Should Louisiana primarily export or import the vast natural gas supplies that have been harvested in just the past few years?

This question was explored at the Louisiana Mid-Continent Oil and Gas Association (LMOGA) annual meeting held in New Orleans last week.

Dr. David Dismukes, associate director and professor at the Louisiana State University (LSU) Center for Energy studies, sees ample room for both. He was one of several speakers who commented on the “unconventional plays” built around the natural gas boom and the Haynesville Shale deposit in particular located in the northwest part of the state.

“As long as we can preserve the policies we have now and facilitate the development of this natural gas, we will have a large enough tent to facilitate these industries,” Dismukes told audience members gathered at the Roosevelt Hotel.

He also said the capital investments that have gone into pipelines, processing and other infrastructure suggest that continued development of natural gas supplies will have continued durability. In addition, Dismukes sees a strong long-term potential for using natural gas with vehicles, but cautions that the sector is still in its earliest stages and requires sustained support and encouragement.

The turnaround in Louisiana, and the country as a whole, is remarkable in light of what leading economic and political figures said just a few years ago, Scott Angelle, secretary of the Louisiana Department of Natural Resources, said during his presentation. In 2003 testimony before Congress, then Federal Reserve Chairman Alan Greenspan declared that there was not enough gas in the U.S. and that the country would need to rely on imports, Angelle informed audience members.

“Think of the generational shift we have experienced,” he observed. “In 2003, the number one economist on the planet said we did not have enough natural gas in America, and seven years later, that’s the snap of a finger, we are talking about seven years where things have changed so dramatically, where instead of importing natural gas we are working and supporting opportunities for exporting natural gas.”

Angelle also acknowledged the ongoing concern some industry officials have about the possibility of suspending the tax exemption for horizontal drilling, but said Gov. Bobby Jindal has made it clear that he would keep the exemption in place. But he did call for policy changes that better accommodate the accelerated pace of natural gas development.

“I don’t think we can build infrastructure quick enough to take advantage of the huge supplies of natural gas,” he said. “Our energy policies are like an aircraft carrier. It takes a long time to change policies. But with our energy policy, we need more of a speedboat mentality, not an aircraft carrier.”

In his talk, Angelle offered up some statistics on natural gas that drove home how strategically vital the Haynesville Shale has become. Out of 19,845 natural gas wells that are active in Louisiana, 1,805 are Haynesville wells, the secretary said. The 1,805 Haynesville are now responsible for 68 percent of production in the state, according to the figures Angelle cited.

The aftermath of the BP oil rig explosion that took place in April 2010 and the subsequent moratorium was another point of discussion throughout the conference. While the regulatory climate in Washington D.C. is always a point of concern, Angelle indicated that rig operators in the Gulf of Mexico had some cause for encouragement.

He noted that Tommy Beaudreau, director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), received a warm welcome from attendees.

“Director Beaudreau would not have come in my mind, if he did not feel comfortable that he was coming to a place where folks would treat him fairly,” Angelle said.

Even with better cooperation out of Washington D.C., LMOGA president Chris John said in an interview he would prefer to see states have oversight of hydraulic fracturing and horizontal drilling rather than the federal Environmental Protection Agency (EPA).

“Each state has its own unique geography and geological formations,” he explained. “Instead of a one size fits all approach from the EPA, we need to let the states and establish the right regulatory environment. Here, I think Louisiana can serve as a model to other of the country because there is a good balance between environmental concerns and energy production.”

The Haynesville Shale has been a success in part because industry officials have been very upfront and transparent about development plans with local residents who are directly effected.

“You have to remember the constituencies are very different in the  Marcellus area instead of say the Gulf where the only constituency you have are the companies,” John explained. “But when you are dealing with neighborhoods, police departments, local governments and mom and pop operations they understandably want to know what this means for their lives and their community. With the right approach, I think people can see that they have a stake in land leases that bring in revenue and open up new opportunities. Transparency is the key because it opens the way to some very strong partnerships.”

Still, after the BP incident, the LMOGA membership is very mindful of the high bar that has been set, he added.

“The norm now in industry is to have no incidents,” John said. But just one incident can be catastrophic and shut everything down.”

Kevin Mooney is  the Capitol Bureau Reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and followed on Twitter.

     

Tenure reform should be linked to a new teacher evaluation system set to go into effect later this year that makes use of student test scores, according to Gov. Bobby Jindal and top figures in education and business who back his reform package. Otherwise, the current system will remain on autopilot to the detriment of students who are deprived of quality education and the more effective instructors who deserve recognition, they argue.

The idea does not sit well with the state’s teachers unions, which released an alternative reform package on Friday. Gov. Jindal’s proposal, which has not yet been enshrined into legislation, calls for the use of new a new education evaluation system, which evaluates teachers based 50 percent on student growth  to be used as a key metric in determining tenure eligibility. The idea behind the new evaluation system is to review student test and assessment scores to determine whether or not they have made the expected amount of academic progress as they move up in grade levels and then use the same methodology to asses the impact a teacher has had on student preparation and performance.

Jindal’s plan does not eliminate tenure, but it would use student growth, which is now required to be 50 percent of a teacher and leader’s evaluation. These policy changes became law last year under Act 54 in an effort to “end blanket job protection in the form of tenure to teachers who are ineffective after one year,” a “fact sheet” from the governor’s office explains.

This means after being rated as ineffective after one year a teacher would lose tenure and become an “at will” employee. The “ineffective” designation established by The Board of Elementary and Secondary Education (BESE) applies to the bottom 10 percent of teachers statewide.

Districts could start dismissal proceedings for teachers who are assessed as being ineffective over a two-year period. After three-years of ineffective ratings, a teacher could lose their certification.  Moreover, teachers would not be eligible for tenure until after they have earned high performance marks over a five year period. Under current law, they receive automatic tenure after just three years.

Moreover, nearly 99 percent of teachers are receiving satisfactory evaluations within the current system, which means earning tenure and keeping their job are virtually automatic. Unless a district actively dismisses a teacher, the teacher receives tenure automatically by law on the first day of his or her fourth year in the classroom.

A pilot program that includes nine school districts and the International School of Louisiana, a charter school based in New Orleans that utilizes the value-added system is up and running. Beginning in the 2012-2013 school year, 50 percent of evaluations for teachers in academic classes will be based on the LEAP and iLEAP test scores, while the other 50 percent will be based more on subjective criteria built around classroom observations to determine how effective instructors are in motivating students.

“By changing the way that tenure works, changing the way compensation works, we want to make sure we are rethinking, identifying and keeping the best teachers in the classroom,” Jindal told listeners during the Louisiana Association of Business and Industry (LABI) annual luncheon on Jan. 17th.

The idea is to “make granting of tenure an active process rather than an automatic one so that tenure becomes a recognition given teachers who have demonstrated excellence, rather than merely surviving for three years,” according to the fact sheet.

A new teacher evaluation system that replaced ineffective teachers with just average instructors would have a measurable influence on the U.S. education system, which now lags behind internationally, a recent study from the Hoover Institution at Stanford University shows. Author Eric Hanushek claims that teacher quality has a much greater influence on student achievement than other factors such as classroom size, curriculum changes and technology.

“At a minimum, the current dysfunctional teacher-evaluation systems would need to be overhauled  so that effectiveness in the classroom is clearly identified,” Hanushek recommends. “This is not an impossible task. The teachers who are excellent would have to be paid much more, both to compensate for the new riskiness of the profession and to increase the chances of retaining these individuals  in teaching. Those who are ineffective would have to be identified. Both steps would be politically challenging in a heavily unionized environment such as the one in place today.”

Philip Martin, the superintendent of Terrebonne Parish school system, would go beyond what Gov. Jindal has proposed to abolish tenure all together.

“We no longer need tenure,” he said. “It is an obstacle to student achievement and I don’t think the unions speak for the majority of teachers.”

Martin’s district is part of pilot program experimenting with the new evaluation, which also includes the city of Monroe and the parishes of Jefferson, Lincoln, Orleans, St. Bernard, St. James, St. Martin and West Baton Rouge.

“I view the value-added method as a very exciting instrument that has untapped potential and provides an objective means of measuring teacher effectiveness,” Martin said. “It has enormous potential, and is light years ahead of what we have been doing.”

To be meaningful, any tenure reform package should include the new evaluation system in some form, he added.

Dr. Michael Walker-Jones, executive director of the Louisiana Association of Educators (LAE), disagrees.

“What the public needs to know is that the tests used with the value-added assessments do not apply to 100 percent of the teachers,” Walker-Jones said. Using a test score to try and predict something that that the test was not designed for, and then trying to evaluate the effectiveness of the teacher from this, is not something we view as a fair measurement.”

Moreover, after the LEAP tests now administrated at the high school level are replaced with end of year examinations, a change that will be instituted at the end of this year, Walker-Jones, expects that percentage of teachers impacted by the new evaluation system will decline further. He also said it was possible teacher evaluation system would need to be put on hold for a period of two years if the I-LEAP and LEAP tests were revised. This is because the individuals responsible for creating the new methodology concluded that two of data gathering is needed for the results to be meaningful, Walker-Jones explained.

Rayne Martin, executive Director, Stand for Children and former Deputy Superintendent of Innovation responsible for implementing the new evaluation system, points to statistical data from the state department of education that shows a sizable percentage of teachers will be assessed based in part on student test scores.

“Currently 35% of teachers in Louisiana receive a value-added score, however that number will increase to approximately 50% through the expansion of state summative tests in 2nd grade and additional high school courses,” she said.

The union plan, which de-emphasizes test scores, calls for “revamping the current teacher evaluation system – brought forth in ACT 54 -by incorporating multiple data sources and student growth plans when evaluating teacher performance. LAE’s agenda also focuses on using student achievement to inform teacher evaluation decisions,” a  press release from the organization explained.

Walker-Jones said his organization is opposed to using the value-added assessments for the purposes of tenure reform.

“We are going to fight it because tenure is being portrayed as something it is not,” he added. “At the K-12 level, tenure refers to your right to due process if you are challenged with dismissal, that’s all it means.  The politicians lead the general public astray because they confuse the tenure in higher education with the tenure in our public school system.”

In response, Martin acknowledged that the pilot program should address some of these concerns. But he also insists the test scores do convey valuable feedback that are indicative of teacher performance.

“Part of the puzzle is how do you deal with non-tested grades and subjects,” he said. “I agree with the unions that this does create an inequity in the system.”

Going forward, Martin recommends that the teachers in core-subject areas where tests are used to measure student programs receive higher compensation. The Hoover study concurs on this point.

“Salaries several times higher than those paid teachers today would be economically justified if teachers were compensated according to their effectiveness,” the study says.

Anything less than “drastic change,” will not suffice, Martin said.

“There’s a reason Drew Brees gets paid more as the quarterback for the Saints than the place-kicker,” he observed. “The success of the team depends more on his day to day performance.”

Other teachers and administrators taking part in the pilot program also view the value-added method as a positive change, but also see the next few months as being very critical to the success of the program.

Susan Benedetto is a library media specialist for the St. Charles Parish School Board who has been assigned to the work group responsible for designing teacher assessments in non-tested subjects such as physical education, art and music. Her group is also charged with making recommendations that are reported back to the Board of Elementary and Secondary Education (BESE) . Over the long-term, she anticipates that policy changes flowing out of Act 54 will work to the advantage of teachers and students.

“What I’m seeing so far is a rubric that is both realistic and fair,” Benedetto observed. “This is not an adversarial system and it does not ask teachers to jump through hoops and perform in an unrealistic way, but we do have to set goals. Once the public understands what has been put into place, they will be supportive.”

Gov. Jindal’s reform package would also give districts the flexibility to reward teacher performance with higher salaries. Moreover, teachers that consistently earn high marks will be able to maintain tenure status.

“Our plan to empower teachers has new components for current and incoming teachers,” Jindal said during his LABI address. “But they all boil down to two very simple ideas. We are going to create a system that pays teachers for doing a good job instead of for the length of time they have been breathing and we’re going to give districts the tools to recognize and keep the best teachers.”

The narrow implementation period for the new evaluation method is a cause for concern for Sean Wilson, the executive director of the International School of Louisiana, in New Orleans. But the concept is valid, and with proper training use of student test scores as part of teacher evaluations could produce meaningful dividends for the state’s education system.

“This is a way to ensure that teachers and the school leadership are inextricably focused on the process of student learning and achievement,” Wilson said. “It is important to have student success as part of our overall evaluation system.”

Brigitte Nieland, vice-president and communications director of the Education and Workforce Development Council for LABI, is unmoved by the union criticism. Louisiana now has a “gold standard model” for teacher evaluations that could motivate other states to advance similar reforms, she said.

“We are the national leaders, we are leading the way,” Nieland continued. “There is tremendous interest in this model. I agree that a lot of components go into making an effective teacher that don’t get reflected in the test scores. But having the evaluations split 50-50 between the tests and other subjective factors is more than fair.”

Walker-Jones views proposed connection between tenure and value-added assessments as “nothing more than smoke and mirrors” that make for “great public relations soundbites” without producing meaningful performance measurements.

But the fact the union members are willing to incorporate testing in some form, even if it is just 20 or 30 percent of the equation [as some union representatives have suggested]  as opposed to 50 percent, is very suggestive, Nieland countered.

“That’s a capitulation on their part,” she said. “It’s easier to kill off 20 percent than 50 percent. This is just another delay tactic.”

Kevin Mooney is  the Capitol Bureau Reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and followed on Twitter.

This mangling of Lincoln is doubly unfortunate coming from the former U.S. senator from the State of Illinois that proudly and officially proclaims itself the “Land of Lincoln.”

This twisting of Lincoln’s convictions is much more than unfortunate. Obama’s version enables government action. Lincoln’s version limits government action. Obama empowers the federal government. Lincoln empowers the people. Obama sets aside the Tenth Amendment of the Constitution. Lincoln embraces it. “The powers not delegated to the United States by the Constitution nor prohibited to the States, are reserved to the States respectively, or to the people.”

Societies are constructed and re-constructed around functional elements of different size and strength. The largest and strongest functional element of American society is the federal government. The smallest and weakest is the individual. Between those two are four other functional elements: state governments, local governments, private organizations (such as firms, unions, trade associations), and families. Within these four, state governments in general are larger and stronger, families are smaller and weaker.

Obama believes in a re-construction that makes the federal government even bigger and stronger. Lincoln rejects any re-construction that makes the people smaller and weaker. By widening opportunities for smaller, less powerful functional elements to participate directly in economic decision-making processes that bear upon their well-being, Lincoln reinforces the democratic principle. Obama weakens it.

By affirming a strong preference for private enterprise, those who are faithful to Lincoln’s vision decentralize ownership and control of economic activities that in turn (1) leads to a greater diversity of goods and services produced because entrepreneurs have a freer hand; (2) a smaller risk that large-scale mistakes will be made because in general private enterprises are smaller than public enterprises; and (3) private enterprises will be more responsive to their customers because they are driven by the need to turn a profit. Those who are faithful to Obama’s vision are convinced that private enterprises have to be controlled lest they run amuck. They put their trust in the government, not the people. Big banks are bad. Big government is good.

In his State of the Union address Obama spoke often and approvingly of the entrepreneur. He sees the entrepreneur as a partner with the federal government in energizing economic affairs. In his vision, the taxpayer is the one who stands to win or lose when the federal government chooses to invest in a specific company such as Solyndra. And when the taxpayer loses why isn’t this the equivalent of taxation without representation?

What Obama does not accept is that whenever an individual or firm is truly empowered and becomes successful in an entrepreneurial venture, the need for public intervention and the scope of any public-private partnership are reduced. The key issues for the empowered entrepreneur are freedom from excessive government control and freedom to risk investing in new ideas. Those freedoms are nurtured more in a social order where preference is given to private control of decision-making, where private investors win or lose based on their own decision-making, and the taxpayer is not on the hook for business decisions made by public officials and Washington bureaucrats.

Americans have a special genius for strengthening private enterprise without turning to the government to solve their problems. From time to time private firms that otherwise compete form alliances to address issues that cannot be handled by those firms operating independently. These alliances are positive-sum agreements that seek to achieve gains for all of the parties involved whether they are directly represented in the alliance or not. Four examples help make this point, reflect the great diversity of such alliances, and drive home the lesson that whenever private enterprise acting alone cannot manage certain problems it is not necessary to turn immediately to government for assistance.

Advanced Book Exchange (Abebooks) is the world’s largest online marketplace for used, rare, and out-of-print books. The exchange brings together thousands of independent booksellers worldwide. Each seller decides which books to list, their general condition, price, and other information. Buyers can browse the books through a convenient search function. The on-line exchange allows buyers to comparison shop and sellers to reach a much wider market.

Louisiana Offshore Oil Port (LOOP) is a limited liability company that offloads and stores foreign crude oil from tankers for eventual transport by pipeline to refineries throughout the Gulf Coast and Midwest. LOOP has three owners: Marathon Pipe Line LLC, Murphy Oil Corporation, and Shell Oil Company. To assure the safe handling of oil from deep draft supertankers the offloading is done at a terminal located 18 miles off the Louisiana coast in 110 feet of water. A pipeline transports the oil to onshore storage facilities and from there to the participating owners’ refineries. LOOP was built and continues to operate only because the three owners understand that they can reduce the risks in offloading and transporting crude oil more effectively by working together than by operating independently.

The Business Software Alliance was established to combat piracy of software products. BSA members include among others Adobe, Apple, Intel, Microsoft, and Symantec. To help reduce the unauthorized installation of proprietary software products without a license BSA has issued an annual report on the extent of piracy and dollar losses by country every year since1992. Unrestrained piracy takes away the economic gain (profit) necessary for private enterprise to survive and thereby destroys the very means by which new and better products and services are brought to the marketplace.

PRIDE of St. Louis is the first voluntary labor-management organization in the construction industry in the United States. Under the direction of  a seven-person leadership team, PRIDE meets monthly with representatives from area architectural, engineering, and construction firms, the building trades, and the buyers of construction services to identify stress points in the St. Louis construction industry in order to forge agreement on how best to improve productivity, cost-effectiveness, and work force training. PRIDE’s ultimate objective is to ensure the continued growth and development of the construction industry in St. Louis for the benefit of all parties involved.

Ceding control of economic decision-making to Washington over time has weakened the resolve and ability of many smaller, weaker functional elements in America to reclaim control of those decisions that directly impact their economic well-being. Lincoln’s vision that empowers the people is being cast aside by Obama who then misquotes Lincoln to make it seem that empowering government was Lincoln’s intention. Lincoln did not say that government should intervene. He emphasized that they “ought not to interfere.”

These two substantially different visions of the role of government are at the very core of the 2012 presidential election campaign and likely will determine if Obama will serve a second term.

Edward J. O’Boyle is Senior Research Associate with Mayo Research Institute. Offices in New Orleans, Lake Charles, and West Monroe. He can be reached at: www.mayoresearch.org, 318-381-4002 and edoboyle@earthlink.net.

By JEREMY ALFORD

Lether Frazar (1904-1960) who legislatively created Louisiana’s first major pension system -- without the money it needed to pay all future benefits. ---University Archives and Acadiana Manuscripts Collection, Edith Garland Dupré Library, University of Louisiana at Lafayette.

Many lawmakers scratch and claw and scramble to get re-elected. They know power begets power and they know incumbency is further fuel. But they obviously don’t know that one term is sometimes enough to leave a lasting legacy.

Just consider that this new term in state government will likely witness Louisiana’s total unfunded accrued liability surpass the $20 billion mark. Depending how lawmakers and the administration react, that figure may mushroom into their collective legacy.

A lot can happen in one term. Just ask Lether Frazar. Or don’t — he died roughly 52 years ago. He’s one of those political characters from Louisiana’s past with connections to cataclysmic events, but very little modern name recognition. An incidental character.

Nonetheless, Frazar had a claim to fame. It was serving as lieutenant governor under Earl K. Long. Most notably, Frazar helped Uncle Earl bust out of a mental facility in Mandeville, where his family had him committed like a sock-wearing rooster. That is, Frazar cosigned Long’s order to fire the hospital superintendent.

But that was several years after Frazar served a single term in the Louisiana Legislature. From 1936 to 1940, he carried the policy torch in the state House for Beauregard Parish. He also carried political water for Louisiana’s teachers, as evidenced by his very first year in the Lower Chamber.

That was when Frazar became the godfather of the teachers’ retirement system as we know it today. He championed the original law, ushered it through the Capitol and lobbied for gubernatorial approval.

Despite his role in what is certainly one of the state’s craziest political tales, it is Frazar’s milestone contribution to Louisiana’s pension system that has relevance in 2012.

The newly-seated Legislature will kick off its first year with a watershed education reform agenda. While aggressive plans to address the state’s unfunded accrued liability, or UAL, have yet to be floated, this would be an opportune time, even though the UAL’s tentacles touch and infect much more than education.

That’s why THE PELICAN INSTITUTE is offering up this five-point guide to understanding the UAL, from how it originated and what kind of impact it’s having to national trends and possible solutions.

To see historical membership data for the teachers’ system, click HERE. 

1.) WHAT IS THE UAL?

State Rep. Kevin Pearson, R-Slidell, the chairman of the House Retirement Committee, said strides have been made in recent years addressing the UAL, but “there's much more to do.”

It’s best to start with the basics. The state runs four separate retirement systems: the Louisiana School Employees’ Retirement System, Louisiana State Employees’ Retirement System, Louisiana State Police Retirement System and Teachers’ Retirement System of Louisiana.

These systems function as you might expect. Members are offered defined benefit plans that pay out specific retirement benefits based on a number of factors, primarily salary and years of employment.

When you hear someone refer to unfunded accrued liability in terms of these retirement systems, or read an article by a journalist about the UAL, they’re referring to the gap between what the systems have on hand to pay future benefits versus what they’ve promised. To put it another way, just consider the UAL as the difference between what the systems have available to them and the amount that would be needed if everyone retired at one time.

When the Louisiana Legislative Auditor’s Office investigated the UAL last spring, the total price tag weighed in at $18.2 billion. By the time the current fiscal year commenced in early June, another $300 million was added to the tally, making for a UAL that’s actually closer to $18.5 billion.

To put that figure into perspective, every man, woman and child in Louisiana would need to pony up somewhere in the neighborhood of $4,090 to retire the state’s entire pension-related UAL.

The Teachers’ Retirement System of Louisiana leads the way, accounting for $10.8 billion of the UAL. The Louisiana State Employees’ Retirement System is on the hook for $6.4 billion. Meanwhile, the School Employees’ Retirement System is responsible for $905 million and the State Police Retirement System $339 million.

State Rep. Kevin Pearson, R-Slidell, the chairman of the House Retirement Committee, likens the UAL challenge to the proverbial elephant in the room. In this case, ignoring it means putting Louisiana’s future in jeopardy.

“Paying down the UAL to prevent collapse of public retirement systems will keep us and future generations from having to bail out the systems,” Pearson said.  ”While we’ve made some headway there’s much more to do.”

So exactly how serious is this whole thing? According to a recent Northwestern University study, Louisiana — if it basically does nothing — will see its pension programs completely run out of money by 2017. Under such a scenario, the state would either have to come up with money, which equates to pulling dollars out of the general fund, or default.

But not everyone buys the dire predictions. Cindy Rougeou, executive director of the Louisiana State Employees’ Retirement System, called the study “misleading” and questioned its value, arguing all the while that steps are being taken to head off the unthinkable.

“(The study’s findings) create unwarranted alarm among the public,” Rougeou said. “This type of academic analysis is not a true reflection of public pension solvency or actuarial soundness.”

Regardless of interpretation, the study, in concert with hordes of other reports and investigations, still points to some sobering trends that can’t be ignored.

To see which state departments and agencies are shouldering the largest portion of the UAL, click HERE.

2.) HOW DID WE GET HERE?

In 1992, the state reduced UAL payment amounts in the state’s two largest systems. As a result, the UAL debt increased even more. The dotted lines represent the total UAL balance before this decision was made. The solid lines represent the aftermath.

To answer this question thoroughly, we need to divert back to our lieutenant governor of note, Lether Frazar. His original incarnation of the Teachers’ Retirement System of Louisiana 76 years ago included everything a massive pension plan might need. Everything, that is, except money.

The legislation that created the teachers’ system in 1936 was unfunded, meaning the system never really had the cash needed to support retirement payments. But who needs money? Payments were made nonetheless, creating an instant UAL.

Two years later, a state police pension was established. Ten years later, state and school employees got their own pensions, too. And, staying on theme, they were all unfunded from the get-go.

By 1987, an initial UAL of $5.8 billion was evident and breathing down state government’s throat. Lawmakers passed and voters approved a constitutional amendment forcing all of Louisiana’s pension systems to be actuarially sound. To accomplish this, a 40-year amortization schedule was put on the books the following year and is constitutionally slated to be paid off by June 30, 2029.

But even that comes with a footnote. C.B. Forgotston, who served for seven years at chief counsel of the House Appropriations Committee , said there was no amortization schedule in the constitutional amendment. “It merely required that the UAL be paid off by 2029,” Forgotston said. “If the UAL had been amortized there would be no problem.”

Today, the systems for teachers and state employees still have balances due for that initial UAL. Meanwhile, all four systems have had a hand in the new UAL that came about in the wake of the 1988 amortization schedule. Add all of this up and you’ll get to that total figure of $18.5 billion revealed earlier in this story.

By the time 2029 rolls around, Louisiana should be ready to make its final payment, between $1.3 billion and $1.9 billion, to close out the initial, pre-1988 UAL. But it won’t end there. In 2030, the new UAL will still be around and require payments of $600 million to $700 million. There’s also no end date in sight, or rather there are only rough estimates that are bound to change based on future policy decisions.

While an unfunded approach helped give birth to the initial UAL, the new UAL is a touch more complicated. Based on findings by the Louisiana Legislative Auditor’s Office, here are the reasons why the UAL continued to grow even after lawmakers thought they had a solution in the late 1980s.

— The Amortization Schedule: In 1992, the state modified the payment schedules to reduce payment amounts and to increase the debt even more. These changes modestly reduced contribution requirements through 2009, only to cause it to be significantly larger in later years.

— Political Promises: While participation provisions for state employees and teachers have not changed dramatically since 1988, benefit accrual rates were substantially increased in 1993 and 2001. These additional benefits that were essentially “promised” by lawmakers to pension members increased the overall debt of the systems.

— Prediction Errors: The Legislature and individual systems employ financial overseers and planners known as actuaries. When they craft valuations, certain demographic assumptions have to be chosen over the years to predict turnover, salaries, the number of retirees, disabilities, deaths and other factors. In theory, if the actuarial assumptions are “reasonable” over the long term, gains and losses should cancel each other out. But that hasn’t been the case. Since 1995, losses have exceeded gains and increased the UAL. Forgotston, among others, are very skeptical about this particular attribute. “There are no errors in predictions,” he said. “They are intentional misrepresentations of the return on investment.  Anybody that has a CD knows their predictions are ridiculous. It is like putting lipstick on a pig.”

— Investment Losses: In an effort to make their assets grow, Louisiana’s retirement systems invest their holdings. As such, there is a certain amount of risk. For the state employees’ and teachers’ systems, no investment gains have occurred since 2007. Only net investment losses have been recorded, which in turn adds to the overall UAL balance.

— Cost of Living Adjustments: All four state retirement systems have mechanisms that provide for COLAs. In recent years when there were investment gains, half of the gains were credited to an experience account to pay COLAs — some critics liken this account to a slush fund. As a result, the full amount of investment gains were not available to fully offset investment losses from 2001 to 2003 and from 2008 to 2011.

As for a wild card, let’s not forget all of the special retirement bills that are passed by lawmakers each session. While these policy proposals are sometimes intended to apply to only one person, they very often open up huge loopholes. For an example, check out this special report from THE PELICAN POST regarding the state’s teacher retire-rehire laws.

For relevant blurbs from two recent news articles about the pitfalls of investment losses, click HERE.

 3.) HOW DOES THIS IMPACT ME?

If you don’t think Louisiana’s pension-related debt is becoming a serious problem, then you’re not paying attention. Employers are being required with greater frequency to kick more money into employee retirement plans. This means more taxpayer dollars are being used to pay for retiree benefits rather than vital services. ---Source: The Political Desk

This depends on who you are. But in all likelihood, there’s a sizable economic impact, and threat, especially if you’re a Louisiana taxpayer. That’s because employers are being asked with greater frequency to kick more money into retirement plans, a burden that is ultimately shouldered by taxpayers.

During the upcoming fiscal year, the employer contribution rates for the state police will be 68.1 percent. That’s an increase from 55.9 percent over the current fiscal year. Moreover, more than half of the new rate, or 41.4 percent, will be directed toward the system’s UAL. Schools will see their UAL contributions increase by an entire percentage point, while other state institutions are slated for an increase of 2.5 percentage points.

During the current fiscal year, more than $1.4 billion in taxpayer money will go toward paying down the UAL. To put this in perspective, the total state budget this fiscal year is $25 billion.

According to research conducted by Blueprint Louisiana, a good government group backed by businessmen and civic activists, the UAL is likewise affecting local school districts in a very significant way.

In 2010, a year that delivered absolutely no increases in state funding for education, Blueprint’s boosters contend that “school systems were required to spend $16 million less on classroom instruction to meet their retirement contribution obligations which now comprise one-quarter of school district spending on payroll.”

Additionally, superintendents cited layoffs and larger class sizes as examples of the immediate impact of increasing retirement costs, Blueprint found.

This theme isn’t confined to schools. The UAL is literally eating up tax dollars that could be spent elsewhere. More money for retirement can mean fewer police on the streets, for example.

Just consider the following conclusion offered up by Legislative Auditor Daryl G. Purpera: “On an annual basis for years to come, retirement costs will require a larger percentage of a shrinking state budget. Taxpayers can expect more dollars to fund the retirement of public employees, leaving less for higher education, health care and other state priorities.”

To take a gander at Blueprint’s overall agenda for pension reform, click HERE.

4.) WHAT IS BEING DONE ABOUT LOUISIANA’S UAL?

The systems for teachers and state employees have certainly received more attention in recent years. Then again, they account for the lion’s share of Louisiana’s UAL.

Last year, voters statewide approved a constitutional amendment that will eventually dedicate at least 10 percent of all non-recurring revenues during a fiscal year to the two systems in an effort to help them maintain healthier budgets.

Non-recurring revenues are basically unexpected monies that the state receives and doesn’t anticipate it will get again. Lawmakers also refer to non-recurring revenues as one-time monies or sometimes a surplus.

Mandating the use of non-recurring revenues to a certain purpose is not unprecedented, according to Barry Erwin, president of the Council for a Better Louisiana. For example, the state already uses such dollars to support the so-called “rainy day” fund and existing law already allows non-recurring revenues to be directed toward the UAL is lawmakers so wish.

“The liabilities in those systems are so huge and the increasing obligation of the state to reduce that debt is so significant that directing a minimum of 5 percent to 10 percent of non-recurring revenues to that purpose seems a reasonable and modest approach to addressing that problem,” Erwin said.

Former state Sen. Butch Gautreaux, D-Morgan City, one-time chairman of the Senate Retirement Committee and co-author of the amendment, said the money will trickle over to the systems rather slowly. Beginning July 1, 2015, 5 percent of all surpluses would be channeled into the UAL. In 2016, the threshold would be increased to 10 percent.

But it won’t be enough to make a sizable dent, compared to the overall UAL. That’s why Gautreaux, among others, believe that a strong political will, as opposed to a one-time constitutional amendment, is needed for the coming years. If lawmakers don’t start taking bolder steps, he added, the problem will only get worse.

“In my personal opinion, it’s never going to change,” Gautreaux said. “We’ll always have an unfunded accrued liability.”

Jeffrey D. Sadow, an associate professor of political science at Louisiana State University Shreveport, has come to a similar conclusion. In a recent blog post, he argued that lawmakers have already missed too many opportunities to act.

According to Sadow, state officials claimed the landmark constitutional amendment from the late 1980s that forced payoff of the UAL by 2029 meant there was no danger and that the rate of return was more than adequate to allay any concerns.

“But what they didn’t admit was the payoff scenario, as legislators have punted on opportunities to sequester money in good times to reduce the UAL, has become increasingly unsustainable,” Sadow said. “In 2008, only about two-thirds of the actual required payout was coming into the system, at that time leaving a $4.4 billion gap.”

For a better understanding of the leadership structures that guide Louisiana’s pension systems, click HERE.

5.) CAN LOUISIANA LEARN ANYTHING FROM OTHER STATES?

Josh McGee of the Arnold Foundation said the size of the public pension debt per household is overwhelming in many areas and the economic and social costs of this crisis are potentially crippling to Louisiana.

Based on datum prepared and analyzed by the Pew Center on the States, Louisiana has the ninth worst retirement liability in the nation in terms of unfunded portions. It ranks behind Connecticut, Hawaii, West Virginia, New Jersey, Kentucky, New Hampshire and Massachusetts.

So there’s certainly room for improvement.

Josh B. McGee, Ph.D, vice president of public accountability for the Arnold Foundation, a nonprofit think-tank based in Houston, said there are solutions that have worked in other states. In part, that’s because some are realizing that “failing to address the public pension crisis promptly would be economically catastrophic, triggering bankruptcies of cities, school systems and potentially even entire state governments.”

The states’ own estimates of the unfunded liability due to their pension benefit promises grew to $1.26 trillion in fiscal year 2009, up from $1 trillion just one year earlier, McGee said. However, using standard private sector accounting rules, the shortfall estimate increases to approximately $3 trillion, a sum that represents roughly one-fifth of the United States’ gross domestic product.

“In other words, the assets that states have set aside to pay for employee retirement benefits fall short of what they owe for those benefits by approximately $3 trillion,” he added.

Here are five potential solutions for Louisiana, as drafted by the Arnold Foundation.

— Defined Contribution: In a defined contribution plan, or DC plan, the employer  promises each employee a fixed percentage of salary. These contributions are placed in an account that is managed by the employee. The employee has the flexibility to choose her investment allocation and to make individual choices about the timing and structure of her retirement. The market risk of these choices is borne solely by the employee. Michigan has had a DC in place for state employees since the 1990s, and higher education and many private sector firms have used the DC structure successfully for decades.

— Cash Balance: Cash balance plans have features that are commonly associated with both defined benefit, or DB, and DC plans. A cash balance plan is a DB plan, but unlike the traditional DB plan, benefits are defined as a lump sum or “cash balance” in an employee’s account. Under a cash balance plan, much like in a DC plan, the employer promises a fixed percentage of salary and contributes that amount to an account for the employee. However, unlike a DC plan, the employee does not manage her account. Instead, the retirement system manages the funds for the employee and promises an average investment return. When an employee reaches retirement age, the employer may offer the employee an annuity based on the size of her retirement account and/or the ability to take all or a portion of the account as a lump sum. Nebraska and many private sector firms use the cash balance structure.

— Side-by-Side Hybrid: In a side-by-side hybrid, the sponsor maintains both a DB and DC plan and allows employees to choose between the plans. When implemented correctly, the sponsor institutes strict accounting controls to keep the problems created by the DB structure in check. Utah and Florida operate DB and DC systems side-by-side, allowing employees to choose between the two structures.

— Stacked Hybrid: In a stacked hybrid system, employees are offered a small DB, meant to provide a minimum amount of retirement security, with a DC stacked on top. The federal employee retirement system and the recently adopted reforms in Rhode Island use a stacked hybrid approach.

— Cap on Employer Contributions with Explicit Cost Sharing: This approach is agnostic about the specific plan structure and seeks only to eliminate cost uncertainty and provide a political incentive to keep future cost increases controlled. A proposed ballot initiative in California takes this approach. The proposed initiative caps employer cost at a specific percentage of earnings and specifies that the cost of all benefits will be divided equally between employee and employer.

If not one of these options, then what? Because of mounting UAL-related shortfalls, McGee said states, municipalities and school districts will soon be forced to take drastic measures to pay for their pension obligations.

For those who don’t think Louisiana’s UAL is impacting them, that means they soon will.

“(Governments) will pass the burden on to the public either in the form of increased taxes or, more realistically, cuts to services that are critical to society, such as education,” he warned. “Without significant changes to the current systems, public pension payments will quickly begin to crowd out other discretionary spending.”

To learn about other possible solutions and to see the latest in UAL news, visit the State Budget Solutions Project HERE.

Jeremy Alford is a freelance journalist based in Baton Rouge. You can reach him through his Web site at www.jeremyalford.com and follow his work at www.thepoliticaldesk.com. 

Lakefront Arena at the University of New Orleans will be at the focal point of national attention this coming Saturday as it plays host to an event that marks the beginning of National School Choice Week.

As Gov. Bobby Jindal prepares to advance an ambitious education reform agenda in anticipation of the legislative session that begins in March, state officials will be in a position to highlight key innovations that have already been set in motion.

The Jindal Administration has continued to expand the revolutionary charter school program that began in New Orleans in the aftermath of Hurricane Katrina. It also secured approval for a limited voucher program in the city. Over 1,600 voucher recipients were enrolled in private schools as of last Spring.

Gov Jindal now favors making these scholarships available statewide. He also called for revising teacher tenure rules and giving school superintendents and principals greater authority over hiring and firing decisions.

The New Orleans celebration will include live musical entertainment from The Temptations and Ellis Marsalis starting at 10:30 a.m. at the Lakefront Arena located on Franklin Avenue. For more information visit http://www.SchoolChoiceWeek.com.

Elected officials, celebrities,  students, parents, and teachers are expected to take part in the event and to discuss their experiences.

Kevin Mooney is the Capitol Bureau Reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and followed on Twitter.

Instead of bowing down to green pressure groups that greatly overstate the environmental risks attached to natural gas production, policymakers in the northeast should look toward Louisiana as a model for economic renewal, industry and government officials recommend.

The vast supply of natural gas that exists within shale deposits are now within human reach thanks to innovative drilling techniques that have the potential to create about 35,000 jobs in Louisiana as energy companies mobilize to make use of these resources, according to the American Chemical Council (ACC).

Unfortunately, well-funded environmental organizations have persuaded elected officials in Pennsylvania, New York and New Jersey to pull back on further development of the Marcellus Shale, Don Briggs, president of the Louisiana Oil and Gas Association (LOGA), laments. The Marcellus Shale cuts across much of New York, Pennsylvania, Ohio and West Virginia.

“These green groups don’t have same kind of influence down here, and this means it’s not quite so easy to scare people about the oil and gas industry and put out misinformation,” Briggs said. “The culture of a state or region matters and you can see where lawmakers can be pressured into pursuing policies that don’t really make sense. Still, there’s great potential for a state like Pennsylvania, which is actually a very old oil province.”

Briggs recommends that policymakers in other states look to Louisiana as a model for energy policies that strike a healthy balance between increased production and environmental protection. He also points out that technological innovations often result in improved safety and cleaner operations.

These new techniques in question that have spurred environmental opposition in some parts of the country include horizontal drilling, which involves turning the drill horizontally after drilling down. This allows for multiple wells to be drilled at one time. The other technique known has hydraulic fracturing or “fracking” uses a mixture of mostly sand and water to create pressure within a well. This process cracks the shale rock and brings natural gas to the surface.

Briggs views hydraulic fracturing as an environmentally responsible method that makes the most of America’s resources. Wells that would have run dry many years ago, or that may not have been drilled at all, are now viable, he said.

Nevertheless, New York and New Jersey have both imposed bans on hydraulic fracturing in an effort to further assess the risks of contamination. Anti-drilling activists have also stepped up efforts in Pa. aimed at shutting down production, according to a report from the Commonwealth Foundation.

“Much attention has been paid to the efforts of gas companies to influence the political debate through campaign contributions and lobbying efforts,” the report says. “But anti-drilling activists—while claiming gas companies use their vast financial resources to weaken regulatory structures and silence poorly funded environmental groups— influence politicians through their own lobbying efforts and by spreading myths about drilling.”

Despite some initial missteps on the part of regulators and industry officials, Robert Bryce, a senior fellow with the Manhattan Institute, does see Pennsylvania moving in a positive direction. Over the past few months, he estimates that the drilling sector is responsible for creating thousands of new jobs for the state. The experience in Pennsylvania proves that the Marcellus Shale can be developed in a responsible and effective way, Bryce suggests

“If you want to talk about comparison, I would compare New York to Pennsylvania,” he said. “New York is moving far too slowly and the debate has been dominated by environmental groups that are using fear mongering to prevent the development of a much needed energy resource.”

The ban New York officials have imposed on new drilling and hydraulic fracturing have cost the state “tens if not hundreds of millions of dollars in tax revenue and tens of thousands of new jobs,” he said. “New York needs the revenue and the employment.”

Bryce also praised Louisiana state officials  for moving in a quick, but also highly responsible manner, to develop the Haynesville Shale. As a result of embracing new technology, “huge quantities of new gas have been introduced into the state’s market.” he observed.

Fracking has become ground zero in the battle between greens and energy producers, says Matt Patterson, senior editor at the Capital Research Center and Warren Brookes Fellow at the Competitive Enterprise Institute.

“The possibility of exploiting large, new reserves of fossil fuels, thanks to advances in technology like hydro fracking, terrifies the environmental movement,” says Patterson, who edits Green Watch for CRC, “because it undercuts the green argument that we are running out of such fuels, or that they are too expensive to exploit.  So they demonize the industry by exaggerating the dangers, hoping to scare the public and intimidate lawmakers.”

The natural gas obtained through shale “provides the opportunity for what will be a renaissance in chemical manufacturing in the United States, and Louisiana is uniquely positioned to capitalize on that,” ACC President and CEO Cal Dooley has said. “The $5.4 billion investment in expanded ethylene production capacity in Louisiana will generate a total of $10.9 billion in additional chemical industry output, bringing the state’s industry revenues to $56.9 billion and maintaining it as the country’s second-largest chemical-producing state.”

A December 2011 report from PricewaterhouseCoopers (PWC) concludes that the robust development of shale deposits could greatly reduce the price of natural gas and spark “a renaissance in U.S. manufacturing.” The report projects that “lower feedstock and energy costs could reduce natural gas expenses by as much $11.6 billion annually through 2025.”  PWC also anticipates that U.S. manufacturing companies could employ roughly one million more workers by 2025 as a result of increased demand for the products used to withdraw the gas.

Of special interest to Louisiana is the Haynesville Shale.

Since its development began at the site in 2008, Haynesville has resulted in the injection of over $22 billion into the local and state economy, according to LOGA.

“When the Haynesville Shale boom came to northwest Louisiana, it made an incredible positive economic impact on an area that already had a strong economy,” Department of Natural Resources Secretary Scott Angelle, has said. “Responsible exploration of this new prospect, even if it does not reach the same fever pitch, could mean a welcome strengthening of the northeast Louisiana economy and greater opportunities for businesses and jobs.”

Rep. William Cassidy (R-La.) is also keen on the idea of further developing shale deposits.
“Let’s start moving toward a natural gas economy,” he said. “It is a domestic energy supply with proven reserves available in an area of the world where we have the rule of law. Right now, we have a 40 year supply and the only reason we don’t go out and find more gas is because we have such a backlog. This is a clean fuel, which works well for Louisiana and the nation as a whole.”

Louisiana was placed in the top 10 percent of areas identified as the most attractive for exploration investments, according to a Fraser Institute survey of energy industry executives released last year.

Development of the Haynesville Shale figures prominently into this story.

“Louisiana’s long and distinguished history of providing energy is known throughout the world, Angelle said. “We are seeing the energy industry’s confidence in our ability to coordinate responsible management of our natural resources with economic development that benefits us all.”

Kevin Mooney is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and followed on Twitter.

Medicaid costs continued to rise in 2011, consuming a greater percentage of overall state spending. This was a result of federal stimulus money, heightened health care expenses and increased enrollment, according to the latest edition of the State Expenditure Report released by National Association of State Budget Officers (NASBO) and the National Governors Association (NGA)

However, state policymakers in Louisiana and in other states will have fewer resources available to accommodate Medicaid over the next few years as the funds made available through the American Recovery and Reinvestment Act of 2009 (ARRA) “wind down” and the economy continues to experience a sluggish recovery, the report says.

This is before any of the new health care regulations are scheduled to go into effect beginning on Jan. 1, 2014. State officials who are already under pressure to cut other vital social services in an effort to meet health care demands will be even further constrained under the new federal law formally known as the Patient Protection and Affordable Care Act (PPACA), key congressional figures and policy analysts warn.

“Even without the burdens ObamaCare will place on Medicaid, we see spending estimates rising to unprecedented levels,” Sean Riley, a legislative analyst with the American Legislative Exchange Council’s (ALEC) Health and Human Services Task Force, observes.  “Now, throw the federal health law’s constitutionally questionable Medicaid expansion scheme on top of that and it’s easy to guess what will happen to already strained state budgets.  Real Medicaid reform would include private options for beneficiaries or a variation of capped allotments and block grants to the states.  Instead, Medicaid expansion under the federal health law will only serve to make a big problem even bigger.”

In Fiscal Year 2011, Medicaid spending is estimated to be $398.6 billion, an increase of 10.1 percent over FY 2010, according to NASBO. This is almost three times the rate of higher education spending, which was 3.4 percent, and much higher than the spending on elementary and secondary education, which was 2.1 percent, and public assistance at 1.8 percent, corrections at 1.3 percent and transportation at 3 percent, the report shows.

ObamaCare calls for state Medicaid programs to be expanded to the point where they cover non-pregnant, non-elderly individuals who have an income up to 133 percent of the federal poverty level. Moreover, states are required to utilize a “five percent income disregard,” which means that Medicaid eligibility actually reaches 138 percent of the federal poverty level.

“This is why the public tide against ObamaCare continues to grow,” said Rep. John Fleming (R-La.), who is also a medical doctor. “Reports like this one confirm everything we knew when Democrats were pushing ObamaCare through. It will cost much more than they claimed and give back much less than they promised, all the while undermining the best health care system in the world. We need to repeal ObamaCare altogether.”

The figures reported by NASBO link back to a series of broken promises associated with President Obama’s health care law, Fleming said.

He described them as follows:

“The broken promise that insurance rates would go down. They went up.”

“The Class Act which was designed to help finance ObamaCare has been deemed defunct by the actuary.”

“The student loan program was nationalized to use `profits’ to finance ObamaCare, but now the president wants to begin forgiving some of the loan debt, creating another loss of taxpayer money and inability to finance ObamaCare.”

“The $500 billion that ObamaCare took from Medicare.”

“At least 12 new taxes or tax increases to help pay for ObamaCare.”

Bruce Greenstein, Louisiana’s secretary for the Department of Health and Hospitals (DHH), is concerned that the federal health law could short circuit reform efforts and innovations at the state level, and further exacerbate an already challenging fiscal climate.

“The economics behind Medicaid is counter-intuitive to what really needs to happen,” he said. “If I thought that more spending was the answer to health care that I would be open to these kind of proposals. But despite all the spending, we still get bad results.”

While he was not opposed to some of the health care expenditures connected with President Obama’s stimulus, Greenstein would prefer to have more freedom and flexibility at the local level for experimentation.

“In fairness, I would say some of the investments I saw with the stimulus money went into areas that were worthwhile,” he said. “But instead of leaning on taxpayers we should let the market decide how to best allocate our dollars.”

Assuming the U.S. Supreme Court does not overturn the individual mandate included as part of the PPACA, there is good cause to be concerned about the impact the law will have on the state, Greenstein added.

Louisiana officials estimate that implementation will cost Louisiana in excess of $7 billion over a 10-year period. Moreover, between now and 2014, Louisiana health officials also expect Medicaid enrollment to grow by more than 50 percent.

Although Medicaid was set up as a federal-state partnership with an eye toward splitting the cost of the program, this arrangement exists on unequal footing, Christopher Jaarda, president of the American Healthcare Education Coalition (AHEC), said. The federal government now largely sets the rules leaving the states with very little latitude, he notes.

“States have to beg the feds for flexibility in how they run Medicaid,” he said. “With the current economy, states need even more flexibility but, with ObamaCare, the feds have expanded the states financial burden under Medicaid, making it harder for states to balance their budgets.”

Moreover, the Medicaid expansion will could force “dramatic cuts” in other areas of state budgets such as primary, secondary and higher education, he added. States face a $175 billion shortfall over the next two years, according to current projections.

“Supporters of ObamaCare call it reform but it is not,” Jaarda said. “What would reform look like? Making every American better consumers of health care dollars, giving each of us skin in the game to make smart decisions and to shop for better, more affordable care. Market forces can help reduce costs, reduced costs will make insurance less expensive, which in turn will mean more people can afford coverage. ObamaCare is not reform because the law does nothing to curb costs, it makes the system less transparent, masking the cost of health care through the expansion of existing entitlements and the creation of new entitlements which simply shift the costs from one group of Americans to another.”

Kevin Mooney is the Capitol Bureau Reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and followed on Twitter.

By JEREMY ALFORD

Aside from cinching the SEC, carrying the brand of Raising Cane’s and building a national media profile around the idea of tasting grass, Les Miles knows how to stir the gumbo pot of south Louisiana just right. Debating his quarterback choices and play calls has become ritualistic for residents of Red Stick and beyond.

But the so-called “Mad Hatter” has decent business chops, too, and that’s worth a few words. As LSU’s head football coach, Miles is at the receiving end of one of the largest consulting contracts in the state. It’s a standalone deal with Louisiana State University A&M, separate and apart from his coaching salary. (Editor’s Note: According to the Division of Administration, LSU funds the government-approved contract solely through self-generated revenues and fees.)

According to documents obtained by THE PELICAN POST, Miles created Just Ball, Inc., which is based in Dallas, TX, to facilitate the state contract. In exchange for $8.8 million, Just Ball provides the “services of Les Miles, coach, to the university to assist in producing and providing radio, TV and Internet programs.”

Les Miles

The contract started Jan. 1, 2010, was officially approved by the state some 21 days later and is scheduled to terminate Dec. 31, 2012. But the most interesting aspect of this arrangement is that Miles created a Texas-based corporation to handle the business side of his Louisiana-based consulting work. Why would the Hatter do that?

Kevin F. Roach, an executive accounting professor at Texas A&M University, says there are a number of protections afforded by such corporations, like shielding from personal liability. But he says it’s also becoming a trend for major earners with diversified income streams to use these corporations as a pension plan of sorts, meaning the money sits in the business until later in life.

Yet there’s something even more appealing than the legal niceties. Texas is among nine states, along with Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Washington and Wyoming that have no personal income tax, as defined in the most traditional sense.

While the Hatter’s company is certainly paying business taxes in Louisiana, it’s also quite possible that any personal income he receives from the flow-through entity would be tax-free. “It’s not an uncommon strategy,” says Roach. “And it’s difficult to criticize Coach Miles for using a form of organization that provides certain benefits.”

Depending on your view, this makes Texas more competitive than Louisiana — if not in football, at least on the income tax front. Based on tabulations from the U.S. Department of Commerce, Texas has the fifth lowest per capita tax collections, or just $1,646 per resident. Louisiana, in comparison, ranks 29th with per capita collections of $2,229, just $105 short of the overall U.S. average.

To invoke the Hatter once more in the name of illumination and narration, Louisiana ranks significantly higher in relation to income tax burdens than other SEC members states like Mississippi, Alabama and Georgia.

Most good-natured, football-watching folks in Louisiana probably aren’t even aware how dependent the Bayou State has become on income tax collections. The latest figures available from the state, for instance, show that cash collected from the individual income tax is dangerously close to surpassing the loot generated by the state’s sales and use tax. Both taxes account for about 60 percent — each is nearly 30 percent — of Louisiana’s annual tax haul.

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For a state-by-state breakdown of tax collections, click HERE.

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What states like New Hampshire and Texas lack in income taxes, they more than make up for in property taxes. Both states, possibly as a result of nixing income taxes, have some of the most exorbitant property taxes in the nation.  Still, the idea of no income tax is appealing to many. In Oklahoma, for example, officials are considering axing the income tax and modeling its tax structure after Texas’ system.

Gov. Mary Fallin (R - OK)

Oklahoma Gov. Mary Fallin, a Republican, has created a task force to move the idea forward. Lawmakers there also held a hearing on the proposal last month and were told by three university economists that repealing or altering the personal income tax, which bankrolls one-third of Oklahoma’s public services, would have to be accompanied by a plan to replace the lost revenues.

State Rep. David Dank, a Republican who represents portions of Oklahoma City, is doing some the grunt work, like lining up votes and framing debate points. He says that a recent analysis of 2010 Census data showed that of the nine states with no income tax, seven were among the fastest growing in America.

A direct payoff of that growth came this year when Texas and Florida gained new congressional seats. Conversely, states with higher personal income taxes like California, New York and even Louisiana lost seats — and population. “People go where they are not taxed to death,” Dank says.

Louisiana, in fact, hosted its own debates over phasing out the income tax earlier this year. As expected, the proposal went nowhere fast, but certainly livened up the 2011 regular session.

Rep. David Dank (R - OK)

Like business interests in Oklahoma right now, some trade groups in Louisiana expressed concern over how the lost revenues would be replaced. Specifically, the big fear was that property taxes would be notched up to compensate. In general, property taxes are often viewed by industry as having a strong negative effect on business, especially since they’re paid regardless of profit or loss.

Dan Juneau, president of the Louisiana Association of Business and Industry, says that from a business perspective, eliminating or phasing out the state income tax could be a positive element for economic development. But it would largely hinge on how the policy is constructed. “What many business owners would fear would be that individuals would be treated fairly in any income tax repeal proposal, but businesses would end up being taxed more to pay for it,” Juneau says.

He adds that the states with no income tax generally have very high sales taxes and higher-than-average property taxes. “Those states also tend to subsidize local governments much less than we do in Louisiana,” Juneau says. “None of them have state supplemental pay for fire and police and few of them have the parish road funds and other subsidies for local governments that we provide.”

Those states aren’t dependent on personal income tax collections like Louisiana, either. And, at least lately, that dependency has come to bite state planners in the you-know-what. Personal income tax collections have dropped so severely that they triggered midyear budget cuts this month. For the current fiscal year, collections are off by roughly $142 million, accounting for a large portion of the reductions that are now being implemented by the administration.

In all, $251 million worth of cuts have been ordered up for the current fiscal year. Commissioner of Administration Paul Rainwater contends they’re being made in a way that reorganizes spending expectations. “These reductions are targeted so that we protect critical services even as we tighten our belt and reform and restructure government to do more with less,” he says.

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To perform a detailed search of parish tax rolls, click HERE.

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While it’s unlikely you’ll find them at a tea party gathering, there are those who argue that Louisiana’s property taxes have ample room for growth due to the low current rates. How low are Louisiana’s property taxes? There are only four or five other states that collect fewer property taxes than Louisiana, depending which statistics you want to believe.

On the state level, Louisiana has a homestead exemption that has remained unchanged since the Great Depression. The exemption protects the first $75,000 of assessed value from being taxed. It is the lowest such rate in the nation and roughly two-thirds of the homes in Louisiana are exempt from property taxes.

As for the local level, that’s an entirely different beast. Local taxing authorities collect more than $2 billion annually from Louisiana property owners. That’s considerably lower than most other U.S. states, but you won’t hear that kind of talk from residents of Cameron Parish.

That’s where local property taxes per capita weigh in at $5,798, according to the Louisiana Department of Revenue. It’s a far cry from the $132 per capita rate enjoyed by residents of Avoyelles Parish. With just a glimmer of irony, it’s important to note that Avoyelles has a population of 42,000 to Cameron’s 6,800.

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For a parish-by-parish breakdown of tax collections, click HERE.

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In Louisiana, state and local governments partially make up for reduced property revenue through above-average use of sales taxes. That was just one of the findings from a Louisiana Public Square broadcast that was dedicated to the topic of property taxes a few years ago. To put that finding into perspective today, bear in mind that Louisiana now has the eighth costliest sales tax system in the nation.

Mark Robyn, staff economist for the D.C.-based Tax Foundation, a think tank that focuses on tax policy, says there’s cause for concern in this area. “The fact that Louisiana allows localities to add on additional sales taxes and, more importantly, define their own tax base — to some extent — adds undesirable complexity for businesses,” he says.

In return, local governments take advantage of that right with gusto in certain cases. In West Baton Rouge Parish (pop. 23,700), sales taxes per capita are $990, the highest in the state. Grant Parish (pop. 22,300) is on the other end of the spectrum with a per capita rate of just $43. Just like local property taxes, local sales taxes are applied with little reason, especially if you continue to take into account population figures.

Additionally, Robyn says all business-to-business transactions should be exempt from sales taxes in Louisiana, “since the sales tax is supposed to be a tax on consumption and business transactions are not consumption.”

The foundation’s most recently published “State Business Tax Climate Index” ranks Louisiana 36th overall. While the study is focused on business tax issues, it also incorporates personal income taxes, sales taxes and property taxes, in addition to the more obvious business taxes. For example, the Bayou State’s unemployment insurance tax system is actually among the nation’s top five, in terms of being business-friendly.

For Louisiana, though, the report isn’t all lollipops and sunshine. When it comes to the individual income tax, for simplicity and consistency at least, Robyn says it would be wise if Louisiana recognized the federal business forms. Currently, LA does not recognize S-Corp status. “Louisiana also has a capital stock tax on corporations, which is a damaging and outdated tax that only still exists in a few states,” he says. “The state further levies an inventory tax, another unjustifiable tax that only a handful of states levy.”

The state’s economic development arm argues that there’s a qualifier: “In Louisiana, when a business files its state income and franchise tax, it can simply claim the amount it paid to local authorities for inventory taxes as a refundable credit. If the inventory taxes paid to the local authorities exceed the company’s state income and franchise tax liabilities, the company gets the balance as a refund.

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For a closer look at Louisiana’s overall tax collections, click HERE.

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In Louisiana, tax collections ain’t what they used to be. In fiscal year 2006, the state collected $7.5 billion in taxes. A decent haul. Two years later, the tally reached $9.1 billion. Then in fiscal year 2010, the most recent data set available from the state Revenue Department, collection reached only $6.9 billion — a five year low. Economists point to an unnatural spike in 2008 due to spending related to hurricane recovery efforts and an influx of new dollars from federal level.

Gov. Bobby Jindal (R)

For now at least, the Bayou State’s political class isn’t exactly tripping over itself trying to replace the losses with new taxes or other revenue generators. Gov. Bobby Jindal, for one, is opposed to taxes. No exceptions. He even opposed a tax renewal for cigarettes earlier this year. The additional dollars were tied directly to health care and it was left up to statewide voters this fall to approve the renewal, which they did.

As a result, Louisiana has become more dependent on tax collections from sales and individual income over the past four years. In fiscal year 2010, sales tax collections topped $2.4 billion, with individual income tax collections trailing closely behind and generating $2.2 billion.

The corporate side of the picture is dramatically different and looking sluggish. Using fiscal year 2010 as a benchmark, corporate franchise tax collections statewide are down $116 million and corporate income collections dropped by $70 million, compared to 2006 collections.

So, aside from creating new taxes, how can the state increase collections? One approach simply involves collecting what taxpayers owe. For starters, perhaps it’s time for lawmakers to take a closer look at the state Revenue Department’s “offer in compromise” program.

Louisiana law authorizes the secretary of revenue, under certain conditions, to compromise on a judgment for taxes. Under this authority, the secretary can accept less than full payment as a final settlement for a state tax liability. In theory, a compromise is triggered when the secretary has a “serious doubt” as to collectability of the tax due or the cost the collection would inflict on the state. The judgment for taxes compromised must be $500,000 or less, excluding the applicable interest and penalty.

The largest offer in compromise last year was dealt out to Todd Matherne. It was a unique case in which Matherne, a Houma resident, was expected to pay more than $52 million in taxes last year, which was ultimately negotiated down to just one payment of $2,000. To be more specific, the state wanted Matherne to pay for taxes related to “drug stamps.”

Matherne was arrested in 2005 for selling steroids and somehow Louisiana’s drug stamp law — $3.50 per gram of marijuana and $200 to $400 per gram or dosage unit for harder stuff — was applied to his case. It originally cropped up as a $47 million tax lien after he was convicted.

The drug stamp law, which has been challenged with some success in other states with similar statutes, is a bit of a gimmick; it’s meant to force drug dealers to pay a tax on their wares and anyone who fails to purchase the special stamps — a possible admission of guilt in and of itself — can be forced by the state to pay twice the amount of tax owed.

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Are you thinking about trying to cheat the tax collectors? You may want to read THIS first.

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Matherne is just an oddity of note. The Revenue Department abated $315,000 for another 22 taxpayers during fiscal year 2010. The sweetest deal went to Mac and Karen Shachat — the department releases first and last names only — who paid $27,600 on a $115,000 tax bill. Harold and Karla Temple, meanwhile, ponied up a $20,000 payment after avoiding a $41,000 lien.

While offers in compromise don’t leave an overwhelming amount of money on the table, citizens who avoid paying taxes altogether do represent a real and present threat. These deadbeat taxpayers literally owe millions to the state — millions that could help ward off budget cuts in areas like education and health care.

There have been efforts in the past to ramp up the Revenue Department’s collection efforts. The now-defunct Commission on Streamlining Government had such a recommendation that was never acted upon: “If the decision is made to re-orient the audit philosophy to one of aggressive pursuit of tax fraud, there is the potential for significant additional revenue to the state. This does not require a tax increase; rather it is the collection of taxes already due. This helps level the playing field for those businesses that are compliant with Louisiana tax laws by eliminating the financial advantage to tax cheats.”

The department has been proactive in the past, but that same kind of ingenuity has been lacking in more recent years.

In 2009, the department oversaw a special amnesty program that allowed individuals and businesses to pay back taxes without a penalty. It collected $545,000 during first five days of September that year. Four weeks later, the total stood at $300 million. By Christmas, the special one-time program was good for $450 million in revenues.

In 2001, the department launched a gotcha program under the moniker of CyberShame. An appropriate name if there ever was one — that’s because the online campaign kicked off by publishing the names and addresses of 117 delinquent taxpayers that owed more than $9 million. Only the most chronic were included. More than $469,000 was collected as a result.

Plus, an additional $194,000 was collected from delinquent taxpayers who said they didn’t want their names published in the future. Another 103 names were added to CyberShame later in 2001. Since then, however, the shame game hasn’t been the same and the department has removed the list from its Web site.

There’s also existing policy that can be built upon. In 2003, the Legislature enacted a law permitting the Department of Wildlife and Fisheries to revoke fishing and hunting licenses of anyone who owes more than $500 in delinquent individual state income taxes. State law likewise calls for driver’s licenses to be suspended or denied for taxpayers owing than $1,000.

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For a listing of recent offers in compromise approved by the state Revenue Department, click HERE.

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There’s nothing easy or simple about Louisiana tax structure. On one hand, Louisiana’s state and local tax burden is fairly low, roughly 8 percent of income, which is 42nd in the nation. On the other hand, a recent report compiled by the Center on Budget and Policy Priorities found that Louisiana was one of 11 states in which a single-parent family of three living at the poverty line still owed state income taxes.

While there’s a strong argument for the Department of Revenue to improve its collections efforts, it appears to be more interested in cyber taxes this holiday season. And for good reason. It’s estimated that Louisiana could gain upwards to $400 million if online sales were properly taxed and collected.

Then there’s the so-called Stelly Plan. Voters approved the complicated tax swap plan as part of a constitutional amendment in 2002. It eliminated state sales taxes on groceries and residential utilities in exchange for increased income taxes on higher income residents. Confusion has become a hallmark of the Stelly Plan, specifically the question of whether it has done more good or bad.

In an exclusive interview with former state Rep. Vic Stelly, the plan’s namesake, Associated Press reporter Melinda Deslatte attempted to peel back the layers. Even though the income tax portion of the Stelly Plan has repealed, it apparently remains a “hot topic” for politicians and taxpayers alike.

“I went to a McNeese (State University) basketball game, and I talked to a guy at the concession stand, and he said, ‘Well, thank God you’re gone. You cost me a lot of money,’” Stelly told Deslatte, noting that a few minutes later at the snack stand, another man walked up and took the other side of the argument.

Deslatte also links the dip in recent tax collections to the Stelly Plan and its policy wake: “The tax increases were rolled back in 2007 and 2008 after public backlash, and the sales taxes were never put back in place by lawmakers, so the changes cut taxes by more than $600 million annually, worsening budget shortfalls in the last few years.”

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To learn more about another well-known politician who left his mark on income tax laws, follow this LINK.

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Tax exemptions can likewise boggle the mind when measuring the effectiveness of Louisiana’s tax structure.

Gov. Bobby Jindal, for one, has credited a few different tax exemptions in the past with helping lure major companies to Louisiana. He has even “rejected calls to review the various tax breaks on the books, calling the removal of exemptions and credits a tax increase.”

Yet there are signs that tax exemptions could be getting out of hand, depending on your perspective. During this year’s regular session alone, new tax exemptions were created for the Cane River Heritage Area, parish councils on aging, breastfeeding items, physicists residency programs, orthopedic devices, alternative fuels for manufacturing and Brad Pitt’s Make It Right Foundation.

Just consider the following three sets of numbers, based on data provided by the Louisiana Department of Revenue:

– $13.3 billion, which represent the total potential tax collections for fiscal year 2009-2010
– $6.6 billion, which was the amount of taxes actually collected and deposited into the treasury that fiscal year
– $6.7 billion, which was the balance, or, rather, the amount that was prohibited from collection due to tax exemptions, credits and other similar mechanisms

The Louisiana Budget Project argues that the $6.7 billion going uncollected due to exemptions is part of a “hidden budget.” This is how the group explains it in a recent report: “It’s the total of more than 440 separate pieces of legislation, each of which exempts someone or something from some form of taxation. While the regular state budget is made up of money the state takes in and then sends back out, the hidden budget is money the state decides to forego in the first place.”

Even the Department of Revenue defines tax exemptions as “tax dollars that are not collected and result in a loss of state tax revenues available for appropriation… in this sense, the fiscal effect of tax exemptions is the same as a direct fund expenditure.”

Sometimes these exemptions can have a heavy impact, and the current fiscal year is a prime example. While declining personal income tax collections have been blamed for the midyear shortfall, they’re not the only culprits. Collections related to the oil and gas severance tax are slated to miss their mark this fiscal year by about $128 million.

Greg Albrecht, the chief economist for the Legislative Fiscal Office, has suggested that lawmakers might want to take a second look at a particular severance tax exemption on horizontal drilling, which helped fuel the craze of recent years emanating from north Louisiana’s Haynesville Shale area. Proponents believe that could help several tax collections inch back up.

Don Briggs, president of the Louisiana Oil and Gas Association, isn’t sold on that. He says any kind of repeal would be “shortsighted” since Louisiana would have missed out on more than $40 billion in direct and indirect economic growth between 2008 and 2010 without the exemption, by LOGA’s accounting.

“This incentive is essential to driving investment in our state and ensures the equitable development of deep and capital-intensive oil and gas projects,” says Briggs. “It is our belief that a repeal of this incentive will exacerbate the decline of the Haynesville Shale development and drive away investment from emerging resource plays across the state.”

With the next regular session right around the corner, though, that debate is far from over. Plus, it’s doubtful that repealing this single exemption would have much of an impact — just consider the overall scheme of exemptions.

During fiscal year 2010, potential collections for individual income taxes totaled $3.3 billion, although $2.2 billion was actually collected due to exemptions. The corporate side, though, is where the action is when it comes to exemptions. Of the $1.7 billion in potential collections for corporate income taxes in fiscal year 2010, only $435 million was actually collected.

The Louisiana Budget Project and Department of Revenue, however, may be overlooking other benefits that take the place of the lost tax collections. The Digital Media Tax Credit, a Jindal program, is a perfect example. Jindal had hoped that the tax credit would generate new investments in this burgeoning field. His answer came when Electronic Arts, better known as EA, set up shop in the Bayou State.

Moreover, Craig Hagen, EA’s government affairs director, says this small corner of the tax incentive landscape helped the company make its decision to move into and expand in Louisiana. “Louisiana’s Digital Media Tax Credit is a strong asset to growing the industry and making the state a global competitor in video game development,” he says.

Hagen says the program allows EA to apply a tax credit of 25 percent on software production and 35 percent payroll expenses related to Louisiana residents. These percentages represent money that would otherwise be going into the state’s coffers.

But there’s a bigger picture. Just look to the Louisiana Digital Media Center on LSU’s campus, which will soon be home to Electronic Art’s North American Testing Center. EA is responsible for wildly popular lines like Madden NFL and Tiger Woods golf, and this is where future versions will be born.

The testing center will be the only such outfit in the entire U.S. and will eventually create at least 600 jobs. The center already employs 200 people today. There’s also a bit of street cred in the digital world that comes with housing an outfit such as EA.

From a policy perspective, there’s certainly room for greater scrutiny when it comes to tax incentives. Prior to this year’s regular session, there were no rules or regulations requiring the Legislature’s money committees to review the state’s tax exemption budgets. But thanks to Act 365 sponsored by outgoing Rep. Michael Jackson, a Baton Rouge Democrat, the committees are now required to review the tax exemption budgets every odd-numbered year.

When added to the growing concerns over competition from other states and a seemingly unfair distribution of local tax burdens and non-aggressive collection efforts and everything else, reforming Louisiana’s tax structure feels like an overwhelming task. “Things are changing dramatically,” says state Treasurer John Kennedy. “Can you believe we’re collecting as much in individual income tax as sales tax? I never thought I would see the day.”

But as complicated as the challenge might be, Kennedy says the best approach may be the simplest. “We just need to make our tax structure less complicated,” Kennedy says. “We need to lower taxes and better leverage potential collections. But it won’t happen overnight. You have to chip away at it over time and do it in a responsible way. Until we’re committed to that idea, I don’t know how changes can be made with the best interests of taxpayers in mind.”

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To better understand the growing cost of tax exemptions, click HERE.

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Jeremy Alford is a freelance journalist based in Baton Rouge. You can reach him through his Web site at www.jeremyalford.com and keep up with his latest work at www.thepoliticaldesk.com. 

Louisiana made the cut this year on an exclusive list, but this is not good news for business owners and consumers who have a stake in energy exploration and production.

The accelerated pace of environmental lawsuits rooted in contamination allegations that often lack hard evidence has eroded the state’s competitive posture, according to a new report from the American Tort Reform Foundation (ATRF). Louisiana has been placed on the “watch list” for “judicial hellholes” as a result of “troubling developments” that lead out of “abusive litigation” practices, the report explains.

Since 2002, ATRF has published annual reports that call attention to areas of the country where judges apply the law in a manner that is considered unfair or unbalanced. The ATRF report also highlights new regulations and legislation that allow for the lawsuit industry to expand liability claims.

The 2011-2012 report names eight areas that stand out as the top judicial hellholes. They are: Philadelphia, California, West Virginia, South Florida, Madison and St. Claire Counties, Illinois, New York City and Albany, New York. But there are additional jurisdictions that are just on edge of falling off into “hellholes” and Louisiana is included on this list.

“This is not the first time Louisiana has been called out on the national stage for its poor legal climate, and whether we like it or not, reputation matters,” Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch (LLAW) laments. “The perception of a state’s legal climate affects how companies do business, and where they decide  to invest and create new, well-paying jobs.”

Louisiana’s burdensome legal climate relates back to civil claims known as “legacy lawsuits.” The suits claim contamination occurred on oil well sites across the state several decades ago causing damage to the land.

“Unfortunately, Louisiana’s pattern of doling out millions of dollars for hugely exaggerated claims of environmental damage as a result of decades-old oil and gas production has spawned a cottage industry of cookie cutter lawsuits that are giving Louisiana a bad name and threatening the survival of a critical aspect of our energy sector,”  Landry said. “This jarring reputation as a potential ‘Judicial Hellhole’ should concern every policymaker and citizen in Louisiana hoping to see more jobs and a stronger economy for our state.”

The aggressive use of “legacy lawsuits” has put Louisiana at a competitive disadvantage with neighboring states like Texas, the report notes. Despite its enormous economic potential, the state has been forced into a position where many of its rigs are either idle or in decline. Over 250 of the “legacy lawsuits” in Louisiana have affected 1,500 companies that have capitulated to claims with settlements instead risking an even more damaging verdict in local court, according to ATRF.

Moreover, it would seem that any funding that should toward any legitimate environmental clean-up needs are instead being diverted over to the plaintiffs’ lawyers, the report suggests.

A 2006 law known as Act 312 was set up to ensure that funds set aside for environmental remediation were actually used for that purpose. But plaintiff attorneys have found a way to make an end-run around the law in court thanks to compliant judges, Landry has explained.

This means the money from settlements is diverted away from legitimate clean-up efforts and in the direction of plaintiff attorneys, she points out.

Landry’s watchdog group favors new legislation that would provide state government officials with greater authority over cleanup exercises and the claims process. Rep. Page Cortez (R-Lafayette) introduced a bill during this year’s legislative session that would reform the existing law, but the House Natural Resources and Environment Committee voted to defer the legislation.

“With the 2012 legislative session on the horizon, our lawmakers and state leaders should be thinking about what they can do to make Louisiana more competitive,” Landry said.  “Addressing the legacy lawsuit issue and passing other meaningful legal reforms to help move Louisiana off the judicial hellholes ‘Watch List’ would be a great place to start.”

LLAW recently released the results of statewide survey that shows 83 percent of Louisiana voters favor lawsuit reform. Among those surveyed, 65 percent  said there are too many lawsuits in the state, while 69 percent agreed that lawsuit abuse contributes to job loss.

Not all of the news is grim in ATRF’s latest report. A section entitled “Points of Light” cites tort reform packages that have taken hold in several states including Wisconsin, Tennessee, Alabama and North Carolina. These reforms include legislation designed to guard against the use of “junk science” in courtrooms and to block courts from expanding liability to include those who trespass on property.

When the Louisiana state legislature convenes early next year, it will have the opportunity to become “a point of light” and to separate itself from the “watch list,” Landry said.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org  and followed on Twitter.

Concerned citizens are invited to visit the Louisiana Lawsuit Abuse Watch (LLAW) group online where they can select their top choice for the most outrageous lawsuit of the year. But it will be not be easy, Melissa Landry, the group’s executive director, points out.

Lawsuit Abuse Awareness Week runs from Dec. 12 to Dec. 16. LLAW has compiled a list of 10 lawsuits from parishes throughout the state that considered frivolous and overly costly.

“Just remember, while many of these cases may seem too ridiculous to be true—they are all real suits that have real consequences,” Landry said.  “The million-dollar payouts and the costs to our judicial system are all too real.  And, even if a frivolous lawsuit results in no award to the person suing, it can still cost thousands of dollars and hundreds of hours in the courtroom to defend.  When someone is truly wronged, a lawsuit can bring needed justice, but when our legal system is abused, we all pay and we all lose.”

The 10 lawsuits compiled by LLAW can be viewed here.

To vote visit www.LLAW.org, twitter.com/ReformLouisiana or join the Louisiana Lawsuit Abuse Watch group on Facebook to vote for the most outrageous lawsuit of the year.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and followed on Twitter.