Higher angst
Faculty Senate President Kevin Cope wonders how a major reorganization of LSU’s institutional structure affecting its schools and colleges is supposed to impress the Legislature if the immediate impact is revenue-neutral.
LSU Chancellor Michael Martin recently told a packed house at a tense faculty forum that changes might help stave off the steepest budget cuts by proving LSU is capable of getting its own house in order and becoming more efficient.
The reorganization, which would create colleges out of schools such as journalism and veterinary medicine, changes the names of some colleges and demotes some deans. But it won’t result in any savings right away.
Cope believes the plan, scheduled for implementation on July 1, was put together in too hurried a fashion and without meaningful input from faculty members and deans. And he believes the Legislature won’t be impressed, either.
“I don’t think the Legislature wants to see that we had our backs to the wall and we threw the dice,” he says. “I think they want to see that we had our backs to the wall and we took a reasonable course of action.”
Astrid Merget, LSU’s executive vice chancellor and provost, disputes the plan was rushed since it’s largely based on one first proposed 15 years ago but never implemented. It’s also in keeping with what peer institutions are doing, she says, calling it more of a realignment necessary to move forward LSU’s flagship agenda.
“We found a pattern that had grown up over time that wasn’t necessarily in harmony with what our aspirations are academically, or how many of our competitors are established,” she says. “We’re not emulating our competitors, but we are taking clues from them.”
As for cost savings, those will come later from greater administrative efficiency. Not every academic unit will have a development office, advisers and infrastructure.
“That’s where we’ll save money,” Merget says.
Contrary to official suggestions that LSU’s University Planning Council assisted in developing the plan, Cope says it really was more of a presentation and not a dialogue. Faculty participation likewise was scant, he says, a situation he thinks has created a fair amount of ill will.
Cope suggests backing up a step or two and soliciting faculty input to help reverse that. “They’ve made it very difficult for themselves to back away without losing face, but I think that is what they need to do,” he says.
Merget says the vast majority of LSU faculty will be unaffected by the changes, though her office plans to form a task force to hear faculty input on what she says are mostly concerns over implementation—such as how realigned units will be governed. She notes the forum had an audience of about 250, while LSU has a faculty of around 1,500.
“To accept the status quo or the past simply because it’s comfortable isn’t acceptable,” she says.
The July 1 implementation has to be adhered to because that’s the start of the fiscal year, Merget adds. Still, Cope thinks it’s too fast for such a profound reorganization—one that contains its own contradictions, such as transferring economics out of the college of business.
“We’ve got just as many splits and inconsistencies coming out of this arrangement as we did before,” he says.—Steve Clark
Bobby’s spending spree
In the past few months, it seems as if the state surplus has been burning a hole in Gov. Bobby Jindal’s pocket. The $865 million surplus can be spent on any number of one-time state expenses—frustrating news to just about every government employee, university administrator and arts organization hoping for some of the money to fill in their looming budget cuts.
Part of the reason Jindal could be spending so rapidly is that he’s under an enormous amount of pressure to utilize the cash on hand to soften the blow of the impending $2 billion budget shortfall as well as to make sure he’s spending it wisely.
The plan for doling out millions looks a great deal like a certain federal stimulus package he recently opposed—utilizing cash for projects that are short-term and shovel-ready. The bricks-and-mortar projects include bridges, highways, college campuses and coastal restoration.
But Jindal soon will find himself out of cash to throw around—making the state financial situation look a lot more grave. If he follows through on all of his current public promises, he’ll be down to a meager $153.9 million in disposable surplus. And the only remaining cash will be the couple million left in the megafund that hasn’t already been promised to a chicken plant.—Olivia Watkins
Reclaiming the cash
In order to recoup investors’ cash, Stanford Financial Group receiver Ralph Janvey filed a $40 million lawsuit in mid-April against 66 Stanford advisers—including Ron Clayton, James Fontenot, Gary Haindel, Charles Jantzi, Grady Layfield, Hank Mills, Tim Parsons, John Schwab and Michael Word of the Baton Rouge office—accused of selling fraudulent CDs in the SEC-alleged Ponzi scheme.
Janvey is claiming the total amount of commission, any front-end loans or other types of related compensation made from each financial adviser as a result of the sale of the CDs, including $5.8 million from the Baton Rouge advisers. The largest local commissions being reclaimed are from Mills and Word, who profited more than $1 million each. On average, commissions over a two-year period ranged from $2.6 million to a little more than $200,000 per adviser.
The suit, filed in U.S. District Court in Dallas, comes days after the receiver filed a separate motion with the court to release 174 accounts from the Louisiana-based Stanford Trust Company. The remaining 82% of STC accounts not released were, according to Janvey, almost exclusively comprised of CDs.—O.W.
A way out
Mall of Louisiana’s parent company, General Growth Properties, filed for Chapter 11 bankruptcy protection April 16 in one of the biggest commercial real estate collapses in U.S. history.
The announcement ended months of speculation. The Chicago-based company has struggled over the past year to refinance its debt amid trouble in the financial markets. In its bankruptcy filing, GGP listed total assets of $29.56 billion and total debts of $27.29 billion, an amount that includes $5.4 billion it inherited in the 2004 acquisition of Rouse Co.
President/COO Thomas H. Nolan Jr. says the court-guided bankruptcy is the “best means of preserving the value of the company.” And while GGP tried several methods to stave off Chapter 11, such as selling key properties throughout the U.S. and requesting corporate-level bondholders to agree to enter a long-term forbearance agreement, nothing raised enough capital to level the balance sheet.
Nolan says there won’t be any changes in the services or amenities provided at GGP-owned properties. Malachy Kavanagh, a spokesman for the International Council of Shopping Centers, agrees. “Most consumers have no idea who owns the local malls,” he says, and they wouldn’t notice a change if it occurs.
The ultimate question is whether or not GGP elects to sell the Mall of Louisiana or any of its other properties. The company owns more than 200 malls across the country—including Faneuil Hall Marketplace in Boston, Water Tower Place in Chicago, Ala Moana Center in Honolulu and Grand Canal Shoppes at the Venetian in Las Vegas—and eight in Louisiana.
“It’s not our ambition to be smaller,” Nolan says.—O.W.
Executive Spotlight: Ann Gregorie Scarle
Executive director, Baton Rouge Bar Association
Hometown: Baton Rouge
If every woman is destined to become her mother, Ann Gregorie Scarle’s three daughters don’t have anything to worry about. Florence, Laura and Anna Beth’s mother is not only successful in her work—like leading legal assistance programs immediately following Hurricane Katrina, for which the Baton Rouge Bar Association was awarded the prestigious Harrison Tweed Award in 2006—but she is content. Despite the ongoing struggle to find the perfect work-life balance, Scarle says, “I am totally satisfied with what I do.” Not a bad unavoidable destiny if ever there was one.
To find out more about Scarle, read the rest of her profile and Q&A here.
Book Review: Catastrophe: The Story of Bernard L. Madoff, The Man Who Swindled the World
Authors: Deborah and Gerald Strober
Publisher: Phoenix Books
Year: 2009
Do you remember Chutes and Ladders?
In the Milton Bradley children’s board game, if you land on a square with a ladder, you move up the board quickly. If you land on a square with a chute, you slide back down just as fast. First to the top wins.
Lately, the game has been eerily similar to the stock market. Up the ladder, down the chute and very few winners.
But while most investors still have a little left in their portfolio, some investors lost everything to the man who has been called the most hated man in New York—Bernard Madoff. In the new book Catastrophe, you’ll read about Madoff, his scams and his victims.
Authors Deborah and Gerald Strober doggedly interviewed dozens of people who were victims of or knew Madoff, people who were affected by his actions and a few who were able to see past his “charm.” And although it dips into the melodramatic and sometimes reads like a supermarket tabloid, compiling all this information in one place makes the book an as-exact-as-possible explanation of what transpired.
Surprisingly, religion comes into play a lot in Catastrophe, and not just because Madoff and many of his victims are Jewish. The authors use religion to explore the concept and possibility of forgiveness. Still, the constant theme falls in stark contrast to quotes from irate victims and damning blog posts.
In the afterward, they discuss how it happened and offer scenarios for what comes next in this drama and in the way we conduct financial business.
If you love to play the stock market, gambol in gambling or otherwise sport with your savings, pick up Catastrophe. This cautionary tale proves that the game of finance is no game at all.—Terri Schlichenmeyer
Fast Forward: Making bank
Tenure with a single company is a rare thing these days, but Mark Bensabat has it with Chase Bank. Bensabat has been the head of the bank’s Baton Rouge operations for 15 years, overseeing 30 locations. But he’s leaving to become the CEO of Chase’s Middle Market Banking in Florida. “The hardest part is leaving here,” Bensabat says. “But this is something I felt like I had to do.”
The difficult part will be filling Bensabat’s shoes. When the Business Report covered Chase Bank in a Jan. 2, 2007 article entitled “Leading the Chase,” Bensabat was guiding the region through a jump in deposits to $1.2 billion, which did not include the $16.2 million held under Bank One Trust Co.
It might be Bensabat’s experience with rapid growth and the acquisition of Bank One that makes him ideal for the Florida job. The acquisition of Washington Mutual requires that Bensabat again guide the bank through another growth-driven change. And that will mean Bensabat will be back at work growing market share in a new area with a new set of parameters. “We want to leverage all those locations and become a force in the marketplace,” he says.
Bensabat’s replacement is Kevin Kelty, who previously served as the head of Chase’s Technology Corporate Banking Group in Dallas. Kelty has already begun working with Bensabat in the Baton Rouge office and seems eager to utilize his 25 years of experience. “I’m looking forward to putting deep roots down in a community and becoming active in Baton Rouge,” he says.—O.W.
The Good Life: Germo-phone?
Scientists have taken the three R’s of waste management—reduce, reuse and recycle—to a new level with a battery built by viruses. MIT researchers have captured the everyday bacteria floating around us, crawling on counters and creeping on door handles, and turned it into energy. Genetically engineering viruses to build a battery with the same energy power as high-tech rechargeable batteries designed for hybrid cars, they’ve made portable power lighter, smaller and a lot more flexible.
The batteries might even have a longer battery life than the iPod—up to three times as much. Plus, the battery’s texture can be designed to look and feel like Saran Wrap. This means even more convenience for gadget-lovers. For now, the amount of energy derived from the battery is enough to power personal electronics. But as their research continues, there’s no telling what it could light up.
There’s no fancy, out-of-this-world equipment used to create it, either. Just water and germs. And the process is harmless. No more worrying about piles of old batteries in your junk drawer that need to be recycled.
While there’s no price yet, researchers say it could potentially be less expensive than batteries that already exist in the market, depending on the scaling of energy conversion.—Summer Suleiman
Business of Politics
Cracking the whip, bureaucratically
Do you think the state’s various departments and agencies can perform better? Baton Rouge Rep. Erich E. Ponti (pictured), a freshman Republican, does. He’s introduced House Concurrent Resolution 3 to direct them to “maximize efficiency, minimize waste and save taxpayer dollars.” While most of the language instructs departments and agencies to be better prepared in providing information to lawmakers, there are a few more pointed provisions.
The resolution calls for the elimination of all obsolete programs and breaking the “cycle of awarding merit increases to employees who have not demonstrated truly outstanding and superior performance.” Ponti also wants the state to begin contracting services from Louisiana companies as much as possible and to turn to out-of state consultants and businesses only as a “last resort.”
While resolutions do not carry the weight of law, Ponti’s measure would require agencies and departments to report annually to the House and Senate governmental affairs committees so progress on the directives can be assessed. Ponti’s resolution has 31 co-authors.
Women on defense
As the state grapples with a $1.3 billion budget shortfall, agencies are bracing for reductions, even the Louisiana Center for Women and Government. Located at Nicholls State University in Thibodaux, the center promotes public service and women through educational workshops, training seminars and outreach. The center is known for its hall of fame ceremony, which most recently hosted James Carville and Mary Matilyn, and Statewide Leadership Institute for Women.
This year, Executive Director Laura M. Badeaux says the center is requesting a restoration of its $300,000 operating plan that lawmakers approved in 2008. The situation is so dire on the state level, however, that Badeaux says even the center’s relatively small budget could be susceptible to cuts. “What we’re assuming is everything in the state may be cut if it’s not academic,” she says. “So we’re fighting hard and proceeding with programs that are important to Louisiana.” Specifically, Badeaux noted the Louisiana Girls Leadership Academy, scheduled for June, and the September debut of the National Women’s Leadership Summit, which is being co-chaired by U.S Sen. Mary Landrieu (pictured), a New Orleans Democrat, and U.S. Sen. Olympia Snowe, a Republican from Maine.—Jeremy Alford
Fortnight April 22 – May 5
April 22 – The Fore!Kids Foundation’s first Zurich Classic Pro-Am tournament is scheduled for the University Club—the first time in more than 40 years PGA Tour pros will play in Baton Rouge. For more information, call [504] 342-3005.
April 23 – A. Hays Town, Hillar Moore Jr., Bobby Yarborough, Darian Chustz, Kleinpeter Farms Dairy and D. Honoré Construction will be honored at the Crowne Plaza Hotel during the 2009 Baton Rouge Business Awards & Hall of Fame Banquet hosted by the Business Report and Junior Achievement. For more information, call 928-7008.
April 24 – The Black Chamber of Commerce holds its Commerce Awards Banquet at the Crowne Plaza Hotel to honor an emerging Baton Rouge small business, a BRBCC member and a major corporation. Nerjyzed Entertainment CEO Jackie Beauchamp is the ceremony’s keynote speaker, which also celebrates BRBCC’s fifth year. For more information, call 381-8480.
April 28 – On this day in 1998? – The state Revenue Department settled major disputes with taxpayers, providing $61 million to assist with budget balancing. The settlement followed months of negotiations to resolve cases in which taxes were paid despite protesting taxpayers.
May 4 – On this day in 1989 – First National Bank of East Baton Rouge closed under federal regulators’ orders after losing nearly $3 million the year before. Twenty years later, community banks are staying afloat during the financial meltdown.
May 4 – On this day in 2000 – Former First Lady Alice Foster unveiled a $1 million renovation to the Governor’s Mansion, which included a painted mural depicting Louisiana’s heritage. Budget cuts proposed by the Jindal administration could impact the availability of historic sites throughout the state.
ONTHEBEAT
Critical backup: NTG, a local company that hosts computer servers, and AmeriVault, a Massachusetts online data backup firm, have merged operations to form a new company, Venyu. The company allows businesses to have end-to-end data protection and disaster data recovery. The Baton Rouge and Massachusetts offices, which both have 40 employees, will remain open and add five new workers each.
Trend-buster: According to a report from the Brookings Institute, the percentage of people working within three miles of downtown from 1998-2006 fell from 18.5% to 16%. At the same time, the number of people working farther than 10 miles from downtown went from 29% in 1998 to 29.6% in 2006.
Tough enough: A business magazine published by the Federal Reserve Bank of Atlanta says Baton Rouge is “standing firm” in the face of the national recession. “If much of the nation suffered economic body blows in 2008 and early 2009, it appears that Baton Rouge took only glancing shots,” says the article in EconSouth.
Diet-busters: A study from an LSU researcher suggests that liquid calorie intake has a bigger impact on weight than solid calorie intake. Dr. Liwei Chen, an epidemiologist with the LSU School of Public Health, says her research suggests policy recommendations and public health efforts to reduce consumption of soft drinks, fruit punch and other high-calorie beverages.
Thrice as nice: Responding to a demand for long-term care insurance, the Baton Rouge office of Bankers Life and Casualty Company will add more than 50 agents to the staff by the end of the year. “We’ve got 27 agents now, and a year ago, we had six,” says Raymond LeCompte, branch manager since August 2007.
Fully staffed: The number of online employment ads in Louisiana dropped by 18.5% from March 2008 to March 2009. According to the Conference Board, there were 49,700 want ads online in the state last year, compared with 40,500 this year. Despite the drop, Louisiana held up better than the national average, where the number of want ads fell by 31%.
Late bloomer: The Louisiana economy shrank slightly in February compared to the month before, becoming the last state to show signs of contraction. According to the report by the Federal Reserve Bank of Philadelphia, the index of Louisiana economic activity was down 0.4% from the previous month, the same rate of shrinkage seen by the U.S. economy. The Philadelphia Fed bases the index on payrolls, unemployment, manufacturing hours and wage and salary disbursements.
Tiger in the tank: A new report says LSU pumps $1.2 billion into the Baton Rouge economy and accounts for 3% of the Capital Region’s gross domestic product. The study found that the university directly or indirectly generated $680 million in salaries and wages, accounting for 4% of the salary totals in the metro area, and generated more than 21,000 jobs. LSU professors and researchers also brought in nearly $100 million in federal research grants to the metro area.
Jump-start, please
After 28 years in auto advertising, Jim Moran says this is the worst downturn he’s seen, but he’s looking to economic forecasts pointing to a third-quarter bounce.
To deal with the slower market, Moran—president of the Moran Group—cut seven employees and started diversifying clientele last year. In the past three months, he opened an interactive digital division and hired two people to meet the growing demand for Internet marketing. “Like any other business, we’re trying to make smart decisions and look at other revenue,” he says.
Auto advertising dollars generally parallel vehicle sales. “Most agree the monthly auto numbers have bottomed out and recent numbers indicate it could be happening,” Moran says.
For nearly eight months, East Baton Rouge Parish auto sales have been down 20% to 50%.—Anna Thibodeaux
High-tech savvy
Louisiana now ranks among the 10 fastest-growing states for high-tech employment, according to a new study. Tech America’s 12th annual Cyberstates report shows Louisiana gained 4,349 high-tech jobs from 2002-07, up 11.3%. The state ranks 10th in the nation for numeric gains and seventh for percent change. That’s at a time when the country as a whole lost 71,863 high-tech jobs, down 1.2%. Most of the growth was in engineering and research and development laboratories.
Even so, Louisiana still ranks 47th when it comes to per-capita, high-tech workers. As of 2007, the most recent year for which data is available, Louisiana had 42,873 high-tech workers. Also, from 2006-07, Louisiana was just one of six states to lose high-tech establishments, a loss of 0.5%. In 2007, the state had 3,492 high-tech establishments. By comparison, the country as a whole gained 10,136 high-tech businesses, up 2.9%.
One problem might be wages. High-tech workers here are paid an average of $58,409 a year, but can earn higher salaries in 40 other states. Overall, Louisiana’s annual high-tech payroll was $2.5 billion in 2007, compared to Florida—the highest-ranking Gulf Coast state—which boasted nearly $19 billion.—Penny Brown Font
Right on target
The economy hasn’t stifled development in Satsuma. Officials broke ground in mid-April on North Oaks Livingston Parish Medical Complex, a $32 million, two-story, 47,000-square-foot outpatient medical facility. But look for construction to begin on much more than that.
Suma Crossing, a 1,037-acre New Orleans-style traditional neighborhood development being built by Baton Rouge developer Garry Lewis, also remains on target. Sherman Messer of Messer Real Estate says construction is scheduled to begin in the next 30 days on 80 condominiums, once permits are issued. A shopping center is finished and has two tenants—a bridal shop and an insurance firm. An ExxonMobil convenience store will go up shortly, and there’s a pending contract for a Holiday Inn Express. The 800-seat Suma Hill Conference Center begins offering Branson, Mo.-style shows in May. And the Livingston Parish School Board is considering construction of elementary and middle schools on donated land.
In all, Suma Crossing will consist of 610,000 square feet of retail and 1.1 million square feet of medical and office space, with 11 restaurants and two hotels. A total of 380 multi-family units and 605 single-family homes are planned in the second phase of the project. Says Messer: “It’s coming along satisfactorily.”—PFB
Price slashing
After several failed attempts to redevelop Westmoreland Shopping Center, the price of the Mid City site has been reduced to $5.5 million.
Marion Cangelosi, who owns the center at the corner of Government Street and Acadian Thruway, had been asking for $6 million. There had been talk the high price was deterring development. The latest deal to rejuvenate Westmoreland fell through in October, when a Cleveland developer dropped plans to build a grocery store and retail center on the site.—Timothy Boone
Smart money
At 158 permits, the Baton Rouge metro area had more residential development in February than it did at the same time last year in a healthier economy. In February 2008, there were 130 single-family permits. The strongest numbers were reported in East Baton Rouge Parish, with 86 residential permits, and Livingston Parish, with 30. Last month’s permits were also up from 130 permits in January.
Joe Didier, chairman of the board of the Capital Region Builders Association, attributes much of the growth to historic low interest rates, as well as lower materials and labor costs. Based on what he’s observed from other builders, Didier says some of permit growth is in spec houses. Didier, owner of Didier Home Builders, expects the growth to continue, especially in high-growth Livingston Parish, where he’s building a spec house. “I think people who are ready for the market will do well,” he says. “I’m betting on it. Smart money moves now.”—A.T.
