It came to light last week that a "working group" consisting of some on the governor's staff, some legislators and the Oklahoma Council of Public Affairs has been working on an effort to design managed care legislation to be passed this year.  The group has been working for about 1 ½ years, and no one representing service providers like physicians, hospitals or provider agencies has been involved in the discussions.  Those efforts have resulted in HB 2788 (McCullough) and SB 1495 (David.) 

                  HB 2788 would require Medicaid services to be provided by managed care plans capable of coordinating all covered services.  It states that OHCA will competitively bid out managed care plans to participate in the Medicaid program.  SB 1495 directs the Oklahoma Healthcare Authority to develop and implement a managed care system to provide Medicaid services to all eligible populations.

                  Interestingly, OHCA's Medicaid program, called SoonerCare, is already "managed care."  It does not provide direct services, but functions like an insurance company.  It sets a rate it will pay for services, within funding provided by legislature, and contracts with providers to provide those services.  There is a good relationship between OHCA and providers.  SoonerCare, with involvement of providers, has developed quality, cost-effective programs in recent years to improve the care for patients/clients and reward providers for better, more cost-effective service.  Not unimportant, SoonerCare pays on time, typically within two weeks of receiving a "clean" claim. 

                  One has to wonder what the problem is we are trying to solve.  The stated problem is that Medicaid continues to gain a larger percentage of the state budget each.  But the next question should be, why?  The answer to that is not inefficiency by OHCA.  As administered by OHCA, SoonerCare's administrative costs are 5.5 percent of total expenditures.  Private managed care Medicaid programs have higher administrative costs, often between 11 and 12 percent.   State expenditures for Medicaid are growing because of growth in the number of Medicaid eligible recipients and reduction of federal matching funds. 

Effort to change pension system under fire

By M. Scott Carter, The Journal Record

OKLAHOMA CITY - The drive to change Oklahoma's public employee pension system isn't due to danger of collapse, but exists more because of the efforts of a foundation created by a former Enron trader and a conservative state think tank, critics of the plan charged Thursday.

Though negotiations continue on changing the state's pension system from a defined benefit plan to defined contribution plan, efforts to pass House Bill 2630 have stalled after union representatives, firefighters, the Oklahoma Public Employees Association and the state's District Attorneys Council announced their opposition to the plan.

Part of that opposition, Oklahoma State AFL-CIO President Jimmy Curry said, is due to who is behind the bill. Groups such the Laura and John Arnold Foundation and the Oklahoma Council of Public Affairs are trying to force states to use 401(k)-style plans.

"(The) Arnold Foundation is doing similar things in 20 different states," Curry said. "Arnold made his money in Enron, then got out before it went belly-up. What we've seen them do in other states is combine all the pension boards. Now why would a hedge fund operator be interested in public pension? I was always taught to follow the money."

During legislative committee meetings on the measure, representatives from the Oklahoma Council of Public Affairs pushed for changes to the state's public retirement system. At those meetings, the organization distributed a document to lawmakers urging them to change to a defined-contribution system.

However, documents obtained by The Journal Record show that part of the OCPA's effort on pensions was funded by the Laura and John Arnold Foundation, a controversial organization created by John Arnold, a former hedge fund trader for Enron Corp. Those documents show the organization gave the OCPA a $50,000 grant in 2013 to analyze public pension plans.

A report from the Center for Investigative Reporting showed the Arnold Foundation gave a $150,000 grant to the right-leaning California Foundation for Fiscal Responsibility for a series of reports seeking to limit public employee pensions.

The Arnold Foundation's work in Oklahoma concerns some lawmakers. House Democratic Leader Scott Inman, D-Del City, said the foundation was funding pension reform in the Sooner State.

"The push behind pension reform in Oklahoma is being bankrolled and supported by an ex-Enron executive, John Arnold," he said. "What you have here is a guy who helped facilitate the robbing of retirements for millions of people in the United States when he helped to tank Enron. He leaves before the thing goes belly-up and now he comes into Oklahoma."

He said the foundation was throwing hundreds of thousands of dollars around trying to convince legislatures across the country to change their pension plans.

"They want to take what is a defined, guaranteed benefit from its employees - who aren't paid very well to begin with - and jeopardize that by putting it the hands of former Enron executives like John Arnold," Inman said.

Jon Small, the OCPA's vice president of policy, said he wasn't sure about the Arnold Foundation's contribution to the organization.

However, the OCPA, Small said, has been talking about the need for the state to move to a defined benefit plan for years.

"It's not a new subject for the OCPA," he said.

Small said the think tank was concerned by the growth in unfunded liability of the state's pension system and its increasing legacy costs.

"When we look at the issue, it's not about looking at the OCPA or the Arnold Foundation," he said. "It's more about the problems with the present system."

Moving to a defined contribution plan, he said, would allow the state to pay more competitive wages. Small pointed to the Oklahoma Department of Wildlife Conservation as the example of an agency that moved to a define contribution system. He said that agency moved to a 401(k)-style plan in 2010 and the results were successful.

State Rep. Randy McDaniel, R-Oklahoma City, authored HB 2630. While McDaniel acknowledged the OCPA's work and the Arnold Foundation's support, he said the bill wasn't being written by outside forces. It is an Oklahoma solution to an Oklahoma problem, he said.

"There's not outside forces that are pushing a different solution than what we want to try and achieve," he said. "We want support where we can get it, and people who support sustainability we want to have advocate for pension reform."

Neither the OCPA nor the Arnold Foundation, McDaniel said, had anything to do with the content of the bill.

"They had nothing to do with the language," he said. "They have actually pushed different types of solutions in different states. I think this is the right solution for Oklahoma."

House Bill 2360, McDaniel said, was nothing that the Arnold Foundation had ever supported in the past.

"In general terms they support sustainable programs, and they do support this," he said. "They've looked at programs such as cash balance systems and this is a true defined contribution plan."

Should his bill pass, McDaniel said, the change would make a state employee's retirement plan mobile.

"The employees could take sovereignty over their retirement plan," he said. "As they build net worth they can better plan for not only themselves, but their entire family."

Like Small, McDaniel said new government accounting rules would require public pension plans such as Oklahoma's to present more accurate financials.

"They can't be rosy pictures," Small said. "They won't be able to discount all their assets and liabilities at their highest assumed rate of return."

McDaniel said the state spent $823 million in debt service for its unfunded pension liability and an almost equal amount for benefits that are accruing.

"You could say if we didn't have an unfunded liability we would have $823 million more for every other goal of the state," he said.

Still, even if the state moved to a new retirement system, McDaniel said it would have to be operated alongside the old one until all those employees under the old system were dead.

"We already have both systems in place right now," he said. "We would just be utilizing a much more generous defined contribution plan than currently exists. ... We have both plans now and will continue to have both plans for many years to come."

New House speaker shakes up leadership

OKLAHOMA CITY (AP) - The newly elected speaker of the Oklahoma House of Representatives has announced several changes to the chairs and vice chairs of various House committees.

Republican Speaker Jeff Hickman announced the leadership changes on Tuesday.

Among the major changes were state Rep. Aaron Stiles , R- Norman, replacing state Rep. Leslie Osborn, R-Tuttle, as chair of the Judiciary Committee. Osborn will now chair a budget subcommittee instead.

State Rep. Mike Reynolds, R-Oklahoma City, replaces state Rep. Jason Murphey, R-Guthrie, as chair of the Government Modernization and Accountability Committee. Hickman also named state Rep. Earl Sears, R-Bartlesville, to replace state Rep. Tom Newell, R-Seminole, as vice chair of the powerful House Appropriations and Budget Committee.

Most of the chairs and vice chairs appointed by former House Speaker T.W. Shannon, R-Lawton, remained unchanged.

Last week ended committee work for bills originating in the House.

Shannon's judicial change efforts losing steam: Proposals find little backing from House leaders

By M. Scott Carter, The Journal Record

OKLAHOMA CITY - An effort by former House Speaker T.W. Shannon to make major changes to the state's judicial system may be losing steam.

With the Legislature's first serious deadline past, several House bills on the subject appear to be dead for the session.

Last fall Shannon, R-Lawton, said he wanted to make the Oklahoma Supreme Court and the lower appellate courts a focus of the 2014 session. Days after the legislative session opened, however, Shannon announced that he was stepping down as speaker to run for the U.S. Senate. Shannon's exit appears to have stalled many of his bills.

Measures such as House Bill 3076, the Judicial Revision Act; HB 3075, the Judicial Reform Act; HB 3074, the Court Improvement Act; HB 3379, a bill that limited the terms of judges on the Court of Appeals; and HB 3380, which created a board appointed by the Legislature and the governor to evaluate the rulings of judges and justices, were not heard by the House Judiciary Committee.

In addition, House Bill 3378, which established a mandatory retirement age for justices of the Oklahoma Supreme Court, also appears to be dead.

Oklahoma Bar Association President Renée DeMoss agreed that the effort to change the judiciary may not be as large as before. However, she said the organization would continue its program to educate residents about the judicial system and the function of the Judicial Nominating Commission.

This year, the OBA launched an educational program designed to provide information about the judicial system and its role in state government.

"Things do appear to be slowing down," she said. "But you never know when that could change. I think the need to talk about the judicial system and its function in government should continue. The better informed people are, the better they understand the issues."

House Democratic Leader Scott Inman, D-Del City, said lawmakers were focused on other problems.

"In the Judiciary Committee this year, the chairman, Rep. Leslie Osborn, made it known that we weren't going to hear any of that legislation that came out of the House, from Speaker Shannon and his leadership team - even though she was part of his leadership team," he said. "She didn't support them, and she wasn't going to hear them."

While Osborn, R-Mustang, is no longer chairwoman of the Judiciary Committee, Inman said he was pretty sure the committee's new chairman, state Rep. Aaron Stiles, R-Norman, didn't like the proposals either.

"I would say he's even less supportive than Rep. Osborn," Inman said.

Inman said House Democrats had grown weary of Republicans in the Legislature telling them they need to support the constitution, yet they turn around and appear to forget that there are three equal branches of government.

"They want to tinker with the judicial branch when they (the judiciary) consistently remind the Republican leaders they are passing unconstitutional laws," he said.

He said Oklahomans don't want lawmakers to meddle with the judiciary.

Still, while most of Shannon's legislation appears dead, at least three measures written by state Sen. Clark Jolley, R-Edmond, await a hearing in the House.

Those bills - all Senate joint resolutions - would make major changes to the judicial system. Senate Joint Resolution 21 would give the governor the power to appoint members of the appellate judiciary and allow the Oklahoma Senate to advise and consent to the appointment.

SJR 22 would give the governor the authority to appoint the chief justice of the Oklahoma Supreme Court, while SJR 24 would impose a 20-year term limit on members of the judicial branch.

On Wednesday, Jolley said the measures would push the state toward a federal-style judicial system.

"It's not that I have anything against attorneys," he said. "I am an attorney, but I think changes are needed."

Allowing the governor to appoint the court's chief justice, he said, would bring long-term stability to the office and its administrative functions.

"The chief justice is responsible for all the judiciary in the state," Jolley said. "Right now, the office is rotated every two years. Just about the time a justice gets settled in the role, he has to change. Giving the governor the authority to appoint a chief justice would bring consistent leadership to the entire court system."

Jolley said he also wanted to see the governor have more appointive authority.

"I think the governor should be able to pick who she wants for the court, then that person is evaluated by the Judicial Nominating Commission," he said. "I don't think she should be forced to choose from just three people who were selected by the JNC."

The JNC vets applicants for judicial posts and submits candidates to the governor's office. No Senate confirmation is required. Oklahoma has used the system - based on Missouri's - since the 1960s, when a bribery and corruption scandal rocked the state's high court.

Changing the way judges and justices were appointed, Jolley said, would bring more accountability to the process.

"I'm opposed to electing judges," he said. "Having the chief executive responsible brings accountability to process."

Lawmakers have until April 24 to review legislation from the opposite chamber.

House passes tax cut bill

By M. Scott Carter, The Journal Record

OKLAHOMA CITY - A bill that would lower Oklahoma's personal income tax rate from 5.25 to 5 percent and cut the corporate income tax rate from 6 to 5 percent passed the House of Representatives Thursday on a 57-34 vote.

House Bill 2508, authored by state Rep. Earl Sears, R-Bartlesville, would cut the personal income tax rate from 5.25 to 5 percent beginning in 2016. The measure includes a trigger that requires personal income tax revenues to be equal or greater in fiscal year 2015 than those generated in fiscal year 2014.

In addition, an amendment by state Rep. David Derby, R-Owasso, lowers the corporate income tax rate from 6 to 5 percent in 2016, provided corporate income tax revenues in fiscal year 2015 were equal or greater than 2014.

Analysts said the measure would cost the state about $200 million in revenue over a full year.

The bill is similar to a tax cut proposal passed by the Oklahoma Senate last week. House Speaker Jeff Hickman, R-Fairview, said both bills use revenue triggers. The House bill, however, also includes the provision to lower the corporate income tax, he said.

"They're a little bit different, so we're going to have to iron out those differences at some point," he said.

Hickman said the corporate income tax proposal was added because members of the House GOP Caucus felt like corporate income tax needed to be a part of the discussion.

When implemented for a full year, the reduction in the personal income tax would cost the state about $147 million in revenue. A 1-percent reduction in the corporate income tax would cost about $53 million for a year.

Sears said both measures were viable tax cut proposals.

"We have two tax bills, I think they're very good tax bills," he said. "We'll come together. I'm very confident that we will offer a plan and program to go to the governor."

Republican Gov. Mary Fallin applauded the bill, calling it meaningful tax relief.

"The House of Representatives took an important step today towards delivering meaningful, responsible tax relief to Oklahoma families," Fallin said in a media statement issued shortly after the measure passed. "Reducing the income tax allows working Oklahomans to keep more of their hard-earned money while helping to attract and retain jobs and businesses. It is an important part of our strategy to grow our economy and continue Oklahoma's forward momentum."

Democratic lawmakers, however, were less than enthusiastic.

House Minority Leader Scott Inman, D-Del City, said cutting the state's income tax when education, health care, public safety and transportation have had their budgets cut was fiscally irresponsible.

"Not one constituent from my district has called to ask for us to cut taxes," he said. "We took a poll in our caucus and not one member of our caucus has had anybody from our district call and say, 'please cut our income taxes.' It doesn't happen."

Inman said residents were worried instead about funding education or the Department of Human Services.

"Today was about ideology and philosophy and not about policy," he said. "So unfortunately, the vote passed."

Derby countered that Oklahoma should continue to push pro-business policies.

"The businesses and the jobs are coming to Oklahoma," he said. "While other states are struggling, Oklahoma's economy is booming, and it is because of pro-business policies and our willingness to compete with states in our region. We must continue to make strides and ensure our citizens and businesses thrive."

The head of the Oklahoma Policy Institute said the tax cut would provide little or no benefit for most Oklahomans.

"Oklahoma is already a low-tax state with too few college graduates," said David Blatt, the think tank's executive director. "Schools are struggling to educate more students with less funds and fewer teachers than five years ago. We won't be more prosperous when we're an even lower-tax state with less education. It defies economics and common sense."

House Bill 2058 now goes to the Senate for review.               

House Democrats agree to support $40M museum fix

OKLAHOMA CITY (AP) - The 29 Democrats in the Oklahoma House of Representatives have agreed to support a Senate-backed measure to spend $40 million to complete an unfinished American Indian museum in Oklahoma City.

The announcement by House Democratic Leader Scott Inman on Wednesday could boost the chances for the proposal to pass the House, where many Republicans oppose the idea.

A bill passed in the Senate on Tuesday would take $40 million from the state's Unclaimed Property Fund to help complete the sprawling American Indian Cultural Center and Museum at the crossroads of Interstates 35 and 40. The state funds would be used to match another $40 million in private pledges.

With all 29 Democrats supporting the bill, only 22 Republican votes would be needed to send the measure to Gov. Mary Fallin.

By Sean Murphy, Associated Press

OKLAHOMA CITY - A 26-year-old Republican lawmaker from Oklahoma City said Wednesday that he's running for the U.S. House seat being vacated by GOP Rep. James Lankford and that he's willing to spend $500,000 of his own money on the race.

"The main reason I'm running is that we need strong, active conservatives of a new generation who aren't part of the status quo, but are there to work hard," state Rep. Mike Turner told The Associated Press ahead of an official announcement.

Turner, whose family owned Turner Bros Trucking for four generations, said he plans to launch a television advertising campaign in the Oklahoma City market this weekend to introduce himself to voters in the 5th Congressional District.

"They're going to learn that I'm not a career politician and that I love to hold people accountable," Turner said. "I have a general interest in serving the people, and not special interests."

Turner's willingness to self-fund his campaign undoubtedly will help boost his name recognition in an already crowded GOP field that includes Corporation Commissioner Patrice Douglas, state Sen. Clark Jolley, former state Rep. Shane Jett and former state Sen. and Army veteran Steve Russell.

A graduate of Heritage Hall High School who received his bachelor's and master's degrees in engineering from Southern Methodist University, Turner knocked off an entrenched Republican incumbent to win his Oklahoma City House seat in 2012. He pledged not to take money from lobbyists or political action committees, refused a state pension and promised to donate half his legislative salary to schools and charities in his district.

He also has shown a willingness to buck leaders in his own party, including a vote last year against a budget agreement reached between GOP Gov. Mary Fallin and Republican leaders in the House and Senate.

By running for Congress, Turner would unable to run again for his seat in the state Legislature. That district includes portions of northwest Oklahoma City and west Edmond.

The 5th Congressional District seat, which includes most of Oklahoma County, along with Seminole and Pottawatomie counties to the east, was thrown open when Lankford announced he wouldn't seek a third term and instead planned to run for the U.S. Senate seat being vacated early by Sen. Tom Coburn.

Among the Democrats seeking the 5th Congressional District seat are state Sen. Al McAffrey, retired University of Central Oklahoma professor Tom Guild, who ran unsuccessfully for the seat in 2010 and 2012, retired federal contractor Keith Davenport and former state employee Marilyn Rainwater.           

Treasurer: Gross receipts on positive trend

OKLAHOMA CITY (AP) - Oklahoma's treasurer says state revenue collections continued to rise in February, the fourth anniversary of the low point reached following the latest recession.

Treasurer Ken Miller released his monthly report on gross receipts Thursday. It says collections have topped the same month of the prior year in 41 of the past 48 months. Miller says gross receipts have grown by almost 25 percent in the last four years.

Twelve-month gross receipts have expanded by $2.2 billion - or more than 23 percent - since exiting their trough in February 2009, eight months following the official end of the last national recession.

February's revenue report shows gross collections of $818 million, up more than $27 million, or 3.5 percent, from February 2013.

Have a good week.  Give me a call at 918.671.6860 if I can be of help in any way.