Legislature(2003 - 2004)
05/09/2004 11:13 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 65(FIN) am An Act relating to the qualifications of correctional officers, parole officers, and probation officers; authorizing the Department of Corrections to enter into lease- purchase agreements with municipalities for new or expanded public correctional facilities in the Fairbanks North Star Borough, the Matanuska-Susitna Borough, Bethel, the Municipality of Anchorage, and the City of Seward; relating to the development and financing of privately operated correctional facility space and services; authorizing the Department of Corrections to enter into a lease-purchase agreement with the City of Whittier for the confinement and care of prisoners in privately operated correctional facility space if the state cannot provide the same level of services required in state law or regulation for the same or less cost; giving notice of and approving, and authorizing the entry into and issuance of certificates of participation for, the upgrade, expansion, and replacement of certain jails in Dillingham and Kodiak; and providing for an effective date. SENATOR LYDA GREEN, SPONSOR, explained that the State suffers from overcrowding in statewide prison facilities and that Alaska needs a responsible solution to address these serious issues, which arise from the overcrowding, deteriorating physical plants and anticipated growth in prisoner populations. SB 65 is the resulting legislation from numerous conversations, revealing a need for compromise in order to pass a comprehensive, long-term correctional facility plan that adequately addresses public safety. The bill would: · Ensure local involvement in the process and guarantees open and fair competition; · Creates a level playing field between the public and private sectors; and · Requires the use of the State procurement process, a feasibility study, and approval of facility designs by the Commissioner of the Department of Corrections. Senator Green believed that the end result would be consistency in facility design and operation. The bill additionally, allows the State of Alaska to bring prisoners back from Arizona, directing that money into the State economy. Senator Green provided a sectional analysis of the bill. Co-Chair Harris inquired if the fiscal note cost included bringing prisoners back from Arizona. Senator Green acknowledged that it did and requested her staff to address the concern. She advised that the Department of Public Safety would be transporting the prisoners across the State. She added that there would be an increase as numbers continue to rise with the current trend continuing. Co-Chair Harris pointed out that the bill indicates a "cost not to exceed" $14,600 dollars per year, per bed in the Fairbanks and Mat-Su areas. He asked the current yearly costs for incarcerating the Arizona prisoners. TRACI CARPENTER, STAFF, SENATOR LYDA GREEN, stated that the current total amount is $14.154 million dollars for out of state contracts. Senator Green interjected that the calculations could be "no more than" as included in the note. The costs have been calculated over the past 15 years. Ms. Carpenter added that the language indicates 25 years, but for purposes of calculation, the fiscal note allows for 15 years. Senator Green added that at the end of the 15-year period, the bed space could not exceed $14.6 million dollars. Co-Chair Harris understood that the bill would allow listed communities such as Seward and Anchorage and a federal issue, Bethel, Mat-Su, and Fairbanks North Star Borough to agree to a bond based upon a State contact to house beds. Senator Green clarified that it would not only house those beds but also construct the facility. Co-Chair Harris noted that the bill provided a maximum and "not to exceed" capital costs of $135 thousand dollars for urban areas and $155 thousand dollars in Bethel. Senator Green affirmed that information. Co-Chair Harris questioned Senator Green's intent for the Whittier concern. Senator Green responded that following passage of the bill, the City of Whittier could begin discussions with the State about bonding and continuing contract service costs with the State by housing the prisoners with continued care. The bill requires that it be an open and competitive process according to the State procurement codes. She pointed out the need for the feasibility study. Co-Chair Harris asked if the feasibility study indicated that private prison care would be cheaper, would there be language included to indicate that other facilities should contract out. Senator Green explained that the language deals only with the Whittier concern. Co-Chair Harris asked if there could be a "mandate" on the Department to contract with the private sector when costs could be lowered. Senator Green did not know. Representative Hawker referenced the Whittier proposal feasibility study, asking if it would be conducted internally or by an independent third party. Senator Green understood that there would be an independent contractor hired. Co-Chair Harris asked if the referenced facility was the Sutton Prison. Senator Green affirmed it is. Representative Chenault noted that the indicated annual lease costs shows the facility at the Anchorage Correctional Center @ $1.76 million dollars and the Spring Creek Center @ $1.76 million dollars. Ms. Carpenter explained that those numbers are based on actual best estimates of anticipated costs and are less than what is allocated in the bill. Representative Croft asked about the competitive bidding process and if the RFP determined that the feasibility was competitively bid. Senator Green responded that an RFP or bid provides a feasibility study, first and intended that any statewide contractors would be allowed to bid. Representative Croft questioned if they "all" would be competitive. Senator Green replied that in the process, a competitive bid is required and that the language mirrors that. Representative Croft agreed that it was covered under the feasibility study, however, pointed out language on Page 4, Lines 11-12, indicating that the Department of Corrections would be required to agree with the City of Whittier. There is already an agreement between the City of Whittier with companies wanting the work. He did not see any discretion that after the study was done, it would be cheaper to do anything but a predefined contract. Senator Green noted language on Page 4, Line 23. Representative Croft questioned the effect with the City of Whittier for design, construction and operations of a facility. Senator Green explained that the intent was for those projects only to come and the others would be "grandfathered" in. Representative Hawker mentioned that there were people present who could testify on the bidding process the city went through. Representative Chenault asked if other municipalities had been required to follow the State Procurement Code. Senator Green affirmed, because they would be dealing directly with the State on the design and approval of the facilities. Representative Chenault reiterated concerns with the annual lease costs. He pointed out that Fairbanks indicates maximum-security costs while others mention only minimum- security costs. Ms. Carpenter stated that under the bill, the annual total lease cost for the City of Seward would be $2.1 million dollars, however, the estimate is $1.76 million dollars. She noted there is leeway for errors. Representative Hawker referenced commentary in the fiscal analysis, indicating no consideration of an independent facility in Whittier and asked what that meant. Senator Green did not know and requested that someone from the Department respond. Representative Fate asked where the projected numbers for the Anchorage expansion originated. Senator Green explained that was a separate federal issue and that those funds would expand the Anchorage facility for the housing of federal prisoners. That money would only be an authorization by the State for use. She added that Governor Murkowski has indicated that Alaska needs a large, central location facility to house prisoners who stay from a medium to long period of time. There needs to be an expansion in Bethel, as during the process, the State currently transfers from the overcrowded Bethel facility to the one in Anchorage. The Fairbanks facility also has needs for additional beds also, which could be balanced out by a large South-central facility, designed for long-term use. It currently, houses those prisoners being sent to Arizona, creating a ripple effect without enough statewide prison beds. Representative Joule noted that he was happy to see that some of the contract jails had been included, however, pointed out that the bill does not indicate "contract" concerns. Senator Green responded that at present time, there is ongoing litigation to address that concern. Co-Chair Harris inquired if the bill covers the rural hub areas. Senator Green responded that all areas with the greatest needs are covered. She added that local government must agree to accept the process of advocating and willingness to assume the bonding burden on that there are many communities not interested in doing that. SB 65 is designed as a lease/purchase; the State will own the facility and the community will be involved in design, construction, maintenance and use of it. In response to Co- Chair Harris, Senator Green added that is the same with the Whittier facility and that the State would ultimately own it. JODY SIMPSON, MEMBER, MAT SU BOROUGH ASSEMBLY, voiced support for SB 65. She noted that the Mat-Su Assembly adopted a resolution supporting the concept of establishing State-operated prisons for the following reasons: · Pressing need to reduce overcrowding in Alaska prisons; · Bringing home prisoners currently housed out of State; · Providing needed construction and year-round jobs; and that · Maintaining prisoners in-state, allows them to be closer to their families and culture, enhancing rehabilitation. Representative Stoltze mentioned the Valley Hospital and other new triads. He asked their ability to provide secure beds. Ms. Simpson did not understand the connection between the two facilities. RAY GILLESPIE, LOBBYIST, MAT SU BOROUGH, explained that there had been extensive discussions with Triad regarding the need for bed security in the event that the prison is built. It is understood that it would be provided by the Valley Hospital. MARC ANTRIM, COMMISSIONER, DEPARTMENT OF CORRECTIONS, indicated that the Department and the Governor support SB 65, allowing the Department of Corrections to address longstanding capacity issues. At any given time, the Department is at 100% capacity with 750+ out of State prisoners. SB 65 provides a vehicle for the Administration to address these concerns. The bill has a bonding component built into it, so that the State can only fund projects, which will not negatively affect credit rating. Representative Stoltze inquired about the status of the Correction Corporation from Florence. Commissioner Antrim responded that the Department currently has an RFP for out- of-state contract beds and that the Corrections Corporation of America is the contractor that the Department is currently working with. Representative Stoltze asked if the Department anticipates a large savings during the next round of RFP's. Mr. Antrim advised the Department is attempting to determine that through negotiations. JERRY BURNETT, DIRECTOR, ADMINISTRATIVE SERVICES DIVISION, DEPARTMENT OF CORRECTIONS, noted "worse fear" scenarios. He thought it would be surprising if future prices were lower. The State is currently in active negotiations on price. Representative Hawker spoke to concerns of the long-term, down-range costs. No one has challenged the need for the facilities but he questioned the long-term deferred maintenance costs. He inquired if the option had been considered for the City of Whittier to cover the debt for operations of the facility. Mr. Burnett said there has been no cost analysis of that issue and that without one, he would not know the answer. Commissioner Antrim interjected that in either case, the State will see costs associated with the facility. RICK HOHNBAUM, (TESTIFIED VIA TELECONFERENCE), CITY MANAGER, CITY OF WHITTIER, reaffirmed Whittier's interest and desire to establish a city-owned and contractually operated private prison. The economic benefits would be significant for that small community. The community and the City Council have continually supported the project. He noted that he had been encouraged by the City to make sure that every opportunity was taken to guarantee success. He spoke of the bidding process and the selection of the firm partnership, providing: · Economic benefit to the City of Whittier, · Financial benefit of cost savings for a private prison for the State, and · Social benefit of housing prisoners in the same State as family with cultural connections for the long-term benefit of prisoners and families of prisoners. TAPE HFC 04 - 110, Side B Mr. Hohnbaum offered to answer further questions of the Committee. DEE HUBBARD, CITIZEN ACTIVIST (TESTIFIED VIA TELECONFERENCE), STERLING, noted that she supports SB 65 as it came over from the Senate, especially the inclusion of the training requirements. She pointed out Representative Croft's Amendment #3, which would delete Section 5. She questioned Representative Hawker's Amendment #1, to Line 9, and asked about a feasibility study extending over a 25-year period. Ms. Hubbard asked why the Office of Management and Budget (OMB) had been selected instead of the Department of Corrections and the Department of Administration to fulfill the contract. Ms. Hubbard continued addressing concerns of the amendments. (Copies of All Amendments on File). Ms. Hubbard identified concerns regarding use for the State procurement code. She recommended that an audit for contract monitoring compliance be placed in statute. She added that there should be a use of fines for non-payment and a specific list of "powers and non powers" granted to contractors. Representative Stoltze recommended that the State procurement officer address Ms. Hubbard's questions. Representative Hawker MOVED to ADOPT Amendment #1, #23- LS0392\NA.8, Luckhaupt, 5/8/04. (Copy on File). Co-Chair Williams OBJECTED for discussions purposes. Representative Hawker explained that Amendment #1 clarifies the Whittier component: · The first section, Page 4, Line 4, mirrors language for authorization of other municipal facilities with intent to relieve overcrowding for the statewide correctional facilities. · Page 4, Line 9, language clarifies that when the contract is signed, there should be a cost analysis study defined before the State moves forward. An outside study would be mandated. · Page 4, Line 10 specifies that the study shall be contracted in an out-source basis. · Page 4, Line 12, language defines what the feasibility study should determine and that it be completed by October 1, 2004. Representative Hawker requested to amend that section by changing the date to January 1, 2005. There being NO OBJECTION, the date was changed. · Page 4, Line 15, provides language to guarantee that comparisons are equal. Senator Green agreed to most of the amendment except for the feasibility completion date. She admitted that there are many steps that need to be addressed before the completion date; not knowing when the request will move forward would make that difficult. Representative Hawker asked if it would relieve Senator Green's concerns to add language that it be complete within six months of the proposed receipt from the city. Senator Green replied that if everything was complete by 2006 that would be the end date. She did not know how long it would take and requested that the Department address that. Co-Chair Harris asked if there had been a required timeframe for the feasibility study related to other facilities. Senator Green stated that none had been required and that the requirement did address contracts and labor force development. A feasibility study would be required if the intent were to use anything by the State labor force in order to build a facility. A method for outsourcing and privatization could be provided. Therefore, that would make a feasibility study a requirement. She admitted that she did not know time constraints associated on the feasibility studies. Co-Chair Williams recommended that each community establish the date. Representative Hawker mentioned concern with providing a date certain. If the Department of Corrections had everything in place by a certain time, they would have to enter into a lease agreement. He thought that there needed to be protection for communities and that the completion date or the date certain could be eliminated. He stressed that the community deserves certainty that there is a level playing field. Senator Green replied that there is "no certainty" in any of the bill. Any city or group that comes to the commissioner and indicates that their city was willing to go into debt, there still would be no assurance that they would be given permission. She stressed that there was no intent in the bill to provide assurance. The bill is permissive with in- dates for private & other facilities around the State. Co-Chair Williams asked Representative Hawker if it would be okay to make the appropriate changes in that area of the amendment. Representative Hawker requested that the Department of Corrections testify regarding any change. Recess: 12:25 P.M. Reconvene: 12:40 P.M. Representative Hawker MOVED to change Amendment #1 by deleting language on Lines 14 & 15: "The feasibility study shall be completed by October 1, 2004". Additionally, it would need to include changing the date on Page 4, Line 5, from July 1, 2006 to July 1, 2007. Representative Croft OBJECTED for further clarification. Following the Department providing that information, Representative Croft WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment #1 as amended was adopted. Representative Hawker MOVED to WITHDRAW Amendment #2, #23- LS0392\N.A.10, Luckhaupt, 5/8/04. (Copy on File). He noted that #2 would be replaced by Amendment #5. There being NO OBJECTION, Amendment #2 was withdrawn. Representative Croft MOVED to ADOPT Amendment #3. (Copy on File). Co-Chair Williams OBJECTED. Representative Croft explained the amendment. He emphasized that the privatization of the prison system bill has been around for many years. He recounted the numerous communities who have attempted to get that proposal and how devastating it was to each of them. Representative Croft objected to the litany of "sole source projects". There has never been a clean proposal presented to the Committee. The proposals are always sole source, with heavy money deals directed to one contractor. It is always prearranged and never clean. He believed that the legislation would result in sole sourcing being prearranged with political pressure through construction and continued operations. Representative Croft warned that the State would see someone indicted and likely sent to prison over the proposed series. He stressed that he "hates" this type of proposal because of what it does to the integrity of the Legislature. He disliked the "high money and motives money and the legislators". These proposals historically have left a trail of damaged communities. Representative Croft warned that Whittier would regret it at some point. Senator Green interjected that the amendment language would return the legislation to the original bill. She pointed out that the Whittier language had been added with great deliberation. All the language is "futuristic" and will result in a lease-purchase owned by the State. She acknowledged it would be a policy call. Representative Stoltze commented that Amendment #3 is important and requested an analysis. He inquired if there had been an overview of the contract between the City of Whittier and that contracting group. VERN JONES, CHIEF PROCUREMENT OFFICER, DEPARTMENT OF ADMINISTRATION, indicated that the Department had not read the contract, but had read the City of Whittier's RFP. The procurement process for the City of Whittier did not comply with the State's contract process. Whittier would be subjected to their own ordinances. Without Amendment #3, the bill requires the City of Whittier procurement process to comply with the State's. He offered to provide technicalities regarding negotiation costs. Representative Hawker acknowledged that the bill could resolve concerns raised by Representative Croft. He said he opposed Amendment #3. A roll call vote was taken on the motion. IN FAVOR: Croft, Stoltze OPPOSED: Fate, Foster, Hawker, Joule, Meyer, Moses, Chenalut, Williams, Harris The MOTION FAILED (2-9). Representative Stoltze MOVED to ADOPT Amendment #4, #23- LS0392\NA.4, Luckhaupt, 5/4/04. (Copy on File). Co-Chair Williams OBJECTED. Representative Stoltze advised that the sponsor submitted the amendment in order to provide clean up language. Senator Green said it was obvious that a provision, addressing the qualification concerns of the correctional officers, needed language for all the hard beds. The amendment would add new language highlighting the intent. Co-Chair Williams WITHDREW his OBJECTION. There being No further OBJECTION, Amendment #4 was adopted. Representative Hawker WITHDREW Amendment #5, #23- LS0392\NA.11, Luckhaupt, 5/09/04. (Copy on File). Representative Croft MOVED to ADOPT Amendment #6, #23- LSO392,NA.6, Luckhaupt, 5/07/04. (Copy on File). Co-Chair Williams OBJECTED. Representative Croft explained that the amendment would add a "small amount of competitive nature" to the proposal. He reiterated his concerns regarding sole sourcing "privatization", creating a combination for the worst aspects of government and business. Senator Green noted that she did not object to the amendment. Co-Chair Williams WITHDREW his OBJECTION. Representative Fate questioned the powers of the Department's commissioner to select the facility site. Representative Croft responded that language was included in the section about the Whittier proposal and intended to be a contemplated site. He stated that the key aspect was that it be open for bid on a non-preferential basis and that it was included in the authorization list with the City of Whittier. Representative Stoltze asked if the proposed amendment would improve the Department's "comfort level with the process". Mr. Jones responded that the language of the amendment requires the competitive process and that made him more comfortable. TAPE HFC 04 - 111, Side A Representative Hawker thought the bill delineated a "forward looking process" and provides an alignment with State statute. He added that the amendment serves no function. Co-Chair Harris pointed out that the language of the amendment provides a mandatory "shall". He commented that the Department of Corrections commissioner had no business selecting the site. The determination should be left to the party given the proposal. Representative Hawker advised that there is language in the bill that the commissioner "shall" approve the design of the facility. Representative Stoltze maintained that the commissioner, the Department and the State should have interest in the site selection process. The placement of prisons and the manner in which they interface with those communities is relevant. The amendment would provide good benefit. Co-Chair Harris took issue with the possibility of there being opposition between the State and the public regarding the chosen area. He believed that the language should not be included, as the public should determine that policy. A roll call vote was taken on the motion to adopt the amendment. IN FAVOR: Stoltze, Croft OPPOSED: Fate, Foster, Hawker, Joule, Meyer, Moses, Chenalut, Harris, Williams The MOTION FAILED (2-9). Representative Foster MOVED to report HCS CS SB 65 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Croft OBJECTED. Representative Croft referred to all previous statewide lawsuits resulting from such a choice. Co-Chair Harris objected to comments voiced by Representative Croft. He claimed that the bill as currently written makes it difficult for any Administration to move forward. He added that most of the bill is good. Representative Hawker agreed that the bill was good, suggesting that most concerns had been thoughtfully advocated throughout the bill. A roll call vote was taken on the motion to move the bill from Committee. IN FAVOR: Foster, Hawker, Joule, Meyer, Stoltze, Chenault, Fate, Williams, Harris OPPOSED: Moses, Croft The MOTION PASSED (9-2). HCS CS SB 65 (FIN) was reported out of Committee with "individual" recommendations and with fiscal note #2 by the Department of Corrections.