BATON ROUGE, La. – Pending website transparency requirements may soon place boards that govern public schools under greater scrutiny. The School Authority Transparency Act, HB 559, awaits floor debate and final vote tomorrow in the Louisiana House of Representatives, with Rep. Rosalind Jones (D – Monroe) as prime sponsor.

HB 559 would mandate publication of a wide variety of information, including school disciplinary procedures, detailed event calendars, and all board policies and procedures. It even goes so far as to include school dress codes, grade change processes, and strategies for bullying prevention.

A school governing authority in theory carries out the wishes of the citizens of that jurisdiction. However, Rep. Jones says constituents have brought their difficulties to her attention – that nominally public information has been difficult to obtain, even requiring legal counsel.

“So I thought to provide some sunshine, some transparency to school board policy and procedure… If the school boards have a website, they should be able to publish all their policies and procedures on the website, along with other pertinent information for parents.”

However, opponents contend that this law places greater top-down burdens on the public school system. Leslie Jacobs, a New Orleans-based education reform advocate and founder of Educate Now!, believes websites can provide valuable information for parents and community, but she cautions legislators that they “not continue to build layers of compliance that take financial and human resources away from the classroom.”

The new law’s requirements also apply to charter schools, which were initiated to be more independent – “overwhelmingly publicly funded, predominantly privately run,” as superintendent of the Recovery School District, Paul Vallas, has described. The proposed law, however, does not distinguish between charter schools and conventional public schools, except that it requires an additional list of charter schools.

“With respect to charter schools,” says Jacobs. “HB 559 is particularly burdensome… Charter schools do not have a central office, nor do they have the staff to constantly update their websites. This requirement will be costly.”

Andrew J. Coulson of the Cato Institute has observed that the “pattern in publicly funded education, both domestically and internationally, has always been one of increasing regulation over time… That same pattern is playing out in the charter school sector.”

Rep. Jones says she has observed little push-back to HB 559, including the governor’s office, suggesting she is confident of its passage.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy and editor of The Pelican Post. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.
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Matthew Cole contributed to this article as research assistant with the Pelican Institute for Public Policy. He studies economics at Loyola University in New Orleans.

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A recent report from Bloomberg News illustrates how police pensions have rapidly deteriorated in Louisiana. Three trustees of the state’s Municipal Police Employees’ Retirement System (MPERS) took control of the pension plan, made disastrous investments, and frittered away tens of millions of dollars. The report also demonstrates the astonishing lack of oversight and transparency that allowed such reckless expenditure of taxpayer money to continue.

In 1999, three members of MPERS’s board of trustees decided to invest pension funds in an unfinished country club in North Louisiana. They bought the still-under construction property for $6 million dollars, $400,000 more than a hired consulting firm advised. Since this purchase, MPERS has invested $15.3 million to maintain the club, while the club’s appraised value has fallen to $3.2 million.

For the fiscal year ending in June 2001, the MPERS system still had a surplus of $141 million. By 2002, these poor investments decisions turned that into a deficit of $195.2 million. MPERS responded in 2003 by relaxing investment standards to allow for higher risk and potentially greater returns. They also doubled the period for MPERS to pay back its unfunded liability to 30 years.

In 2003, the trustees also hired their Chief Investment Officer as their actuary, built a $3 million headquarters to accommodate their staff of six, and invested over $70 million into hedge funds, which require large initial investments and essentially operate with high-risk techniques. These particular investment aggregations have received criticism for their relative lack of transparency and regulatory oversight compared to mutual funds.

Ultimately, the trustees spent $73.4 million on properties which are now worth only $11.7 million.

MPERS gambled with public money, and lost. If this were a private company, these disastrous mistakes would surely result in bankruptcy. This outrage demands reforms that don’t leave the taxpayers with the bill for the shortsighted decisions of a select few.

Having taxpayers increase contributions to help cover pension benefits, losses, and expenses is not a tenable solution. Doing so would only further punish taxpayers, who already pay 56 percent of state police pensions, while doing nothing to increase accountability.

Meanwhile, the state has relatively simple options at its disposal that would raise accountability and transparency in the pension process, namely, raising individual contributions to 10 percent from 7.5 percent. This is the preferred option, rather than making taxpayers dole out more money.

Furthermore, it would be beneficial to reconstitute the board of trustees to include mandatory legislative oversight. In the past, as the story notes, the board nominally included two “honorary ”members from the state legislature. However, neither of these representatives went to a single board meeting over the last decade. Including representatives from the Legislature or state departments would help ensure accountability over these publicly held pensions.

MPERS operates with the public’s money, which it ought to use responsibly and efficiently. Only the implementation of legislative reforms to increase oversight and decrease taxpayers’ burden will allow this goal to be accomplished.

Jamison Beuerman is a contributing writer and policy analyst at the Pelican Institute for Public Policy. He can be reached via email at jbeuerman@pelicaninstitute.org or on Twitter @jbeuerman.

Pelican Institute provides new source for transparency and accountability in government spending

State Treasurer John Kennedy recently laid out 16 measures that would save nearly $3 billion in state funds, which can then be allocated to health care and education. Treasurer Kennedy’s listed measures are grounded in common-sense and practicality. His first suggestion is axiomatic: “Do not raise taxes or fees. We do not need to. It won’t work anyway. Ask California.”

Likewise, he illuminates one of the biggest problems with our state government, the disproportionately large size of per capita state employees, which siphons funding away from schools and hospitals into unnecessary administrative positions. By eliminating 5,000 of these positions each year for three years, Kennedy estimates annual savings of $500 million. The Treasurer also stresses restructuring the state’s consulting contracts by eliminating 10% of the current 16,000 contracts and by reducing costs by 5%. Over $1 billion a year will be saved by implementing these two suggestions.

Also central to Kennedy’s plan is overhauling our currently unsustainable Medicaid plan. The amount of unnecessary and superfluous government expenditures on the Ponzi scheme that is Medicaid is astounding. Kennedy points out that implementing a provision of the state law will allow the state to purchase private insurance for low-income citizens, which is cheaper than Medicaid and will result in $100 million in annual savings.

Furthermore, the lack of transparency in the Medicaid program often means that tax-payers fund emergency room trips for non-emergencies and Medicaid patients receive egregious state-subsidized hospital stays. Simple measures to increase oversight into the Medicaid system will greatly reduce wasteful government spending that could be better used on hospitals or struggling schools.

One hopes that suggestions such as these will receive due attention. Whether every recommendation on the list is ideal is beside the point. Serious cuts in spending need to be made and Kennedy should be commended for proposing reforms that address the deficit without further burdening the taxpayers of Louisiana.

The latest example of astonishing wasteful government spending in Post-Katrina New Orleans was described in a recent report by the Times-Picayune. In this example of progress impeded by bureaucratic incompetence, a study by a federal inspector general found that 80% of sampled recipients of Road Home elevation grants in 2006 and 2007 failed to use the grants for its intended purpose: to elevate their homes.

That means that 80% of the $3.8 million granted to this sample pool was wasted. Worse, officials fear the second round of grants in 2008 and 2009 could also have been squandered. This just highlights the need for internal auditing and transparency of government expenditures, as well as further private (re: efficient) financing of rebuilding efforts in the New Orleans area.

Of course, private investment cannot be the sole source of rebuilding in New Orleans. Government has an important role to play in emergency situations such as a natural disaster. But government cannot make effective use of taxpayer money if it lacks the necessary auditing. With better oversight and increased transparency, this money could help far more people rebuild than it currently does.

The Jefferson political dynasty seems to have finally collapsed under its squalid foundation of greed and deceit. This week Betty Jefferson has resigned her post as the 4th district assessor following pressure from her fellow assessors.

The resignation follows her guilty plea to swindling money from both her office and from nonprofit groups funded by taxpayers. Apparently, her reported $90,000 a year salary wasn’t enough to satiate her greed. (For a powerful indictment of Betty Jefferson, read Jarvis DeBerry’s excoriation of her in the Times-Picayune).

Despite the black eye that this episode has left on the city, it seems the municipal government has learned a lesson. The seven assessor offices have been consolidated into one city-wide office, which Erroll Williams was elected to this past February.

Limiting the number of bureaucratic offices, such as consolidating 7 assessor offices into one, will both allow the municipal government to run more efficiently, as well as prevent abuse of office by allowing for more transparency and auditing. This case illustrates the need to eliminate superfluous government offices, which as the precedent shows, lead to wasteful spending and corruption.

Additionally, Betty Jefferson’s case serves to illuminate the troubles which inevitably follow government-subsidized non-profit organizations. As demonstrated by both Ms. Jefferson and ACORN, the usage of tax-payers money to subsidize non-profits which are then manipulated and exploited for political ends illustrates the need to decrease, or end, such practices altogether.

It is absolutely imperative that federal, state and local government implement more transparency. Taxpayers have a right to see how their money is being spent. How many more scandals will it take to elicit action from our elected officials?

In fact, today’s Biden schedule highlight is a meeting with the chief of transparency for economic recovery. But, unfortunately, the transparency meeting is non-transparent, closed to the press. Which makes it — what? — secret openness? Open secrecy?

For all the promises of transparency from both the President and Vice-President on the campaign trail, their record of carrying through with such promises leaves something to be desired.

Since the beginning of the mayor’s race candidates have shed light on the worse features of New Orleans, public corruption being just one of them. Acknowledging the city’s weaknesses and proposing solutions are essential steps for a better New Orleans. However, addressing the problems only during the mayor’s race and forgetting about them after Election Day is not effective.

Corruption should be constantly controlled and minimized. The passion with which the candidates outlined their plans needs to persist after the winner has been inaugurated.

Why is public corruption such a terrible trait for a city?

Not only does political corruption deny citizens the ability to rely on their local government, it also limits the city’s economic growth. Looking at New Orleans it seems clear that corruption goes hand in hand with a low economic growth rate. A high level of corruption has been associated with a low level of investment, which then causes a lower per capita income. Political corruption behaves like a tax by diminishing incentives to invest, reducing the effectiveness of government expenditures, and limiting economic growth. Overall, corruption is a negative-sum game (we all lose.)

How can public corruption be minimized?

A transparent and accountable administration that discloses all public budget and contracting information would reduce the incentives and opportunities for corruption. What’s more, reducing the power of public officials would eliminate incentives to demand bribes. Transparency and limited government have to be on politicians’ agendas in order to effectively fight corruption in New Orleans.

It was encouraging to hear six out of six candidates stress the need for transparency along with full disclosure of information. They also expressed the need to increase the accountability of the local government and guarantee zero tolerance on corruption. These are essential elements for an honest, transparent administration. Will the future mayor of New Orleans keep in mind the promises and the passion with which corruption was addressed? We hope so.

More details on Friday’s mayoral forum can be found on NOLA.com.

• President Obama has signed 114 bills into law.
• 86 of those bills, or 75%, have been held at the White House for five or more days as a matter of course. Simply posting them on Whitehouse.gov for comment would have fulfilled the president’s pledge.
• Forty-seven bills (41%) have been posted on Whitehouse.gov for five days, but without links leading visitors or search engines to them, so they cannot be counted as fulfillments of the Sunlight Before Signing promise.
• One bill has been posted online for five days, accessible to the public for their review, before receiving the president’s signature: The DTV Delay Act, Public Law 111-4.

Harper notes that a “link on the homepage [of the White House] pointing to bills awaiting the president’s signature” is now available, and predicts that the percentage of bills fulfilling the President’s campaign pledge will greatly increase.

The Pelican Institute applauds the move by the White House to ensure greater transparency and hopes that this trend will continue.

This is bad policy and bad for business. Any state requirement for legislative approval of individual contracts will automatically increase the political risks faced by the private sector. This makes sense, of course—private vendors spend thousands, sometime millions, developing proposals and engaging in state procurements, with lengthy, time consuming processes that require vendors to take on significant legal, financial and other costs. If you, as a business owner, knew that you could jump through all of the existing procurement hoops (and pay the necessary costs) to win a competitive bid and then still face a 50-50 shot that the contract wouldn’t proceed to close, would you be more or less likely to bid? Ideally, the risk of project approval would decline as the competition nears completion, not peak at the very end. And fewer bidders on the margin = less competition = higher costs = less value for taxpayer money.

[side note: see a harsh lesson learned by Pennsylvania on legislative approval of contracts, where the legislature left $8.9 billion on the table not too long ago that I'd bet they wish they had right now.]

From a public administration standpoint, legislative approval of contracts works at cross purposes to the day-to-day management and administration work performed by agency directors and staff. It becomes hard for them to make decisions and accomplish their goals when the political process sits waiting in the corner to potentially undermine them anywhere along their path to the goal line. The proposed recommendation would allow procurement decisions to be easily hijacked by political aims, rather than guided by smart policy.

In addition to the legislative approval provision, the proposed recommendation would require agencies to explain to the legislature: (1) why they department or agency needs to hire an outside consultant, (2) how the service provided by the outside consultant conforms to the department or agency’s mission, (3) why the service cannot be performed by a regular employee or employees of the department or agency, (4) how the outside consultant was selected, and (5) how the department/agency would provide the service if the Joint Budget Committee does not approve the contract.

There’s a better way to get to the heart of these very same policy considerations in a way that doesn’t undermine smart contracting by politicizing it. In fact, I presented a better option in my testimony before the Streamlining Commission in September, and I suggest that the Commission revisit it.

I recommended as a state best practice putting in place a mechanism similar to Florida’s Council on Efficient Government (CEG). The CEG was former Florida Gov. Jeb Bush’s response to a related contracting challenge there, in which media scrutiny of the implementation challenges associated with a large state IT procurement began to undermine his administration’s broader, enterprise-wide outsourcing initiatives. Gov Bush’s response was not to put in place political barriersto state contracting—rather, he put in place a mechanism to make better decisionson state contracting.

Over the last decade, Florida has been a national leader in privatization, undertaking some 130+ privatization initiatives saving hundreds of millions in direct dollars and avoiding billions in future costs. The CEG essentially serves as a privatization “center of excellence” that has helped agencies improve their procurement practices and disemminate best practices and lessons learned throughout state government. The CEG is a major reason that Florida has developed perhaps the most robust and transparent privatization process out there among the states.

A key lesson learned from global experience in privatization is that it works best when governments develop a centralized, independent decision-making body to manage privatization and government efficiency initiatives. Gov. Bush applied that model in creating the CEG to serve as the enterprise-wide gateway for best business practices in competitive contracting and standardize how the state identifies and conducts competition initiatives. The CEG was a key component of a strategy that ultimately helped his administration realize over $550 million in cost savings through over 130 privatization and competition initiatives. Last year alone, the Council evaluated 28 new business cases for potential agency outsourcing projects with a cumulative value of over $244 million, identifying over $53 million in projected savings to the state.

I describe it in much more detail here and here, but the CEG’s main function is to oversee a pre-budgetary analysis of proposed outsourcing initiatives that involves a multi-stage review and development of a business case, for starters. Private companies prepare business cases routinely on proposed outsourcing projects—shouldn’t government? A business case analysis gets to the heart of the very same issues Louisiana policymakers are concerned with—what can we do through contracting that we can’t do today, what does the in-house option look like, could we achieve better performance and value for money, etc.

But it gets to the same goal without injecting tremendous political risk, reducing competition and ultimately making Louisiana a less desirable place to do business next to Texas, Virginia and some of its peers.

The question should not be, “are we doing too much contracting or too little contracting?” Instead, Louisiana policymakers should be asking, “can we do better contracting?” See excellent, recent articles along these lines by Harvard Kennedy School professor and former Indianapolis mayor Stephen Goldsmith in Governing and Professional Services Council president Stan Soloway in Washington Technology. Both critique the Obama administration’s anti-competitive, anti-privatization procurement policies that are virtually assuring a massive expansion of the federal workforce at a time of record deficits and debt.

The policy the Streamlining Commission will consider Monday would have very similar effect in Louisiana as Obama’s are at the federal level—more government, rather than less. More state employees, rather than less (something I know is very near and dear to Treasurer and Commission member John Kennedy, for one).

The Streamlining Commission should reject the recommendation on its Monday agenda and instead support the steps that the administration is doing to embrace the Florida model. The process is designed to have agencies look before they leap into contracts, do a side-by-side analysis of the private and public options, and expand the use of performance-based contracting statewide. In fact, Arizona came close to replicating the Florida model earlier this year, and the American Legislative Exchange Council adapted Arizona’s bill into model legislation it recommends for state legislators seeking to improve their procurement policies.

The focus should be on doing everything possible to streamline bureaucracy and stimulate economic growth. If the Streamlining Commission wants Louisiana to be a place to do good business, it should reject policies that increase political risks of contracting and undermine competition. Otherwise, instead of more streamlined government, taxpayers might just get more government in the end.

» Reason Foundation’s Annual Privatization Report 2009
» Reason Foundation’s Privatization Research and Commentary

UPDATE: It’s also worth mentioning Governor Jindal’s recent contract transparency initiative that incorporated information on state government services contracts into LaTrac, the Louisiana Transparency and Accountability Portal so that any citizen can review it. This move, described in more detail here, is designed to shine light on state contracting, which implicitly helps guide better decisionmaking.

Leonard Gilroy is the director of government reform at Reason Foundation and an adjunct scholar at the Pelican Institute. This entry is cross-posted at Reason Foundation’s Out of Control Policy Blog.