Veteran politicians know what these guys know when negotiating what they want – don’t be afraid to climb those golden stairs, ask for the maybe the moon but not the stars (going overboard makes one look unserious), and, while you’re unlikely to get what you initially claim you want, you still might get a pretty good deal. Gov. Bobby Jindal knows that, and his budget proposal with the necessary allied policy changes shows that, gives clues as to where policy might head, and provides a marker that assesses the degree of policy change success he seems likely to enjoy.
In each of the three big controversial policy objectives Jindal forwarded in the document released last week (although the details of the allied legislative changes necessary have yet to be submitted as legislation), relative to Louisiana’s ingrained political culture that condones government as wealth redistributor and livelihood provider, he takes a big, but not ridiculously so, whack. He wishes to ratchet back the gravy train afforded to state employees by altering its generous retirement provisions, to jumpstart institutional and individual education reforms to increase achievement, and to begin replicating what he has started to do in the health care field, induce greater efficiency through having functions performed outside of government bureaucracy when they can be done at least as well and for less, in the area of corrections. For each, there are some things he must be willing to modify and/or let go in order to get the rest.
Concerning changes in retirement policy, Jindal wants to have employees in one of the four state systems, the Louisiana State Employees Retirement System, which accounts for over a third of the unfunded accrued liability the state is on the hook for presently, instead of paying (typically) 8 percent into their pension plans to increase to 11 percent, which is closer to the private sector average of 18 percent. He also wants to base the pension payment on a five-year salary average rather than three, which may reduce the payouts, and increase the retirement age for those not almost there from 55 to 67 (still assuming 30 years in); the typical private sector pension plan has a retirement age around that age of 67, the Social Security standard (Louisiana state employees do not participate in the federal system). Finally, he wants future hires, and present employees in that system if they wish, to have a retirement plan in a cash balance system rather than the present defined benefit, which would operate like a defined contribution system except the employee contribution portion (Louisiana matches employee contributions, at a rate for most almost double the private sector average, for some much higher) would never be less than the amount they put in.
He has a great chance of retaining both the conversion to a five-year average, which past behavior shows would lower slightly the typical pension, and institution of the cash balance system or option, since these barely affect current employees of that system. Even the increased contribution stands a better than even chance of finding its way into law, given that state employees pay in currently at less than half the rate of those in the private sector, they only contribute about a quarter of the total support from all sources into their retirement, the average LASERS regular member salary in 2010 was $41,771 compared to the average earner in the state making $38,446, and this will brake partially the burgeoning UAL which has reached a crisis level.
However, Jindal may have to pull back on the retirement age issue. He probably can work in a compromise, creating a staggered system of retirement ages so the closer to 55 somebody is now, the more years after that but less than 67 they can retire in.
He already had a compromise of sorts worked into changes in education, as he exempted these employees (under the Teachers Retirement System of Louisiana) from retirement plan changes, even though TRSL is responsible for over half of the UAL. This is because Jindal wants to change tenure rules to make it more difficult to achieve it and less certain to be retained with it, streamline the process to charter a school by allowing direct application to the state (which presently serves as an appeals court), alter other hiring rules, expand merit pay opportunities, and to allow over half of the current public school population to have school choice by allowing students in any school scoring C, D, or F to have a chance to attend another school. Because these hinge on legal changes (that could reduce significantly the Minimum Foundation Program funding commitment) not enacted, these savings do not appear in the actual budget document.
Jindal could have, as has happened in other states, essentially eliminated the idea of tenure, but chose a reform route that surely would improve chances of easing inadequate teachers out of the system compared to the present one. This change seems more likely than not, perhaps with slight fiddling in the mechanism such as changing years needed of good or bad performance to gain or lose tenure, and what standards constitute “good” and “bad.” Changing the application process seems an almost certainty, and expanding on the nascent merit pay program seems likely.
Where alteration looks almost certain comes with the choice provision. With such a large potentially eligible population, the infrastructure doesn’t exist to handle and would have to develop. What Jindal could settle for is starting with those in failing schools, then after a couple of years extend it to D schools, and then again in the future, the C schools. This also would have the benefit of giving subpar schools time and incentive to improve out of these categories. Forgoing the hiring rules changes also might have to happen, depending the resistance put up by districts and unions.
The ideas concerning corrections call for closing two high-cost, minimal security facilities and merging them into other nearby ones and to take one of the merged facilities and privatize it, made possible given the slack afforded by space in local prisons and the slowly declining state prison population. Less ambitious than last year’s pitch for more site privatization, but still controversial because many regard these institutions primarily as vehicles for jobs more than as corrections instruments, the closures should go through easily but the privatization aspect will raise enough hackles that Jindal may have to settle with just the closures and mergers.
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