Legislature(2003 - 2004)

04/29/2004 09:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE BILL NO. 65                                                                                                         
     "An  Act authorizing  the Department  of  Corrections to  enter                                                            
     into agreements with  municipalities for new or expanded public                                                            
     correctional  facilities in the  Fairbanks North Star  Borough,                                                            
     the Matanuska-Susitna  Borough, Bethel, and the Municipality of                                                            
This  was the sixth  hearing  for this  bill in  the Senate  Finance                                                            
Amendment #7:  This amendment replaces  the words "a minimum  of 25-                                                            
years"  with "a  term not  to exceed  25-years" in  Section 5,  page                                                            
four, line three,  of the Version 23-LS0392\E committee  substitute.                                                            
Co-Chair  Green  moved  to  adopt  Amendment  #7.  This "technical"                                                             
amendment would address  the leasing of correctional facility space.                                                            
There being no objection, Amendment #7 was ADOPTED.                                                                             
Co-Chair Wilken  noted that Co-Chair Green has provided  a sectional                                                            
analysis  [copy on file]  for the Version  "E" committee  substitute                                                            
that was previously adopted by the Committee.                                                                                   
GREG PEASE, Executive  Director, Gastineau Human Services  and Board                                                            
Member  representing  the  States  of  Washington,   Oregon,  Idaho,                                                            
Alaska,   and  Montana  on   the  American   Probation  and   Parole                                                            
Association, shared  with the Committee "the importance  of programs                                                            
that  assist  offenders,  victims  and  communities,  and  community                                                            
assets"  treatment  and  support groups;  specifically  faith-based                                                             
community initiatives  that assist in re-entering  violent offenders                                                            
back  into   the  community.  He   noted  that  when  contemplating                                                             
legislation  such  as this  bill  that addresses  the  expansion  of                                                            
correctional  facilities,  it should  be  noted that  current  State                                                            
Statutes require that six  months prior to an inmate's release date,                                                            
that individual  should attend a community  residential center  that                                                            
would assist  them in  reentering  a community.  He urged that  this                                                            
requirement   be  continued   "if   not  expanded."   He   supported                                                            
incarcerating  people  in the  State as  opposed to  outside of  the                                                            
State  facilities  as it  would allow  them  to be  closer to  their                                                            
families and  support groups. Therefore,  he urged the Committee  to                                                            
be aware that,  in addition to housing needs, program  needs must be                                                            
provided for.                                                                                                                   
Mr. Pease  also asked  members to  question the  reason why  so many                                                            
individuals are  being incarcerated "to begin with."  He noted that,                                                            
in  this  State, the  majority  of  those  incarcerated  are  Alaska                                                            
Natives.  More importantly,  he urged the  Members to consider  what                                                            
happens to inmates  upon their release from jail.  He expressed that                                                            
the United  States  has experienced  "a prison/jail  building  boon"                                                            
which,  he  stated must  be  recognized  as providing  "short-term,                                                             
temporary   low-income  housing   for,  primarily,   mental   health                                                            
beneficiaries  in this State." He  pointed out that the majority  of                                                            
the  individuals  serving  time  in  State  prisons  and  jails  are                                                            
probation and parole violators.                                                                                                 
Senator Dyson  questioned the relevance  of Mr. Pease's comments  to                                                            
this bill.                                                                                                                      
Mr. Pease  expressed that  while this bill  would provide more  jail                                                            
facilities,  it  does  not address  the  aftermath  faced  by  those                                                            
incarcerated  once  they  are  released   from  prison.  Other  than                                                            
providing  a big  building,  this  legislation  does not  provide  a                                                            
support  system to assist  individuals re-entering  society.  Absent                                                            
this focus, he attested,  a cycle of re-offending would evolve. This                                                            
in turn would require more facilities to be available.                                                                          
Senator  Dyson ascertained;  therefore,  that the  testifier is  not                                                            
speaking in  opposition to the bill,  but is rather speaking  to the                                                            
fact that this legislation  only addresses a portion of the problem.                                                            
Mr.  Pease commented  that  the number  of incarcerated  parole  and                                                            
probation re-offenders  is a testament that the State  does not have                                                            
a  proven success  rate  in  keeping people  from  re-offending.  In                                                            
addition  to  the  money  being  expended   to  construct  a  prison                                                            
facility, funding must  be included to support the Therapeutic Court                                                            
and other mandatory programs.                                                                                                   
Senator  Dyson  understood  therefore,  that  the testifier  is  not                                                            
against the bill.                                                                                                               
Senator  Bunde asked  for clarification  that the  testifier is  not                                                            
implying  that people have  been incarcerated  without committing  a                                                            
Mr. Pease responded no,  the intent of his testimony is to highlight                                                            
the  need   to  provide   assistance  to   people  while  they   are                                                            
incarcerated that would assist them upon their release.                                                                         
Co-Chair Green, the bill's  sponsor, informed the Committee that, at                                                            
her request,  the Department of Corrections  would be testifying  to                                                            
provide expertise  regarding the technical aspects  of the bill. The                                                            
testimony would be provided in a neutral manner.                                                                                
Co-Chair   Wilken  acknowledged   Co-Chair   Green's  comments   and                                                            
specified that,  were the Department uncomfortable  with a question,                                                            
Co-Chair Green would address it.                                                                                                
JERRY  BURNETT, Director,  Administrative  Services,  Department  of                                                            
Corrections,  read  information from  the  aforementioned  Sectional                                                            
Analysis of the Version "E" committee substitute as follows.                                                                    
     Sections  1, Section  2, and Section  3. Requires correctional                                                             
     officers,  parole officers, and  probation officers  working in                                                            
     all correctional  facilities  in the State of Alaska  to have a                                                            
     valid  certificate   issued  by  the Alaska   Police  Standards                                                            
     Section 4. Authorizes  the Department of Corrections (not later                                                            
     than July 1, 2009)  to enter into agreements with the Fairbanks                                                            
     North  Star Borough,  the  Matanuska-Susitna  Borough,  Bethel,                                                            
     Municipality  of  Anchorage  and  city  of Seward  for  new  or                                                            
     expanded correctional  facilities. The authorization is subject                                                            
     to 5 conditions.                                                                                                           
     (1)  Average  capital cost per  bed may not exceed $135,000  in                                                            
          the Fairbanks North Star Borough (up to 80 beds),                                                                     
          Matanuska-Susitna Borough (1,200 to 2,251 beds),                                                                      
          Municipality of Anchorage (up to 200 beds) and City of                                                                
          Seward (up to 144 beds); and must not exceed $155,000 a                                                               
          bed for Bethel. These costs are adjusted for inflation.                                                               
     (2)  For  new facility construction, the municipality  will own                                                            
          the facility and the state will operated the facility.                                                                
          The state will lease the facility for a term of not more                                                              
          than 25 years with annual lease payment not exceeding                                                                 
          $11,600 a bed. (Similar to Anchorage Jail and Spring                                                                  
          Creek Correctional Center in Seward)                                                                                  
     (3)  For  expansion  of existing  facilities,  there will  be a                                                            
          joint ownership agreement between the municipality and                                                                
          the state and the state will operate the facility. The                                                                
          state will lease for not more than 25 years and payments                                                              
          may not exceed $16,700 a bed for the Bethel facility and                                                              
          $14,600 a bed fro the Fairbanks, Anchorage and Seward                                                                 
          facilities. The state will own these facilities, so will                                                              
          own the newly expanded parts as well).                                                                                
     (4)  Lease   agreements   must   allow  the   Commissioner   of                                                            
          Corrections to terminate the contract for cause.                                                                      
     (5)  The  Commissioner may not enter into an agreement if bonds                                                            
          issued for the new or expanded facilities are below                                                                   
          investment grade. (Investment grade is a term of art that                                                             
          means single A or better - see Alaska Permanent Fund                                                                  
          Statute: Investment responsibilities of the board AS                                                                  
     Further,  expansion of the Anchorage jail may  only occur if it                                                            
     is funded by up to $30,000,000 in federal receipts.                                                                        
Co-Chair Wilken  asked for further information regarding  the single                                                            
"A" bonding requirement.                                                                                                        
Mr. Burnett  stated that the language  in Section 4, subsection  (5)                                                            
indicates that a test regarding  the bonding capacity of the bonding                                                            
community and  the State must be considered,  as the bonds  would be                                                            
State debt under the aforementioned definition.                                                                                 
MARC ANTRIM,  Commissioner,  Department of  Corrections, noted  that                                                            
this  language   addresses  one  area  of  concern   raised  by  the                                                            
Department of Corrections.                                                                                                      
Mr. Burnett  referred the Committee  to the "CSSB 65 Version  E Cost                                                            
Comparison"   chart  attached   to  the   aforementioned   Sectional                                                            
Analysis,  that  specifies  that the  total  cost of  expanding  the                                                            
Fairbanks   Correctional  Facility   by  80-beds  would   amount  to                                                            
$10,800,000.  To provide two additional  security guards  per shift,                                                            
11 new positions  would be required.  The City of Fairbanks'  annual                                                            
lease debt service would  equate to $1,076,000, the annual operating                                                            
expenses  would be  $1,329,200. Thus,  the total  annual cost  would                                                            
amount to $2,405,200.                                                                                                           
Co-Chair  Wilken understood  therefore that  the total bond  package                                                            
required to expand the  Fairbanks correctional facility by up to 80-                                                            
beds would  be $10,800,000,  based on a per  bed maximum expense  of                                                            
$135,000.  The  State  could  not  enter   into  a  lease  agreement                                                            
exceeding  25  years nor  exceed  an inflation  adjusted  amount  of                                                            
$1,076,000  per year. Operating costs  of $1,329,200 per  year would                                                            
be borne by the State,  and, at the end of those 25 years, the State                                                            
would own the expanded facility.                                                                                                
Mr. Burnett  clarified that  the aforementioned  expansion  expenses                                                            
would  be in affect  were  a 15-year  lease in  place. Annual  costs                                                            
would be lower were a 25-year lease in place.                                                                                   
Co-Chair Wilken  understood therefore that an annual  revenue stream                                                            
of $1,076,000 would be  required to support bonds based on a 15-year                                                            
Mr.  Burnett  agreed that  this  would  be the  amount  required  to                                                            
support "the pass through lease cost net."                                                                                      
Senator  Hoffman asked  for confirmation  that  the "Annual  Capital                                                            
Costs (lease  debt service)" column  on the chart depicts  a 15-year                                                            
lease amount.                                                                                                                   
Mr. Burnett affirmed.                                                                                                           
Mr. Burnett stated that  the Department's fiscal note was calculated                                                            
based upon this Cost Comparison chart.                                                                                          
Mr.  Burnett  read  the  City  of  Whittier  correctional   facility                                                            
information, as depicted  in Section 5 of the Sectional Analysis, as                                                            
     Section 5. Authorizes  the Department of Corrections (not later                                                            
     than July 1, 2006)  to enter into an agreement with the City of                                                            
     Whittier  to acquire correctional  facility space for  at least                                                            
     25 years  and facility operational  services for not  more than                                                            
     five  years. Before  entering  into a contract,  Department  of                                                            
     Corrections  and  Administration  must  conduct  a feasibility                                                             
     study  to  determine  whether   the  state  can  provide  these                                                            
     services  for  the  same   or less   cost  than  a third-party                                                             
     operator.  An agreement  with the  City of  Whittier cannot  be                                                            
     made  unless the state  cannot provide  these services  for the                                                            
     same or less cost.                                                                                                         
     Further,  an  agreement  between  the  state  and the  City  of                                                            
     Whittier  requires an  agreement between  the City of  Whittier                                                            
     and  a  3rd party  contractor  to  construct  and  operate  the                                                            
     facility.  The agreement between  the City of Whittier  and the                                                            
     3rd  party  contractor  must  be based  on  a  competitive  bid                                                            
     process.  The City of  Whittier must  follow state procurement                                                             
     procedures.  The Commissioner  of correction also must  approve                                                            
     the facility design before the agreement.                                                                                  
     Authorization   for the  agreement  is  subject  to  5  further                                                            
     (1)  Must  be a minimum of 1200 beds and a maximum of 2251 beds                                                            
          and payments by DOC must be sufficient to cover all                                                                   
          capital and operating costs, not including inmate                                                                     
     (2)  The  obligation  of DOC  to make  payments  is subject  to                                                            
         annual appropriation of funds by the legislature.                                                                      
     (3)  The  Commissioner of corrections retains  the authority to                                                            
          terminate the contract with the third party.                                                                          
     (4)  The  contract between the  City of Whittier and  the third                                                            
          party must require culturally relevant reformation                                                                    
         services to incarcerated Alaska Native offenders.                                                                      
     (5)  No  agreement can  be made  if the bonds  issue are  rated                                                            
          below investment grade (Single A or lower)                                                                            
     The City  of Whittier may issue  bonds to finance construction                                                             
     of the facility.                                                                                                           
Mr. Burnett  reminded the Committee  that the adoption of  Amendment                                                            
#7  changed the  lease  agreement with  Whittier  to a  term not  to                                                            
exceed 25 years.                                                                                                                
Co-Chair Wilken  inquired the reason  this agreement is specific  to                                                            
the City of Whittier.                                                                                                           
Co-Chair  Green   explained  that  this  bill  evolved   as  several                                                            
different  pieces  of  legislation  regarding   prison  issues  were                                                            
Co-Chair Wilken  asked that further  discussion be held until  after                                                            
Mr. Burnett concludes his review of the sectional analysis.                                                                     
Mr. Burnett  read the sectional  analysis  pertaining to Sections  6                                                            
and 7 as follows.                                                                                                               
     Section  6.  Authorizes  the  state  bond  committee  to  issue                                                            
     certificates  of participation to provide state  matching funds                                                            
     to  assist with  the  cost of  construction  of community  jail                                                            
     facilities in Kodiak  and Dillingham ($4 million for both). The                                                            
     annual rental obligations  for the certificates ($400,000) will                                                            
     be paid  by the state on an annual  basis. The total  estimated                                                            
     cost  to the state to  pay off the  certificates is $6  million                                                            
     (the estimate  includes total payments, credit  enhancement and                                                            
     underwriting  expenses, rating agency fees, bond  counsel fees,                                                            
     financial   advisor   fees,   printing  fees,   trustee   fees,                                                            
     advertising fees,  capitalized interest, interest earnings, and                                                            
     other costs of issuance  and required reserves). The state bond                                                            
     committee  may not authorize  the issuance  of certificates  of                                                            
     participation  if the  issuance lowers  the state's credit  and                                                            
     the certificates are rated below investment grade.                                                                         
     Section  7.  Approves  community  jail  facilities  to  receive                                                            
     proceeds of the certificates  of participation authorized under                                                            
     sec. 6 if  the community is able to provide their  share of the                                                            
     matching funds ($1.5  million each) to be used for the upgrade,                                                            
     expansion, or replacement  of the jail facilities at Dillingham                                                            
     Community   Jail  and   Kodiak  Community   Jail.  Subject   to                                                            
     appropriation,  the Department of Corrections  is authorized to                                                            
     pay the annual operating  costs associated with the addition of                                                            
     new beds at those two facilities.                                                                                          
Mr.  Burnett  noted  that  the  aforementioned   chart  depicts  the                                                            
projected  State  debt  service  and  increased  operational   costs                                                            
associated  with  expanding the  Kodiak  Jail by  six  beds and  the                                                            
Dillingham Jail by 17 beds.                                                                                                     
Mr. Burnett read the final portions of the sectional analysis.                                                                  
     Section  8.  Provides  notice  and  approval  of  the  projects                                                            
     described in sec. 6.                                                                                                       
     Section 9. Repeals existing statute.                                                                                       
      Section 10. Provides an effective date of July 1, 2004.                                                                   
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
[NOTE: This bill was readdressed immediately following the 9:53 AM                                                              
RECESS 9:53 AM / 2:59 PM                                                                                                        
     SENATE BILL NO. 65                                                                                                         
     "An  Act authorizing  the Department  of  Corrections to  enter                                                            
     into agreements with  municipalities for new or expanded public                                                            
     correctional  facilities in the  Fairbanks North Star  Borough,                                                            
     the Matanuska-Susitna  Borough, Bethel, and the Municipality of                                                            
Co-Chair  Wilken  announced  that  the  bill  is  again  before  the                                                            
Committee.  The sectional analysis  review was completed  during the                                                            
earlier hearing on the bill.                                                                                                    
SFC 04 # 100, Side B 03:00 PM                                                                                                   
FRANK SMITH, Independent  Criminal Justice Researcher, testified via                                                            
teleconference from an  offnet site to share comments based upon his                                                            
33-year  experience  in pre-and-post-prison  releases  and  research                                                            
pertaining  to  the development  of  alternative  programs  in  this                                                            
regard.  For the past  eight years,  an area of  focus has been  the                                                            
development  of private prisons. He  voiced being pleased  with some                                                            
of the inclusions  in the committee  substitute, specifically  those                                                            
that would  require guards  and other employees  to meet  standards.                                                            
Several  states  are  addressing  similar   issues.  Continuing,  he                                                            
stressed the importance  of conducting an economic feasibility study                                                            
prior  to furthering  the construction  of the  Whittier prison,  as                                                            
when a similarly  remote site in Kansas  was being considered  for a                                                            
prison,  a  study  was conducted.  The  study  determined  that  the                                                            
facility would have been  "impossible to staff." He anticipated that                                                            
a prison in  Whittier would also have  staffing issues. He  recalled                                                            
that a study  [copy not provided]  that was conducted regarding  the                                                            
construction of a prison  in the Delta Junction area determined that                                                            
it would be impossible to make a profit at that location.                                                                       
There being  no further testifiers,  Co-Chair Wilken announced  that                                                            
public testimony on the bill was concluded.                                                                                     
Co-Chair Wilken  stated, for the record,  that he could not  support                                                            
establishing  a prison in  Whittier, as it  would place a strain  on                                                            
the community,  its schools and its  utilities system. Furthermore,                                                             
as  the City  of  Whittier's  school  system  is a  Rural  Education                                                            
Attendance Area (REAA),  it receives no local funding. Therefore, he                                                            
could  not  support  construction   of  a  prison  facility  in  the                                                            
community until the City  could absorb its school responsibility, as                                                            
other communities are required to do.                                                                                           
Co-Chair Green moved to  report the bill, as amended, from Committee                                                            
with individual recommendations and accompanying fiscal notes.                                                                  
There  being  no  objection,  CS  SB  65  (FIN)  was  REPORTED  from                                                            
Committee  with a new  $260,000 fiscal  note, dated  April 29,  2004                                                            
from the Department of Corrections.                                                                                             

Document Name Date/Time Subjects