Legislature(1995 - 1996)
04/18/1996 02:20 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= 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.
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