Legislature(1995 - 1996)
04/18/1996 02:20 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 428 LEASE-PURCHASE CORRECTIONAL FACILITY SENATOR KELLY announced HB 428 to be up for consideration, but sai they would take a break at 2:45 p.m. SENATOR KELLY called the meeting back to order at 3:12 p.m. DENNIS DEWITT, Staff to Representative Eldon Mulder, said HB 428 allows the Department of Corrections to pursue the use of private facilities. The first portion of the bill clarifies the ability to contract for private services. The second portion of the bill allows the Department to enter into a lease purchase agreement with a private contractor for a private facility in Alaska. There are some parameters like it can't be larger than 1,000 beds, should be designed for expansion, should include housing for female prisoners which is one of the critical needs we have in Alaska and that construction costs should not exceed $100 million. It should be constructed with a project labor agreement. There's language in the bill that encourages the Department of General Services to develop incentives in the bid process for bidders who promise to employ Alaskans in the operation of the facility. The bill requires that correctional officers in this facility be trained at the same level as correctional officers in the facilities operated by the State of Alaska. MR. DEWITT said that we do need additional capacity in Alaska. Today we're at about 107 percent of capacity in our facilities. We also have 206 prisoners in Arizona and we're spending nearly $6 million providing jobs for Arizonans. Improving facilities for female offenders is one of the things that's outlined in the Cleary final settlement agreement and it's an issue that it has been agreed to by almost everyone involved in the prison system. Number 400 The Subcommittee on Corrections held interim hearings on the topic of privatization and found that the ability to move quickly is enhanced using private sector facilities and the record of private facilities is as good as public facilities in terms of safety and quality of the product that they offer. The cost in Arizona per inmate day is $59 with additional costs bringing it up to $73 per day. In Alaska we pay $109 per day. He believes that a facility built in Alaska by a private contractor would substantially reduce the per diem cost in Alaska facilities. Bringing competition into the market place will help bring the cost of their other facilities down as well. He believes HB 428 addresses the problem of prison capacity, brings construction and operation jobs to Alaska, brings Alaska money back to Alaska, provides innovative opportunity to address Alaska's needs and assures safe and secure prisons. BOB COLE, Director, Division of Administrative Services, thanked Representative Mulder for attacking the problem of over-capacity prisons in Alaska. He said the number of offenders being held on civil law matters has risen about 6% - 8% per year for the last several years, the number of man days served has been rising proportionately. MR. COLE said that the Governor has an alternative proposal which envisions regionalized facilities that meet different requirements of communities around the State. This is particularly important since the biggest portion of the rise in traffic is in misdemeanors and pretrial populations which are localized kinds of offenders who aren't sentenced yet, for the most part. They don't think that a huge centralized facility like the one proposed in HB 428 in a single location in the State is going to solve problems in places like Barrow, Nome, Palmer, and Juneau. MR. COLE said they have concerns about the propriety of issuing RFP's to private contractors to propose to build a facility of up to 1,000 beds at $100 million instead of the design build mode. They have some concerns about the propriety of doing that in the sense that it would lock the State into an agreement for a 20 year period of time. The Governor's approach envisions issuing GO bonds in the amount $148,500,000 for slightly over 1,000 beds dispersed across the State. HB 428 offers no real opportunity for voter input. They think when they are asking the State for $100 million with a payback potential of $200 million over a 20 year period of time that the voters probably should have something to say about it. The Governor's bill would put the entire matter on the ballot in November of 1996. The Department recognizes the need for beds in Southcentral Alaska. The Governor's proposal has an 600 bed proposal for the area in and near Anchorage. MR. COLE also pointed out that the Governor's proposal is cast in the context of a long range financial plan which has been submitted to the legislature; HB 428 was not. Number 475 SENATOR SALO asked if there was an accreditation process that would require certain things of the correctional officers. MR. COLE replied there is a provision in HB 428 that would require comparability of training for correctional officers working in the private sector. This was put in in recognition of the fact that the State Department of Corrections has an excellent record when it comes to deaths, fights, assaults, and that sort of thing. There is a very rigorous process in place now for State correctional officers. SENATOR TORGERSON asked if this bill passed the full body, if they looked at it as a mandate to go forward with private prisons or as an option to lay alongside the table with the GO bond proposal? MR. COLE answered if there is some agreement reached during the session including both in a single piece of legislation, he didn't know what the answer would be. SENATOR TORGERSON said he didn't think this mandated building a private prison since the wording was "shall" look into it and "may" come forward with a proposal. MR. COLE replied that the bill was written permissively. Number 505 SENATOR KELLY asked for a spreadsheet analysis (capitalization costs, finance costs, operational costs) of the Governor's proposal over 20 or 30 years and the proposal in HB 428 for the same time period. MR. DEWITT replied that there are no sheet like that and part of the problem in developing that, especially with the operational side, is that they have left it to the Department to define the operational needs that the facility ought to fill. He said he had done a very "quick and dirty spreadsheet" in terms of the capital costs on both proposals. The Governor's proposal is about $135,000 capital costs per bed and HB 428 is a little more than $100,000 per bed. In terms of operation, they have no reason to believe they would change the approximate $100 per day cost of operation in the system through the Governor's proposal. They would expect a private facility on the average to come in substantially below that. SENATOR KELLY asked him to bring him a side by side comparison of the two proposals, construction costs and as near as he could with the operational costs. SENATOR TORGERSON said one of the concerns he had with both options is that they are not considering the option of lease purchase that the City of Seward has done and the City of Kenai said they would do. He wanted to see the numbers on the lease purchase agreements that the city would sell revenue bonds for and then lease it back to the State as another part of that side by side. Number 540 MR. COLE said setting aside the matter of what's the right way to provide correctional services, there are a number of financial pros and cons to the lease purchase, private purchase, private capitalization, and general obligation bonding. One of the reasons they decided to go the general obligation bond route, in addition to giving full disclosure and participation to the public, is because they are told it is financially advantageous to the State to do that for a number of different reasons, both in terms of initial capital cost and the payback. CHUCK O'CONNELL opposed HB 428. It does not resolve the problems of overcrowding in Juneau, Fairbanks, Nome, and Bethel. It puts a large monolith somewhere in central Alaska which could ultimately result in some problems requiring them to house inmates where they can have access to their attorney, families, etc. He wanted the committee to consider regarding the prisoners in Arizona that you have additional medical costs, probation costs, program and other divisional costs. A private contractor would not have those costs, but the State would still have to bear them. So if you're going to build a prison in Anchorage, the fair way to compare that cost is to compare it to the cost of running a facility nearby. For example, the Department has published a cost of care institution by institution, presently at Palmer Correctional Center. The cost is $62.51 per day while Mr. DeWitt testified that the total cost in Arizona is $73 per day. MR. O'CONNELL said he thought we would be extremely competitive if we compared the right figures. He said that HB 428 is a whole new approach. Prisoners do not spend all their time in jail. They are on the road to the doctor, to the dentist, to court. They are in and out of jail all the time. This is a public safety concern that has had no study. They are talking about spending $200 million without a fiscal plan or analysis of whether or not this is a prudent way to spend state dollars. MR. O'CONNELL reiterated that ASEA completely opposed this bill. He said we have never had a correction officer killed in the State of Alaska and we are the only State that can say that. And we have never had an inmate killed. TAPE 96-28, SIDE B He said we have an efficient, safe, correctional system and although the costs are high, when you compare the costs of the institution itself to the cost of an institution in Arizona, they are very competitive. SENATOR KELLY interrupted Mr. O'Connell and apologized to him and everyone else for the little amount of time they could spend on this issue today because of the end of session. He said they would come back on Tuesday and see what the Department of Revenue would say. SENATOR KELLY adjourned the meeting at 3:37 p.m.