HEAL's Operations Marked by Lack of Construction Projects, Increasing Expenses, Noncompliance

An evaluation of the Health Education Authority of Louisiana’s (HEAL) operations, including the sources and uses of its funding, has identified numerous weaknesses, the Legislative Auditor said in a report released today. HEAL is a quasi-public agency created in 1968 to promote medical and/or health education activities in Louisiana and to help primary institutions obtain tax-free bonds to construct, renovate, or enhance their facilities.

Auditors found that HEAL has not funded a construction project since 2004, but between 1968 and 2004, it financed nine construction projects totaling $253.4 million, including the HEAL parking garage in New Orleans, which is the primary source of its revenue.

In addition, HEAL’s expenses increased 153 percent between fiscal years 2012 and 2016, while its revenue remained relatively consistent from fiscal years 2012 to 2015, increasing 3 percent. Revenue did increase 27 percent in fiscal year 2016 but that was a result of refinancing some outstanding bonds. The result was deficit spending in fiscal years 2014 through 2016.

HEAL staff also circumvented state purchasing oversight controls and violated state purchasing regulations, auditors said. Specifically, the executive director signed contracts and contract extensions without the required approval of the Louisiana Department of Health (LDH) undersecretary and obligated LDH and the state without proper authority. The HEAL staff and board members also violated state regulations for travel mileage reimbursements, required ethics training, and required reporting to the Division of Administration.

The report noted as well that HEAL’s Board of Directors had several unfilled positions and did not meet between 2004 and 2011. Between 2011 and 2015, the board held only eight meetings, with other meetings canceled because of the lack of a quorum.

During the 2016 Regular Legislative Session, HEAL’s enabling legislation was amended by
Act 577, which transferred the agency from LDH to the Department of Education and placed it under the Board of Regents to operate under its own authority. The Act also expanded HEAL’s primary service area from a 10-mile radius in New Orleans and Shreveport to include communities where graduate medical education is offered, changed the composition of HEAL’s board, and expanded HEAL’s bonding authority from $400 million to $800 million. However, when the Act took effect on August 1, 2016, HEAL had no transition plan in place and found itself with no email services and no way to pay its employees or its bills.