State Treasurer John Kennedy thinks there’s too much waste in state government.
On Wednesday, he proposed a way to cut out some of that waste and provide some financial relief to colleges and universities at the same time.
Kennedy’s plan, unveiled in an opinion column, calls on the state Legislature to pass a bill that would require every agency in state government to cut its spending on consulting contracts by 10 percent.
Opponents of the plan say those types of across-the-board cuts are popular until the details are hashed out and the effects of the cuts becomes clear.
Kennedy said this time is different. His idea is to take all of the money saved from reducing consulting contracts, and dedicate those dollars toward the state’s higher education institutions. Kennedy said the savings could be as high as $528 million per year — 10 percent of the estimated $5.28 billion state agencies spent on consulting when the issue was studied in 2012.
At the same time, Louisiana’s network of colleges and universities is widely seen as limping along after six straight years of state budget cuts totaling roughly $700 million. And while many states have begun increasing their higher education funding as the country recovers from a recession, Louisiana is still slashing college budgets.
The American Association of Colleges and Universities reports that Louisiana’s 17.6 percent cut to higher education during the 2013-14 fiscal year is the most severe reduction in the nation.
“Frankly, I don’t know how our schools keep the lights on,” Kennedy said.
Sniffing out what he perceives as waste and then shouting about it publicly is something that Kennedy has been known for. Two years ago, the treasurer pressed Gov. Bobby Jindal’s administration for details on a number of taxpayer- funded construction projects, including walking and biking trails and $140,000 set aside to build a new fence for the Kingwood Homeowner’s Association in eastern New Orleans.
The governor’s staffers argued that many of those projects pre-dated Jindal taking office.
This time around, Kennedy is questioning why the Louisiana Department of Education spent $615 million on 5,499 consultants between 2005 and 2010. Or why the state Department of Health and Hospitals pays someone $19,500 to “coordinate two Golden Glove Boxing tournaments.”
While Kennedy acknowledged in a phone interview that similar plans to cut out waste have run into roadblocks, he said this year’s version has the potential to garner more public support than before.
“It would seem to me that those who would oppose this idea would be arguing that consulting contracts are more important than higher education. Are these contracts more important than LSU or Southern or ULL,” he asked. “I’m not saying that all of these consulting contracts are bad. I’m asking what’s more important, some of these consultants, or our universities.”
State Commissioner of Administration, Kristy Nichols, Jindal’s chief budget adviser, responded to Kennedy Wednesday in a prepared statement late Wednesday that suggested Kennedy also look for waste in his own shop.
“We appreciate the treasurer’s advice. We have been very aggressive in reducing the number of state contracts resulting in the savings of millions of dollars,” Nichols said. “We will continue to do that. In fact, the treasurer’s office has state contracts totaling more than $11 million.”
State Sen. Jack Donahue, R-Mandeville, said he also agrees that cutting contracts is a good thing. The last state budget eliminated between $20 million and $25 million in consulting contracts, he said.
The problem, Donahue said, is that many of the consulting contracts have to do with the state’s Medicaid and pharmaceutical contracts. Across-the-board cuts could mean reducing funding to healthcare providers. It could also mean hurting the state’s ability to provide life-saving medication to people.
“I like the idea, but you can’t just do it across-the-board,” Donahue said. “You have to make a more discerning approach.”