A 77-page audit released Tuesday by State Auditor Marion Higa only confirms what some have long suspected: Hawaii cannot make real progress on solving prison overcrowding until it fully understands how much it costs to incarcerate inmates.

As well, there are serious management and procurement problems with the state’s contract to hold some 2,000 inmates at Corrections Corporation of America facilities in Arizona.

The audit, titled “Management Audit of the Department of Public Safety’s Contracting for Prison Beds and Services,” comes just two weeks after Gov. Neil Abercrombie said he wants to bring all the prisoners back to the islands. The governor wants new facilities here and also wants more focus on rehabilitation programs.

And, the audit comes just weeks before the 2011 Legislature opens for business.

While the contract with Corrections Corporation of America, which expires June 30, will likely be amended and renewed at least on a short-term basis — there’s no place to put the mainland inmates in Hawaii — a key state senator says the audit may expedite efforts to pay for a new prison facility on Maui and to release hundreds of non-violent offenders into community programs.

Will Espero, chairman of the Senate’s Public Affairs, Military Affairs and Intergovernmental Affairs Committee, called the report’s finding of violations of state procurement law by the Department of Public Safety “disturbing.”

Following the audit’s recommendations, he told Civil Beat he has spoken with Aaron Fujioka, the administrator of the State Procurement Office and Chief Procurement Officer for the executive branch, “to work closely with DPS and the administration so that if there is another agreement with CCA or an MOU is signed, that it is done properly and follows the law.”

At the same time, however, Espero wants action on developing a plan to bring “a majority” of Hawaii prisoners back home. He said that “should not take too long.”

Interim Public Safety Director Jodie Maesaka-Hirata issued a statement in response to the report that read, in part, “The Department acknowledges the recommendations of the Auditor and will address the concerns raised in the report. In addition, we will review all administrative rules, practices, and existing policies as it relates to the Mainland and Federal Detention Center Branch.”

‘Quick and Dirty’ Numbers

The audit says the Department of Public Safety used “misleading cost data and improper contracting”; because of that, finding prison solutions has become “more elusive.”

In 1995 the department began transferring inmates to out-of-state facilities in order to alleviate overcrowding. Today nearly 2,000 male inmates — one-third of Hawaii’s total prison population — are held at two facilities in Arizona, Red Rock Correctional Center and Saguaro Correctional Center.

It was supposed to be temporary, but, according to the audit, Public Safety management “does not understand the necessity of providing detailed and accurate financial information to policymakers and the public, a key component in solving this crisis.”

The auditor says estimates that it costs twice as much to keep inmates in-state are based on flawed methodology — “quick and dirty” numbers.

Public Safety also has not adequately used an inmate-tracking management system to provide useful data to managers and policymakers about the cost of incarceration. In one analysis, the auditor found errors in almost 30 percent of the tracking system’s reports.

‘Circumventing the Law’

The audit also found that the Department of Public Safety violated state procurement law in exempting, in 2006, an inter-governmental agreement with the City of Eloy, Ariz., to consolidate housing for Hawaii inmates to three prisons owned and operated by Corrections Corporation of America (CCA).

CCA began building a $95 million prison in Saguaro, Ariz., specifically to house Hawaii inmates.

“Through this misuse of the exemption, the department was able to secure CCA as its preferred provider,” says the audit, adding that the agreement with Eloy contains no safeguards to protect Hawaii’s interests “in the event of a dispute or if funds are not appropriated or available to pay CCA.”

In short, Hawaii “is exposed to a liability risk.”

Further, the Department of Public Safety “has no written policies or procedures for contract administration, and the administrator and staff readily accepted CCA’s representations and conclusions of its performance without verifying statements against documented evidence.”

Lastly, the department had “no plans” for contracting for private prison beds beyond the date the contract expires.

Prisons and Programs

The report concludes by stating, “The Legislature must hold the Department of Public Safety accountable for its inadequate cost reporting.”

It also lists a number of recommendations such as improving both compilation of incarceration data and monitoring the operations of private prisons.

The bigger problem is building new prison space in Hawaii. But Espero says the state has already invested $10 million in designing a new prison to replace the dilapidated Maui Community Correctional Center. Problem is, there’s no financing for construction.

“That is something that this administration must tackle as a top priority,” said Espero, noting that it costs Hawaii $60 million a year to house its inmates on the mainland.

As for reintegrating non-violent offenders into the community, the Legislature asked Public Safety to identify 500 prisoners for early release.

“I have spoken with many people in Public Safety, and there are estimates of between 10-20 percent who are currently incarcerated who may not have to be incarcerated,” he said. “On the high end, that’s 1,200 people.”

As Interim Public Safety Director Maesaka-Hirata put it in her statement, “While we understand state budget constraints, our goal is to ensure that people are incarcerated humanely with the least restrictive means conducive to learning and growing to become productive citizens of Hawaii.”

DISCUSSION: *Share your thoughts about the audit and read what others have to say about it in our criminal justice and prisons discussion.

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