The $500 million savings report by Alvarez & Marsal (A&M) was finally released on Monday only minutes before adjournment of the 2014 legislative session—and, conveniently for the administration, too late for critical feedback from lawmakers. The Report
So, what makes this one any different than the others, given the fact that the A&M report acknowledges that Louisiana “has a long history of performance reviews, dating back to one performed by the Treen administration in the early 1980s?” Well, for one, the punctuation, spelling and grammatical errors contained in the report indicate that it was thrown together rather hastily to satisfy a state-imposed deadline for completion.
The 425-page report, produced under a $5 million contract, while projecting a savings of $2.7 billion over five years (an average of $540 million a year), the substance of the report was sufficiently ambiguous to render the document as just so much:
(a) Useless trendy jargon and snappy catch phrases like synergy, stakeholders, and core analytics to give the report the appearance of a pseudo-academic tome;
(c) Window dressing;
(d) Regurgitation of previous studies by previous administrations that are now gathering dust on a shelf somewhere;
(e) All of the above.
Three things were immediately evident with only a cursory review of the report:
- Two offices that have been privatized by the administration as a means of savings and efficiency—the Office of Risk Management and the Office of Group Benefits—were subjected to rather close scrutiny by A&M which identified a host of ideas to make both offices more cost efficient. And we thought all along the administration had assured us of great cost savings and efficiency as its reasons for privatization in the first place. Yet A&M, in its report, claims its recommendations can save OGB another $1.05 billion while ORM can save an additional $128 million through implementation of recommendations contained in the report.
- While A&M met extensively with and took suggestions from state employees who were tasked by the administration with coming up with savings ideas as far back as last September, not one word of acknowledgement is given to those employees in the report, prompting one employee to wonder, “Why the hell can these New Yorkers take my ideas and work and resell them to the state?” Of course the report did give a tip of the hat to Commissioner of Administration Kristy Nichols for her assistance in overseeing “all aspects of the state’s participation.” We suppose that will have to suffice.
- Though virtually every office operating under the auspices of the Division of Administration came under the watchful eye of the A&M suits, not a single recommendation for increased efficiency and/or cost savings was offered up for the Governor’s Office itself. The closest A&M got to the governor’s office was the Office of General Counsel, the legal office of the Division of Administration. The obvious conclusion to be drawn from that is that the Governor’s Office is already operating at peak efficiency and minimum waste.
Most of the projected cost savings were based on assumptions for which A&M offered little or no supporting data other than arbitrary estimates and suppositions that could have been produced at a fraction of the report’s $11,760 per-page cost.
The report acknowledged that Louisiana already has the highest Medicaid recovery rate in the nation with $124 million in improper payments recovered but nevertheless listed as one of its recommendations that the Department of Health and Hospitals (DHH) “reduce improper payment in the Medicaid program.”
Seriously? Who would’ve thought that might be a way to save money?
Other suggestions included in the study by agency and projected savings (in parentheses):
DHH ($234.1 million)
- Establishing more cost-effective pediatric day health care programs and services;
- Maximize intermediate care facility (ICF) bed occupancy rates;
- Shift the administrative management of uninsured population from state management organization to local governing entities (Municipal and parish governments better take a long, hard look at that recommendation);
- Improve the process and rate of transition of individuals with age-related and developmental disabilities from nursing facilities and hospitals.
Department of Transportation and Development (DOTD) ($99 million)
- Expand advertising revenue for roads, bridges and rest stops;
- Reduce the construction equipment fleet;
- Convert some of vehicle fleet to natural gas (for this we needed a consultant?)
- Reduce cost overruns with quality assurance/quality control engineering firm (another consulting contract);
- Utilize one-inch thin asphalt overlay (and after reducing the construction equipment fleet we can change the names of our state routes from highways to obstacle courses).
Department of Corrections: ($105.3 million)
- Expand certified treatment and rehabilitation program;
- Expand re-entry program;
- Increase use of self-reporting.
Department of Revenue and Taxation ($333.4 million)
- Re-build audit staff positions depleted because of retirements and hiring freezes;
- Increase compliance efficiency and reduce backlog of litigated cases
Department of Public Safety ($45.4 million)
- Centralize state police patrol communications
- Consolidate state police patrol command position;
- Optimize state police patrol shifts
- Expand Department of Public Safety span of control.
Office of Juvenile Justice ($44.2 million)
- Increase probation and parole officers’ caseloads;
- Relocate youth from Jetson Center to other Office of Juvenile Justice (OJJ) facilities (so, just how out of touch was A&M to have not known the Jetson Center was closed in January?);
- Increase OJJ span of control.
Department of Children and Family Services ($2 million)
- Continue to implement innovative strategies intended to reduce;
- Safely decrease the time children spend in state custody.
Louisiana Economic Development ($142.9 million);
- Adjust fees for inflation;
- Enhance review process for Motion Picture Tax Credits;
- Enterprise Zone benefits and audit review process;
- Consolidate Louisiana Economic Development (LED) offices into one government-owned facility (What? No privatization?).
Human Capital Management ($65.9 million)
- Creation of agency workforce and succession plans;
- Redesign of job families through creation of a competency model;
- Improve the administration of Family and Medical Leave (FMLA) across agencies;
- Review overtime policies;
- Increase span of control for agency supervisors.
Office of General Counsel ($3.825 million)
A&M noted that the Office of the General Counsel (that would be the in-house legal counsel—they hate being called that—for the Division of Administration) “is responsible for ensuring that the commissioner’s statutory duty to respond to public record requests in a timely and legal manner is carried out.”
This was a favorite part of the entire report for us. The DOA Office of the General Counsel has historically delayed responding to public record requests of LouisianaVoice far beyond any reasonable—or legal—time limits. Louisiana’s public records statutes require an immediate access to public records unless they are unavailable in which case the custodian of the record must, according to law, respond in writing as to when they will be available within three working days. It is not at all unusual for the Office of the General Counsel to drag his feet for weeks on end before producing requested records.
But A&M has solved that knotty little problem by pointing out that as the custodian of the DOA’s public records, “it is the commissioner’s (Kristy Nichols) responsibility to receive and process public records.
A&M’s recommendation that the Office of the General Counsel can generate its five-year cost savings simply by:
Increasing the organization efficiency of the office, ($1.975 million) and
Increasing the efficiency of document review process and reducing internal and external attorney costs ($1.85 million).
That, of course, raises the burning question of what will happen to Jimmy Faircloth?
Other suggested savings came under:
- Procurement ($234.8 million);
- Facilities Management and Real Estate ($70.9 million), and
- Provider Management ($2.2 million).
“I am so proud of this report,” gushed Nichols. “These are real, common sense solutions that will not only save money for the people of Louisiana, but will improve the way we operate.”
Question, Kristy: If they are such “real, common sense solutions,” why has this administration in six-plus years experienced this epiphany before now?
Another question: If these suggestions, which you say were “thoroughly vetted,” are going to save money for us and make our lives better through better operations, where has Jindal, his cabinet secretaries, undersecretaries, deputy secretaries department heads, managers and great legal minds been all this time? Wasn’t it their job to give us the biggest bang for the buck? (Oops, that’s three questions.)
Oh, well, let’s go for broke here. Fourth question: Who “vetted” these wonderful ideas? If the vetting was done by those already on the state payroll, why didn’t those employees perform the task in the first place instead of blowing $5 million on this report that a second year economic major at LSU could have written?
Fifth question: Does the administration—and by extension, A&M—hold employee morale in such low regard that it was not considered as a factor in facilitating more efficient job performance across the board? Improved employee morale would seem to be conducive to cost savings, yet it was never addressed even once in the entire 425-page document. That omission speaks volumes.
And finally, if you are “so proud of this report,” why was it that you reportedly tossed an A&M representative out of your office with the admonishment that he’d better find something after he initially reported to you that his consulting firm was having trouble coming up the $500 million savings?
Could this explain why some of the “savings” appear to have been plucked out of thin air?