Legislature(2003 - 2004)
03/11/2003 03:35 PM Senate STA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 99-CORRECTIONAL FACILITIES
SENATOR CON BUNDE, bill sponsor, advised some Whittier residents
asked him to offer the bill as one possible alternative of doing "if
not more, at least the same for less." He paraphrased from the
sponsor statement:
Senate Bill 99 authorizes the Department of
Corrections to enter into an agreement with the
City of Whittier for a 1,200 bed [medium]
security correctional facility and services for a
period of 25 years.
Alaska needs a new prison and the ultimate
question is whether the prison is in Alaska or
another state. Currently the state prison system
is operating over capacity and the population is
projected to rise.
Given the current fiscal challenge in the state,
a private prison offers the best value for scarce
dollars. In addition to being the only
economically viable choice, building a prison
will bring benefit to the state, both
economically and socially. Previous testimony
demonstrates the benefit of having prisoners
closer to their families and other support.
SB 99 will provide investment for future economic
growth by creating more than 500 direct and
indirect union scale construction jobs and more
than 450 permanent, direct and indirect, jobs for
Alaskans associated with prison operations for
the 25 year lease authorized by the legislation.
By locating the prison in Whittier, that
community will have an anchor industry to
generate vital economic benefits for an
economically disadvantaged rural community.
A majority of Whittier residents, maybe not the
most vocal but the majority, have indicated at
least to me their support for a private prison in
their community.
I think SB 99 makes sense for Alaska's economy
and her citizens and would encourage your careful
scrutiny and support.
SENATOR LYMAN HOFFMAN referred to the construction cap placed on
SB 65 and asked why there was no such cap in SB 99.
SENATOR BUNDE wasn't sure why a cap would be placed on private
enterprise.
SENATOR JOHN COWDERY asked if the prison would be financed
through bonds.
SENATOR BUNDE replied that's his understanding.
SENATOR COWDERY noted bonds are carefully scrutinized to make
sure they would be paid back.
SENATOR BUNDE said the question is moot if the bonds aren't
viable.
There were no further questions asked of Senator Bunde.
MR. FRANK PREWITT advised he was a former commissioner of the
Department of Correction with about 20 years in public service.
SB 99 proposes a city owned, but privately managed 1,200 bed
prison that is founded upon the same sound correctional
practices as the state run facility proposed by SB 65. Both
capture efficiency through design and economy of scale and both
are located where construction costs are relatively low, where
wages and benefits are the lowest in the state, and within 50
miles of the most sophisticated and plentiful fire, life,
safety, program, housing and human resources in the state.
Management and cost are the substantive differences between the
proposals. Private contractor, Cornell Companies, would manage
the Whittier prison while Sutton would be operated by the state.
Daily capital and operating costs at Sutton are estimated to be
$110 per prisoner while Whittier costs would be just $94 per
prisoner per day. The $94 includes inmate programs, major
medical, staff recruiting and training, equipment, facility
maintenance and all other capital and operating expenses. The
only cost above the $94 would be transportation of prisoners to
the prison and the cost to monitor the contract. The Department
of Corrections transports prisoners between facilities and the
State Troopers take prisoners to court.
The perception that SB 65 and SB 99 are competing bills is
incorrect and neither bill standing alone will solve the prison
bed shortage issue. The Department of Corrections projects a
need for over 1,600 prison beds by 2006. For the last 20 years
there has been need for an additional 200 prison beds each year
and there is nothing to suggest that will change in the near
term.
If the Whittier prison is authorized this year, the doors could
open in two years while the Sutton prison wouldn't open for four
or five years. "It's a simple matter of timing and inflation.
The two bills don't compare; nor do they compete." The Whittier
proposal is the only immediate in-state solution, but a project
such as the Sutton proposal and a modest expansion of regional
jails needs to be in place to fix the long-term shortage.
Governor Murkowski said his primary mission is good paying jobs
and reducing government spending and growth. The Whittier prison
accomplishes all those objectives. Wages and benefits are lower
than with the state, but they are "good, solid private sector
wages and benefits." The facility costs less because the private
sector has a different overhead structure and can build for
less.
He referred to the cost comparison table in tab 3 of the "State
of Alaska Projected Prison Bed Demand & Cost Analysis" booklet.
After comparing the costs, he asked members to review the March
6, 2003 "Whittier Prison Project Economic Impact" report by
economist, David Reaume. Mr. Reaume argues the economic stimulus
and benefit to the state exceeds the extra expenditure of
housing Alaska prisoners in state.
Alaska Natives represent close to 40 percent of the prison
population in Alaska yet SB 99 is the only bill that has an
express provision in the body of the law to provide culturally
relevant programs for Natives. Cornell Companies has made a
commitment to team with the Native community to provide this
type of programs for Native offenders
SENATOR HOFFMAN said Native inmates in the Arizona prison report
the culturally relevant programs were not working. To have
potlatches, they are required to raise private funds, but they
receive no cooperation when they ask for an accounting of the
funds raised. He asked if such practices would take place if a
private facility were built in Alaska.
MR. PREWITT replied Corrections Corporation of America operates
the facility in Arizona and Cornell Companies is a different
company. Cornell Companies recognizes that nothing has been done
to curb the incarceration and recidivism rate of Native
Alaskans. It is their intention to involve the Native community
by teaming with Native corporations to explore new ways of doing
business because the old ways have not worked.
SENATOR COWDERY asked if Cornell Companies would be interested
in bidding for the design, construction and operation of the
prison proposed in SB 65.
MR. PREWITT replied, "If you're suggesting that the Department
of Corrections could put out a competitive bid to design and
operate a facility at Sutton rather than having that be state
operated, that's something that Cornell Companies and
Corrections Corporation of America and several other companies
most assuredly would respond to it."
4:50 pm
CHAIR GARY STEVENS noted members had other commitments at 5:00
pm and announced the hearing would be continued on Thursday.
SENATOR GUESS asked whether pharmaceuticals were included in the
major medical program.
MR. PREWITT replied pharmaceuticals were included; there is
confusion over the cost and "the fiscal note attached to this
House [Senate] bill is the result of their [Department of
Corrections] analysis of the contract between Cornell Companies
and the City of Whittier as well as the intent language in the
bill itself where the intent language says, 'similar services to
Arizona' when Arizona major medical pharmaceuticals are not
included in that. It is our intent that they are included. We
tried to address that in the 'not to exceed $94' per diem
language. As for the contract with Whittier, that's in the
process. That particular contract was based upon last year's
legislation, which was different."
SENATOR GUESS referred to language in Section 2, subparagraph
(A) regarding adjusting per diem cost that states, "costs not
incurred until full occupancy;" and asked whether he was
familiar with that clause.
MR. PREWITT said that is a "ramp up" provision and Mr. Wiebe
from Cornell Companies could provide an explanation.
CHAIR GARY STEVENS asked Mr. Prewitt, Mr. Wiebe, Mr. Butler, Mr.
Wilson, Mr. Burnett and Mr. Wright whether they would be able to
attend the Thursday hearing. After receiving affirmative nods,
he announced there was time for a few more questions.
SENATOR GUESS said her previous question could wait. She then
asked, "Who decides which type of prisoners would be in a
private facility and which type would be in a public
[facility]?" She was more concerned with how and where inmates
with significant and critical medical conditions such as HIV and
cancer would be assigned.
MR. PREWITT wanted Mr. Wiebe to respond.
SENATOR GUESS said she could wait for an answer until Thursday.
MR. PREWITT replied it is up to the Department of Corrections
when prisoners are assigned to and removed from the facility,
but certainly a contractor wouldn't want a population with a 100
percent disability.
SENATOR HOFFMAN asked whether he had reviewed the 3/10/03 fiscal
note provided with SB 99.
MR. PREWITT replied they had reviewed the fiscal note from the
Department of Corrections that had a number "somewhere over $50
million."
SENATOR HOFFMAN asked if they agree with the findings.
MR. PREWITT replied they do not agree. "The $94 per diem rate
includes all costs to the Department of Corrections as I
testified except for the cost to bring the prisoner to the door
and monitor the contract. $94 a day times 1,200 times 365 is $41
million." The Department of Corrections and the bill sponsor
need to dialog.
SENATOR HOFFMAN advised he could save his questions for the
Finance Committee if that was the wish of the Chair.
CHAIR GARY STEVENS replied he would prefer that he direct
finance questions to that committee.
There were no further questions of Mr. Prewitt.
MR. MARVIN WIEBE, Senior Vice President Cornell Companies,
introduced his company as a partner with state departments of
correction. They compete for contracts with their competitors
and, as in this instance, with state correction departments. As
a company they try to meet the particular needs of each state.
Cornell Companies has been in business a number of years, is
traded on the NYSE, and has about 16,000 people under
supervision in 14 different states and the District of Columbia.
They have operated in Alaska since 1998 and have 160 staff
members that supervise nearly 600 offenders in prison or
community residential centers. They have been working closely
with the Alaska Native Brotherhood to focus on Native Alaska
programs. Alcoholism is much more difficult to solve than any
other addiction problems and is particularly difficult in Native
cultures. It is a major issue and they need the help of Alaska
Natives to provide meaningful, helpful, and culturally relevant
solutions.
There was no further testimony on SB 65.
CHAIR GARY STEVENS held SB 65 in committee.
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