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Apr 08, 2009
Governor Bobby Jindal Highlights Major Budget and Government Reform Initiatives at Lafayette Event

LHA and CABL Issue Letters in Support of Budget Reforms

LAFAYETTE – Today, Governor Bobby Jindal joined several area legislators and local officials in Lafayette to highlight five major budget and government reform initiatives that he will work with the legislature to pursue in the upcoming legislative session. Governor Jindal emphasized that the state is facing long-term budget challenges brought on by a decline in revenue and the implementation of these reform measures will reduce the size of government, streamline government functions and dramatically reduce spending to ensure the state is living within its means.

The Governor was also proud to announce that the Council for A Better Louisiana (CABL) and the Louisiana Hospital Association (LHA) are supportive of the efforts to reform the state’s budgeting process. CABL and LHA sent letters in support, which are included below.

Governor Jindal said, “It is critical that we roll up our sleeves now, in this session, and immediately begin the hard work that must be done to streamline our government and make government more efficient, so we can better protect critical services – such as health care and higher education, even during times of national economic downturn.

“The current system of state government is too inefficient in too many areas. It spends too much for too little result. We are in desperate need of common-sense reforms that will allow us to control spending and make government more efficient. With the help of these fiscal reforms and service reforms implemented by departments, the state will be better prepared to approach potential budget challenges in the future while continuing to improve opportunities for all Louisiana citizens.”

The first major reform initiative proposed by Governor Jindal is focused on higher education spending reforms through a new funding formula.

Governor Jindal said, “The new funding formula must focus existing and new dollars on performance – and it must be more connected to the missions of our colleges and universities, while recognizing different program costs in different areas.”

The Governor also noted that the current funding formula incentivizes enrollment growth in general, and funds institutions at an amount believed to be comparable to their peers. He said there is little, if any, incentive to target resources to academic programs that produce graduates in critical shortage areas in the workforce or focus attention on research that will make the state more competitive in the global economy.

The second major reform initiative proposed by the Governor is the formation of a “Commission on Streamlining Government” to examine each state agency’s statutory and constitutional duties in an effort to reduce the size of state government.

The Governor said this commission will target programs and agencies whose functions can be consolidated, in addition to identifying opportunities for privatizing and outsourcing current state functions. He said the commission will propose recommendations for reform for an up or down vote to the Joint Governmental Affairs Committee before the next legislative session. Once approved, the Governor said he will work with the legislature and stakeholders to prepare the appropriate legislation needed to implement the recommended reforms into law.

Governor Jindal said, “This overhaul of state government is extremely important, especially in these times of national economic turbulence, to ensure that state tax dollars are being spent as efficiently and effectively as possible. Many state agencies were created 30 years ago and served a purpose that may or may not be relevant today.”

The third major reform initiative proposed by Governor Jindal is the implementation of civil service reforms targeted at streamlining the number of government employees on the rolls by tying employees to their job performance and not simply encouraging them to achieve government tenure.

Governor Jindal said the civil service reforms will have three main focuses. First, he said these reforms will get rid of so-called “bumping” by eliminating seniority as the ultimate protector of an employee, instead relying on positive performance reviews. Second, Governor Jindal said the new measures will reduce job classifications and pay bands that are typically very detailed, narrow classifications – and currently total 1,400 different job descriptions in the state. Finally, the Governor said the new civil service reforms will make classified employees’ merit increases contingent on performance and reviews, and therefore serving as the basis for promotions or realignments. Currently, compensation is dictated by job classification and level. Raises are typically automatic as employees move up pay steps within a job class, dictated solely by their time on the job.

The fourth major reform initiative proposed by the Governor is focused on fiscal reforms. Specifically, the Governor has called for four fiscal reforms that will increase flexibility and accountability in the budget process.

The first fiscal reform proposed by the Governor is a law to authorize the automatic sunsets of all dedicated funds beginning at the end of the next fiscal year, July 1, 2010, with renewed or newly created dedications to sunset every four years thereafter.

Second, the Governor is proposing an annual review of the performance of statutorily and constitutionally dedicated activities, similar to the Activity Performance Review the Division of Administration conducts for funds supported through the general fund. Currently, when a deficit is projected, the state’s constitution only allows for reductions to statutory dedications up to five percent. The third fiscal reform calls for an increase of this discretionary limit to ten percent so that it will provide far greater flexibility in identifying potential cost savings when revenue falls and deficits are realized.

Finally, current statute says that the five percent reductions to statutory dedications can only be made over a two-year period. Governor Jindal proposes to get rid of this limit, which will create more flexibility on a yearly basis to strategically reduce spending in areas other than higher education and health care.

The fifth and final major reform initiative proposed by the Governor calls for changes to the Minimum Foundation Program (MFP) education funding formula so that it will be more accountable and transparent.

Governor Jindal said the MFP formula currently has additional costs associated with educating students living in poverty, and those who need special education services, career and technical education, and a more challenging curricula. However, because the MFP is a block grant to school districts, there is no accounting for how these targeted funds are used to benefit these targeted students.

The Governor said that beginning in Fiscal Year 2011, under this legislation, local school districts will be required to allocate weighted MFP dollars to schools that serve these populations of students and annually report on how funds are spent to support them. Additionally, part of this reform will also require the Department of Education to post funding allocation and expenditure information by district and school level on a new user-friendly website for parents.

The Louisiana Hospital Association (LHA) Supports Budget Reform Initiatives

April 8, 2009

The Honorable Bobby Jindal
Governor
State of Louisiana
PO Box 82860
Baton Rouge, La 70884

Dear Governor Jindal:

On behalf of our 180 member hospitals, we applaud you and Senate President Chaisson for supporting budget reform in the 2009 Legislative Session through SB 1 and SB 2. With healthcare and higher education already enduring a combined $632 million reduction, as proposed by the Governor’s Executive Budget for fiscal year 2010, it is essential, and fiscally responsible, to enable the administration and legislature to put all options on the table when making strategic budgeting decisions.

Imagine not being able to afford private insurance. Imagine your child desperately ill and having no place to go for help. For many people, Medicaid is the only option.  It’s not a luxury, it’s survival. Without applying common sense to protect these healthcare services for our citizens in the state’s budget, it just does not work.

It is critical that the legislature work with the administration in planning ahead for the expected budget shortfalls by bringing state government into a more sustainable posture, so it can afford the emerging needs and priorities in the coming years.

The Louisiana Hospital Association supports SB1 and SB2, because it will enhance the flexibility of the legislature and administration in finding savings within 391 statutorily-protected dedications. We appreciate your leadership and look forward to working with you and the legislature on passing these very important bills to protect vital healthcare services to those in need.

Sincerely,

John A. Matessino
President & CEO
Louisiana Hospital Association


The Council For A Better Louisiana (CABL) Supports Budget Reform Initiatives

CABL Supports Additional Flexibility for Budget Reductions

CABL supports the recent proposals from Governor Jindal to give the governor and the Legislature more flexibility to make budget cuts during revenue shortfalls. We believe the proposals are reasonable and in alignment with principles CABL has supported for a number of years.

CABL has long been uncomfortable with our current situation that leaves two critical areas of our budget – health care and higher education – vulnerable to the most extreme level of budget cuts. Today, our elected leaders do not have the needed flexibility to make budget cutting decisions based on the state’s most immediate priorities. This can result in greater cuts to areas of the budget we might want to protect, while shielding other areas that might actually be a lower priority.

The governor’s proposal to increase the permissible level of cuts to dedicated funds from 5% to 10% is reasonable and helps mitigate some of the negative impact our current law has on higher education and health care. It in no way requires the maximum 10% cut be made to any of the dedicated funds. Importantly, it allows the governor and Legislature to maintain their discretion to make budget reductions in the best interests of all the state during extraordinary times while maintaining proper checks and balances.

Likewise, since budget reductions can clearly occur in back-to-back years, the governor and the Legislature should not be constrained by the existing law that severely limits their ability to spread these cuts over multiple years.

CABL also believes that the added transparency of requiring the Legislature to review statutory dedications every four years is a positive move. It’s unlikely that most will be tampered with, but there could well be some that have outlived what usefulness they might have had and should be abolished. At the very least, state leaders can see if they remain the priorities they once were or judge whether they are performing as intended.

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