Pension system tries to distract from needed reforms

As policy ideas about Baton Rouge continue to circulate that would reduce the amount of money coming into Louisiana’s two dominant retirement funds by assets, each tries to crow about its performance when anything beyond surface analysis reveals their warts. First it was the Louisiana State Employees Retirement System which tried to mask its subpar performance over the past decade and more; now it’s the Teachers Retirement System of Louisiana.

TRSL sent out a news release with the latest results from a research firm comparing its performance to other state pension funds, and to a smaller subgroup of those with similar asset amounts. Over the five-year period ending in 2011, TRSL returned 10.7 percent and 2.6 percent in private equity and real assets, respectively. The U.S. average was 7.4 percent for private equity and 1.8 percent for real assets. The release did not give such statistics for the peer group; unfortunately, the report is not publicly available, so TRSL’s place among its peers cannot be determined, but it seems that positive news in that category would have been reported in the release.

But, as with an analysis of LASERS, this kind of relative comparison means little without looking at absolute performance metrics. One of these is to compare the return on investments of the fund. At the end of fiscal year 2011, it held about 60 percent in equities, about 15 percent in bonds, and the remainder in “alternative investments,” which appear to be real estate and commodities among other things. Reviewing return for the past five years reported (that is, performance for FY 2007 through 2011), which includes more than just the categories cited in the release, the average annual return for it was 3.074 percent, compared to the Standard and Poor’s 500 Index (which is based on equities) return of a 4.143 percent. In other words, the fund would have done better by plowing everything into an index fund representing the S&P 500.

Charity hospital transformation plan needs implementation

With news that most of Louisiana’s charity hospitals may get downsized confirms the move to dismantle the system as it is has come to the stage of a realistic alternative future, also bringing big change to some other related areas of policy, and not a second too soon to benefit the state.

Spurred by the sudden loss of a good chunk of its Medicaid reimbursement from the federal government – the vast majority of these public hospitals’ business is paid for that way, making Louisiana public institutions a wildly disproportionate user of those funds – at first former system leaders developed a strategy to cope by using mainly reserve funds, necessary because they remained invested in the notion that public hospitals providing free care to the indigent must exist.  In retrospect, this appears now accepted then only because of the compressed time frame, but that the basing of the response on the concept of necessity of public hospitals was not considered viable over the long haul.

As such, the officials in charge of the entire ten-hospital system and of the Health Care Services Division that oversees seven of them, while the remaining three in Shreveport, Monroe, and Pineville are organized separately under the auspices of the Louisiana State University Health Sciences Center Shreveport, were removed and the new officials came up with a different strategic paln for the system that largely gets it out of the direct provision of hospitalization services. In its most radical version, the plan calls for all but the New Orleans one to be downsized in bed capacity to 10, with the New Orleans one set at 150.

Despite high state support, structure hurts LA universities

Today is a big day in Louisiana higher education, a sector sliced many times in recent years by planned and surprise budget cuts, with for most institutions the reporting of enrollment figures (a couple of days late because of Hurricane Isaac closures) that will determine its revenue picture for the remainder of the year. Yet any good news (that is, enrollment increases, meaning more revenue) for institutions only will delay the day of reckoning coming to Louisiana higher education as a whole unless major policy changes occur.

Although the report from the State Higher Education Officers Organization came out six months ago, recent interviews concerning data from its State Higher Education Funding 2011 edition demonstrate that education policy to date has not significantly changed the headwinds Louisiana higher education faces. Some of the larger trends affecting it the Louisiana State University Board of Supervisors has heard recently. But the specific ills as they apply to this state’s higher education system remain unaddressed and therefore unresolved.

Much moaning and groaning has circulated concerning funding of Louisiana higher education, as the state in total has retracted over a half a billion dollars, or about a fifth of its total state subsidization, since 2008. Tuition increases have made up a good portion of the difference, leading to another lind of carping about students (and taxpayers, through the Taylor Opportunity Program for Students) paying more, but institutions and governance boards still complain that not only are further significant cuts positioned to bring apocalyptic results to their sector, but that increases in state subsidization only may improve quality delivery.

Downplay disguises union influence in LA politics

Long predating the bogus “fact check” mania spawned in recent times by the mainstream media, for a number of years the Baton Rouge Advocate has run a version of it called “Ask the Advocate,” providing some kinds of answers to questions presumably generated from stories in the newspaper. However, the answers don’t always accurately capture the meaning and context of the issue in reference, which can mislead when the discussion is politics.

A case in point regards its explanation of teacher union presence in Louisiana. The relevant part of the article reads: “Q. There has been a lot of talk lately about teacher unions. How many parishes in Louisiana actually recognize collective bargaining for teachers? A. Seven of Louisiana’s 70 school districts have collective bargaining rights with one of Louisiana’s two teacher unions.” It then lists the districts and whether it is the Louisiana Federation of Teachers or the Louisiana Association of Educators that represents in each.

Of slight annoyance, the snippet implies that only 7/70 = 10 percent of teachers enter into collective bargaining. In fact, the proportion is a bit higher, the latest figure available being 11.6 percent. More perturbing, the way the question is phrased, focusing solely on collective bargaining, restricts the inquiry into the implied part of the question – there is “a lot of talk about teacher unions” because they are inserting themselves forcefully into the political process, which goes far beyond just collective bargaining. (It also negates the fact that there actually are three statewide unions, the other being the Associated Professional Educators of Louisiana, which has no collective bargaining units established and declines to identify itself only as a union saying it is a broader professional organization).

Tax break panel's attitude putting it on course to fail

If Louisiana legislators remain invested in the same ideology that has spawned the hundreds of tax exceptions, not a single constructive thing will emerge from the effort.

Last week, the Revenue Study Commission reviewed a number of these in an effort to parse out whether policy as it exists in this regard optimally forgoes revenues because of these exceptions. Part of the exercise allowed arguments, particularly from current beneficiaries, stating cases as to why their breaks, some of which on the surface seem very questionable, should continue.

And so we got from them arguments like Lt. Gov. Jay Dardenne’s, who oversees arts policy as part of his portfolio, defending the sales tax exemption on art sales in the state’s designated 63 arts districts, who claimed it was a economic redevelopment tool that cost only $500,000 over the past two years but the districts themselves had economic activity of over $1 billion. Bullion dealers say introduction of a sales tax exemption on sales above $1,000 caused their business to increase many times. A representative with the New Orelans Jazz and Heritage festival said a new exemption applies to sales tax on admission and vendor sales helps “maintain a ticket price that is reasonable.”

Demoting old hands needed to achieve deisrable change

With the departure of another high-level executive from Louisiana State University’s hospital and medical division, that indicates the necessary change in culture is occurring to improve system performance and to have it operate more efficiently.

While the old hands being replaced, first Fred Cerise by the Board of Supervisors and then with his replacement Frank Opelka informing Cerise’s immediate subordinate Roxanne Townsend that he was replacing her choices to head up some system hospitals triggering her resignation, unfortunately experience goes with them that might be useful as the system begins its long-overdue transformation from state-supported provider to quasi-public status and hopefully beyond. Former Gov. Kathleen Blanco indicated as such when she opined about Cerise’s departure that “I think they made a terrible mistake firing Fred Cerise, a man with so much integrity and so much knowledge on how to serve people”

No doubt – if you are invested in a government-run health care model for the indigent, as was Blanco and her allies and former appointees Cerise and Townsend. But that is a deviant model among the states, with no other state sharing the charity model foisted upon the state over 75 years ago, and for good reason, as it has produced low outcomes at high cost. And for that same reason it’s not the model that the Gov. Bobby Jindal Administration wishes to follow.

Lame remarks need not deter LA from improving vote laws

While generally the comments made by former New Orleans Mayor Marc Morial at his party’s national convention have no basis in reality, they illustrate why tighter voting registration requirements are vital to the health of American representative democracy, including in Louisiana.

Morial, who now heads the National Urban League, opined to Democrats that laws requiring certain, positive identification of potential voters were a plot by wild-eyed racists, presumably not Democrats, to bring back “the old Jim Crow.” Then in expressing approval of laws that allow for loopholes, he firmly came down in the camp of those who would subvert democracy because anything but laws mandating strict identification measures with government-supplied, if need be free to recipients, photo identifications cards allow for fraud.

The vanguard states for honesty at the polling place are Indiana and Georgia, which have these requirements. Even without that identification, one can vote provisionally but then shortly after the election must produce it for the vote to count. Other states like Louisiana generally require photo identification but have exceptions granted that easily may be used to cheat.

Changing law good response to lame duck sheriff damage

Scooping up the low-hanging fruit is easy. But new Bossier Parish Sheriff Julian Whittington will need to get a lot more ambitious if he is to promote long term cures for what ails the department.

Elected last fall to succeed a retiring Larry Deen, as parish executive offices work in Louisiana, Whittington had to wait over half a year to assume his new post. In the interim, Deen doled out some hefty promotions and pay raises that took a deteriorating fiscal condition born of spendthrift ways and pushed it into deficit spending.

For over a decade, Deen had been ramping up expenditures with an ever-increasing size of his agency as it performed more peripheral functions or others that should have been left to other law enforcement agencies, while its performance stagnated or declined. Eventually, revenues calculated at constant property tax levels weren’t enough so in 2010 he raised collections by announcing a roll forward of millages (sheriffs are the only unitary authority of all local governments so, unlike with other units, they may do this unilaterally).

Obama retracts middle finger, grits teeth and stops by LA

What first seems counterintuitive about the dueling major party presidential candidates’ recent trips to Louisiana becomes perfectly understandable once we remember who and what the parties, candidates, and ideologies involved are.

Following the custom born in the 20^th Century, Pres. Barack Obama is visiting the state most of which recently was declared by him as a disaster area from Hurricane Isaac, at the invitation of Gov. Bobby Jindal, days after the storm departed the state even as its effects linger. But expanding upon the custom, days earlier Obama’s Republican candidate for the presidency former Massachusetts Gov. Mitt Romney took a brief tour also at Jindal’s invitation.

Indeed, Romney came right after his party’s national convention closed, cancelling a campaign swing through the very competitive state of Virginia to head to wringing-out Louisiana where he will win by a comfortable margin. Meanwhile, Obama said during and right after the natural catastrophe he watched sports on television, and only after word got out that Romney would show up did he commit to coming on by the state, after doing some campaigning in the competitive state of Iowa where he watched some football on TV and scarfed down pizza.

LA faces federal endorsement that puts power above law

Federal District Court Judge Susie Morgan, recently appointed to the bench by Pres. Barack Obama, followed through for her political allies by ignoring the most pertinent constitutional question concerning the succession process determining who will be the next chief justice of the Louisiana Supreme Court. Hopefully, more responsible jurisprudence will prevail in the future of this case that pits whether abuse of power or rule of law prevails in the state.

It involves Associate Justice Bernette Johnson, who has sat with the Court since 1994 but did not get elected to it until 2000, after two other members were elected. Constitutionally, the senior most justice in point of service gets to be chief justice, with the current holder of that Kitty Kimball retiring at the end of the year.

The original agreement that allowed Johnson, elected to an appeals court, to make decisions with the Supreme Court, was amended years later to reflect passage of an act of the Legislature (although it did not codify this in statute) that said the judge in this position was to get the “benefits” of Court service “as provided by law,” deemed by Johnson and other special interest allies, ideological fellow-travelers among elected officials, and the Obama Administration through this subsequent act’s explicit mention to include seniority for purposes of determining who sits as chief justice.