Tuesday, December 2, 2014

Tuesday, December 2, 2014

Louisiana taxpayers subsidize Matt Dillon’s massages; Audit: Privatization is more expensive; State revenue picture could worsen; Half of Louisiana kindergarten students lack reading skills

Louisiana taxpayers subsidize Matt Dillon’s massages
State taxpayers spent more money ($35 million) on “Green Lantern” than they are sending to the University of New Orleans this year. Taxpayers are not only underwriting the cost of Duck Dynasty but also pay for massages and gym memberships for actor Matt Dillon when he comes to Louisiana to make a film. And while the state’s film subsidy program has been great at recruiting film productions, it’s been a massive money-loser for state government, according to the latest installment of The Advocate’s “Giving Away Louisiana” series. The state’s Motion Picture Investor Tax Credit is the most generous of its kind in the country and has grown significantly over the past decade – to $251 million in 2013 from $40 million in 2003.

A succession of state-funded studies have shown the program — like those elsewhere in the U.S. — doesn’t come close to paying for itself. Simply put, Louisiana may not be able to afford more growth. The most recent cost-benefit analysis of the program, by economist Loren Scott, found that in 2012, the state put $218 million into film production and recouped only $50 million of that through taxes, or about 23 cents for every dollar spent… And the studies suggest that the real returns may be even more dismal.

Not surprisingly, as the newspaper details in an instructive sidebar, this cash cow program has become a magnet for fraud despite efforts by the Department of Economic Development to clean it up:

But one obvious reason is that the program is so generous, there’s a huge temptation to game it. Since the state pays for 30 percent of a film’s “Louisiana spend,” filmmakers have an incentive both to overstate their spending and to say it all happened in Louisiana. The barriers to such chicanery are hardly impregnable. “If a person is determined to steal from these programs, the way that it’s set up right now, it’s not that hard to do — if they get an auditor that is either willing to be part of the scheme or one that’s willing to sort of stick their head in the sand and just take what they’re provided without questioning the validity of it,” (Inspector General Stephen) Street said.

 

Audit: Privatization is more expensive
Medicaid costs in Louisiana have grown by more than $900 million since Gov. Bobby Jindal privatized the state’s charity hospital network in 2012,according to a new Louisiana Legislative Auditor report. About $600 million of the additional spending is due to increases in the Bayou Health managed care program for Medicaid recipients, and $350 million to increased uncompensated care payments to LSU hospital partners. Additionally, the audit notes that the portion of Medicaid expenses funded by federal dollars has decreased – to 64 percent in fiscal year 2014 from 83 percent in fiscal year 2010 – due to the expiration of certain hurricane disaster aid and the American Recovery and Reinvestment Act.

Auditors told The Advocate’s Marsha Shuler that they’re not sure exactly why costs are spiraling.

“You do see the impact of these program,” said Ernie Summerville, assistant director of Financial Audit Services. But, he said, “there are a lot of other factors that go into the overall determination whether this is costing us that much money. I don’t think we have enough information to say that … This is looking at one aspect.”

 

State revenue picture could worsen
Jeremy Alford of LaPolitics, writing in The Ind, looks ahead to the 2015 budget debate and sees lots of potential landmines as the governor and legislators grapple with the latest shortfall of $1.4 billion. With new constitutional amendments putting more of the budget off limits to cuts, and nearly $1 billion in piecemeal financing set to expire, legislators could be faced with the unpleasant election-year task of either raising new revenues or making more painful cuts to critical services. Alford says the “long shot” revenue possibilities include an Internet sales tax, but also notes that the state’s financial picture may get more bleak in the months ahead.

The Revenue Estimating Conference, which met last month, is charged with determining how much money that state has to spend, which in turn determines how much needs to be cut. They can choose between two different sets of predictions: one from the Legislative Fiscal Office or another from the Division of Administration. REC members, as per tradition, went with the more optimistic forecast in November, which came from the LFO this go around. The other forecast from the DOA was far worse, and has lawmakers nervous. Even Senate President John Alario, R-Westwego, admitted last week the numbers may have to be adjusted again when the REC next meets in January.

 

Half of Louisiana kindergarten students lack reading skills
The first five years of a child’s life are critical to developing social, academic and cognitive skills that are the foundations of future success. High-quality early childhood education increases the likelihood that a child will graduate from college and get a good-paying job. But new figures from the state Department of Education suggests that Louisiana still has much work to do to ensure our youngest students are prepared for their future. Only 56 percent of kindergarten students attending Louisiana public schools are meeting state reading standards,Nola.com reports. That’s a drop of eight points from the 2011-12 school year, the first year kindergarten students took the Dynamic Indicators of Basic Early Literacy Skills test. DOE is trying to fix the problem by raising performance standards for early childhood centers. But child advocates note that it’s virtually impossible to raise standards without additional financial support. Additionally, increasing standards without raising state fundingleaves some parents are at risk of facing higher tuition costs.

 

Number of the Day
56 percent
– Proportion of kindergarten students attending Louisiana public schools that are meeting state reading standards. (Source:Nola.com)