. Jindal has never been one to display an excessive amount of compassion for state employees. Quite the opposite would, in fact, seem to be the case. He just doesn’t care. He has shown that in his actions time and again, from privatization, to behind-the-scenes efforts a year ago to dismantle the state Department of Civil Service and the Civil Service Board.

He showed it when he gutted the state’s ethics laws, all the while spouting his oft-repeated mantra in campaign appearances in other states that his is the most transparent, most ethical administration in Louisiana history.

He showed his disdain for minorities in the manner in which he replaced a white member of the Board of Regents for Higher Education with an African-American, all the while claiming the move had nothing to do with a lawsuit brought by Southern University students challenging the makeup of the previously all-white board. Yeah, right.

At least that move was pretty transparent.

He has shown nothing but contempt for public school teachers in the way his administration is hell-bent on destroying public education in favor of charter (read for-profit) schools. He must be very proud of the Recovery School District.

No, it’s not very likely that Raj G. Jindal will be asked to lead by example by doing “more with less.”

It’s just not in our governor’s makeup.

Instead, the governor will in all likelihood fall back on another line he uttered just before departing for yet another out-of-state campaign appearance last fall: “Quit whining.”

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Before privatizing, consider the real motives–political and economic–and the financial repercussions

Posted in Governor's Office, OGB, Office of Group Benefits, ORM, Office of Risk Management, Prison, Privatization, Transparency on March 27, 2011| 3 Comments »

When considering the motives behind the sudden push by Gov. Bobby Jindal to privatize so many facets of state government, one must pause and ask one simple question: if private industry can accomplish what the state has been doing for decades and do it more efficiently and at less cost, why are so many for-profit companies falling all over themselves to win the contracts?

The answer is just as simple. They see ways to make enormous profits.

If the math doesn’t work for you, you’re not alone.

But a March 17 story in Bloomberg Businessweek (click here for story) may have helped to bring into the focus the reasoning behind private industry’s salivating over running such state agencies as Group Benefits, Risk Management, state prisons, and even the state’s public education system.

A story by Bob Sloan, (click here for article) posted on the web on March 26, also shed light on the machinations of private industry’s involvement in prison administration. Neither story paints a pretty picture.

But first, some background.

The argument could be made that only one company submitted a bid on the twofold contract to serve as a financial assessment expert to assess the value of the Office of Group Benefits (OGB) and to secure a private sector buyer for the agency that is presently sitting on a $500 million surplus, about $300 of which would go to the new purchaser with the remainder going to the state’s General Fund.

That’s true enough but then Wall Street banking firm Goldman Sachs helped to write the specifications for the state request for proposals (RFP) on the contract and was subsequently the only bidder on the $6 million project, it raised more than a few eyebrows.

That was enough to get the attention of the Legislative Auditor’s office, which promptly dispatched a team of auditors to OGB to look into that arrangement as well as the issuance of a $49,999.99 contract to Chaffe Associates of New Orleans to work up some preliminary assessment figures for Jindal in time for his presentation of his proposed budget for the coming fiscal year.

The Chaffe contract was exactly one penny less than the amount that would have required approval of the Office of Contractual Review. To date, Chaffe has not presented any studies nor has it billed the state for any services.

The Office of Risk Management was privatized effective last July 1 when F.A. Richard and Associates (FARA) of Mandeville began a five-year phase-in takeover at a “maximum cost of $68 million.” Now, barley nine months into its contract, FARA has already requested a $7 million amendment to a cost “not to exceed” $75 million.

And while considerable attention has been given the proposed privatization of state prisons, the privatization of public schools has managed to fly under the radar of the state’s citizenry—with the notable exception of public educators.

In the wake of 2005’s Hurricane Katrina, the number of public schools in New Orleans has shrunk from 123 to four while the number of charter schools has gone from seven to 31, according to author Naomi Klein in her controversial book, The Shock Doctrine, The American Enterprise Institute virtually crowed, “Katrina accomplished in a day…what Louisiana school reformers couldn’t do after years of trying.”

Jindal’s more immediate concern at the moment, at least publicly, appears to be the auctioning off of state prison facilities. A Request for Information (RFI, not to be confused with an RFP) by the Department of Corrections to determine interest in attracting bidders on an RFP to be issued later for the sale of prisons in Winn and Allen parishes drew responses from six bidders, including Winn Parish Sheriff A.D. “Bodie” Little, LaSalle Management Co., dba LaSalle Corrections, of Ruston, Emerald Correctional Management of Shreveport, Corrections Corp. of America (CCA) of Nashville, TN, GEO Group of Boca Raton, FL, and Management & Training Corp. of Centerville, UT.

The Ruston-based LaSalle Management already operates prison facilities in Homer in Claiborne Parish, Richwood (Ouachita), Harrisonburg (Catahoula), Jonesboro (Jackson), Urania (LaSalle), Ruston (Lincoln), and Ferriday (Concordia) in Louisiana and four others in Texas.

Emerald runs the West Carroll Detention Center in Epps and facilities in Texas, New Mexico, and Arizona.

CCA is the largest private prison contractor in the U.S. and currently has contracts with the Immigration and Customs Enforcement (ICE) and other federal clients, and 19 state prison systems.

CCA and GEO, the second-largest private prison contractor, together account for more than $3 billion in gross revenue annually, according to the Bloomberg Businessweek article.

The state currently pays local sheriffs in every parish $31.51 per day for each state prisoner housed in local jails. ICE, on the other hand, pays CCA $90 per day per person to house illegal immigrants.

Given the difference of nearly three to one, why would CCA, GEO and the others be so eager to offer bids in the range of $40 per day for state prisoners?

One answer is that they are in the business of making a profit and in all probability they have their eyes on federal detainees. The question must be asked: how long before the private companies, with federal dollars shining in their eyes, tell the state to take a hike?

Another possible answer is that CCA and companies like it go to great lengths to lobby federal and state governments to adopt ever-stricter punishment for non-violent criminals in an effort to maintain—and increase—America’s already high rate of detention. At $90 per day, it’s to the best interest of the private companies to keep as many prisoners as possible.

A third alternative is to cut staff, reduce the salaries of guards, terminate rehabilitation and vocational programs designed to move prisoners back into society.

The second and third alternatives would be in direct conflict with Jindal’s stated goal of rehabilitating and training prisoners in order to release non-violent offenders and thus, reduce Louisiana’s prison population rate, which right now is the highest in the nation which in turn, has the highest detention rate in the world.

The Bloomberg Businessweek article quoted CCA critic Bob Libal, Texas coordinator for Grassroots Leadership, an anti-private prison coalition as saying the company manages to skim better-behaved (read: cheaper to control) inmates from the general population, leaving government facilities to deal with the more violent prisoners.

Another factor that is never mentioned in any RFP or contract is the fact that no matter how many state prisoners a private company may take into its care, the cost of providing medical care for the prisoners remains the responsibility of the state.

CCA, according to the article, operates facilities throughout the southern part of the U.S., from California to Georgia. Low labor costs are a major factor in that clustering, the article said.

Judy Greene, a criminal justice expert at the Brooklyn-based nonprofit research group Justice Strategies, said the private companies save money at the expense of labor. “Labor is cheap, wages are lower, and benefits are few,” she said.

GEO is not without its critics, either.

In Mississippi, a state audit in 2005 noted that GEO has reduced staffing at Walnut Grove, a juvenile detention center that houses 1,200 inmates, to a guard-to-inmate ratio of 1 to 60, compared to the national norm of 1 to 10 or 12.

And while state prison employees erect yard signs in opposition to the prison sales and protest in Baton Rouge, the bottom line is they are going up against an industry with almost $5 billion a year in gross revenue and an administration that wants very badly to accommodate them in the interest of getting a few million dollars in up-front money to help plug a gaping hole in the state budget.

A betting person wouldn’t give very good odds on the administration’s suddenly developing a conscience and changing its mind on this issue. The alliances run too deep, there’s too much money at stake, and like it or not, money is the fuel that runs the political machinery.

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First, help us with the RFP, then you can bid on the project

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, RFP, Request for Proposals on March 17, 2011| 3 Comments »

A major global investment banking firm that spent several weeks with state officials assisting in the writing of a request for proposals (RFP) from “qualified financial advisors” to assess the market value of the Office of Group Benefits (OGB) preparatory to privatizing the agency turned out to be the only one to submit a proposal, according to sources within the Louisiana Division of Administration (DOA).

Goldman Sachs, which helped write the specifications of the RFP, submitted the lone proposal that calls for the Wall Street firm to assess the market value of all tangible and intangible assets of OGB and to seek a buyer for the agency that oversees benefits for 78,000 people, including state employees and their dependants.

Under terms of its proposal, presented on Monday, Goldman Sachs would receive $6 million for its services whether or not it is successful in securing a buyer for the agency, one source said. “Even if they are unable to find a buyer, they still get the $6 million,” he said.

In another development that could raise eyebrows among members of the Joint Legislative Committee on the Budget, the Division of Administration, realizing it was short of time, retained the services of a New Orleans firm to work up an evaluation in time for Gov. Bobby Jindal to submit his proposed budget last Friday.

The firm, Chaffe and Associates of New Orleans, was awarded a contract for $49,999–one dollar less than the $50,000 amount that would have required the approval of the Office of Contractual Review. Moreover, when the contract was initially drafted, it was for $44,000 but was quickly amended to $49,999.

It is considered unusual, if not illegal, for a firm to assist in drawing up specifications for a bid proposal and subsequently bidding on—and winning—the contract for the work.

Gov. Jindal has indicated he feels he can use $150 million to $200 million of OGB’s current surplus of more than $500 million to help plug the state’s looming $1.6 billion budget deficit.

The way it would work, said the DOA source who asked not to be identified, the purchaser would discount OGB’s assets, giving the state $150 million to $200 million with the remaining $300 million to $350 million being passed on to the purchaser.

Jindal, in his budget proposal last week, called for the elimination of 149 positions at OGB, saying the layoffs would save the state $10.3 million, a figure disputed by Capitol News Service’s DOA source.

“The privatization of Group Benefits, if it goes through, will destroy health benefits for state employees,” he said.

Those sentiments have been echoed by State Sen. Butch Gautreaux of Morgan City.

“I am very concerned about the governor’s efforts to sell off OGB,” said Gautreaux, a member of the OGB board, in a recent email. “I sit on the 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.”

He said OGB, with administrative costs of only 4 percent, is financially stable. Privatization, he said, “will be a catastrophic move.”

“The governor is getting some very bad advice,” said the DOA source. “He’s listening to people who have no insurance background whatsoever.”

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Administration takes first steps to privatize another agency (and maybe pick up a spare $500 million in the process)

Posted in Budget, Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, ORM, Office of Risk Management, Privatization, RFP, Request for Proposals, Transparency on March 3, 2011| 4 Comments »

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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