Archive for Friday, October 14, 2011

Corporate restructuring consultants from Blackstone Group meeting with Kansas officials

October 14, 2011


— Representatives with The Blackstone Group have met with Kansas higher education officials and are reporting back to Gov. Sam Brownback on ways to cut costs in state government, according to higher education officials.

Blackstone is best known for working as consultants in the private sector to restructure and turn around financially troubled corporations.

Top officials at Kansas University and Kansas State University recently said that Blackstone representatives have met with the school officials and planned to report back to Brownback. But since the meeting, the school officials say they haven’t heard anything more.

Blackstone representatives met in July with members of the Council of Business Officers, which includes the chief business officer of each state university.

In response to inquiries from the Lawrence Journal-World, KU officials divulged scant information on the meeting outside of what was cited in the minutes of another meeting last month.

Bruce Shubert, vice president for administration and finance at Kansas State, made brief remarks about Blackstone to the Council of Presidents, which consists of the leaders of state universities.

The minutes of that meeting say, “The Blackstone Consulting group was engaged to evaluate State of Kansas units to identify opportunities to increase efficiency and reduce costs. Questions about university funding and operations, purchasing practices and program review procedures were answered. Barry Swanson, from KU, recently provided additional purchasing saving information he has been collecting. Blackstone was expected to provide a report to the Governor in August.”

The Kansas Board of Regents referred a question about Blackstone to Brownback’s office. But Brownback’s office says Blackstone has not been hired to work on the governor’s behalf.

Peter Rose, a spokesman for Blackstone said, “I am sorry but we cannot discuss confidential client assignments.”

Shortly after taking office in January, Brownback had a two-hour meeting with Blackstone representatives, according to a report by Bloomberg News. The news organization cited unnamed sources as saying the discussion centered on ways to sell state assets, streamline operations and downsize state government.

The Kansas state budget has been hit hard in recent years because of the recession, resulting in cuts to education, social services and public safety. But tax collections for the first quarter of the current fiscal year are running 8.8 percent ahead of last year, and 5 percent more than earlier revenue estimates.

Kansas Board of Regents Chairman Ed McKechnie of Arcadia said he thought discussions between state officials and Blackstone representatives would be beneficial in getting an outside perspective.

“It doesn’t hurt to talk,” he said.


Paul R Getto 5 years, 10 months ago

Don't know if they are paying these guys, but their advice will look like this: Fire staff and reduce services. That's just about the only way to save much money. This advice is, of course, worth what I charged for it. Wanna bet their report looks similar?

captainzeep 5 years, 10 months ago

Conspiracy theory - Blackstone "consulting" actually due diligence before aquistion attempt of several desirable state assets. Education sector and toll roads are of tremendous interest to cash flush private equity. I suspect KTA books were opened wide for these guys.

guess_again 5 years, 10 months ago

you might have nailed this one on the head.

chootspa 5 years, 10 months ago

I bet you're right. Add to it the voucher/charter thing ALEC is pushing, and you've got a cash machine for the private sector. Buy public school assets at fire sale prices. Use taxpayer money for vouchers. When 20% or more of those schools fail to improve outcomes, you just sell those property assets (at a profit) to the next group that wants to spin the wheel. Nobody actually loses in this deal except for the taxpayers, the teachers, and the students. Great fun!

Kate Rogge 5 years, 10 months ago

Who owns the Blackstone Group? Who are its primary investors and clients?

Bob_Keeshan 5 years, 10 months ago

Now this is interesting:

But Brownback’s office says Blackstone has not been hired to work on the governor’s behalf.

Because this is even more interesting:

Peter Rose, a spokesman for Blackstone said, “I am sorry but we cannot discuss confidential client assignments.”

So the Governor's office says they are not a client of Blackstone, and Blackstone says they can't discuss anything relating to a client.

So somebody is lying. I'm willing to bet the liar isn't Blackstone.

coloradoan 5 years, 10 months ago

Bob ya beat me to it - that was my question when I saw that line about not hired for the Gov's office: who IS paying if not the Gov? And what do they expect to get for their "investment"?

just_another_bozo_on_this_bus 5 years, 10 months ago

Looks like Brownback is getting mighty comfortable with the secret government thing.

mloburgio 5 years, 10 months ago

Blackstone Alternative Asset Management Private Equity Real Estate Hedge Fund Solutions (BAAM) Credit Businesses (GSO) Closed End Mutual Funds New Initiatives Financial Advisory Advisory and Restructuring Park Hill

just_another_bozo_on_this_bus 5 years, 10 months ago

From wikipedia--

Blackstone Group The Blackstone Group L.P. (NYSE: BX) is an American-based alternative asset management and financial services company that specializes in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions (M&A), restructurings and reorganizations, and private placements.

captainzeep pretty well nailed it. Look for Brownback to begin selling off state assets at fire-sale prices-- but it will make him lots of friends who have plenty of money for political donations to the "right" candidate.

1983Hawk 5 years, 10 months ago

I'm struggling with the notion that this shadowy Blackstone group, specializing in fire sales of public sector assets, was brought in here, paid with taxpayer dollars, and given access to all financial info and top officials at two of our universities. But the Governor's office DENIES they are the client? Then who the hell is? Can the Koch boys and their fake grass roots special interest group toadies now directly access public funds for these things without having to bother even nominally running things thru the Gov's office or having any shred of accountability? Maybe we should cut Art Laffer another 75k check while forcing Lawrence and Pratt to self-fund SRS offices since we are so "broke" and all...

chootspa 5 years, 10 months ago

Remember how Dave Trabert said that he wouldn't disclose KPI donors because they feared "economic harm" from people who worked for the state should their identity be known. Yeah, I remember that. Hey, maybe it doesn't have anything to do with this at all, but it sure was an interesting way to phrase it.

Norm Jennings 5 years, 10 months ago

Frankly uninterested in ridiculous guessing about conspiracies real or imagined. Nobody is gaining facts by speculating or attacking the speculating of other posters. Bottomline - KC Star's reporting of Brownback's plan sounds like educational wealth re-distribution from communities who have had the resources and/or interest in providing resources to their districts, and reallocating those funds to districts that probably should have been consolidated decades ago. Any additional brain cells that could be engaged, that might help this governor grasp that typically "excellence does NOT boil up from the bottom." The better off NE Kansas public school kids will be. Trying to "boil up" excellence from the bottom is a recipe for more expensive, and continually failing education.

verity 5 years, 10 months ago

You know who can tell you how to save money and fix things? The people on the bottom rungs who are actually doing the work. And they won't charge you extra for the advice.

My experience is that "efficiency" changes instigated from the outside make things worse.

1983Hawk 5 years, 10 months ago

Verity is right. "Efficiency" measures dreamed up by the multi billion dollar "consultant" industry who breezes in, pretends to analyze things, and then whips a pre-packaged report off the shelf that the Koch toadies had already dictated, very seldom make any actual improvements. But it is important to pay Blackstone with an unspecified amount of tax dollars, let them refuse to disclose the amount or identify their client while they cash their government welfare check, and then implement their "recommendations" which are designed to systematically weaken the public sector and demoralize its employees. And if public employees then quit or take early retirement, we'll just replace them with some Hitler youth who parachute in here from other states after "graduating" from Liberty University or some right-wing think tank.

sciencegeek 5 years, 10 months ago

Blackstone isn't doing this out of the kindness of their hearts, folks. Nor are the other businesses brought in to "advise". The first things consultants do is find out what their employers what to hear, and tailor the results accordingly.

Here's a suggestion: any group brought in to advise, analyze, recommend, restructure, etc. must sign a contract that stipulates that said group CANNOT bid on or be hired for any subsequent work done to implement their recommendations. Then you wouldn't end up with companies recommending a solution for which they are uniquely qualified. It still wouldn't stop them from having other clients benefit, but it'd be a start.

Common sense, don't you think?

Sparko 5 years, 10 months ago

You elect Brownback and this is what you get. Permanent poverty.

Sparko 5 years, 10 months ago

And honestly Journal World. Don't just report. Investigate. Brownback should be impeached and removed from office for the shady business dealings he has brought to Topeka. He is part of the national corporate agenda this year that brought the nation Scott Walker and Rick Scott. And Brownback. Recall the guy. Kansas is not his personal ATM.

sciencegeek 5 years, 10 months ago

Hey, don't knock the LJW. At least they reported it. That's more than any other newspaper has done. Heck, I know people in Topeka who check LJW to find out what's happening in their own town!

Shouldn't other papers in the state be investigating, too? Even if it takes the LJ to bring it up. Instead, no one does anything, and the juggernaut keeps on rolling, over all of us.

Steve Jacob 5 years, 10 months ago

Don't forget in Brownback's term he will lose the 1% sales tax that saved our behind, and no way it gets extended.

Commenting has been disabled for this item.