Data show LA state workers must make up for mistakes

Now at the plate for Louisiana policy-makers, it’s retirement system reforms. Supporters argue they are needed to put shore up a shaky and unsustainable financial situation, while opponents claim they unfairly target the compensation of the state employees involved. The latest data show the reform case has greater validity, and points to change needed beyond the current batter.

The changes for most current employees would increase paycheck deductions for retirement pensions from eight to 11 percent in order to finance the growing unfunded accrued liability of the Louisiana State Employees Retirement System, extend out the regular retirement age to 67, and use a five-year rather than three-year average to compute pension benefits. In large part, opponents express qualms in that they assert state employees are relatively underpaid to what they should be, and that if any future deficit would arise in the ability to pay pensions, it is the responsibility of the state, i.e. taxpayers, to come up with the “promised” remuneration rather than employees contributing more to their own retirement savings. To some degree, the arguments are related; because state employees are “undercompensated,” therefore it is the duty of the public to make up any shortfall.

However, the data point to the opposite conclusion. While no comprehensive study has looked at Louisiana specifically, the most recent work from 2009 by U.S. Bureau of Labor Statistics economists, Congressional Budget Office staffers, and researchers in academic settings shows that in measuring total compensation in comparing jobs of similar duties, all of federal, state, and local government employees are overcompensated compared to the private sector. In the federal instance, a retirement package judged 3.5 times higher than that of the typical private sector worker doing the same tasks led to a 16 percent premium in total compensation. Without even factoring in retirement benefits, salary and current benefits of state and local government employees nationwide are 10 and 21 percent higher, respectively, than private sector employees doing similar work. This confirms differentials observed in other studies and data of years past, and it would be highly unlikely that Louisiana’s data were skewed much lower.

Omitted date discovery shows opposition's disingenuity

We didn’t ask for it, but opponents of elementary and secondary education reform gave us a final demonstration of disingenuity with comments about one bill accomplishing changes after they lost the battle of ideas over it.

While the general contents of the bills have been known and discussed for months, by candidates and research organizations, the specifics came to light just before the beginning of the session, and 23 days after its start the finished products were sent to the governor after more discussion on them than any bills in the modern history of the Legislature. Included in them were the exact procedures for their implementation.

However, one of them, HB 976, forgot to include a tool of convenience, a date in which the law becomes effective. Constitutionally, the effective date of a law unless otherwise indicated in it is Aug. 1 of the year passed. Six different implementation dates are listed in it, four at the beginning of 2013, but one on Aug. 1 and another on Jun. 30. The former instructs the Department of Education to develop standards, so even if the law wasn’t official that work may proceed. The latter is a deadline for private schools to seek participation in the scholarship voucher program, so that known incentive dangles out there for them even if the law technically has a month to go before coming into force. In others words, in this instance, the omission of an earlier effective date (such as on the governor’s signature) has no practical impact on its implementation.

Consequences of elections amplified by reform votes

Once again, the fact that elections have consequences must be searing itself in the minds of the many formerly comfortable elites invested in the way elementary and secondary education has been – poorly – delivered in Louisiana. Because had things gone a little bit differently a few months ago, these holders of power and privilege would continue to rest easy in a world without HB 974 or HB 976.

These bills, prepared to be signed into law by their most powerful backer Gov. Bobby Jindal, induce choice and competition into the archaic government monopoly system of education and place greater emphasis on merit and demonstrated ability in personnel decisions, passed the state Senate with some margin for error, 23-16 and 24-15, respectively, and would be approved by the House (which had previously approved almost identical version) at roughly the same level of support. But, focusing on the latter, had a few Senate elections gone the other way last fall, this may never have happened.

The final margin meant a swing of five votes would have defeated the measure. And when reviewing some close contests in 2011, it’s easy to see where swapping a thousand or less votes in a district would have put into office people unlikely to vote for this bill.

Jindal back, better positioned, to remake prison system

With a bill to accomplish more of this headed for committee discussion this week, it’s time again to talk about privatization of prisons and reconfiguration of the system, so that means a rehash of the uninformed, nonsensical, and silly arguments made against this from last year. Let’s take a look at the old wine in new containers.

In 2011, Gov. Bobby Jindal proposed the privatization of two prisons to join two others, initially wanting to plow the money paid for them into the operational budget. Eventually, his Administration decided to separate that out and build a budget only counting on savings from contracting. But before anything could happen past hearings on the matter, essentially he yanked the package over what appeared to be intractable opposition.

This year, Jindal is back with a somewhat different plan. This one relies only on the sale of one prison and closing of two others through consolidation, made possible by declining numbers of prisoners in the state, this perhaps caused by policy and administrative changes to place greater emphasis on probation and parole and on the use of technology in correctional facilities. Research, on the state’s two prisons privatized two decades ago, shows this privatization brought cost reductions without reductions in quality, which Jindal’s current budget counts on.

Easter Sunday, Apr. 8, 2012

This column publishes usually every Sunday through Thursday after noon (sometimes even before; maybe even after sundown on busy days) U.S. Central Time except whenever a significant national holiday falls on the Monday through Friday associated with the otherwise-usual publication on the previous day (unless it is Independence Day or Christmas or New Year's when it is the day on which the holiday is observed by the U.S. government). In my opinion, there are seven of these: New Year's Day, Easter Sunday, Memorial Day, Independence Day, Veterans' Day, Thanksgiving Day, and Christmas.

With Sunday, Apr. 8 being Easter Sunday, I invite you to explore the link above.

Numbers point to substantial state insurance plan savings

As some special interests seem unable to understand the logic and math behind it all, this space (as it is wont to do) will bring some clarity to the savings the state will achieve by contracting out the book of health insurance business it current self-ensures, and where the process is headed.

A Gov. Bobby Jindal Administration met with Louisiana’s State Civil Service Commission yesterday to give an update on where the effort is headed. The decision has been made to get the state out of the business of running its own plan, which only one other state does, impacting the roughly one-quarter of state employees and retirees and their families who choose what is called the Preferred Provider Organization plan. As the latest statistics show that over half of the money spent by the state agency administrator Office of Group Benefits goes to running this plan, logically savings should result if run more efficiently by the private sector as with other state plans (and, because PPO rates are higher for the same service provided and there’s a taxpayer match, this could save clients and taxpayers an estimated $55 million above and beyond savings in administrative costs).

The procedure to implement requires that a request for proposal go out soon, followed by a contract letting anticipated in June. The Jindal Administration may hope to catch the Joint Legislative Committee on the Budget while the Legislature remains in session (until Jun. 4), which would have to approve of a contract of this size in the millions of dollars (even as the state can expect a one-time gain much higher than an annual contract by making available to a private entity the right to do this business.) This assumes (pretty safely) that a bidder will come in below the current rate structure.

LSUS growth, service plan should eliminate merger talk

While its motives for doing so might be suspected, the Louisiana State University System came up with a plan that should be enough to head off any talk of it losing one of its member institutions by a proposed merger of Louisiana State University Shreveport and Louisiana Tech.

Perhaps a week before one or both bills to authorize this merger were due to get discussed in legislative committee, the document outlines, with some specificity, the kinds of things the system said it do would do in order to dispel the most potent complaint merger supporters had forwarded: that the system insufficiently had enabled LSUS to become capable of meeting higher educational needs in the state’s third-largest metropolitan area. The plan calls for new degree programs and certificate offerings, some based on campus, some in collaboration with other system members, increased cooperation with area schools and great expansion of its paltry online course offerings, and other administrative changes designed to boost enrollments and provision.

Questionable fee bill provides Jindal with interesting test

Gov. Bobby Jindal may have an interesting call ahead on a pair of bills that might put to the test his avowed anti-tax, but pro-fee (when demonstrated as necessary to cover costs) position regarding government revenues.

In his fifth year in office, Jindal staunchly had headed off every tax increase of any kind where he had the power to do so – even if it was a new tax right after the same one expired. His attitude on government increases in fees has been different, not opposing them when he saw convincing evidence that they were to cover the cost of government doing that business – even when legislative majorities were displeased with the fee increase. He has done so both through the formal instruments of his office such as signing or vetoing legislation, and through informal means such as letting out the word that he would veto something objectionable, which would be enough to stop it from advancing any further in the legislative process.

Now, SB 361 and SB 630 present potential hard cases for him. The bills, the former applying to Orleans Parish, the latter to St. Bernard Parish, would raise fees on telephone lines, both land and mobile, ostensibly to fund 911 emergency services in those parishes. They would force operators to tack on even more in fees onto their bills, expanding their roles as fee collectors for local governments, although voters in St. Bernard would have the option of defeating in a referendum their hike. Author J.-P. Morrell in offering these is following the common practice of passing through what serves as a sales tax by a local government but, by putting a private entity as an intermediary, deflecting constituent attention away from that.

Two papers in one illustrate legacy media's problems

If we needed any reminder of the self-inflicted troubles of the legacy media, one Louisiana media outlet recently provided a perfect example of this, with the example drawing upon an asinine decision made in Congress.

On Mar. 30, the New Orleans Times-Picayune ran a story about the conclusions drawn by the Senate Ethics Committee concerning Republican Sen. David Vitter. Some months ago, Vitter had refused to go along with a salary increase for Secretary of Interior Ken Salazar, on the basis that he was performing a bad job in choking off oil drilling for political reasons. A vote had to be held for Salazar to have an increase because the Democrat had resigned a Senate seat to take the job, meaning he could not have any salary increase in the executive branch beyond the Cabinet salary at the time of his resignation until his term would have ended, given the Constitution and related legislation.

The Senate allows broad latitude to its members in personnel matters, this known variously as “committee clearance,” “senatorial courtesy,” “blue slip,” “hold,” etc., where the objection of a single senator in essence can veto the action of the entire Senate. It not uncommonly is used to prevent an appointment until a senator extracts a policy promise from an appointee. Vitter’s use appeared novel, in part because the statute enabling this subsequent raise had been passed as a special case only in 2008. A few months after his hold, he announced he would not continue to block it.

Pension reform report has not legal but political impact

Flying under the radar, until the results were made public last week, was a report requested by the Louisiana Legislative Auditor to assess costs associated with the implementation of retirement system reforms promoted by Gov. Bobby Jindal. While it did not shed much light on the final determination of legal issues involved, it made clear the political issue.

It’s important to understand what the report, rendered by an out-of-state law firm, was intended to do and what it does not say. As, constitutionally, notes must be produced for legislation the fiscal impact of which may be more than a (relatively) small amount, part of the potential cost could be legal challenges. Already, opponents and special interests have indicated this would be a consideration in their reaction to the legislation, potentially adding millions of dollars to the cost (although, in the larger scheme of things, the changes would save taxpayers hundreds, perhaps thousands, of times that cost).

As the report itself indicates, its job was to assess the likelihood of legal challenges to these bills if becoming law, not the constitutionality or legality of them. And nowhere in it does it say it builds, according to the Louisiana Constitution in the context of existing Louisiana jurisprudence, any kind of compelling case that these laws would not be constitutional. Indeed, there is not a single remark in it that suggests the bills would be contrary to established Louisiana case law.