Financial contingency planning for California's prison system

Prison Funding

Finding Funds for Fighting Crime: Financial Contingency planning for California's Prison System

Prisons have always been a controversial aspect of society, and far more so in the modern era of sociological and psychological inquiry into the nature of crime, punishment, and rehabilitation. Deciding precisely what function prisons are meant to serve and how they should go about serving it has been the cause of a great deal of social and political debate, and these issues are far from settled. There are those that argue for the reduction of prison terms and sentencing lengths and a move to more rehabilitative efforts rather than the punitive focus most prisons seem to hold today, while others insist that making prisons punitive and able to accommodate more inmates serves as a deterrent to crime and as a testament to the rules of justice. These abstract issues in and of themselves make the prison issue highly contentious, before the many practical complications of prisons are even considered.

Funding prison systems creates a slew of other debates from a wide range of perspectives. Much like arguments about government funding for anything else, there are both pragmatic and ideological arguments that come into play when trying to secure funding for prisons, and these can create fluctuations in the available funding for prison systems at certain politically and economically sensitive times. Regardless of where ideology and policy come down, however, those in charge of prison systems have to make sure that all basic needs and legal requirements are being provided for with whatever funding is available.

The following pages will examine the various sources of funding available to the California Prison System, which is one of the largest in the nation and constitutes a significant portion of the state's budget (Governor's Budget, 2012; Skelton, 2011). Making ends meet for all of the system's prisons and prisoners can be a challenging and complex task, involving many different types of funding from many different outlets and coming at varying rates. It is only through the careful pursuit and coordination of all potential funding sources that the prison system is adequately maintained and operated regardless of the societal and political debates regarding the purpose and rectitude of this operation, and at times navigating the channels of practicalities involved in prison funding can be just as difficult and subtle as effectively navigating political and ideological channels argued form less pragmatic perspectives.

Public-Private Partnerships

It was not until 2006 that public-private partnerships became a major source of funding/funding structure for California prisons (Gilroy et al., 2010). Overcrowding and other issues had continued to place strains on the California Prison System for quite some time, and it was in 2006 that Governor Schwarzenegger declared an emergency in the corrections institutions and programs in the state, opening the door for greater private intervention in what had been an almost exclusively public sphere (Gilroy et al., 2010). Since that time, public-private partnerships have become much more commonplace in the state, not only providing a means of funding the prison system but also creating savings (Gilroy et al., 2010).

The current estimate for the cost of housing a single inmate for one year in the California Prison System is approaching $50,000, and the total cost to the state in direct terms (not counting future reimbursements, federal funds, and certain other costs) for the prison system as a whole exceeds ten billon dollars annually (Gilroy et al., 2010; Governor's Budget, 2012; Skelton, 2011). Private operations have been able to create a savings of up to 28% per inmate depending on the level of private partnership within the public prison system, which translates to a savings of fourteen thousand dollars per inmate or a total savings in direct costs of over three billion dollars (Gilroy et al., 2006). Private involvement in the prison system is the source of some controversy in terms of public opinion and policy, however the savings and essentially limitless funding capacity of private enterprise has made it a necessary part of funding the California Prison System (Gilroy et al., 2006).

Non-Profit

Non-profits do not appear to be a major source of funding for the California Prison System, as their entrance into fundamental and large-scale operations was also limited until the emergency declaration by Governor Schwarzenegger in 2006 (Gilroy et al., 2010). What involvement non-profits do have is largely limited to support services and non-essentials, however these still represent certain savings to the state and thus "funding," in a certain sense (Gilroy et al., 2006). Seeking greater levels of partnership and involvement from non-profits will help to make up for funding shortcomings that might occur in the future.

Bond Issuance

According to the information available in the latest budget for the state, just over eight-hundred thousand dollars in funds from general bonds are used as funding for operations within the California Prison System (Governor's Budget, 2012). This is a fairly small amount in terms of the total funding of the California Prison System, representing only three-quarters of one percent of all direct funds necessary to maintain full operations for all facilities and inmates, however these funds are still vital to the cash-strapped system (Governor's Budget, 2012; Gilroy et al., 2006). It is far from certain that bonds can be relied upon to provide more significant amounts of funding in the future, though, or even that they will continue to provide the same level of funding that they currently do, and this is for entirely pragmatic and financial reasons directly related to market forces rather than ideological controversies.

Issuing bonds would be rather difficult and not necessarily possible or advantageous given the current state of the overall economy -- bonds require purchasers, and given the impact that the recent economic downturn has had on expendable income and investment accounts, purchasers are in short supply. In addition, California has suffered significant deficits in recent years, reaching crisis level at certain times. Bonds are only purchased when the rate of return is commensurate with the risk these bonds carry, and California would have to pay a fairly substantial interest rate on the borrowed money that bonds reflect. Bond issuance should not be counted on as a major source of funding for California's prisons, then.

Grants

There are several different specific grant programs used as a means of organizing and securing funding for various aspects of the California Prison System, from the juvenile incarceration facilities and programs included in the state budget to some of the higher-order planning operations that help to adjust and run the system from year to year (Governor's Budget, 2012). Despite this range in the areas of the California Prison System in which grants are utilized as a funding source, this type of funding is far less substantial even than bonds, comprising a total of under two hundred thousand dollars' worth of the total budget for the prison system (Governor's Budget, 2012). This works out to under two-tenths of one percent of the total annual operating budget, and like bonds this is not a number that is likely to increase over the coming years without an unexpected upturn in the state and global economy, therefore these should not be looked to as sources for additional funding for new expansion or development projects in the current period but rather should be relied upon as little as possible.

Effects of Taxation

Because government funding provides the majority of the financial resources the prison system needs to operate, prison funds are directly related to taxation rates. The effects of taxation on a population to provide more prison funding are clear, however, at least in California: taxation leads to new governments with lower taxes, generally speaking (Skelton, 2011). One of the primary reasons that the California Prison System is experiencing funding problems is that for the past several decades the prison system and the laws that lead to incarceration have been expanding at a much faster rate than taxation, and measures are continually passed to spend more while explicitly refusing to raise taxes (Skelton, 2011). This has led to a growth not only in the absolute costs of running the prison system, but also in the proportion of the state's budget that must be devoted to the system, while the system's ability to effectively operate and provide all necessary functions and operations has been greatly diminished (Skelton, 2011; Gilroy et al., 2010). The state is also facing major financial and operational shortfalls in other areas that receive greater attention from voters, such as education, and raising taxes to pay more for prisons would likely not be proposed by any politician hoping to be re-elected, and would likely be shot down or overturned by voters in the state, regardless (Skelton, 2011). This final area of consideration makes it clear that finding funding for new prison projects will not be a simple task.

Conclusion: Efficiency and Efficacy

Financial efficiency and program efficacy will be primary components in securing funding from available sources. Both private concerns and governments -- the two most abundant and likely sources of future funding -- require this efficiency and efficacy for different reasons. Governments need to know that their money is being wisely parceled out, serving the greatest purpose with each dollar so the system can be made more effective without costing more. Private concerns are worried about profitability, and ultimately for every dollar put into the system they will expect a dollar and change out. Efficient and effective use of money is the only way to turn a profit, and this seems to be the future for prisons in the U.S. And California.