Increase Unit Accountability for Operating Costs in Prisons


Prisons should increase budget accountability by using a unit-based reporting system, which should lead to enhanced efforts for cost containment.


Background
To accommodate the extraordinary growth in offender population and adapt to continuing pressure on the Texas Department of Criminal Justice-Institutional Division (TDCJ-ID) to comply with terms of the recently settled Ruiz v. Collins lawsuit, it is essential that state appropriations are allocated appropriately and that TDCJ is held accountable for controlling surging costs.

Prison officials have struggled to answer three critical questions relating to operating requirements and capital investment for corrections:
1. What is the average daily cost of each component of the system?
2. What is the real differential between the cost of public and privately managed prisons?
3. What is the true variance in cost among prison units of similar security levels and size?

Answers to these questions require precise and accurate reporting of budget and expense data at the unit level in a timely and consistent manner.

Average Daily Cost
The 1986 Uniform System Cost Project required the Criminal Justice Policy Council to report sentenced-offender cost per day and interagency comparisons for each component of the adult and juvenile system. Designed to guide general policy, these data hel p ascertain cost distinctions among community-based punishment and institutional sanctions and provide information about operating costs associated with various levels of institutional security and custody.

Table 1 reflects fiscal 1989 expenditure data and highlights the value of precise cost information pertaining to each corrections option. Within the past decade, Texas has made extraordinary progress in developing a more comprehensive range of options in r esponse to a diverse mix of offenders within the system.

Public/Private Institution Differential
Another issue requiring accurate cost data is the state s contract for the private management of prisons. To date, the state manages 2,000 pre-release beds operated by two private companies at four separate sites. One of the 500-bed units has been converte d to an in-prison drug treatment center. While Table 1 shows a substantial differential between the per diem cost of the public units and the operating requirements of the private prisons, many officials ar gue that better accounting would reveal a higher cost to the state, because TDCJ-ID routinely absorbs some private-unit operating costs. Examples include administrative overhead, transportation, diagnostic and some health service expenditures. Some argue t hat the lower cost of the private units is attributable to lower-risk offenders being housed in those units. 1


Table 1 - Corrections Options by Cost
(Fiscal 1989 Data)

Sanction Per Diem Cost
~~
Probation $1.30 - 13.66
Non-Residential
Regular ($1.30)
Intensive ($3.88)
Specialized ($3.51)
Surveillance ($11.85)
Electronic Monitoring ($13.66)
~~
Residential $37.83 - 44.06
Restitution ($44.06)
Treatment ($37.83)

Institutions 34.79 - 55.42
1,000 bed ($40.37)
2,250 bed ($45.20)
Segregation ($55.42)
Private Contract ($34.79)

Parole 2.15 - 7.00
Non-Residential
Mandatory Supervision ($2.15)
Intensive Supervision ($4.16)
Substance Abuse ($4.16)
Specialized Caseload ($2.31)
Electronic Monitoring ($7.00)

Residential 24.89 - 27.39
Halfway House ($24.89)
Pre-Parole Transfer ($27.39)

Source: Texas Criminal Justice Policy Council, Uniform System Cost Project 1989-90.


Prison Unit Cost Variance Among Security Levels
TDCJ planners have determined that maximum security facilities will have 2,250 beds and medium/minimum security facilities will have 1,000 beds. Some believe that one advantage of the 2,250-bed prototype unit is increased efficiency in operating costs, sug gesting economies of scale that cannot be realized in smaller units. 2 Performance to date has not proven such efficiencies exist. As noted in Table l, available information that it costs $5 more per day to house an inmate in a 2,250-bed unit than in a 1,000-bed unit.

Key Factors Limiting Accountability
TDCJ maintains a highly centralized program budget system that does not incorporate detailed budget documentation for each unit, limiting accountability. Prison wardens and division managers are not provided comprehensive budget documents and are not directly involved in budget monitoring. 3

TDCJ has made important strides in developing unit-based expenditure accounting by acquiring a new budget/accounting system modeled after the Uniform Statewide Accounting System (USAS). USAS was designed by the Comptroller s office to be used by state agencies to centralize state government accounting information, provide uniformity and consistency in statewide reports and provide accounting flexibility at the agency level. TDCJ s modified version of USAS, known as LoneStars, should increase capability for analyzing actual operating costs and providing valuable cost accounting data.

The privately managed units operated by Wackenhut Corrections Corporation maintain line item budgets at the unit level; however, the format and description of costs vary considerably from TDCJ s expense reporting system.

Also limiting accountability are major discrepancies in the planning figures used by TDCJ in the annual construction report and in the actual expenditure data re ported annually for each unit. While the TDJC construction plan and agency appropriations project that the operating cost of the new 2,250-bed units will be approximately $22 million, the actual operating expense is approximately $32 million. (See Table 2-Hughes unit.)

While TDCJ officials accurately report that the budget request figures do not include certain non-appropriated costs like Old Age Survivors Insurance (OASI) matching, interest, retirement matching and depreciation, this promotes a misconcept ion that costs are lower than what has been experienced.

To better understand actual unit-operating costs and assess existing monitoring systems and procedures, accounting data for the operation of three types of prisons were reviewed. One unit of each type was selected: 2,250-bed prototype (Hughes); 1,000-bed p rototype (Lewis) and privately managed 500-bed unit (Kyle).

Tables 2 and 3 compare the distribution of various costs between the two prototype units and between the public and privately managed units. The tables also display the differences in reporting formats.


Table 2 - Expenditures by Unit, Fiscal 1992

Hughes - 2,250 Beds Lewis - 1,000 Beds
Percent of Percent of
Amount Total Budget Amount Total Budget

Salaries
Administrative $ 4,969,665 15.5% $ 2,365,731 21.5%
Custodial 12,825,274 40.1 4,212,546 38.2
Professional Services 481,246 1.5 166,157 1.5
Contract Services 16,034 0.1 43,908 0.4
Subsistence/Inmates 1,525,529 4.8 770,815 7.0
Utilities 1,705,433 5.3 384,395 3.5
Raw Materials 1,481,022 4.6 944,497 8.6
Supplies 727,926 2.3 336,193 3.1
Clothing 353,934 1.1 124,553 1.1
Repair 327,610 1.0 192,642 1.7
Depreciation 7,722,849 24.2 2,142,755 19.4
Other 2,312,508 7.2 1,004,552 9.1

Total Operating Expenses 34,449,030 107.7 12,688,744 115.1
Total Operating Income (2,454,044) (7.7) (1,666,249) (15.1)

Net Operating Costs $31,994,986 100.0% $11,022,495 100.0%

Source: Texas Department of Criminal Justice, Institutional Division, Annual Financial Statements , August 1992.


Table 3 - Current Budget/Selected Items, Fiscal 1992
Kyle Unit 500-Bed Installation

Percent
Item Cost of Budget

Wages: Security $1,426,646 29.2%
Wages: Programs 425,931 8.7
Wages: Medical 220,342 4.5
Wages: Maintenance 41,816 .9
Wages: Administration 149,278 3.1
Other Labor 214,536 4.4
Labor: Tax and Insurance 396,695 8.1
Medical Service/Supplies 197,196 4.0
Food Service 663,327 13.6
Supplies 130,770 2.7
Utilities 383,016 7.9
Depreciation 40,950 .8
Other Indirect 589,290 12.1

Total $4,879,793 100.0%

Source: Wackenhut Corrections Corporation, Fiscal 1992 Operating Budget, Kyle Unit.


Two areas warrant special attention: (1) the nature of the inmate population affects security staffing and (2) the private 500-bed units are less costly because security measures were incorporated into the physical plant through advanced technology and imp roved layout.

Analysis of s taffing plans currently used by TDCJ-ID for 2,250-bed and 1,000-bed units shows that the three highest cost centers for security include perimeter tower staffing, utility teams and staff housing for administrative segregation in the 2,250-bed units.

Some TDCJ staff are assigned to utility teams, maintained to ensure available staff for unscheduled absences, special events and emergencies. Current security staffing requirements are directly linked to TDCJ-ID s limited use of security technology.

Security s taffing costs for the Kyle unit represent approximately 26 percent of the operating budget, as compared to 38 percent of the 1,000-bed unit and 40 percent of the 2,250-bed unit. This variance is partially explained by the lower level of security required in the minimum security pre-release centers in the private prison.

It is evident from the tables above that the units utility costs are higher in the larger unit than in the medium security unit but are lower than in the privately managed unit. Food costs are also proportionately lower in both public units.

While it is important to note that the public unit information pertains to actual expenditures and the private unit data represent an operating budget, some comparisons can be made since the private unit cost figure is set by contract.

No attempt is made to establish a fixed per diem cost figure; however, it is important to recognize several distinctions in the operating costs of the three unit sizes. An estimate of the per diem, per bed operating costs for each unit is:

Hughes (2,250) $40.99
Lewis (1,000) $31.78
Kyle (500) $25.57
The Kyle unit costs do not include certain expenditures borne by TDCJ, including diagnostic, transportation and contract monitoring services. Therefore, no attempt is made to compare the daily costs between public and private facilities. Based on this anal ysis, TDCJ planners assertion that there are economies of scale to be gained by building and operating larger facilities appears open to challenge.


Recommendations
A. The Texas Department of Criminal Justice (TDCJ) should adopt a unit-based budget reporting system compatible with current expense reports and should require all wardens to use the documents as management tools.

B. TDCJ should develop a decentralized budget system requiring each unit manager to develop, implement and monitor unit budgets and expenditures.

Improvements in economy and efficiency should be realized through increased manager accountability.

C. The private-unit management contracts should be modified at the time of renewal to include requirements to collect and report budget and expense data in a format compatible with TDCJ.

D. The Criminal Justice Policy Council should be charged with refining the Uniform System Cost Project in a manner that distinguishes the cost of prison units by various security, support and program functions.

E. TDCJ should continually monitor and reevaluate the components of security costs since 26 to 40 percent of total unit expenditures relate to security staffing.

The fact that the Ruiz litigation settlement establishes specific staffing guidelines should not preclude more efficient security methods in a manner compliant with the court s intent. 4


Implications
With the recent rapid growth and expansion of TDCJ, it becomes increasingly difficult to maintain central budget control. Each unit management team, headed by the warden, should be given greater responsibility for the management and control of operating re sources. Increased accountability should include the development of more efficient methods for service delivery.

New reporting systems are designed to promote focus on and comparison of functional cost centers within various units. Highly centralized, generally labeled program budgets do not allow such scrutiny and limit the opportunity for important comparative anal ysis.

By comparing the costs of specific activities and functions within units, TDCJ has the opportunity to apply the gains in efficiency within one unit to the entire system.

The performance of wardens should be assessed in part by their ability to identify and develop improved security staffing strategies at a lower cost, especially in such areas as the use of pickets, introduction of technology, utility teams, rover positions (employees depl oyed to major areas of activity) and housing staff.

While new proposals must be consistent with conditions of the Ruiz settlement, Texas must avoid being locked into a single expensive prototype approach that can become blind to improvement.

Fiscal Impact
No additional operating costs should be incurred as a result of these recommendations. While it is not possible to quantify savings associated with the recommendations at this time, it is likely that they will yield considerable savings due to increased ac countability by department managers. There may be some additional administrative costs associated with new record keeping and reporting requirements; however, these should be largely offset by savings from more efficient budget management practices.



Endnotes
1 Interview with James Andy Collins, Director, Institutional Division, Texas Department of Criminal Justice, Huntsville, Texas, November 18, 1992.
2 Senate Interim Committee on Criminal Justice, Report to the 73rd Texas Legislature (Austin, Texas, November 1992).
3 Interview with O. Perez, Assistant Warden, McConnell Unit, Texas Department of Criminal Justice, Beeville, Texas, November 18, 1992; and interview with Chris Koenig, Budget Analyst, Institutional Division, Texas Department of Criminal J ustice, Huntsville, Texas, January 6, 1993.
4 Ruiz v. Collins, Stipulation Modifying Crowding Provision of Amended Decree, Civil Action No. H-78-987-CA, 1987.