The city of Bogalusa learned Monday that it would likely have its locally elected officials temporarily replaced by a state fiscal administrator.

During a meeting of the state’s Fiscal Review Committee on Monday in Baton Rouge, Bogalusa and the city of Sterlington were both added to the list of communities where the state has asked for the courts to appoint state administrators. There are currently seven such municipalities in the state, which is the most ever.

A fiscal administrator replaces locally elected officials in times of financial trouble. Administrators have the power to raise fees, cut services, lay off employees and perform other actions in order to keep municipalities’ budgets in line.

Bogalusa’s elected officials will essentially serve as advisors to the state administrator until it is determined the crisis has been adequately addressed.

On Monday, both Bogalusa and the town of Sterlington were added to a list of five other municipal bodies that already have fiscal administrators. Those bodies are Jeanerette, St. Joseph, Clayton, Clarence and a Madison Parish hospital district.

Legislative Auditor Daryl Purpera, who chairs the three-member Fiscal Review Committee, told the Advocate of Baton Rouge that it is likely another “seven or eight” communities could also be on the brink of having administrators installed.

Several local officials spoke Monday in Baton Rouge before the Fiscal Review Committee. They included Bogalusa Mayor Wendy Perrette, Director of Administration Stacy Smith, Bogalusa City Council members Gloria Kates and Oneita Graham, auditor Freddy Smith, State Rep. Malinda White, State Sen. Beth Mizell and former Bogalusa City Council member Thomas Kates.

It is very likely additional communities could have state financial administrators named in the coming year. The Legislative Auditor’s Office has issued a list of 15 municipalities that have a “high financial risk.” Sterlington was on the list.

The other 14 towns, cities and villages on the list include Grambling, Baldwin, Epps, Morse, Eros, Tallulah, Vidalia, Winnsboro, Independence, Gibsland, Waterproof, New Llano, Robeline and Quitman.

 

City’s problems are not new

Bradley Cryer, the assistant auditor in charge of overseeing the finances of local governments, outlined some of the city’s financial issues for the Fiscal Review Committee on Monday.

Cryer noted that the largest liability is the improper funding of the city’s retirement pension system, known as COBERS. He said that as of 2017, the pension system had a net liability of $22.4 million and was funded at just a 17-percent ratio. For comparison’s sake, he noted that the state’s teachers’ retirement system is funded at 70 percent.

Cryer said that the pension system was funded at approximately 60 percent in 2001, but it has gone down every year since. He noted that the city must contribute about $1.1 million per year to keep the system solvent, but in past years it has contributed less than half of that.

Two tax-related proposals passed in December, which will re-dedicate existing funds to address the pension system shortfall. However, one of the proposals re-dedicates approximately $272,000 from the city’s General Fund, which now leaves a hole in that fund.

Perrette told the Fiscal Review Committee that the city has determined it would need to save approximately $1 million a year to meet its financial obligations going forward.

She said that the plan would involve layoffs of 16 employees — six of which have already occurred since the start of the year. This would save approximately $730,000 per year.

“At this time, we’re going to have no other choice,” Perrette said, about the layoffs. She said there was a total of 162 employees at the start of the year.

Perrette also said there would be a 50-percent reduction of paid overtime, which would be a savings of about $257,000 a year. Other savings would be made with smaller changes, such as starting to charge for some services that are currently free (such as police escorts and large-item trash pickup) and by selling aviation fuel at the city airport.

Perrette said that of the $1 million in savings, $750,000 would go toward the pension and the remaining $250,000 will be used to fill the hole left by the re-dedication of exiting General Fund revenues.

She noted that one of Bogalusa’s biggest challenges is the loss of population in recent decades.

“Our city was based off 25,000 people,” she said. “And our population as of 2010 was 12,232 people. The tax base has dwindled.

“We’ve tried to educate (the taxpayers) to educate them, and tell them and show them how we are not going to be able to continue these services,” she said. “Like a police department or a fire department, if we don’t pay for those things.”

Perrette noted that no property tax revenue goes toward the police department, and just 2.73 mills goes toward the fire department. The remainder of those departments’ budgets are paid for out of the General Fund.

“I only paid $13.06 last year (in property tax millage to the city’s fire department),” she said.

Perrette noted that the city had attempted to address the pension deficit with a 12-mill increase in April. That referendum failed, with 22 percent of the voters rejecting it. A similar 3-mill increase in December also failed, but by a significantly smaller margin.

 

State: Progress made, but more needed

Purpera and the other two members of the Fiscal Review Committee ultimately voted unanimously to ask the Attorney General’s office to ask the courts to appoint a fiscal administrator. The committee members noted that the city has made positive improvements, but stressed the seriousness of the pension liability.

“I feel like I’m looking at some folks out in the audience who are looking for help,” committee member Wilbur Stiles said. “I don’t think that’s a reflection on anybody that’s currently in office. It’s just not moving in the direction that we need it to move fast enough.

“I’m hoping that this could maybe be one of those fiscal appointments that we make that goes in and can occur in a relatively rapid movement.”

Committee member Ron Henson agreed with Stiles.

“I’m in full recognition that improvements have been made in Bogalusa,” he said. “But in my judgment, the retirement system can’t wait. It’s too close; it’s too precipitous.

“I reiterate, we take no great joy in appointing financial administrators. But I believe it’s justified here. Bogalusa needs some help. The citizens need some help, and that’s why I’m voting yes.”