Legislature(1995 - 1996)

04/23/1996 04:02 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          HB 428 LEASE-PURCHASE CORRECTIONAL FACILITY                         
  SENATOR KELLY announced  HB 428  to be up for consideration.                
 CHARLES CAMPBELL, Juneau resident, said he was Director of                    
 Corrections during the last three years of the Hammond                        
 Administration.  More recently he served as standing compliance               
 monitor in the Cleary case.  However, he had no role in reaching              
 the settlement, but he had a responsibility for monitoring                    
 compliance with the decision.  He said he had a variety of roles in           
 Corrections over a period of about 45 years including assignments             
 to seven different federal prisons.                                           
 During recent years he has spent much of time researching and                 
 writing in the field of penal history and he believed that when it            
 comes to making public policy it is a big mistake to ignore the               
 lessons of history, especially when the lessons are clear and                 
 applicable as they are where imprisonment for profit is concerned.            
 He said we especially need to remember the appalling results and              
 sad legacy, especially in the Southern States, of turning                     
 imprisonment over to private, profit seeking interests as was done            
 at the end of the civil war.                                                  
 MR. CAMPBELL opposed HB 428 or any legislation that would move                
 Alaska toward privatization of prisons.  He said the core problem             
 here is not so much the lack of space to house convicts as it is              
 the really alarming number of Alaskans in prison.  The                        
 privatization idea is a way of accommodating a problem rather than            
 looking for ways of solving it.  Privatization will become a matter           
 of relying on folks whose corporate survival depends on the problem           
 not being solved or alleviated very much.                                     
 MR. CAMPBELL said we need to keep in mind the Alaska Constitutional           
 requirement reiterated in the Cleary settlement that the State's              
 prisons provide rehabilitative opportunities.  The privatization of           
 a facility does not relieve the State from this requirement.  We              
 ought to be able to assume that the people running rehabilitative             
 programs or facilitating those programs in a State prison genuinely           
 want the programs to be successful.  How could we ever make that              
 assumption when the financial interests of the company running the            
 prisons are served best by the failure of rehabilitation programs?            
 Recidivism is a plus factor for the private prison industry.                  
 He said that he didn't think that people getting six figure                   
 salaries were the kind of folks who would be using their skills and           
 influence to encourage legislation that might reduce the rate of              
 MR. CAMPBELL said he didn't think we could build our way out of               
 this problem.  It is not just here in Alaska; it's a national                 
 problem - an increase of the prison population of almost 150                  
 percent over the last 15 years. Here in Alaska we have outstripped            
 that growth.                                                                  
 He added that after WWII the U.S. sent thousands of young Americans           
 off to colleges, universities, and technical schools.  The whole              
 nation benefited.  Now we are sending thousands of young Americans            
 off to penal institutions that hardly make a pretense anymore of              
 having rehabilitative programs.  We will be sure to reap the                  
 consequences of the new and revised kinds of training these                   
 thousands of Americans are receiving in jails and prisons across              
 the country.  It is not a happy prospect.                                     
 MR. CAMPBELL said he did not believe the American people are so               
 inclined to violent, criminal behavior as to justify the highest              
 incarceration rate on earth.  He asked what happened to the                   
 Criminal Justice Planning Commission or to the Corrections Master             
 Plan that was developed in the late '70's and early '80's.  He                
 asked what happened to the Sentencing Commission.  He said we are             
 paying the price for failing to appreciate the importance of                  
 analysis and long range planning.                                             
 He said we need to reject the privatization idea, go with the                 
 Governor's plan that is the best approach for dealing with the                
 immediate problem, and then set up some arrangement to seek out the           
 factors that have contributed and are still contributing to the               
 problem of over imprisonment.  He said we need to revamp the                  
 sentencing statutes of the State, making sure dangerous offenders             
 stay confined a long time and that nondangerous offenders take up             
 less bed space in conventional prisons.  We need to make expanded             
 use of alternatives to imprisonment for prisoners who are not                 
 dangerous and we need to give serious support to drug and alcohol             
 treatment programs and other kinds of preventative measures like              
 better schools and better resources for young people and better               
 parenting for our children.                                                   
 Number 313                                                                    
 SENATOR SALO said she agreed with much of what Mr. Campbell said,             
 but in the event they were not going to lay aside HB 428 she had              
 some amendments that would make this bill better public policy.               
 SENATOR SALO moved amendment #1.                                              
 SENATOR KELLY apologized and said there were a number of people               
 waiting on teleconference to testify before they voted on                     
 amendments.  SENATOR SALO said that was o.k.                                  
 GARY DAMRON, Shift Supervisor, Department of Corrections, said he             
 spoke on behalf of 800 correctional officers with ASEA and over               
 75,000 correctional officers who have contacted him nationally.               
 MR. DAMRON said that private corrections throughout the United                
 States has a long history or failure.  He noted a number of                   
 institutions in the 1700 and 1800s that had to be taken over                  
 because of abuses against the prisoners.  New York's most prominent           
 prisons, Auburn and Singsing, were once private facilities run by             
 corporations.  In the late 1880's private prisons were so popular             
 they were the norm, not the exception.  Around 1900, due to abuse             
 complaints from the private sector, the states were forced to                 
 accept responsibility to manage and operate the facilities.                   
 MR. DAMRON said there is a substantial conflict of interest for a             
 private company to run a public prison.  The Alaska Constitution              
 requires reclamation of the defender, but private companies want to           
 keep their cells filled to keep their profits up.  There is no                
 incentive for them to run quality rehabilitation programs, because            
 if you reform a defender, he or she becomes a productive member of            
 society and you lose our revenue.  Rehabilitation programs are very           
 Another conflict of interest comes to disciplinary problems inside            
 the prison.  One of their best management tools currently is                  
 statutory good time for good behavior.  A private prison would have           
 no incentive to use that tool.                                                
 The two companies, Wackenhut and Correction Corporation of America,           
 seem to be the force behind the privatization effort in Alaska.               
 Wackenhut used unlicensed investigators in Alaska to quiet Alyeska            
 Pipeline Service Company critics and they broke the law in three              
 states investigating congressmen.  The Correction Corporation of              
 American is currently being investigated for a bribery kickback               
 scam involving a $1 million contract for operating a correctional             
 In conclusion, MR. DAMRON said that the State of Alaska wants a               
 correction system that concentrates on the humane treatment and               
 reformation of the prisoner and not merely warehouse a convicted              
 person.  The Alaska Department of Corrections is the finest                   
 correctional system in the United States.  We have excellent                  
 programs including sex offender treatment, drug and alcohol abuse,            
 male and female offender rehabilitation, and mental health                    
 treatment and education.                                                      
 Number 330                                                                    
 RICHARD SEWARD, Fairbanks, opposed HB 428.  He said he wasn't a               
 correctional officer, but he had spent time visiting correctional             
 centers and looking into Alaska correction issues.  When you are              
 enforcing the captivity of citizens there is always a threat of the           
 use of force.  He thought it was bad public policy to let the use             
 of force be a profit making endeavor.  He said it is very clear to            
 him that the liability of the use of force will always be with the            
 State of Alaska.                                                              
 GLENN SCHRADER, Kenai, said he was totally against privatization of           
 the prison system.  A private operator is in it to make money and             
 they will try to cut corners and cut costs.  He endorsed Governor             
 Knowles proposal to add on to existing facilities.                            
 Number 440                                                                    
 BILL PARKER, Soldotna, said he agreed with the previous testimony             
 because they are correct.  Private jails were tried in this country           
 years ago and they didn't work.  He said it didn't make a lot of              
 sense to spend a whole lot of money shuffling inmates all over the            
 State from one location for meetings with their attorneys and                 
 CHESTER ZEIGLER, Anchorage, said he had talked to a lot of people             
 from different walks of life and found no one who supports this               
 bill.  MR. ZEIGLER said it becomes a dehumanized task to handle               
 prisoners, but it becomes more so when you don't have State                   
 responsibility and oversite of it.  He said the Governor's plan is            
 the best plan we have right now and is a better way to go than                
 getting involved with privatization.                                          
 Number 485                                                                    
 CHUCK O'CONNELL, ASEA, said he read an article in a national                  
 publication concerning privatization.  Last summer there was a                
 major riot at a privately run facility in northern New Jersey.                
 Previous to that riot the Federal Bureau of Prisons had contracted            
 to build four additional private prisons.  Following the riot and             
 the tremendous liability the Federal Government found themselves              
 facing with the deaths and injuries that occurred in the riot, they           
 canceled all of their private contracts with the exception of one             
 that is about to open.                                                        
 He thought it was important to note that we have never had a riot             
 in Alaska.  In Minnesota and Louisiana when private contracts were            
 let, they came in with very low bids, but in all (three) instances            
 they came back for and received additional money.                             
 Number 515                                                                    
 ROSS KINNEY, Deputy Commissioner, Department of Revenue, said they            
 have one concern with this bill and that is with the financing                
 mechanism being proposed.  He explained that lease purchase is a              
 viable option for financing.  However, in this case, the concerns             
 they have from the State bond community's perspective is the fact             
 that the financing is rolled into an overall contract that deals              
 with construction and operation.  There are a number of inherent              
 risks association with that type of activity from a financing                 
 The concerns they have are simple.  They feel as though the State             
 bonding community can issue debt on behalf of the State of Alaska             
 cheaper than anyone else can issue on our behalf.  The revenue                
 stream that would arrive from the lease payments associated with              
 the contract would be pledged as security for this debt.  That is             
 subject to annual appropriation by this legislature and as a result           
 will receive a rating that is significantly less than our general             
 obligation bond rating.  Where we have a AA rating for GO bonds,              
 our rating on a prison facility under a COP issue would be rated A.           
 Rates that could be utilized under an insured issue for a AAA                 
 rating are substantially below what a AA GO rate would be.                    
 If a private contractor were to finance this obligation, there                
 would be risks associated with that, not only in the area of                  
 appropriation risk, but a construction risk.                                  
 He said you need to be aware of the fact that they need to deal               
 with a contractor who is rated or is highly rated in order to                 
 assure we will get the best interest rates for the kinds of debt              
 that is being issued.  If there is a problem with either the                  
 construction or the operation of this contract, it has to be                  
 unbundled to separate the financing portion.  This could be                   
 extremely expensive.  There is a question also if the State will              
 benefit from interest rates moving in our favor and being able to             
 utilize refinance mechanisms to lower our interest costs over the             
 life of the debt.                                                             
 MR. KINNEY said on our current revenue stream and the unrestricted            
 portion of the general fund revenue our debt rating is predicated             
 on the fact that we are looking at a situation whereby oil is                 
 decreasing in production quantity and that over time our budget is            
 going down accordingly.  For that reason the issuance of debt                 
 according to the rating agencies by the State of Alaska should not            
 be extended beyond the year 2013 until the legislature come to                
 grips with the need for a long range fiscal plan and a capital                
 improvements program that covers six years, but also covers the               
 broad spectrum of needs that we have.  If we want to extend beyond            
 that, he assured them that he could issue that debt, but there is             
 an extremely high probability that we will have to accept reduction           
 in the State's rating and therefore an increase in the interest               
 cost.  This is the case for either G.O. debt or lease purchase, he            
 SENATOR TORGERSON asked why we didn't have this problem with                  
 construction of the Seward Prison.  MR. KINNEY replied in that case           
 they were using a municipality for that purpose, as a conduit, and            
 not a contractor.  The State remained liable for everything.  This            
 is entirely different from having an independent contractor                   
 utilizing our credit rating and our stream of money for those                 
 Number 568                                                                    
 SENATOR SALO moved to adopt amendment #1.                                     
 SENATOR MILLER objected.                                                      
 SENATOR SALO explained that amendment #1 requires the facility to             
 demonstrate that they can operate 10 percent below the cost of a              
 comparable State facility.                                                    
 REPRESENTATIVE MULDER opposed the amendment strongly because there            
 is no other facility in terms of size or scope in the State of                
 Alaska to compare it to.  Also the jury is not impartial since the            
 Commissioner opposes the private concept.  He noted that the                  
 operations is only a portion of the cost.                                     
 SENATOR KELLY asked all those in favor of amendment #1 to raise               
 their hands.  Upon a show of hands SENATOR SALO voted yes; SENATOR            
 MILLER, SENATOR TORGERSON, and SENATOR KELLY voted no; and the                
 amendment failed.                                                             
 SENATOR SALO moved and asked unanimous consent to adopt amendment             
 SENATOR SALO explained that currently the bill does not allow the             
 State to operate the facility unless the contractor defaults.                 
 TAPE 96-29, SIDE B                                                            
 Number 586                                                                    
 It takes out the language saying "the State may not operate" and              
 gives the Commissioner some latitude to deal with problems like if            
 the bids are not responsive, what if the operator is unacceptable,            
 etc.  It could easily be in the State's interest to take over an              
 operation before an emergency situation exists.                               
 REPRESENTATIVE MULDER opposed the amendment saying the only time              
 the bill allows the State to operate the facility is when the                 
 private contractor has defaulted and only until they have put in              
 another private contractor.  He thought the State employees were              
 afraid of some competition and this specifies there will be                   
 Upon a show of hands SENATOR SALO voted yes; SENATOR MILLER,                  
 SENATOR TORGERSON, and SENATOR KELLY voted no; and the amendment              
 SENATOR SALO commented that she is repeatedly getting a response              
 that somebody is afraid of competition or the Commissioner is                 
 somehow to be distrusted.  She thought the State of Alaska has                
 invested authority into the Commissioner of Corrections for a very            
 good reason and she trusted that authority and the Commissioner.              
 SENATOR SALO moved to adopt amendment #3.  She said the bill                  
 requires correctional officers to meet certain standards, but it is           
 permissive relating to guards.  The proposed amendment requires               
 guards to meet the current standards of training for correctional             
 officers.  The intent of the amendment is to make sure, whether               
 they are privately or publicly run, the guards are well trained.              
 REPRESENTATIVE MULDER responded that the bill already allows for              
 the Commissioner to direct officers within the private facility be            
 trained to the same level as their public counterparts.  It makes             
 training mandatory and not at the option of the Commissioner.                 
 MR. DEWITT, Staff to Representative Mulder, said AS18.65 requires             
 things other than training and this amendment limits the                      
 requirements to training.                                                     
 SENATOR TORGERSON said he thought they should divide the question.            
 The first part of the amendment doesn't hurt anything, but he                 
 agrees with the later part.                                                   
 SENATOR TORGERSON moved to divide the question. REPRESENTATIVE                
 MULDER said he had no opposition to that amendment.  SENATOR SALO             
 commented that she thought removing the Commissioner reference in             
 the beginning of that sentence would be shifting responsibility               
 somewhat to the Department of Administration.  She said if the                
 statutes talk about training and more, then it didn't matter to               
 have the Commissioner in the first part.                                      
 SENATOR TORGERSON removed his motion.                                         
 Upon a show of hands SENATOR SALO AND SENATOR DUNCAN voted yes;               
 amendment #3 failed.                                                          
 SENATOR SALO moved to adopt amendment #4.  SENATOR MILLER objected.           
 She explained that this bill does not allow the State to operate              
 the facility unless the contractor defaults, but the amendment                
 would allow the Commissioner to operate this facility if the                  
 contractor does not meet the 10 percent cost savings assuring that            
 the cost savings remains.                                                     
 REPRESENTATIVE MULDER commented that this was a combination of                
 amendments #1 and #2 and the same arguments can be used.  He added            
 that his bill makes a statement that we want a private prison                 
 within the State to provide competition.                                      
 Upon a show of hands SENATOR SALO and SENATOR DUNCAN voted yes;               
 amendment #4 failed.                                                          
 Number 487                                                                    
 SENATOR SALO moved to adopt amendment #5.  SENATOR MILLER objected.           
 She explained that amendment #5 requires the operator of the                  
 facility meet the Cleary settlement or else the State must step in.           
 REPRESENTATIVE MULDER said that he originally included this                   
 language in his bill, but it was removed at the request of the                
 Department of Corrections because the Commissioner felt she wanted            
 to have that latitude.                                                        
 BOB COLE, Administrative Director, Department of Corrections, said            
 that any facility operating within Alaska is bound by the Cleary              
 SENATOR KELLY said there was no objection to amendment #5 and it              
 was adopted.                                                                  
 SENATOR SALO moved to adopt amendment #6.  SENATOR MILLER objected.           
 She explained that it requires the facility to seek, obtain, and              
 maintain accreditation.  This would hold the facility to a standard           
 that she thought the State ought to be able to expect.                        
 REPRESENTATIVE MULDER said that not all of our State facilities are           
 accredited.  He thought that accreditation should be required of              
 all facilities.                                                               
 SENATOR KELLY asked why some facilities aren't accredited.  MR.               
 COLE replied that it's mostly because of overcrowding.  SENATOR               
 KELLY commented why shouldn't they have to be accredited.                     
 SENATOR SALO moved to amend amendment #6 to delete "This                      
 requirement is effective only when, as a matter of policy, the                
 Commissioner of Corrections seeks and obtains accreditation of                
 State Correction facilities."                                                 
 There was discussion on the motion and SENATOR TORGERSON asked if             
 there was a yearly process for reaccreditation.  MR. COLE said he             
 believed there was a reaccreditation process that occurs                      
 SENATOR KELLY asked who does the accreditation.  MR. COLE answered            
 the American Correctional Association.                                        
 SENATOR KELLY moved to adopt, "In the award of a contract for the             
 operation of the correctional facility to be constructed and                  
 operated under the notice and approval given in A of this section             
 the Department of Administration shall require the contractor to              
 seek, obtain, and maintain accreditation of the correctional                  
 facility by the American Correctional Association."                           
 SENATOR SALO said she like that language.                                     
 SENATOR KELLY announced that there were no objections to that                 
 amendment and it was adopted.                                                 
 Number 400                                                                    
 SENATOR SALO moved to adopt amendment #7 and asked for unanimous              
 consent.  SENATOR MILLER objected and asked how they accounted for            
 areas like Fairbanks where there is a second class Borough and                
 there are home rule cities within that or if you want to put the              
 prison in an unorganized borough.                                             
 SENATOR SALO said there was an example like that in the Kenai                 
 district where a half way house was proposed that wasn't in a                 
 municipality or a zoned area and there was no method by which to              
 hold hearings.  One might argue that if it is in an area like that,           
 it's not as densely populated as when it is within a municipality             
 or the wording could be changed to provide a hearing process                  
 anywhere.  She thought it was important to have a public process.             
 REPRESENTATIVE MULDER opposed the amendment.  He said the site                
 selection is a public process already included in the fiscal note.            
 He is sensitive to the public process, but the word "approves"                
 troubles him because it sets up another hurdle.  People don't want            
 a prison in their back yard.  SENATOR SALO responded that when it             
 remains a public facility it is governed by existing rules and                
 regulations, but if it moves to the private sector, those                     
 regulations and requirement for public input diminish                         
 significantly.  She said in the spirit of cooperation she would               
 withdraw the amendment and try to work on something that would meet           
 their needs.                                                                  
 SENATOR SALO withdrew amendment #7.                                           
 SENATOR KELLY said he had his sympathies with this amendment in               
 another form, but he didn't want to hold the bill in this committee           
 waiting for the acceptable form to be drafted.  He said he                    
 preferred that she work on it as it passes through.                           
 Number 330                                                                    
 SENATOR TORGERSON moved to adopt the CS to HB 428.  There were no             
 objections and it was so ordered.                                             
 SENATOR TORGERSON moved SCSHB 428 from committee with individual              
 recommendations.  SENATOR SALO objected.  Upon a show of hands                
 SENATOR SALO and SENATOR DUNCAN voted no; and the bill passed from            

Document Name Date/Time Subjects