Presentation to the Commission on Streamlining Government

1. Presentation to theCommission on Streamlining Government State of Louisiana August 18, 2009 Crisis Management and Operational Restructuring Sandra Crayton, Managing Director Bill Roberti, Managing Director

2. Presentation Overview • The Case for Restructuring • State of Louisiana Case Studies • Alvarez & Marsal Capabilities • Appendices: • Presenter Biographies • Alvarez & Marsal Firm Overview • Representative Client Case Studies • Representative Client List

3. Streamlining Government – A Platform for Change I. The Case for Restructuring A&M’s experience restructuring commercial and public sector organizations provides us with the vision of how to address crisis situations, drive change, and realize unprecedented value to leadership and the public. Like all states, Louisiana is challenged to meet significant budget crises given the economic conditions. The 2010-11 budget reflects aggressive cuts to address the loss of $1.3 billion in the tax base. The hardship of the current economy is evident in decreased tax revenues and reflecting the negative financial situations faced by citizens and businesses . Engaging a partner with experience restructuring organizations comparable in complexity and scale provides the State with executive guidance and operational leadership. A&M believes the scope of the restructuring includes: • Provide restructuring leadership at a critical juncture where Louisiana faces internal and external challenges and financial and operational issues • Rapidly build a robust fact base to include: • Near-term opportunities to improve its operational and financial state • Financial analysis that describes the alignment between statutory requirements, costs and revenues • Near-term operational and financial prospects • Formulate a comprehensive program of Restructuring Initiatives that includes: • Assessment of costs associated with delivering statutory requirements (evaluating operating, fixed, personnel and capital costs) • Assessment of scope and size of government • Detailed plans to optimize customer service to citizens improving efficiency and effectiveness • Timing, resources and anticipated impact of plan • Overlay the identified Restructuring Initiatives into State strategic plans and legislative authority to create a revised strategy • Work closely with management and stakeholders to best address non-core operations and execute the strategic and operational plan

4. The Current Economic Crisis Presents Significant Challenges and Limited Opportunities for States I. The Case for Restructuring Federal Stimulus funding offsets needs for more dramatic actions in the short term with funding primarily available to support 2009-2011 source: Recovery.Gov The continued deterioration in the economy GDP 5% 0% -5% is severely impacting Louisiana‘s Revenue Base Source : Center on Budget and Policy Priorities

5. Louisiana Has Responded Aggressively I. The Case for Restructuring negative funding impacts on the state budget Unemployment rates June 2008 – 2009 Source: Louisiana Budget Project. And Gov’s Executive Budgets …. Louisiana has taken aggressive action to balance the budget • Eliminated more than 1,300 positions from state government in this budget, bringing the total number of full-time positions eliminated to more than 3,300 since January 2008. • Decreased total spending by around $700 million • Consolidating school and health services • Established the Committee on Streamlining Government

6. Louisiana’s Challenges Cannot Be Solved Through Disconnected Analysis I. The Case for Restructuring Tax base Org structure Services PROGRAMS AND DEPARTMENTS Economic Development Statutory Requirements Federal Funding $ Revenue Costs $

7. A Restructuring Approach Is Holistic I. The Case for Restructuring Louisiana’s fundamental challenges and solutions can only be identified by understanding the interdependence between cost drivers, revenue streams, and the other core elements Tax base ORG STRUCTURE Services Programs and departments Economic development Statutory requirements Federal funding $ Costs A&M traces all costs and revenue sources Revenue A&M traces the financials from Programs and Departments $ Accurately correlating the cost and revenue drivers provides a fact base to identify and justify significant change and opportunities for growth

8. Overview of A&M’s Approach . The Case for Restructuring I. The Case for Restructuring I. The Case for Restructuring I. The Case for Restructuring Monitor, Reevaluate and Operate Finalize Options and Restructuring Plan Initiatives Select, Lead and Restructure Assess, Evaluate and Communicate

9. Tailored Approach to Transition Management I. The Case for Restructuring Clients rely upon A&M in times of transition to provide reliable stability, leadership, and plan execution that provides a foundation for sustainable long-term solutions. • All of the above steps provide the platform for A&M to… • …Support , Guide, and Execute…this is our differentiating factor • Execute transition and restructuring plans • Provide calm and measured responses to transition challenges • Promote Transparency and Accountability • Build the foundation for the future • Transition our leadership effectively to permanent leadership

10. New Orleans Public Schools II. State of Louisiana Case Studies Background • In June 2005, the Public Sector group of A&M was engaged to restructure the financial and administrative operations of the 117 schools in the New Orleans Public Schools system. After Hurricane Katrina, imperatives changed, from making sure that teachers, administrators and staff were paid, to preparing and submitting insurance claims on a timely basis, and, most importantly, addressing the future educational needs of New Orleans children in the wake of unimaginable destruction of school property and buildings. A&M Role • A&M served many interim management positions including CRO, COO and CFO Outcomes • Pre-Katrina, A&M set up a system to verify employment of every NOPS employee and coordinated the staffing of schools. They made sure books and other supplies were in classrooms. They coordinated 179 bus routes across the city, worked with maintenance vendors to ensure repairs were made and schools were clean • Following Katrina, A&M went from financial managers to crisis managers. • A&M Real Estate Advisory Services and A&M Dispute Analysis & Forensic Services led the way in working with the Federal Emergency Management Agency (FEMA) to assess the damage, school-by-school and get buildings into condition to be opened and occupied. • Through the firm’s oversight, the district was able to avoid defaulting on $279 million in bond debt, allowing time to receive financial assistance from the federal government. • Alvarez & Marsal’s IT staff set up a new IT system for all of NOPS Public Sector New Orleans Public Schools

11. LSU Interim Medical Center II. State of Louisiana Case Studies Background • A&M engaged to provide services of Chief Management Officer (Sandra Crayton ) and to conduct a 45 day Assessment of Interim LSU Public Hospital’s (“Hospital”) finances and operations. • A&M team conducted reviews of the Hospital’s overall financial status, including: salaries and benefits and workforce productivity. • A&M team conducted reviews of several different areas of operations, including: workforce productivity, materials management, and graduate medical education. • A&M team conducted reviews of three service lines of the Hospital: Nursing Services, Peri-Operative Services, and Outpatient Clinic Services. Outcomes • Recommendations presented focused on identifying quick, impactful savings opportunities, growth initiatives and revenue cycle improvement. • Initiatives as implemented will have an impact on every department in the Hospital and therefore require a commitment from Administrative leadership, Department Directors, medical staff and employees to implement. Health Industries Group LSU Interim Medical Center

12. Alvarez & Marsal Capabilities III. Alvarez & Marsal Firm Capabilities A&M Service Lines Performance Improvement Corporate Restructuring Business Advisory Services • Operational Efficiency • Business Consulting • Technology Asset Management • Interim Management • Turnaround Advisory • Crisis Management • Creditor Advisory • Claims Management • Risk Management Advisory • Corporate Finance • Transaction Advisory • Tax Advisory • Dispute Analysis & Forensics • M&A and Financing • Healthcare • Financial Services • Real Estate • Consumer / Retail • Food and Beverage • Media / Telecom • Industrial / Automotive • Chemicals • Metals and Mining • Energy / Utilities • Transportation • Public Sector Representative A&M Industry Expertise Alvarez & Marsal has three major service lines along with dedicated industry expertise to help meet the broad needs of our clients. Drawing on its strong operational heritage and pragmatic hands-on approach, A&M works closely with organizations and their stakeholders as financial and operating advisors or interim managers to help navigate complex business issues and boost performance

13. Appendices Presenter Biographers Alvarez and Marsal Firm Overview Representative Client Experience Representative Client List

14. Presenter Biographies Appendices Sandra Crayton Sandra is a Managing Director with Alvarez & Marsal's Healthcare Industry Group. She brings substantial experience managing all aspects of large, complex, multi-site organizations and a proven record of achieving results. Since 1985, Ms. Crayton has held Chief Executive Officer or Chief Operating Officer positions in academic medical centers, including the University of Chicago Hospitals, acute care hospitals, physician practice management, and home health companies. She has led organizations with as many as 650 beds, 6,000 employees, revenues of $750 million, and operating budgets in excess of $400 million. Since January 2009, Ms. Crayton has served as Chief Management Officer of the Interim LSU Public Hospital. In the first three months of the engagement, Ms. Crayton lead a team of consultants that identified $66 million in cost reductions at the Hospital. Contact: scrayton@alvarezandmarsal.com, (404) 610-1121 Bill Roberti Bill leads Alvarez & Marsal’s Public Sector Services Group and has translated private sector and military leadership gained as serving as CEO of Brooks Brothers and as a Army Reserve Colonel to leading change for public sector organizations. Bill drove significant change as the Chief Restructuring Officer for the St. Louis Public Schools and the New Orleans Public Schools, has restored accountability for Department of Education’s funding to the US Virgin Islands and is currently supporting driving financial stability for the Detroit Public Schools. He continues to work with philanthropic organizations committed to public sector revitalization including the Broad Foundation. Contact: broberti@alvarezandmarsal.com, (203) 400-1623

15. Firm Overview Alvarez & Marsal Firm Overview • About A&M • Founded in 1983 by co-CEOs Tony Alvarez II and Bryan Marsal • 1,600+ professionals • 38 cities; 15 nations; 4 continents • 200+ Managing Directors • North America • New York (Global HQ) • Atlanta • Birmingham • Boston • Charlotte • Chicago • Dallas • Denver • Detroit • Houston • Kansas City • Los Angeles • Europe and the Middle East • London (Europe HQ) • Amsterdam • Cairo • Dubai • Madrid • Milan • Latin America Location • São Paulo (Latin American HQ) • Bogotá • Asia • Hong Kong • Shanghai Miami Nashville Philadelphia Phoenix San Antonio San Francisco Seattle Tampa Toronto Vienna, VA Washington, D.C. Moscow Mumbai Munich New Delhi Paris For 25 years, Alvarez & Marsal has set the standard for working with organizations to tackle complex business issues, boost operating performance and maximize stakeholder value. As a leading, independent global professional services firm, Alvarez & Marsal (A&M): • Has been owner-operated and privately held since inception • Puts the needs of businesses and their investors first – without competing interests and free of audit-based conflicts A&M Approach Clients have trusted A&M to work with them to help solve their most important business problems. We have earned this trust by: • Giving every problem the utmost senior-level attention • Researching and understanding the facts before drawing conclusions • A steadfast commitment to objectivity, quality and integrity • Demonstrating time and again that leadership makes all the difference As corporate advisers or in interim leadership and management roles, A&M employs a hands-on approach to solving problems and creating value – with a bias toward action and delivering results. At Alvarez & Marsal, we: • Hold ourselves accountable to delivering results • Provide leadership by rolling up our sleeves and get the job done • Believe in the importance of collaboration with our clients and their constituencies

16. A&M’s Market Differentiators Alvarez & Marsal Firm Overview Why Alvarez & Marsal is Different: • Blend ability to make decisions with the skills to make business process and technology change • Bias toward action • Make decisions fast; willing to take informed risks • Not limited by the culture; willing to break some furniture to get the job done • Know “what success looks like” and how to model it • Set aggressive goals, execute relentlessly, measure • Pressure test team members with tactical issues to evaluate them quickly • Drive accountability in the organization—make sure people deliver on commitments or quickly find new people

17. Representative Experience Representative Client Case Studies Background • Lehman Brothers Holdings Inc. filed under Chapter 11 on September 15, 2008. Alvarez & Marsal was hired at 10:30 p.m. on September 14, 2008, just hours before Lehman Brothers filed for the largest bankruptcy in U.S. history, and began work that same week. • At bankruptcy, Lehman Brothers listed $613 billion in debts and $639 in assets. • Bryan Marsal, A&M’s Co-CEO, was designated as the Chief Restructuring Officer. On December 31, 2008, he assumed the role of CEO, supported by a large A&M staff (with nearly 200 FTEs), including senior professionals from the various divisions across the firm. • A&M is currently working to maximize the recovery value of assets to LBHI creditors, and minimize claims. • A&M’s main strategy is to: • Preserve, capture and store key data in order to reconstruct transactions and events. • Address immediate fire sales impacting asset values and claims. • Identify and retain teams to work the problem. • Determine pre-bankruptcy events giving rise to causes of action or mitigation of claims. Outcomes-Ongoing • Since A&M was assigned to the case in September 2008, an orderly wind-down has been in effect. • The Lehman Estate has also provided job security for about 560 financial professionals (approximately 200 FTEs from A&M, 130 retained from Lehman and 230 recruited primarily from former Lehman and other marquee name firms). Turnaround Consulting / Crisis Management Lehman Brothers

18. Representative Experience Representative Client Case Studies Background Nation’s largest commercial provider of outpatient surgery, diagnostic testing and rehabilitation services • More than 46,000 medical and business professionals in nearly 1,700 locations throughout the US • The System was the victim of a massive accounting fraud conducted by a small group of senior management • HealthSouth, a publicly traded company, faced FBI and SEC investigations alleging multiple frauds committed by the CEO • HealthSouth terminated the CEO and CFO and a number of senior executives and the financial team also left the company prior to A&M’s engagement • A&M was hired as restructuring advisors and crisis managers by the Company Outcomes • A&M’s strategy helped the Company avoid bankruptcy • Coordinated multiple concurrent Federal investigations while simultaneously working to stabilize operations, lease renegotiations, asset sales and other transactions • Slashed $250 million in capital expenditures and cut 24% of corporate staff resulting in savings of $125 million. • A&M’s Immediate Action Plan improved liquidity position ($345 million) • Equity value at time of retention was approximately 15¢ per share; value was over $5.00 per share when A&M completed assignment in June 2004; all paid holders and creditors. • Planned and implemented an unprecedented refinancing of the capital structure in partnership with Credit Suisse First Boston Crisis and Turnaround Management HealthSouth

19. Representative Experience Representative Client Case Studies Background • Saint Vincent Catholic Medical Centers, a distressed health system in New York City, filed for bankruptcy in July 2005. • SVCMC, a $1.5 billion not-for-profit hospital system, consisted of five acute care facilities, a home health agency, a comprehensive behavioral health business and several nursing homes. • With losses of nearly $10 million per month, the hospital system had major underfunded pension obligations of more than $75 million, an estimated $190 million in trade liabilities, and between $80 million and $115 million in trailing medical malpractice liabilities. • Management was dysfunctional; there was distrust among and poor communication with all constituencies including unions, creditors, banks, state agencies, physicians. • A&M was hired as restructuring advisors Outcomes • Working closely with hospital executives, and union and community leaders, A&M quickly stabilized cash flow, increased liquidity, maintained operations, implemented quality controls, overhauled management and governance structures, outsourced information technology functions and third-party revenue cycle collection contracts, and stabilized union relationships. • A&M professionals spearheaded the closure and sale of four money-losing facilities in Brooklyn, Queens and Staten Island, generating new liquidity and reducing middle management costs. • Within just 20 months after entering Chapter 11, and only 14 months after hiring A&M, SVCMC filed a consensual plan of reorganization, improved annual cash flow by more than $100 million dollars, achieved positive monthly cash flow of approximately $3 million and was on track to achieve EBITDA of more than $60 million. • SVCMC emerged from bankruptcy in September 2007, as a smaller, leaner organization with a revitalized balance sheet and a long-term vision focused around a new state-of-the-art hospital. Turnaround and Restructuring Saint Vincent Catholic Medical Centers (SVCMC)

20. Representative Experience Representative Client Case Studies Background • A&M led the re-designing of a budget that exceeded $14 billion in support of a system that serves approximately 1.2 million children in 2005. • A&M was engaged by the New York City Public Schools, the largest public school district in the country, to restructure and redesign a centrally mandated, top-down, supply-driven organization to a bottoms-up, demand driven school-based organization • A&M personnel served in the following roles: Chancellor’s Chief Advisor on Restructuring, Chief Restructuring Officer (“CRO”) for Finance, CRO for the Office of School Support Services, CRO of Office of Pupil Transportation, Special Education CRO for Empowerment Schools . Outcomes By August of 2006, approximately 25% of the system’s 1,400+ schools had been moved into a leaner, more customer-focused empowerment structure, over $89M in costs savings had been realized and devolved directly to schools and their support structure. Other results included: • A fully functioning, on-line internal market for services where the bureaucracy would offer for sale services to schools to purchase including professional development, coaching, etc. • A redesigned special education support structure complete with new roles, responsibilities, process maps, training and monitoring capabilities of key metrics for this population of children representing approximately 18% of the total student population and in excess of $3B+ in spend • A redesigned Office of Youth Development complete with a call center, crisis response teams and content experts to serve “at-risk” kids struggling with issues of attendance, substance abuse, drop-outs and under-credited and overage characteristics • Innovative, data driven restructuring initiatives in non-academic operations designed to save up to $100M by more efficient & effective management in the areas of Transportation, Facilities (including custodial, energy conservation, repairs & maintenance) and Food Services. Program Innovation and Cost Management New York City Department of Education

21. Representative Client List Representative Client List A&M works with large and middle market companies and public sector entities spanning a variety of industries, geographies and operating environments. Public Sector Alabama Department of Transportation Algiers Charter School Association California Department of Motor Vehicles Chicago Transit Authority City of Aspen, CO City of Philadelphia City of Olathe, KS Detroit Public Schools Fairfax County, VA Indiana Department of Education Kansas City Board of Public Utilities Legal Aid Society of New York Maricopa County Community College District New Orleans Public Schools New York Department of Education Louisiana State University Maryland General Hospital Providence Public Schools St. Louis Public Schools St. Vincent’s Catholic Medical Centers South Coast Water District, CA University of Texas System U.S. Virgin Islands U.S. Department of Defense U.S. Department of Housing and Urban Development U.S. Department of the Navy U.S. Department of the Air Force University of Southern California Keck School of Medicine Washington DC Planning and Economic Development Washington, DC Public Schools Transportation Amerco (U-Haul) ANC Rental Concordia Bus Nordic AB Consolidated Freightways, Inc. Envirotainer AB ExpressJet Airlines Fairchild Dornier GmbH SIRVA, Inc. US Airways VecTour, Inc. Viking Freight Wabash National Corp. Oil, Gas and Natural Resources Amerada Hess Advanced Chemicals, Inc. BP Chemicals Cedar Chemicals, Inc. GEO Specialty Chemicals, Inc. Halliburton Energy Services Group Horizon Natural Resources, Inc. OMNOVA Solutions, Inc. Murray Energy Pioneer Companies Polymer Group, Inc. Sterling Affiliates, Inc. Tesoro Valero Energy Yukos Oil Company Power and Utilities British Energy EOTT Energy Partners, LP Gearhart Industries, Inc. Light Servicos de Electricidade SA National Energy & Gas Transmission, Inc. Pacific Gas & Electric Company Petrolane, Inc. Pioneer Electric Raymond International Reliant Energy Suez Energy Western Company of N.A. Financial Institutions American Business Financial Services Auto Finance Company, LLC Babcock & Brown DVI, Inc. GE Commercial Finance Houston Casualty Company Integrated Resources Lehman Brothers Metropolitan Mortgage & Securities Co., Inc. National Century Financial Enterprises, Inc. New Century Mortgage Risk Management Alternatives, Inc. The Rockefeller Group Wachovia Securities Washington Mutual Healthcare Aveta, Inc. Affiliated Medical Enterprises Allegheny Health, Education, and Research Foundation Bradford Teaching Hospitals Charter Behavior Health System, LLC Charter Medical Corp. Grady Health System Glenbeigh, Inc. Healthcare International, Inc. HealthSouth Corp. Integrated Health Services, Inc. Magellan Health Services, Inc. New York United Hospital Medical Center Republic Health Corp. (ORDNA) Rotech, Inc. Strategic Optical Holdings, Inc. (WISE) Stryker Orthopaedics St. Vincent’s Medical Center University of Connecticut School of Medicine University of Southern California / Keck School of Medicine Valley Presbyterian Hospital Watts Health Foundation Industrial / Manufacturing Anthony’s Manufacturing Co., Inc. APW, Ltd. Astronautics Corporation of America Atchison Casting Baldwin Industrial Services Birmingham Steel Corporation Carbide / Graphite Group, Inc. Chatham Technologies Dresser Rand FeddersCorporation Florida Steel Fruehauf Goodman Manufacturing Goodrich Goss International Heartland Steel, Inc. Kaiser Aluminum Long Agribusiness, LLC Moll France SARL Paper-Pak Products, Inc. SICPA SLI, Inc. Treofan

22. Representative Client List Representative Client List A&M brings together a diverse range of operational and financial skills to solve problems, implement solutions and create value for clients. Media and Entertainment Aladdin Gaming Company, LP DoubleClick Movie Gallery, Inc. Panini SpA PBI Media President Riverboat Casino Resorts International, Inc. Trump Casinos Vail Resorts, Inc. Vertis Communications Westar Hotels Apparel Cluett American Dan River, Inc. Donnkenny Apparel Eddie Bauer Galey & Lord, Inc. Kasper A.S.L., Ltd. Lejaby S.A. Levi Strauss & Co. London Fog Industries The Gitano Group, Inc. The Spiegel Group The Warnaco Group, Inc. Tropical Sportwear International, Corp. Professional Services Altheimer & Gray Arthur Andersen, LLP Jenkens & Gilchrist Thomas Havey, LLP Education / Publishing Jostens Learning Phillips Colleges, Inc. Scholastic, Inc. University of Chicago Press Western Publishing Private Equity Apax Partners Bank of America Capital Partners Berkshire Partners Catterton Partners Cerberus Capital Management Clayton, Dubliner, & Rice Fenway Partners Private Equity (cont.) First Reserve Corporation Greenbriar Equity Group GTCR GoldnerRauner LLC Harvest Partners HIG Capital KRG Capital North Castle Partners Pegasus Capital Advisors Sun Capital Partners Tennenbaum Capital Partners Texas Pacific Group Vestar Capital Partners Wellspring Capital Management Retail AutoZone Ames Department Stores, Inc. Burger King Corporation Camelot Music, Inc. Color Tile, Inc. Crescent Jewelers Drug Emporium, Inc. E-Z Mart Stores Fedco, Inc. Handy Andy Home Improvement Centers IhrPlatz GmbH Kleinert’s, Inc./buster Brown Nordstrom Phar-Mor, Inc. S&K Famous Brands, Inc. Snyder’s Drug Stores, inc. Wherehouse Entertainment, Inc. Homebuilding and Construction J.A. Jones KBR Kimball Hill Homes Oakwood Homes Corporation Technical Olympic USA, Inc. US Concrete Woodside Homes Zachary Construction Technology Adelphia Communications Applied Graphics Technologies, Inc BMC Software Bridge Information Systems, Inc. DLT Solutions Technology (cont.) Epoch Networks Exodus Communications, Inc. Genuity, Inc. iSoft JDS Uniphase Corporation Jippi Group Oyj LG Phillips ON Semiconductor Corporation Physician Computer Networks Unidigital, Inc. Vitesse Semiconductors Telecommunications Affinity Internet Holdings, PLC AT&T Latin America ComCorp Broadcasting, Inc. e-spire Communications, Inc. Global Telesystems, Inc. Globix Corp. Infonet Services Corp. Innovative Communication Corporation International Fibercom, Inc. Irdium, LLC KPNQwest Iusacell Latin America Microcell, Inc. Microsoft Telegroup, Inc. Ventelo Group Western Union Corp. Winstar Communications, Inc. Consumer Products and Services American Italian Pasta Company Anchor Glass Applica Brake Bros. Plc Burger King Corporation Cannondale Bicycle Corp. Chiquita Brands Formica Corp. Interstate Bakeries, Inc. Le Petit Bistro, Inc. Leiner Health Products, Inc. Microsoft Parmalat PepsiCo Sysco Foods Timex Corp. Winn-Dixie World Kitchen, Inc. (Corning)

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