Legislature(2001 - 2002)
03/05/2002 08:10 AM House STA
| 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
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 5, 2002
8:10 a.m.
MEMBERS PRESENT
Representative John Coghill, Chair
Representative Jeannette James
Representative Hugh Fate
Representative Gary Stevens
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
Representative Peggy Wilson
COMMITTEE CALENDAR
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."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 498
SHORT TITLE:WHITTIER PRIVATE PRISON
SPONSOR(S): FINANCE
Jrn-Date Jrn-Page Action
02/20/02 2342 (H) READ THE FIRST TIME -
REFERRALS
02/20/02 2342 (H) STA, FIN
02/28/02 (H) STA AT 8:00 AM CAPITOL 102
02/28/02 (H) Heard & Held
02/28/02 (H) MINUTE(STA)
03/05/02 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
FRANK PREWITT, Consultant
Cornell Companies
8500 Upper Huffman Road
Anchorage, Alaska 99516
POSITION STATEMENT: Provided comments and responded to
questions during discussion of HB 498.
MARVIN WIEBE, Senior Vice President
Cornell Companies
1700 West Loop South, Suite 1500
Houston, Texas 77027
POSITION STATEMENT: Provided comments and responded to
questions during discussion of HB 498.
VICTOR WELLINGTON, Sr., Mayor
Metlakatla Indian Community
P.O. Box 8
Metlakatla, Alaska 99926
POSITION STATEMENT: During the hearing on HB 498, testified
that Metlakatla is also interested in having a prison.
ELSIE HENDRIX, Vice President
Kenai Native Association
215 Fidalgo Avenue
Kenai, Alaska 99611
POSITION STATEMENT: During the hearing on HB 498, testified in
support of having a prison in Whittier.
JAMES PRICE
P.O. Box 7043
Kenai, Alaska 99611
POSITION STATEMENT: During the hearing on HB 498, testified in
opposition to having any publicly funded private prison anywhere
in Alaska.
VALERIE McCANDLESS
P.O. Box 2238
Wrangell, Alaska 99929
POSITION STATEMENT: During the hearing on HB 498, testified
that she preferred not to have private prisons in Alaska.
SHARI MIETHE
P.O. Box 963
Wrangell, Alaska 99929
POSITION STATEMENT: During the hearing on HB 498, testified
against legislation that will incur long-range expense and
export millions of dollars out of state.
KEVIN WYATT
(No address provided)
Homer, Alaska 99603
POSITION STATEMENT: Suggested changes to the language of HB
498.
MICHAEL YOURKOWSKI, City Council Member
City of Homer
491 East Pioneer Avenue
Homer, Alaska 99603
POSITION STATEMENT: During the hearing on HB 498, mentioned
alternative bills and recommend that a competent analysis be
done.
GEORGE AVILA
P.O. Box 872379
Wasilla, Alaska 99687
POSITION STATEMENT: Testified on HB 498, mentioning alternative
bills and accessibility issues relating to the proposed facility
in Whittier.
JIM LECROWE, Retired Corrections Sergeant;
Retired Air Force Pilot and Parachutist
6010 Staedem Drive
Anchorage, Alaska 99504
POSITION STATEMENT: During the hearing on HB 498, testified
about his concerns regarding the proposed prison's readiness for
tsunamis and avalanches.
LEONARD JONES, Director
Public Facilities
City of Whittier
P.O. Box 608
Whittier, Alaska 99693
POSITION STATEMENT: Provided comments and responded to previous
testimony during discussion of HB 498.
DAVID KATZEEK
Juneau Alaska Native Brotherhood (ANB) Camp 2
6590 Glacier Highway, Number 129
Juneau, Alaska 99801
POSITION STATEMENT: During the hearing on HB 498, testified in
support of the opportunities in private prisons to restore and
rehabilitate people who are incarcerated.
DON ETHERIDGE, Lobbyist
for AFL-CIO
710 West Ninth Street
Juneau, Alaska 99801
POSITION STATEMENT: During the hearing on HB 498, testified on
behalf of the public employees sector of the AFL-CIO in support
of expanding existing facilities.
CHARLES CAMPBELL
3020 Douglas Highway
Juneau, Alaska 99801
POSITION STATEMENT: During the hearing on HB 498, testified
that the proposal in HB 498 is not a tenable one.
ACTION NARRATIVE
TAPE 02-22, SIDE A
Number 0001
CHAIR JOHN COGHILL called the House State Affairs Standing
Committee meeting to order at 8:10 a.m. Representatives James,
Fate, Stevens, Crawford, and Coghill were present at the call to
order. Representative Hayes arrived as the meeting was in
progress. [For the overview on actuarials and the Division of
Retirement and Benefits, see the 9:25 a.m. minutes for this
date.]
HB 498-WHITTIER PRIVATE PRISON
[Contains mention of HB 388, SB 231, SB 261, and SB 336]
Number 0075
CHAIR COGHILL announced that the committee would hear 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."
Number 0158
FRANK PREWITT, Consultant, Cornell Companies, came forward to
testify. A former [commissioner] with the Department of
Corrections under Governors Sheffield, Cowper, and Hickel, Mr.
Prewitt noted that Marvin Wiebe, the senior vice president of
Cornell Companies, was available online to answer questions
regarding Cornell Companies - the contractor in the Whittier
prison - and about the "quality of the delivery of private
correctional services."
MR. PREWITT noted that he himself would address several
questions asked at the prior hearing on HB 498 [February 28,
2002]. The first was a question by Representative Hayes
concerning procurement. Mr. Prewitt noted that under state law
there are two ways the Department of Corrections can acquire
private correctional services in Alaska: the department could
issue an RFP [request for proposals] under the state procurement
code and, through a competitive bid process, secure private
prison services in Alaska; in the alternative, the department
could, without a competitive process, purchase those private
services directly from another entity of government such as a
city entity, a borough, or the federal government, if that
government entity has put forward a competitive procurement
process under its own procurement code. Under [HB 498], he
noted, private prison services would be delivered through a
competitive process that is used at the local government level.
Number 0336
MR. PREWITT explained that a disadvantage to the state's putting
out an RFP to purchase those services directly is with regard to
the state's power of eminent domain. He clarified as follows:
The state can build a prison wherever it wants,
whenever it wants, and solicit a private company to
manage it. The state can also solicit private
companies to find [real estate] to build a prison ...
and then buy the service from the provider. The
Arizona prison is owned and operated by the
Corrections Corporation of America. And while it's
prudent to involve the local community, it's not
required. ... All it takes is suitable zoning or [an]
unrestricted parcel of land.
So, the public process that Whittier has gone through
is easily circumvented under the scenario of the state
going directly out to a competitive bid for a prison.
All the contractor has to do is find an unrestricted
parcel of land or zoning and - bang! - you've got a
prison.
Number 0456
MR. PREWITT noted that as Margot Knuth had testified at the
previous hearing, the disadvantage to the process used in Delta,
Kenai, and Whittier is that the state does not control where the
prison is built, who builds it, or who operates it. Under the
Kenai legislation and the legislation before the committee, he
said, the state doesn't have to contract for the service unless
the prison meets the Department of Corrections' standards and
conditions well before construction. He continued:
Through the intergovernmental agreement that's
effected between the state and between the city, one
would think that those ... conditions that the
department has - in terms of the quality of
construction and the types of services that are
delivered - would be made, or the state simply
wouldn't go out and buy the service.
Under this process, which I think is ... a bit more
advantageous process, the clear advantage is that the
local community has a choice in the matter. Most
communities don't have a choice in the matter of where
a prison is located. Kenai opted not to have one.
Whittier has opted to have one if that's the wish of
the legislature to provide the Department of
Corrections that option.
MR. PREWITT said he has been coming to Juneau for several years,
representing one of what he believes are two "legitimate
approaches to the delivery of correctional services in this
state." One is cost-intensive, whereas the other is cost-
effective; both satisfy correctional practices and can meet the
highest standards of the industry.
Number 0625
MR. PREWITT noted that in the prior week, the administration had
[proposed] a plan that he believes represents the cost-intensive
approach to managing Alaska's prisons and jails. He referred to
a handout, which he highlighted page by page:
As you can see by the first page of the handout, the
administration proposes to spread 1,269 beds
throughout the state, at a total capital cost of $239
million. ... The other ... interesting information on
this summary is that there's a quote out of that plan
that says the state now has an overabundance of
medium-custody inmates; I'll be addressing that later.
And on the next handout [page 2], you can see that the
Whittier prison will add the same number of beds in
one centralized facility for a total capital cost of
$110 million - $239 million [versus] $110 million.
Both the state and the Whittier beds are designed to
meet national and state standards.
So what accounts for the difference? The difference
can be summed up in one sentence of the departments in
that volume, under the Yukon-Kuskokwim Correctional
Center [YKCC]. In the plan that the state passed out,
under the YKCC ... , it says that "the additional 96
beds at Bethel will allow the Yukon-Kuskokwim
Correctional Center to function as it was originally
intended, to serve the needs of the region's sentenced
defenders."
The administration's plan provides prison and jail
services under one roof, and it intentionally avoids
economy of scale by duplicating programs and services
throughout the state. It's an acceptable practice.
It's an expensive practice.
Jails are meant to hold prisoners, from arrest until
sentencing - until sentencing. The mission of a jail
is "safe and secure confinement" - no frills, no
programs, just confinement. That's what a jail does.
After sentencing, prisoners in other states are
transferred to central prisons to meet their security
and their program needs. And that can be for many
years.
Toward the end of that sentence, the offenders
hopefully will be returning closer to their
communities, to ... pre-lease centers in the last year
or two of confinement, to prepare them for
reintegration back into society. It's not the job of
a jail. The job of a prison is long-term confinement
for sentenced offenders. So, in an ivory-towered
world where money is no objective, there's nothing
wrong with the administration's plan. ... It simply
swims against what I believe is conventional and
affordable correctional practice.
Number 0803
MR. PREWITT offered that effective prison programs require
access to mental health, adult educational opportunities,
vocational training, and substance abuse resources; the latter
are limited in most Alaskan communities. Duplicating these
programs in regional facilities throughout the state is not only
inefficient and cost-prohibitive, he said, but frequently cannot
be done at all because quality control and program continuity
are difficult to maintain in communities without those types of
resources. That, he explained, is why a larger facility makes
sense.
MR. PREWITT told the committee it is more efficient and
effective to have long-term sentenced prisoners in larger
centralized prisons, near communities with liberal resources.
He noted that a 1,200-bed centralized prison in Alaska [would
be] modest by national correctional standards; many prisons
outside of Alaska are two to three times that size. He pointed
out that Spring Creek [Correctional Facility], which is small by
those standards, has over 500 prisoners now - [less than] half
the size.
Number 0910
MR. PREWITT noted that over the past seven years there has been
an impasse created by this "philosophical, but very practical,
very pragmatic difference of opinion by qualified corrections
providers," which has resulted in the worst prison overcrowding
in the state's history. He drew attention to the third sheet of
the handout, titled, "Instate Inmate Count - Alaska Department
of Corrections - February 2002," which he said is a prison
count. Every day of the year, he explained, the Department of
Corrections, under "the Cleary order," is required to keep a
prison population count. He noted that the state has an
emergency capacity and a maximum capacity. He said, "The red is
every day that one of these facilities - there's 15 state-
operated correctional facilities - has been over emergency
capacity." He added that when prisons are over capacity,
inmates and staff get hurt, for example.
MR. PREWITT noted that the distinction [as shown in the chart]
between maximum capacity and emergency capacity "isn't very
much." The numbers show that the system is "maxed-out" and
overflowing, he said. The state is nearly 200 beds over
emergency capacity, not counting the 750 prisoners in Arizona.
He stated, "The question isn't whether the beds are needed. The
question is what kind of beds, and where."
Number 1060
MR. PREWITT noted that the department's plan shows that the
state currently has an overabundance of "medium-custody"
inmates, and it calls for adding 217 medium-security beds to
Palmer and 256 to Kenai. He said, "When the 750 prisoners are
factored into that demand, the state needs 1,223 medium-security
beds and 'high-medium' beds in order to return those prisoners
from Arizona." This is the population targeted by the Whittier
facility and is classified by the department as "its greatest
need," he said. Mr. Prewitt told the committee he believes the
department does need more beds at other facilities, in other
regions around the state; however, "until jails are used as
jails and prisons are used as prisons, it's very difficult to
assess what regional need is."
Number 1103
MR. PREWITT pointed out that the one thing that can be
determined is cost. He said, "Under the plan that you were
given last week, the state will deliver 473 medium-security beds
in Palmer and Kenai ... at a total capital cost of $94.5
million." For roughly the same money, he noted, the Whittier
plan would deliver 1,200 beds - over twice as many. He
continued, "The real difference is in comparing the combined
capital and operating daily costs per bed at a state medium-
security facility versus a private medium-security facility."
MR. PREWITT pointed to the handout titled "Difference Between
State and Whittier Daily Costs Per Bed." He noted that the beds
proposed in Palmer and Kenai, when combined, have an average
daily operating cost of $98 per day, a figure that is the
institutional average, combined with "other line items that are
centralized in the department's accounting system - inmate
programs, [administration] and support, statewide and direct."
He said if the $94 million is amortized over the 25 years
proposed under the Whittier legislation, there would be a
capital cost per bed of $36. The 473 state-proposed beds will
cost the state $134 a day, per bed, whereas the Whittier prison
is capped by the legislature at an $89- to-$91-dollar rate,
which is the combined operating and capital rate. He continued
as follows:
So a medium-security bed in Southcentral Alaska, at
Whittier - which is no further away than Wasilla, from
a commuting standpoint, with a tunnel that gives
access, in the same region as Palmer and Kenai - costs
us roughly $90 a day per bed, combined capital and
operating, versus $134. Over 25 years, the savings is
astronomical.
MR. PREWITT noted that Mr. Smith, who had testified at the
previous hearing, called the Whittier plan a "welfare plan." He
told the committee that Mr. Smith lives in Kansas, serves on the
executive board of the retiree chapter of the Alaska State
Employees' Association, has vigorously opposed privatization for
the last five years, and is entitled to his opinion. Mr.
Prewitt offered his own belief that the Whittier prison plan "is
no welfare plan for Whittier." He said the benefits would be
extreme for the entire state, and he noted that the handouts
show just some of the benefits to the state.
Number 1307
MR. PREWITT offered that the Whittier plan would return $18
million a year to Alaska's economy. He said, "If you take the
multiplier effect of that $18 million, it benefits all of
Alaska." He listed some other benefits related to this proposed
project: 325 union jobs, 228 indirect construction-related jobs
that provide services, and 225-275 permanent prison jobs. Mr.
Prewitt referred to criticism about the [pay] rates [heard at
the previous hearing]. He suggested that Mr. Wiebe could talk
about the budget that has been prepared by Cornell Companies.
He said, "These are sound, private-sector wages. These are not
halfway-house, $8-an-hour jobs." He also said there would be
200 permanent, indirect jobs. He mentioned purchases of goods,
materials, and services over 25 years from around the state. He
suggested it would be 35 percent less costly to build this
prison than to have "state-operated beds." It would mitigate
the state's liability for prison overcrowding, he added.
MR. PREWITT told the committee that the department was released
from Cleary oversight - from court oversight - about a year ago.
Before that time, he noted, there were sanctions accruing at
roughly $2 million a year. He continued as follows:
I don't know what the prisoners' attorneys are doing
about the situation that I just showed you. But you
can tell that if this is worse than the conditions of
while we were under Cleary oversight, somebody's got
to be looking at this. And I think the state is very,
very close to being ... sued once again, under
prisoners' rights action, for overcrowded conditions
of confinement, not to say the liability of a staff or
an offender being hurt under these conditions.
... The Whittier plan returns Alaska prisoners closer
to rehabilitation sources and to their families. No,
it doesn't put them back next to their families if
they live in Bethel and Nome. It's not intended to.
Offenders with long sentences go back to their home
communities for pre-release planning, to halfway
houses, to pre-release centers, where for a year or
two they're involved in community activities so that
they can transition. You don't open the door of a
prison and let a person just go back to the community
with $200 in their pocket. It doesn't work. They re-
offend.
Number 1446
MR. PREWITT said this is the only plan with a focus on Alaska
Natives and that talks about offering programs "for Natives, by
Natives." He noted that there is a teaming agreement with the
Alaska Native Brotherhood (ANB) and said "we've" been talking
with other corporate entities. He stated: "There's a sincere
commitment on the part of the City of Whittier and on the part
of Cornell Companies - who operate these kind of programs
Outside - to team with the Alaska Native communities to break
this horrible cycle of recidivism."
MR. PREWITT noted that 37 percent of "our" prison population are
Alaska Native men, although 7 percent of [Alaska's] general
population consists of Alaska Native men; he called [those
statistics] a "travesty." He added, "And I don't see anything
going on that's going to try to address that problem. And
whether it's successful or not, that's another story." Mr.
Prewitt also offered his belief that only 6 or 7 percent of the
Department of Corrections' correctional staff are Alaska
Natives. He asked the committee [to consider what these
statistics mean].
Number 1540
MR. PREWITT said this project would add value to a $90-million
tunnel that, when opened, "did the opposite of what the City of
Whittier expected it to do." He referred to previous testimony
by Mr. Butler, Mayor of Whittier, regarding the skyrocketing of
sales taxes during the first year of the tunnel's operation and
the nonuse of the tunnel the following year when a toll was
charged. He said the community [of Whittier] desperately needs
an "anchor tenant" to stimulate its economy. He added, "They
don't have any other options, if you've ever been there." He
said [Whittier] is within close proximity to Anchorage;
therefore, the real beneficiary in terms of employee hire and
the purchase of goods and services, for example, would probably
be Anchorage and "communities in between." He reiterated that
this project would add value to the $90-million tunnel. He
suggested it would perhaps justify more liberal access to Prince
William Sound.
Number 1600
CHAIR COGHILL said [Mr. Prewitt's testimony] gave a balance to
some of the testimony previously heard from the Department of
Corrections.
Number 1616
REPRESENTATIVE CRAWFORD asked how, if the [prison] is going to
be built [with union labor], the large amount of projected
savings to the state is achievable while still getting a return
on investment. He also inquired about the [projected rate of]
return on investment.
MR. PREWITT deferred to Mr. Wiebe.
Number 1700
MARVIN WIEBE, Senior Vice President, Cornell Companies,
testifying via teleconference, said he was not certain whether
Representative Crawford's question referred to the construction
phase and cost of the facility only, or whether it also
addressed issues of operation. Specific to the construction
issue and the use of union labor, he answered that private
operators look at making the prison as efficient as possible,
because every square foot costs money.
MR. WIEBE noted that he had seen some projections from the State
of Alaska with estimates as high as 435 square feet per
prisoner, for example. He remarked, "In our world, which is the
world of the American Correctional Association [ACC] and the
standards that are set by the [ACC] at the national level, those
kinds of footages are higher than we need to operate our
prisons." He said it is not atypical for [ACC] to operate
medium-security beds in a facility that has footages of 220-250
square feet. He mentioned one of [ACC's] facilities that has
175 square feet per inmate that, while tight, has operated
efficiently for many years. He added that it was not a facility
that "we" designed and built.
MR. WIEBE said there are economies of scale associated with
constructing one large facility at one site, as opposed to
constructing several facilities to achieve 1,200 beds across the
state. He also said there are a variety of other factors
regarding [cost efficiency] in construction techniques.
Number 1830
MR. PREWITT replied, "The short answer, on the operating side,
is there is no intention to pay starting correctional officers
the wage and benefits of starting correctional officers for the
State of Alaska, so there are cost savings there." He added
that it doesn't mean substandard wages would be paid. He asked
Mr. Wiebe what the starting hourly [wage] is for a corrections
officer with academy training but no experience in the field.
Number 1865
MR. WIEBE responded that there are a variety of wages for those
who have already met the training requirement. Those
requirements are equivalent to those for the State of Alaska and
are higher than the national averages and certainly higher than
the minimums required by the ACC. With respect to wages, he
noted that the pay range, depending upon experience, would be
$13.50 to $16.34 an hour, with an average estimated starting pay
of a little over $14.00 per hour.
Number 1930
REPRESENTATIVE CRAWFORD mentioned health and retirement benefits
[for Cornell Companies].
Number 1940
MR. WIEBE explained that the benefit package is "pretty much"
standardized, with slight variations from state to state. On
balance, he said, [Cornell Companies'] benefits match those of
the private-sector industries around the country such as IBM.
He noted that [Cornell Companies] provides a very good health
package for its employees and their families; the portion paid
for by the employee is a relatively small amount per month, and
the portion the employee pays toward family coverage is "very
low," he said. He indicated that a large amount, close to $500
per month, is paid by the company. The reason for that, he
explained, is that the company wants families of employees to be
insured with "those kinds of benefits."
MR. WIEBE said the company has a different holiday and vacation
package that it "just rolled out." The number of days off per
year varies with the employee's experience; typically, however,
the employee receives a minimum of two weeks' vacation for the
first year, as well as 10 or 11 paid holidays, depending on the
jurisdiction. Mr. Wiebe also said the company provides a sick-
day policy and sick leave, covers pay during unlimited jury
duty, and a has a good package for those with commitments to the
National Guard.
MR. WIEBE noted that typically in the private sector, 401(k)
plans are currently being utilized; employees can enroll in
those plans within one year of employment, which allows them to
defer part of their [monetary] compensation. In addition, he
said, there is a company match equivalent to 50 percent of the
first 6 percent of contribution on an employee's wages.
Furthermore, the company issues stock options periodically,
based on performance for employees, and other incentive
programs.
MR. PRUITT offered his understanding that the value of the
package is 28 percent, on top of the wage.
MR. WIEBE concurred.
Number 2082
REPRESENTATIVE CRAWFORD reiterated his question regarding the
expected return on the investment. He also mentioned a story
that Cornell [Companies] had had trouble with its accounting
practices, similar to those experienced by Enron. He asked
where [the State of Alaska] would be left in this process, if at
some point in the future Cornell Companies went out of business.
MR. WIEBE replied as follows:
Let me make a couple of comments about the issue of
the accounting discussion. I'm probably, as an
officer of the company, not at liberty to say a lot,
because there's clearly some additional auditing
that's going on, and that was asked for by our board
of directors just to make sure that we are on ...
sound ground.
But, clearly, these were audit decisions that were
made in concert with our auditors at the time and with
reviews by the SEC [Securities and Exchange
Commission]. We've gone into a climate in our country
- and probably a very healthy climate - where we're
looking at - not just with Cornell and not just with
Enron, but really many, many companies - ... a variety
of accounting transactions, many of which were
probably aggressive - and I'm not characterizing ours
in that way, at all. But they were a function of the
time and this belief that that was [an] acceptable
practice.
I think, generally, the standards in accounting are
going to become more rigid, and we're certainly going
to see ... transactions accounted for differently in
the future.
We're confident that we're on sound ground with
respect to the accounting transaction that's being
reviewed right now, and so we're comfortable with the
outcome. But, nonetheless, Cornell is a strong
company. Even if we restated earnings at some level,
currently we're sitting on, I think, about $80 million
in cash that we are planning to use in investments,
such as this facility in its operation, and to have
reserves sufficient to take care of our business.
Number 2190
We're a strong company with a long history. Many of
the elements of our company go back as far as 1973 and
... shortly thereafter. This is a company with
programs that have operated well for many, many, many
years, and we expect that continuity to continue.
With respect to the potential or the possibility that
there could be a collapse of any company, for that
matter, as a private operator, there are provisions in
the contracting agreement with the City of Whittier
and Cornell ... which will be, I'm sure, dealt with
and addressed in the ... agreement between the
Department of Corrections in Alaska and the City of
Whittier. With respect to bringing in replacement
operators or, in emergencies, perhaps even having the
state take over the facility, if that were the
choosing or decision of the state to do that.
But, clearly, there are many competitive operators out
there who are able to step up and operate these
facilities, and so there's a way for these contracts
to be (indisc.) and others to step in and operate if a
private operator is preferred to come in and operate
the facility, in the case of a collapse. That seems
unlikely, given the assets of the company and the
strength and history of the company, but that would be
my response on that specific issue.
Number 2265
MR. WIEBE responded to Representative Crawford's question
regarding the return on investment (ROI) by saying he didn't
know that. He said he had worked for years on bids, but no
longer does; he added, "Our ROIs were estimated to be about 3
percent." He said he is not currently looking at those numbers
on the project, partly because the company is still working on
the numbers. He explained that this process is atypical,
although not unusual, in that it begins with a cap - for
instance, the company's $89-$91 cap - and works backward into
the company's numbers in order to determine feasibility. He
said a variety of issues are still being addressed; however, the
company would not be moving ahead on this project if it didn't
think it was feasible.
MR. WIEBE said it is difficult to estimate what the margins will
be. Referring to mention that quality staff may not be
attracted by wages lower than those paid by the state, he said,
"Our experience has not been that." If, hypothetically, that
were the case, he said, [Cornell Companies] would expect to pay
whatever wages were needed to ensure that the facility was run
properly. "That would be within the $89-$91 cap," he added. He
reiterated that it is difficult to predict what the company's
return will be.
Number 2383
VICTOR WELLINGTON, Sr., Mayor, Metlakatla Indian Community,
testifying via teleconference, pointed out that Metlakatla also
is interested in having a prison and is working very hard on
putting a package together to bring to the state. He added,
"And the funding would be on our side."
Number 2450
ELSIE HENDRIX, Vice President, Kenai Native Association,
testified via teleconference on behalf of the Whittier private
prison. She said her prime interest is in bringing Alaska's
Native people back to their state. She opined that Whittier
would be a good location; because it is close to Anchorage, it
would cut down on transportation costs. [The prisoners] would
also be closer to their families, and she suggested it would be
a benefit in their treatment programs.
Number 2500
JAMES PRICE, testifying via teleconference as a private citizen,
told the committee he was formerly the chairman of Peninsula
Citizens Against Private Prisons, the organization that fought
to bring the prison issue in Kenai up for a vote of the people.
He noted that every time a community [in Alaska] has voted on
having a private prison, it has been soundly defeated, by about
3-1. Most of the time, he said, when people have really taken a
look at a privately operated public facility, they have "chosen
not to desire this type of an arrangement."
MR. PRICE said he really feels that having a private operator
doing a job traditionally done by the state is a mistake. He
offered his belief that "a lot of history" shows that this type
of arrangement is not beneficial to the people of Alaska. He
encouraged the committee to look at what has happened in other
communities and what the public sentiment is towards this type
of an arrangement. Mr. Price clarified that he strongly opposes
any publicly funded private prison, anywhere in Alaska.
Number 2596
VALERIE McCANDLESS, testifying via teleconference as a private
citizen from Wrangell, told members she would prefer that there
not be private prisons within the state. She said she believes
this is an arrangement that will cost the state more in its
resources and, ultimately, its tax dollars. She noted that
[Wrangell's] Representative Peggy Wilson has had public meetings
to discuss the shortfalls of the state budget and possible
solutions such as "dipping into the permanent fund" and
establishing a state income tax. The latter, she said, would
mean that people throughout the state would be supporting the
privately run [Whittier prison].
MS. McCANDLESS noted that the community of Wrangell recently
held a special election regarding the prison issue; it was voted
down by over 70 percent. She said this was an issue that the
city council had almost moved forward on, without a vote of the
people. She referred to the testimony of Mr. Prewitt that it is
prudent, but not required, to involve the local community. She
said she thinks it is instructive that when other communities
have studied the issue and had the opportunity to vote, the
people have overwhelmingly voted against this. She suggested
there should be "an educational opportunity" and a feasibility
study before any decision is made.
Number 2689
SHARI MIETHE, testifying via teleconference as a private
citizen, told the committee she is opposed to the privatization
of prisons in Alaska. She asked permission to read her written
testimony, which she estimated to be 2.5 minutes in length.
CHAIR COGHILL asked Ms. Miethe to summarize her testimony and
fax the full text to the committee.
MS. MIETHE presented her testimony as follows:
The process generated from a private prison located in
Whittier will primarily go to the Houston, Texas-based
prison corporation, Cornell, and its stockholders.
Taxpayers in the State of Alaska will have to fund it
to the tune of a minimum of $40 million per year, for
25 years, according to HB 498.
Representative Peggy Wilson reported in the Wrangell
Sentinel of February 28, 2002, that the State of
Alaska has "three pots of money or accounts" that the
state draws from to pay its bills: the constitutional
budget reserve [CBR], which serves as a shock absorber
for the state general fund, and the earnings reserve
account [ERA], where the permanent fund [dividend] is
located. And she stated that the CBR only has enough
funds in it for another two years, and that if we
don't close the fiscal gap, the ERA or permanent fund
account will be the next pot that's dipped into.
[Representative Wilson] had further stated that
Alaskans have only three choices to choose from in
resolving our fiscal problem or gap. And one choice
would be to cut programs statewide. And I'm quoting:
"It seems to me a greater fiscal responsibility would
be gained by not initiating projects that will incur a
minimum yearly cost of $40 million."
And it seems that if we're so eager to spend this
additional $40 million a year, I'd like to see us look
to the needs of Alaskan communities and keep the
revenue in our state - like senior health care, port
expansion, fisheries enhancement, job placement
services, et cetera, et cetera. The list is endless.
My question is this: How does the state justify
legislating another multimillion-dollar project while
we're seeking ways to save money, generate revenue,
and close the fiscal gap?
MS. MIETHE mentioned SB 336, which she said would allow for the
expansion of existing public prison facilities and would make
the private prison investment a [moot] point. She said she does
not want the legislature to enact further legislation that will
incur long-range expense and export millions of dollars out of
state, while becoming another case of poor fiscal budgeting that
will ultimately cost Alaskan citizens their permanent fund
[dividend] revenues, "and much more."
Number 2840
KEVIN WYATT, testifying via teleconference as a private citizen,
told the committee that "the private-versus-public debate" was
hashed out extensively on the Kenai Peninsula, and "once again,
when the people voted, ... I think it was a 3-1 thing." He
offered his belief that it is a fundamental responsibility of
state government to incarcerate and rehabilitate people who
break the law. He spoke against shirking this responsibility by
including third-party [contractors] in carrying out the
responsibility.
MR. WYATT, in regard to [HB 498], suggested deleting the
language "third-party operator[s]". He explained:
I just think it has no place in the ... debate of the
good of the public. ... I appreciate the work you guys
do, and I also support both the administration and
both House bills coming out that have a very cost-
effective plan to just add to existing state
facilities.
Number 2916
MIKE YOURKOWSKI, City Council Member, City of Homer, testifying
via teleconference, mentioned making certain that all the
state's costs are included, among them the transportation of
prisoners, medical costs, and court-ordered programs. Having
looked briefly at the fiscal note, Mr. Yourkowski said he hopes
there will be a more competent analysis. He opined that "we
should be throwing our weight behind SB 261 or HB 388," which he
believes would do a much better job of keeping prisoners in
their communities. He suggested that rehabilitation should come
first, and profits should not be a consideration when looking at
the welfare of [Alaska's] prisoners.
CHAIR COGHILL responded that the fiscal notes would be
scrutinized.
Number 2990
GEORGE AVILA, testifying via teleconference, told the committee
that although he was a correctional officer for the Department
of Corrections, he was speaking as a private citizen.
TAPE 02-22, SIDE B
Number 2990
MR. AVILA noted that currently there is a shortage of
correctional officers, and he indicated that a 350-bed facility
is being opened in Anchorage, which [the department] must
endeavor to staff along with its existing facilities. He stated
that it would be an incredible stretch for the Department of
Corrections to take over a 1,200-bed facility now, or in the
future, without pre-planning and hiring [in] stages. Mr. Avila
said he doesn't think it is sound resource management to build a
facility in Whittier and expect that people from Fairbanks,
which is on the road system, would go there [for family
visitation].
MR. AVILA mentioned SB 231 and the governor's bill, [SB] 336.
He noted that both would allow expansion of facilities around
the state, which would allow families "better access to their
... prisoners when they come back."
Number 2932
JIM LECROWE, Retired Corrections Sergeant; Retired Air Force
Pilot and Parachutist, testifying via teleconference, told the
committee he has spent much of his life planning ahead for
emergencies. He expressed concern that if there were a tsunami
warning in the Whittier area, for example, either 1,200 inmates
would have to be moved or the decision not to move them would
have to be made. Moving 1,200 inmates without transport-
qualified staff is impossible, he said; the endeavor would
require thirty 40-person buses, 1,200 sets of handcuffs, and
1,200 sets of leg irons, for example. He said it isn't
feasible.
MR. LECROWE indicated an opportunity in "the other bills" to
impact numerous regions and communities, not just one. He
referred to the testimony of Mr. Prewitt with regard to
generating $18 million a year for the Alaskan economy. He
pointed out that it would be generated regardless of whether
[the prison] is built in Whittier or somewhere else.
MR. LECROWE offered that it is a fallacy to consider Alaskan
inmates to be closer to home in Whittier than they would be in
many other localities. He concluded by saying, "I'm against it.
And, at the very least, you should look at increased
construction costs in Whittier to withstand an avalanche and
tsunami."
Number 2852
LEONARD JONES, Director of Public Facilities, City of Whittier,
testifying via teleconference, referred to a two-page letter
he'd faxed to the committee; he offered a synopsis. An Alaskan
resident for 33 years, Mr. Jones said he was a corrections
professional for the Department of Corrections for 28 years; he
was a contract administrator, at the executive level, for the
ten community residential centers or halfway houses operated
throughout the state. He'd resigned on November 16 [2001],
however, and had gone to work for the City of Whittier.
MR. JONES told members he has seen a need for effective
programming and Native cultural programs for offenders, and has
helped to develop those programs in Nome, Barrow, and Southeast
[Alaska]. He mentioned the vision for the Department of
Corrections and read from his written testimony, which stated:
"To be partners with the public in the delivery of a continuum
of correctional services with integrity and a commitment to
excellence." He said he wouldn't read the mission statement,
but has learned over the last 90 days that "the City of Whittier
is prepared to work with the Department of Corrections to
develop fully and completely this same mission and vision
concerning ... the return of prisoners to Alaska." He stated
his full support of this concept and said he believes it is
important to bring [Alaska's] prisoners home, somewhere within
the state.
Number 2769
MR. JONES referred to testimony the previous week from a
gentleman from Homer who suggested that "family [members], loved
ones, and others who may visit this prison site are 'not the
kind of people you want in your community.'" Mr. Jones recalled
that the testifier had spoken of increased crime and negative
ideations that would be caused by having these people visiting
prisoners. Mr. Jones emphasized that he disagreed, because each
prisoner incarcerated, whether in Arizona or Alaska, "is someday
going to be released and is going to come back and be your
neighbor." He mentioned effective programming and Cornell
[Companies], suggesting that with some oversight from the city,
the needs of the state and all Alaskan citizens can be met.
Number 2665
DAVID KATZEEK, Juneau Alaska Native Brotherhood (ANB) Camp 2,
began his testimony [interspersing short segments spoken in
Tlingit] as follows:
My Tlingit name is "King-gees-teh" (ph). ... I want
to express my appreciation for giving me this
opportunity to present to you our position. Noble and
honorable people of the land - ... this is the way the
Tlingit culture has always been regarding our people,
or any people, that we look at them as noble people.
We don't classify them as criminals. We don't
classify them as bad people. We look at them for who
they are, and we work with them in a way that brings
back an individual who may have violated some
boundaries and things of that nature.
And to me, when you're talking finances and so forth,
I think you're rightly talking about the right thing.
But ... how much can you put on a child who sees his
dad come out of prison and is rehabilitated and is
restored, and comes back into the community when, one,
the public is safe; two, ... the recidivism rate is
reduced; and three, that individual is rehabilitated
and is contributing to the community.
We look at it as an opportunity - from me, from the
Alaska Native Brotherhood, Camp II - that there's an
opportunity in private prisons to be able to do the
kind of things that would help restore our people. It
isn't whether you're spending millions and millions of
dollars, but it's saving money if you develop a
program, ... whether it's a state prison or within the
... structure of a private prison. And we favor the
private prison, because we understand some of the
types of things: there are special-interest-type
groups that are happening here. And we're talking
economics.
But I want to bring to your attention that we need to
address the issue with respect to broken homes and
broken hearts and broken spirits. How much money can
you put on that? And so, I just say to you that we
support bringing back our families together - not from
down [in] Arizona, but from Juneau, from Hoonah, from
Yakutat, from Metlakatla, and Sitka - to bring them
together back as a family. ... That's the way it was
always, with your families and our families, across
this world.
MR. KATZEEK concluded by saying 96 percent of individuals who
re-offend use alcohol. Many are incarcerated in Arizona, which,
he opined, is no different from the [detention, after the
terrorist attacks on September 11, 2001, of purported members
of] Al Qaeda at Guantanamo Bay. He urged the committee, when
thinking about money, to include other values that have a
positive impact "for all of us, as a people."
Number 2470
DON ETHERIDGE, Lobbyist for AFL-CIO [American Federation of
Labor and Congress of Industrial Organizations], testified on
behalf of the public employees sector of the AFL-CIO. He said,
"We oppose it for many, many of the reasons you already heard."
He stated support for expansion of existing facilities, which
would allow [prisoners] far away from home to be closer to where
they came from. Referring to testimony during a prior hearing
on HB 498, when a testifier commented that "it wasn't heard in
Juneau," Mr. Etheridge said "it" has been heard in Juneau, just
not in the capitol. He noted that the local assembly had passed
a resolution in support of the expansion of the existing
facilities.
Number 2400
CHARLES CAMPBELL came forward to testify. A resident of Juneau,
he told the committee that he came to Juneau 22 years ago as
"Director of Corrections in Alaska." He indicated he'd also
served for two and one half years as [a monitor] for Cleary [a
legal case that had been settled pertaining to prisoners'
rights]. Beginning in 1950, he said, he'd filled a wide variety
of roles and worked in seven different federal prisons.
MR. CAMPBELL said he loves [Alaska] and wants the state to have
a good corrections program. He assured the committee that the
proposal in [HB 498] is not a tenable one; it would not allow
Alaska to continue to have its currently good correction system.
He noted that [Alaska] is one of the few states that continues
to have "a reasonably good correctional program, despite ... its
... limited resources." He remarked, "Frank Prewitt is
certainly right in saying that there are states down south that
have prisons with three and four times as many beds as ...
anticipated in this plan. They've had to throw ... in the
sponge."
MR. CAMPBELL offered that a 1,200-bed prison in Whittier would
not be much of an improvement over [the facility located in]
Florence, Arizona, as far as accessibility to families is
concerned. The only way a 1,200-bed prison could work, he
opined, is by way of a unit system whereby the prison is divided
into perhaps four or five separate units, each individually
staffed and programmed. He suggested that would be impossible
for Cornell Companies to do, however, because of cost
considerations. With 1,200 beds, he said, prisoners begin to
have more influence than staff over what happens at the prison.
MR. CAMPBELL referred to previous comments by Mr. Prewitt
regarding community resources. He stated that community
resources are enormously important to a good prison. He told
the committee that it is important to remember that the Alaska
State Constitution requires that correctional administration be
based on principles of reformation. Whittier, he said, would
not be able to provide, even remotely, the types of community
resources that are needed. He clarified that he was not
referring to contractual resources and said, "a good volunteer
cadre is essential to a good program."
MR. CAMPBELL said he sees no possibility of [a facility in
Whittier] being staffed; there is still a deficit of officers at
Spring Creek [Correctional Center] who don't have to commute.
Cornell proposes to pay less money, with a less favorable
package, he said, adding that the leadership of the facility is
in question because it has "an inescapable conflict of
interest." Calling [HB 498] an "atrocious bill," Mr. Campbell
concluded by expressing confidence that the prison will never be
built but that the bill will be moved forward, causing a long
delay in addressing the serious problem of having 800 prisoners
in Arizona.
Number 2119
CHAIR COGHILL closed public testimony. He indicated there were
many questions regarding the bill - philosophical, practical,
legal, contractual, and economical. He offered his intention of
letting the House Finance Committee address economic issues. He
indicated the current committee needed to consider the policy
decision regarding a city's asking [the legislature] to do "an
authorization for contracts on private corrections."
Number 2062
REPRESENTATIVE JAMES commented on the sincerity of the
testifiers, but indicated she didn't share the concerns. In
regard to Mr. Campbell's last comment, she said, "We don't make
it happen; we only allow it." She mentioned the proposal for
Kenai and the Alaska Native participation. She said she thinks
it is worth the chance to go ahead with this. She concluded
that she was happy with the legislation and would support it.
Number 1998
REPRESENTATIVE FATE noted that other communities are interested
in [a prison as well]. In addition, while [Mr. Katzeek's]
testimony cited the Tlingit culture, people from other cultures
are in prisons across the state. He questioned whether the
Alaska Native Brotherhood [members] would take up permanent
residence [in Whittier] or would have to commute. He said he
was concerned about visitation to such a remote area because it
is a major factor in rehabilitation "for friends and relatives
to come and reinforce those inmates," especially in the "medium"
facilities. He noted that he has seen this firsthand.
REPRESENTATIVE FATE said he was questioning the choice of a
private prison when the state did not come out with a request
for proposals to find out if any other communities were
interested in the prison or to see what private contractors were
available. He said he needed answers to questions before he
would vote for a city that he wasn't sure had the infrastructure
to provide the type of facility that "we" want.
Number 1845
REPRESENTATIVE CRAWFORD voiced concern that 1,200 beds is two
and one half times [the size] of any facility currently in the
state. He said he believed [building this prison in Whittier]
would "preclude us from constructing any other facilities in the
state over the next 25 years." He explained that he is
concerned about having "one monolithic structure" in Whittier,
when there are needs and concerns all over the state. He said
he favors a regional approach to this, and although there are
some economies of scale, [the committee] should be concerned
with rehabilitating [prisoners] to re-enter society. He
concluded that this [legislation] would be a bad idea.
Number 1765
CHAIR COGHILL announced that HB 498 would be held over.
ADJOURNMENT
Number 1728
The House State Affairs Standing Committee took a brief at-ease
to prepare for the overview regarding actuarials and the
Division of Retirement and Benefits. [For the overview, see the
9:25 a.m. minutes for this date.]
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