MIDTERM REPORT CARD.


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MIDTERM REPORT CARD Triumphs, Difficulties and Prospects for the Following Two Years Speaker Jim Tucker Victories 2008 AND 2009 Victories Administrative, Legal and Nearby Legislative Morals Change Cut Assessments or gave Charge Credits 35 time in the course of the most recent two years
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MIDTERM REPORT CARD Successes, Challenges and Prospects for the Next Two Years Speaker Jim Tucker

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SUCCESSES

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2008 AND 2009 SUCCESSES Legislative, Judicial and Local Governmental Ethics Reform Cut Taxes or gave Tax Credits 35 time in the course of the most recent two years Balanced the Budget Without Raising Taxes Began Planning Process for the Next Two Years Streamline Commission Postsecondary Education Review Commission

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2008 and 2009 SUCCESSES Strategic Capital Investments: Prior Year Surplus Spending Coastal Restoration - Superdome Improvements DOTD/Road Projects - Higher Education Capital Outlay Medical Center of La at NO - Wet-Lab Business Incubators Hurricane Recovery - La. Malignancy Research Center Mega Fund Federal City - V-Vehicle Company NASA Michoud Assembly Facility - Foster Farms Federal Stimulus Higher Ed, MFP, flex grant - DSS

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2008 and 2009 SUCCESSES State Faired 2 nd Best Among 50 States amid Recession by Portfolio.com Job Growth -Income Growth Unemployment -Home Value Growth Wage growth -Construction Growth State Unemployment Rate – 6.7% in November, 2009 Southern Average – 9.3% National Average – 10.0% Louisiana Ranked #1 in 2008 by Southern Business Magazine for Places to work together in the South (tied with Tennessee)

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2008 and 2009 SUCCESSES Louisiana Experience it’s Third Year in a Row of Net Population In-Migration Over 18,000 a greater number of individuals moving into Louisiana than out in 2009 Louisiana Finished in the Top 25 for the Second Consecutive Year in Site Selection Magazine’s Top State Business Climate Rankings General Obligation Bond Rating Increases by Fitch and Standards & Poor to AA-Increase in Outlook from Stable to Positive from Moody’s

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CHALLENGES

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FY 2008 GENERAL FUND SOUTHERN STATE COMPARISON

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CHALLENGES Systemic Problems Bloated Public Spending

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CPI PROJECTED TOTAL STATE SPENDING COMPARED TO ACTUAL STATE SPENDING

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CHALLENGES Systemic Problems Bloated Public Spending Retirement Losses

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HISTORY OF THE RETIREMENT UAL

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CHALLENGES Systemic Problems Bloated Public Spending Retirement Losses Federal Disallowances

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FEDERAL DISALLOWANCE Road Hazard Disallowance - $310 Million Public Nursing Facilities Disallowance of Intergovernmental Transfers - $120 Million DSH Overpayment to LSU-HCSD - $362 Million

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CHALLENGES Systemic Problems Bloated Public Spending Retirement Losses Federal Disallowances Broken Health Delivery System

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CHALLENGES Systemic Problems Bloated Public Spending Retirement Losses Federal Disallowances Broken Health Delivery System Employment Base Too Large

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EMPLOYMENT SUMMARY (bars clinics) Payroll is paid from all trusts – SGF, Federal, Self Generated and Statutory Dedicated funds

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CHALLENGES Systemic Problems Bloated Public Spending Retirement Losses Federal Disallowances Broken Health Delivery System Employment Base Too Large Higher Education System Less Than Productive

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HIGHER EDUCATION

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CHALLENGES Systemic Problems Bloated Public Spending Retirement Losses Federal Disallowances Broken Health Delivery System Employment Base Too Large Higher Education System Less Than Productive K-12 Enrollment versus Spending

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K-12 ENROLLMENT VS. SPENDING State reserves for K-12 Education surpass the SREB Average Local Funding per student – 94% of SREB neighborhood normal La. Subsidizing per student – 111% of SREB state normal Louisiana just state lawmaking body not approved to revise the administrative instrument that turns into the MFP

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CHALLENGES Systemic Problems Bloated Public Spending Retirement Losses Federal Disallowances Broken Health Delivery System Employment Base Too Large Higher Education System Less Than Productive K-12 Enrollment versus Spending Pace of Hurricane Recovery/LRA

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HURRICANE RECOVERY Through the 4 th Q 2009, OCD-DRU Reports $9.863 Billion Spent of the $13.41 Billion of CDBG trusts (73.55%) $8.18 Billion has been Spent on the Road Home Program $1.683 Billion has been Spent on 29 Other Programs $3.547 Billion Remaining to be Spent

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CHALLENGES New Problems FMAP (Federal Medical Assistance Program) Declining Tax Collection – National Economic Situation Cost of National Health Care Reform to be Dumped on the States

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FMAP (Federal Medical Assistance Percentage) ARRA rate right now 81.48% - lapses December 31, 2010, halfway through FY’10-’11 Louisiana’s FMAP to reduction to 63.61 viable January 1, 2011 Drop of almost 18% will bring about loss of government match of $900 Million every year Louisiana’s FMAP has gone from 70 – 73% since 2004 26% of the state populace depends on the Medicaid program

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DECLINING TAX COLLECTION

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NATIONAL HEALTH CARE REFORM COST SHIFTING Direct expenses for the state could run from $130 Million every year for Medicaid extension to as much as $400 Million every year As net expense of Medicaid develops, the state’s spending plan deficiency would develop also Additional $400 Billion in charges and $500 Billion in proposed Medicaid “savings” will quicken expense moving that has expanded private wellbeing protection premiums previously

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WHERE ARE WE NOW???

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CONFLUENCE OF THE EXTRAORDINARY Gross Excessive Recurring Spending Post-Katrina Tax Reductions Designed to Stimulate the Economy National Economic Meltdown

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FINANCIAL IMPACT FY ’09 – ’10 Mid Year Cuts - $248 Million FY ’10 – ’11 Shortfall - $1 Billion FY ’11 – ’12 Shortfall - $2.45 Billion Expenditures are anticipated to increment $1.5 Billion from FY ’10 – ’11 levels Federal Stimulus “loss” - $950 Million

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SOLUTIONS OVER THE NEXT TWO YEARS Hospital Restructuring Retirement Reform Restructuring of Employment Base Federal Disallowances/FMAP Constitutional and Statutory Changes Implementing Higher Education Reform K – 12 Education Improvements Constitutional Amendments Dealing with Untouchable Budget Areas The Recovery

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HOSPITAL Restructuring the Charity Hospital System Under Federal Health Care Legislation, Disproportionate Share Severely Cut Focus on Medical Education Benefits Lower Per Patient Day Costs Less Bureaucracy and Potential for Fraud A More Responsive and Financially Stable Private Hospital System Potential Increase in Health Outcomes

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RETIREMENT REFORM Defined Benefit Plan versus Characterized Contribution Plan Consolidating Investment Policy Benefits Significant Future Risk Reduction to Taxpayers and Budget Actuarial Solvency Decrease Risk and Cost to Investment Portfolio

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RESTRUCTURING OF THE EMPLOYMENT BASE Benefits Ongoing Budget Savings More Efficient Operations “Freeing Up” Future Revenues for Other Investments Lower Future Retirement Costs, both Normal and UAL

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FMAP AND FEDERAL DISALLOWANCES FMAP Benefits Budget Fairness Federal Disallowances Benefits Balance Sheet Clean Up Elimination of Outstanding Issues

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IMPLEMENTING HIGHER EDUCATION REFORM Benefits Matching Higher Education Needs to Private Sector Labor Needs Lowering Institutional Costs and Creating Operating Efficiencies Increasing the Number of Graduates in this way Increasing Personal Income Per Capita/Quality of Life

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K – 12 EDUCATION IMPROVEMENTS Benefits Modify the State Funding Formula so Money Follows the Child, Not the School System Reconstitute Charter School Authorization and Renewals into One Third Party Increasing so as to author Entity Further Incentivize Districts Financially Performance Based Funding

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DEALING WITH “UNTOUCHABLE BUDGET AREAS” Benefits Eliminating Draconian Cuts to Higher Education and Health Care Creating Management Flexibility Within the Budget Better Implementation of K-12 Funding, including Charter School Expansion

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THE RECOVERY Appointing of an Oversight Committee $3.457 Remains Unspent Benefits Accelerating the Recovery Providing Transparency Making Additional Economic Development Investments .:tslide

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