Legislature(1995 - 1996)
04/23/1996 04:02 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.
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
imprisonment.
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
expensive.
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
center.
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
court.
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
perspective.
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
concluded.
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
operations.
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
competition.
Upon a show of hands SENATOR SALO voted yes; SENATOR MILLER,
SENATOR TORGERSON, and SENATOR KELLY voted no; and the amendment
failed.
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;
SENATOR MILLER, SENATOR TORGERSON, and SENATOR KELLY voted no; and
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;
SENATOR MILLER, SENATOR TORGERSON, and SENATOR KELLY voted no; and
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
settlement.
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
periodically.
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 MILLER, SENATOR TORGERSON, and SENATOR KELLY voted yes;
SENATOR SALO and SENATOR DUNCAN voted no; and the bill passed from
committee.
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