Cuts should prompt reflection on ways to prevent them

Another round of mid-year budget cuts must be endured by Louisiana, but more interesting than its causes and dealing with those solutions chosen is the reaction of one policy-maker in particular.

Given the overwhelming number of protections placed upon most spending in the state, the brunt of these reductions must fall on the two large areas of state government that rely for much of their funding on the state’s general fund, health care and higher education. The latter essentially was spared, by eliminating some unfilled jobs and by factoring increased, and higher-than-expected aggregate collected, tuition. Thus, health care took most of it, in ways to displease a number of policy-makers.

Those presumed concerned over the use of nonrecurring revenues for recurring purposes should note a lawsuit settlement was included in making up part of the $166 million the state was forecast to be short at the regular Revenue Estimating Conference meeting, plus the deficit in the Minimum Foundation Program because of increased school enrollments. Medical providers took another small haircut in reimbursement rates, but after several of these they do add up and may force cost-shifting or retrenchment of services. Some Medicaid optional programs that provided small savings will be terminated.

Subversion of popular rule raises anti-democratic worries

A troublesome development concerning Louisiana’s State Civil Service Commission points to the potential for future mischief and subversion of democracy, perhaps requiring constitutional amending to mend.

Yesterday, the SCSC considered the layoff plan for the Southeast Louisiana Hospital, which has been deemed by the state as too inefficient to continue under direct state operation. With local governing authorities, it has worked out a deal to reopen the space to be closed (some continues to stay open under a previous contracting agreement from a couple of years ago) with a bed count of about half its recent size contracted to a private operator. This deal better fits market demands, costs taxpayers less, and promises continued quality care. However, it means that all current state employees must be discharged, and probably less than half would be rehired under the new arrangement.

Part of the Commission’s constitutional duties is to promulgate rules related to layoff, found in Chapter 17 of its rules. Essentially, the Commission must study each proposed layoff plan to see that it comports to procedure, where the plan must show it carries savings and that all necessary information and procedural steps were followed. This is to demonstrate that the action is not one where layoffs are being used to coerce employees into supporting electorally a particular political faction.

Reform needed to stop annual $1 billion taxpayer drain

At least someone’s trying with serious ideas. State Sen. Elbert Guillory announced his intent to file several pieces of legislation for next year to overhaul the state’s ailing pension funds, aimed that the two that have the large majority of members, the Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana, and they are needed.

Last year, Guillory helped to spearhead efforts at reform, designed to rein in the lucrative retirement benefits regime promised by the state disproportionately generous to what employees contribute. The problem has created a situation where each fund could pay off only a little more than half of its future obligations with present funding mechanisms and predicted investment performance. This has created increasingly massive unfunded accrued liabilities that the state constitutionally must pay off by 2029.

In order to do so, since 1989 the state has had continually to increase its extra portion paid in beyond what the system was designed to do. For example, for fiscal year 2012 TRSL paid in an additional 17.73 percent for employees under its largest of four plans, above its 5.97 rate while employees paid in 8 percent. Assuming this figure across all state plans (it varies and TRSL’s regular plan’s is lower than most; for some of the smaller ones, the figure was in the 30-40 percent range), and using average salaries and fulltime equivalent employment numbers and estimated full-time equivalent number of teachers and their salaries, this means an estimate of the extra that taxpayers had to contribute to meet the generous payouts was $1.045 billion in that year, or four percent of the entire budget and enough to have restored funding for health care and higher education to 2008 levels.

End begins for charity model with crumbled resistance

In the relative scheme of things, perhaps early December, 2012 will be viewed in Louisiana political history as the health care policy equivalent of the peaceful breaching of the Berlin Wall. The ending of the era of a state-operated charity hospital system has begun peaceably, and both clients and taxpayers are better off for it.

Yesterday, the Louisiana State University System that runs the state’s 10 charity hospitals announced agreements to begin the transformation of at least three of the facilities to have their operations leased to nongovernment entities. Other deals appear to be in the works. These initial agreements come in front of the LSU Board of Supervisors for ratification later in the week.

The state will receive a payment upfront, then periodically over terms to last several years, limiting its involvement to ownership of the property and overseeing executing of the contracts. Even though it will reimburse the operators at a higher rate than for others for Medicaid – the state sets rates subject to federal oversight as a large portion of the money used comes from the federal government – apparently given the lease payments, the federal matching funds that may be drawn from them, and eliminating most of the expenses associated with running a hospital, this still will result in substantial savings to the state.

Coming college crisis should spur reevaluation of spending

It has become fashionable in some quarters to lament the departure – some by retirement, most by taking jobs elsewhere – of higher education leaders in Louisiana, often blamed on a tough budgetary climate of reductions in the neighborhood of $425 million since 2008 (but a far lower amount compared to 2006). But not only are these concerns largely misplaced, they in fact present an excellent opportunity to improve higher education delivery.

For the salient fact, derived from an admixture of both (my 26-year employed career in higher education) experience and common sense, is that on the academic side most university administrators (those above the department level) earn in excess, sometimes far more, of what abilities they actually bring to the table, or of needs of the job, or even if the job is one that actually contributes meaningfully. Thus, people leaving these positions provide the chance for fresh faces to assume their duties, and usually at a salary level more commensurate with what the job requires.

That’s more important than ever these days in Louisiana higher education, where the beginnings of a fundamental transformation are in place, away from an input-oriented model to one focused on outputs. Some of these officials had come in under the past paradigm, or risen through the ranks under that paradigm, that is part and parcel of the higher education bubble that will force major changes and retrenchment in public higher education that, to some minor extent, Louisiana policy-makers already have recognized. The newer leaders hopefully understand this while a number of the departed undoubtedly do not and will find themselves unprepared for a contracting environment.

Runoff results end politician's, party's hopes for power

With the couple of Louisiana regional elections turning out as anticipated, presumed political consequences are confirmed.

For the Third District of the U.S. House of Representatives, Rep. Charles Boustany won not uncomfortably over Rep. Jeff Landry in a contest pitting Republican incumbents because of redistricting. Boustany, given the new district contained more of his old one than it did of Landry’s old one, his several more years in office than the rookie Landry, and, related to that, larger war chest made him the favorite and he parlayed that to a win.

With records that made Landry only marginally more conservative than Boustany, Landry was in the position of trying to accentuate the differences between the two and to paint Boustany as more beholden to Washington special interests. If he could make it to the runoff against him, given the different dynamics in the runoff that would put disproportionately more ideological voters into the electorate that would turn out, if he could keep it close in the general election, Landry would have had a good chance to win. But when Boustany put up nearly 50 percent more votes than Landry in the general election, that sealed Landry’s fate absent a Boustany blunder.

Budget reformers need to stop posturing, start working

Despite the trappings attempting to make the act seem one about constitutionality, the complaint forwarded by some Louisiana House of Representatives members about the current state budget was and always will be political. Therein lies the dénouement to the issue if any satisfactory end will come of it.

As noted previously, of the three different queries brought before Atty. Gen. Buddy Caldwell by state Rep. Kirk Talbot – that money predicted to be used as a revenue source from outside of the Revenue Estimating Conference procedure that they term as a “contingency,” cannot be used; that some of these funds are “fictional” because they won’t come about that money placed into a fund any that was initially determined by the REC as nonrecurring stays nonrecurring and cannot be removed from that fund for nonrecurring reasons – only the last may be questionable constitutionally because while to act otherwise does not violate the law, it denies its spirit. On strictly constitutional grounds, Talbot and his colleagues’ challenge had real little merit.

Thus, the real impetus behind it comes as political, confirmed by Talbot’s remarks that the group does not at present seek litigation to press their point, but that this does not preclude them from doing so in the future, as Caldwell said he would not rule on the constitutionality questions given the presumption that legislative acts are constitutional and that he would have to defend any challenges to them. While precedent heavily is on his side – almost never does an AG make such a ruling, restricting their pronouncements to questions of interpretation – it too serves a political motive: Caldwell would prefer not to touch off a crisis and thereby be considered, more than Talbot and his gang, the Grinch that stole the state’s budget at Christmastime.

Single-issue emphasis distracts from obvious vote choice

When was the last time Louisiana’s state party endorsed and Koch Industries donated the maximum to the same Democrat candidate for office? Probably never, and it illustrates the unusual cleavage cutting across and confusing the District 5 Supreme Court contest to be settled this weekend.

Current 1^st Circuit Court of Appeals Judges Democrat John Michael Guidry and Republican Jeff Hughes will meet in the general election runoff Saturday. While the district has nearly half Democrat registration, the majority of those whites under normal circumstances would join the vast majority of Republicans in voting for Hughes, while the remaining Democrats, most of whom are black with blacks comprising about a third of the district, would vote for Guidry. This means Hughes wins.

But circumstances may not be normal. Hughes is rated as generous to trial lawyers in liability cases, despite comments to the contrary to the very organization that publicized this, and received major backing in the general election and has continued to through the runoff. This has caused several interest groups who normally back candidates who speak as Hughes does on most issues to either issue no endorsement in the contest, or to back Guidry. It also has spurred a donation by Koch to Guidry, of whom the brothers who run it routinely are made villains of by the conspiratorial-minded hard left in Louisiana and beyond, which typically gives only to the most conservative candidates in any kind of contest.

Special interests lament hospital deal that wins for all

The agreement among Louisiana, St. Tammany Parish, and a private Florida-based firm to run some of the space (not already operated by another entity since 2010) at Southeast Louisiana Hospital wins for all – unless you are a true believer in the faith that government must run health care facilities and lots of other things, as are some stick-in-the-muds who complain about the deal.

Under extraordinary budget pressures stemming from a sudden federal government decision to reduce Medicaid payments significantly to the state, the Gov. Bobby Jindal Administration decided to close abruptly the psychiatric facility. As both the region and state are well above average in beds available, no real crisis existed, but if the market would bear more, an operator would come in.

And one did, at least for a smaller number of beds, enabling the state to save about $200 per patient, reducing the economic effects of the retrenchment, and providing more care options. Better taxpayer value, gainful employment, services rendered – one would think this would make everybody happy.

Hainkel home tussle illustrates populism staying power

Like metastasized cancer, the legacy of populism infects the Louisiana body politic in so many ways, making it difficult for the Gov. Bobby Jindal Administration and reformers to eradicate the disease so interwoven into not just the state’s political culture, but culture in general, as the struggle for the state to exit substantially the nursing home business demonstrates.

Only a few years ago, for the developmentally disabled the state ran several large residential facilities located in various part of the state to warehouse these citizens, paying much more per client than comparable nongovernment providers. Since then, during Jindal’s terms most of these places have been turned into non-residential resources centers, with just one continuing to operate on behalf of clients with the direst of situations of developmental disability. The remainder of former residents either has been placed with nongovernment providers or made the transition to home- and community-based settings.

Yet another outlier exists, because of the political history of the John J. Hainkel, Jr., Home and Rehabilitation Center, or the “Hainkel home.” In 2009, the state wanted to privatize or sell the state-owned facility, as by regulation state operation inflated costs that made the partially-full facility a risky proposition for taxpayers going forward. But the state representative in whose district the place sits, Neil Abramson, successfully sabotaged those efforts.