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9.12.10

Layoff setback reminds Jindal to push for pay reform

Earlier this year, Gov. Bobby Jindal swung for the fences with civil service reform. He missed, lost his taste for it in the immediate future, and took the easy route out, but now it has come back to haunt him, at least temporarily – giving him even more incentive to return to finish the job.

For classified employees of the state, in a reduction-in-force situation, any plan must be approved by the State Civil Service Commission, comprised of six gubernatorial appointees (from selections made by state private university presidents) of fixed terms and one elected representative. For his own Division of Administration, Jindal had permitted forwarding a layoff plan (one of several) compelled by the state’s necessity of meeting a tremendous projected budget deficit, as his office is one of the few that does not have statutory or constitutional protection from reductions during the budget year. The CSC rejected part of it.

The rationale given was in the plan “meets requirements” employees would be laid off as the sole criterion. Employees are rated by their supervisors into any of five categories, where the bottom two are considered unsatisfactory and continued performance at those levels can lead to discharge, and the highest three are deemed at least adequate performance. “Meets requirements” is the lowest of these three. Rule 17.15 of the Civil Service Rules states that in a layoff situation people in the two lowest categories are first out the door, but after that they “shall be laid off on the basis of the least years of service as determined by adjusted service date.” The presumed sin of the Jindal Administration was to try to lay off the middle category individuals of greater service credit before those rated higher. Only a year-and-a-half prior, changed due to reforms, seniority had held a near-absolute privileged position for any layoff plan.

Commissioner of Administration Paul Rainwater lamented the development, noting that differentiations among the highest categories of performers ought to mean something for both pay and layoff matters. One commissioner said that wouldn’t be a good idea because of the varied way in which supervisors may rate individuals and in how jobs differ.

Note the lack of logic in that assertion. If those kinds of issues cloud the validity in distinguishing among the three highest levels, would they also not invalidate distinctions between them and the lowest two categories, and between the two lowest categories? Yet the CSC traditionally has felt this way about the categories because they’ve been a joke for decades.

This is because of the ridiculously skewed distribution of ratings, where annually not even one percent of employees rated fall into the lowest categories, and the second-highest category (“exceeds requirements”) is the modal position where about half of employees end up. This clearly is unrealistic to think the state has cornered the market on fabulous employees and points to supervisors padding performance reviews because the prevailing practice for decades has been to give annual “merit” pay raises of the same size (four percent) to anybody in the top three categories regardless in which of those three categories they scored. That essentially rendered them meaningless.

The Jindal Administration correctly recognized this had evolved into a kind of cost-of-living increase in practical terms and wanted to put an end to this by giving agencies greater autonomy in giving raises differentiated by scoring without any guaranteed minimum raises. Twice in the last year it tried to steer the Department of State Civil Service (which recommends actions on state personnel to the CSC) into creating a plan to do so, and twice the DSCS came up short. Jindal then abandoned the effort. Instead, for two years now, he simply denied in the budget money for any of these so-called merit raises.

Forcing such a plan through (not only by turning off the money for raises but also by threatening the CSC appointive members with non-reappointment) would have helped even out the skew as agencies would see value in distinguishing among employees, so a lack of will on the Administration’s part bears some blame for failure to do so. But what would have done more would have been for the CSC to follow through on a pledge made a year ago to improve training of supervisors in their evaluation capacity to forestall the possibility of invalid reviews and that probably would correct for the skewing. By the commissioner’s remark made above, clearly it did not keep its commitment. Together, these initiatives would have given much more meaning to scoring in different categories and improve Rainwater’s argument that, among adequate performers, they should mean something and be employed in reduction-in-force situations.

Rainwater has said he would like the CSC to revisit that layoff rule. However, if Jindal was serious about correcting for that and the disconnection between pay and performance, he would revive his efforts to remake totally the system, being insistent this time that his preferred plan go through and something be done about the skewed distribution. The terms of three members of the CSC end tomorrow; Jindal should tell them in no uncertain terms that he will not reappoint them if by the March meeting the DSCS director (their appointee) does not forward his plan to them and they approve it. If they balk, if he acts expeditiously he can get replacements that agree with him in place in time to enact such a plan for the next fiscal year.

It may be easiest to just keep withholding money for raises until the system forces itself to reform under existing rules, but it would happen quicker and with a greater chance of permanent beneficial change that would increase efficiency and service for Louisiana taxpayers if Jindal moves goes for the grand slam on this one. Election-year politics could distract him from this mundane but valuable attempt, yet the conditions will never be better for him finally to fix the morass that has interfered with effective use of taxpayer dollars.

8.12.10

Landrieu prefers class warfare over good policymaking

Somebody should tell Sen. Mary Landrieu that ignorance is unbecoming, especially in a U.S. senator, but her latest statements seem to reveal that she doesn’t mind coming off as a political and economic illiterate more interested in a petty agenda.

Landrieu, who appears to be a millionaire and whose spouse does well in law and real estate, spared little vituperative enthusiasm in criticizing the deal made between Pres. Barack Obama and Democrat and Republican congressional leaders that would extend for a couple of years tax cuts for all income-producing Americans. Her anger came over giving those who make a million or more bucks a year the same break, who constitute less than one percent of all filers and who pay around a fifth of all income taxes – more than about the bottom 80 percent of filers.

Why she has such acrimony over fair treatment of those who foot her salary in great disproportion can be inferred from statements such as to her deal meant to “borrow $46 billion from the poor, from the middle class, from businesses of all sizes” and that to relieve the crushing burden on these million-dollar earners was “moral corruptness.” The sheer hypocrisy and vapidity of these remarks deserve further scrutiny.

It would appear that the “borrow” phrase to her means that would be the initial estimated forgone revenue as a result of not raising income taxes on million-dollar earners beginning next year. How she thinks this can be “borrowed” from the poor is gibberish as they, by definition, don’t have those funds, how the federal government would “borrow” from the others is unclear, and she seems unaware that many in small business are precisely those earners she would prefer to punish. Perhaps she means it would be money that could be spent on them in the form of government programs and benefits; in others words, the government would have to borrow $46 billion more without the projected initial revenue.

But since when has Landrieu cared at all about federal government debt? She gleefully has voted for record- and back-breaking Democrat/Obama federal deficits, and even before then went along with the milder (but, before Obama, record) Pres. George W. Bush deficit spending. To object now to a conjured figure that represents less than 6 percent of the 2009 spending bill Landrieu supported that did next to nothing to aid in economic growth is the height of hypocrisy.

Add to that Landrieu’s lack of understanding basic economics. As empirically confirmed, tax reductions have the most salutary effect on economic growth for all in an economy, with a multiplier of anywhere from three to five times in economic output. Thus, it should not be long before the $46 billion figure assumed from a static analysis of tax revenues disappears through the reality of dynamism that typifies free markets and free individuals’ decision-making processes, mainly because the wealthiest filers themselves pay for most of it.

That’s because this multiplicative effect of tax cutting also has the interesting effect of increasing the proportion of taxes paid by the wealthiest earners. For example, in 2001 before the Bush tax cuts the highest one percent of filers paid about 34 percent of all federal income taxes while by 2008 they paid 38 percent, compared to the lowest 50 percent who paid four percent in 2001 which fell to below three percent by 2008. The same is true in share of adjusted gross income paid in taxes; from 2001 to 2008, while the proportion of adjusted gross income paid in taxes by the highest one percent of filers fell 15 percent, that proportion fell 63 percent for the lowest half.

The historical record clearly demonstrates that, in the long term, across-the-board tax cuts increase the total contribution made by the wealthiest while relieving the burden most the lowest-income filers. Simultaneously, it is the fairest treatment especially to the small group that pays incredibly disproportionately highly to allow so many that pay little or nothing to receive their transferred wealth. If Landrieu regards this as “morally corrupt,” one wonders just what her morals are.

In the final analysis, these statements demonstrate that Landrieu prefers conducting class warfare over pursuing good policy.

7.12.10

LA disabled cost savings plan good if done carefully

In efforts simultaneously to create a more efficient delivery system for health care for the developmentally disabled that also would tackle burgeoning costs for Louisiana, the state has taken a better approach but one that cannot be undertaken haphazardly

Through the last decade, Louisiana has seen a steady expansion of its provision of home-based care for the developmentally disabled (people with a significant mental and/or physical disability). This was as a consequence of judicial actions that determined the state was not providing legally-obligated care in the least restrictive environment. Until then, nearly all such people were forced to live in large institutions in order to receive state assistance, which also had the effect in many cases of being more expensive, that also prevented some clients from being able to be employed, or if cared for at home without state assistance took family caregivers out of the workforce.

Unfortunately, the program grew quickly and without adequate matching of needs and state resources, creating another potential legal situation based on the federal mandate that home- and community-based care’s costs could not exceed on average institutional care. At the same time, the budget crisis began impacting the state and its peculiar fiscal structure thrust the bulk of spending reductions on health care. The state, by now led by Gov. Bobby Jindal, responded to these twin imperatives of cost cutting by instituting a Resource Access Model (RAM) which worked well in many cases but had flaws in administration and in adapting to extreme cases.

These problems became exposed in a situation where a client would have received a cut in hours served, even if at the 64 weekly maximum now allowed, that created a medically questionable situation where the state eventually entered into an agreement to permit more. While this was going on, in response to the budgetary crisis, without any legal imperative as motivation, reimbursement rates to providers of these services (all are contracted to the private sector) were diminished in a series of rounds.

Now using the same procedure, the state wants to implement completely hours reductions where indicated, as well as move to the next part of the reform which is to take home-care clients whose needs are conducive to the strategy of putting them into small group residences, where this will cost less. These have been announced as substitutes for the tactic to continue to cut reimbursement rates because those cuts were making it difficult for providers to continue to operate. Again, no legal imperative exists to choose this approach but it is driven by budgetary facts of life.

Some argue this could lead to additional dangerous situations. Others maintain this could violate the legal least-restrictive standard. One interest is planning legal action on the basis of the administration of the RAM.

Thus, the state has to be careful in pursuing this course to make sure lives and rights are protected. Assessments need reviewing and if any seem questionable, they need redoing. Extreme cases where home care costs still would be less than institutionalization costs even if they exceed the maximum hours must be granted. The move into group homes for those affected must be carefully vetted so that no significant changes in autonomy occur for them.

The state does have the law on its side – no recipient is guaranteed services at home nor, if granted, can their costs exceed institutional costs. More efficient service provision that also will save taxpayers’ dollars is possible with this plan, but it is imperative that the state does it correctly.

6.12.10

Study shows how to remove LA higher education waste

The mix of some good news but more bad news regarding Louisiana’s higher education contained in New Orleans’ Pelican Institute for Public Policy report on it reveals some solid policy recommendations for system reform.

The key result noted in “Louisiana: Public Institutions” is admissions standards for the state’s baccalaureate-and-above institutions are too low. They contribute to sparse completion rates on first-first, full-time, freshmen entering in the fall semester (FFFF) six-year graduation rates – in the state, on average only 39 percent do so compared to the national average of 54 percent. This creates a cohort of around 30 percent enrolled in state institutions few members of which are likely to attain a baccalaureate degree and essentially wastes university resources – much of which are taxpayer-funded. The study pegs this number at $440 million a year, or a third of the entire recent budget of higher education.

There is some good news in that even as the FFFF six-year rate in Louisiana is 15 points below the national average, degree completion remains relatively good at 20 percent, above the national average. This means of those enrolled at a given time, 20 percent per year complete a degree. This indicates that a number of those who start out at a public institution are not dropping out but instead are transferring elsewhere in the system to finish the degree and shows the performance of some institutions (such as mine, Louisiana State University Shreveport) that rank low on the FFFF six-year rate rank among the highest in completer percentage of total enrollment. Still, it also means there is too much inefficient churn in the process of transferring to complete, meaning likely failed courses at one institution while at the other(s) additional courses may have to be taken in order to meet different requirements.

5.12.10

Democrats mistakenly think LA taxes, spends too little

Perhaps one reason why Louisiana’s Democrats are slipping into political irrelevance is they see taxing and redistribution of wealth as more important than spending less to reducing bloated government in order to solve the problem of state budgetary deficit.

It’s difficult not to draw this conclusion when parsing the outcomes of a powwow many legislative Democrats attended some days ago where some of them, including the highest ranking of them all state Sen. Pres. Joel Chaisson, argued that temporary tax increases ought to be part of any package to deal with a predicted $1.6 billion deficit for the next fiscal year.

The implicit ideas here, in suspending some tax breaks such as for sales taxes for energy for business, the deductibility of itemized expenses permitted beyond the standard federal income tax deduction against income for individuals, and in recent rate reductions for middle- and higher-income tax household filers, are that Louisianans and their businesses, especially those earning higher incomes, don’t pay enough in taxes and that increased taxation to support higher spending will not hurt the economy. Empirical investigation shows as demonstrably false both implied notions.

According to the Tax Foundation’s invaluable calculations with the latest data, compared to other states Louisiana’s business suffer higher state and local taxation, ranking only 36th (that is, 14th highest tax burden) in its Business Tax Climate Index. In per capita terms for individuals, the minority who own homes get off easily with property taxes as the state has the fourth lowest ($463), but almost the entire population endures the fourth highest sales taxes ($2,168) and are 35th in income taxes ($715). However, in the last instance keep in mind that of all household filers the bottom 42 percent in adjusted gross income ($25,000 or less) paid less than 4 percent of all income taxes collected, while the highest 13 percent (more than $100,000) paid a severe 58 percent of all income taxes collected, meaning the 45 percent of households in between paid around 38 percent. These statistics show that if there is any imbalance in taxation, Louisiana remains overtaxed.

Add to this the understanding that tax and spending policy very directly impact economic growth and thereby government revenue generation. As economic theory, history and statistical studies reveal, more taxes and spending are more likely to harm than help the economy. And it’s not like Louisiana is a modicum of spending restraint already – it ranks tenth in state spending per capita.

Especially in a recession, elected officials need to understand the harmful effects of tax increases and higher spending levels in government. Louisiana Democrats don’t appear to while the public, who unlike these privileged folks is suffering through the effects of vastly increased government spending at all levels over the past few years, does, which is why the public increasingly rejects Democrats at the ballot box.