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Bill to Reduce State Consulting Contracts Vetoed by Governor

BATON ROUGE, La. - State Treasurer John Kennedy announced today that HB 142 requiring additional financial accountability and legislative oversight of state contracts was vetoed by the Governor, even though the bill unanimously passed the House (98 to 0) and Senate (37 to 0) and was supported by many University Faculty Senates.


"I thank Governor Jindal for his consideration. I am, of course, disappointed that we will continue to waste money on frivolous, overly expensive consulting contracts to the detriment of our taxpayers and higher education funding," said Treasurer Kennedy. "However, it took six years to convince the Governor to support our new Office of Debt Recovery to collect money owed Louisiana taxpayers, so we will be back with our consulting contracts reform effort next year."


HB 142 by Rep. Dee Richard provided that all state dollar contracts totaling $40,000 or more of General Fund and Over-Collections Fund dollars had to go to the Joint Legislative Committee on the Budget for final approval. The Joint Budget Committee could then approve the contract, ask for revisions, or disapprove the contract and direct the savings to higher education.


According to Treasurer Kennedy, Louisiana spent $1.6 billion from its general fund on higher education in 2008, reaching the southern average for the first time in 25 years. This year's general fund spending for higher ed is $525 million--a 67% reduction. Even after taking into account tuition and fee increases on the backs of students and parents, total funding on higher ed is down $353 million.


"State funding for higher education in Louisiana is down 17.6 percent this fiscal year alone -- the most dramatic reduction in America -- while 3/4ths of states have raised their higher education funding," said Treasurer Kennedy. "Louisiana's colleges and universities need money. There's a way to help them without raising taxes or tuition: reduce spending on state government's consulting contracts."

Bill to Shine More Light on State Consulting Contracts Sails Through Senate

BATON ROUGE, La. - A bill that would require additional financial accountability and oversight of state contracts unanimously passed the Senate floor today, according to State Treasurer John Kennedy. HB 142 passed the Senate floor with a vote of 37 to 0 and now returns to the House for concurrence.


"I commend Rep. Dee Richard for his efforts to bring the consulting contract process into the sunlight," said Treasurer Kennedy. "Nothing makes it easier to resist temptation than good values, a proper upbringing and witnesses. This bill provides the witnesses."  


HB 142 by Rep. Richard would provide that all state dollar contracts totaling $40,000 or more of General Fund and Over-Collections Fund dollars have to go to the Joint Legislative Committee on the Budget for final approval. The Joint Budget Committee could then approve the contract, ask for revisions, or disapprove the contract and direct the savings to higher education.


"For the first time the Legislature will be able to take a hard look at state contracts; eliminate the obviously frivolous ones; and generate money for higher education," said Treasurer Kennedy.


If the House concurs with the Senate's amendments to HB 142, the bill will then move to Governor Jindal's desk for his signature. If the bill becomes law, it will be in effect for the next three fiscal years and will automatically sunset on July 1, 2017.

Bill to Cut Consulting Contracts Unanimously Passes Senate Finance Committee

BATON ROUGE, LA -The Senate Finance Committee unanimously adopted a compromise bill to cut state consulting contracts today, and HB 142 by Rep. Jerome "Dee" Richard now moves to the Senate floor for a vote, according to State Treasurer John Kennedy.


HB 142 Unanimously Passes Senate Finance Committee

Treasurer Kennedy Discusses Today's Developments via @YouTube

"Nothing makes it easier to resist temptation than good values, a proper upbringing and witnesses," said Treasurer Kennedy. "This bill provides the witnesses. I want to thank Dee Richard for being a road warrior for higher education and the protection of taxpayer dollars.  I also want to thank the members of our higher education community who came out and spoke in support of the bill today and our Senate leadership for helping craft a compromise bill that will finally make meaningful cuts to wasteful contracts."


The Finance Committee amended HB 142 to provide that all state dollar contracts totaling $40,000 or more of General Fund and Over-Collections Fund dollars have to go to the Joint Legislative Committee on the Budget for final approval. The Joint Budget Committee could then approve the contract, ask for revisions, or disapprove the contract and direct the savings to higher education. If the bill becomes law, it will be in effect for the next three fiscal years.


"The bill is important to our state, because the carnage in higher education must end," said Treasurer Kennedy. "The formula for a better Louisiana is simple: real jobs for adults and a good education for our children. We can't have one without the other."


Treasurer Kennedy credits Senate President John A. Alario and Senate Finance Chairman Jack Donahue for working up the compromise needed to get HB 142 through committee. Historically, previous versions of the bill have sailed through the House of Representatives but stalled in the Senate.


"This has never been tried before, but the impossible is often just the untried," said Treasurer Kennedy. "For the first time the Legislature will be able to take a hard look at these contracts; eliminate the obviously frivolous ones; and potentially generate money for higher education."

 Opinion Columns

Helping Education by Cutting Consultants

After a four year struggle, the Louisiana Legislature has at last passed a bill to reform state spending on consultants and dedicate the savings to higher education. HB 142, by Rep. Dee Richard, is now on the Governor's desk awaiting his signature.


As amended, HB 142 would do the following:


  • All consulting contracts using state taxpayer dollars and costing $40,000 a year or more must be reported to the Joint Legislative Committee on the Budget (the JLCB, comprised of the House Appropriations and Senate Finance Committees).
  • A list of these contracts will be public documents and therefore available to the public and the press when forwarded to the JLCB.
  • If the JLCB does not place a particular contract on its agenda within 30 days of receiving the contract, the contract is automatically approved. If, however, within 30 days, the contract is placed on the agenda, it will require the JLCB's approval in an open, public meeting.The JLCB may either approve the contract, recommend revisions to it, or reject the contract. 
  • The money for rejected contracts will be deposited into the new Higher Education Financing Fund in the state Treasury, which will be dedicated to public post secondary education institutions.
  • If the JLCB recommends revisions to a contract, it will not become effective until it is revised, resubmitted to the JLCB and approved. If the contract is not resubmitted within 30 days after revisions are recommended, the contract is deemed rejected, and the money is deposited into the Higher Education Financing Fund. 
  • Professional, personal or consulting service contracts exempted from the bill are contracts of the Secretary of State to conduct elections; Medicaid and other contracts for doctors and other providers; contracts using federal funds; and District Attorney and Public Defender contracts. 
  • The provisions of the bill will sunset on July 1, 2017, unless extended by the Legislature.


HB 142 in its final form is not as tough on wasteful consultant spending as some of us wanted, but it's a start.


If you want to encourage Governor Jindal to sign HB 142 into law, his telephone

number is (225) 342-7015, or you can send him an email by visiting our website at and clicking the link "Contact Gov. Jindal."
SB 603 Could Be State’s Best Shot at Recovering Unclaimed U.S. Savings Bonds

The federal government is sitting on $16.5 billion worth of unredeemed U.S. savings bonds that have matured, some of which no longer earn interest.  Not surprisingly, the U.S. Treasury hasn’t been very proactive about returning this money, and thousands of Americans don’t even know the bonds are out there. 

Many savings bonds are purchased as gifts by parents, grandparents or relatives.  Sometimes bonds were kept in Grandma’s safe deposit box or tucked away in a drawer, and the actual owners have no idea they even exist.  After 20 or 30 years, you can see how many of these bonds were forgotten about or went missing.

States have tried to work with the U.S. Treasury to turn the responsibility of locating the owners of unclaimed savings bonds over to state Unclaimed Property offices.  The problem is the federal government doesn’t want to give up the money.  The U.S. Treasury doesn’t even want to give us names or other information to help get this money back in the hands of the people.

A few years ago, Louisiana joined several states including New Jersey in suing the federal government for unclaimed savings bonds.  We lost in court, but the judge said we could have the standing to get the money back for taxpayers if the savings bonds were escheated to the states.  That’s what the State of Kansas did in 2013 and won.

Kansas was the first state in the nation to take the U.S. government to court to escheat unclaimed savings bonds.  The state was successful and was able to collect $861,908 from the U.S. Treasury.  Kansas sued the federal government for savings bonds in the hopes of collecting $160 million belonging to its residents.

A bill moving through the Louisiana Legislature follows in the footsteps of Kansas and is the next step in recovering savings bonds for Louisiana residents.  SB 603 by Sen. John A. Alario, Jr. would escheat around $484,000 in unclaimed savings bonds to the state and enable us to sue the federal government for unclaimed savings bonds belonging to Louisianians.

If Louisiana is successful in this effort, we could eventually collect $100 million to $200 million in savings bonds from the federal government to return to Louisiana taxpayers, for whom this money is owed.  SB 603 could be the state’s best shot at recovering unclaimed savings bonds for the people of Louisiana.

Louisiana Needs A Med School In Lafayette

Louisiana needs another medical school.  Lafayette would be an ideal location.


Our state has a doctor shortage.  A third of our people live in a federally-designated primary care shortage area.  Over 2 million Louisianians lack the access to specialist physicians enjoyed by people who live in wealthier states.


Louisiana's physician shortage is probably going to get worse.  More of our doctors (28%) are 60 or older than are under 40 (19%).  Our three medical schools-LSU New Orleans, LSU Shreveport and Tulane-graduate about 450 doctors a year, but not all of them stay in Louisiana.  (In 2012, 108 out of 171 graduates of LSU Medical School in New Orleans remained in Louisiana; for Tulane's Class of 2012, it was 35 out of 177.)


Like the rest of America, our population is aging.  By 2030, 20% of all Louisianians will be 65 or older, and most of them will need a doctor.  The federal Affordable Care Act (Obamacare), which will insure many previously uninsured Americans, will push demand even higher.  No wonder the Association of American Medical Colleges predicts our country will need 63,000 more physicians by 2015 (140,000 by 2025) than we are likely to have to serve America's medical needs.


Other states are addressing their physician shortages.  29 new medical schools have opened in the last 20 years, including a major expansion in 2013 of the University of Mississippi College of Medicine.  Louisiana still has time to catch up, but only if we act immediately by establishing a fourth medical school in our state.


Our politicians can fight over the turf later, but an appropriate location for that new medical school is Lafayette.  Metropolitan Lafayette is one of the fastest-growing regions of our state, with a thriving, diversified economy, superb quality of life and an accomplished community of health care providers.


Lafayette General Medical Center, which is now a teaching hospital after taking over the state's Charity Hospital in Lafayette (the University Medical Center), is the largest full-service, acute care medical center in Acadiana.  Lafayette General could easily and efficiently support the new medical school, perhaps in conjunction with the new Our Lady of Lourdes Regional Medical Center, the Regional Medical Center of Acadiana and Women's and Children Hospital.


There will, of course, be hurdles.  For one thing, money is tight.  The new medical school at Quinnipiac University in Connecticut, which opened in 2013, cost $100 million.   I believe Louisiana could do it cheaper.  Louisiana could save money on its new medical school's physical plant needs by using some of the existing infrastructure in our Charity Hospital system.  Besides, once our new medical school is operational, a class of 100 students would generate $8.4 million a year in tuition for all classes in the 4 year program.


A second hurdle will be obtaining new medical residencies.  A medical school graduate cannot practice medicine in the U.S. until he has received on-the-job training as a resident under the supervision of a senior, fully licensed physician for 3 to 5 years, depending on the branch of medicine the resident chooses.  There is a looming shortage of medical residencies.  By 2020 the number of U.S. medical school graduates will exceed the number of residencies.


The good news is there are solutions.  Bipartisan legislation is pending in Congress to create 15,000 new residencies over the next 5 years.  Obamacare creates 600 new primary care residencies.  Teaching hospitals currently pay for 10,000 residencies a year; Louisiana could ask its new private hospital partners to contribute.  Commercial insurance companies, which will benefit handsomely from Obamacare, can be asked to help.  States can also use Medicaid monies to fund residencies.  It's important to address the need for more medical residencies in Louisiana teaching hospitals, because 60% of physicians end up practicing within 100 miles of where they did their residency.


Louisiana needs more doctors, and we're going to have to grow our own.  In 2013, Louisiana's three medical schools had 14,116 applicants for 493 spots.  A new medical school in Lafayette is needed, and makes financial sense.  If you want somebody to take care of you in 20 years, the training must start now.


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