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