Legislature(2001 - 2002)
03/28/2002 01:48 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 28, 2002
1:48 P.M.
TAPE HFC 02 - 69, Side A
TAPE HFC 02 - 69, Side B
TAPE HFC 02 - 70, Side A
CALL TO ORDER
Co-Chair Mulder called the House Finance Committee meeting
to order at 1:48 P.M.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative John Harris
Representative Bill Hudson
MEMBERS ABSENT
Representative Bill Williams, Co-Chair
Representative Richard Foster
Representative Ken Lancaster
Representative Carl Moses
Representative Jim Whitaker
ALSO PRESENT
Margot Knuth, Assistant Attorney General, Department of
Corrections; Charles Campbell, Juneau; Frank Prewitt,
Cornell Whittier, Anchorage; David Katzeek, Juneau ANB, Camp
2, Juneau
PRESENT VIA TELECONFERENCE
Pete Halgren, City Administrator, City of Delta; Mayor John
Williams, Kenai; Steve Sweet, Fairbanks; John Duffy, Borough
Manager, Mat-Su; Jim LeCrone, Public Safety Employee
Association, Anchorage; Don Valesko, Public Employees #72,
Anchorage; Dee Hubbard, Anchorage; Frank Smith, Kansas;
Marvin Wiebe, Cornell Corporation, Ventura, California
SUMMARY
HB 498 An Act expressing legislative intent regarding
privately operated correctional facility space and
services; relating to the development and
financing of privately operated correctional
facility space and services; authorizing the
Department of Corrections to enter into an
agreement for the confinement and care of
prisoners in privately operated correctional
facility space; and providing for an effective
date.
HB 498 was HEARD and HELD in Committee for further
consideration.
HOUSE BILL NO. 498
An Act expressing legislative intent regarding
privately operated correctional facility space and
services; relating to the development and financing of
privately operated correctional facility space and
services; authorizing the Department of Corrections to
enter into an agreement for the confinement and care of
prisoners in privately operated correctional facility
space; and providing for an effective date.
MARGOT KNUTH, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
CORRECTIONS, agreed that more prison and jail beds are
needed for Alaska. She mentioned the two bills put forth by
the Governor, which address the expansion of existing
facilities and Senator Green's proposed bill, which also
addresses the expansion of some of the various State
facilities. In crafting the Department of Corrections
expansion plan, Governor Knowles and Commissioner Pugh came
up with a four-point standard that must be met by any plan.
Any initiative must be:
· Safe;
· Meet the statewide needs of the Department;
· Meet government-to-government relationships; and
· Be cost effective.
She warned that HB 498 does not meet any of the criteria.
Co-Chair Mulder asked Ms. Knuth for further clarification.
Ms. Knuth explained that the community of Whittier has a
population base of around 200 residents. It is located 45
minutes from the Anchorage area. The proposal under
consideration is a 1200 bed prison. The City of Whittier
has a limited infrastructure. The capability of its fire
and police department to be able to respond in the evident
of an emergency is limited. Additionally, there are issues
of transfer time for medical emergencies. She reiterated
that the fire and police protection concerns are problematic
when there are six inmates for every citizen in a community.
That is a difficult ratio and additionally, there will be
one correctional employee for every three inmates making
another 400 staff members.
Ms. Knuth referenced remarks made by Frank Prewitt regarding
the State's needs. She noted the handout provided by Mr.
Prewitt, which indicates the Department of Corrections
master plan numbers. Out of the 1269 beds listed there, the
beds in Palmer and Kenai are the types of beds that the
proposed facility would be duplicating. The remaining beds
would not be satisfied with that proposal and it does not
address any "special need" beds. Adding the 1200 bed
facility as proposed would not relieve the State from the
current need for the 96 beds in Bethel, 80 beds in Fairbanks
and the 150 beds in Seward or any of the special need beds
for the youthful offender program. The Mat-Su beds are
essential because that is where the fastest growing
population is. Pt. McKenzie is the transition place and
those needs would not be addressed. Juneau and Ketchikan
are also jail facilities. At this time, the Department of
Corrections has identified a need of about 475 beds for
medium security inmates.
She pointed out that those numbers are listed in the handout
and it also indicates the 750 beds in Arizona. The Arizona
inmates would be brought back. She reminded members that
the new Anchorage jail facility would be opening very soon.
Those beds will take care of the Arizona population. She
interjected that listing the 217 Palmer beds, the 250 in
Kenai and then adding the 750 Arizona beds to that, was
"false" math. By the end of this fiscal year, the number of
inmates in Arizona will drop to 585 because of the opening
of the Anchorage jail.
Ms. Knuth pointed out that crime rates are declining across
the nation except in Alaska. There are two reasons for that
to be occurring. In 1980, when the sex offender code was
revised, Alaska extended sentences significantly. That has
increased the length of time that inmates are spending in
the system. They are not getting out as fast as they are
coming in. Additionally, there has been an increase in the
number of incarcerated pretrials. She advised that both of
those concerns could be addressed through policy changes.
Other states have made the decision to not spend as much of
their budget on incarceration but instead at looking at
reducing sentences and increasing treatment programs outside
the facility. Ms. Knuth claimed that it is essential to
stabilize the incarceration given the State's fiscal
circumstances.
In the State's master expansion plan, when the Department
indicated some uncertainty whether they would continue to
need beds in Arizona, given the expansion as outlined, it
was because the Department could not determine future needs
and whether there would be an increase or a decline. She
suggested that it would be unfortunate to lock the State
into a 1200 bed facility if there was a way to stabilize the
incarceration needs. She added that even if there were
adequate number of prison beds, the State would still need
700 more jail beds and special need beds that are not
addressed by the prison proposal.
Ms. Knuth pointed out that the proposal does not include
transportation costs. She noted that when there are people
in Bethel who must show up for court appearances, that the
transportation need must be addressed. It is for that
reason that Bethel needs to be expanded. She explained that
expansion should have been done several years ago. The
needed expansion number is 400 beds, not 96. That number
was scaled back to just the jail beds by Cornell, and the
jail bed number is 96. Fairbanks needs 80 more beds for
those inmates who are pre-sentenced or serving short
sentences. Logistically, it is difficult to transfer an
inmate from Fairbanks to Arizona or Whittier to serve a
three or four day sentence.
Ms. Knuth emphasized that the proposed legislation does not
meet statewide needs and suggested that it was "overbuilt".
The Department sees a need for about 500 medium security
prison beds. The legislation would be locking the State
into 1200.
On the issue of government-to-government, she voiced concern
that Whittier is a small community and that it does not have
the infrastructure and expertise to "stand on it own two
feet" through the transaction. Whittier has never taken on
a project of this size and they would be forced to rely on
outside resources. In a town with a population of 182, it
is not likely that the State of Alaska would have a
government-to-government relationship. She sensed that the
State would have a superficial relationship with Whittier
and would need to apply to other experts for negotiations.
Ms. Knuth stressed that it is the private party, Cornell,
that has the vested interest. The venture would not be cost
effective for the State of Alaska.
Ms. Knuth reminded members that the Anchorage jail project
is coming on line. The Municipality of Anchorage had enough
resources to be concerned about what they wanted. The State
was able to work with Anchorage as a team. She reiterated
that the Anchorage jail was an impressive facility and was
the result from negotiations and planning, needed for any
facility, especially one that is three times the size of
Anchorage.
Ms. Knuth pointed out that there are other problems with
Whittier regarding the infrastructure needed to support a
prison that size. Their water and electric capacity is not
known. They do not have the population base from which they
would be able to hire correctional officers, teachers or
medical personnel to run the facility. She added that there
are other communities such as Metlakatla that would like to
be considered for a proposal such as this. That community
believes that they could be competitive and that they have a
relationship with the Bureau of Indian Affairs (BIA)
currently established. That relationship with the federal
government could make them competitive because they would be
able to qualify for subsidized federal funds. She commented
that in terms of a competitive process that would make sense
for the State. It would behoove the Committee to open the
bill up to allow other communities to express their
interest.
Ms. Knuth mentioned that the State has significant concerns
regarding the competitive bidding process. She recommended
deleting language on Page 2, Lines 22 & 27, which states
that the procurement requirements of that subsection are
satisfied by the City of Whittier in exercising its powers
to procure. The concern for the State is that the City of
Whittier is able to achieve and protect its interest through
the procurement process. She stressed that the State of
Alaska has extremely vested interest and those interests
need to be protected. Using the State procurement code
would allow that.
Ms. Knuth pointed out that references had been made to the
Inter Governmental Agreement (IGA). The problem with
relying on the IGA is that in terms of effectiveness, the
State does not know and will not have the resources to know
how much these services ought to cost such as building a
fence around the facility. The competitive bidding process
is cost based. That is the process that the State uses.
That process has proven to be a significant grantor of cost
effectiveness.
Ms. Knuth pointed out that the cost listed by Cornell is $91
dollars per day. That number does not represent the 18-20%
cost savings over what the State's cost of running the same
facility as proposed here.
Co-Chair Mulder thought that the State's capital costs were
not the same.
Ms. Knuth replied that would be if the State were building a
1200 bed facility as opposed to expanding the existing
facilities. She suggested that more would be lost because
it will expand the "economy of scale". If the State could
use a 1200 bed facility, and they built it and ran it, then
Alaska could do it for $4 million dollars a year less than
the amount of money authorized through the legislation for
Cornell. The figure that is used in the legislation for the
State number is the current average per diem rate for all
State facilities. If the State ran a 1200 bed facility, it
could beat its own average per diem rate because of the
economy of scale.
Co-Chair Mulder agreed. He asked if that $4 million dollars
less would include the operational costs.
Ms. Knuth offered to provide that information. She added
that the cost of care in Palmer and Cook Inlet, which are
the State's largest facilities, is $65 dollars a day when
you exclude the items that are excluded in HB 498. Those
excluded items are prisoner care, major medical,
prescription medical, and transportation costs of the
prisoners. She noted that Mr. Prewitt suggested that those
dollars would total over $15 dollars or less a day, when in
reality, they are over $30 dollars a day. Major medical per
inmate per day is $17 dollars. The indirect costs would
total $32 dollars a day. The cost of care in Palmer is $65
dollars a day. If the State were operating a 1200 bed
facility, the State could do better because of the economies
of scales.
Vice-Chair Bunde inquired why the State was not currently
running a 1200 bed facility if it were that much cheaper.
Ms. Knuth replied that the Department does not believe that
there is a population that warrants or justifies that size
facility. There needs to be more regional beds. If an
inmate were going to be sentenced tomorrow in Bethel, they
would need to be in Bethel.
Co-Chair Mulder thought that the concept of a jail with a
larger central facility was simply a larger jail. He
advised that it appeared that the Administration has gone
along with the concept of a larger jail as opposed to a
central facility. He was trying to understand why that was
preferential. He felt that the costs would not warrant it.
Ms. Knuth explained that the jails are overcrowded. The
places highlighted in the account sheet, indicate inmates
that cannot go elsewhere. People with remarkably short
sentences are being transported to Palmer. Palmer is
supposed to be a facility for sentenced inmates. The
handout indicates that the Palmer medium correctional is
holding 130 un-sentenced inmates. Those are people that
belong in jails and there is not enough room in their local
jails for them to be housed. Our court system has said that
defendants have a right to appear at their trial and
sentencing. If a three-day sentence were about to occur,
that would be difficult.
The Department of Corrections has 30,000 bookings a year.
Out of that, within the State there are 2,894 beds currently
being used and 700 beds in Arizona. There are 3,500 beds
filled with Alaska inmates. The 30,000 bookings that come
through the facility represent a large volume of people
staying for a very short time. Those people need to be in
the jails and cannot be sent to Arizona or a prison in
Whittier. It does not make economic sense to take someone
with a three or four day sentence and pay the airfare to get
them from Bethel to where there is a larger facility. Each
day, the number of inmates is combed, looking for those that
have a longer than 10 day sentence. The average length of
sentence for people in Arizona has dropped dramatically.
Anybody that has a sentence longer than a year would be
eligible to go to Arizona. They are released directly from
Arizona back into their communities. She stressed that
prisons are bursting at the seams.
Representative Hudson requested a side-by-side comparison of
all the numbers being presented. He asked the number the
Department would recommend for a facility and if the
facility would need to include a pre-trial area. He
admitted that he was confused.
Representative Davies agreed that a side-by-side comparison
would be helpful. He added that the current comparison was
an "apples to oranges" comparison. He added that there
needs to be a comparison of the option of having a longer-
term incarceration regional facility versus having inmates
in a centralized facility. He recommended that the bigger
policy choices should be separated.
Ms. Knuth recommended that one way that could happen would
be to take the summary sheets from the handout and to circle
the 217 beds from Palmer and the 256 beds from Kenai. Those
are the two prisons that the Administration wants to expand
to create room for the long-term sentenced defendants.
That number is 473 and then you can add the anticipated
growth rate.
In response to Co-Chair Mulder's recommendation that the
Arizona component be included, Ms. Knuth explained that the
number was based on bringing home the Arizona inmates. She
added that there are about 735 inmates in Arizona, and
reiterated that the Anchorage jail would soon be opening.
That would allow the State to bring enough inmates home,
th
that by June 30, the number would decline to 585. That is
the number of prison beds needed. She noted that 256 would
go to Kenai and 217 would go to Palmer. There would be
special beds at the Pt. McKenzie farm and the Seward Spring
Creek facility. Pt. McKenzie and Seward Spring Creek would
not be a part of the prison system. It is the Palmer and
Kenai beds that represent the pool.
Co-Chair Mulder questioned that supposition. Under the
proposal, "increasing capacity at Wildwood would enable the
Department of Corrections to keep up with the growing number
of prisoners and perhaps bring home some prisoners from out
of State". He believed that the supposition was that the
Department may or may not bring people back from Arizona.
Ms. Knuth argued that the Department of Corrections would
never "look a bed in the mouth". If that is how the State
wants to spend money, then filling every bed could happen.
Co-Chair Mulder inquired how many inmates at the Bethel
facility were from Fairbanks.
Ms. Knuth did not know but offered to provide that
information.
Representative Davies and Co-Chair Mulder requested that the
Department provide the Committee with side-by-side
highlighting points of concern.
Ms. Knuth requested clarification on the specifics.
Representative Davies recognized that a pre-sentencing need
exists and asked to see:
· The shortage numbers;
· Information on the medium and longer-need inmate
needs;
· Building a larger facility in Whittier scale and
would that be cost effective using the State's
economy of scale.
Representative J. Davies requested that the trade-offs
be highlighted. He thought that should be a reasonable
policy question. He requested a comparison of the
policy options and costs associated and those policy
choices.
Representative J. Davies thought that the best system would
be one in which the person that needs to go to jail would be
placed in their local area so that the transition back into
the community could be more smooth. He recommended seeing
the full-up costs.
Co-Chair Mulder disagreed, commenting that not everyone
agrees that the inmates should be located in close proximity
to their communities. He claimed that the Legislature has a
higher "sensitivity" than most of the Alaskan public to that
concern.
Ms. Knuth referenced the expression that Whittier was 100%
behind the process. She pointed out that there is a
process, which the community has not yet gone through, where
the community learns what is being proposed and what it
would look like.
Ms. Knuth addressed the expense of the project. At $90
dollars a day, times 1200 inmates, times 365 days, would
equal a $40 million dollar a year piece of legislation.
Over the 25 year life of the proposed contract would
generate $985 million dollars. She underlined how
complicated that is. That would be the largest amount ever
awarded in the history of the State.
CHARLES CAMPBELL, JUNEAU, advised that the difference
between a private correction and a public correction is the
goal. The goal of a public facility is to try to empty the
beds, while the goal of a private facility is to keep the
beds full.
Mr. Campbell advised that the legislation proposes the
biggest contract in the State's history, which he assumed
was a bad idea. He advised that most correctional
professionals in the State that know about the situation,
realize that this is bad legislation and do not support it.
He added that Senator Lyda Green's bill, SB 231, was a
superior approach to addressing the Alaska prison based
needs and problems.
Mr. Campbell stated that the bill would not accomplish the
needs of Alaska. The thought of a with 1200 bed prison in
an inaccessible location with inexperienced and marginally
qualified officers and no law enforcement back up near by,
is very worrisome. He voiced concern with the
qualifications of the staff and noted that Cornell would
have a difficult time recruiting a competent staff of
officers and in addition would have a more difficult time
trying to keep their staff. The annual turnover rate in
private prisons across the country has risen to 53%.
If the legislation passes, Mr. Campbell stated that it would
create a huge legal headache and embarrassment for the State
of Alaska. He acknowledged that the Cleary ruling has been
overturned but he thought that could suddenly change. The
principle ruling remains in place, as does the State
Constitution.
Mr. Campbell did not agree with Mr. Prewitt in contending
that a private prison would be the best place for the
Department of Corrections to center the State's correctional
efforts. He advised that corrections happen better in small
facilities than they do in the larger ones. The lack of
infrastructure in Whittier would make it impossible to have
a professional correctional program. The size of the
facility would make it worse.
Mr. Campbell stated that the biggest need is to bring the
offenders back from Arizona. The bill proposes a location
in which the inmates would still be inaccessible to their
families and their communities.
Mr. Campbell noted that Alaska is one of the few states that
still have a viable correctional system. Many other states
are basically "warehousing" prisoners. He claimed that
Alaska could continue to have a better system when it is
clear that the staff and not the inmates are in charge. Mr.
Campbell emphasized that Senator Green's bill offers a
responsible and reasonable means of doing that with seven
communities addressing their individual concerns.
Mr. Campbell stressed that it is "very wrong" that an
essential public service be given to a profit making entity
when the goals of that entity are in conflict with the
State's mission.
TAPE HFC 02 - 69, Side B
Mr. Campbell added that private prisons have never served
the public well. They have a fatal flaw and serve a
conflict of interest, because the focus has to be on the
profit margin rather than on the effectiveness of the
program. He indicated that with HB 498, millions of dollars
would be leaving Alaska.
Representative Hudson asked if Mr. Campbell had ever been or
evaluated a Cornell operated or comparable private operated
prison.
Mr. Campbell responded that he had not. He added that an
"exemplatory" system is never seen anymore. He added that
the facility in Arizona is one of the better private
prisons. If a business must be careful of the bottom line,
they always cut corners. He reiterated that he had not seen
a Cornell prison facility.
Representative Hudson stated that HB 498 measures a Cornell
system. He added that the State is interested in trying to
improve the corrections system in Alaska.
PETE HALGREN, CITY ADMINISTRATOR, CITY OF DELTA, indicated
that the City of Delta has no position on the advisability
of a prison at Whittier. He advised that Delta Junction has
its own lawsuit settlement obligation arising out of the
previous prison proposal. Mr. Halgren noted that the City
of Delta Junction has already paid $100 thousand dollars and
has an additional $1 million dollar obligation due in three
months for the promissory note. Delta does not have the
money to pay that obligation and cannot raise it.
Co-Chair Mulder noted efforts made to lighten the burden for
the City of Delta Junction.
Mr. Halgren voiced his appreciation, however, added that the
underlining federal statute thoroughly precludes the use of
impact funds for anything prior to that concern. He
stressed that the City of Delta, currently, has no way of
using any potential grants that are on the horizon.
Co-Chair Mulder understood and noted that they had met with
those individuals to reflect that concern.
MAYOR JOHN WILLIAMS, KENAI, commented that it is the State's
responsibility to incarcerate and protect criminals and to
address and administer the laws. Philosophically, Mayor
Williams noted that he opposes the issue of private run
jails. He stated that HB 498 has the same problems that it
had when Kenai was being considered. It would be difficult
to oversee the concerns in such an isolated area and that
much of the money would leave the State of Alaska. The
location of Whittier has a lot to be desired.
Mayor Williams addressed the issue of multiple prisons
throughout the State. He noted that many people in Alaska
support Senator Lyda Green's bill, which would take care of
many of the problems and questions through smaller prisons.
He spoke to the existing infrastructure. If you can add on
to the existing infrastructure, then that which is available
could be taken advantage of, and that action which would
save a considerable amount of money. Mayor Williams added
that the personnel problems would then be handled more
efficiently. He noted that he did support a smaller, State
run facility and recommended that the issue be put to rest.
The State of Alaska has been involved in this problem for so
long. He added that during one of his previous testimonies,
the question was asked if the communities were against
prisons. He explained that the communities are not against
State run prisons but they oppose privately run prisons.
Co-Chair Mulder asked if Mayor Williams was aware that under
the approach of the Administration, the increased cost to
the State would be over $30 million dollars per year. He
warned that was the amount of revenue sharing and municipal
assistance. He asked if their community would be willing to
give that up for the sake of having a regional plan. He
indicated that these are "real considerations" that need to
be made by the Legislature.
Mayor Williams advised that he would not be willing to give
up municipal assistance and revenue sharing but would be
willing to pay an income tax and cap the dividend from the
permanent fund. He stated that in regards to the $30
millions dollars, the State currently spends $20 million
dollars in Arizona per year. An additional benefit to the
State would be that an extra $10 million dollars would be
spent within the communities that need that kind of economic
development. Mayor Williams stated that there are answers
to all sides of each question.
Representative Davies voiced concern with the number being
"thrown around". He noted that it is not an "apples to
apples" comparison. The Administration's number is
attempting to solve some other problems as well. He
reiterated the need for the spreadsheet.
STEVE SWEET, FAIRBANKS, voiced his opposition to the
legislation and building a private super prison. He
commented on the wear and tear to the road system in
building such a facility. He noted that he was a heavy
equipment operator and had worked on the Haul Road and seen
the damage done from heavy loads. The volume and equipment
involved in building a super prison would be huge. After
the prison was built, the State would have to up grade the
road to a four-lane road to accommodate all the people that
would work in the prison. He pointed out that it costs $1
million dollars per mile to upgrade a road.
Mr. Sweet added that there is currently no place to live in
Whittier, so the roads would be greatly impacted. The
threat of avalanches is present all of the time and many
people have been killed in that stretch of road already.
Citizens have already voted 3-1 against the private prison
in three cities so far.
Mr. Sweet stated that he did not want to support a
multimillion-dollar company that would lower the standard of
living in Alaska by saving money using cheap labor. He
claimed that cheap labor would be the only way that Cornell
could make money. It makes economic sense to expand
existing facilities throughout the State.
Mr. Sweet disagreed with comments made by Co-Chair Mulder
that the people of the State do not care where the prisoners
are located. He agreed with Representative J. Davies that
it is healthier for those inmates to be located close to
their communities and family support when in prison.
JOHN DUFFY, BOROUGH MANAGER, MAT-SU, voiced opposition to HB
498. He added his support for Senator Green's bill, SB 231.
He noted that he was concerned that HB 498 would redirect
revenue and attention away from public owned and operated
commercial facilities throughout the State.
Mr. Duffy added his concern that there are not true
regulations concerning the operations, security and
management of private prisons in the State. Those
regulations should be put in place first. If a private
prison is to be considered, then an open and competitive
process should be used to select the operator.
Mr. Duffy noted that there must be a request for
qualifications by the city of referral. That needs to be
one of the on-going steps of the procurement process. It is
important to determine what type of qualifications needs to
be in place. It is important that qualification
requirements be in place that considers audits, prior
experience and management approval.
Mr. Duffy noted that he preferred the regional approach
where the economic impact is shared throughout the State of
Alaska. There are a number of communities that have voiced
their support for the regional concept, the preferred
alternative.
JIM LECRONE, PUBLIC SAFETY EMPLOYEE ASSOCIATION, ANCHORAGE,
voiced support for SB 231 and opposition to HB 498. He
acknowledged that no one could argue against Whittier's
economic need. There is no logical tie between that need
and the State's need so far as the correctional institutions
are required. Every single time that the voters in the
State have been given a choice, they resoundingly vote
against private prisons. Privatizing an important public
safety function makes no sense.
Mr. LeCrone reminded members that in 1977, the Legislature
enacted a statute creating the Police Standards Council. In
1988, the Department of Corrections was placed under that
statute and they rule on standards for selection, training
and certification of correctional officers. He cautioned
the Committee to hold Cornell to that standard and not to a
lesser one.
He added that the fiscal notes to the bill suggest that the
contract would spend nearly $1 billion dollars over 25 years
and would be the largest single contract in the State's
history. He warned that the Legislature should move
cautiously when entering into a contract with a corporation
that is involved in no less than five lawsuits with their
stockholders.
Co-Chair Mulder asked about Mr. LeCrone's statement that the
voters had rejected overwhelming private prisons three
times. He asked which city rejected it besides Delta and
Kenai.
Mr. LeCrone noted that Wrangell had a vote, in which 70%
voted against the private prison.
DON VALESKO, PUBLIC EMPLOYEES #71, ANCHROAGE, noted that he
has sat on the privatization commission that the Legislature
authorized a few years back. On the Commission, it was
revealed that over the past ten years, the State has turned
over quite a few of its functions to the private sector and
during that time, the State has seen the largest increase
expense in the rate of government doing business in Alaska.
The term that privatizing something is going to save the
State dollars is a fallacy. He noted that he had serious
concerns that privatizing a government function is morally
wrong. To privatize housing, care and rehabilitation of
prisoners does not make sense. He questioned where
privatization saves money.
Mr. Valesko reiterated that privatization would save money
on the backs of the working people. He thought it was wrong
for the Legislature to say that they want to lower the
standard of living for the people of Alaska.
Mr. Valesko indicated that SB 231 would expand prisons.
That bill would bring prisoners back to Alaska from Arizona
and put them in communities where they have a support
community. It would allow for construction at reduced costs
and personnel costs would be less.
Mr. Valesko addressed the number of avalanches that happen
each year going into Whittier. Most of the employees for
Cornell would live in Anchorage. He asked if the Committee
could imagine a prison where the roads would be closed
because of an avalanche and the existing staff on board in
Whittier would have work day and night during that time. He
asked who would run the prison. There would not be enough
rested staff to do the work. He asked if the Legislature
was willing to commit the dollars to fix up the road between
Anchorage and Whittier.
Mr. Valesko reiterated his support for Senator Green's
prison bill and concluded that community support is non-
existent for any private prison.
DEE HUBBARD, ANCHORAGE, voiced strong opposition to HB 498.
She warned that currently, there are no existing statutes or
regulations that govern private prisons. There use to be
but in 1986, the corrections title was rewritten and all the
references to private prisons were deleted. Since there are
no laws, the State would have to go on whatever the private
agreement was.
Ms. Hubbard spoke to the contract that Cornell had presented
to the State. The State would be paying for all of the
beds, whether they are filled or not. That is called "take
or pay basis". The take or pay rate must be acceptable to
Cornell and advance payment is required. A bond trustee
would be appointed because the City of Whittier would have
no responsibility for the bond. The bond will reflect that
it would be paid by the bond amount. Under warranties of
the City of Whittier, the facility would be established as
an adult, medium correctional facility to house inmates from
in Alaska, the federal government and other governmental
entities that may wish to house inmates in the facility.
She stated that means that Cornell could "go shopping" for
inmates wherever they want because the State has no laws
which indicate that we will not accept out of state
prisoners. The City of Whittier would cooperate with
Cornell to accommodate any other sources of inmates, which
Cornell may identify. That could allow for an additional
expansion of the facility. The State would not be involved
if the facility were to be expanded or not, it would be up
to Cornell. Cornell and Whittier would cooperate with each
other to seek reimbursement of their planning and promoting
expense. She suggested that the "promoting" expenses would
be their lobbying costs. In other words, Cornell and
Whittier are going to be reimbursed for every expense since
the time that they began talking about the plan in October
2001.
Ms. Hubbard stated that if the Cornell agreement is
terminated for cause, the State still has to make payment.
There are only two-sub sections in the entire agreement
where it states that if there is a conflict between the
agreement and the IGA, the terms of the IGA shall control.
Ms. Hubbard pointed out that the former CEO of Cornell, Mr.
Logan, had a conference in October and was asked about the
th
impact of September 11. He stated that since September
th
11, there is a heightened focus on detention. He commented
that it would cause more people to get caught and claimed
that was positive for the industry. He added that in the
United States, there are over nine hundred thousand
undocumented individuals of Middle Eastern descent and that
population is being targeted. He noted that the federal
business is the best business for Cornell and the events of
th
September 11 are increasing the level of business. Ms.
Hubbard thought that statement indicates the moral problem
that many residents in Alaska have with Cornell.
Ms. Hubbard questioned if enough fiscal notes had been
submitted for the legislation. She emphasized that she did
not support the "marriage" of a public and private prison
bill. Ms. Hubbard asked if the $90 million dollars that was
deleted from the operating budget was intended to cover the
costs associated with the proposed bill.
FRANK SMITH, KANSAS, commented that there were few true
comments made by Mayor Butler of Whittier. He added that he
was "out raged" by comments made by Mr. Prewitt. There were
few factual statements in Mayor Butler's testimony. Mr.
Smith thought Whittier was a terrible place to put a prison.
Mr. Smith stated that he had visited both private and State
owned prisons throughout the country. He noted the need for
prisoners to be near their families. Mr. Smith indicated
that he had done research regarding prisoners being near
their community. The recidivism rate by the prisoners not
located by their families and communities is much higher.
Mr. Smith addressed how all of the Cornell prisons have been
run and the legal trouble that those prisons are
experiencing throughout the country. He warned that Cornell
has a bad history and reputation.
TAPE HFC 02 - 70, Side A
MARVIN WIEBE, CORNELL CORPORATION, VENTURA, CALIFORNIA,
offered to answer questions of the Committee. He noted that
he does not believe that the Governor intends to close five
private prisons in the State. He claimed the information is
not yet released.
Co-Chair Mulder asked if there were any particular points
raised that Mr. Wiebe wanted to respond to.
Mr. Wiebe commented on the ethics of corporations in
general. He acknowledged that there is a sense that there
is no basis for the private operation of a prison. Mr.
Wiebe noted that he had been working for 28 years in the
private correctional center business. He pointed out that
the federal government is embracing the private correctional
plans. The primary source of national strength is private
operators.
Mr. Wiebe added that specifically, he was addressing one
recent study in the Arizona operations. It was noted that
after three or four years of operation, over $5 million
dollars had been saved, indicating a 12% savings. He added
that those prisons were run as well as any prison throughout
the State. He added that nationwide, there is a $50 billion
dollars shortfall in state budgets over the next year. The
state governments do not have a lot of options on how to
deal with that shortfall. He suggested that the cost of
labor should be considered. He acknowledged that there is a
difference in labor costs for a private and public facility.
Mr. Weibe acknowledged that Cornell had been criticized by
paying lower wages to employees. He claimed that the wages
are not consistent in the market place and that those are
the issues which need to be addressed.
DAVID KATZEEK, JUNEAU ALASKA NATIVE BROTHERHOOD (ANB), CAMP
2, JUNEAU, noted that his family settled in this land. He
pointed out that the majority of the prisoners in the State
of Alaska are Native Alaskans. The fundamental thing that
Alaskan Natives have is the way in which they address one
another. Mr. Katzeek commented that the testimony presented
has provided many numbers, however, he asked how many
leaders have heard the cry of a person incarcerated. He
asked how does one know the frustration, rage, anger, and
resentment that come on the land those people settled long
before any other people. The issue is not to place any
burden on anyone. It takes leadership to do what the
majority might say you should not do.
Mr. Katzeek noted that back in the late 1800's, people
called Alaska, Seward's folly. Evidence is built all the
time on why something should not be done. There is an
opportunity for the leaders of Alaska to face the issue.
The need is that the Alaska Natives, the citizens of the
State who are being incarcerated, have a right under the
Constitution to be rehabilitated. He claimed that issue is
not adequately being addressed. The recidivism rate is
high, and that 96% of the people that end up going back into
jail have problems with alcohol and drug abuse. He
acknowledged that the public also needs to be saved. He
claimed that safety does not rest in building bigger prisons
but in rehabilitating the inmates with treatment efforts.
Mr. Katzeek agreed that an additional need was one of
respecting finances. He concluded that what needs to be
should be handled through Legislative leadership.
Mr. Katzeek urged that the cry of the Native people be
heard. He believed that this is the opportunity and voiced
his appreciation for the proposed legislation.
Co-Chair Mulder acknowledged the need for appropriate
programs for the Natives. He noted that he and
Representative Kapsner had visited the facility in Arizona
and that the programs there were good. Co-Chair Mulder
believed that those programs as well and more variety could
be addressed in Alaska. He encouraged Mr. Katzeek to work
with Cornell to develop a strong foundation for that type
program.
HB 498 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 3:41 P.M.
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