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KENNEDY: Louisiana Has A Spending Problem, Not A Revenue Problem

KENNEDY: Louisiana Has A Spending Problem, Not A Revenue Problem
June 30
11:40 2015

Most Louisianians deeply mistrust government and think a large portion of every dollar government spends is wasted. The recently completed legislative session accomplished little to disabuse them of that notion.

Sure, we’re all relieved the legislature did not cut higher education any further and that our state hospitals and medical schools will remain open. How that was accomplished, however, did not solve the huge structural deficit in Louisiana state government finances.

Fundamentally, Louisiana state government does not have a revenue problem. We have a spending problem. Each year, no matter how much revenue we have, we spend more revenue than we take in, and when we do spend money, we don’t spend enough of it on things taxpayers need as opposed to things politicians want.

Here are some examples of ways Louisiana state government can save money, none of which our legislature devoted any time to in the session:

1.  Executive branch departments are top heavy. They have too many generals and not enough foot soldiers. The Legislative Auditor has found that 22% of all the managers in classified state service manage one employee. The average manager manages four employees. We need to limit layers of management in each department to four or five with a maximum of six for large departments, allocate one manager per ten staff, and limit clerical staff to 15% or less.

2. According to the Public Affairs Research Council, each year Louisiana has 900,000 taxpayer-funded visits to emergency rooms for nonemergencies, such as acne, insomnia, pregnancy tests, infertility counseling, obesity counseling, diaper rash, and examinations for eye glasses. (PAR Report June 2006). It costs many times more to treat a patient in an ER than a private clinic. Neither federal nor state law requires an emergency room to treat a patient for a nonemergency. Louisiana should adopt the Patient Navigator Program to steer these patients to physicians who can treat them, through the Medicaid program, in private clinics. We should also adopt a statewide ER visit database, like Washington state, to track chronic abusers, and copy New Mexico’s NurseAdvice Call Center and Wyoming’s 24/7 Nurse Line to help keep routine care patients out of our emergency rooms.

3. According to the state’s 2014 Medicaid Report, 3% of the state’s 1.4 million Medicaid patients account for 43% of the $8 billion in taxpayer money spent each year. That’s $86,000 per patient. Louisiana should crack down aggressively on Medicaid fraud. Then we should implement an aggressive chronic disease management program, like the Stanford School of Medicine program used in Florida and other states, to save money treating chronically ill patients without sacrificing the quality of care.

4. Louisiana has over 350 “statutory dedications”, which are special funds set up by majority vote of the legislature into which $3 billion to $4 billion automatically flows annually without having to compete with other expenditures, such as higher education and roads. Many of these statutory dedications, such as the Transportation Trust Fund, the Rainy Day Fund, and funds such as the Boll Weevil Eradication Fund (for which businesses self-assess themselves a fee in return for a government service) are necessary. Others are not. The legislature should objectively review each statutory dedication and eliminate as many as possible to free up money for more important needs.

5. Louisiana state government has 19,000 consulting contracts, according to a Legislative Auditor report issued in May of 2015. More than 4,500 of them are “off the books” and not even reported to the Office of Contractual Review. Additionally, though Louisiana colleges and universities are starving for money, the state has or has had consulting contracts with the University of Tennessee, the University of Georgia, Texas A&M, the University of Arkansas, Rutgers University, the University of Southern Mississippi, Oregon State University, Vanderbilt University, Duke University and many others. We should eliminate 10% by value of those consulting contracts funded with state money. The Governor should then write all the consultants funded with state money that are not eliminated and ask for a 5% discount. Additionally, all consulting contracts funded with federal money should be offered first to Louisiana universities.

These five ideas will save millions of taxpayer dollars. There are others. The truth is Louisiana doesn’t have a revenue problem nearly as much as we have a spending problem.

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State Treasurer John Neely Kennedy

State Treasurer John Neely Kennedy

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