(Very substantive diary addressing Douglas’s proposed cuts. – promoted by Jack McCullough)
she posed the following question re. the decision to close a prison and (presumably) ship more prisoners out of state
“How much does it cost us to export prisoners? Is that cheaper than running a prison ourselves?”
Doug Hoffer Testimony
House Government Operations
Regarding CCA and the DOC
2 April 2008
We know that the cost of housing a prisoner is cheaper at an out of state (OOS) facility than in Vermont. But is the comparison apples-to-apples? If not, the purported savings are exaggerated and could result in bad decisions. Here are some differences.
1. Corrections Corporation of America (CCA) does not provide mental health services. DOC has not provided data for the actual cost of mental health services in Vermont prisons.
2. CCA does not provide services related to sexual abuse, substance abuse, or violent offenders. DOC programs not available through CCA include the Cognitive Self Change program for violent offenders; the Intensive Domestic Abuse Program; Batterers Intervention Program; the Network Against Domestic Violence and Sexual Assault Programs; and the Discover Program for those with substance abuse problems.
DOC has not provided data for the actual cost of these services in Vermont but they must be substantial. For example, the treatment programs for sexual abusers include over 100 beds in St Albans, Springfield, and Windsor staffed with 7+ FTE master’s level MH professionals.
3. CCA provides a GED program but, according to DOC, it is not comparable Vermont’s Community High School (CHS). DOC has not provided data for the actual amount spent by CCA for its GED program or any details about the program.
DOC’s cost for “education” was $3.6 million in FY07. DOC was unable to say what CCA spends. When asked to provide comparable figures to reflect the difference in services, DOC adjusted its education costs downward to $1.45 million.
According to CCA, 120 inmates earned a GED at its Kentucky facility in 2006. But the company did not say how many Vermont inmates went through the program (and DOC did not tell us). CCA reported that about half the inmates at the Kentucky facility were from Vermont. But since Vermont does not send inmates under 22 years of age OOS, it is likely that Vermont’s share of CCA GED graduates is less than half the total.
CHS reported that 148 high school diplomas were awarded in FY07. DOC describes the CHS as a very substantial program serving hundreds of inmates who log thousands of hours of time in the classroom. DOC is required to spend the equivalent of the statewide average for public school students (minus trans. & debt service). Since CCA’s business model is based on cost containment and limited services, the quality of instruction cannot be comparable to the CHS.
Therefore, without more information, it is difficult to understand DOC’s adjustment from $3.6 million to $1.45 million.
4. DOC reported spending $13.4 million for medical care – $7,953 per inmate (not including mental health services). It seems highly unlikely that CCA would spend anywhere near that much since the total annual cost per inmate is only about $23,000. Thus, notwithstanding the differences due to the economies of scale, there must be significant differences in the health of the two populations and/or the nature and quality of the services provided.
We asked DOC for information about health care services and costs at CCA facilities, but DOC had none. When asked, CCA provided information on Vermont inmates’ share of the percentage of total expenditures for medication. Vermont inmates represented about half the population at the Kentucky facility but accounted for 77% of the total cost for medication (including diabetic, cardiac, HIV, Hepatitis C, and asthma medication).
The numbers appear compelling but there’s a lot of information missing. Percentages don’t tell us what the costs are. For example, 77% of a small amount is no big deal. And we don’t know whether a significant portion went to a small number of inmates with more serious conditions. And we don’t know anything about the demographics or medical condition of the Kentucky inmates. And, most importantly, we don’t (yet) know how the per inmate medication costs for VT inmates in Kentucky compare to the costs at DOC facilities. The question was about costs, not percentages.
5. The CCA contract calls for the company to provide only the first $2,000 in care outside the facility (it was $20,000). A DOC memo claims this change will cost the state $360,000 per year. It does not appear that this cost has been added to the published contract costs for OOS prisoners.
6. AHS and DOC staff make periodic visits to the OOS sites for various purposes. DOC estimated that the cost for FY07 was $139,000.
All these costs should be taken into consideration when comparing the CCA contract rate and the DOC instate cost. The bottom line is that a fair comparison can only be made when the characteristics of the population and the services provided are apples-to-apples. We don’t yet have the data necessary to do this.
CCA only takes inmates who do not need mental health care or specialized treatment programs. And it seems highly unlikely that CCA’s GED program is anything like the full-service high school experience offered by the CHS. Therefore, it’s not surprising that CCA’s program is so much cheaper; it is the equivalent of an insurance company cherry picking only healthy people.
What’s the alternative?
We asked the DOC to help explain the differences in the cost structure. According to DOC, the primary reason is that CCA achieves economies of scale with larger facilities. This is reflected in Vermont’s figures as well since the larger in-state facilities have lower costs per person. However, that doesn’t necessarily mean the best solution is to outsource.
Note: CCA also keeps the price down by paying very low wages. The median annual wage for a corrections officer in Kentucky is less than $25,000.
Every dollar spent with CCA is a dollar lost to the Vermont economy. On the other hand, if we built a new prison, we would have a fifty-year asset large enough to achieve at least some of the economies of scale we need to save money. And we would get the short-term benefits of the construction and fit-up (tens of millions in local payroll), as well as the long-term benefit of those continuing expenditures for salaries (money circulating in the local economy).
Having said that, I understand that the annual savings appear to be large. But we don’t yet have an apples-to-apples comparison. Once we do, the question is how do the savings from outsourcing compare to the benefits of building and operating a new facility? This critical question has not been addressed.
Furthermore, if Vermont continues to rely on CCA for more and more beds, the instate infrastructure (physical & human) will be reduced over time from closures, retirement, and layoffs. If so, what is to prevent CCA (or another vendor) from raising the price when Vermont has even less capacity?
Miscellany
Some items in DOC’s report to the legislature that merit brief comments.
• The table at the top of page 26 shows the “Hypothetical Cost of Contracting by Facility”. It says the state could save $41 million by outsourcing all of Vermont’s inmates. This is not accurate. As discussed above, CCA does not provide a number of very expensive services. If they were required to do so, the cost would go up accordingly. In my view, it is terribly misleading to present this kind of information.
• The second table on page 26 shows the projected contract costs for the “New England Option”. This too shows tens of millions in annual savings but suffers from the same flaws as the first table. More importantly, it notes that CCA’s per diem cost would likely rise to $80 from $58, in part to cover the capital costs of the new facility.
I ask you to think about this. Why should Vermont taxpayers pay for a new prison in another state, to be owned not by Vermont but by a private company? If taxpayers are asked to pay for a new prison, why shouldn’t the facility and the jobs be in Vermont? This just makes no sense to me.
• Under “Plan C” (Re-Task Several Facilities), the report states “The correctional facilities serve multiple populations and functions, and intersect with the interests of the criminal justice system, law enforcement, cities and towns, victims, families of offenders, advocates, and taxpayers. Each of these stakeholders has a valid interest in Vermont’s current and future correctional system.” (emphasis added)
Sending inmates OOS does not serve families or advocates.