The High Price of Housing Prisoners

For the last few years, county lobbyists have been engaged in conversations with state officials and legislators about the reimbursement counties receive for housing convicted felons for the state. Currently, the Tennessee Department of Corrections reimburses counties only for costs related to housing convicted felons in local jails and workhouses. The county covers the costs of housing convicted misdemeanants and the cost of all pre-trial detainees. At one time, counties were paid by the state for pre-trial detainees, but that practice ended many years ago. Back in 1994, the McWherter administration, in an effort to contain state costs, limited the amount paid to most county governments for housing felons to $35 per day, regardless of actual costs. During the Sundquist administration, the Department of Corrections stopped paying counties for inmates who are incarcerated awaiting a hearing for an alleged probation violation. That remains the practice today. During the early years of the Bredesen administration when the state faced a budget crisis, the reimbursement for housing prisoners was reduced from $35 per day to $32 per day. That rate was later restored to $35 and it remains there today. But as you can see, there has been a trend, regardless of who is in office, for the state to save money by cutting back on what they pay counties for housing prisoners.

There are several different arrangements counties can have with the Department of Corrections. Some counties have contracts for a flat rate. Some have contracts for reasonable allowable costs. Others have no contract but get reasonable costs up to the cap. A small number of counties house prisoners by resolution authority at a significantly lower rate - $18 or $20 per day. For FY06, only three local government facilities received more than $35 per day. They were the Johnson City Jail for housing female inmates at $36.75, the Davidson County Detention Facility which received $39.96 per day for felons and the Shelby County Correctional Center which received $46.46. From the 2006 data, it appears that 65 counties are hitting the $35 cap, either by contract or through capping the reasonable allowable costs which are reimbursed. At these jails, the county is essentially subsidizing all inflationary costs related to housing prisoners for the state. I asked Lynne Holliday with the County Technical Assistance Service to do a quick calculation of how inflation would have affected this reimbursement rate. Her numbers are telling. She used two different figures, the CPI and a less well known statistic – the Implicit Price Deflator for State and Local Government Expenditures (IPD). The IPD is targeted to reflect those factors of the economy that most directly relate to the costs of providing government services. According to Lynne, the IPD has traditionally gone up faster than the CPI. Using either figure, the effect is significant.

Taking the $35 figure established in 1994 and adjusting it for increases in the CPI, $35 in 1994 will buy only $24.88 worth of goods and services today. To put it another way, it takes about $49 today to buy the equivalent of $35 worth of goods and services in 1994 dollars. Using the IPD the outcome is even worse. Adjusted for IPD increases, $35 in 1994 will buy only $23.45 worth of goods and services today, or it would take $53 today to buy the same $35 worth of 1994 goods and services. This is an inherent unfairness in the way the state is treating county governments that only gets worse over time. The private correctional corporations that contract with the state get paid at higher rates than local government and they generally have inflationary factors built into their contracts. Change in this area is long overdue. The Department of Corrections deflects some of this concern by arguing that it should only pay our marginal costs. Essentially they are saying counties would have to pay to operate jails regardless of whether or not the state had any prisoners in them. Regardless of whether or not you agree, you still cannot deny the inflation issue. If $35 was a fair level to cap what the state will pay counties in 1994, it's hard to argue that is still a fair rate 13 years later. Relief for county jails is long overdue from the state. The cap should be raised significantly. But even if we can't get relief now by raising the cap, there at least needs to be an inflationary factor added immediately to the rate this year so that the situation does not continue to worsen.

Look for more information about this issue in the weeks to come.