Lawmakers' efforts to find big savings through a series of performance reviews of state agencies is off to a rough start, with the Alaska Department of Corrections saying in the first report it could not recommend reductions to programs that would amount to a 10 percent cut of its general funds.
Such a requirement is spelled out in a new law calling for vigorous reviews of 18 agencies scheduled to occur over the next decade. The reviews are wide-ranging and focus partly on performance. But finding ways to trim costs is also a key element as legislators look to reduce operational budgets that have swelled in recent years and the state faces a $7 billion deficit this fiscal year and next.
Former DOC Commissioner Joe Schmidt said in a letter to legislative auditors this spring he could not recommend such a large cut because all the agency's programs are authorized by law or the Constitution, serve a need and are essential to the agency's mission and core services. He said it appears that the only way to make such a reduction to the agency's general fund budget -- essentially $31 million -- is to shut down one or more of the 13 correctional facilities spread across the state.
But he added that doing so would be indefensible and would reverse state policy designed to keep Alaska prisoners in state.
Schmidt provided a list of the facilities to choose from for potential shutdown. No specifics were offered on which facility or facilities to eliminate to reach the cost-cutting goal, according to the report issued by the contracted review team, CGL.
In turn, legislative auditors asked CGL, headquartered in Sacramento, California, to evaluate the feasibility of closing one or more facilities.
"In short, the (Corrections Department) offered potential concepts for 10 percent budget reductions but did not submit an actual plan for reduced spending, arguing that reductions of this magnitude would make it impossible for the department to perform its mission," CGL said in a report released last week.
Lawmakers weren't happy with the department's approach.
The 13-member Legislative Budget and Audit Committee received the report last week, said Laura Pierre, chief of staff to Sen. Anna MacKinnon, the committee chair.
It was "frustrating" for MacKinnon to learn that the corrections department had "flat-out refused" to suggest specific savings, she said.
"You can have your mission and your core services and the absolute necessities but there are always ways to find efficiencies in government," said Pierre, aide to the committee. "That's what we hoped to get out of the performance reviews, that they would at least come up with suggestions that are cost-saving measures."
House Speaker Mike Chenault, R-Nikiski, who sponsored the performance review bill last session with several other legislators, said in an emailed statement Monday the report provides findings that highlight the agency's strengths and weaknesses. But he is "quite concerned" the department did not comply with the law.
"The largest issue we will be addressing this year is declining revenues," he said. "This information would have been extremely valuable to the Legislature and the incoming administration."
"We will be looking further into this noncompliance with our legal department and the finance committees to see if we need to strengthen the statute," he said.
On Dec. 1, more than two weeks before the report's release, Gov. Bill Walker announced he was naming Ron Taylor as acting corrections commissioner. Schmidt was not retained. Walker during his campaign had emphasized the need for a thinner state budget. In an effort unrelated to the performance review, he has said he will soon ask agency heads to identify budget reductions of 5 percent.
Sherrie Daigle, special assistant to the DOC commissioner, said in an email to a reporter the department "continues to review and improve our ability to provide core services as efficiently and effectively as possible" without hurting its mission or jeopardizing public safety.
While Schmidt in his letter suggested the idea of closing correctional facilities, he said doing so would be "untenable, would reverse the policy direction set by the Legislature, and would require a return to contracting to house prisoners in out-of-state facilities."
Schmidt said the Legislature recently set clear policy goals that increase costs, including reinforcing "reformative programs" and "supervised release." That would help reduce a prison population currently numbering about 6,000. Also adding expense is the opening of Goose Creek Correctional Center in 2012 to help keep Alaska prisoners in the state rather than in Outside facilities.
CGL, in its analysis, said shutting down the prison and housing its 1,314 inmates out of state would actually save $31.4 million, meeting the reduction requirement in one fell swoop by closing the largest, newest and most expensive facility. In 2012, the DOC estimated it would cost an additional $30 per prisoner, per day, to use Goose Creek instead of a facility in Colorado that the state contracted with to house prisoners.
However, CGL said the closure would reverse a "major policy commitment made by the state in opening the Goose Creek facility to house all Alaska inmates with the state. Moreover, Goose Creek is a highly effective, state-of-the-art correctional facility with the best level of performance of any correctional institution in the state."
The lack of ideas from the corrections department prompted members of the audit committee last week to take a step toward approving another possible contract so CGL could seek savings. This contract could cost up to $35,000 and would allow CGL to search for ways that prisoner health care costs, currently borne by the state, could be shared by Medicaid, Medicare, the Indian Health Service or private insurance.
No contract has been signed for that review, Pierre said Monday.
The next agency up for review is the Department of Health and Social Services in 2015, followed by the Department of Education in 2016.
Pierre said there's a sense that departments may be reluctant to provide ideas for reductions, out of fear lawmakers will slash them all.
"We are simply looking for options," she said.