California State Auditor

Report 2009-107.2 Summary - May 2010

California Department of Corrections and Rehabilitation:

Inmates Sentenced Under the Three Strikes Law and a Small Number of Inmates Receiving Specialty Health Care Represent Significant Costs

HIGHLIGHTS

Our review of California's increasing prison cost as a proportion of the state budget and California Department of Corrections and Rehabilitation's (Corrections) operations revealed the following:

  • Inmates incarcerated under the three strikes law (striker inmates):
    • Make up 25 percent of the inmate population as of April 2009.
    • Receive sentences that are, on average, nine years longer-resulting in about $19.2 billion in additional costs over the duration of their incarceration.
    • Include many individuals currently convicted for an offense that is not a strike, were convicted of committing multiple serious or violent offenses on the same day, and some that committed strikeable offenses as a juvenile.
  • Inmate health care costs are significant to the cost of housing inmates. In fiscal year 2007-08, $529 million was incurred for contracted services by specialty health care providers. Additionally:
    • 30 percent of the inmates receiving such care cost more than $427 million.
    • The costs for the remaining 70 percent averaged just over $1,000 per inmate.
    • The costs for those inmates who died during the last quarter ranged from $150 for one inmate to more than $1 million for another
  • A significant portion of the increased workload due to medical guarding and transportation is covered through overtime.
  • The large leave balances of custody staff, to which the furlough program has contributed a significant amount, will eventually cost the State from $546 million to more than $1 billion.

RESULTS IN BRIEF

The mission of the California Department of Corrections and Rehabilitation (Corrections) is to ensure public safety through the safe and secure incarceration of offenders, effective supervision of parolees, and rehabilitation strategies to successfully reintegrate offenders into communities. In a report we published in September 2009 titled 2009-107.1: California Department of Corrections and Rehabilitation: It Fails to Track and Use Data That Would Allow It to More Effectively Monitor and Manage Its Operations (prior report), we described how Corrections' expenditures of $10 billion comprised 10 percent of the State's General Fund budget for fiscal year 2007-08. Although Corrections tracks costs at the institutional level, it does not track costs in a manner that would allow us to stratify them by specific inmate characteristic. As a result, despite rising costs, Corrections does not have sufficient information to identify how much specific inmate or institution characteristics contribute to these costs and how changes in its operations would influence expenditures. In this report, we expand on certain issues presented in our prior report and present additional information related to the inmates incarcerated under the three strikes law (striker inmates). We provide a breakdown of some health care costs by type of service, the health care delivery method, and whether the inmates receiving specialty health care were striker inmates. We also describe the impact of vacancies on overtime, and we discuss California Prison Health Care Services' (Health Care Services) plans for containing health care costs.

As of April 2009, 25 percent of the inmate population was incarcerated under the three strikes law, which requires longer sentences for individuals who are convicted of any felony and have been convicted previously of crimes defined in state law as serious or violent felonies, also known as strikes. As discussed in our prior report, we estimated that on average, these individuals' sentences are nine years longer because of the requirements of the three strikes law. In further analyzing the nature of the crimes for which striker inmates are incarcerated, we found that the current conviction for which many are imprisoned is not a strike. However, the longer sentences that striker inmates are receiving are based on their previous strikes. We also found that significant portions of the striker inmate population were convicted of committing multiple serious or violent offenses on the same day, and that some committed one or more serious or violent offenses as a juvenile.

As we described in our prior report, the cost of housing striker inmates for the additional years they were sentenced to under the three strikes law represents a substantial liability to the State. We estimated that the additional years imposed by the three strikes law represent $19.2 billion in additional costs over the duration of the incarceration of striker inmates identified as of April 2009. Of this amount, $7.5 billion is associated with striker inmates whose current convictions are for crimes that are not strikes. Although we identified specific populations of striker inmates and the additional years these inmates are sentenced to, there are some limitations in Corrections' data that limited our analysis.

A significant part of the overall cost to house inmates in Corrections' 33 institutions is inmate health care costs. Health care provided to inmates can generally be classified as one of two types: primary health care, which is provided by medical staff within the institutions, and contracted specialty health care, which is provided by contracted providers. We obtained the costs and nature of contracted specialty health care provided to inmates from the Contract Medical Database (the CMD), most of which we were able to associate with individual inmates.

Of the $734 million in the CMD costs in fiscal year 2007-08, $529 million was for contracted services by specialty health care providers. The remaining $205 million was for contractors that provide temporary staff to fill vacant health care positions to provide medical care at the institutions, referred to as registry costs. Of the $529 million in contracted specialty health care costs, we were able to associate 89 percent, or $469 million, with valid inmate identification numbers. We could not associate the remaining $60 million with specific inmates. Our analysis of the specialty health care costs associated with specific inmates revealed that the majority of these costs for fiscal year 2007-08 were associated with a relatively small population of inmates. Specifically, among the inmates with specialty health care costs recorded in the CMD, 30 percent of the population cost more than $427 million, while the costs for the remaining 70 percent averaged slightly more than $1,000 per inmate. Further, just one-half of 1 percent of the inmates incarcerated during the year, or 1,175 inmates, incurred 39 percent of such costs in fiscal year 2007-08. We also found that of the nearly 15,800 inmates who incurred more than $5,000 in specialty care costs during fiscal year 2007-08, 63 percent were age 40 and older. In comparison, inmates age 40 or over represent only 41 percent of all inmates. We also found that the 72 inmates who died during the last quarter of fiscal year 2007-08 incurred, on average, $122,300 for specialty health care services for that fiscal year. Ranging from $150 for one inmate to more than $1 million for another, these 72 inmates accounted for $8.8 million in specialty health care costs during fiscal year 2007-08.

According to Health Care Services—the organization overseen by the federal receiver responsible for administering health care provided to inmates—it is taking steps to contain health care costs. These cost containment measures include implementing utilization management, contracting with a third-party administrator to process medical invoices, and expanding telemedicine. Although Health Care Services has continued expanding its use of telemedicine as part of its cost containment strategy, it has not fully estimated the potential savings of using additional telemedicine. Health Care Services did provide an estimate of the medical guarding and transportation costs that are avoided with each telemedicine consultation, which indicates that the telemedicine consultations completed in fiscal year 2008-09 resulted in savings of $4.6 million to $9.2 million in guarding and transportation costs. Estimates of the costs associated with projects that will facilitate expanding telemedicine are significant. They include $41 million for the Telemedicine Services Project, a broadly defined project intended to provide technology and resources to improve and expand telemedicine services by 400 percent to 80,000 consultations by fiscal year 2013-14. Using Health Care Services' most recent cost avoidance estimates, the $41 million in costs would be offset by $46 million to $93 million in costs avoided over the five-year period. Savings vary significantly by institution, however, suggesting that some telemedicine consultations may not be cost-effective.

Finally, using payroll-related information from the State Controller's Office, we reviewed the relationship between Corrections' vacant custody staff positions and overtime. We determined that a significant workload related to medical guarding and transportation does not have associated authorized positions and is covered through overtime. Additionally, we found that the formula Corrections uses to determine how many custody staff should be hired to adequately staff its institutions did not accurately account for the factors in the documentation that supports Corrections' calculation of custody staff that are unavailable to work, such as vacation or sick leave. As a result, custody staff opportunities to take the leave that they earn were decreased. These errors are offset in some institutions by the way Corrections applies the formula to the number of guarding assignments.

Whether due to fewer opportunities to use leave or other factors, custody staff have accumulated significant leave balances. Although the work provided when staff choose not to take the full amount of leave they earn during the course of a year reduces the current staffing costs of running the correctional system, the growing leave balances represent a deferred liability. However, if custody staff used the leave to which they are entitled, Corrections would incur higher overtime costs. The furlough program has exacerbated this situation because of the need to maintain staffing levels in the institutions, causing further increases in total leave balances. We estimate these total leave balances will result in an eventual cost to the State of at least $546 million and could be more than $1 billion, depending on whether staff are paid for the leave when they quit or retire, or are able to use the leave while they are employed.

RECOMMENDATIONS

Health Care Services should continue to explore methods of reducing the costs of medical care to the State, including those of inmates with high medical costs. These efforts could include proposing a review of the program that allows for the early release of terminally ill or medically incapacitated inmates, and other possible means of altering the ways in which inmates are housed without unduly increasing the risk to the public.

To determine whether the additional expansion of telemedicine is cost-effective within the California correctional system, Health Care Services should further analyze the cost-effectiveness of telemedicine through a more robust estimate of savings, including consideration of factors such as the percentage of telemedicine consultations that required subsequent in-person visits because the issue could not be addressed through telemedicine.

To ensure that the level of custody staffing meets institutional needs, and to provide staff the opportunity to use the amount of leave they earn in the future, Corrections should update its staffing formulas to accurately represent each of the factors for which custody staff are unavailable to work, such as vacation or sick leave. In addition, Corrections should create a policy for regularly scheduled reviews of the data used in the staffing formulas and update the formulas as necessary.

To better communicate to policy makers the annual cost of incarceration, and to provide a more accurate estimate of expenditures associated with changes in the large leave balances of custody staff—many of whom require relief coverage when they are absent—Corrections should provide the following as supplemental information to the relevant legislative policy and fiscal committees:

  • A calculation of the annual increase or decrease in its liability for the leave balances of custody staff to better explain the cause of changes in expenditures.
  • An estimate of the annual cost of leave balances likely to be paid for retiring custody staff.

AGENCY COMMENTS

Corrections did not disagree with our findings or recommendations, but did not specifically address them in its response.

Health Care Services states that it concurs with the audit findings and recommendations, but also chose not to address them specifically.















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