Despite legal ambiguity, added Census question needed

While it might appear that the issue of whether the 2010 Census should count separately undocumented persons is something that just came up, in fact it is a perennial issue of long history that often is not well understood. Clarity is required to assess the reasonableness of this requirement and therefore how to proceed on the issue.

Despite Sen. David Vitter’s recent taking up of this cause, it’s been around a long time and others of his colleagues have been there before. As far back as prior to the 1980 census it had become part of the public policy debate. In 1988, members of Congress wanted to pass legislation requiring a separate count on all forms (since the middle of the 20th century only the “long form” included the question, which is sent to a smaller portion of households). They also threatened to file suit, but neither went anywhere. A number of academic studies came out in the 1990s and this decade estimating the impact of illegal immigrants on apportionment. In 2006, Sen. Conrad Burns raised the issue but was rebuffed. A number of stories early in this year appeared about it.

Why Vitter and others came to start offering amendments to bills that would deny funding for Census activities at such a late stage in the game, when they might have been more effective months ago and prevented Democrat counterparts such as Louisiana’s Mary Landrieu from using as an excuse the process was too far along and would cost millions of more dollars, is a mystery. Also complicating his fight is that in all likelihood it is unconstitutional. Some argue in the context of what the earliest Congress is believed to have understood that created the operating rules for the Census could be interpreted to mean only citizens could be counted, but it is a bit convoluted of an argument. The Fourteenth Amendment seems particularly damaging to that cause, when it pretty directly mandates that all “persons” be counted.

Many misunderstand place, purpose of streamline panel

So, Louisiana’s Commission on Streamlining Government is actually beginning to compile recommendations, which legally are due by Dec. 15. To understand what this will mean for public policy going forward over the next nine months, we must understand the purpose of its existence.

Some have invested too much importance in it. For example, the idea factory member Treasurer John Kennedy has become on it would make one think he’s running for governor in 2011 with this gig as a means of floating trial balloons for the future. This is not a bad thing, but it’s not realistic either to think the CSG was formed solely and only to ferret out novel, never-before-seen and creative ways of making state government more efficient.

At the same time, others have dismissed it without understanding its true importance. Those who say it is an exercise in hot air that seeks to substitute rhetoric for action (or to excuse inaction) in a sense also have misunderstood it by assuming its political value is diversionary. In fact, it is intended to be a complementary political tactic to build support for some inevitable proposals and in the process perhaps find some genuinely new approaches that can be added to that agenda.

This is why observing the role played by the Gov. Bobby Jindal Administration in its unfolding is vital to comprehending its impact. Those testifying on the Administration’s behalf just didn’t wake up after the Commission formed and suddenly started to brainstorm on efficiency in their corners of government. The ideas they are pitching have been on the minds of Jindal and/or his key subordinates for some time, many of which challenge the existing bureaucratic system and special and political interests that support it.

Thus, the primary purpose of the Commission is to provide additional legitimacy to these propositions. Many Jindal would be bringing forward for consideration in next year’s legislative session regardless of whether such a body ever had existed. But with it in place, by getting its imprimatur on as many of the things it has discussed as possible, it makes it that more difficult for opponents to battle the forthcoming Jindal agenda. The bonus would be any new ideas Jindal likes being revealed in the process of deliberations, which he can add to that agenda.

Therefore, the valid way to understand the existence and purpose of the Commission is it’s there to increase political support for Jindal’s ideas that would be introduced next year regardless of its existence, maybe to find him new ones to add, and perhaps leading to the discard of some that the process may reveal face too much opposition. Of secondary importance is its place as an incubator of truly unknown stuff. None of this is a bad thing; airing out and vetting all these ideas contributes to the debate around the broader question for which the commission was formed.

As a result, its final decisions as far as recommendations are important only insofar as they reflect a rough estimate of political support for them. Some that get rejected nevertheless will appear in Jindal-sponsored bills next year, while others accepted will not be supported by Jindal and therefore are likely to go nowhere during the next session. Again, knowing that it is an instrument to aid certain ideas of efficiency primarily and secondarily serves as a blank slate for any such idea truly realizes its place and impact in Louisiana public policy-making in the near future.

Budget imperative finally threatens nursing home bonus

It took a budget crisis, not any rational reassessment, to get Louisiana at least to consider getting on the right track in regards to long-term institutional health care. Regardless of the motive, the inefficient use of taxpayer dollars biased in favor of institutions finally looks like it is going to come under review, and actually be eliminated.

The looming 2010-11 fiscal year budget deficit, as part of the Commission on Streamlining Government exercise, much of which is being caused by the state’s largest expenditure of long-term care costs for the indigent and disabled, has prompted the state’s Department of Health and Hospitals to propose the single largest, by far, cut in spending with a $232 million reduction in reimbursements for hospitals and nursing homes in care – a position long advocated in this space. It would be an across-the-board rollback of rates to the 2006-07 levels, as Louisiana in ineligible to change eligibility standards due to its acceptance of federal money courtesy of the federal spending bill passed earlier this year.

Hospitals were nonplussed at their share of over $100 million to endure, and they may have a point. With Louisiana’s stubborn insistence on maintaining charity hospitals – whose days may be numbered if Washington Democrats succeed in cramming down an unwilling public’s throat any current budget-busting, quality-harming plans that will lead to nationalization of health care – many nongovernmental hospitals will be able to shunt Medicaid patients to these, so the state will not save much at all. This should be evaluated more closely by the Commission when it makes its recommendations by Dec. 15.

Superintendents prefer to protect interests, not educate

As if more confirmation was needed, that Louisiana’s school superintendents are complaining about a legal change regarding school financing once again demonstrates they seem more interested in acquiring power and privilege for their agencies than in educating children.

A recent change of law now directs a proportion of locally-generated operating funds to charter schools in any of Louisiana’s 69 local school districts, away from the district. Previously, only state funds that would have gone to the district were shunted away. Of course, this has perturbed a number of these districts’ superintendent who are complaining that they now aren’t getting money for students their traditional schools aren’t educating.

If that appears somewhat farcical, get a load of the comments made by the president of the Louisiana Association of School Superintendents, one of their own: “It’s kind of like the Boston Tea Party all over again,” said Gary Jones, superintendent of schools in Rapides Parish. “It’s taxation without representation.”

That remark leaves no doubt that Jones, if he came from the teaching ranks, never was a history or government teacher. Citizens do have representation in this matter – they voted for state legislators and the governor who made the decisions to change the law. Further, since the people’s representatives did approve of the matter, to argue there is a lack of representation suggests that the locus of the thing lacking representation in the mind of Jones is not the people, but the school districts themselves.

But Jones and the other complaining superintendents seem to forget the Louisiana Constitution in all of this. Art. VIII Sec. 1 says it is the Legislature that is to “provide for the education of the people of the state and shall establish and maintain a public educational system.” Also, Art. VIII Sec. 10 states that “parish and city school board systems … are recognized, subject to control and supervision by the State Board of Elementary and Secondary Education and the power of the legislature to enact laws affecting them.”

In other words, these districts act as agents to the state for the purposes of education. Further, any money they receive as a result of lawful revenue-producing actions by the Legislature or its agents the districts is the people’s money, not theirs. All the people care about is that education occurs; there is no mandated way that money must be apportioned among state agencies in order for it to occur beyond what the Constitution says about the matter, which is that it’s ultimately in the hands of the Legislature.

This explains why the argument about the impermissibility of charter schools getting dollars raised by a local government even when rejected as charter schools by that local government also fails. Most charter schools exist today (outside of the Recovery School District) because the state had to approve them after they were rejected at the local level – rejected usually precisely because the local districts saw them as threats to them and other special interests like unions rather than evaluated them as a different kind of and perhaps better agent besides traditional public schools to help educate children. Again, education is a state, not local, responsibility so if the state’s agent overrides a local decision where so empowered, it should have the right to redirect dollars attendant to the decision addressing the function in question.

Understand the basic dynamic going on here: districts do not like charter schools because they know these are more committed to providing quality education than are they, who put too much emphasis on keeping cozy relations with special interests like unions and in maintaining the existing bureaucratic and political structures and power relations. Their arguments on this issue merely reflect this attitude and in the end remind us of as a consequence of the actions stemming from such mindsets why public education in Louisiana remains, in both absolute and comparative senses, insufficient and subpar.

Spending, not revenue, problem causes Bossier deficit

One part of the cacophony emanating from Bossier City’s budget meltdown is the assertion by its Finance Director Joe Buffington that the city got into its predicament of having a $6.5 million hole in a $50.3 million operating budget because it didn’t tax its citizenry enough. Let’s see just how valid this is.

Buffington had complained shortly after the news had been “revealed” (making a very unlikely assumption that Buffington had not known about it for months) that Bossier Citiy's consistent refusal to roll forward property tax millages over the past few cycles had created this hole. When assessments of property values occur every four years, rates automatically change to compensate for the change in value; governing authorities have the option to vote to not make the adjustment, thereby increasing property taxes for payers and increasing the amount of property tax revenue coming into a jurisdiction.

“It's the same hole perpetuated for the last two years by rolling back taxes and spending down the fund balance," Buffington said. "The administration just finally put the pieces of the puzzle together.” Since then, Buffington has been muzzled by Mayor Lo Walker, who has stated he will not raise taxes to deal with the situation. The entire city administration refuses to make comments on any aspect of the budget.

Excuses to retain old pay system paint sorry picture

If the comments being received (at civilservicecommission@la.gov and apparently subject to release on request) about revisions to Chapter 6 of Louisiana’s Civil Service rules are any indication, these changes to be reviewed by the Civil Service Commission on Nov. 4 are more desperately needed than ever.

The changes would more closely tie pay adjustments to actual performance and move away somewhat from declaring almost every single classified civil service employee in the state worthy of a flat 4 percent raise every year, and very few deserving of nothing. But from the comments received about the changes, you wonder just how well served Louisiana’s citizens from a group of people who appear to show a tremendous ability to come up with all sorts of straw men and red herrings in their arguments, but with little ability to think critically.

Summarized, the comments, virtually all negative, argue the new plan:

Places too much power in the hands of supervisors to allow for favoritism and does not really reward people for doing a good job. Now, let me get this straight, the evaluation system – the validity of which must be severely questioned when almost every employee is judged as at least adequate many of which are ranked even higher – is not going to change, just the distribution of pay raises, yet it’s actually argued that it is this change that would affect the ability of supervisors to play favorites? How in the world can one argue that the present system is any less susceptible to favoritism, and therefore meaning the change cannot possibly increase it? If “favoritism” is the problem, the real change needs to be in the evaluation method itself which has nothing to do with the distributional method of the raises.

And this new system would not reward for doing a good job? By contrast, as it stands now, an employee just scraping by gets exactly the same percentage raise as an outstanding employee. You tell me how the current system would do a better job of motivating and rewarding than what is proposed, and thereby deriving more efficiency.

Lets agencies use this as a way to deny raises to their employees to save the agencies money. See above; that is a problem with the evaluation system, not the new proposed distribution. Under the present system, the same thing can be done simply by handing out (which would be more realistic in any event) more of the two lowest categories of evaluations. How would the proposal change this in any way?

Allows some agencies to have more capacity to provide pay raises than others that creates an uneven playing field among employees from agency to agency. If so, wouldn’t that be happening now under the current regime where agencies with fewer resources would have to give out more two lowest evaluations? So how would this be any different, if it is actually the case, under the new regime?

But, more to the point, so what? Employees should be concerned about their own performances, not what others are getting. Further, job classifications operate within certain bands so the same kind of job being performed in different places, if one gets more in raises, eventually it levels as the top of the band is reached. And it is the job of the Department of State Civil Service to review pay among classifications to make sure it is appropriate for the job being done. If some are getting out of whack by many salaries in an agency hitting the top, it needs to go in and make adjustments. Again, this has nothing to do with the proposed plan itself.

Cannot possibly tie successfully performance to pay increases. Meaning it shouldn’t be attempted at all? Certainly the new plan will not perfectly accomplish this. But there’s no doubt it will do a much better job than the current in which only in the most tenuous fashion does pay get linked to actual performance.

None of these objections, upon analysis, hold any water. But that doesn’t mean that implementing the new plan by itself, as explained elsewhere, accomplishes the objective of greater performance for less money. Two other things must happen.

One, the evaluation system must be made realistic. It should be obvious that no organization, especially one not facing market pressures, has almost no inadequate employees, and so many good ones. The Commission must investigate ways in which to have evaluations performed that more genuinely reflect the true performances of classified employees, and implement necessary changes based on this.

Two, supervisory training of the new system must be adequate. Supervisors who will be doing the evaluating must have a clear idea about how do it: knowledge of benchmarks, how to measure those benchmarks, how to translate those benchmarks into ratings, and the like. As an example of where there may be a gap that can be addressed by this, in academia unclassified employees often supervise not only other unclassified employees (such as faculty members), but classified employees as well (such as secretaries). Civil Service must rigorously train every supervisor in the proposed plan should the Commission wisely adopt it to make sure proper implementation produces valid results.

Let’s hope for the sake of reassurance of quality in Louisiana’s civil service that the comments received as of a week prior to the deadline are reflective of an unrepresentative set of individuals comprising present and former employees in the classified service, and for the future’s sake that the Commission understands the vapidity of a great many of them.

Suggestions great, but need right budget paring strategy

As twin deadlines of statutory natures draw closer for Louisiana, the time for talk should recede and the time for planning for difficult action must commence with the leadership to do it as a budget catastrophe looms.

Both of the state’s temporary panels to find ways of reducing state government expenditures, the Commission on Streamlining Government and the Postsecondary Education Review Commission, are coming the point where they need to spit out recommendations for legislative action, by Dec. 15. About the same time, the state’s Revenue Estimating Conference will certify the status of the balance of the budget as state agencies for months have been taking actions, and continuously talking of additional ones, to pare expenses to stave off a deficit being declared.

With just 55 days to go, the various scattered suggestions and responses must coalesce into a particular strategy that determines what gets recommended and what can be implemented immediately, in order to allow for action by the Legislature and agencies to commence. The optimal strategy should concentrate on four items.

First, personnel is the key area. The largest single area of expenditure in government, or any organization, is in salaries and costs associated with them. No meaningful reduction in the cost of government can occur without much taking place here. Even if it shed no functions (but see below), efficiencies in the number of positions required and in job performances must be addressed.

One lawmaker, in a recent commission meeting, wondered whether the tactic of offering early retirement with some inducement could really trim expenses that much, because it could be that those positions would have to be filled in any event. This is a partial concern, because while many jobs can be eliminated with duties apportioned out, some cannot. But it also is an opportunity in many cases to be able to promote capable subordinates into these positions. Chances are disproportionately that their retiring bosses, because of looming changes that will better match pay to performance, went early because they were coasting underperformers. They may have had capable subordinates bottled up behind them who will do a better, more efficient job.

Second, reductions cannot be indiscriminate. Across-the-board cuts may work, but not well, because they lump in the necessary with the peripheral (see below). The Gov. Bobby Jindal Administration has the right idea in moving to an outcome-based budgeting regime, because it will create priorities of functions, and the least important can be identified for cutting. This also means review of dedicated funding must occur to ensure appropriate amounts are going to appropriate things.

Third, taxes cannot be raised as a solution. As the recession continues with no clear signs of ending, the worst thing to do is to raise taxes to sap economic recovery. Fee raising for the most part also should be off the table, unless there can be demonstrated a strong connection between a particular service being performed and the quantifiable amount of resources going into it can be demonstrably shown as significantly lower than this, such as potentially with college tuition.

Fourth, politics must be minimized. Politics breeds inefficiency which sometimes must be tolerated, such as with devoting huge resources to the disabled, but too often can keep programs benefitting too few people who have little real need going when they need to be shut down. It also gets used as an escape from responsibility to make hard and/or unpopular decisions. The idea of across-the-board cuts is an example, for it spreads pain of cutting around assuming everybody will hurt some. But as it attenuates both the necessary and the peripheral, it is not the best use of resources and still promotes the use of some less efficiently than if the cuts fall on the least needed activities, allowing those really necessary to get more funding. Cowardice of this nature must be avoided.

The Jindal Administration needs to adopt these ideas, if it hasn’t already, and articulate to the Legislature that they will guide Jindal’s actions in his budgeting, while also employing commission recommendations, and use of veto powers. Failure to do so will not avert the crisis and just make future solutions harder and less achievable.

Independent entrance could alter radically race dynamics

Already shaping up to be interesting, Louisiana’s Third Congressional District contest which selects nominees in a little under a year may be getting even more fascinating if state Rep. Jerome “Dee” Richard enters the fray.

Richard, who has run as an independent, would join a declared field of state Rep. Nickie Monica, a Republican, another in businessman Kristian Magar, and attorney Ravi Sangisetty, a Democrat. Others, like Richard, ponder entering but Richard’s entry, should he choose to run as an independent, would alter the contest’s dynamics more seriously than probably anybody else.

With the advent of closed primaries for federal office in Louisiana’s last election cycle, Richard could be the only candidate that would avoid any kind of runoff or runoff primary to make it to the general election in a little over a year. This would give him a small advantage in terms of resource conservation and make him less likely to attract negative attention from opponents.

But of more tantalizing concern for the major parties’ nominees is this would alter the trajectory of the general election in unpredictable ways. Chances are slim he could win in a three-way matchup with the other two nominees – around his little corner of the bayous independence plays well as an alternative to the GOP in the historically loyal Democrat area, but it will be a disadvantage district-wide especially with major party financial support – but his presence would guarantee no candidate could get a majority and he would siphon votes off from them.

The question is, will a Republican or Democrat suffer more defection because of his presence? That really can’t be answered until the actual nominees win their spots and we can see the various experience and personalities of the pair. For example, if voters are really in an anti-politician mood, if he is matched up against other officeholders he would probably draw more from them than against political newcomers.

Still, some reasonable, general inferences may be drawn. If it’s going to look like a big election year for the GOP, the national Democrats probably won’t put much into this seat and Richard’s intervention won’t amount to much. Compounding that will be Democrats realize even if they pull it out, that could trigger the redistricting away of that seat after just a couple of years, another thing which may put a damper on quality Democrats from pursuing the spot and reducing its competitiveness an thereby Richard’s effect.

Only if it looks like Democrats could be competitive in the district might Richard’s presence make a difference. In that case, all other things equal, he may detract more from the Republican candidate. National Democrats have attained a level of some toxicity in the district, with incumbent Rep. Charlie Melancon’s duck-and-cover, gallivanting style of the past few months disappointing many voters not helping, he will attract some of the disaffected. But national Republicans only now are beginning to regain their conservative credentials so for those still turned off by their straying from them who were never fans of Democrats in the first place, Richard might be an attractive alternative especially if he tries to sound some conservative themes in this putative campaign.

In short, those who became alienated enough typically voting Republican who took a flyer on Melancon over the past few years and are not ready to come back to the GOP likely outnumber those usually voting Democrat disgusted enough to flop over to an independent but not ready to touch a screen for a Republican. But there’s so much else that could happen between now and then that the only sure thing about a Richard entry would be an intriguing race would become that much more.

Bossier City officials to bill citizens for their mistakes

Even as the Shreveport political corruption circus grows alarmingly vaster, there's another set of clowns who legally have squandered far more money than apparently illegally disbursed under Shreveport Mayor Cedric Glover’s watch – Bossier City’s Mayor Lo Walker and its City Council.

Budget inattention aside, the latest buffoonery on their parts has them coming to the citizenry to make it pay tens of millions of dollars for their exercises in economic ignorance and ego-stroking. Last week, the Council signaled its intent that in the near future it was going to almost double the fees for water and sewerage service for the average user. The typical household that directly pays on these things under the announced hike would cough up nearly $250 more a year.

This increase is designed to offset about $38 million in costs for a $106 million upgrade and expansion of the city’s sewer system. Of the remainder, $60 million will come from conventional bond debt (at 20 years at current rates costing the citizenry about $1.36 million a year in interest) and another $8 million from special low-interest loans (at an assumed .95 percent interest for that term another $40,000 or so a year). This means you can add about $50 more a year interest payments to each Bossier City household on top of the average fee increase, or about $300.

Move to compulsory defined-contribution best for LA

Tomorrow, Louisiana legislators will look at the possibility of converting the major retirement systems of the state into compulsory defined-contribution plans and no longer give the option for a defined-benefit program. It’s sure to create controversy, but needs to happen.

About two decades ago, for some retirement systems the state began to give new enrollees the option of enrolling in a defined-contribution plan, where a certain variable amount of an employee’s salary plus a fixed amount from the employee, tax free at the time go into an investment account that the employee with restrictions can manage. Prior to that, the only choice was a defined-benefit program where after a certain number of years one could get vested into the system and, depending on the length of time in state service, upon retirement (after a certain age) one could get as much as 100 percent of a declared three-year average of salary drawn (usually the last three years since they would be the highest) paid annually in retirement.

Up until this time point, the sole us of the defined-benefit strategy had several repercussions. First, it tended to discourage talented employees who held attitudes of rapid upward mobility. The state civil service being what it is, advancement and especially salary increases were glacial, and since vesting took some years, those really on the go didn’t want to wait around for that benefit to kick in so they would leave state employment. Second, also discouraged may be those talented individuals thinking of state employment but who are put off by having to wait around years to collect the promise of a benefit they can’t enjoy unless they stay awhile, instead of getting part of it immediately even if they can’t get at it immediately. They might already have a defined-contribution plan from elsewhere that they would prefer to see supplemented, not set aside.

Third, it tended to encourage the modestly-talented to stay, as once they got vesting they could cruise along with essentially guaranteed annual increases (a flaw about to be rectified) so the promise of retirement at perhaps full highest salary made them want to hang on as opposed to leaving for similar-paying jobs without such a benefit. Fourth, at the same time it may have trapped others in a sense, in that they come to points in their careers where they would rather do something else but stay only because they have to hit certain marks for retirement purposes and don’t want to “waste” the time already put in.. These less-motivated employees likely would perform more poorly as a result.

Fifth, it aggravated what had become a problem by the time it no longer was compulsory, a burgeoning unfunded accrued liability in the retirement system. Vesting required a certain amount be set aside to pay off retirees claims, but the defined-benefit regime encouraged long tenures and actuarially mistakenly allocated too few dollars and/or at too low of rates of return to full fund all expected claims. Thus, a huge deficit estimated at $12 billion has accumulated, which must be paid off presently by 2029.

Going exclusively to a defined-contribution plan would address positively all of these aspects. Salaries could be increased by the amount set aside statutorily by the state less its contributions to attract better employees. Employees also would not feel that they are hanging on or trapped in the system, as these plans are portable so if there are incentives for them to leave, they can, just as others may be attracted by bringing and perhaps leaving with benefits intact. The nature of the program also would make it easier for the state to manage and, while it would be tough medicine, kick the state into actually dealing with the unfunded accrued liability problem which it barely has done in two decades since the current system of paying retirees with present contributors’ dollars creates disincentives for dealing with it now.

The only real point of concern is that now employees themselves would have to manage their own accounts. For those with acumen, they could end up far better off than under the present system. For those who don’t the plans are administered by nongovernmental entities such as financial services companies where agents are assigned to employees who can dispense with advice. Still, that could go sour as well, and it’s argued that, since investments can gyrate substantially in value, somebody might be unfortunate enough to want to take retirement in a down phase for his investments and get less out than under a defined-benefit system.

However, this should not be a real concern. For example, these plans typically have investments options that are fixed rate that vary with interest rates and have no investment risk. Let’s say that somebody starts working today even with a crummy 3 percent fixed-rate risk-free return, at $30,000 annually and 8 percent is removed from salary, matched 4 percent by the state. Over 40 years, assuming annual 4 percent salary increases in the same job, what begins as $3,600 a year contribution balloons to an annuity paying about $28,500 a year for 30 years. That’s not great, but it’s not bad, either. If the risk-free rate of return was bumped to 5 percent throughout, which is closer to historical norms, that annual annuity figure becomes almost $54,000. In other words, patient investing even in low-risk instruments should yield a pretty decent retirement income from just that source.

Thus, the vast majority of state retirees and certainly its taxpayers will be better off if the discussion tomorrow leads to an eventual decision to make a defined-contribution plan mandatory for all employees hired after July 1, 2010.