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CENTER ON JUVENILE AND CRIMINAL JUSTICE PRESS ROOM | |
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| Center on Juvenile and Criminal Justice, 1622 Folsom Street, San Francisco, CA 94103 | Tel: (415) 621-5661 | Fax: (415) 621-5466 |
California's prison system, already under fire for hundreds of millions of dollars in annual overspending, also does a poor job in contracting for expensive outside medical care, a state audit said Tuesday.
Most contracts are awarded without competitive bids; the Department of Corrections employs "flawed negotiating practices;" and some contracts don't include information the department needs to get promised discounts, auditors found.
Other contracts violate the department's own policies by exceeding standard rates, the department spends beyond what the contract allows, or prisons ignore guidelines intended to contain costs.
The audit provides no estimate of the total overspending, though on four sample contracts alone the department overspent by $6 million.
State lawmakers have criticized the nation's largest prison system for virtually disregarding its budget, most recently overspending by $500 million at a time when the state is struggling with a record budget gap. An Associated Press analysis in January found the department overspent by nearly $1.6 billion since 1999, with much of it going for overtime and sick leave.
In response, corrections officials said they're under budgeted for services they must provide, including costly medical services required by laws and lawsuits. Their audit response points to areas where they have been able to shave costs over the last 15 years, though auditors said those efforts have not always been successful.
The prison system provides much of its own medical care for the 161,000 inmates in its 32 prisons, but spent $239 million on outside care in the last fiscal year. Outside care costs have risen more than 15 percent each of the last four years -- including 29 percent two years ago and 20 percent last year.
Yet the department sought competitive bids on just 23 percent of its 1,149 contracts the last two years, relying on a 30-year-old policy exemption that contains no standards for determining reasonable costs, auditors found.
The department said it instead conducts an "informal hospital solicitation process" to find cheaper rates, and is extending it to other services contracts. Auditors said their review shows even those informal solicitations are usually not conducted.
Corrections officials argued the no-bid process cuts prices by keeping contracts confidential; providers must base their rates on actual costs, not what other providers bid. Auditors called that argument "without merit," and said the state should reconsider the policy.
The Department of General Services, which oversees state contracts, said it would reevaluate the policy over the objection of corrections officials; a spokesman declined further comment. The policy also potentially affects the departments of Health Services, Mental Health, Developmental Services, Youth Authority and Veterans Affairs.
Meanwhile, the powerful California Correctional Peace Officers Association offered to reopen negotiations on what some lawmakers contend is an unaffordable five-year contract -- but only if the state adds layoffs, employee transfers and prison closures to the collective bargaining process. Those have traditionally been considered administrative decisions.
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