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13.1.11

Lack of political will crippling best LA budget solutions

Smoke signals emanating from important decision-makers concerning Louisiana’s 2011-12 budget suggest competing views on its formation, and that some degree of synthesis will end on shaping the plan.

At a panel set up by the Louisiana Association of Business and Industry, member of the Senate Finance Committee state Sen. Jack Donahue argued that the state needed more aggressively to pursue cost-cutting recommendations made by a commission he headed, which would include constitutional and statutory changes to add flexibility to state spending choices. As it stood, a forecast deficit of $1.6 billion (more guidance to be provided on that later today) would have to be removed from a pool of $2.6 billion because of the hundreds of dedicated funds existing in the state. Almost by default, this strategy removes rationality and prioritization as a goal from budgeting decisions.

However, it seems little enthusiasm exists for Donahue’s call to increase ability to plan by importance of function, at least in time for the upcoming budget. Because constitutional amending would have to occur, necessitating a vote of the people, these could make their way to the people in time to affect this budget cycle only by dealing with them in a special session. While one is on the way to deal with redistricting, no hint has emerged this other issue will come up during that.

Instead, another view articulated by House Appropriations Committee Chairman Jim Fannin is that the two major areas funded by the $2.6 billion, health care for the indigent and higher education that comprise two-thirds of that amount, can bear much of the brunt. This simply is unrealistic, for both legal and practical reasons.

While this space has featured many posts on how changes in practice can make both enterprises run more efficiently and thereby save the state money, these things cannot be implemented in the short run to save so much money for next year. Constitutionally, a certain kind of health care must be provided to the poor and disabled, and legal requirements must be met because federal funding takes care of a large portion of this. Although the provision of higher education involves none of these questions (except that it can’t fall below spending a certain level because of requirements for money doled out by the 2009 federal spending bill), the fundamental reforms here by their nature simply cannot happen so quickly, and probably would take a decade to discharge fully, given the politics of the situation.

With reimbursement rates teetering on the verge of encouraging providers to vacate the system and with the 2010 federal health care changes imposing additional costs to states in order to provide a smokescreen that they actually will save money, reduction of coverage is the only way to spend significantly less in health care, which can run afoul of constitutional and statutory imperatives. And there seems no political will by Fannin or any other elected official to do the only thing that will save enough money in higher education: immediate merging and closings of programs, schools, and higher education governing systems. Thus, if this comprises Fannin’s plan, he speaks irresponsibly and does not contribute to any constructive attempt to produce a realistic and workable budget. Worse, he tries to create a straw man argument that the public would not vote to accept bigger cuts in the most prominent dedications if Donahue’s changes were presented; the point is it would be more than willing to allow for redirections from the 90 percent or more of the picayunish dedications which a carefully worded amendment would permit.

Commissioner of Administration Paul Rainwater, by contrast, has continued on the only politically-manageable course to date: force reductions sprinkled in with dropping a few functions, which is all the executive branch can do without legislative approval, and continuing efforts to increase efficiency. Such efforts (like almost no merit raises for state employees as part of a gambit to introduce more efficiency, better matching of need to resources in health care, privatization, etc.) already have paid off to the tune of hundreds of millions of dollars but it’s not going to be enough fast enough to balance the budget for next fiscal year.

(Part of this strategy also entails raiding every year the funds into which dedications flow, by legislative direction via appropriations bills since money is not spent because of personnel and programmatic reductions, the excess piles up in a fund and must be removed to be used elsewhere. Here, Fannin is hypocritical in that he rails against the use of these “one-time” funds yet does not endorse the fiscal changes necessary to prevent the practice he criticizes.)

It bears repeating that Louisiana has a spending problem by per capita measures of spending and personnel. But solving it requires putting the state into the position where it can be done in a manner that maximizes the ability to spend in the most needed areas while jettisoning low priority expenditures, as well as doing it more efficiently. Only Donahue’s view suggests this, while Rainwater primarily addresses the efficiency aspect and Fannin’s denies the necessity of any need to set priorities and just to hack at is what possible. (And then there’s Treasurer John Kennedy, who takes a mix of Rainwater’s and Fannin’s approaches and puts them on steroids to provide many good, but some questionable or unrealistic, suggestions.)

Political resolve seems in short supply for the most optimal solution here. Hopefully, its paucity won’t be such that least optimal one gets chosen.

12.1.11

LA higher education must plan mergers, closures now

Perhaps advocates of more efficiency in Louisiana higher education should take the recent retreat of Southern University Baton Rouge from raising admissions standards as a slap in the face. Then again, the new statewide 2012 admissions standards alone threaten creating greater system inefficiencies that must be addressed.

SUBR had plans to raise the average American College Test score to 22 by 2012 and increase its minimum grade point average in high school coursework from 2.0/4.0 to 2.5. This would have been on top the elevated state requirements that essentially changed the current standards that, relative to SUBR, mean students will have to have at least a 2.0 (they don’t have to now), that this be on core courses, and creates a minimum ACT subscore of 18 on English and 19 on math (by 2014 with no minimum required now). Instead, SUBR has decided to indefinitely postpone implementation of this.

Little wonder, since even the incoming state standards promise to trigger an alarming drop in enrollment when they go into effect. While the voluminous reporting of Louisiana higher education includes many things, one thing not regularly reported is average ACT scores for schools. But percentage of students on the Taylor Opportunity Program for Students gives a decent proxy of how many students may be denied admittance by 2014, as one of its requirements is a minimum ACT of 20 and core GPA of 2.5. This information also is not made directly available by the Board of Regents but can be found in their TOPS reports.

11.1.11

LA officials unwisely disregard looming pension crisis

As much deserved attention has gone to the budgetary difficulties Louisiana faces in fiscal year 2011-12, undeservedly pushed out of focus has been the ticking time bomb known as Louisiana’s unfunded accrued liability (UAL) for its pensions to state workers. State politicians and retirement systems officials don’t want people to think it’s a problem, but pesky watchdogs keep trying to counter that illusion.

The latest comes from an article in National Affairs that looks at the postures of all states on this matter and finds most of them having at least some problems (it also includes an analysis of expected health care-related forecast expenditures as well). Louisiana is ranked as having the tenth worst situation in per capita terms at a total between pensions and health care of around $24 billion or $6,000 per capita.

This comes on the heels of a report issued last year, again reviewing the sorry state of pension funding among states and which identified Louisiana as the sixth worst in fiscal shape, in that, at current rates, it would run out of money by 2020 and then present a bill for $4.3 billion or 27 percent of projected state revenues the next year (using a forecast of 8 percent return for and 3 percent revenue growth into the systems).

10.1.11

TX shows way for desirable LA higher education changes

As debate continues in Louisiana over how to make higher education deliver more efficiently in order to reduce budgetary pressures, Texas forges ahead with ideas with which Louisiana needs to take a good, long look.

Two approaches nationally drive the call for reform in higher education resource allocation, the linking of university performance to student outcome and greater transparency. Louisiana has more aggressively entertained the former with the implementation of the GRAD Act, but has not really engaged in the latter.

Not like Texas, and in particular Texas A&M University. While Louisiana State University Baton Rouge might have the defeated the Aggies in the Cotton Bowl, A&M puts the Tiger administrators to shame with its willingness not just to put some financial figures in the public domain, but for giving them some context and to use them in management decisions. For example, while in Louisiana it’s possible for the public to get access to public college faculty members’ salaries, in Texas schools must post online, in an easily-accessible way the budget of each academic department, the curriculum vitae of each instructor, full descriptions and reading lists for each course and student evaluations of each faculty member – and A&M has taken the further step of computing cost-benefit analyses for each faculty member in order to reward high performers with bonuses.

A&M’s pioneering effort wasn’t without problems. Originally, it also published salaries and cost per student for individual faculty members but the effort was rife with errors and provided inadequate context – for example, while by the numbers somebody pulling six figures who taught few students may have seemed far less efficient than another who taught a thousand at a much lower salary, the latter may have little chance to teach as effectively if given very large classes. As a result, A&M eventually pulled the report from public view.

Still, it was a step in the right direction and certainly the idea to use the data privately to reward productivity is solid. As always, the devil is in the details in terms of the definition of “productivity.” Using the above example, the likely reason one faculty member makes much more than another is a record of voluminous research (usually defined as number of publications and papers presented, with some subjective analysis of their quality factored in). And while research production is good for teaching ability because it further informs an instructor, often there is little correlation between teaching ability and research production, if in fact this is not a negative relationship. Further, courses offered may reflect more arcane research interests than in necessary offerings in a discipline. Yet this archetype reaps the highest rewards in academia, the exact opposite of the primary purpose for its existence: where the best teachers (meaning those whose students learn the most and the most useful information in a fashion that sharpens their critical thinking skills) should be expected to teach more students and receive the highest salaries.

As such, to some degree Louisiana should emulate Texas and A&M. Thus, even though it’ll be all busy dealing with redistricting and budgeting this spring, the Legislature would be wise to pass legislation that:

· Requires putting online (within three links of the home page is the Texas standard) the budget of each academic department, the curriculum vitae of each instructor, the salary of each instructor, the number of students taught by each in the previous year, the average salary cost (including fringe benefits) per student for each, the average grade point average for each class taught by each in the previous year, full descriptions and reading lists for each course from the previous year, and student evaluations of each faculty member from the previous year (with an explanation of the methods/instruments involved)

· Mandates each department require an assessment of its graduates of its majors offered, outline how that assessment is conducted, produce the aggregate scores of the assessments, compute the number of graduates in each major, and publish these previous years data online as well

· Put online, for the previous year, overall university profiles of faculty salaries, by mean and mean per quartile, numbers of tenured, tenure-track, non-tenure-track, and adjunct faculty, list all administrative and staff positions with brief job descriptions and their salaries, the budget of each non-academic department, and ratio figures of administrative/staff costs to faculty costs, and ratio of the number of staff/administrators to full-time faculty equivalents

Not only would this produce information that can be used for innovative productivity enhancement plans as A&M is attempting and assist in budgeting and strategic planning, it also would increase transparency so students and their families can weigh the deployment of their (and maybe taxpayer) dollars in higher education decisions. As Louisiana’s public continues to become more skeptical about the utility of higher education spending in the state, these changes can restore its confidence in this area and lead to more efficient allocation of resources.

9.1.11

Informed consensus predicts demise of Third District

Maybe Gov. Bobby Jindal isn’t going to interject himself into the redistricting process, but myself and several other Louisiana political scientists – all of whom who have studied and/or participated in the process – were willing to when we were part of a panel devoted to the topic at the Southern Political Science Association meeting in New Orleans last Friday.

Speculation about the placement of the state’s Congressional districts, with their necessity of paring from seven to six due to population loss, we considered to some degree. We concluded the matter mostly open-and-shut that today’s Third District, running from Acadian parishes on the west in a swath curling all the way across to the most southerly and easterly parts of the state, was a goner, its spoils divided among several existing districts. Several reasons suggested this:

· It will produce five districts favorable to (with four absolutely safe for) Republicans and one to (and safe absent scandal for) a black Democrat, an important consideration where roughly three-quarters of each legislative chamber is composed of Republicans and black Democrats, with a governor from the GOP

· The population distribution by race in the state makes it about impossible to draw any more than one minority/majority district, but the requirement that at least one majority/minority district get drawn makes New Orleans the epicenter of that district, menaing to increase in size to get its additional population it only can move south or west – and west, as well as the Northshore, are constrained by the necessity of drawing a separate district grabbing at least part of Jefferson Parish, boxed in as this (currently the First District) is by geography (Mississippi to the north and east)

· The Third District’s representative of days-old tenure, Jeff Landry, has no seniority compared to all other majority/majority district holders nor any time in elective office – important because the more senior members have built up contacts among state legislators and have leverage over them even in this earmark-less era, none of which Landry has delivered

· Without Jindal applying little to no pressure, the two most important figures in the decision will be House and Governmental Affairs and Senate and Governmental Affairs Committee, respectively, Chairmen state Rep. Rick Gallot and state Sen. Bob Kostelka – both from north Louisiana and almost neighbors, so it is unlikely they would look favorably on any remapping that, as the continuance of anything like the Third would require, would put all of north Louisiana in one district, as it now is split between the Fourth and Fifth in essence creating double representation

· It also seems that any plan that keeps something like today’s Third around would create any of odd shapes, non-compact districts, and make strange bedfellows of different areas of the state, at least relative to a plan of carving up today’s Third – these nebulous judicial standards of contiguity, compactness, and community

· More future political careers also might be better served by the division of the Third; for example, the state Senate district of Neil Riser makes up a good chunk of today’s Fifth District and if he harbored progressive ambition he would find something that preserved something like the Third would split his voting base

We agreed that both politically, because there might be Republican control of both legislative chambers by the time the process runs its course, and from a legal/judicial standpoint, given the criteria set forth above plus as there seemed to be no concerns of lack of equiproportionality (districts with fairly equivalent populations) to draw such a plan, that the dismembering of the Third would occur. That doesn’t mean alternatives won’t be offered and debate won’t occur over them, but the dynamics clearly favor this plan.

As for Jindal, we suspect he hasn’t completely detached himself from the process. If he does have a preference, as long as the Legislature seems headed in that direction, he’ll stay out of the process. But if he does and for whatever reason the Legislature doesn’t appear to head in that direction, we may not have heard the last from him on this subject.