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Focus on the Fisc - September 2013

Focus on the Fisc - September 2013

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Published by RepNLandry
September 2013 edition of “Focus on the Fisc”, an interim publication prepared for the Louisiana Legislature by the Legislative Fiscal Office (LFO). “Focus on the Fisc” is prepared to give succinct factual information on many of the fiscal issues facing the state of Louisiana. FY 2014, Volume 2, Issue 3.
September 2013 edition of “Focus on the Fisc”, an interim publication prepared for the Louisiana Legislature by the Legislative Fiscal Office (LFO). “Focus on the Fisc” is prepared to give succinct factual information on many of the fiscal issues facing the state of Louisiana. FY 2014, Volume 2, Issue 3.

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Published by: RepNLandry on Oct 04, 2013
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 A Publication for the Louisiana Legislature by the Legislative Fiscal Office
Volume 2, Issue 3
September 2013
Potential Higher Ed Cash Flow Issues
 J. Travis McIlwain, Gen. Govt. Section Director,mcilwait@legis.la.gov Charley Rome, Fiscal Analyst,romec@legis.la.gov 
FY 14 funding for higher education has approximately $340 M from theOvercollections Fund, which includes various funds sweeps and othersources of revenue. The Overcollections Fund represents approximately13% of overall funding for higher education in FY 14. Due to OvercollectionFund resources being collected irregularly throughout FY 14 and due toonly a small portion of monies appropriated to the Overcollections Fund being available to date, the State Treasury is allowing higher educationentities to spend approximately 1/6 of their annual SGF authority eachmonth (as opposed to 1/12, which is the normal practice) because moniesfrom the Overcollections Fund are not yet available. This may result inhigher education expending all of its SGF resources prior to the end of calendar year 2013. Through the first two and half months of FY 14, highereducation has expended approximately 43% of its SGF resources. Highereducation’s total FY 14 SGF appropriation is approximately $422.6 M andthus far $180.4 M has been expended, or 42.7%. Based upon the currentaverage daily expenditure rate for all of higher education (approximately$2.5 M SGF expended per day), LA higher education on average mayexpend all SGF resources by January 20, 2014. See table 1 on page 2 for acomplete illustration of each higher education system and the anticipatedday in which SGF could be completely expended. The anticipated daysrange from December 9, 2013 to April 19, 2014.The existing operating budget (EOB) for the Overcollections Fund in FY 14 is approximately $419.1 M (includingapproved CF BA-7s) of which 81% is currently appropriated within higher education. See table 3 for a complete FY 14EOB that includes August approved CF BA-7s. As has been mentioned in previous editions of 
“Focus on the Fisc,”
 these FY 14 appropriations are supported by various revenue sources. According to information provided to the LFO by the State Treasury, to date the Overcollections Fund has collected approximately $28.9 M of anticipated resourcesin FY 14. Including an anticipated FY 13 prior year fund balance of approximately $22.7 M, the current total amountof revenues available for FY 14 expenditure is approximately $51.6 M. The anticipated revenue sources that have not been transferred into the Overcollections Fund are listed in table 2. The DOA fully intends all anticipated FY 14Overcollections revenues to be collected in FY 14 and as such resources are collected, State Treasury will pro-ratereceipts based upon the original Overcollections Fund appropriation in Act 14.
Note: Legislative appropriation bills donot specify funding priorities if proceeds to the fund are less than budgeted in FY 14. As such, State Treasury has indicated thatthey will reduce Overcollections Fund appropriations on a pro-rata basis if proceeds are less than budgeted. Also, there is $50,000
1 Potential Higher Ed Cash Flow Issues2 Office of Group Benefits (OGB) Update3 Telemedicine Services for Offenders4 Mental Health Courts5 Potential Additional Election Costs6 FY 13 State Revenue Actual Collections7 Higher Education Overview9 Deferred Maintenance—Higher Education10 LSU Health Sciences Center—Shreveport11 Hospital Lease Payments: An Update12 Detailed spreadsheet of Lease Payments
John D. Carpenter, Legislative Fiscal OfficerEvan Brasseaux, Staff DirectorEconomic Section
Greg Albrecht, Chief EconomistDeborah Vivien, Economist/Fiscal Analyst
Education Section
Mary Kathyrn Drago, Section DirectorCharley Rome, Fiscal Analyst
Health & Hospitals Section
Shawn Hostream, Section DirectorAlan Boxberger, Fiscal AnalystPatrice Thomas, Fiscal Analyst
General Government Section
 J. Travis McIlwain, Section DirectorStephanie Blanchard, Fiscal AnalystMatthew LaBruyere, Fiscal AnalystEvelyn McWilliams, Fiscal Analyst
Information Services Section
Willie Marie Scott, Section Director
Support Staff
Debbie Roussel, Jean Pedersen, Rachael Feigley
900 North 3
Street (P.O. Box 44097)State Capitol Building, 18
FloorBaton Rouge, LA 70804Phone: (225) 342-7233, Fax: (225) 342-7243Website: lfo.louisiana.gov
Louisiana Legislative Fiscal Office
Your Legislative Fiscal Office is pleased to present the latest edition of Focus on theFisc. We hope you enjoy it and encourage feedback.In October 2013, the office will be releasing our annual publication “FiscalHighlights.” This document is a summary of fiscal actions taken during the 2013Regular Legislative Session and a compilation of historical fiscal data. We hope you find this information useful for speeches, constituents’ questions and generalinformation.Please contact us at (225) 342-7233 if you have any questions or need additionalinformation. Look for the next edition of Focus on the Fisc at the end of October.
Louisiana Legislative Fiscal Office
of FY 13 transfers into the fund thatoccurred prior to end of year close that areincluded within the $22.7 MOvercollections Fund FY 14 beginning fund balance. This transfer is appropriatedin Act 14 (HB 1) for FY 14. The specificFY 13 transfer being utilized for FY 14appropriations included within the FY 14beginning fund balance are $50,000FEMA reimbursement proceeds. Act 14appropriates $20 M of FEMA proceeds.
 To the extent SGF resources arecompletely expended andOvercollections Fund resources arenot collected timely, higher education would likely request a state treasury seed with the anticipated OvercollectionsFund collections being utilized to pay the seed once received. Higher education requested a state treasury seed in July2013 in the amount of $340 M and the DOA has not approved the request at this time.
Entity(Table 1)FY 14 SGFEOBFY 14 SGFExp. ToDate%Expended
SGF Exp.Per Day
# Days Left toExpend SGF basedupon current SGFExp./DayLFO Proj.Day SGF MayRun Out
Board of Regents$8,302,079 $3,072,428 37.01% $42,088 124 Days Left 1/14/14LAUniversitiesMarineConsortium$1,360,036 $340,009 25.00% $4,658 219 Days Left 4/19/14LSU System $185,987,445 $79,870,671 42.94% $1,094,119 97 Days Left 12/18/13SouthernSystem$31,792,040 $10,295,476 32.38% $141,034 152 Days Left 2/11/14University of LA System$130,200,280 $58,861,276 45.21% $806,319 88 Days Left 12/9/13LACommunity& TechnicalCollegeSystem$64,961,839 $27,917,886 42.98% $382,437 97 Days Left 12/18/13
TOTAL $422,603,719 $180,357,746 42.68% $2,470,654130 Average DaysLeftAverage Day1/20/2014
FY 14 OvercollectionsFund Sources (Table 2)Anticipated CollectedTo DateLeft toCollect
FY 14 Beginning Balance $22,688,497 $22,688,497 $0Hospital Lease Payments $140,250,000 $0 $140,250,000Legal Settlements $64,771,871 $0 $64,771,871Various Property Sales $44,620,000 $338,331 $44,281,669LDR Fraud Initiative $20,000,000 $0 $20,000,000Excess FEMAReimbursements$19,950,000
($50K transferredin FY 13)
 $0 $19,950,000LDR SGR $13,132,881 $11,941,920 $1,190,961Go Zone BondRepayments$28,284,500 $11,591,755 $16,692,745Excess IAT/SGR $10,000,000 $0 $10,000,000LA Housing Corporation $2,000,000 $0 $2,000,000Self Insurance Fund $16,000,000 $0 $16,000,000LPAA $5,000,000 $5,000,000 $0LA Fire Marshal Fund $1,988,106 $0 $1,988,1062% Fire Insurance Fund $2,358,715 $0 $2,358,715Beautification &Improvement of the Cityof New Orleans CityPark Fund$48,298 $0 $48,298Compulsive & ProblemGaming Fund$57,071 $0 $57,071DOJ Legal Support Fund $585,598 $0 $585,598Incentive Fund $4,000,000 $0 $4,000,000Marketing Fund $1,000,000 $0 $1,000,000Mega-ProjectDevelopment Fund$11,300,000 $0 $11,300,000New Orleans UrbanTourism & HospitalityTraining in EconomicDevelopment FoundationFund$25,019 $0 $25,019Penalty & Interest Fund $1,541,440 $0 $1,541,440Riverboat GamingEnforcement Fund$8,605,392 $0 $8,605,392Transfer from fund toSGF($5,000,000)$0($5,000,000) 
TOTAL $413,207,388 $51,560,503 $361,646,885Schedule(Table 3)Agency FY 14 EOB(includes CF)
01-111Governor's Office of HomelandSecurity & Emergency Preparedness$21,25001-112 Military Department $500,00004-DOJ Attorney General $4,563,97107-DOTD Transportation & Development $36,000,00008-DPS State Police $84,79611-DNR Natural Resources (Judgment) $4,104,28612-REV Revenue Department $3,950,00019-LSU LSU Board of Supervisors $143,575,15519-LSUHCSD Healthcare Services Division $20,000,00019-SUSouthern University Board of Supervisors$27,466,77919-ULUniversity of LA Board of Supervisors$103,618,30519-ULUniversity of LA Board of Supervisors (Judgments)$1,333,70719-BOR LA Board of Regents $5,917,48919-LUMCON LA Universities Marine Consortium $977,91019-LCTCSLA Technical & Community CollegesBoard of Supervisors$56,709,70519-BESEBoard of Secondary & ElementaryEducation$69,40520-945 State Aide to Local Governments $3,720,24720-950 Judgments/Special Acts $6,495,602
TOTAL $419,108,607
Office of Group Benefits New TPA Agreement Update
 J. Travis McIlwain, Gen. Govt. Section Director
 ,mcilwait@legis.la.gov Based upon the first 6 months of OGB financial data, thenew third-party administrator (TPA) contract with BlueCross Blue Shield (BCBS) that has been in place since January 1, 2013 is saving the state administrative costsranging from $4 M to $7 M from January 1, 2013 to June31, 2013. The majority of these savings is likely due to thereduction in T.O. positions from 327 in FY 12 to 79 in FY14. The LFO will be able to better identify the specificsavings of the new TPA arrangement when OGB’s fiscalyear ends in December 2013. This will allow for 12months of financial data to be analyzed to determine theexact amount of savings as a result of the new TPA.
Louisiana Legislative Fiscal Office
State IT Consolidation Update
 J. Travis McIlwain, Gen. Govt. Section Director
 ,mcilwait@legis.la.gov The Division of Administration (DOA) announced in September 2013 that Deloitte Consulting was selected toprovide consulting and management support services for information technology “policy, planning andtransformation initiatives.” Based upon discussions with the DOA, this vendor will study the state’s current ITinfrastructure, framework and current statewide IT costs and provide the DOA with a recommended plan for a newconsolidated model for delivery of state IT services. The DOA is currently in negotiations with Deloitte Consultingand anticipates the final contract being brought before the Procurement Support Team (PST) at its October 2013meeting for final recommendation and approval. The PST, which is created in statute (R.S. 39:1496), serves as anadvisory group to the Director of the Office of Contractual Review (OCR). Members include representatives from theAttorney General’s Office, the Legislative Fiscal Office and the OCR.State budgetary adjustments for FY 14 that occur as a result of any consolidation will likely be approved via DOA in-house BA-7s. These budgetary adjustments will not require Joint Legislative Committee on the Budget (JLCB)approval due to Section 6B of Act 14 (HB 1). Section 6B of Act 14 provides language that allows the commissioner of administration to transfer functions, positions, assets and funds from one department to another related to the new ITdelivery model. The specific language in Act 14 is as follows:
Pursuant to the authority granted to the Office of InformationTechnology in R.S. 39:15.1 through R.S. 39:15.3 and in conjunction with the assessment of the existing staff, assets, contracts,and facilities of each department, agency, program, or budget unit’s information technology resources, upon completion of thisassessment and to the extent optimization of these resources will result in the projected cost savings through staff reductions,realization of operational efficiencies, and elimination of asset duplication, the commissioner of administration is authorized totransfer the functions, positions, assets, and funds from any other department, agency, program, or budget units related to thisoptimization to a different department.
The LFO will provide more details on this issue as additional information is madeavailable. See the previous edition (Volume 2, Issue 2) for more information about this topic.
Telemedicine Services for Offenders
Stephanie Blanchard, Fiscal Analyst
 , blanchas@legis.la.gov The Department of Corrections (DOC) is exploring options to provide healthcare services at a lower cost.Telemedicine services allow patients to connect with doctors remotely on site with the use of video conferencing andother electronic communication.Prior to FY 14, all DOC prisons and 13 parishes were equipped for telemedicine purposes and DOC began looking toexpand the network. In FY 13, the LSU School of Medicine had the contract for telemedicine services with a budget of approximately $600,000. The contract included physician providers from the LSU School of Medicine, technical staff,network that the telemedicine clinics required to operate and the clinical staff that supports the physician during theencounter.In order to expand services in FY 14, DOC used the competitive bid process and received 5 bids, including a proposalfrom LSU School of Medicine. The Austin-based US Telehealth was the lowest bid at $1.66 M, while LSU School of Medicine’s bid was $2.85 M. Since US Telehealth was the lowest bid, it was selected to administer the telemedicineprogram for the entire state, instead of retaining LSU School of Medicine. However, DOC decided to utilize the LSUSchool of Medicine to provide services to south Louisiana prisons and US Telehealth would be limited to northLouisiana prison, which did not have access to these services previously. Since DOC decided to utilize contracts with both LSU School of Medicine and US Telehealth, the total costs are approximately $1,558,560.The LSU School of Medicine contract is based upon a flat fee per 4-hour session, for up to 12 inmates per session.There will be 14 specialties offered and each specialty session will vary from $953 to $1,919 per session, with anaverage of $1,360 per session. The LSU School of Medicine will bill DOC for each actual session performed and themaximum amount of the contract is $1.002 M. The US Telehealth contract is based upon a flat fee of $1,200 per sessionfor up to 15 inmates per session. There will be 14 specialties offered. The US Telehealth contract will bill DOC for eachactual session performed and the maximum amount of the contract is $556,560. Both contracts are based upon a flatfee per 4-hour session. DOC estimates the volume of telemedicine checkups will increase from approximately 3,500 inFY 13 to approximately 20,000 in FY 14.
Effective August 2013, OGB reduced its premiums by another 1.77% (OGB reduced rates for FY 13 by 7.11%). Basedupon information provided to the LFO from the DOA, the 1.77% decrease will result in state agency savings in theamount of $9.9 M, state employee savings of $3.9 M, school board savings of $9.3 M for a total premium savings of approximately $23.1 M. Essentially, OGB’s overall fund will have $23.1 M in less revenues to pay administrative costsand medical claims in FY 14. However, the DOA/OGB indicate this is possible due to the new TPA agreement withBCBS.
The LFO will continue to monitor this issue and provide updates to the legislature. A complete 12-month analysis of thespecific savings as a result of the new TPA will be completed by the LFO in January 2014 and reported to the legislature.

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