|Department of Corrections
Substance Abuse Programsa
|(Dollars in Thousands)|
|Amity-Richard J. Donovan Correctional Facility||$1,080|
|"Forever Free"--California Institution for Women||1,083|
|Walden House--California Rehabilitation Center||450|
|California Substance Abuse Treatment Facility - Corcoran||4,459|
|Parolee Service Networks|
|Bay Area Services Network||$5,818|
|Los Angeles Prison Project Network||1,578|
|San Diego Parolee Partnership Network||1,500|
|Fresno County Central Valley Network||120|
|Office of Substance Abuse Programs administration costs||$500|
|Research and evaluation--UCLA||400|
|Training and technical assistance--UC San Diego||161|
|Department of Alcohol and Drug Programs
network administration costs
|aPrograms operated directly by the Office of Substance Abuse Programs. Does include programs operated directly by various Department of Corrections institutions (such as Civil Addict Program) or parole offices.|
In this analysis, we review several of the ongoing and proposed substance abuse budget proposals and provide our recommendations for addressing some of the major pending policy issues relating to substance abuse programming.
The Civil Addict Program provides substance abuse rehabilitation for persons who are identified by the court as narcotic addicts and who meet detailed criteria established in state law. In most cases, commitment to the program is in lieu of prosecution for a criminal offense. The program, which was established by the Legislature in 1961, accepts both male and female offenders.
As of early January 1997, CDC held about 2,600 civil addicts. About 1,600 male addicts and 600 female addicts are housed at the California Rehabilitation Center (CRC) at Norco, and another 400 were held at a community correctional facility at Adelanto. The CRC also houses the offices of the Narcotics Evaluation Control Authority, a panel which determines which addicts may be placed on outpatient status (in effect, released on parole) and whether outpatients who violate terms of their release must be returned to the CRC for further incarceration and treatment. The CRC facility is not used exclusively for the Civil Addict Program: another 2,600 adult felons, primarily male offenders, are also housed there.
Rehabilitation Program Has Improved. Following a review of the program four years ago, we had recommended the abolition of the Civil Addict Program. At the time, we had determined that the CDC had redirected resources and changed priorities in such a way that the program's original treatment level had been substantially diluted. Many hours of program activity consisted simply of physical exercise rather than substance abuse treatment, and illegal drug trafficking at the facility had become a significant problem. A subsequent detailed analysis of the program by the RAND Corporation, performed under contract with the Youth and Adult Correctional Agency, confirmed earlier criticisms of the program, calling it "clearly inadequate."
In response to these criticisms, the Legislature augmented the program by $1 million in the 1994-95 Budget Act. The increased funding level has been continued in the base budget in subsequent and is proposed again in the 1997-98 Governor's budget. The CDC has used these resources to expand educational components of the program and establish group counseling sessions with inmates. A selected group of civil addicts has also participated in more intensive counseling under a therapeutic community model that has proven cost-effective in rehabilitating long-term drug addicts. The $1 million augmentation has also been used to improve training of teachers, substance abuse counselors, and custody staff, and to strengthen efforts to reduce drug trafficking within the CRC.
Based on our visit to the CRC and extensive discussions with CDC officials, we believe that the CDC has made significant progress toward reforming the Civil Addict Program. The CDC has been carrying out the program it presented to the Legislature for the use of these additional funds and the state appears to be receiving a good return on its $1 million investment.
Civil Addict Population Has Declined Sharply. As of June 30, 1994, the CDC had housed nearly 4,000 civil addicts, of which about 3,200 were held at the CRC. As of January 1997, these numbers dropped to 2,600 and 2,200 inmates, respectively. Thus, the overall population of civil addicts in the state prison system has dropped by more than one-third during the last two and a half years. The number of civil addicts held at the CRC has likewise dropped by almost one-third, while the number of general population inmates--felons who are not participating in the Civil Addict Program--has increased more than 50 percent to 2,600.
Based upon our review of CDC admissions and population data, and our discussion of the situation with correctional and law enforcement authorities, we believe the sharp decline in the civil addict population is primarily the result of the enactment of the "Three Strikes and You're Out" law in 1994. In addition to mandating longer prison terms for many repeat offenders, the "Three Strikes" law contains a provision prohibiting the commitment of repeat offenders to the CRC under the Civil Addict Program. Thus, offenders who might previously have been sent to the CRC as civil addicts now are being excluded because their criminal records made them ineligible for the program.
Strong evidence of the "Three Strikes" link can be found in the abrupt decline in new admissions of civil addicts to the prison system. During the year leading up to legislative enactment of the "Three Strikes" law (May 1993 to April 1994), 245 civil addicts per month were being received by the CDC. The commitment rate has dropped each year since enactment of "Three Strikes." More recent data indicates that civil addicts were being admitted to the prison system at the rate of only 129 per month, little more than half the original rate of civil addict admissions. If that trend were to hold, the number of civil addict new admissions will have dropped by 1,400 annually compared to the pre-"Three Strikes" period.
A second reason the civil addict population may be declining is an August 1995 California Supreme Court ruling striking down the good-conduct credits that civil addicts used to be able to earn to reduce the time they must spend in confinement. The court held that a 1980 statute granting the credits to civil addicts was overridden by a 1983 statute revising the credit system for all state prison inmates. Because the choice of being committed to the Civil Addict Program is essentially voluntary for inmates, the ruling has raised the concern that some offenders might be deterred from participating in the program. This is because an offender might be faced with the possibility that, without good-conduct credits, he or she could spend longer in confinement under the civil addict program than by serving a regular prison sentence.
This situation may also have been indirectly aggravated by the enactment of the "Three Strikes" law, according to Civil Addict Program officials. A backlog of pending "Three Strikes" felony trials in some counties has delayed judicial hearings on civil addict commitments, program officials indicated. Offenders who might be eligible for civil commitment may have already served so much time in jail by the time their case finally comes before a judge that they may no longer be willing to consider a civil addict commitment. They may prefer to plead guilty to a felony knowing they will be sentenced to a relatively short prison stay rather than be committed as a civil addict for an undetermined period of time.
Program Improvements Reducing Civil Addict Numbers. Not all of the reduction in the number of civil addicts in state prisons is due to the enactment of the "Three Strikes" law and the court ruling on good-conduct credits. Part of the reduction also appears to be due to recent program improvements that have reduced the number of civil addicts returned to prison for parole violations and new criminal convictions.
Before improvements were made to the Civil Addict Program, the number of civil addict parolees sent back to state prison while on parole equaled 63 percent of the total civil addict parole population. As of September 1996, the return to custody rate for this population of civil addicts has dropped to 52 percent. Because the return-to-custody rate has improved, we estimate that about 440 fewer civil addicts per year are being returned to state prison than would otherwise have been the case.
This figure may understate the full impact of program improvements on the CDC prison population. It is possible that, in addition to curbing the return of parole violators, improvements in the program have also reduced the number of narcotic addicts sent back to prison by the courts for new crimes. The CDC has indicated that, based upon its review of its new admissions data, it believes that is the case.
Although other factors may also be involved, we believe that recent program improvements are probably the principal cause of the recent reduction in the return-to-custody rate of civil addicts. Other CDC substance abuse programs, particularly those employing the therapeutic community model, have demonstrated significant reductions in inmate recidivism. It seems likely that the ongoing transition by the Civil Addict Program toward this model would achieve similar results.
The drop in the return-to-custody rate of civil addicts suggests that the $1 million augmentation in the program has been cost-effective. We estimate that this factor will reduce the population of civil addicts held in the state prison system by at least 133. That means the state is achieving annual savings of at least $1.7 million and will eventually avoid a one-time expenditures of at least $7 million to build additional prison space.
Population Decline Raises Policy Concerns. In our view, the significant drop in the civil addict population raises several fiscal and policy issues.
First, the downward population trend in the program means that 1,400 fewer offenders are receiving drug rehabilitation programming than was the case two and a half years ago. Drug-addicted offenders released on parole without the benefit of substance abuse treatment are more likely to commit new crimes. Some will be caught and punished for those crimes with a return to prison, adding to state correctional costs and the ranks of crime victims.
We are also concerned that the changing population mix at the CRC could undercut the efforts to reform and improve the effectiveness of the Civil Addict Program. We have been advised by correctional authorities that felons incarcerated at the CRC, particularly those with a history in drug trafficking, view the presence of the civil addict population there as a prime potential market for illegal drugs smuggled into the institution. Although the CDC has made progress in curbing illegal drug trafficking at the CRC, authorities acknowledge that it remains a serious problem. In our view, the drug trafficking problem could be exacerbated by the decline in the civil addict population and the commensurate growth in the felon population.
Finally, we are concerned that the shift of offenders from the Civil Addict Program to regular prison sentences as a result of the "Three Strikes" law is significantly adding to state prison costs. That is because an offender sentenced under the "Three Strikes" law would typically stay in prison almost five times as long as an offender sent to prison as a civil addict. We estimate that the shift of inmates from the Civil Addict Program to "Three Strikes" prison sentences will add tens of millions of dollars annually to state prison operations costs within five years and eventually generate one-time capital outlay costs in the low hundreds of millions of dollars to provide prison space for thousands of additional offenders.
Expand Services to Other Inmates at CRC. Although the population of civil addicts housed at CRC has dropped significantly since 1994, the CDC has made no significant changes in the level of staffing requested in the 1997-98 Governor's Budget for the facility. In effect, the budget requested for the CRC provides for staffing and funding sufficient to provide drug treatment programming for a population of 1,000 more civil addicts than it is actually projected to receive.
Thus, the Legislature may wish to consider the option of reducing the staffing and funding that has been proposed for the CRC to reflect the one-third reduction in the Civil Addict Program caseload. However, we believe the state would save more money in the long run if CDC were instead directed to shift the funding and resources previously used for civil addicts to provide comparable drug treatment programming for felons housed at CRC who are not in the Civil Addict Program. In effect, about 1,000 general population felons would take the place of the 1,000 civil addicts who previously received drug treatment at CRC but are no longer sent there. The savings to the state in correctional costs resulting from reducing the recidivism rate of drug-addicted felons through drug treatment programming would, in our view, exceed the savings that could be achieved by cutting the budget of the CRC. We believe this approach would also help to offset the additional prison costs that have resulted as the "Three Strikes" law diminishes the Civil Addict Program.
Accordingly, we recommend adoption of the following budget bill language:
The Department of Corrections shall use staffing and funding at the California Rehabilitation Center at Norco previously provided for the Civil Addict Program, but which is no longer being used for the program because of a decline in the civil addict population, to provide substance abuse treatment of general population inmates at the prison so that the total combined population of civil addict and felon offenders receiving drug treatment services at Norco at any time is at least 3,200.
Consider Converting CRC to Substance Abuse Rehabilitation Center. We also recommend the adoption of supplemental report language directing the CDC to study the conversion of the entire CRC to a drug rehabilitation center for civil addicts and felons.
As we indicated earlier, the division of the CRC between civil addicts and a regular felon population has made the facility more difficult to manage by encouraging drug trafficking. We believe these security problems could be lessened considerably if the mission of the CRC were to provide drug treatment to all offenders sent there--civil addicts and felons. Because there may be significant costs to provide necessary space for programs if the entire CRC is converted, we recommend that the CDC submit a feasibility study of such a proposal by December 1, 1997.
Specifically, we recommend the following supplemental report language:
It is the intent of the Legislature that the California Department of Corrections provide a report to the Legislature by December 1, 1997, as to the feasibility of providing drug treatment programming to all civil addicts and felons incarcerated at the California Rehabilitation Center at Norco, and, if deemed feasible, the staffing, funding and timetable necessary to accomplish this change.
Change in Law Needed. Finally, we recommend adoption of a statute restoring good-conduct credits to civil addicts. To the extent that such a legal change prompts some offenders to agree to participate in the Civil Addict Program instead of accepting a regular prison sentence, the state could save on correctional costs and there will be fewer drug-addicted offenders committing crimes and adding to the state's prison population. We also believe it is reasonable that civil addicts and felons incarcerated together at the CRC be treated alike in the allowance of good-conduct credits.
September Opening Scheduled. Chapter 585, Statutes of 1993 (AB 10, Costa) authorized the construction of a 1,000-bed SATF as part of a new prison at Corcoran. Construction of the facility is scheduled to be completed in August 1997 and the SATF facilities will open in September. Because of severe overcrowding within the prison system, the CDC plans to eventually overcrowd the new Corcoran SATF to provide housing and treatment services for 1,478 inmates.
In keeping with legislative direction, the new facility will provide intensive drug treatment programs based on the therapeutic community model discussed previously in our review of the Civil Addict Program. We have reviewed the CDC's proposal for start-up of the in-prison component of the program and believe the funding level requested is appropriate.
Legislature Should Review Report on Aftercare Services. The Supplemental Report of the 1996-97 Budget Act directed the CDC to prepare a plan for legislative review by April 1, 1997, on the services for inmates when they are paroled to the community after completion of their prison terms. This requirement stemmed from legislative concern that aftercare services are a critical element of the program's success. A recent study of a pilot substance abuse treatment program at a state prison in San Diego demonstrated that the recidivism rate of offenders paroled to the community dropped dramatically if they received effective aftercare assistance.
We are advised that the plan has been completed and is under review by the CDC. Pending its review and release, we withhold recommendation on $1 million provided in the CDC budget for the aftercare component of the funding requested for the Corcoran program.
Long-Term Program Evaluation. The Corcoran proposal also contains $400,000 to pay for the first installment of a five-year, $2 million evaluation of the effectiveness of the Corcoran SATF program. Because the new Corcoran facility differs, in some respects, from other in-prison substance abuse programs operated by the CDC, we believe providing funding for a long-term evaluation of the program is appropriate. However, we are concerned about the five-year, $2 million cost of the evaluation, and believe it may be appropriate to redirect up half to of the money so that a larger number of offenders released from the SATF on parole may receive residential aftercare services. Among the options we believe could reduce evaluation costs are obtaining matching research grants or additional federal funds, modifying the scope of the evaluation, or ensuring that any evaluation contracts are issued through a competitive process. Redirection of the funds would likely permit up to an additional 90 beds to be provided for residential treatment services for SATF parolees. We
note that the President's proposed budget for federal fiscal year 1998 would double federal funding for drug treatment of state prisoners.
Analyst's Recommendation. For these reasons, we recommend approval of $3.6 million and two personnel-years to commence operation of the SATF but withhold recommendation on an additional $1 million pending release of the aftercare services plan. We also withhold recommendation on the first $400,000 provided for evaluation of the program pending a report by the CDC at budget hearings as to the feasibility of redirecting up to half of those funds for additional residential aftercare services.
Projects Intended to Reduce Recidivism. In 1991, the CDC began a series of pilot projects, known as the Preventing Parolee Failure program, that were intended to reduce parolee recidivism. The pilot projects included multiservice centers to house homeless parolees, computer learning centers offering literacy training, job placement services, and two networks of residential and outpatient drug treatment services the Los Angeles Prison Project Network and the San Diego Parolee Partnership Network.
The Supplemental Report of the 1996-97 Budget Act directed the CDC to complete its ongoing studies of the cost-effectiveness of the now six-year-old pilot programs and report to the Legislature which programs should be discontinued, which should be expanded, and which should be modified and retested. The report to the Legislature is due April 1, 1997.
Bay Area Services Network Study Indicates Program Was Not Cost-Effective. Although it is not one of the Preventing Parolee Failure (PPF) pilot projects, the CDC recently released a cost-benefit study of the Bay Area Services Network (BASN), which is similar in concept to the PPF substance abuse networks in Los Angeles and San Diego. The BASN study concluded that the BASN was not cost-effective. Specifically, the evaluation found that the BASN cost $5.5 million a year for drug treatment services for parolees, but saved the state only about $1.5 million in incarceration costs by reducing recidivism.
Nonetheless, the CDC believes continuation of the BASN is justified. The CDC points out that the study was based on preliminary outcome results from offenders who entered the BASN during 1991-92. The CDC contends the early data are not representative of subsequent program results. They emphasize that the program has been revised to provide longer periods of residential treatment for at least some parolees, a change likely to improve the performance of the BASN. The CDC has also indicated that another independent cost-benefit study of the program by the RAND Corporation reflecting the current BASN program is under way, with preliminary results scheduled for release early next year. In the meantime, the CDC is preparing to issue a request for proposals to continue BASN services for about 565 parolees in the Bay Area.
We agree with the CDC that it would be premature to terminate the BASN program on the basis of the recent study, but believe that continuation of the program should be reviewed next year after the preliminary results of the new RAND study have been released. In the interim, we do not yet have sufficient information on the PPF programs, including its two parolee drug networks, to determine whether funding for the pilot projects should be continued. We anticipate that the CDC report to the Legislature on the pilot programs will assist the Legislature in assessing whether the PPF programs merit continued funding.
Analyst's Recommendation. For these reasons, we withhold recommendation on $8.1 million provided in the Governor's budget for continuation of the PPF program pending receipt of the April report on its effectiveness.
The PIA Fiscal Condition Has Improved. In April 1996, our office published Reforming the Prison Industry Authority, a report which analyzed the performance of the 14-year-old correctional industry program, and recommended its privatization as an independent, nonprofit, tax-exempt organization modeled after the Prison Rehabilitative Industries and Diversified Enterprises Inc. of Florida.
During our review of the PIA's performance, we determined that the Authority had measurably improved its financial position. More recent financial statements released by the PIA confirms that this is still the case. As of June 30, 1996, the PIA list of assets includes more than $26 million in cash (including cash temporarily borrowed from the PIA by the Pooled Money Investment Account).
Moreover, the PIA is now comparatively debt-free. Five years ago, the PIA had $22 million in long-term debt on its books, but that figure stood at $1.2 million as of June 30, 1996, and since that date additional debt payments have reduced the total further.
Little Direct Financial Return to State. At the time the PIA was created, it received a transfer of state assets valued at $17.7 million. The state has since provided another $93 million in buildings and equipment to the Authority but received little direct financial return on that investment. Had the state invested the $93 million in the Pooled Money Investment Account instead of the PIA, it could have earned a significant financial return exceeding $46 million. State law provides for the transfer of surplus PIA funds to the state General Fund, but the PIA reported that it has never executed such a transfer of funds since its creation.
The state has received some financial benefit through short-term borrowing of the PIA's cash surplus. For example, the state had borrowed $15.4 million interest-free from the PIA as of June 30, 1996, permitting the state to avoid the cost of obtaining additional funds it needs from other sources. However, the overall financial return received by the state to date for its investment in the PIA appears inadequate.
For these reasons we believe a shift of part of the PIA's current surplus of cash is justified, as provided in law.
Alternatives Available to the Legislature. We recommend that the Legislature take into account whether it wishes to restructure the PIA before it determines the amount of surplus cash to be shifted to other purposes. We believe that, were the PIA to be privatized, as we have proposed, and thus given greater operational flexibility, as much as $14 million of the cash reserves could be shifted from the PIA to other purposes. If the PIA is not restructured and thus has less operational flexibility, we believe a lesser shift, perhaps as much as $8 million, could be considered. (The amount of cash reserves actually available for transfer may change significantly in coming months depending on the ongoing financial performance and financial practices of the PIA.)
Given those considerations, we offer three options for addressing the cash surplus issue:
Transform the PIA to a Nonprofit Corporation. The Legislature could adopt our legislative proposal to transform the PIA into a nonprofit organization. That would potentially allow the transfer of $14 million in surplus cash. In our April 1996 policy brief, we proposed that the CDC be directed to draft a plan to use the surplus to expand other inmate work and education programs not operated by the PIA. The amount of investment required to create each PIA job is relatively high. Our proposal, which may require enactment of a state Constitutional amendment, would enable many more work and education assignments to be created than if the surplus funds were left with the PIA.
Consolidate With Joint Venture Program. A second option now being considered in the Legislature is to make no structural change in the PIA's structure but to use an undetermined amount of the PIA surplus as start-up capital for creation of a new nonprofit work program along the lines of the Florida model. This new program could be consolidated with the existing CDC Joint Venture program.
Transfer Cash to General Fund. Finally, the Legislature might decide to make no changes in the CDC work and education programs but simply transfer a portion of the PIA cash surplus to the General Fund, where it could be used for funding other programs it deems to be a higher priority.
Analyst's Recommendation. As we stated in our April 1996 report, we believe basic reform of the PIA is long overdue, and continue to recommend adoption of a privatization plan that would permit as much as a $14 million shift of surplus PIA cash to expand other CDC work and education programs or to the General Fund. However, we believe all the options outlined in this analysis are reasonable and viable alternatives that would benefit the state.
Last year, the CDC requested $1.6 million and 24 personnel-years to complete planning and commence implementation of a special education program for adult prison inmates. The CDC indicated that it had submitted the funding request because of the threat of legal or administrative action against the state for its failure to comply with a federal mandate that special education services be provided to all eligible inmates under age 22.
Because of its concerns over the potential cost, appropriateness, and effectiveness of such a program in an adult prison setting, the Legislature appropriated $207,000 to continue program planning but did not appropriate funds for implementation. The Legislature adopted supplemental report language directing the CDC to submit its plan for the provision of special education services to the Legislature by January 10, 1997. The supplemental report language also stated legislative intent that the Governor's Office seek an amendment to pending legislation in Congress that would specify that special education programs would not be mandated in adult prison facilities.
Program Planning Has Started. Since enactment of the 1996-97 Budget Act, the CDC has moved forward with planning, but not implementation, of the special education program. We have been advised that completion of the special education plan has been delayed until April 1 in order to permit further analysis of potential program implementation costs.
We believe this brief delay is warranted in light of the significant potential cost of such a program to the state. Initially, the CDC estimated that the cost of the program at full implementation would be $4.3 million. As a result of further planning work, the CDC now believes the full cost of the program could be double or triple that sum. We are particularly concerned about the CDC's proposal for the program because we can find no significant evidence that special education programs initiated in other states in adult prisons have been cost-effective.
Threat of Federal Funding Cutoff. The administration has indicated that efforts are under way to amend federal law, as the Legislature has proposed, to remove any potential threat of a federal mandate to implement such a program. Meanwhile, the U.S. Department of Education has found the State of California to be out of compliance with federal rules requiring that all eligible persons under age 22, including adult prison inmates, have access to special education services. The federal finding makes the state subject to a cutoff of more than $332 million in special education funding for California public schools.
As a result, the State Department of Education and the CDC are now seeking to enter a compliance agreement with federal authorities that would permit special education funding for California schools to continue uninterrupted while the state moves ahead over a three-year period to implement a special education program for all eligible inmates at CDC institutions.
Analyst's Recommendation. In light of the significant potential cost of implementing a special education program at the CDC, and the threat of a loss of federal funding if it does not do so, we recommend that the Youth and Adult Correctional Agency and the CDC report at the time of budget hearings on the efforts in Congress to resolve the issue through a change in federal law. At that time, the State Department of Education should update the Legislature on the threat of a federal funding cutoff to California public schools.
Chapter 1063, Statutes of 1992 (SB 1124, Presley) authorized the CDC to establish a pilot program at San Quentin State Prison to place 176 nonviolent offenders at a time in a short-term "shock incarceration program" or "boot camp" at state prison followed by intensive supervision of the offenders on parole.
The Alternative Sentencing Program (ASP), as it is formally titled, is one of about 40 boot camps around the country. The CDC pilot program provides intensive military-style drills, physical training, and intensive counseling and education during a 120-day period, which is generally shorter than the sentence these offenders might otherwise serve. Upon release from prison, ASP parolees initially live in a community correctional facility in Oakland or Los Angeles, then transition into work and housing with the assistance of parole staff.
Chapter 1063 mandated an independent evaluation of the program, which has been conducted by the RAND Corporation. The RAND report was submitted to the CDC last fall, but the CDC has not complied with the statutory deadline for its release to the Legislature by October 1, 1996. We have been advised by the CDC that it has not released the report because it is still reviewing its language.
Although the program will expire at the end of 1997 unless it is extended by the Legislature, the Governor's budget provides funding for the continuation of the ASP through at least June 30, 1998. We intend to review the pending report in order to provide the Legislature with a recommendation as to whether the program, and its funding in the budget, should be continued. We would note that research on similar programs in other states has documented savings from the shortening of prison commitments of offenders in such programs, but little impact upon the rate of recidivism of the offenders.
Analyst's Recommendation. For these reasons, we withhold recommendation on the funding and personnel provided for the program and recommend that the CDC provide the Legislature with the overdue report before budget hearings.
Background. In 1991, partly as the result of litigation, the CDC contracted with the Western Consortium for Public Health to develop a mental health services delivery system. The result was a report which made recommendations for a comprehensive health services delivery system for both medical and mental health care. Based on this report, the department developed a three-phase plan to provide mental health services and medical care to inmates. The health care delivery system also included plans for licensing the CDC facilities as Correctional Treatment Centers (CTC), a new licensing category which was established in statute for facilities which provide subacute, 24-hour medical treatment for inmates.
The new delivery system is intended not only to improve inmate medical and mental health services, but also to find more cost-effective means to provide these services. Between 1988-89 and the proposed 1997-98 budget, the CDC's annual budget for medical, dental and mental health services has increased almost fourfold, to $508 million. During the same timeframe, in contrast, the CDC inmate population has just doubled. Figure 22 shows the growth of CDC medical costs. A central concept behind the new system was that better service delivery and management would result in lower medical costs.
The Legislature has already approved all three phases of the new system. Costs for the phases were $8.1 million for 1994-95 and $19.6 million for 1995-96. Additionally, as we reported in last year's Analysis, costs for the third phase, which is being implemented in the current year, were higher than planned. When the Legislature initially approved implementation of the delivery system, the CDC reported that phase three would be the last phase, and that it was projected to cost $9 million. However, the CDC requested, and the Legislature approved, $22.5 million to implement the third phase of the system in the current year. The department advises that implementation of many parts of the new system will extend beyond the current year.
Status of Implementing the New System. The department is still implementing many of the elements of its health care delivery system. To improve its delivery of mental health services, the department established a graduated system of decentralized mental health care, providing mental health services based on the severity of an inmate's mental illness. We briefly describe the status of each element of the mental health component of the system below. (We also describe the department's capital outlay requests in our chapter on capital outlay.)
Reception Center Screening. The CDC has implemented systems at its reception centers to determine whether the inmate is mentally ill and whether that illness requires treatment. The department is still developing data on the prevalence of mental illness in new admissions.
Correctional Clinical Case Management. The department provides mental health treatment to inmates in the regular inmate population through case management. The department indicates that most of the staff necessary for providing these case management services have been hired or will be hired in the current year.
Enhanced Outpatient Program. The department provides mental health services to inmates with greater treatment needs, or who need a protective environment, in Enhanced Outpatient Programs (EOPs). The department will activate all 13 of these EOPs in the current year. Because the EOPs are still being implemented we do not have data on the utilization of these programs.
Inpatient Crisis Care. The department has developed "crisis-care" beds, in its inpatient medical facilities for inmates requiring short-term acute care because of psychotic or other breakdowns. These beds will be fully activated in the current year.
Department of Mental Health Contract Beds. The CDC moves inmates whose illness is so severe as to necessitate long-term care to the Department of Mental Health. Because the activation of the entire mental health system is not complete we do not know what impact it will have on admissions to the Department of Mental Health's state hospitals.
Medical System Implementation. In addition to its mental health system, the CDC has implemented a series of changes to how it provides medical services. Many of those changes are still being implemented. For example, the department is in the process of seeking licensure for its 15 CTCs. Only one CTC has been licensed--at Pleasant Valley State Prison (Fresno County)--and in December 1996, the CDC informed us that 15 percent of the needed staff positions for the other CTCs remained unfilled. In addition to needing to fully staff these facilities to meet licensing requirements, significant capital outlay expenditures of $46 million are estimated to build or renovate facilities at 12 institutions.
Areas of Concern. It is too early to determine whether CDC's new medical and mental health systems are working as intended because most of the systems are still being implemented. Implementation of the new health care delivery system has been a major undertaking that has significantly changed how medical and mental health services are provided to inmates. The CDC indicates that many of the components of the new system will take time to implement.
In addition to system implementation, there are other areas of potential concern related to the new CDC systems:
Litigation. The department's medical services, including mental health, for male and female inmates continue to be the subject of litigation in the federal courts. None of the courts reviewing CDC efforts have completed their review of any part of the new delivery system. If any of the courts find that the system does not meet minimum levels of care, then the CDC could be forced to embark on significant and possibly costly changes to its system.
Inmate Population Increases. The department has indicated that its original plans for implementation did not account for growth in the inmate population. It cannot be determined at this point whether the system can grow "incrementally" to meet the needs of future population growth or if major changes would be needed with growth.
Recruitment and Retention of Staff. Successful implementation of the delivery system is predicated on being able to hire specialized clinicians and health care workers in diverse parts of the state. Because some of the CDC's prison locations are remote, the department has had difficulty in hiring certain types of needed staff. Consequently, if CDC cannot hire adequate staff, then it might have to re-think the distribution of medical resources.
The CTC Licensure. As we indicated above, only one of the CDC's 15 proposed CTCs has been licensed. Until licensing is well underway, we will not know whether the department's plans for staff, equipment, or capital outlay are sufficient for final licensure. If not, then there might be the need to consolidate facilities, or provide additional resources to obtain licensure.
Limited Utilization Data. There are large gaps in the utilization data needed to evaluate the success of the new systems. For example, the CDC is still developing data on the prevalence of mental illness in its institutional population.
No Savings Estimated. At this time, we believe that the department's medical budget potentially overstates the costs of providing medical and mental health services. This is because the department's request does not estimate any anticipated savings from the implementation of the new health care delivery system. For example, as the department activates medical and mental health facilities within its institutions, there should be savings from the decreased use of outside contract medical providers. However, as part of is budget request, CDC is asking for a baseline increase of almost $1 million for contract medical services. The baseline adjustment means that the CDC will be paying more, rather than less, for contract medical services, even with the implementation of its new systems. Furthermore, there should be additional savings as the department makes better use of its own facilities which are generally less expensive than community facilities. In addition, the CDC incurs overtime costs for custody staff whenever its sends an inmate to a community provider. As the department uses its own medical facilities, it should see significant savings in medical guarding costs.
The department has not indicated how it plans to evaluate its system to determine whether each component part is effective in achieving stated goals. In addition, there is no plan for evaluating the cost-effectiveness of the new system. For example, there are no plans for examining whether the current structure for providing decentralized EOP services is the most effective and efficient way to provide this service. The EOPs are located throughout the state, each serving a group or cluster of prisons. If inmates are placed for very long periods of time in EOPs, or spend their entire period of confinement in an EOP, then there is no real need to have the program decentralized. If EOP usage is long-term, then it might be more efficient to convert one or two facilities for EOP services. The CDC does not have complete data on EOP utilization yet, and will not until the program is fully implemented. However, the department is requesting significant capital outlay monies for its EOPs, even though the EOP system has not been fully implemented or evaluated.
Analyst's Recommendation. Given the uncertainties and information gaps outlined above, we believe that the CDC needs to begin to evaluate its medical care program. Thus, we recommend that the CDC prepare a plan prior to legislative budget hearings that shows how it will evaluate its provision of medical, dental, and psychiatric services for inmates and the implementation of its health care delivery system. The plan should identify the resources necessary to evaluate the (1) the cost-effectiveness of the delivery system and systems for which all other medical services are provided, (2) the impact of continuing litigation on medical costs, and (3) the potential for improvement of, and savings from the implementation of the health care delivery system.
Background. Hepatitis B and C are viruses of the blood. Individuals contract the disease through blood transfusions, needle exchange (from intravenous drug use or tattooing), and sexual activity with infected partners. An infected person may show no or limited symptoms. However, when these diseases become "acute" or "chronic," liver cancer or liver failure can result. The department notes that treating chronic and acute cases is costly, but has no direct data on the number of inmates who currently are being treated for conditions related to viral hepatitis.
Last Year's Budget Proposal. The department requested an augmentation of $2 million from the General Fund for drug therapy and related tests for treating inmates with hepatitis B or C for the current year. The Legislature approved funds to provide Interferon therapy and associated medical tests. However, because the department did not have data to show how many inmates would receive this treatment, the Legislature specified that the $2 million could only be used for the proposed purpose, and that unused monies would revert to the General Fund. The Legislature also directed the CDC to report by December 31, 1996 on the number of inmates receiving Interferon treatment and the costs of providing the treatment.
Legislative Oversight Ignored. The department has not provided the Legislature with the required report nor has it provided any data showing how the funds have been used. The department has not completed the required report and indicates that no report is forthcoming. At the time of its request, the department had no estimate of the number of infected inmates in the current population or whether infection is spreading. Thus, one year after proposing $2 million for the program, the department has provided the Legislature with no information with which to validate its cost-effectiveness. The department's medical request for the budget year is $374 million. If inmates require Interferon therapy, then the cost could
be borne through these funds. For these reasons, we recommend that the proposed funds be deleted for a General Fund savings of $2 million.
The budget includes $14 million from the General Fund to continue implementation of the CDC's primary information technology project , the Correctional Management Information System (CMIS). The project, begun in 1992, is intended to provide the department a computer-based system to maintain comprehensive information about offenders, and support related departmental activities. There are five phases comprising the CMIS project: (1) automating offender-related information, (2) establishing a parolee information network, (3) developing an inmate health care management information system, (4) automating other offender-related management functions, and (5) automating administrative management functions.
Automation Effort is Driven by Need and Anticipated Benefits. The purpose of this major information technology investment is to improve prison operations and departmental administration, primarily through replacing unwieldly and labor-intensive manual processes with a new, computer-based system. In addition to various management benefits which should result from the CMIS project, the department anticipates that operational efficiencies will generate substantial savings in staff time. The CDC estimates total benefits from phase one--the automation of offender-related information--at slightly less than phase one project costs ($93.6 million in benefits, $95.8 million in costs). The department estimates net ongoing savings of $24.5 million once phase one is in a full production mode.
Issue of Contractor Performance Remains Unresolved. Approximately one year ago, the department determined that the system design provided by the contractor hired to design and implement phase one of CMIS was unacceptable. Although work on the project has continued since then, the department and the contractor have been engaged in a dispute over contractor performance; that is, what the department believes the contractor is obligated contractually to provide, versus what the contractor claims is required. According to the CDC, the matter is currently the subject of "privileged settlement negotiations" intended to provide a just resolution of the issues.
Department Is Doing the Right Thing. A frequent criticism of state information technology projects is that they have too often been conducted in the absence of well-written contracts and effective state management of both contracts and projects. In some cases, the state has allowed a contractor to escape contractual obligations and, in effect, to simply walk away (for example, the ill-fated Department of Motor Vehicles project which was terminated in 1994 after a state expenditure of about $50 million). Regarding the CMIS, however, not only has the department apparently held firm in terms of attempting to hold the contractor responsible for fulfilling contractual obligations, but the department has also employed outside technical project experts to monitor both the state's and the contractor's performance in order to help ensure project success.
According to the CDC, the state has paid only $2 million to the contractor, although the contractor has expended many millions of dollars on the project so far. The reason that relatively little has been paid is the result of contract terms which provide for payment only when a required product is delivered and accepted. Moreover, the CDC advises that the contract provides for a hold-back of 50 percent of the contract amount. In other words, $20 million (one-half the contract amount) will be held back and paid only when the entire project has been completed and accepted by the CDC. Finally, the department notes that the contract includes a $10 million letter of credit which would become the property of the state should the contractor be found in default and the contract therefore terminated. Given the steps the CDC has taken to protect the public interest, we believe that the department's approach to managing this complex project is sound and can be a model for other state agencies. In short, we believe that the department is doing the right thing, even though the project has not proceeded on schedule.
Special Project Report Anticipated. Until the settlement negotiations currently underway have been completed, it is not possible to determine the department's budget requirements for this project in either the current year or the budget year. In fact, the department advises that it will submit, before April 1, 1997, a special project report (SPR) detailing its assessment of changes in project costs and schedule. This report will serve as the basis for determining the budget requirements for the CMIS project. State policy requires that a SPR be provided to the Legislature at the same time that it is provided to the Department of Finance and the Department of Information Technology for their review and approval. Following review of the SPR, it will be important to determine whether, as a result of the current negotiations between the state and the contractor, the state has agreed to any contract modifications which would have the effect of reducing the project's scope, and therefore, its schedule, costs, and benefits.
Analyst's Recommendation. As a result of the uncertainties surrounding this project, we withhold recommendation on $14 million requested to continue implementation of phase one of the CMIS, pending our review of the CDC' reassessment of this project, scheduled to occur prior to April 1, 1997.
The 1997-98 Governor's Budget requests $20.3 million for salaries for correctional officers and other operating expenditures of the Richard A. McGee Correctional Training Center at Galt. The budgeted request would provide sufficient funds for enrolling seven classes of 460 correctional officer cadets in the academy, or a total of 3,220 cadets, during the budget year. This is the same amount of funding and assumes the same number of cadets as in the 1996 Budget Act.
Cadet Needs Affected by Prison Population. The number of correctional officer cadets who are trained each year at the academy is closely related to the size of the inmate population (although that is not the only factor involved). As of mid-January 1997, the number of inmates in the prison system was about 2,000 below projections. If this trend were to hold, the CDC would not need to train as many correctional officer cadets during 1997-98 and the budget for cadet training could be reduced accordingly. The CDC will update its population estimate for both the current and the budget year this spring.
Analyst's Recommendation. For these reasons, we withhold recommendation on the $20.3 million requested for Academy cadet payroll and operations.
The Governor's budget requests $23.8 million and 272 positions (including some positions deliberately left temporarily unfunded) for the Planning and Construction Division, and proposes to further shift financial support of the division from bond funds to the General Fund and anticipated federal funds.
The support budget for the division would be reorganized and 15.5 staff positions temporarily left unfunded because of the completion of authorized prison construction. However, the proposal retains staff related to the Governor's proposal to fund planning and design activities involving six additional state prisons and various ongoing construction and repair project at existing prison facilities.
Division Workload Uncertain. Because the Legislature and Governor have not reached agreement during the last three years on any proposals for new prison construction, the workload of the Planning and Construction Division will drop significantly by the budget year. The construction of the new Corcoran state prison and emergency beds will be largely completed early in the budget year.
The Governor's budget proposes $360 million in capital outlay spending for the CDC for various projects at existing prisons and to start work on six new prisons. In our analysis of the proposed capital outlay budget for the CDC (please see the Capital Outlay chapter in this Analysis), we recommend the deletion of some projects at existing prisons and recommend the funding of others, but withhold recommendation for now on the funding requested in the budget year for new prisons, pending review of the updated inmate population projections at the time of the May Revision.
We are advised by the CDC that, were the Legislature to reject the Governor's proposal for six new prisons, the Planning and Construction Division and other related CDC functions would be overbudgeted by 27 personnel-years and $6.5 million. Thus, we believe it is inappropriate to determine the overall level of funding that will be provided to the division until the Legislature has determined what capital outlay projects should be included in the budget. This approach will ensure that division operations are budgeted at a level to support the department's construction plan and are not overbudgeted. We do have specific proposals to offer at this time regarding the CDC's funding requests related to inmate
payphones and administration of Federal Crime Act funds, which we discuss below.
Analyst's Recommendation. Accordingly, we withhold recommendation on the $23.8 million requested for support of the Planning and Construction Division pending legislative deliberations and our further review of the capital outlay projects proposed for the budget year. Should the Legislature and Governor not reach agreement on prison construction and repair projects, there would be no reason to support the division at the level requested, and thus the division's budget should be reduced accordingly.
The Governor's budget proposes to spend $186,000--90 percent of that sum from federal funds with the balance from the General Fund--to establish one new position each in the Planning and Construction Division, the Evaluation, Compliance and Information Systems Division, and the Administrative Services Division to administer anticipated Federal Crime Act funds and to help lobby for additional funding.
In our view, the CDC has not provided sufficient justification for these new administrative positions, because existing resources could be redirected to these purposes. We believe that the use of the Federal Crime Act funds should be used for administration of specific correctional facility construction projects, not more general administrative activities. For these reasons, we recommend that the request be denied.
The Governor's budget requests $1.9 million and 36 personnel-years as part of an overall $13.2 million Disability Placement Plan proposed by the CDC in response to ongoing litigation (Armstrong v. Wilson) over the applicability of the Americans with Disabilities Act (ADA) to the correctional system. Although the CDC intends to contest a federal district court ruling that the requirements of the ADA apply to prison inmates, the department has prepared a Disability Placement Plan which it believes is justified under more general U.S. Constitutional requirements guaranteeing appropriate treatment of prison inmates.
The plan provides 6.5 personnel-years for a centralized unit (called the Institution Standards and Operations Section) to coordinate implementation of the Disability Placement Plan; 9 personnel-years for additional correctional officers assigned to transportation of disabled inmates statewide; 20 teachers and physical therapists to provide direct services for disabled inmates; and funding to contract for sign-language interpreters for hearing-impaired inmates.
We discuss the related proposal to retrofit prison facilities for disabled inmates in the Capital Outlay chapter of this Analysis. In that chapter, we propose some modifications to the plan intended to reduce the capital outlay cost, including some changes that would eliminate retrofitting work at prison reception centers, and withhold recommendation on other elements of the capital outlay proposal pending further review of its merit.
Operations, Capital Outlay Should Be in Sync. The Governor's budget for CDC operations assumes that all of its capital outlay requests are approved as submitted. Thus, we believe funding for Disability Placement Plan operations should be revised in accordance with forthcoming legislative decisions about the capital outlay proposal. If the Legislature reduces or modifies the capital outlay proposal, it would also be appropriate to modify some elements of the proposed support budget.
Accordingly, we withhold recommendation on the $1.9 million requested for operational support of the Disability Placement Program pending legislative deliberations and our further review of the capital outlay projects.
The 1996 Budget Act provided the CDC with $264,000 and the Department of General Services (DGS) with $250,000 to procure inmate pay telephone services, as well as other communications services, for the CDC. The Supplemental Report of the 1996 Budget Act directed the CDC and the DGS to jointly report to the Legislature within 30 days of its completion of their plan to procure the inmate pay telephone services under a marketing approach that will maximize state revenues.
The Governor's budget requests another $137,000 from the General Fund and two personnel-years for the CDC Planning and Construction Division to assist in the anticipated installation of new pay telephones at CDC institutions. The funding would additionally be used to help install equipment in CDC fire and conservation camps, similar to that now provided in regular prisons, to monitor inmate telephone conversations.
Pay Telephone Bidding May Be Postponed. At the time this analysis was prepared, the CDC and the DGS had not completed nor released to the Legislature their marketing plan for pay telephone services. However, the departments have indicated that they are considering a one-year extension of two existing contracts due to expire in August 1997 rather than rebidding the contracts at this time. (We discuss the significant fiscal ramifications of this approach in our analysis of the DGS--please see the General Government chapter.) If the contracts are extended, new pay telephones might not be installed during the budget year.
The CDC also intends to use about one-fourth of the requested staff time to assist in the installation of equipment to monitor conversations on pay telephones at the state's 38 fire and conservation camps. Given the small amount of revenue the state receives from camp pay telephones--about $330,000 annually--we do not believe additional state resources for this effort are warranted. Although the camps hold about 4,000 mostly low-level offenders at any given time, the CDC could point to only one case in which an escape of an inmate was known to have been facilitated by use of a telephone. If providing such equipment is a high CDC priority, the department can accomplish the work through the redirection of its existing resources.
Analyst's Recommendation. For these reasons, we withhold recommendation on the request for funding to assist in the installation of inmate pay telephones until we can determine whether such installations will actually occur during the budget year. In any event, we believe any funding related to setting up monitoring equipment at camps should be provided through the redirection of the CDC's existing resources rather than the requested funding increase.
In the 1995-96 Budget Act, the Legislature approved 17 positions for a two-year limited-term period for planning activities associated with the enactment of the "Three Strikes and You're Out" law. The funding and positions were to be eliminated automatically at the end of 1996-97. The Governor's budget proposal for 1997-98 inadvertently retains the funding and positions, but does not request either that the positions be extended or be made permanent.
We recommend that the $660,000 and 17 positions be deleted in accordance with the
1995-96 Budget Act.
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