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.

Abolishing clemency powers unpardonable mistake

No doubt prefiled HB 85 by Democrat state Rep. Austin Badon is more political jab than serious policy, but the issue deserves a nontrivial hearing.

This bill would amend the Constitution to abolish the governor’s authority to issue pardons and would retain only the automatic pardon provision for first-time perpetrators of nonviolent crimes and some violent offenses. This would make Louisiana unique as the only state not to grant some kind of executive clemency power for nearly all state crimes; currently in 41 states governors, many requiring the recommendation of a board (such as Louisiana), and in nine states an executive board may exercise sweeping pardon powers.

Companion legislation filed by Badon, HB 84, would excise the state’s Board of Pardons, the imprimatur of which is necessary for a request to go to the governor. It also wipes out the governor’s power to commute sentences and to grant reprieves, along with the Board’s role in that process.

Desperately bad arguments against reform betray fear

Maybe now we know why the Louisiana State Employees Retirement System’s investment return barely beat that of a risk-free 30-year U.S. Treasury bond over the past five years – because its top officers aren’t very good critical thinkers, as evidenced by the sloppy, if not illogical, arguments they try to make against reforms proposed for the state’s retirement system for most of its non-education employees. Or maybe this display of intellectual piffle shows they're just desperate to stop an erosion of their power and privilege.

Gov. Bobby Jindal has proposed altering regulations regarding LASERS, one of the four state (major) retirement funds and which is responsible for about a third of the unfunded accrued liability taxpayers must face (inflated in no small part by its failure in recent years to achieve its stated target of an 8.25 percent rate of return on its roughly $10 billion investment portfolio). These would have current employees pay 11 percent rather than 8 percent of their pay into retirement (the private sector average is 18 percent), and calculate the value of their defined benefit pensions (which few in the private sector offer any more) on the average of their (usually last) five years instead of three, and in addition for future employees raise the retirement age for most jobs from 55 to 67 (matching the regular retirement age for Social Security), and enroll them in a defined contribution systems that acts like an individual retirement account (which most private sector employees now offer).

Dim bulb #1 is LASERS Executive Director Cindy Rougeou, who complained that these kinds of changes ultimately would constitute a change of provisions that “would violate the constitutional restriction against impairing existing benefits.” She further declares that, because LASERS is the only state system about which these kinds of changes have been contemplated, that these changes are not comprehensive enough to merit adoption, and she promises “protracted litigation” over the matter.

Higher admission criteria will fail without other reforms

The politics of demagoguery and putting of special interests first are coming home to roost for Louisiana as the day draws closer to the implementation of just one of many needed changes in its higher education delivery, in potentially setting the state up for failure. One hopes this serves as a wake-up call to implement needed others before the system takes a turn, reversing the small progress of the past few years, to even greater inefficiency and ineffectiveness.

Readers of this space have known that looming changes to admissions standards for baccalaureate-and-above institutions, beginning this fall and continuing through 2014, will reshape profoundly the landscape of higher education, forcing a significant shift in students and thereby resources from these institutions to community colleges. This will create more slack resources for the senior colleges although, theoretically, increased performance will come from the student body as a whole, as marginal students no longer would begin an academic career at a four-year university and have a better chance of degree completion.

Particularly affected will be the lowest performing universities, in terms of retention and graduation rates. During last year’s debate over the combining of Southern University New Orleans, the University of New Orleans, and Delgado Community College, this space pointed out the impending standards increase alone justified the effort.

Landrieu needs to lead, not pose, on spending issues

As noted in yesterday’s post, one challenge Louisiana must meet as it evolves towards a more effective and efficient indigent care system is dealing with mental health issues. This requires analysis and leadership rather than the posturing exemplified by New Orleans Mayor Mitch Landrieu.

Part of mid-year budget corrections involves the state reducing funding for indigent mental health care. As Medicaid funds from federal sources few recipients for this service, states pick up the bulk of this, and Louisiana, with its aberrant charity hospital system, until recent years funneled the vast bulk of its spending on this to those institutions or to nursing homes. With cuts now necessary until the end of this budget cycle, these hospitals must absorb the bulk of them, including disproportionately those in the care of the indigent mentally ill.

This upset Landrieu, who asserted an issue looming large for his administration was crime, and he noted correctly that less servicing of the indigent mentally ill increases crime and its costs. He called these cuts therefore counterproductive and implored Gov. Bobby Jindal generally and the Louisiana State University System specifically to reconsider them.

We can perhaps put aside the fact that Landrieu did not address the actual reason why these cuts came, because of a state fiscal structure that leaves the state with surplus money for spending on low-priority items while higher-priority needs, almost all in the areas of health care and higher education, get squeezed. With almost $5.5 billion idling in funds produced by some 300 constitutional and statutory dedications, a significant portion of which never would get spent for their designated purposes, the state is awash in cash but unable to direct it to where needs are except by separate appropriations bills, until reform of this inflexible system occurs.

But Landrieu also demonstrated misdiagnosis of resources allocation in behavioral health policy, if not actually having contributed to the problem through inattentiveness. As it reforms its wasteful institution-based, money-follows-the- provider indigent health care system to one that is diversified where money follows the patient, maybe its most inefficient part has been in this policy area.

As with other states, when the deinstitutionalization paradigm took hold about 40 years ago, which argued many of mentally ill did not have to live in large, state-run mental hospitals, Louisiana cut them loose with few transitional elements in place, and likely went overboard in doing so. As a result, some who should not have been put into the community and cannot live reasonably ordered lives outside of hospitals were cast adrift, while others who could lead lives close to normally behaving began to rely voluntarily on charity hospitals and/or involuntarily on law enforcement for their care.

Both choices spend resources in this kind of care very inefficiently and cannot entirely address safety concerns of both the individual and of the public. Like other states, in recent years Louisiana has increased its attention to managing a continuum of care for these individuals, which in most instances proves much less expensive (older data estimate direct savings of at least 15 percent compared to institutional care) than providing acute care repeatedly or longer term care in less appropriate settings, such as having the mentally ill reside in nursing homes rather than less restrictive settings. This has been accomplished through increased emphasis on outreach programs and through the use of programs that encourage living in group settings in the community and with clients’ families in home environments.

Landrieu complained about cuts that affect acute care of mental illness. But these are areas that should be reduced anyway, in favor of home- and community-based solutions, along with the realization that it would be best for some people presently not in institutions to be placed newly or back into institutions. Rather than call only for restoration of funds for a leaky acute care system for dealing with mental illness, Landrieu at the very least needs to supplement his remarks, if not replace them, with a call to system reform that encourages transferring resources for this that presently go to charity hospitals or other intermediate care facilities towards home- and community-based care networking.

Instructively, Landrieu did not comment on a report that showed New Orleans had the second-highest rate of homeless, nor the significant discovery that its proportion of mentally ill homeless was about double the national average. In part, this is a result of the rush to deinstitutionalize and a fragmented care system concentrated too much on the extreme of acute care. With increased crime, this is another example of the indirect costs of a poorly-functioning behavioral health care system.

Obviously, we should want a state fiscal system that does well in priorities in spending, necessitating both constitutional and numerous statutory changes. However, within an area of policy also we need the most efficient and effective use of taxpayer dollars that can achieve the best outcomes. As a part of the entire overhaul of the state’s indigent health care system that will require removing most of the present charity hospitals and state developmental disability centers from state ownership, perhaps some of these can be converted to serve as facilities to handle a larger number of the mentally ill who, in their own best interests, need to be back in institutions.

Yet remaining resources do not need devoting to state institutions or to Louisiana’s notoriously over-bedded nursing home sector, in dealing with behavioral health issues. They would go further in serving more and in better ways those with mental health problems by steering them to home- and community-based services. As far as politicians go, Landrieu must learn not just to gripe about money, but to advocate the use of it more wisely and implement such solutions at the macro level of state fiscal policy and the micro level of specific policy. Had these kinds of programs been in place, he might have found the reduced amount of money the state has to offer to pay for these services would have been more than enough to provide more of them than it could prior to such reductions, and he’d have no letters to write.

Painful cuts point out need to dismantle charity system

While mid-year budget corrections disrupt optimal planning, and Louisiana’s fiscal structure exacerbates the problem by shielding much, some low-priority areas, from reductions to force them upon very few and higher-priority areas of state government, the silver lining again is the opportunity for the exercise to accelerate beneficial reform – as one state legislator accidentally may have discovered.

To be implemented immediately, joining the rest of higher education and also other areas of health care provision, Louisiana’s charity hospital system for the remainder of the fiscal year will suffer cuts that officials predict will have a measurable impact on service provided to the indigent. These also will slice a few hundred jobs off of the state payroll.

State Rep. Joe Harrison seemed rather miffed that one such facility in his district, Houma’s Leonard J. Chabert Medical Center, would endure such belt-tightening, to the tune of 80 positions and $2.9 million less. He publicly announced he would investigate in the upcoming session to separate the facility from the Louisiana State University System that runs these hospitals and create its own independent district.