NEWS

April 14, 2010
How to close a prison and still not save money.

SPECIAL REPORT: Why Michigan prison costs keep growing

As Michigan lawmakers negotiate next year's corrections department budget, analysts are perplexed by a persistent conundrum: The state's spending on prisons isn't shrinking, despite recent years' steep cuts in staff and in the inmate population.

The contradiction raises questions about competing corrections budget plans. The governor is calling for a return to "good-time" sentence-reduction plans which would close facilities and release thousands more prisoners. A Senate bill aims to maintain facilities but control costs on items like prison industries, food service and inmate transportation.

But does either plan really address rising payroll costs, which currently consume nearly 75 percent of the Michigan Department of Corrections budget?

The disconnect frustrates policy analysts and other experts who see controlling corrections spending – the second largest item in the state budget, after community health – as a key to solving the Michigan's enormous financial deficit.

According to a recent Corrections Department presentation, the state's prison population is about 6,270 inmates lower than the March 2007 peak, noted Matt Johnson, a fellow with the Lansing-based Citizens Research Council of Michigan. And the MDOC currently employs about 1,000 fewer staffers compared to 2007 rolls.

Yet the 2010 fiscal year Corrections Department budget of $1.898 billion is $32 million higher than in 2007.

"The expenses haven’t come down commensurate with what you might expect," said Johnson. "And payroll seems to be where the action is."

Michigan Spends More

Michigan continues to devote more of its budget to corrections than other Great Lakes region states and most of the rest of the nation, no matter which metrics are used, according to recent reports by the National Association of State Budget Officers, the Pew Charitable Trusts and other non-profit organizations.

Examples:

Per-prisoner daily costs: It costs $89.91 per day to house an inmate in a Michigan prison, according to a recent report by the Pew Center for the States. That’s above the national average of $79 and significantly higher than neighboring states with similar economies: Ohio spends $69.23; Illinois spends $61.36; Indiana spends $54.28. Coastal states tend to have the highest per diem spending, like California, which spends $134. 83 per day; Massachusetts at $130.16 and Maryland at $86.01. Deep southern states post some of the lowest rates, like Texas at $42.54 and Mississippi at $35.69.

Corrections expenditures as a percent of total expenditures: In 2008, Michigan ranked highest among nearby states at 5.3 percent of total expenditures. Ohio came in at 3.6 percent, Indiana and Illinois at 3 percent and Wisconsin at 3.4 percent. The average of all states is 3.5 percent.

Corrections expenditures as a percent of general fund spending: Again, in 2008 Michigan was highest in the nation at 22.1 percent –and the only state that spent more than 11 percent of its general fund monies on corrections. Indiana was the lowest among Great Lakes states at 5.2 percent, with Ohio at 7 percent and Illinois at 6 percent.

Total spending, including capital: Michigan spent more than $2.3 billion in 2008, counting state and federal monies as well as bond issues. In raw dollars, only California, Texas, Florida and New York exceeded that amount, with California the biggest spender at $9.8 billion. Among Great Lakes states, Indiana spent the least at $734 million, while Ohio was just behind Michigan at $2 billion . Illinois spent $1.4 billion and Wisconsin $1.2 billion. Michigan’s tally included the most federal funds – $92 million – compared to $29 million for Ohio and little in the other three Great Lakes states.

These reports reflect 2008 figures but 2009 estimates followed the same general trends.

Analysts caution that state-to-state comparisons are fraught with pitfalls and should be viewed as trend indicators rather than as measures of efficiency. Some states, for example, may appear to have lower budgets because big-ticket items like employee health care benefits, pension contributions, payments to local jails and substance-abuse programs are not included.

Measurements Tricky

When it comes to prison spending, it’s very difficult to come up with a valid formula for calculating return on investment, notes Richard Jerome, manager of the public safety performance project at the Pew Center for the States.

Looking at recidivism rates compared to costs doesn't work because incarceration policies vary so widely. A state that imprisons many non-violent offenders – who are less likely to commit new crimes when paroled – can appear to be "curing" the problem of repeat offenders compared to states like Michigan which imprison only the most hard-core, likely-to-reoffend cases. Similarly, comparing prison costs to crime rates doesn’t really work.

And spending the least per prisoner is not necessarily something to boast about, said Jerome, because it may mean giving short shrift to substance abuse treatment and other programs that help parolees stay away from trouble. "There are certain short-term savings that in fact will end up contributing to long-term costs and public safety problems," Jerome said. For example, he pointed out, funding has been gutted in Kansas for model programs that provided transitional housing and other help for inmates rejoining the community, drastically cutting recidivism rates. Michigan has made those programs a priority in the Michigan Prisoner Reentry Initiative.

Evaluating spending "is not a simple task and there are no simple answers," Jerome said. "There are things we have learned – things states have started to use – that will give us a better return on investment."

High Labor Costs

In a March presentation to state legislators, the MDOC noted that the department's costs rose 31 percent from 2000 to 2009, even as the prison population declined in recent years back to roughly 2000 levels, or about 45,000 inmates.

In that period, salary costs have grown 13 percent, while retirement and FICA contributions have soared 103 percent and health care costs have risen by 141 percent, according to the MDOC documents.

In 2009, payroll costs consumed 74 percent of the MDOC budget – about the same as in 2003 – despite facility closings and the drop in the inmate population.

"It is a little concerning that you have a decrease in staffing and population yet your payroll remains the same percentage of the budget," said Johnson of the CRC. "In fact, it is the same percentage of a larger budget. I don’t think they are increasing salaries and wages by that much, so it’s definitely something that needs to be studied."

By contrast, Ohio’s Department of Rehabilitation spends 54.8 percent of its annual budget on payroll costs, a spokeswoman said.

Some of the disparity is due to Michigan's higher starting wages. The Citizens Research Council estimates that the average corrections department salary in Michigan is more than $53,000, compared to $34,000 in Ohio and a Great Lakes average of $44,500.

John Cordell, an MDOC spokesman, doesn’t dispute the figures, noting that $50,000 is in the range for an entry-level corrections officer with less than five years experience. He says that in addition to Michigan's historically higher pay in many fields, one thing buoying corrections salaries is the state's more rigorous education and training requirements.

Also, he said, "health care and legacy costs are a significant issue. They have ballooned in the past several years."

Labor contracts still call for the state to make defined-benefit pension contributions, for example, and will for another 15 years, Cordell said. In the future, more workers will fund their own 401(k)-style plans but for the time being pension costs will remain on the books.

Cordell also noted that without a dip in inmate population and the resulting facilities closures, Michigan could be operating as many as 48 prisons and camps instead of the current 35. "We could be spending $2.5 billion annually, had we continued locking people up at the rate we were, and keeping them as long as we did," he said. "Spending would be significantly greater."

And, he noted, initiatives to help inmates assimilate back into jobs and society are creating more reentry-focused jobs – from electronic monitoring technicians to parole board members to parole and probation officers — as the ranks of corrections officers decline. In 2007, the MDOC had 1,691 field operations positions and 13,972 employees in correctional facilities. The Senate budget recommendation for 2011 calls for 2,215 field employees and 13,454 in correctional facilities, Cordell said.

The Long-Term Picture

Long-term, reducing recidivism and the length of prison sentences in Michigan is key to cutting corrections costs, most experts agree.

Michigan historically has had an incarceration rate far above the national average; in 2007 it was 499 inmates per 100,000 population, or 10 percent above the national average.

Although we send fewer felons to prison than other states – diverting them instead to county jails and other programs – once in the state prison system, inmates stay there far longer than in states with early-release programs. Here, it's required that inmates serve 100 percent of their minimum sentence before parole eligibility. And they can be held at the discretion of the parole board for the statutory maximum sentence for their particular crime. That can triple the time behind bars.

Even with Michigan's recent prisoner release initiatives, the state parole board tends to make prisoners serve about 127 percent of the minimum sentences judges impose, according to Marshall Clements, project director at the Council of State Governments Justice Center.

"The biggest cost driver is the number of people in prison," Clements said. "As long as the state has the discretion to hold people in prison for 150 percent, 200 percent, or 300 percent of their minimum sentence, it will be very hard for victims to know just how long offenders will serve and for taxpayers to know how much they'll be paying for the state's prison system."

Budget proposals for 2011 protect spending for the lauded Michigan Prisoner Reentry Initiative (MPRI), which begins preparing inmates for release long before their time behind bars is up, and which provides ongoing community-based supervision and support after release.

Sentencing experts hope that programs like MPRI, which include risk assessments that identify prisoners least likely to re-offend, will help motivate the parole board to release more prisoners after their minimum time is served.

"There is a lot of discretion built into the process," said Marc Mauer, executive director of The Sentencing Project, a Washington, D.C.-based advocacy group. Michigan's incarceration rate remains higher than neighboring states, "but they are doing some good things, which I think will give the parole board more confidence in releasing people."

Moneywise, "it's a no-brainer," said Beth Arnovits, executive director of the Michigan Council on Crime and Delinquency, which partners with the MDOC in implementing the reentry program.

"A prison bed costs $25,000 to $30,000 a year. We spend an average of $3,500, max, on people coming out," she said. "Of course, keeping them crime free is also an important goal. That's why we should be preparing people for release from the moment they enter the prison system."

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