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Archive for the ‘Transparency’ Category

Appropriations Chairman Jim Fannin deflects administration effort to cut 149 OGB positions

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, Public Records, RFP, Request for Proposals, Transparency on May 23, 2011| 4 Comments »

The Jindal administration suffered a legislative setback in its efforts to privatize the Office of Group Benefits (OGB) Monday when the House Appropriations Committee voted unanimously to reinstate 149 positions the administration had cut from the OGB budget.

The move came as an amendment to HB 32 by bill author and Appropriations Committee Chairman Rep. Jim Fannin (D-Jonesboro).

At the same time the committee further amended the bill by deleting five lines that would have directed the state treasurer to transfer a portion of the OGB $500 million surplus into the general fund, thus guaranteeing that the administration may not use part of the surplus to help plug the $1.6 hole in the state budget.

In asking the committee to amend the bill to restore the jobs and to protect the agency surplus, Fannin said, “I have had no communication (from the administration) about any savings to be realized by eliminating these positions.”

Communication has become something of a problem lately as administration officials have refused to attend meetings of the Senate Retirement Committee. Retirement Committee Chairman Sen. Butch Gautreaux (D-Houma) has made no secret of his opposition to efforts to privatize OGB.

Gov. Bobby Jindal has run into considerable opposition to his efforts to privatize OGB although the administration has issued a request for proposals (RFP) for a financial adviser to evaluate the agency and to seek a third party administrator (TPA).

It is the second RFP issued by the administration after Wall Street banking firm Goldman Sachs was the lone bidder on the first and then only after taking part in drafting that RFP.

DOA representatives say that the current RFP was drafted completely in-house.

Former OGB CEO Tommy Teague, who was fired on April 15 after leading OGB from a $60 million deficit when he took over five years ago to its current $500 million surplus, testified before the Senate Retirement Committee that he could not understand the need for a financial adviser if the intent of the administration was only to obtain a TPA.

“It’s not necessary to know the financial situation of the agency just for a TPA,” he said. “The only rationale for a financial assessment would be that the administration plans to sell OGB.”

The original RFP did indeed make repeated references to the sale of the agency and Commissioner of Administration Paul Rainwater has consistently given conflicting testimony about whether the administration’s intent was to sell the agency or obtain a TPA for OGB’s Preferred Provider Organization (PPO).

Approval of Fannin’s amendment does not necessarily mean that Jindal has failed in his efforts toward privatization of the agency. It does mean, however, that he would have to come back before the legislature to obtain approval for cutting the positions, a move Rainwater claims would save the state $10 million a year.

Even that claim, however, is somewhat vague since the $10 million does not come from the state’s general fund. OGB is completely self-funded, deriving its revenue from premiums charged state employees for health care coverage.

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Rainwater & Thompson need to answer this: What did you know about the sale of FARA and when did you know it?

Posted in Governor's Office, House, Senate, Legislature, Legislators, ORM, Office of Risk Management, Privatization, Transparency on May 20, 2011| 13 Comments »

During the Watergate hearings nearly 40 years ago, U.S. Sen. Howard Baker (R-Tenn.) asked that now-famous question, “What did the President know and when did he know it?”

That question today could be addressed to Commissioner of Administration Paul Rainwater, Office of Risk Management (ORM) Director J.S. “Bud” Thompson, and F.A. Richard & Associates (FARA) CEO Todd Richard after revelations on Thursday that FARA had been sold to Avizent, a national claims and risk management company in Dublin, Ohio.

FARA last year was the winner of a bidding contest to take over ORM’s claims, loss prevention, and subrogation operations in the first of Gov. Bobby Jindal’s ambitious plan to privatize everything in state government that moved and to cut funding for those that remained stationary.

Under the contract, “not to exceed” $68.2 million, that went into effect on July 1, 2010, FARA was to phase in its takeover of ORM over a five-year period.

The Loss Prevention, Subrogation, and Worker’s Compensation units were the first to go over to FARA and General Liability was scheduled for the transfer later this year.

In the meantime, only eight months into its contract, FARA, with the blessings of Thompson, requested a contract amendment of $6,811,971, bringing the new contract to “a maximum amount of $74,930,868.

Under law, the Office of Contractual Review may approve contract amendments of up to 10 percent without legislative approval.

The contract amendment was conveniently requested—and approved by Contractual Review—for precisely 10 percent.

The Office of Contractual Review is under the direct supervision of Rainwater, also convenient.

Both facts were not lost on Rep. Jim Fannin (D-Jonesboro), who chairs the House Appropriations Committee. He was understandably miffed that neither ORM nor DOA requested approval of the amendment from his committee, choosing instead to circumvent the intent of the legislation by keeping the amendment to exactly 10 percent.

Adding insult to apparent injury, Patti Gonzales, assistant director of ORM and who works immediately under Thompson, calmly informed Fannin that the full $6.8 million amendment wasn’t even necessary because it was anticipated that only about $2 million of that would actually be spent.

That could have been because the 10 percent clause is a one-time Get Out of Jail Card. Any subsequent amendment requests, no matter the amount, must come before the Appropriations Committee. Gonzales knew that and admitted as much to Fannin and the committee at its May 12 hearing on the contract amendment. It was a classic case of ORM hedging its bets.

Thompson sat behind Gonzales at that hearing, choosing not to speak. That was probably advisable, considering the near disaster last year in allowing him to testify before the same committee when it was considering the privatization proposal.

Thompson was dressed down by Sen. Ed Murray (D-New Orleans) during the morning session of the committee when Thompson, with many of his soon to be out-of-work employees sitting behind him in the hearing room, quipped that once the privatization took place, he would remain in his job to oversee operations and would “probably need a raise.”

That comment came on the heels of a legislative decision to forego civil service merit salary increases beginning on July 1, 2010—a policy that has been carried over into 2011 because of the state’s fiscal crisis.

Murray delivered a withering reprimand to Thompson that the committee was considering a serious matter and that he should act accordingly. Thompson did not attend the afternoon committee session after that public relations fiasco.

He apparently learned his lesson because at last week’s hearing, he allowed only one ORM employee to attend, citing in an email to ORM employees the rising Mississippi River and preparations for the transfer of the General Liability section to FARA as his reasons.

In a Feb. 28 memorandum to Rainwater, Thompson requested Division of Administration (DOA) approval of the contract amendment.

“Since the implementation (of the FARA takeover) began, ORM has begun experiencing difficulty in retaining our experienced adjusters, as many are seeking employment elsewhere in state government,” the memo said. “We are currently utilizing contract adjusters to supplement our in-house staff for lines not yet transitioned to FARA, at considerable expense to the state and with a significant loss of efficiency.”

So, what did he expect “experienced adjusters” to do? Their jobs and benefits were being yanked from beneath them. Did he realistically expect them to quietly remain on their jobs until the final shoe fell? ORM, as of last July 1, was a sinking ship and rats, as the expression goes, are predisposed to leave. Did he not take that into account when ORM and DOA first issued the request for proposals (RFP) or later when the contract with FARA was negotiated?

All that would seem surreptitious enough but now comes word that FARA is selling out to Avizent, which presently has 35 offices in 25 states. Its Baton Rouge office has one employee.

One has to wonder, in retrospect, about that $6.8 million contract amendment. Was it truly essential for FARA to continue its takeover, which it now turns out, was fairly short-lived? Or was it necessary to bolster the revenue side of FARA’s ledger in order to make the firm more attractive to a buyer?

Did Rainwater know of the impending sale when he signed off on the amendment request? Most probably.

Was Thompson aware of what was taking place when he made the request for the amendment? If not, he should be fired. No one in the position of running a multi-million dollar agency should operate in a total vacuum and be allowed to remain.

If he did know, he should be fired. If he knew, he had an obligation to so inform Fannin and his committee last week. Instead, he sat quietly by and said nothing.

Did Richard know the formal announcement of the sale of his company was merely days away as he sat next to Gonzales at last week’s committee hearing? Of course he did.

These transactions don’t take place over a matter of a few days or weeks. It takes months, sometimes years, of poring over books, reviewing clients, debts, and staffing for such decisions to be made.

Of even greater importance, what does the sale mean to the remaining ORM employees? Or for that matter, what does it mean to those who have already gone over to FARA?

The original contract called for FARA to retain ORM employees for at least a year at salaries comparable to the industry standard.

Will that requirement be carried forward in a new contract with Avizent? Or will a new contract even be required? Most likely. Avizent, after all, now has only a one-person office in Baton Rouge. It will need to obtain employees from somewhere. As to salaries and benefits, those remain unanswered questions.

Rainwater, asked by email to address the sale, has instead chosen to ignore LouisianaVoice inquiries. FARA also has been strangely silent. Only Avizent, through a spokesperson for Avizent CEO Tom Watson even so much as acknowledged that company was “in the process” of acquiring FARA.

Of course, since FARA contributed $10,000 to Gov. Bobby Jindal’s 2003 gubernatorial campaign, all is quite likely to be forgiven.

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Here’s how privatization works: first get the contract, sell the company for a huge profit, and then simply walk away

Posted in Contract, Contracts, ORM, Office of Risk Management, Privatization, Transparency on May 19, 2011| 3 Comments »

BATON ROUGE (CNS)—Neither rain, nor sleet, nor act of sale by contractor shall deter Gov Bobby Jindal’s ever-onward march of privatization of state agencies.

LouisianaVoice has learned that F.A. Richard & Associates (FARA), the company that assumed control over the Louisiana Office of Risk Management (ORM) only last July, has been sold for an undisclosed amount to an Ohio company.

Avizent, of Dublin, Ohio, will apparently assume control of ORM, though no timetable was immediately available as to when the transition would take place.

FARA signed a contract with the Division of Administration (DOA) last year whereby the Mandeville company would be paid $68 million to take over all lines of coverage provided by ORM, as well as its Loss Prevention, Accounting, and Subrogation units.

ORM’s Loss Prevention, Subrogation, and Worker’s Comp sections were the first to go over to FARA and General Liability will follow later this year.

Only last week, Rep. Jim Fannin (D-Jonesboro), chairman of the House Appropriations Committee chastised DOA and ORM for neglecting to seek approval for a $7 million amendment to FARA’s five-year contract.

The Office of Contractual Review approved the amendment, according to ORM Assistant Director Patti Gonzales, because the agency is allowed one amendment without legislative approval so long as the amendment amount does not exceed 10 percent of the original contract amount.

A $7 million amendment, however, would be $200,000 in excess of 10 percent of the original $68 million contract.

FARA CEO Todd Richard sat beside Gonzales during the committee hearing last Thursday’s hearing but never mentioned the pending sale of his company.

Avizent has 35 offices in 25 states but the Baton Rouge office is manned by only one employee.

Attempts to obtain comments from Commissioner of Administration Paul Rainwater and Fannin were unsuccessful. A spokesman for FARA declined to comment but a spokesperson for Advizent CEO Tom Watson confirmed that Advizent was “in the process” of acquiring FARA. She said Watson was in Baton Rouge Thursday in preparation for a public announcement of the transaction.

ORM was the first successful privatization of a state agency by Jindal. Other agencies he is attempting to outsource include several state prison facilities and the Office of Group Benefits (OGB).

OGB presently has a request for proposals (RFP) for a financial analyst to assess the value of OGB and to then seek a third party administrator (TPA) to run OGB’s Preferred Provider Organization (PPO). Blue Cross/Blue Shield already administers OGB’s HMO but there has been considerable resistance to the privatization of the PPO.

Tommy Teague, the former CEO of OGB, who was fired on April 15, testified before the Senate Retirement Committee recently that he saw no need for a financial analyst if DOA only wanted a TPA. “There is no need to know the worth of the agency just to obtain a TPA,” he said, adding that a financial assessment would be needed only in the event the state wants to sell OGB.

Rainwater has been inconsistent about whether or not the state desires to sell or obtain a TPA, issuing conflicting statements in testimony before the Senate Retirement Committee (see May 18 Notable Quotables) and its chairman, Sen. Butch Gautreaux (D-Morgan City).

CNS has also learned that a number of private prison enterprises have contributed generously to Jindal’s political campaigns since his first run for governor in 2003.

Leading contributors included Corrections Corp. of America (CCA) of Nashville, Tennessee, the nation’s largest private prison firm ($13,000), which runs the state’s Winn Parish facility on a contractual basis; GEO Group of Boca Raton, Florida, which operates Allen Correction Center in Kinder in Allen Parish ($10,000); LaSalle Management of Ruston, which operates lockups in Claiborne, Ouachita, Catahoula, Jackson, LaSalle, Lincoln, and Concordia parishes ($10,000), and Emerald Correctional Management of Shreveport which operates facilities in West Carroll Parish ($10,000).

A fifth contributor, Wackenhut Corrections of Palm Beach Gardens, Florida ($10,000), once operated a juvenile detention center in Jena but after a CBS 60 Minutes report on abuses by guards at the center prompted federal investigations into the center, it was turned back over to the state.

Abuse of juvenile offenders is not limited to Louisiana.

A lengthy investigation in Pennsylvania revealed that two judges in Luzerne County were involved in the “cash for kids” scandal in which the judges handed down severe penalties for minor infractions. Many juveniles were led from the courtroom in shackles and were shipped directly to private-run detention centers that were paying kickbacks to the judges.

Judge Mark Ciavarella, who sentenced one teenage girl to 90 days in a detention center for the crime of spoofing her high school vice principal on MySpace, was convicted in February for his role in the $2.8 million bribery scandal.

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Notable Quotables (in their own words)

Posted in Budget, Governor's Office, House, Senate, Legislature, Legislators, Notable Quotables, Prison, Privatization, Transparency on May 18, 2011| 4 Comments »

“It seems to me like we’re selling prisons to cover a hole this year but we haven’t addressed covering the hole next year.”

—Rep. Page Cortez (R-Lafayette) on Gov. Bobby Jindal’s proposal to sell state prisons.

“Until the day I was arrested, I never knew there were ‘for-profit’ prisons.”

—Unidentified writer commenting on nola.com story on prison privatization.

“If the sheriffs don’t want to participate, we’ll go back to the original plan, go back to the private sector.”

—Gov. Bobby Jindal, reacting to Avoyelles and Rapides sheriffs Doug Anderson and Charles Wagner, Jr. who denied Jindal’s announcement that they had agreed to purchase state prisons in their parishes.

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Follow the money….and you usually find political motive

Posted in Campaign Contributions, Jobs, Prison, Privatization, Transparency, Vitter on May 18, 2011| 4 Comments »

Deep Throat , during the cloak and dagger pursuit of the Watergate story by Washington Post reporters Bob Woodward and Carl Bernstein, at one point advised Woodward to “follow the money.”

Nearly four decades later, that’s still good advice for any reporter attempting to develop a cause and effect angle to any political story.

That’s what LouisianaVoice has been doing for some time now with Gov. Bobby Jindal’s campaign finance reports and it’s a long, convoluted path with numerous twists and unexpected changes of direction. But a pattern does appear to be emerging from this work in progress.

Take for example Jindal’s oft-repeated stand on gay rights.

He has consistently opposed expanded adoption rights for gays and way back in 2003 he made it clear he had no time to meet with a gay rights group.

As governor, he even created the Louisiana Commission on Marriage and Family which was designed to “propose programs, policies, incentives, and curriculum regarding marriage and family by collecting and analyzing data on the social and personal effects of marriage and child-bearing within the state of Louisiana.” One of his first appointees to the commission was Tony Perkins of Baton Rouge, president of the anti-gay advocacy group known as the Family Research Council.

But there’s that $5,000 campaign contribution in August of 2008 from Paul E. Singer of New York.

Singer is an enormously wealthy New York City hedge fund manager and prominent Republican donor.

Together, he and two other right-wing Republican donors from the financial district contributed nearly $1 million to a new coalition of gay rights organizations in New York.

Politics, it seems, does indeed make for strange bedfellows. Okay, that was too easy but you knew someone was going to say it.

In last fall’s congressional elections, Jindal campaigned vigorously for Republicans in other states but avoided U.S. Sen. David Vitter like the plague.

Some felt that Vitter’s admitted trysts with prostitutes did not square with Jindal’s family value core beliefs. How then, does he explain the $19,000 he accepted from former Congressman Bob Livingston between April 2003 and February of this year?

Perhaps he calculated that Livingston was flying well below reporters’ radar. But remember, Livingston admitted his own dalliance with another woman just prior to the impeachment proceedings of President Bill Clinton.

At the time Livingston was poised to become House Speaker but resigned from Congress instead.

Not that Jindal goes to any great lengths to vet his contributors.

We’ve already seen that he accepted $11,000 from the Louisiana Horsemen’s Benevolent and Protective Association (LHBPA) in apparent violation of state and federal prohibitions against political contributions by non-profit taxpayer-supported bodies.

Actually, that $11,000 figure is from the Legislative Auditor’s office but CNS has documented $22,000 in LHBPA donations from November of 2003 through March of 2009. Apparently, the state auditor only more recent contributions.

The top two administrators of the association at the time are now awaiting trial on 29-count federal indictments of fraud, election rigging, and other charges.

Then there is the $2500 donation made to Jindal in December of 2008 by HCA of Nashville.

In 1997, eleven years prior to that donation, HCA became embroiled in the largest Medicare fraud investigation in history. HCA ultimately paid a record $1.7 billion in criminal and civil fines.

The CEO of HCA at the time was a man by the name of Rick Scott.

Rick Scott is now the Republican governor of Florida for whom Jindal campaigned extensively last fall.

Just last Saturday, the Florida legislature passed a $69.7 billion budget that included Scott’s sweeping program to privatize at least 16 prisons, numerous annexes, juvenile correction facilities, road camps, and work-release centers in 18 counties.

The Florida privatization plan will result in the loss of 1700 jobs in the state prison system as well as reduced benefits for those lucky enough to keep their jobs—all for a promise by the private companies of an annual savings of $40 million, a promise State Sen. Mike Fasano finds vague and unconvincing.

State Rep. Paige Kreegel said the core mission of government is to protect good people from bad ones. “When we shirk our core mission, we lost our legitimacy to govern,” he said.

Both Kreegel and Fasano are Republicans.

Scott had his reasons for wanting to privatize, of course: 25,000 reasons, to be precise. GEO Group, a Boca Raton-based company, contributed $25,000 to Scott’s campaign in January, about the same time he took office.

GEO is the nation’s second-largest private prison operator is currently contracted to run the Allen Correctional Center in Kinder in Allen Parish.

The company contributed $10,000 to the Jindal campaign in separate $5,000 payments in 2007 and 2008.

Other private prison firms contributing to Jindal’s campaign include:

• Corrections Corp. of America (CCA) of Nashville, TN., the nation’s largest private prison firm–$13,000;

• Wackenhut Corrections of Palm Beach Gardens, FL.,–$10,000;

• LaSalle Management, formerly of Rayville but now headquartered in Ruston–$10,000;

• Emerald Correctional Management of Shreveport–$10,000;

• Waterproof Correctional of Shreveport–$2500;

• LCS Corrections Service of Baton Rouge–$2500;

• Richwood Correctional Center of Ruston–$2500, and

• Joseph Russell of Nashville, a member of the CCA board of directors–$2500.

CCA presently operates the state’s Winn Parish facility on a contractual basis while LaSalle runs state lockups in Claiborne Parish (Homer), Ouachita (Richwood), Catahoula (Harrisonburg), Jackson (Jonesboro), LaSalle (Urania), Lincoln (Ruston), and Concordia (Ferriday).

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

Wackenhut once ran the state juvenile detention facility in Jena but subsequently returned the facility to the state following claims of brutality by guards.

Abuse of juveniles by private prison concerns is not limited to Louisiana, of course.

Pennsylvania has been rocked by a scandal in which two judges funneled juveniles with only minor offenses into privately-run detention centers in exchange for monetary kickbacks from the companies.

All the controversy swirling around the private companies is of little apparent concern to Jindal, Scott, and Republicans in general, who appear determined to privatize state agencies.

If a little campaign money helps grease the skids, so much the better.

Prison privatization appears dead for this year’s legislative session but it’s pretty much a certainty that it will remain a high priority on Jindal’s agenda.

As we have observed before, he is half-right about his administration’s being the most transparent and ethical in state history.

He is certainly transparent enough but we’re still looking for the ethics.

And we’re continuing to follow the money.

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