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Editor’s note: Former State Sen. Butch Gautreaux addressed the Joint Legislative Committee on the Budget following the presentation of Gov. Bobby Jindal’s executive budget and the ensuing queston and answer session between legislators and members of the Division of Administration. Unfortunately, when the last legislator’s question was asked and answered, reporters exited the committee room, unaware that Gautreaux would testify against the controversial proposal to privatize the Office of Group Benefits, meaning his words got little play in the media.

Following is an exclusive reprint of his comments:

Although Governor Jindal has strived to bring transparency to the office of the Governor, the Office of Group Benefits (OGB) sale or its placement in the hands of a third party administrator is a case that denies the public, or for that matter even the legislature, the opportunity to see or understand what is being considered.

When news first came to light last year of an effort to capitalize on the large cash reserve, I called meetings of the Senate Retirement Committee to try to learn the rationale of the sale. I invited all parties including the governor, the commissioner of administration and others involved. Mr. Rainwater did attend the first two meetings but little was learned. When repeatedly asked by panel members why the sale was being considered, Mr. Rainwater was pat on his answer, never swaying from his statement: “the State should not be in the insurance business.”

Remember, the state set up a workers’ compensation company, LWCC in the early nineties that still exists today and seems to function well. The state set up Citizens in response to coastal residents not being able to acquire homeowners insurance. It’s had its problems but is still doing the job. Does Mr. Rainwater advocate getting rid of those two insurance companies?

We just learned last week that the Governor contracted with Morgan-Keegan to do an analysis on the feasibility of selling out or placing in the hands of a third party administrator the PPO for the Office of Group Benefits. As a member of the board of OGB I have not had an opportunity to see the final Morgan-Keegan document or anything else. I can only tell you a little history of a health insurance system that is the envy of the other 49 states. Louisiana has the only self-administered and self-funded health insurance for state workers and retirees. The plan provides competitive rates to members and to the state. Remember, the taxpayers pick up most of the cost. And unlike some other departments OGB has for the last seven years grown in becoming a model of what other states should emulate.

Mr. Rainwater likes to state that we have twice the number of employees in our health insurance department. Of course we do. We are the only state to administer its plan, and at a cost that is a lot cheaper than it can contract for.

Eight years ago OGB was in trouble for an assortment of reasons and something had to be done if the system was to survive. Governor Kathleen Blanco hired Tommy Teague to take over as the director and through his excellent management practices and leadership we saw a system that was wrought with problems and inefficiencies go from a $33 Million deficit to a $550 Million cash reserve. Let me say that I served on the board of directors during this transition from something very troubling to what has become a shining star. And then when Tommy resisted taking actions that would undermine the system, Governor Jindal summarily fired him.

We now have a premier public health insurance department for state workers that offers affordable premiums and industry-acceptable reimbursements to health care providers. This took a lot of talent. Mr. Teague negotiated with providers who previously were not interested in doing business with OGB. He promised them big changes in service and negotiated better discounts from them at the same time.

While at its worst, most hospitals and doctors did not want to accept the plan. But, at the last board meeting back in September it was reported that every hospital in Louisiana except one now accepts the plan as do most doctors and other providers.

Better discounts and other efficiencies of scale were building increased cash balances. At the final meeting of the last fiscal year the board had a motion on the table to reduce premiums which would have helped with the cost to the state during this fiscal crisis. That motion was met with a substitute motion to maintain rates until we knew how things would shake out with efforts by the administration to take the fund balance to fill a gaping hole in the state budget. The OGB monies are constitutionally protected from being raided as so many other department budgets were being raided at the time.

In the face of the board action, Governor Jindal announced a 5.6% increase in premiums effective July 1st of last year. This action was not only unnecessary but put an additional strain on the already stressed state general fund as the state pays on average 75 percent of the premium cost.

At the same time, it was announced that deductibles would hold over until January 1, 2012, with the effect of drawing down the balance of the cash reserves, placating the complaints of members who could ill-afford more deductions coming from their diminishing pay checks. But this was all part of the governor’s overall plan.

Again for January 1, 2012, the Governor announced and implemented another premium increase of 5.5 percent. Remember, we were in a position to reduce premiums when the plan to raid OGB was put together.

Speaking of transparency, it was indeed very clear what the plan was. By implementing the unnecessary increases in premiums, further increases would be less of a shock to the members and you who must somehow balance the state budget. Experts are telling us that the private insurance company will have to ease in another increase of roughly 10 percent to meet the needs of executive compensation, marketing, stockholder dividends, profit, taxes and other expenses we don’t currently have at the not-for-profit OGB.

Our own actuary gave a figure of $97 million in additional costs to the taxpayer for the July 1 premium increase, coupled with the member deductible holiday through the calendar year. Since that time, there has been another unnecessary premium increase to the taxpayer and the members.

This privatization will be very costly to the taxpayers of Louisiana, but then we get to fire 177 rank-and-file state workers to counter the hiring of former chief of staff Teepell’s family members and all of the politically-connected, deposed elected officials over the last four weeks, most at six figure salaries.

You only need to follow the dollars to understand why the Governor wants this to happen. Thank you for your attention.

The administration preferrs “coordinated responses from our (public relations) offices so that all units of higher education respond in the same generally positive and supportive way to the administration’s efforts to avoid significant loss of funding…”

–From an email memorandum from LSU Systems President John Lombardi to system administrators just hours before the Joint Legislative Committee on the Budget received Gov. Bobby Jindal’s executive budget for FY-2012-2013.

Bobby Jindal, the “most transparent, most ethical, most accountable” governor in Louisiana’s history just also happens to be a governor who will brook no dissent.

If you don’t believe that, of course, you need only contact Tommy Teague, the firmer director of the Office of Group Benefits (OGB), who was summarily fired last April when he didn’t jump on board the OGB privatization bandwagon quickly enough. Or his wife, who had the temerity to testify against Jindal’s proposed governmental streamlining plan and was fired the very next day. (She won her job back through Civil Service, but it took several months.)

But a more recent example has just surfaced in the form of a lengthy email from LSU System President John Lombardi and the contents of that memorandum are quite revealing of the Politburo mindset of this administration: “Be grateful for what we give you or suffer the consequences.” (The “Politburo” term was given us by friend Judith Howard, a columnist for Ruston’s Morning Paper.)

Lombardi’s memo went out to LSU administrators only hours before the Joint Legislative Budget Committee convened on Thursday to receive Jindal’s executive budget that called for, among other things, the elimination of 2,837 positions in higher education that turned out to be actually “only a handful,” according to testimony given by the Division of Administration (DOA) during Thursday’s testimony.

The discrepancy was explained that the bulk of the job eliminations were for vacant positions that will not be filled. Commissioner of Administration Paul Rainwater did not explain how eliminating already vacant positions would save the state money. And no one asked, certainly no one in higher education.

“In this upcoming session,” Lombardi said in his email, “the administration will be focused on K-12 and retirement reform, and the administration does not think it helpful to have complicated or difficult or contentious higher education initiatives brought before the legislature. Special tuition bills or other initiatives that do not have the complete support of all of higher education will only distract from their effort to hold the budget intact for higher education and complete the rest of their agenda.”

Does not think it helpful Indeed. How many parents would love to be able to sell that concept to their teenagers?

Lombardi also said the LSU Board of Supervisors leadership “has indicated strong support for coordinated messaging to accompany coordinated representation during the upcoming legislative session.”

Of course Jindal appointees make up the majority of that board’s membership. ‘Nuff said about that.

Lombardi also just happens to be in the final year of his contract. ‘Nuff said that, as well.

The budget counts tuition increases in the system’s total state budget allotment and includes tuition paid through the college scholarship program TOPS in much the same manner as it used grants from the 2009 federal stimulus act to prop colleges and universities.

But rather than complain, Lombardi wrote, “In exchange for this good treatment, the administration would appreciate” it if higher education officials recognize that the budget “gives higher ed special treatment and thank the administration for their attention and concern for higher ed.”

You can almost visualize the college presidents, deans and department heads down on their hands and knees at the fraternity hazing initiation saying as the fraternity president lays the leather strap to their backs and buttocks, “Thank you, sir! May I please have another?”

Here is the complete text of his email, which went out at 6:07 a.m. on Thursday:

As you all know, the Division of Administration will present the Governor’s budget to the legislature today. The best information we have from the Administration is that the general outlines of the budget for higher education will include the following:

1. higher education will be provided the same total all funds budget level as last year;

2. the new budget will include Grad Act tuition increases as part of the total all funds budget;

3. savings from the retirement adjustments will be given back to higher ed institutions;

4. only higher ed receives both the hold harmless all funds budget and the additional opportunity to use any retirement savings;

5. there will be no freezes on salary adjustments for employees whether in civil service or not;

In exchange for this good treatment, the administration would appreciate higher ed leadership doing the following:

A. recognize that the budget gives higher ed special treatment and thank the administration for their attention and concern for higher ed;

B. avoid negative messages about higher ed funding this year or overall as the total means of finance for higher ed has experienced a relatively low
reduction compared to other parts of the state budget and compared to other states;

C. recognize the need for retirement reform and recognize the benefit to higher ed of the ability to use the retirement savings at the institutions,
something not possible for other state agencies. Estimate is $100M from retirement savings to higher ed;

D. provided coordinated responses from our PR offices so that all units of higher education respond in the same generally positive and supportive way
to the Administration’s efforts to avoid significant loss of funding from the all funds budgets of higher education institutions.

In this upcoming session, the Administration will be focused on K-12 and retirement reform, and the Administration does not think it helpful to have
complicated or difficult or contentious higher education initiatives brought before the legislature. Special tuition bills or other initiatives that do
not have the complete support of all of higher education will only distract from their effort to hold the budget intact for higher education and
complete the rest of their agenda.

As usual, we will ask Bob Keaton to coordinate the LSU System institution’s responses to legislative issues, and Charlie Zewe will coordinate with
campus public relations offices on the various messages needed.

The Board of Supervisors leadership has indicated strong support for coordinated messaging to accompany coordinated representation during the
upcoming legislative session.

Many thanks.

John

The email may have been written by Lombardi and sent out by him over his name but the document has Jindal’s fingerprints all over it.

Jindal’s promise of $100 million for higher education should his retirement package pass the Legislature this year isn’t really that much when it’s divvied up among all the universities. The LSU system alone is comprised of 11institutions.

Then there are the various campuses of Southern University (Baton Rouge, New Orleans and Shreveport), University of Louisiana-Monroe, Louisiana Tech, Grambling, Northwestern, McNeese, University of Louisiana-Lafayette, Nicholls State and Southeastern. Without even factoring in the junior colleges, that comes to 22 campuses, or an average of less than $5 million each.

Editor’s note: We occasionally like to showcase the writing skills of guest columnists. Judith Howard is a regular columnist for the Morning Paper of Ruston. She has written a thought-provoking piece on the American Legislative Exchange Council (ALEC) and we are proud to have her essay grace our blog.

By Judith Howard

A year ago when newly elected governors in Wisconsin (Scott Walker), Ohio (John Kasich), Florida (Rick Scott), and Michigan (Rick Synder) simultaneously began their war on workers by trying to destroy collective bargaining, I thought this must have been a plan hatched at some national Republican meeting after the 2010 elections.

I thought the same thing about these Republican governors, including our own, when they started pushing the privatization of education and prisons. With a $500 million surplus, the Louisiana state office that administers health insurance is a gem Jindal can’t wait to sell, even though it will result in higher premiums for state retirees and workers.

I was half right and half wrong about the origin of these parallel Republican initiatives. The sponsor was the American Legislative Exchange Council (ALEC). This organization describes itself thusly: “With more than 2,000 members, ALEC is the nation’s largest, non-partisan, individual public-private membership association of state legislators.”

So I was right in that it was a coordinated attack, but I was wrong that it must the Republican National Committee pushing this stuff. ALEC is, however, overwhelmingly Republican.

ALEC says it is interested in the conservative principles of free markets (translated—unregulated markets), limited government (translated–except in private affairs like family planning and how you die), and federalism (translated–state governments are cheaper to buy and control. You know, divide and conquer). It touts its benefit to private members this way:

“One of ALEC’s greatest strengths is the public-private partnership. ALEC provides the private sector with an unparalleled opportunity to have its voice heard, and its perspective appreciated, by the legislative members.” (Emphasis mine.)

Appreciated, indeed. ALEC develops model legislation that its legislative members take to their respective states. This way, it gives the public the impression that these ideas have widespread support across the country, and that said support just popped up independently.

Dues for corporations are $7,000, $12,000 or $25,000 depending on the membership level. The Koch Brothers, David and Charles, long-time drivers of ALEC are members at the $25,000 level. For the return they get on that minimal investment through legislation written by ALEC, you gotta figure these are pretty cheap dues.

Koch Industries, the second largest privately held business in the U.S., reports annual revenues of 100 billion dollars. For David and Charles, $25,000 is pocket change.

Dues for state legislators are just $100 for a two-year membership. There is no list of legislative members on the ALEC website, but the organization boasts that 1/3 of all legislators are members.

If legislators pay dues from their campaign funds rather than out of their pocket, it’s possible to find out which legislators are ALEC members.

Hollis Downs, for example, was a member of ALEC.

Each year ALEC legislative members in their respective states introduce about 1000 pieces of legislation, and estimates about 20% gets passed into law. Do you think legislators advertise that these legislative proposals were written by ALEC?

Of course not. It’s as if this legislation originated in their own minds as they contemplated what would be in the interests of the public they purport to serve. Who writes our legislation and who benefits from it should be public knowledge, especially when those two happen to be one and the same. As it stands now, ALEC is able to keep its fingerprints off laws that roll back environmental protection in order to increase energy company profits, roll back union rights for the same reason, and roll back voting rights in order to get more corporate-sponsored Republicans elected.

I should say are USUALLY able to keep their fingerprints off legislation. In November, Florida Rep. Rachel Burgin introduced a bill to reduce corporate taxes. She made the embarrassing mistake of using the model bill written by ALEC’s Tax and Fiscal Policy Task Force rather than changing the wording a little.

Rep. Burgin forgot to delete the following from the bill: “WHEREAS, it is the mission of the American Legislative Exchange Council to advance Jeffersonian principles of free markets, limited government, federalism, and individual liberty.” Oops.

So when you hear the constant drumbeat of privatizing public services like education and prisons, demolishing EPA regulations, initiating voter ID laws, destroying collective bargaining, remember where these ideas originated–ALEC. The reasons given for the need to do these things are not the real reason behind the push to do them.

To take just the first of these issues–why, you ask, is the Koch brothers-backed effort to privatize education such a priority? Well, I’m glad you asked. That effort has an interesting history.

Charles and David Koch’s father’s name was Fred. Ol’ Fred ranted and raved that public school books were filled with communist propaganda. His paranoia about communist infiltration extended to President Eisenhower, the Supreme Court, and the national teacher’s union. That man hated him some unions!

I suspect the Koch paranoia about public education and union hatred stems from Daddy Fred’s deranged mind. Plus, there is money to be made by privatizing schools, so what’s not to like? Of course the home schooling movement also fears that teachers might indoctrinate their kids with science, so there’s that too.

When David Koch ran for VP on the Libertarian Ticket in 1980, he pushed the idea of tax credits to encourage alternatives to public education. Over 30 years later, he’s still pushing for taxpayers to pay for private schools.

So what is the strategic goal in the legislation ALEC advocates for and that Republican governors push? Think about it.

They want to control what’s taught in schools (the Kochs now fund university departments IF they get to approve the professors and the content of the courses). They want to teach the scripture of unfettered capitalism, where unions are socialist Satans instead of being a countervailing force to corporate power.

It’s important to break up unions since they fund primarily Democratic candidates while corporations fund primarily Republican candidates. Disregard any noise about the need to break up public unions because of budgetary problems. That’s merely a convenient ruse.

As long as plutocrats can pit poor whites against blacks, blacks against Latinos, and private workers against public workers, that animosity keeps our attention off the real problem–corporate ownership of government.

The EPA is a favorite whipping boy for ALEC, and they are going berserk over the new consumer protection bureau. Heaven forbid that anybody in government look out for the interests of the little guy.

Until the sudden rush to crush unions by new Republican governors last January, I had never heard of ALEC. My colleague, Tom Aswell, wrote a column about ALEC sometime last year, but my guess is most Americans haven’t heard of the organization either.

Yet for 40 years about 300 of the largest corporations like Koch Industries, Exxon, Centerpoint, Verizon, AT&T, Bank of America, State Farm, Blue Cross, Pfizer, and Walmart have used ALEC to push legislation written by themselves to benefit themselves, but put forth by legislators. Local company Hunt-Guillot is also a member.

I envision ALEC as something like a computer virus, stealthily infecting our political system without our knowledge. We notice things slowing down as it spreads behind the scenes until, like a computer, our politics cease to function.

As if there weren’t already enough corporate influence in government, the Supreme Court two years ago allowed unlimited money into the political system with their Citizens United decision. Super Pacs will probably spend more money than political parties in this year’s election.

As someone once said, “Legislators ought to wear logos like NASCAR drivers so everyone would know who sponsors them.”

“It doesn’t raise taxes on businesses and families. It’s a strong reform budget. We’re going to continue to reduce the size of state government.”

–Commissioner of Administration Paul Rainwater, on the executive budget to be presented to the Joint Legislative Committee on the Budget on Thursday.