BILL ANALYSIS                                                                                                                    


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                                 THIRD READING

          Bill No:  AB 552
          Author:   Solorio (D)
          Amended:  4/6/10 in Senate
          Vote:     27 - Urgency

           SENATE PUBLIC SAFETY COMMITTEE :  5-0, 3/23/10
          AYES:  Leno, Cedillo, Hancock, Steinberg, Wright
          NO VOTE RECORDED:  Cogdill, Huff

           SENATE APPROPRIATIONS COMMITTEE  :  8-1, 4/26/10
          AYES:  Kehoe, Cox, Alquist, Corbett, Leno, Price, Wolk, Yee
          NOES:  Denham
          NO VOTE RECORDED:  Walters, Wyland

           ASSEMBLY FLOOR  :  Not relevant

           SUBJECT  :    Correctional facilities:  AB 900 revisions

           SOURCE  :     Department of Corrections and Rehabilitation

           DIGEST  :    This bill makes technical and substantive  
          changes to the requirements of the Department of  
          Corrections and Rehabilitation construction projects  
          authorized by AB 900 (Solorio), Chapter 7, Statutes of  
          2007.  Specifically, this bill (1) expressly includes the  
          development of medical and mental health beds and treatment  
          space, as specified, in the and expressly states that these  
          beds will be supported with rehabilitative programming, (2)  
          authorizes the renovation of existing buildings for  
          approved beds and reentry program facilities, (3) expressly  


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          includes ancillary improvements to provide dental, medical  
          and mental health treatment, in specified construction  
          authority, and (4) changes Phase II conditional language  
          requiring that at least 4,000 beds from Phase I be "under  
          construction" to instead require that at least 4,000 beds  
          be "established by the by State Public Works Board."

           ANALYSIS  :    Current law, as enacted in 2007 by AB 900  
          (Solorio), Chapter 7, Statutes of 2007, generally  
          authorizes $6.2 billion in lease-revenue bond financing for  
          construction of 40,000 new state prison beds and $1.2  
          billion for an estimated 13,000 new county jail beds,  
          phased-in over time and contingent upon a series of  
          construction and rehabilitation program implementation  
          benchmarks.  (Section 15819.40 et seq. of the Government  
          Current law specifically authorizes the Department of  
          Corrections and Rehabilitation (CDCR) to "design,  
          construct, or renovate housing units, support buildings,  
          and programming space in order to add up to 12,000 beds at  
          facilities under its jurisdiction."  (Section  
          15819.40(a)(1)(A) of the Government Code)  CDCR is required  
          to "complete site assessments at facilities at which it  
          intends to construct or renovate additional housing units,  
          support buildings, and programming space.  The department  
          may use the funding provided ? to complete these site  
          assessments.  After completing these site assessments, the  
          department shall define the scope and cost of each project  
          (as specified) ?"  (Id.)

          Current law provides that the authority described above  
          "may be used to develop new beds including appropriate  
          programmatic space (as specified) ..." (Id,  

          Current law further requires that any new beds constructed  
          pursuant to the provisions described above "shall be  
          supported by rehabilitative programming for inmates,  
          including, but not limited to, education, vocational  
          programs, substance abuse treatment programs, employment  
          programs, and prerelease planning."  (Id, para.(a)(2).)

          Current law further provides that the purpose of beds  



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          constructed pursuant to the provisions described above "is  
          to replace the temporary beds currently in use, and they  
          are not intended to house additional inmates.  For the  
          purposes of this section, 'temporary beds' shall be defined  
          as those that are placed in gymnasiums, classrooms,  
          hallways, or other public spaces that were
          not constructed for the purpose of housing inmates."  (Id,  

          This bill alters existing statutes that authorize CDCR  
          prison construction project, enacted in 2007 by AB 900  
          (Solorio). The most substantive effect of these changes is  
          to allow greater flexibility in the use of bonds authorized  
          by the statute. While, often, changes that allow previously  
          authorized bonds to be issued for a wider variety of  
          projects and/or expedite their issuance are considered by  
          this committee to create additional bond pressure (to  
          expend the full amount of approved bond funding), the  
          changes proposed in this bill will likely result in  
          substantial cost savings because of external factors  
          governing prison construction decisions.
          AB 900 authorized multiple project types, with bond funding  
          amount distinguished for each general project category, and  
          construction phase.  "Infill" funding for construction of  
          new beds in state prisons was enacted to help reduce  
          overcrowding, and specified that the new beds created are  
          intended to replace temporary beds, and not to house  
          additional inmates.  Existing law generally authorizes $6.2  
          billion in lease-revenue bond financing for the  
          construction of 40,000 new state prison beds, phased-in  
          over time and contingent upon a series of construction and  
          rehabilitation program implementation benchmarks. (Section  
          15819.40 et seq. of the  Government Code) 

          CDCR prison health care is currently in federal  
          receivership.  In 2005, the United States District Court  
          for the Northern District of California established a  
          Receivership to take control of the delivery of medical  
          services to all CDCR inmates.  In its order, the Court set  
          forth comprehensive duties for the Receiver, including  
          leadership and executive management of the California  



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          prison medical health care delivery system.  The Court  
          expressly ordered the Receiver to "exercise all powers  
          vested by law in the Secretary of the CDCR as they relate  
          to the administration, control, management, operation, and  
          financing of the California Medical health care system."   
          The Court suspended the Secretary's exercise of these  
          powers for the duration of the Receivership. Moreover, the  
          Court's order expressly provides that, "(a)ll costs  
          incurred in the implementation of the policies, plans, and  
          decisions of the Receiver relating to the fulfillment of  
          his duties under this Order shall be borne by (the state).   
          (The state) shall also bear all costs of establishing and  
          maintaining the Office of Receiver, including the  
          compensation of the Receiver and his staff."

          This bill expressly allows medical and mental health beds  
          to be constructed with infill money, in order to give the  
          Receiver access to authorized bond funding to build medical  
          and mental health beds to satisfy the Court. CDCR and the  
          Receiver have established a plan to construct sufficient  
          beds, with the specified bond funding, to fulfill the court  
          order without using any current General Fund.  In an April  
          5, 2010 letter to the Committee, the Receiver indicated  
          that the negotiated plan "will fully satisfy the need for  
          medical/mental health/dental construction within the  
          original AB 900 allocation and subsequent funding will not  
          be necessary."

          In the absence of this bill, CDCR has existing statutory  
          authority to build general population (Level 4) beds from  
          these bonds, in order to ease general overcrowding, and  
          intends to do so.  The Receiver, simultaneously, has the  
          authority to demand funding for this project to be paid  
          from the General Fund, if other funding is not made  
          available by the state.  If CDCR and the Receiver are not  
          given authority to implement their compromise, the state  
          will likely be required to spend additional money on  
          medical and mental health construction from the General  
          Fund.  Furthermore, to the extent that the Court's  
          requirements are fulfilled more quickly, prison health care  
          authority can be returned to CDCR, and current costs to  
          operate the Office of the Receiver will be eliminated.

          In addition to the bond flexibility previously discussed,  



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          this bill specifically authorizes bond expenditure for the  
          renovation of properties, rather than only new  
          construction, to build additional approved beds.   
          Renovating existing facilities is typically less expensive  
          than new construction, and CDCR believes intends to utilize  
          renovation projects as a cost savings measure.  CDCR has  
          existing facilities, primarily its vacant juvenile  
          facilities, and plans to convert them to adult facilities  
          because it would be less expensive to use land and basic  
          infrastructure already owned by the state to convert to new  
          beds for adult inmates than to build new facilities.  On  
          its own, the authority granted in this bill would likely  
          produce savings over new construction.  In real world  
          implementation, CDCR already has construction plans that  
          assume this authority. In the absence of that authority,  
          CDCR would have to (at least partially) start over and  
          establish new plans that fall within the original AB 900  
          authority, which would result in additional costs.

          This bill also changes a condition for the release of  
          specified Phase II funding. Current law specifies that  
          Phase II funding for CDCR construction may not be released  
          by the Public Works Board until a three-member panel  
          verifies that specifically enumerated conditions have been  
          met.  (Section 7021 of the Penal Code.)  One of those  
          conditions is that "at least 4,000 beds authorized in  
          subdivision (a) of Section 15819.40 of the Government Code  
          (Phase I) are under construction."  (Section 7021(a)(1) of  
          the Penal Code.)  This bill revises this language to  
          instead require that at least 4,000 beds "have been  
          established by the by State Public Works Board."

          If the Public Works Board has established the project, a  
          loan will be issued from the Pooled Money Investment  
          Account (PMIA), and CDCR will be functionally committed to  
          that project.  (If CDCR were to stop the project, it would  
          be responsible for repaying the PMIA loan from its  
          operations budget).  Allowing Phase II funding to be  
          released at that point, instead of waiting for construction  
          to end, would begin Phase II projects more quickly.  CDCR  
          estimates that those projects could be completed 12-18  
          months earlier than if the funding was not available until  
          after Phase I construction has begun.



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           Prior Legislation
          SB 4 X2 (Cogdill), Chapter 2, Statutes of 2009-10, Second  
          Extraordinary Session, passed the Senate with a vote of  
          30-4 on February 14, 2009.

          SB 14 X3 (Ducheny), Chapter 16, Statutes of 2009-10, Third  
          Extraordinary Session, passed the Senate with a vote of  
          32-6 on February 19, 2009.

          SB 81 (Senate Budget and Fiscal Review Committee), Chapter  
          175, Statues of 2007.

          AB 900 (Solorio), Chapter 7, Statutes of 2007, passed the  
          Senate with a vote of 27-10 on April 26, 2007.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)

           Major Provisions      2009-10     2010-11     2011-12     Fund  

          Phase II conditional          No cost; possibly  
          significant savings           Bond*/
          language change                                   General

          Receiver costs averted        Substantial savingsGeneral

          Renovation authorization      Potentially significant  
          savings             Bond*

           * Lease-revenue bonds for prison construction are  
            ultimately repaid by the General Fund

           SUPPORT  :   (Verified  4/27/10)

          California Department of Corrections and Rehabilitation  
          California Fence Association
          California Prison Federal Receiver
          California State Council of Labor



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          California State Sheriffs Association
          Engineering Contractors Association

           ARGUMENTS IN SUPPORT  :    The bill's sponsor, the CDCR,  
          states in part:

            "AB 552 is technical cleanup legislation that will  
            provide consistency between Phase I and Phase II funding  
            authority and provide conforming changes to recognize the  
            use of design-build project delivery authority provided  
            in 2009.  Specifically the measure would: 

                 Provides that funding in the AB 900 Infill  
               appropriation may be used to develop beds and  
               treatment space serving inmates requiring medical or  
               mental health services, and that rehabilitative  
               programming for these beds shall be consistent with  
               the medical or mental health services being provided  
               to these inmates. 

                 Modifies the authorization by the Public Works  
               Board, rather than the commencement of construction,  
               as a pre-requisite to release of Phase II funding.   
               This will allow Infill, Reentry and Medical projects  
               funded from Phase II to begin approximately 12 months  
               (or more) sooner then would occur under existing law.   

                 Provides consistency between the scope of AB 900  
               Phase I and Phase II funding authorities.  Phase I  
               Medical funding should include renovation (already  
               included in phase II), and both phases should  
               reference necessary ancillary improvements.  Phase II  
               Reentry funding should include renovation and land  
               acquisition (already included in phase I).

                 Authorizes the Public Works Board to perform  
               oversight of projects utilizing design-build authority  
               ? by referencing Government Code Section 13332.19."

          RJG:mw  5/10/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE



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