BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
552 (Solorio)
Hearing Date: 04/26/2010 Amended: 04/06/2010
Consultant: Jacqueline Wong-HernandezPolicy Vote: Public Safety
5-0
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BILL SUMMARY: This bill makes technical and substantive changes
to the requirements of the Department of Corrections (CDCR)
construction projects authorized by AB 900 (Solorio, 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 includes ancillary improvements to provide
dental, medical and mental health treatment, in specified
construction authority;
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."
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Phase II conditional ***No cost; possibly
significant savings*** Bond*
language change General
Receiver costs averted ***Substantial savings. See Staff
Comments*** General
Renovation authorization ***Potentially significant cost
avoidance*** Bond*
*Lease-revenue bonds for prison construction are ultimately
repaid by the General Fund.
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STAFF COMMENTS:
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
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AB 552 (Solorio)
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.
(Government Code 15819.40 et seq.)
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
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 would expressly allow 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, 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
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AB 552 (Solorio)
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. (Penal Code 7021.) 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." (Penal Code 7021(a)(1) This
bill would revise 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.