Gov. Bobby Jindal begins his second term at the apex of his power as Louisiana’s chief executive. His first four years were heavily characterized by crisis control, including hurricanes Gustav and Ike, the oil spill in the Gulf of Mexico, the Mississippi River’s perilous rising and recessionary budget deficits. He toured the nation and compiled an intimidating campaign war chest, raising both his and the state’s image on the national scene.
Now, following a re-election triumph in which no major candidate stood to oppose him, Jindal has the pieces in place for the biggest moves yet in his political career. Backed by his hand-picked legislative leadership and a recast state school board, the governor is proposing a massive, multifaceted reform of K-12 education. He wants expanded choice of schools for low-income families, a statewide voucher program based on his New Orleans scholarship pilot program, new tenure and evaluation systems for teachers, tax rebates for private school tuition donations, and initiatives to promote new charter schools.
Jindal is also pushing to reduce the state’s costs in financing the government worker pension systems, particularly the state employee defined-benefit retirement plan known as LASERS. The systems have accumulated a large shortfall in the funding needed to meet long-term obligations, called the Unfunded Accrued Liability. Jindal’s plan would establish a later retirement date and restrain cost-of-living adjustments. Employees enrolled in LASERS who now pay a rate of 8% of their pay toward their retirement plan would begin paying 11%. The state and its agencies, as employers, pay about 28% of their payroll toward retirement costs, including a payroll base contribution that would be reduced by 3% under the governor’s plan. New state employees would be enrolled in a new type of retirement program called a cash-balance plan. State employees are not enrolled in the federal Social Security program.
Before the legislative session began March 12, Public Affairs Research Council of Louisiana President Robert Travis Scott spoke with Jindal about his reform agenda, management style and life with his wife Supriya and their three children, in an exclusive interview for Business Report.
Gov. Bobby Jindal: I’ve told my cabinet from the very first cabinet meeting, which was my first day as governor … we’re going to run out of time before we run out of things to do. I’ve got the greatest job I’ve ever had and I probably will ever have in my professional career. So for me every moment is precious. I don’t want to waste a moment in this job.
I really do tell my cabinet officials and my staff that years later we’re going to look back and we’re not going to regret all the things we did or the battles we fought or the challenges we tackled. I think we’ll look back and regret that we didn’t do more. We need to make the most out of every moment.
I remember in high school we were allowed to choose a phrase—you know, when they do the yearbooks or senior quotes. I took my quote from Shakespeare, where he wrote, and I’ll paraphrase, there’ll be time enough to sleep in the grave. … I just believe that life is precious, life is too short.
Jindal: I do, every day. … I’ve always exercised, but a few years ago … I became much more regular and rigorous about it. … I’ll get up incredibly early so I have the ability to go exercise, and I do have more energy. I’d rather give up the sleep and have the time to work out. It gives me more energy during the day, and it’s … also great because it is one time during the day when you can clear your mind—you know, the phones are not ringing. … It really does give you time to think and be creative.
Jindal: To Supriya and me it is very, very important that our kids have a normal childhood. … Your children have to be your highest priority. Obviously, it takes a partnership. … I wouldn’t be able to do this job if Supriya wasn’t the extraordinary wife, friend, first lady, that she is.
I’m there at their soccer games. I’m there when they do their school plays. And given my job and sometimes given the unique time demands, I can’t be there as regularly as Supriya is. But I think it’s important for the kids to know that they’re a priority to us. … I try very hard to make it home in time to at least put them to bed, at least pray with them every night. We try to have dinner together as a family.
I don’t do a lot of social events. You know, as governor you get invited to so many different events around town, around the state, and we don’t go to the formal evenings. That was true even before I was governor. For us, the way that we enjoy spending our free time is spending time with our kids.
Jindal: That’s exactly right. We turn down the vast majority of invitations.
Jindal: I know that’s right, but it wouldn’t work without that partnership, without that teamwork.
BRBR: How would you describe your management style? I’ve seen it exhibited in the crisis situations where you demand your staff to come back and report. You follow up on them, figure out whether or not they have done what you asked them to do. You tell them to bring you solutions, not problems. Describe in a nutshell your management style and how it has changed in the past four years?
Jindal: It all starts before you get to that [crisis] challenge. One, you have to hire the best people, and we’ve done that. … The second thing is that, even before the challenge comes, you have to be prepared. If it’s a hurricane, you’d have to have drills. If it’s a legislative session, you have to do your homework, whether it’s the bills you’re preparing or the policies you’re proposing.
But then the third thing—there’s a famous quote that no battle plan survives the first bullet in war—is that you’ve got to be prepared for things not to work as you anticipate. You’ve got to … hope for the best, but always prepare for the worst. So in a hurricane, it may be that the federal government promises you ambulances and MREs that don’t arrive in time, like what happened during Gustav. And you have to be adaptive. You have to be ready to change your tactics and respond to unexpected challenges. You can’t simply stick to your game plan despite the changing environment.
I very strongly believe in hiring great people, getting out of the way and managing for results. And what that means, for example, is I don’t try to do other people’s jobs. I tell them, “We don’t need two people to do the same job,” and that can be very liberating. I think your highly motivated, your very smart, your very diligent workers want bosses that are demanding but also don’t micromanage them. And so I tell my folks, “Don’t bring me problems, bring me solutions.”
I do look for quantitative measures. I look for hard data to back up assertions or to back up results. …
For any boss, whether it’s the governor or CEO or a manager, I think it’s very important … to be helping [employees] set priorities. You know, it’s very easy, especially in a large organization like state government, to get lost in the bureaucracy, to think that process is more important than outcomes.
Jindal: I think you had a couple of unique dynamics going on in these last four years. For the first time you had such a significant portion of the Legislature that was newly elected to their jobs. In the House it was over 50 brand-new members who had not served there before, thanks in large part to term limits. And so I think you had a natural learning curve. We had a new administration, new Legislature; and I think we worked very well together, but I think we learned how to work together throughout those four years and it was a successful four years. You now have folks … in committee assignments, … in leadership, who’ve now been here at least one term.
Jindal: We got involved last time in leadership, the selection of the [House] speaker and the president of the Senate. We’ve gotten even more involved this time. And we were very up-front about it. Last time we polled the [legislative] members and saw where the consensus was, in terms of leadership positions. This time we were much more involved in both endorsing a candidate for speaker and a candidate for the president of the Senate, and we were much more involved working with them as they assembled their leadership teams.
But look, at the end of the day it’s still a partnership. And at the end of the day we’re going to still work with them. We’re not always going to agree with each other 100% of the time, and that’s OK. We are also being very, very aggressive in our first regular session and we’re tackling many things: obviously, education reform and pension reform.
BRBR: Let’s dig into those. I’d like to start with the state pensions, looking first at the issue of the 3% increase for the employees’ [payroll retirement contribution], but very importantly the 3% decrease for the state’s contribution to that. Can you, in a nutshell, explain how that part of the program is going to work?
Jindal: Let’s talk about the employee contribution rates. To really understand this, I think you have to understand there are three parts of the pension reforms. One is making sure we keep our commitment to our current workers. The second is about new workers, and the third is about the overall administration of the program.
And before we discuss any change, we have to understand that the status quo is not sustainable: $18.5 billion [Unfunded Accrued Liability]. We’re spending already over $2 billion dollars a year [for retirement programs]. If we do nothing, the UAL will go up by $3 billion.
Let’s look at the alternative. If we do nothing, there really are just three alternatives. One is that we break our promise to employees, which we’re not willing to do. Second is that we devastate critical services like education and health care. We’re not willing to do that. Third is that we simply raise taxes on our people. We’re not willing to do that as well. Some would say, “Well, why tackle these hard reforms? Constitutionally, you don’t have to pay off the UAL until 2029.” I think that’s irresponsible.
Jindal: But the way they structure it, the most pain is going to be felt long after I’m no longer governor. The reality is, the real pain from the UAL payments is structured such that the pain gets much worse in the out years. …
There are going to be gimmicks proposed about … ways you can delay some of these payments. There are ways you can … play with what’s counted, in terms of having to pay off that UAL. So there are accounting gimmicks. If we were simply just interested in four years of state general fund savings, there are a lot of gimmicks we could be embracing that would get us similar savings. But all that would do is backload this debt and make it even worse for future taxpayers.
BRBR: There’s a piece of this program that I’m trying to understand a little bit better. State employees in the LASERS program will see their contribution to the pension raised up from 8% to 11% of their payroll. And maybe an argument can be made that that’s fair, given the burden of the retirement program and also what the standard may be in other states. The part of it that I’m trying to understand is, why would the state agencies be reducing their contribution by 3%? Why would you be asking the employees to go up the extra 3% and not leave the agency or the state contribution as the same? It seems like we’re backing off.
Jindal: There are a couple of things. One, when you look historically at the 1980s, taxpayers were paying for 60% of the retirement program’s cost. Workers were paying 40%. That was considered a fair balance. Today taxpayers are paying 75% and the employees are only paying 25% of the retirement costs. Even with all the reforms that we’ve proposed, we’re not going back to 60/40, even with the savings for taxpayers. You’re still looking at a … two-thirds, one-third split. So taxpayers are still paying for two-thirds of the retirement program. I think a better question, another way to ask that question, would be, “Why didn’t you go back to 60/40, why not cut the taxpayers contributions to 60%?” …
I think that if you go and ask the average taxpayer, “Hey, look, you guys used to pay 60% of the retirement cost; today you’re paying 75%. Don’t you think you should get a little bit more of your money back?” I think, absolutely. I think their money should go back to them. Whether it’s in tax cuts, whether it’s investments in education, whether it’s investments in health care. Because what has happened over the last several years is, those investments have been crowded out as the [state retirement contribution] share has gone up. What has happened is, instead of being able to pay for classrooms and instead of being able to pay for health care, instead of being able to pay for tax cuts, taxpayers have been forced to pay for retirement costs.
BRBR: When government officials go about privatizing a government agency, there’s always a lot of concern about government employees not earning the same rate of pay as those in the private sector. But when you talk about retirement programs, there’s always this conversation about how the wages are not as good in the public sector, so therefore we need a strong retirement program in order to attract people into the public sector. Do you have a view on that one?
Jindal: I think there’s a lot of politically convenient rhetoric that ignores the facts. The reality is that we owe the state employees a fair and just retirement system, and what we’ve got today we simply cannot afford to keep doing forever.
There are practices that the government does that nobody does in the private sector. Eighty percent of private sector employers … are already in some kind of defined contribution system. We’re one of the last large employers to make that switch. Now, what we’re saying is, go to a cash-hybrid system for new employees, where they get the investment gains but they don’t incur the investment losses.
You look at the retirement age. We’re simply saying, go to the normal Social Security retirement age with an option for people to retire at a younger age with an actuarially reduced benefit package.
I think the reality is that the state government is late catching up with what other employers are already doing. And not just other private sector employers, [but also with] what other states are already doing. You look at what other states have already done in terms of retirement contributions, in terms of retirement ages, in terms of defined contribution and cash-hybrid plans. Louisiana is actually now catching up with what a number of states have already done.
BRBR: This particular plan that you’ve proposed for new state employees, I guess we’re calling it a cash-balance plan, or maybe calling it a hybrid. The media sometimes refers to it as a 401(k). I think LASERS has referred to it as a defined-benefit program. It seems to me neither one of those descriptions is really accurate. How exactly would this program work?
Jindal: It’s more of a blend, and it’s really designed to have the best features of both. And the way that it works is, there’s a 12% payroll contribution made on behalf of each state employee. It is then invested … by the [retirement] system on behalf of that employee. In years when there are [investment] losses, employees wouldn’t lose … any money. [The state] would absorb that. In years when there are gains, employees would get those gains minus 1%. That 1% would be kept to try to offset the years with the losses.
Jindal: That’s right. And the bottom line is that according to actuarial modeling, if you assume very bad economic outlooks, the returns would be at least as good as what they would get with Social Security. But if you assume average or better economic outlooks, it would be better.
Jindal: You’ll never lose, and you’ll never go below the 12% payroll contribution at the very minimum.
Jindal: Absolutely. Look, the state risk isn’t going away, because we want to make sure that our employees do have retirement. And when they retire, they can choose whether they want to take that as a lump sum or whether they want to get it in annual payments. They can choose how they want to get their dollars.
BRBR: So it has the features of being gauged to what the real investment market is, as opposed to what some aspiration of the market might be. And it also helps with the Social Security side, since state government employees do not get Social Security. It at least gives them a base that they can work off of.
Jindal: That’s exactly right. And it does a couple of other things. One, it also is more affordable. And so, unlike today’s retirement plan, it is designed for those employees who may want to come work for state government mid-career, who may want to work for their state government and then leave, rather than coming and working for state government for 30 years. I mean, no longer the traditional model that had been designed where the employee comes out of school, works for state government their entire career and retires. That’s less and less the norm in state government.
Jindal: But, you know, if you saw the same courage in Washington, D.C., to tackle the Social Security program, the proper challenge is we don’t know what Social Security’s going to look like. And we don’t know what changes are going to be made.
We considered all those options, and we felt like we could give the state employees an actual benefit that’s more likely … to be better than what they would get with Social Security. And so, given all the uncertainty in Washington, we thought, we looked at the different options and … even in the worst-case economic assumptions, this should be at least as good as Social Security. But it’s probably going to be better than Social Security for our employees.
Now, you’re exactly right that it doesn’t eliminate the risk. It’s not one of these programs where the worker assumes all the risk. We are sharing the risk, again between taxpayers and employees. And I think, fundamentally, when you think about any kind of retirement reforms, you really have to think, how do we protect our employees, how do we make sure they’ve got a benefit that will help them in their retirement years, how do we also protect our taxpayers, and how do we balance that sharing of risk between those two groups? We think this is a fair balance.
One of the things we tell legislators is, this isn’t one of those things you’re going to see in an immediate short-term benefit. This is more about what is good for our state’s long-term future. And if our predecessors had made some of these tough decisions, we wouldn’t be facing this big UAL debt that we’re facing today.
BRBR: If you changed the terms of employee retirement plans, there’s some discussion about whether these changes would be constitutional because you’d be changing the rules from what the state originally agreed. Do you think you’re going to run into a problem on that front?
Jindal: No, I think it’s a red herring argument.
Jindal: I think this is an argument for people who don’t want to make changes. The reality is, we do believe people who are receiving retirement, who have already retired, we do agree that they have protections; we’re not proposing changes for people who are already retired. … We think folks who argue on the legal merits, that is a red herring for people who want to defend the status quo. If you really listen to that argument, all they’re basically saying is, the only answer is for taxpayers to give us a whole lot more money without any reforms.
BRBR: I want to get to school reform. You’ve got a pretty broad package. There’s a lot of enthusiasm about it. But if there’s one question about it, it isn’t so much what you’re doing, but rather how the heck are you going to pull it off? I think there’s a concern that we are going to create a bureaucracy. Is it going to cost a lot of money? Are we dumping a lot of paperwork on everybody? Let’s talk about the accountability section, for example. We’ve seen in some states where value-added accountability standards were put in and there was a ton of paperwork, and the school principals were just buried in it. How do you achieve this goal but not create huge bureaucratic burdens?
Jindal: And that’s a great question. But if anything, we’re going in the opposite direction. If you actually look at our budget, the Department of Education is decreasing their [employee positions] by 10%. You look at the paperwork requirements today: Our schools are required to fill out 90 different forms … because a lot of those are federally required. And you do the math—180 school days, 90 forms—that’s a form every other day. We’re actually eliminating much of that paperwork.
You asked me about my management style. You go back to what I said before about how you manage and you measure results. That’s what value-added assessment does. For too many years we have tried to measure inputs and we’ve tried to measure process, and we did everything but actually look at how well the students are learning. This simplifies all of that and says, well, it’s real easy. You measure where a student is at the beginning of the school year, you measure where they are at the end of the school year, you look at the difference and that’s how you decide if a teacher has been effective.
Jindal: No, we’ve actually been working [on a federal waiver]. … We’ve been working with U.S. Education Secretary Arne Duncan. We’ve been working with the administration in D.C. We’re very optimistic. Obviously the state Department of Education is submitting a very aggressive waiver. We’re very optimistic we’ll be able to streamline a lot of the paperwork and a lot of redundant reporting requirements because we’re showing that we’re actually implementing higher standards—when you look at the end-of-course standards, when you look at the common core curriculum that we’re implementing in Louisiana.
So, for example, we’re simplifying testing in high school. We’re moving to … ACT-based testing. With the common core standards of the ACT testing, we’ll now be able to compare how our students are doing compared to students all over the country.
So we’re talking about simplifying the bureaucracy. Make it … easier for parents to understand. An example of that are the letter grades.
Jindal: That’s right, the letter grades for the schools.
Jindal: Yeah, the 200-point system, with five stars and minimum growth requirements and labels. It was so confusing. We took that same data, made it into grade levels. Now every parent in Louisiana can easily understand.
Jindal: I’d say two things to them. One, their world’s going to get a lot better in terms of having a lot more flexibility and control over personnel. They’re going to be able to reward their best teachers, for example. They’re going to have more input—both the superintendents and other school leaders—in terms of staffing decisions that right now sometimes are micromanaged by their school boards. They’re going to have the tools they need to reward great teaching. Those are all positive. And in return, they give up a lot of bureaucracy and red tape and unnecessary paperwork.
There’s a second part to this as well. There’s going to be accountability. And now we are going to be measuring … who’s doing a good job and who’s not doing a good job. And if they’re doing a good job, they’ll be rewarded for that because they’ll be measured based on student achievement. …
We’ve created all this bureaucracy and red tape over the years because we were trying to find proxies for student achievement. So we look at input, so we look at how many pieces of paper a teacher can get, different kinds of certifications. We look at different master’s degrees, and we look at all kinds of different inputs. If what we’re really interested in is student achievement, why not just measure student achievement? And so to me, trying to measure teacher quality or trying to measure a school’s quality without respect to student achievement is like trying to measure a football game without looking at the final score. It is a ridiculous way to look at education.
So to those principals I’d say, the great news is, you’re going to have a lot more flexibility, you’re going to have the ability to direct your resources, you’re going to have a lot more control over hiring and firing and staffing decisions, and you’re not going to be filling out a lot of unnecessary paperwork.
BRBR: Let’s talk about the choice aspect of it. If you believe in the value of choice, how do you make it work? How do you manage a statewide voucher program without creating a bureaucracy and without creating a very difficult method for implementing it?
Jindal: Well, two things. One, let’s not forget parents have choices today. As a parent you had a choice, you had a decision to make. Am I going to enroll my children in parochial schools, in private schools, in public schools, in a magnet school? I don’t know your income, but … you probably do have the means … to send your children to a wide array of schools. If you wanted to take your kids out of public schools, you probably have that choice. What we’re talking about is simply giving more choices to parents who may not have those choices today—parents whose only local public schools are getting less than stellar grades. Their children are trapped in schools that are not performing up to their potential. We’re talking about parents who probably couldn’t otherwise afford to send their kids to a lot of those private schools.
Jindal: Two things. First, I want to go back to the last question. I’ll come back to the choices they should face. One, I think that’s an important point because critics I think don’t give parents enough credit. I think we have to understand that parents are capable of making these choices. And so a lot of critics will say, “Oh, this is too complicated.” That’s offensive to these parents. Their children only grow up once. They will go through and they will do what it takes to make sure their child gets a great education. We saw that with the scholarship program in New Orleans.
Jindal: Very simply, the dollars should follow the child instead of the child following the dollars. … Ultimately if that child wants to take an online course, … if they’re eligible for the scholarship program and they want to go to a private school, if they want to go to another public school, if they want to take a dual-enrollment course, those dollars should follow the student.
Now in terms of … a particular school, should they have a choice [to get] into that school? Obviously, you’re going to have capacity issues and it’s going to be up to those schools, as it is under the current scholarship program [in New Orleans], to decide how many slots they have, how many students they want.
Jindal: That’s for public schools, too.
Jindal: Look, every parish does it differently. In Rapides Parish … they have a Montessori school that does extremely well. They have open enrollment in their parish. Any parent can send their child from anywhere they live in that parish to that Montessori school. You don’t have to live in that local area.
Jindal: Well, look, that’s going to be up to the local districts. Just as we don’t force the private schools to take kids outside their communities, their neighborhoods, their service areas, it will be up to the public schools as well to decide whether they want to take students, just as it is under the scholarship program today. If a public school wants to take additional students, they can do that.
And again, I think what you’ll see is that ability now, for the first time, for many parents to have a choice will do a couple of things. For the parents who don’t have choices today, it’s incredibly liberating for their kids to be able—they only grow up once—to be able to escape a failing school and get a great education. But I think that competition will also force improvements on those traditional public schools.
Jindal: Look, for any public school, I think it will be up to their principal, their superintendent, to decide whether they want to add capacity and decide how many students they can educate. I think you will see more pressure on your better schools to add capacity. I think you’ll see more pressure on your poorly performing schools to improve their performance. I think that’s a good thing. I think the reality is, if that pressure doesn’t exist today, the adults in the education system can ignore the demands of those parents, knowing they have nowhere else to go.
So I think a couple of things happen. Some parents will go out and choose to send their kids to private schools, but the goal is that those traditional public schools will also improve.
Jindal: Two points on education, on K-12 education reforms. One, you’ve got to view it comprehensively, because I think critics and proponents make the mistake of looking at the choice component in isolation. … This is not simply adding choice to the status quo. This is about changing the whole system, so that … after these laws have passed, you have schools that have the resources or the ability to put great teachers in every classroom; and you also have the ability for schools now to offer online courses, dual-enrollment courses, and kids to go and those dollars to follow.
But I also want to take a step back. … When you look at what we did this first term, we’ve outperformed national and southern economies every month. Now for four years, our unemployment rates have been below the national and southern averages every single month. You look at all the tens of thousands of new jobs, the billions of dollars of private capital investment. … And you look at all these lists. We’re now ranked higher than we’ve ever ranked before in terms of business friendliness, business climate and economic development. We are one of only two states in the South that has now got more jobs than we did before the recession started. If we want to continue to outperform the rest of the South and the country, we have to improve our educational system. Seventy percent of the companies that are going to move here or expand here tell us one of their top two concerns is finding a skilled worker.
You know, when we did ethics reforms and we did tax cuts, those had an immediate impact on our economy. Doing retirement reforms, doing K-12 reforms, is going to have a longer lasting impact on this state. If we want to consistently outperform the regional and national economies, if we want to consistently bring our people back home, we have to address issues like retirement and educational policies.
And the reason I want to close there is that this really is about the future of our state. This isn’t about a short-term gain. This isn’t about an incremental. This is not about short-term budget savings, and this is not about short-term economic developments. This really is about what kind of quality of life we want to leave behind for our children and grandchildren.
Any issue you care about—whether it’s lowering incarceration rates, improving health care outcomes, growing the economy, improving per capita income—it goes back to education. You could double the health care budget and you wouldn’t be able to improve health care nearly as effectively as if you improved education and improved our ability for our people to get better jobs with better benefits, take better care for themselves and have better preventative health care coverage. That’s why this is all so important to get done.