The governor’s proposed 2002-03 state budget will close five private community correctional facilities (CCFs) as of June 30^t unless the Legislature takes action. This so-called cost-saving decision will actually increase the cost to taxpayers, lose badly needed jobs, and terminate key drug rehabilitation and education programs that reduce recidivism.

The state faces a $17.5 billion deficit. Three weeks after agreeing to give the prison guards union a 33.76 percent five-year salary increase indexed to the salaries of the California Highway Patrol, the governor announced he was closing five private prisons to save money. Never mind that these programs cost the state less to run than the existing publicly owned prisons.

The California Department of Corrections (CDC) says that closing these facilities will save the state $5.1 million; the Legislative Analyst’s Office (LAO) reduced this number and estimates the savings would be no greater than $2.8 million. Both CDC’s $5.1 million and the LAO’s $2.8 million estimates overstate the savings. It is likely that the closure of the five CCFs will actually result in increasing state costs by at least $16 million.

Here are the details:

• Over $6.8 million in added state costs for minimizing the “good time” sentencing reduction program. Until this year, CDC has always maintained that the state saves money by housing inmates in CCFs rather than state institutions since the inmates receive more good time sentence reduction. For example, in a 1998 budget change proposal, CDC said that using CCF beds instead of overcrowding existing state prison facilities made it “easier to establish work assignments for the inmate population and maximize good time sentence reduction, which results in overall cost savings.”
  
  If the state closes the five CCFs as planned, as many as 90 percent of them will not be assigned work. The result is lengthening inmates’ time in prison and increasing the cost to taxpayers. [1] Using CDC’s incremental overcrowding rate of $14,797 per year, the cost of these “extra days served” to California taxpayers would be $5,290 for each CCF inmate year that is eliminated. [2]Assuming the loss of all 1,435 CCF beds, the total taxpayer cost resulting from the lost good time could be as high as $6.8 million per fiscal year.[3]

• Over $5.4 million of state capital costs were not considered in CDC’s per inmate cost estimate. In 1998, the Bureau of State Audits documented per-capita costs of $3,795 that were not captured in CDC’s published figures. CDC did “not include capital costs, such as lease-purchase payments, debt-service costs for new construction, and costs of improving and renovating existing prisons,” the bureau said. These costs are included in the private CCF’s $14,910 average per-capita cost. If the CDC did not include capital costs associated with housing these inmates, $5.4 million must be added to the state costs. Did CDC or LAO consider these state costs in their recent analyses?

• Over $3.8 million in added continuing state costs due to the closures. Approximately $2,700 of the cost of operating private CCF beds are state costs associated, mostly, with the CDC staff who work at, or in support of, the CCF. Each CCF has several state employees working full-time at the facility. CDC has told these employees they will not lose their jobs and will be transferred to existing state institutions. Using LAO’s figures, if these state employees are absorbed into the state prison system, the estimated $2.8 million savings will be wiped out by the added $3,874,500 in continued costs[4]. Did CDC assume these state employees would be laid off when they calculated the potential future savings of closing five private CCFs?

• And, what about the recently awarded 33.76% pay raise? Is it factored into the CDC’s estimate? Since the CDC has promised to transfer the state employees from the CCFs into the state system, and the budget proposes hiring additional CDC staff, this pay increase must be figured into the calculations. CCFs do not receive regular cost-of-living adjustments.

• In order to show a savings, the CDC has created a misleading annual cost called an “overcrowding rate.” Based on this computation, the first inmate costs the state approximately $87 per day and the other supposedly costs only $40.56 per day. It is only the second inmate, or the overcrowded inmate, that is compared against the CCF rates to produce a savings. The reality is, once there are two inmates in the cell, each has an identical average cost to the state. This CDC “new math” is dangerous. Using the average cost of housing an inmate in state-run facilities is a more accurate number. The Bureau of State Audits found in its 1998 audit that the average cost of housing an inmate in state institutions was $24,807 per year with a low of $18,562 and a high of $38,554. Using the state auditor’s approach, costs are increased significantly.

•  What about women’s institutions? One CCF slated for closure exclusively houses female inmates. While the LAO specified CDC’s rate for “inmate-overcrowding” at $14,797 per bed per year, it did not specifically address a women’s overcrowding rate. The four state institutions for women are significantly more expensive on average than the male institutions. Drawing from the Bureau of State Audits’ report dated September 15, 1998, we know the least expensive women’s prison (Valley State Prison for Women) cost $25,638; the most expensive was a whopping $31,846 (Northern California Women’s Facility). The current cost associated with the women’s CCF is only $16,037.  Comparing the cost of housing women in a CCF versus an “overcrowding” rate not exclusive to the women’s institutions is deceptive. Without a published “overcrowding rate” for women, it is impossible to accurately compare the private CCF and state institution costs for housing women.

• How will CDC handle overcrowding? Before California’s inmate population started declining, inmates were triple-bunked along outside walls and double-bunked in the center floor area in gymnasiums at every prison in California. However, the problem of overcrowded state prison facilities is alive and well. Although the CDC is now claiming that they have eliminated use of “gymnasiums” for housing inmates, it continues to use other areas of prisons not designed for inmate housing, such as day rooms, storage units, etc., as sleeping areas. This apparently proves that these public facilities still have insufficient cell space. It is remarkable that community correctional facilities are being closed while this overcrowding problem exists.  California taxpayers may be one lawsuit away from a financial liability for violation of inmate rights, including violations to the American Disabilities Act, and inmate overcrowding.

• The state spent over $35 million on inmate lawsuits last year. Did CDC or LAO consider these costs in their analyses? Private CCF contracts indemnify the state against inmate lawsuits that arise from the operation of the prison. The cost of defending and settling these lawsuits is included in the private CCF’s average annual payment of $14,910 per inmate. If these inmates are transferred into state-operated prisons, the cost of defending and settling these lawsuits will be borne by the state.

The following chart is a recap of how California taxpayers will spend over $16 million to save $5 million by closing the five targeted community correctional facilities:

Spending $16 Million to Save $5 Million
Added state costs for minimizing the good time sentencing reduction program	$6,800,000
Enhanced state costs for excluding capital outlay costs in CDC’s per inmate cost estimate.	5,400,000
Added state costs that will continuing after the CCF closures, including the 33.76% pay raise for transferred CDC staff	3,800,000
Enhanced costs due to CDC’s misleading use of the “overcrowding rate”	$$$
Enhanced state costs if CDC and LAO excluded costs of lawsuits in their analyses	$$$
Total:	+$16,000,000

Internal Department of Corrections audits and Inspector General reports demonstrate that most private correctional facilities provide superior inmate services and positive community impact, which we believe have led to reduced recidivism rates. However, the Department of Corrections prohibits private prison providers from keeping recidivism data. Legislative budget writers should require a three-year study to determine whether private prison programs reduce recidivism more effectively than existing public programs. The private industry is willing to undergo this kind of scrutiny. If private prisons are more effective than existing overcrowded public prisons in reducing the number of inmates returning to prison, tens of millions of dollars could be saved and crimes prevented.

The public wants to see cost reductions, greater efficiencies and more effective management used to help address the $17 billion state budget deficit. Instead of cutting costs and increasing efficiency, closure of these five facilities goes the opposite direction. In particular, these cuts will result in serious adverse economic impact in smaller communities which host CCFs. Community correctional facilities are often one of their largest employers as well as one of their biggest taxpayers, generating substantial revenue from property tax, utility user tax and other state and local taxes. Some specific examples include:

• The city of McFarland receives approximately $120,000 in local property taxes, and the McFarland Water Agency receives payment exceeding $15,000 annually. The McFarland CCF facility purchases most of its daily need for supplies from local vendors. This includes food, gasoline, and myriad other items needed to maintain operations. McFarland employees use local vendors as well.

• As a company, Wackenhut Corrections Corporation (WCC) and its employees participate fully in the community. Local schools and charities regularly receive donations of needed equipment. WCC and its employees participate in food drives, etc. One WCC staff member serves on the city council in the neighboring community of Wasco.

• The Baker CCF facility inmates provide emergency first response services through the San Bernardino Fire Department for an area of over 3,000 miles. Baker CCF inmates staff the first emergency vehicles responding to automobile accidents occurring on I-15 between Barstow and the Nevada state line. The next closest first response emergency crew is over an hour away. The San Bernardino Fire Department has stated it will cost taxpayers at least $900,000 per year to replace the services provided by the inmates at Baker. The California Highway Patrol also benefits from the presence of these inmates at the scene of accidents.

• In the city of Live Oak, home to the Leo Chesney Center, over 40 percent of the citizens live below the poverty line and are on some form of government assistance.  This number is guaranteed to increase if Live Oak’s largest single employer is shut down. Baker, Eagle Mountain, McFarland, and Mesa Verde (locations of the other CCF’s) are all in similar, if not worse, predicaments. General fund revenue is reduced via the tax base and expenditures are increased due to the increase in government assistance.

Small communities that are home to the CCFs receive benefits from the taxes and fees paid by the private CCFs to maintain local schools and parks. And, the real world effect of closing the CCFs is that nearly all of the non-CDC staff will lose their jobs. Several hundred taxpaying employees are going to be unemployed and most likely will become an added cost to the state of California.

If the governor and the Legislature were interested in cutting state costs, then consideration should be given to closing old, expensive antiquated institutions in the state prison system. Taxpayers should be asking the governor and Legislature this question: Why are inefficient and expensive institutions receiving future funding while the less-expensive five CCFs are targeted for closure?

[1] Inmates housed in overcrowded state institutions without work assignments can only receive one day of good time sentence reduction for every two days served (up to 182.5 days of good time sentence reduction per 365 day inmate year).  Each private CCF bed (with a work assignment) can create up to 261 days of good time credit (“one for one”) for each “inmate work year” plus 52 days of good time credit (“one for two”) for the 104 weekend/RDO days when an inmate is not working.  This totals to 313 (261 + 52 = 313) good time sentence reduction days per year when housed in a private CCF. By transferring these “working” CCF inmates to overcrowded CDC institutions, the state will reduce the total number of good time sentence reduction days by up to 130.5 days for every CCF inmate year (261 possible work days at “one for two” rather than “one for one”). 

[2] $14,797 /365 = $40.54 per day x 130.5 days = $5,290.

[3]  Assumes 90% of inmates now sent to private CCFs are not earning day for day work credits when they enter the facility; thus, 1,435 inmate years x 90% x $5,290 cost for the extra days that will be served in overcrowded state institutions.

[4] $2,700 in state employee expense per CCF bed X 1,435 beds = $3,874,500.