Budget continues progress in right-sizing LA govt

Not a lot of surprises emerged in Gov. Bobby Jindal’s budget, but what ones did come from the specifying of details after months of general discussion were good to see, and brought Jindal nearer to his stated desire to see smaller, more efficient state government.

This one as a whole shows a small net spending decline despite small forecast increases in both the state general fund and federal funds, because of a roughly one-tenth decline in dedicated fund revenues. “One-time” monies total around $230 million, below the $377.5 million increase in the general fund revenue forecast between this budgeted and the fiscal year after, significant because of the House of Representatives rule that requires a two-thirds instead of simple majority vote to use such funds if they total higher than the forecasted change. (If this fails, the budget would cut from health care expenditures.)

As far what was known to be coming, the Jindal Administration will hope to breach the education special interests whose support of the current way of doing things continue to shortchange Louisiana’s children, but since that aggregate spending amount largely is cordoned off from politics, all Jindal could do was say no increase would come to that amount beyond that necessary by formula – appropriate as the state continues to shed students in its public school systems, even as reforms previously taken show some hope in reversing that. Jindal’s proposal to increase vastly parental choice is not budgeted in, but past data suggest it could drop spending levels and produce outcomes as least as good.

Also coming in as advertised but with a larger budgetary impact, retirement system reform that will reduce only marginally the unfunded accrued liability in the present but which certainly will reduce potential future such liabilities therefore will constitute an imperative part of the budget, not just for the $55 million savings it can provide this year but for the much higher future savings. Many compelling reasons exist for the reforms, and it’s no doubt fair that, as the state employees in question pay only 25 percent of their total retirement burden and contribute at a rate that puts Louisiana in the bottom third of states, that they repay the generosity of the taxpayers through this change.

Part of the generosity comes from health benefits offered relative to what gets paid in, and taxpayers’ burdens will be eased by Jindal Administration plans, as a part of the budget now formally announced, to find an administrator for the only health plan for state employees still run by the state. While the savings through efficiency would be $26.5 million on an annual basis (the change will happen halfway through the fiscal year, as the health plans operate on calendar years), taxpayers and ratepayers according to historical data should see savings into the future.

Some smaller items that previous signals from the Jindal Administration hinted might occur also got confirmed, such as the state’s exiting the absurdly inefficient ferry business in the greater New Orleans area and ending the conduit to a money sinkhole that has been tolls on the Crescent City Connection bridge. The items that did surprise show a continuing state commitment along these lines to move the state out of doing things that the private sector can do no worse than as well as and less expensively, and to move away from the use of institutions and towards community- and individual-based solutions to address needs.

Unfortunately, another small percentage reduction has come to medical providers paid through Medicaid. Small, but it’s on top of others in recent years and, hopefully, won’t reduce supply of those services significantly. One bright spot of these is a change to methodology that would serve the purpose of reducing resources into the state’s overbuilt nursing home sector, which will need many more years of population growth and of the elderly proportion of it in particular to get to a point where there will not be an oversupply of beds for those in actual need, when many can live better and more cheaply to the state in the community.

Pineville has begun to acquire the status of the center of Louisiana’s disability care directly by the state. The budget announced continuing plans to take behavioral health problem-solving out of a regimen of acute care episodes and into a continuum of care strategy, with Pineville’s Central State Hospital as the consolidated medical facility for those with intense support needs. Elsewhere, the budget encourages more integration of these disabled into the community with the necessary supports but performed by the nongovernment sector, to avoid past less effective and less efficient efforts. Pineville also retains its next-door Supports and Services Center for the developmentally disabled with intense supports needs.

But the other two remaining such centers (with several having been closed or converted away from residential facilities, and another becoming a group home), in Bossier City and Hammond will be transferred to private operators and even more emphasis placed on independent living for the developmentally disabled. Even as this will produce operational savings of $6.9 million (at a cost of a half to two-thirds what the state has paid), the budget also expands the number of waiver slots to enable home- and community-based care by 877,  at an annual cost of $17.3 million.

But you can’t win them all in Pineville. Not actually new in the sense this came up last year in a different way, Jindal also proposes closing its J. Levy Dabadie Correctional Center and housing its 330 low-security inmates at the nearby Avoyelles Correctional Center (which would require some shuttling to local prisons that have excess capacity), and then attempting to sell and privatize that facility, noting its per inmate costs are a third higher than the rates paid at Louisiana’s two completely privatized prisons already. This, like the retirement changes, would require legislation beyond the budget.

Consolidation also would occur with substance abusers imprisoned at Forcht Wade Correctional Center in Keithville to be transferred to David Wade Correctional Center, which already administers this facility, in nearby Homer. Together, these changes in the Department of Corrections would save over $10 million this fiscal year, and they should have no negative effect on public safety – in the past couple of years, the state’s prison population has been edging down overall, but more quickly among those in state prisons, so the excess capacity is there.

Meanwhile, higher education will operate essentially at standstill (including the recent mid-year reduction) but more reliant upon its own resources, through its ability for systems and institutions to increase tuition. Potential savings to taxpayers get circumscribed somewhat because they will have to pay for some of the increase through the Tuition Opportunity Program for Students (which, regrettably, was not changed to make it more a true scholarship program that reduces attraction of marginal students that end up wasting higher education resources as well), but this philosophy heads the state in the right direction. With tuition rates in the bottom half of the state, it’s appropriate that students take more ownership of their educations and rely less on taxpayers to pay its total cost.

All of Jindal’s budgets have headed in the right direction, but this one picks up the pace. While the most monetary impact comes from the retirement plan changes (which, hopefully, can be expanded upon to include all state systems in the future, not just one), given the gravity of that it might actually prove less difficult to achieve than the changes to correctional facilities (this time, Jindal applied more pressure for passage by tying the plan change savings into the budget), which, like concerning retirement issues, got derailed last year by the Legislature despite their benefits exceeding their costs. Yet if it ends up taking a form similar to this, Jindal will have succeeded in lopping off 10 percent of general fund spending and over 15 percent of total spending from his first year in office (and reduced the full-time equivalent state government workforce by 15 percent, the first time it would be under 80,000 in many years).

While macroeconomic conditions thrust this upon the state drove this process, that Jindal did it with no significant reduction in service, both in terms of those being provided and in their quality, demonstrated a good grasp of what were essentially unnecessary services or level of service to stop providing and also the skill to make programmatic changes (such as with the implementation of Bayou Health) to wring more efficiency out of government. A few more years at these budgetary levels, and Louisiana just might end up with right-sized government.