Louisiana

Louisiana is a fascinating study in contrasts. It has more people living in poverty than almost any other state, but money is coming into the treasury at an unusually rapid rate, thanks to booming oil and natural gas prices. The state faces a $596 million shortfall in revenues to cover ongoing expenditures over the next two fiscal years, even as it holds a remarkable $3 billion in various trust funds. Amid some glaring management weaknesses, it boasts one of the strongest and best-institutionalized systems of performance-based budgeting and program evaluation in the country.

The biggest problem area is infrastructure, and especially maintenance. Louisiana’s attitude toward keeping up its physical assets over the years can best be described as determinedly negligent. Managers believe they have a maintenance backlog of almost $2.3 billion for state buildings; that’s a stunning figure by anyone’s measure. But it’s only a best guess. The state has finally begun to do condition assessments, and with the project one-third completed, it comes up with about $750 million in backlog. A little back-of-the-envelope multiplication yields the $2.3 billion figure.

Whatever the precise number turns out to be, the state put only $90 million toward maintaining its infrastructure last year, and that wasn’t nearly enough. “Deferred maintenance is a staggering problem,” says William Morrison, assistant director of Facility Planning and Control. “Nobody wants to spend money on it. Even when it’s appropriated in the operating budget, agencies will tend to spend it on other things.”

Money B+ Long-Term Outlook Budget Process Structural Balance Contracting/Purchasing Financial Controls/Reporting People B Strategic Workforce Planning Hiring Retaining Employees Training and Development Managing Employee Performance Infrastructure C+ Capital Planning Project Monitoring Maintenance Internal Coordination Intergovernmental Coordination Information A- Strategic Direction Budgeting for Performance Managing for Performance Program Evaluation Electronic Government • Population (rank): 4,468,976 (22) • Average per capita income (rank):    $26,100 (43) • Total state spending (rank):    $18,319,273,000 (24) • Spending per capita (rank):    $4,093 (32) • Governor: Kathleen Babineaux    Blanco (D) • First elected: 11/2003 • Senate: 39 members: 26 D, 13 R • Term Limits: 12 years (consecutive) • House: 105 members: 68 D, 36 R, 1 I • Term Limits: 12 years (consecutive)

Once the current condition assessment is complete, the state will have taken a solid first step. But the second step may be a descent into quicksand. There’s a long-standing state tradition of spending infrastructure dollars based on benefits in the voting booth, not the roadway. “It’s completely political,” says one legislative fiscal officer. “Decisions are not ever based on economics.”

As sloppy as Louisiana has been at tracking its physical assets, it runs many of its other operations with solid data. The state has been moving toward performance budgeting since 1987, and the process was codified and strengthened in the mid-1990s, due largely to the efforts of longtime legislator Jerry Luke LeBlanc, the current commissioner of administration. Now, agencies report on their performance quarterly through a publicly available database; if there’s more than a 5 percent deviation from expected goals, the agency must explain the change to the budget office. By law, performance measures are as much a part of the appropriations process as money. “We analyze the budget request in terms of returns on investments,” says Carolyn Lane, the state budget manager.

If there’s a problem with this carefully articulated system, it’s that some of the individual measures may be a little soft. Agencies sometimes set their performance bar low. “We will revise the appropriations next year based on the goals and targets, but the goals themselves are fairly easy to meet,” says a legislative fiscal officer.

Workforce planning is an area where Louisiana could stand improvement. Although the state has been working with agencies to focus on succession planning and personnel development, the state does not currently have a statewide workforce plan. What it does do is give agencies considerable flexibility in negotiating salaries for hard-to-fill positions. This seems to be paying off; Louisiana has not experienced the same types of health care labor shortages that most other states are facing.

Management in several financial areas has been innovative. The state maintains a Web site for contracting and purchasing on which agencies post information and address questions and concerns; billing and payment are also handled online. Agencies have no limits on outsourcing, but all state contracts have required a performance-based monitoring plan since 1997. “We say to the agencies, ‘Just because you’re passing through the money doesn’t relieve you of your statutory responsibilities to produce performance information,’ ” says Lane.

The overall budget picture looks relatively peaceful right now in Louisiana, but that’s mostly because so much oil money is coming in. Down the road, there will be some problems: Current operations are being funded in part through the use of more than half-a-billion dollars in non-recurring funds.

For additional data and analysis, go to: http://results.gpponline.org/louisiana

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