Bobby Jindal
Governor
Paul W. Rainwater
Commissioner of Administration
Executive Budget
Fiscal Year 2012-2013
Joint Legislative Committee on the Budget
February 9, 2012
Bobby Jindal
Governor
Introduction and Overview
• Prioritizes spending with targeted reductions
• Reforms and restructures government
•No tax increases
• Reduces more than 6,300 fulltime positions
• No reduction to higher education
• Expanding access to health care
2
1
Louisiana’s Employment* Levels have Outperformed
Both the South and Nation since Recession Began
Total nonfarm, seasonally-adjusted employment* (100=January 2008)
107
Fifteen consecutive months
of year over year job growth
for La.
Louisiana
100
United States
93
JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND
2008
2009
2010
2011
* December figures are preliminary; U.S. data also preliminary for November 2011
** Based on aggregate of SREB states (Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana
Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia)
Source: BLS; LED analysis
3
Job Creation and Economic Progress
•
In December, Louisiana recorded its 15th-consecutive month of year-over-
year job growth. For the year, Louisiana recorded a net gain of 46,700
jobs in December, compared to the final month of 2010. Louisiana joins
Texas as the only states in the South to record an increase in overall
employment since the official start of the recession in December 2007.
•
Louisiana’s current unemployment rate of 6.8 percent is well below the
state’s rate one year ago (7.7 percent) and compares even more favorably
to the current jobless rates for the South (8.4 percent) and the nation (8.3
percent).
•
In 2011, the U.S. Census Bureau reported that Louisiana’s population grew
by more than 168,000 from July 1, 2007, to July 1, 2010, a growth rate
about 43 percent faster than the U.S. over that time.
•
The U.S. Census Bureau recently reported that Louisiana experienced its
fourth consecutive year (2007-2010) of population in-migration, reversing
decades of out-migration.
4
2
South**
Business Climate and Economic Development
Rankings on the Rise
•
For the third straight year,
Southern Business and Development
magazine named Louisiana either State of the Year or Co-State of
the Year, noting that Louisiana attracted more significant business
investment and job-creating projects per capita than any other
state in the South.
•
Business Facilities
magazine ranked Louisiana No. 2 in the nation
for Economic Growth Potential and No. 7 among U.S. states for
Best Business Climate in 2011, both new highs for Louisiana.
•
LED FastStart™ ranked as the nation’s No. 1 state workforce
training program for the second straight year in the
Business
Facilities
2011 rankings.
5
Business Climate and Economic Development
Rankings on the Rise
•
Area Development
magazine ranked Louisiana No. 6 in the U.S. in
its 2011 ranking of Top States for Doing Business, a survey of
leading site selection consultants who rank which U.S. states are
most attractive for business investment. Louisiana ranked No. 3 for
states that are leading the economic recovery, No. 4 for states
with the best workforce development programs, and No. 4 for
states with the best overall business environment.
•
In 2011,
Site Selection
ranked the Louisiana business climate No. 7
in the nation for the state's highest ranking ever by the
magazine. Louisiana ranked No. 3 in the
Site Selection
Governor’s
Cup Awards with 347 new business location projects. Additionally,
Louisiana's per capita ranking jumped from ninth in 2009 to first in
the U.S. for 2010 rankings that were released in 2011.
6
3
State General Fund Revenue
14.0
12.0
10.0
8.0
6.0
4.0
2.0
Forecast
0.0
Savings Categories
• $325 million in departmental and statewide
reductions
• $286 million from not funding certain cost increases
anticipated at continuation
• $284 million in reductions to General Fund support by
maximizing all means of finance
• Includes $230 million in one-time money for recurring
expenses, well below the $377.5 million FY13-FY14
increase in revenue forecast
8
4
COMPARISON: FY 11-12 Budgeted to FY 12-13 Executive Budget
Total Funding and Positions (T.O.)
(Inclusive of Contingencies) (Exclusive of Double Counts)
As of
12/01/2011
Budgeted
2011-2012
Executive
Budget
2012-2013
Executive
Budget
Over/(Under)
Budgeted
Percent
of Change
GENERAL FUND, DIRECT
$8,277.9
$8,406.7
$128.8
1.56%
GENERAL FUND BY:
FEES & SELF-GENERATED REVENUES
$2,134.4
$2,164.7
$30.3
1.42%
STATUTORY DEDICATIONS
$4,002.7
$3,608.7
($394.0)
-9.84%
INTERIM EMERGENCY BOARD
$.5
$.0
($.5)
-100.00%
TOTAL STATE FUNDS
$14,415.5
$14,180.1
($235.4)
-1.63%
FEDERAL FUNDS
$11,175.0
$11,349.4
$174.4
1.56%
GRAND TOTAL
$25,590.5
$25,529.5
($61.0)
-0.24%
TOTAL POSITIONS
72,686
66,315
(6,371)
-8.77%
NOTE: Positions are authorized, not filled positions. Dollar amounts are represented in millions.
9
State Government Workforce at Lowest Levels
in a Generation
Appropriated Positions:
The FY 13 Executive Budget proposes further reductions in the
number of fulltime appropriated positions in the executive branch by
6,371. Following prior reductions of 9,885 through budgetary actions,
approval of this FY 13 recommendation would mean a total reduction
of 16,256 fulltime appropriated positions since the beginning of the
Jindal administration.
10
5
State Government Workforce at Lowest Levels
in a Generation –
Actual Employees:
Based on figures from the Department of State Civil Service, between December 31,
2007, and January 27, 2012:
•
The total “head count” of all employees in state government has fallen from
100,677 to 88,396, a reduction of 12,281, or 12.2 percent.
•
In terms of fulltime employees (or FTEs), the total has fallen from 93,554 to
79,559, a reduction of 13,995, or 15 percent. These reductions have occurred
fairly proportionally between the classified and unclassified workforce, as follows:
Since December 31, 2007, the number of classified fulltime employees has
fallen from 62,260 to 53,465, a reduction of 8,795, or 14.1 percent.
During the same time period, the number of unclassified fulltime employees
has fallen from 31,294 to 26,094, a reduction of 5,200, or 16.6 percent.
According to Civil Service historical data, even before the new position reductions
proposed in the FY 13 Executive Budget, both the total number of state government
employees and the number of fulltime employees in state government are already at
their lowest levels in 20 years.
11
FY13 Net Adjustments in Authorized Positions
Executive
-99
Children & Family Services
-122
Veterans Affairs
5 Natural Resources
-13
State
0 Revenue
-10
Justice
-5
Environmental Quality
-43
Lt. Governor
0 Workforce Commission
-36
Treasury
-1
Wildlife & Fisheries
2
Public Service
0 Civil Service
1
Agriculture & Forestry
-19
Retirement Systems
0
Insurance
-2
Higher Education
-2,837
Economic Development
-2
Other Education
-2
Culture, Recreation & Tourism
3 Dept. of Education
-58
DOTD
-172
Health Care Services Div.
-600
Corrections
-583
Other Requirements
0
Public Safety
-13
Ancillary
-205
Youth Development Services
-30
Health & Hospitals
-1,530
TOTAL
-6,371
12
6
Reforming, Restructuring Government
Building on Past Success
• Workforce Development
• Children and Family Services
• Louisiana Housing Corporation
• Bayou Health
13
Reforming, Restructuring Government
Pension Reform
•
Creating a hybrid retirement plan for new hires – known as a cash-balance
plan – which combines the best features of defined benefit and defined
contribution plans.
•
Reducing the incentive for artificial inflation of salaries by calculating
benefits using an employee’s salary averaged over five years rather than
three years.
•
Aligning the retirement age with the Social Security standard of 67, while
exempting anyone who is 55 or older and approaching retirement.
•
Rebalancing the retirement cost burden between taxpayers and
employees by increasing the employee contribution rate by 3 percentage
points.
•
Saving $55 million in General Fund in FY 13.
14
7
Reforming, Restructuring Government
•
The Department of Corrections
will consolidate the
offender population at J. Levy Dabadie Correctional
Center in Pineville to Avoyelles Correctional Center in
Cottonport and pursue the sale of Avoyelles and
convert it to a privately run correctional
facility. Proceeds from the sale of Avoyelles are not
included in the Executive Budget
.
•
The Department of Corrections
will also move the
substance abuse treatment program at Forcht Wade
Correctional Center to David Wade Correctional Center.
15
Reforming, Restructuring Government
The Office of Group Benefits
will not proceed with a sale/
transaction of its business and operations. However, in order to
operate more efficiently, it will move to a third-party administrator
for its PPO plan, just as is currently the practice for the HMO and
other OGB plans, and of those of almost every other state
government. The TPA contract will be in place for the beginning of
the plan year starting January 1, 2013.
•
For FY 13 this move will generate $13.25 million in savings, with an
annualized savings of $26.5 million. It will result in the reduction
of 177 positions from its current level of 327 positions, beginning
to align its size with other states, as the same office in Florida
employs 23 people, while Mississippi employs 20.
•
OGB will implement no premium rate increase for plan members in
calendar year 2013.
16
8
Reforming, Restructuring Government
•
The Department of Transportation and Development (DOTD)
will
implement a plan, working with local officials, to transition
services at the Crescent City Connection, in preparation for the
sunset of tolls in December 2012.
Services will be realigned with the level provided to other bridges
across the state, while partnering with local governments for bridge
lighting, and with state police and local law enforcement agencies for
bridge policing.
A request for proposals will be issued to public/private operators for
best value submittals to privatize the operation and maintenance of
the Gretna, Algiers and Chalmette ferries.
A total of 148 positions will be reduced (73 positions from the CCCD
bridge section, and 75 positions from CCCD marine division once
ferries are privatized).
17
Reforming, Restructuring Government
•
In order to focus resources on services most utilized by taxpayers,
DOTD
will implement a Streamlining Commission recommendation
to eliminate ferry services with low ridership.
The Edgard/Reserve ferry carries approximately 350-400 vehicles per
day and costs taxpayers approximately $15 per trip for every
vehicle. Less than 2 percent of the operating costs are covered by the
$1 round-trip toll, with the balance subsidized by taxpayers across
Louisiana. By closing the ferry, 12 positions will be eliminated, and
taxpayers will save $1.5 million per year.
The White Castle ferry carries approximately 150-200 vehicles per day
and costs taxpayers approximately $17 per trip for every vehicle. Less
than 1 percent of the operating costs are covered by the $1 round-trip
toll, with the balance subsidized by taxpayers across Louisiana. By
closing the ferry, 5 positions will be eliminated, and taxpayers will
save $800,000 per year.
18
9
Reforming, Restructuring Government
•
The
Department of Education
will continue implementing its 2010
reorganization plan, which redirects the department’s human and
financial resources to services, functions, and activities that most
effectively support the educational needs of Pre-K-12 students in
Louisiana. These restructuring efforts, as well as other efficiency
measures, will result in the reduction of 58 departmental positions in FY
13, and total savings of $8.9 million.
•
The
Department of Children and Family Services (DCFS)
continues to
streamline its services by consolidating offices around the state, resulting
in reduced leases, at a savings of $3.6 million through FY 2013. As a
result of these types of department-wide efficiencies, DCFS will reduce
122 vacant positions, at a savings of $6.2 million.
•
The
Office of Student Financial Assistance
will outsource the Loan
Operations program, which will result in the reduction of 60 positions and
savings of $1.1 million.
19
Reforming, Restructuring Government
•
The
Governor’s Office of Homeland Security and Emergency
Preparedness (GOHSEP)
is reorganizing and streamlining divisions,
consolidating employee duties, and eliminating duplicative services.
Through the reallocation of 37 positions to the federally funded
Disaster Recovery division, the elimination of a professional services
contract, the elimination of four agency take-home vehicles, and the
elimination of three vacant positions as well as other personnel
savings, GOHSEP will generate more than $646K in savings.
As previously announced during the mid-year reduction, annualized
savings of $355K are being achieved by streamlining services in
logistics, which will be handled by the National Guard in coordination
with existing GOHSEP staff, eliminating technology and phone system
contracts, and by targeting duplicative services.
20
10
Reforming, Restructuring Government
•
The
Department of Public Safety
continues to identify
duplicative and unnecessary tasks increasing productivity and
decreasing need for personnel. The Office of Management and
Finance is realizing savings of $585K and the elimination of
seven positions. The Office of State Fire Marshal has
undergone agency-wide cross training of all Fire Marshal
positions, resulting in a savings of $405K and the elimination of
six positions.
21
Education: Protecting Investments While Pursuing Reform
K-12 Education Funding – Minimum Foundation Program
We continue to protect K-12 education funding in the FY 13 budget, with
the MFP increasing from $3.39 billion in FY12 to $3.41 billion in FY13,
which includes an increase of $27.9 million in General Fund to reflect
the annualized formula increase from the October student count.
Taking into account the new dollars committed to the MFP in this
budget, total MFP funding will have increased by nearly $300 million, or
9 percent, since FY 08.
22
11
Education: Protecting Investments While Pursuing Reform
K-12 Education Funding – Continued Investments to Improve Outcomes
• $75.5 million for Cecil Picard LA4 Early Childhood Program to allow 4-year-old children
considered “at-risk” to be enrolled in LA4 during the 2012-2013 school year.
• $24.7 million for
Ensuring Literacy for All (ELFA)
program designed to ensure every
student is reading and writing at or above grade level by 3rd grade. Almost 222,000
students will benefit during the 2012-2013 school year.
•
$24.3 million for College and Career Readiness to support programs contributing to
achieving an 80 percent graduation rate, including Accelerated Student Academic
Pathway, Attendance Recovery, Credit Recovery, Everybody Graduates, Louisiana Virtual
School, New Tech Network, and Senior Project. More than 135,000 students benefit from
College and Career Readiness programs.
• $16.6 million for Career and Technical Education (CTE) to allow almost 170,000 students
to benefit from the promotion and integration of career and technical concepts within
the academic and counseling framework of schools to prepare them for immediate and
successful entry into the workforce or enrollment in post-secondary institutions.
• $3.95 million for dropout prevention programs (Jobs for America’s Graduates and
EMPLoY), allowing more than 4,000 students to participate in these programs.
•
$2.9 million for Science Technology, Engineering, and Math (STEM) allowing 30,000
students to benefit from enriched science and math programs.
23
Education: Protecting Investments While Pursuing Reform
Higher Education Funding
The FY 13 Executive Budget protects funding to campuses, fully funding
$97 million in carryover tuition that was included in the current year
budget with General Fund and additional tuition funds provided from
their tuition authority previously granted through the LaGrad Act. As a
result, there is no change in funding for higher education schools after
annualizing the $50 million reduction associated with addressing the FY 12
midyear deficit, and after non-recurring carryover and one-time
expenditures in the current year’s budget. Higher education will also
save more than $100 million in retirement expenditures that can instead
be used to invest in the classroom as a result of the Governor’s pension
reform plan.
24
12
Education: Protecting Investments While Pursuing Reform
Higher Education Funding
•
$13.6 million in additional funds, with total funding of $168 million,
are provided to fully fund Taylor Opportunity Program for Students
(TOPS)
awards.
•
$26.4 million in General Fund for
Go Grants
is unchanged from the
FY12 budgeted amount.
25
Transforming Health Care
BAYOU HEALTH
•
A new approach to Medicaid that:
Coordinates care for 865,000 or Medicaid’s 1.2 million enrollees
Enhances access to care
Saves taxpayer money
Improves Health Outcomes
•
DHH has contracted with five Health Plans to move from fee-for-service
model.
•
First area of the state – New Orleans and Northshore – launched Feb. 1
•
Second area – Baton Rouge, Acadiana, Houma/Thibodeaux – launching
next with rest of the state to follow before end of FY 2012.
•
Saving $135.9 million in FY 13.
26
13
Transforming Health Care
The Louisiana Behavioral Health Partnership
•
A new approach to Behavioral Health Care
Serves 100,000 adults and 50,000 children with specialized behavioral health
care needs
Single point of entry
Streamlining fragmented services and funding streams
Expands services and provider types covered under Medicaid
Coordinates services across providers, provider types and state agencies
•
Includes the Coordinated System of Care
Will serve 2,400 children most at-risk or in out-of-home placement
Brings services from four child-serving agencies together under one umbrella
Engages local providers and communities
•
Invests $260 million in this improved system from existing funds across different
programs and agencies and leverages federal dollars more effectively.
27
Containing Health Care Costs
•
Growth in Health Care costs ballooning
15 percent growth in enrollment in 6 years
30 percent growth in expenditures in 6 years
This is still lower than national rates of growth.
•
Even with $135.9 million savings from better coordinating care through BAYOU
HEALTH, we must control costs.
•
FY 13 budget includes critical cost-containment measures in Medicaid:
Implementing utilization management strategies for Hospice ($1 million SGF);
Expediting the inclusion of Waiver recipients into BAYOU HEALTH for
coordination of non-waiver services ($1.2 million SGF);
Using a managed care approach for long-term personal care services for adults
in NOW Waiver ($3 million SGF);
Transitioning the pharmacy program from using the Average Wholesale Price
to Average Acquisition Costs ($1.5 million SGF);
Restructuring payments to hospitals to a Medicare-like reimbursement system
($3.2 million SGF);
28
14
Containing Health Care Costs
• Because of the continuing line of growth anticipated, DHH will also
be implementing an overall 2 percent reduction in the Medicaid
private provider program. Specific rate cuts to providers in this
program will range from 1 to 3 percent. The Department will be
working closely with each provider type in Medicaid to identify the
best approach to achieve that reduction for each.
• That same 2 percent reduction in the private provider program will
also be applied to the managed care companies for both BAYOU
HEALTH and the Behavioral Health Partnership.
• The savings from BAYOU HEALTH is helping to contain costs by
mitigating the reductions in the Private Provider Program, which
would be nearly 5 percent without those savings.
29
Reforming the DHH Footprint in Provision of Health Care
• Privatizing North Lake and Northwest Supports and Services
Centers that serve individuals with developmental disabilities
for a savings of nearly $6.9 million.
• Consolidating Central Louisiana State Hospital – an 87-building,
400-acre property that goes largely unused – and building a
new, more efficient facility for a savings of $2.5 million
• Establishing the sixth local governing entity – Acadiana Area
Human Services District – for human services to maximize local
revenue sources and use local control to manage community-
based car
e
30
15
Investing in Access to Care, Improved Health Outcomes
Outcome-focused Investments
•
Improving Birth Outcomes
Funding behavioral health care for pregnant women
Working to end non-medically necessary births prior to 39 weeks
gestation
•
Health Care Capacity
Building health care capacity in New Orleans communities through
Greater New Orleans Community Health Clinics (GNOCHC)
Investing funds to draw down federal funds to continue providing
critical primary care to the indigent population in New Orleans
Investing in primary and preventive care through federally qualified
and rural health to save taxpayer money that would otherwise have
been spent on expensive avoidable hospitalizations
31
Investing in Access to Care, Improved Health Outcomes
Outcome-focused Investments
•
Upper Payment Limit Programs
Continuing the Hospital Upper Payment Limit program and leveraging
funds to create $14.4 million in federal funds for a new ambulance
UPL
•
Promoting Independence
Annualizing 877 NOW waiver slots with an investment of $17.3 million
in FY 2013
32
16
Health Care Funding
The Department of Health and Hospitals’
total proposed budget is $8.96
billion, up from the FY 12 existing operating budget amount of $8.28 billion,
for a total net increase of $678.7 million
•
Medical Inflation expected to be 8.5% in 2012.
•
Other increases:
Pharmacy utilization as drug prices increase ($48.7 million)
Obamacare mandate to increase Primary Care Provider rates as
of Jan. 1, 2013 ($29 million)
Annual Nursing Home rebasing ($49.3 million)
Moving the office of elderly affairs to DHH ($44.6 million)
•
Funding critical to prevent steep cuts in private provider rates of as much
as 18.5%.
33
Major Takeaways from the Budget
• No reduction to higher education.
• No tax increases.
• Expanding access to critical health care services.
• Continuing to reform and restructure government.
• 6,300+ further position reductions, with state
workforce already at smallest size in 20 years.
34
17
Budget Information Online
Budget and Supporting Document
www.doa.louisiana.gov/opb/pub/ebsd.htm
Online State Spending Database
www.latrac.la.gov
35
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