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21.1.10

Landrieu can't talk her way out of big political damage

No amount of spin emanating from Democrat Sen. Mary Landrieu can change the fact that the victory by Republican Scott Brown in Massachusetts Senate special election is for her an unmitigated political disaster. The interesting part is in discovering just how stupid she is willing to appear in trying to avoid that.

Landrieu’s subsequent remarks about this betray any one or all of a heretofore-unimagined vapidity, an incredibly stone ear, or a super-sized blithering idiocy. Let’s start with her declaring that the victory by Brown, which deprives Democrats of a chance to be able to break Republican Senate filibusters to prevent a health care reform bill that would raise costs, premiums, and lower quality that Landrieu supported, was “a wake-up call to the wing of the Democratic Party that wants the federal government to overreach and overspend.”
By that statement, Landrieu suggests she is not part of that “wing” of her party. That being the case, if she doesn’t want “the federal government to overreach and overspend,” then why did she vote for a bill that precisely did these things? (And, in another self-negating act, for a spending bill that has done nothing positive for the economy?) Despite numerous constituent outcries in Louisiana against the bill for these reasons (that is, when she could be bothered to listen which appeared to be seldom) to alert her to this fact, she seemed to ignore the reality of what she now admits.

20.1.10

Absent Vitter blunder, Melancon Senate chances gone

You might write it off as a fluke owing to sample size, method, etc. or not compelling if one poll gives a candidate even a decent-sized lead 10 months from an election. But when two give a Louisiana candidate with the field essentially to himself for the Senate an average of a 19 point lead and an average of over half the electorate intending to vote/support him – especially an incumbent Republican – the race is over.

Republican Sen. David Vitter finds himself in this enviable position as a Rasmussen poll of likely voters by phone and a YouGov/Politmetrix Internet poll of likely voters put him solidly ahead of Democrat U.S. Rep. Charlie Melancon. This is the largest lead registered by one major-party candidate over another in almost two decades in the state, before Senate races started to field competitive Republicans. Also favoring Vitter is that it’s been eight decades since an incumbent lost in Louisiana and, in the competitive era, no Senate candidate with such a lead ever has lost.

Add to that the darkening red shade of Louisiana statewide electoral politics and it might be a long, lonely, and resource-poor interval for Melancon as he beats his head against this brick wall. It’s difficult to think of any normal scenario where Melancon could pull this out given these numbers and must be stoking up the heartburn among himself and his campaign staff.

For example, what if the election of Republican Scott Brown from Massachusetts to the Senate, flipping the seat, stops radical health care reform in its tracks? Without that shoved down an unwilling American people’s throats, that issue goes off the table and Melancon won’t have to deal with that toxicity? Not really, because Vitter will remind all he was right from the start while Melancon had to be dragged kicking and screaming to starting over.

Or if Obama suddenly came to his senses and began to try to govern from the center instead of the far left? No, Vitter gets the credit for opposition that he can legitimately claim pulled Obama in that direction, while Melancon becomes an enabler for votes such as for the spending bill that has done nothing positive to the economy and hiked debt up to previously-unimaginable levels.

(As a side note, with Secretary of State Jay Dardenne announcing that he won’t contest Vitter for the GOP nomination, that would indicate Dardenne may be seriously contemplating getting into the lieutenant governor’s chair if, as he is predicted to do, current holder Mitch Landrieu wins the New Orleans mayoralty. His odds would have been better than Melancon’s but still long and the expense huge, so this comes as no real surprise regardless of whether a vacancy will come soon.)

As always, a lot can happen in a little under 300 days. But the facts are if anybody is going to come back from 20-point deficits in 2010 elections, it’s not going to be a Democrat. Numbers and history show that, unless Vitter is crazy enough to commit another “serious sin,” what once was considered a possible Democrat pickup opportunity has vanished.

19.1.10

Some in LA higher education their own worst enemies

Often in this state, elements of higher education become its own worst enemy, indicated by a tantrum thrown concerning the adverse impact of budget cuts on Louisiana’s colleges and universities that will only turn off the public even more about their plight.

Last month, the Gov. Bobby Jindal Administration was handed the unpleasant news that before the end of this month constitutionally it would have to axe $248 million from current year spending. Because of the fiscal structure of the state’s spending of its own revenues, the largest absolute hit happens to health care, but the largest proportional hit goes to higher education. Added to previous reductions for the same reason, higher education has now gone from a $1.4 billion budget a couple of years ago to about $1.15 billion.

It would have been worse without the federal spending bill passed last year, and part of that law which allowed money to be used for higher education also has a provision that says support levels for higher education can’t go below 2006 levels. Projected cuts of $84 million this time would put the state $60 million below, thus to proceed a waiver from the federal government – already successfully obtained by two other states – must be granted.

18.1.10

Case shows desirability of LA retirement policy change

Louisiana House Speaker Jim Tucker got resolved that the Legislature should look at changing Louisiana’s retirement system from a defined benefit to a defined contribution plan. The experience of former Jefferson parish President Aaron Broussard shows why this is a wise move.

Until 1990, most state employees and many parochial and municipal employees on hiring were enrolled in a defined benefit retirement plan which means they receive a set annuity (adjusted optionally legislatively for cost-of-living increases) monthly. It is computed typically at one of 2.5, 3 or (for elected state officials) 4 percent of base salary times number of years served. Base salary is determined by an employee’s retirement eligibility (usually 30 years in or after age 55) date for the three following years if an employee requests to declare participation in the Deferred Retirement Option Program. During that time, money that would be paid upon retirement is banked and then becomes available shortly after retirement. If the 36 months passes and an employee continues to work, the money earns interest until it can be withdrawn.

Broussard, who resigned under pressure, has almost-immediate access to $185,000 (although for tax reasons he may wish to do otherwise) because of his DROP participation. Further, he will draw a pension of about $90,000 annually, or about 72 percent of his last salary. If he has any, also available is compensation for any sick/leave days which can be substantial.

By contrast, a defined contribution plan essentially takes tax-free a part of an employee’s pay (currently 8 percent) and a state match (currently 7 percent) and puts them into what is essentially an individual retirement account. Upon retiring, depending upon age, a lump sum and/or annuity payments could be taken. Unlike the defined benefit plan, there is no disability or survivor’s benefit after five years of service.

Just by using this example, the state can save in at least three ways and promote more efficiency. First, the state doesn’t have to pony up money three years before retirement which looses interest income for it. Second, by not allowing employees to leave potentially in the 50’s and paying them essentially full salary, experienced employees are encouraged to work longer instead of becoming double-dippers by taking another job after state retirement. Third, the state won’t be on the hook for extras like disability pay, survivor’s benefits, and the like which should be the responsibility of individuals to arrange.

Thus, while it is impossible to say with certain actuarially, it is likely that the state would save money this way. Even if those costs ended up the same, it would bring more order to the process (no more predicting about who retires and dies when, just known amounts going into plans every month) and keep the state from having to front money early by DROP. Note also perverse incentives for early retirement would be reduced, and the state would save money by eventually not having to a pension-management apparatus.

The matter’s urgency intensifies because of the huge deficit the defined benefit plan has triggered in the state. It’s now estimated that the unfunded accrued liability on accounts – which constitutionally must be solvent by 2029 – is almost $17 billion which creates a massive debt to be financed. While a switch in strategy won’t reduce this, it will prevent it from becoming larger through new obligations.

Committees have mused about ending the current system by the start of the next fiscal year Jul. 1. A defined contribution plan won’t deprive future employees of a generous retirement if they behave reasonably, and will save taxpayer resources. The example of Broussard’s case should sensitize politicians and the public to the wisdom of making the change.

17.1.10

Legislators complain about wrong disabled policy

Some Louisiana legislators expressed perturbation over the state’s Department of Health and Hospitals abruptness in moving to privatize group homes the state has maintained for the developmentally disabled. More appropriately this emotion would be levied at themselves over their lack of alacrity dealing with the disposition of past privatization fruits concerning this clientele.

Members of the Joint Legislative Committee on the Budget complained that they and the relatives of individuals living in these homes, which are geared to serve moderately mentally and physically disabled individuals, received next to no warning of the decision before it was announced that the facilities were not going to be closed immediately and that over the next few months they would be privatized or, failing that, their residents dispersed to other homes. The move by the state came as a result of necessary mid-year budget cuts and similar previous utilizations showed that costs per client are significantly lower with comparable or better care in private facilities.

But it must be acknowledged even as legislators pontificate about how forcibly quick decisions of this nature – which aren’t that hasty in that closing such facilities has been a long-term goal of the Gov. Bobby Jindal Administration and before – threaten outcomes that provide for maximal care and peace of mind for client’s relatives, that in the minds of many of them there is another reason for their pique: as with any state-run operation, these homes are seen as devices by which to win votes locally. Being able to campaign with taking credit for providing this service, as well as the state jobs attached to it, is off the table when the state no longer directly provides the service or jobs. Legislators do not like it when executive branch officials take away their ability to be perceived as doling service and employment opportunities, so this was part of their angst although none will admit that.

Yet ironically, in the larger question of the state getting out of the business of direct provision of living spaces for the developmentally disabled, it is legislators themselves who are not addressing about the right thing nor making efforts to see that it is done. As the state has reduced its role, it has been slow to implement the cost savings from the growing privatization campaign which delays possible benefits going to that client population.

In recent years, beginning before Jindal assumed office, the state has had a strategy to shed itself of some of the supports and services centers for the most severely disabled and downsizing others to group homes. The strategy was to close and sell the facilities and, according to Act 555 of 2006, to use proceeds to fund more Medicaid waiver slots that would permit home- and community-based care. However, this has occurred at a snail’s pace where the state still has the facilities (one is no longer residential and four have been turned into glorified group homes) with costs still being even higher by keeping them operating with far fewer clients so that no proceeds have been forthcoming to fulfill that new law. This statute also would apply to the closing of these group homes.

Legislators should not be so concerned about facilities getting closed as they should be getting the proceeds from their sale into reducing the tremendous backlog in the waiver program that will only grow as de-institutionalization becomes recognized as an option for some clients displaced through the closings. Further, the cost savings (such as maintenance) from taking these properties off the state’s hands can go to addressing the budgetary crisis in the state’s Medicaid system because the state’s fiscal structure forces so many reductions on it. They need to pay more attention to their oversight duties on this account, and not so much sniping over decisions made for efficiency and effectiveness sakes.