CHAPTER 2
EXPENDITURES

According to Lynn Bauer of the Bureau of Justice Statistics (BJS) in Justice Expenditure and Employment in the United States, 2001 (May 2004), the total amount spent on corrections at the federal, state, and local levels rose from about $8.9 billion in 1982 to $57 billion in 2001, an increase of roughly 540%. During the same time period, total expenditures for police protection also increased—from $19 billion to $72.4 billion. Total judicial and legal costs rose by 385%—from $7.8 billion in 1982 to $37.8 billion in 2001. (See Table 2.1).

Justice Expenditure and Employment in the United States, 2001 also reported that local governments paid for nearly half of all U.S. justice expenditures in 2001, including 70% of spending on police. State governments bore the largest share of corrections costs (67.8%). Table 2.2 presents justice spending by level of government and justice activity during fiscal year 2001.

Calculated on a per capita basis, in 1982 total spending on corrections cost each U.S. resident $39. By 2001 that figure had risen more than 400% to $200 per person. Adjusted for inflation, the increase was 222%. (See Table 2.1.) By comparison, the per capita cost of police protection, after inflation, rose by 109%, and judicial and legal costs rose 155%.

INCARCERATION RATES RISING

The reasons for the escalating costs of corrections are simple enough:

• More people are being sent to prison
• Mandatory sentencing rules require that some criminals be held for longer periods
• Some courts are requiring stiffer sentences

The official crime rate, reported by the FBI in its Uniform Crime Reports, has declined since the 1980s and early 1990s, when it averaged an annual rate of more than 5,500 crimes per 100,000 population. After reaching 5,898 crimes per 100,000 in 1991, the national rate declined to 4,063 crimes per 100,000 population by 2003. During the same period, the incarceration rate as reported by the Bureau of Justice Statistics has increased from 313 per 100,000 in 1991 to 482 in 2003. These two trends appear paradoxical. Part of the explanation is that the official crime rate does not track drug offenses—or related money laundering offenses and illegal weapons violations—which have been growing at high rates. For this reason, the official crime rate and the incarceration rate do not always move in parallel. They do not reflect the same underlying facts.

According to Prisoners in 2003 (Washington, DC: Bureau of Justice Statistics, November 2004), the number of sentenced prisoners under jurisdiction of state and federal correctional authorities increased from 1,585,586 in 1995 to 2,085,620 in 2003, an increase of 31.5%. The average annual increase during this period was 3.5%. (See Table 2.3.) In the western United States the percentage change between 1995 and 2003 was 35.4%, from 207,661 to 281,135, with Oregon (8.7%) seeing the biggest average annual percent change in its prison population. (See Table 2.4.) The Midwest saw a 28% increase, from 192,177 to 246,053, with North Dakota (9.8%) and Minnesota (6.2) experiencing the largest average annual percent changes. The prison population in the South grew 26.9%, from 446,491 in 1995 to 566,679 in 2003. West Virginia (8.3%) and Mississippi (7.7%) gained the most on an average annual basis. The Northeast had the least growth (5.46%), from 155,030 in 1995 to 163,494 in 2003. Maine (4.9%) and Vermont (3.7%) experienced the highest average annual percent change. Only two states witnessed a decline in prison population during that timeframe: Massachusetts, which decreased from 10,427 in 1995 to 8,814 in 2003, and New York, which had reduced its number of prisoners from 68,486 in 1995 to 65,198 in 2003.

FEDERAL CORRECTIONS

The Budget of the United States for Fiscal Year 2006 proposes $4.75 billion in budget authority for corrections (Washington, DC: Office of Management and Budget, February 2005). Included in this proposal are $85 million to open three new federal prisons and to expand two other facilities, $37 million to pay for the added costs of almost 4,300 inmates in existing facilities, and $20 million for 1,600 new private contract beds. Historically, actual outlays tend to be slightly below authorizations as Congress debates the amounts to be spent.

STATE CORRECTIONS

Based on data from the Bureau of Justice Statistics in Justice Expenditure and Employment in the United States, 2001, corrections represented about 3% of state and local direct expenditures in 2001. The criminal and justice system as a whole accounted for some 7% of state budgets, while 30% went to education, 14% to public welfare, and 7% to health and hospitals. These percentages have been remarkably steady since 1977. (See Figure 2.1.)

According to the U.S. Census Bureau, direct corrections expenditures by states in 2003 were $39.2 billion. (See Table 2.5.) The last year for which a complete breakdown of state prison expenses is available is 2001. According to James J. Stephan of the Bureau of Justice Statistics (State Prison Expenditures 2001, June 2004), a total of $38.2 billion was spent by state correctional systems in 2001. Of that amount, $29.5 billion was used for operating adult correctional facilities. The average annual operating cost per state inmate in 2001 was $22,650. (See Table 2.6.) State prisons in the Northeast spent the most on average per prisoner ($33,037), while those in the South spent the least ($16,479). State prisons cost each U.S. resident an average of $100 a year to operate. Prisons in the West cost the most per resident ($108), while those in the South cost the least ($91). Overall, Southern states spent the most money on prisons ($10 billion) and had the largest prison population (563,818).

Various factors, many out of the control of prison officials, influence the costs of running a state prison. Among such variables are climate (heating costs in the Northeast can be more expensive than in the South), local wage rates, and local cost of living. However, other costs are within the control of prison officials. State prisons with a high inmate-to-staff ratio, that is, with fewer guards, reported lower costs,

while those with large staffs, some as high as one staff member for every 1.7 inmates, had heavy costs. States with a few large prison facilities tended to have lower overall operating costs than those with multiple, smaller facilities.

The $29.5 billion spent on state prison operations in 2001 was an increase of almost 23% from 1996, when $24 billion was spent, and a 150% increase from 1986, when a total of $11.7 billion was spent. The per capita rate for prison expenditures (cost per year to each U.S. resident) also rose during this period at an average annual rate of 6.4%. (See Table 2.7.) Compared to other state expenses, prison spending was relatively low. In 2001 the per capita rate for education was $1,315 and for public welfare, $914.

In 2001 salaries, wages, and benefits for state prison employees made up about two-thirds of state prison operating expenditures. Table 2.8 breaks down prison operating expenditures by state during that fiscal year. Operating costs include supplies, maintenance, and contractual services. About 4% is spent on new construction, renovations, major repairs, equipment, land, or buildings. Expenditures for new prison construction have been declining, from $1.5 billion in 1996 to $1.1 billion in 2001.

Other operating costs for state prisons include medical care, food service, and utilities. By far the largest of these costs was some $3.3 billion spent on prisoner medical care in 2001, followed by $1.2 billion for prisoner food, and $996 million for utilities. (See Table 2.9.) Nationwide, the average annual amount spent for medical care per prisoner was $2,625 (the average spent by U.S. citizens on their own health care is $4,370 per year.) The amount spent on prisoner medical care varied widely by state. Such factors as a high number of inmates with drug and alcohol abuse problems can raise costs, while operating larger prison facilities, and thereby raising the average inmate-to-doctor ratio, can result in cost savings. In 2001 Maine spent the most on prisoner medical care ($5,601), while Louisiana spent the least ($860). By region, the West averaged the most spent on medical care ($3,672), and the South averaged the least ($2,025). Annual food service costs tended to be lowest in those states, such as Mississippi ($297 per prisoner) and North Carolina ($191 per prisoner), where prisons operated their own farms and grew their own fruits and vegetables. In addition, North Carolina prisoners operate their own cannery and meat processing plant.

LOCAL JAIL EXPENDITURES BY COUNTIES
AND MUNICIPALITIES

According to Justice Expenditure and Employment in the United States, 2001 (Bureau of Justice Statistics, 2004), governments on the local level carry the bulk of justice system costs because police protection is primarily the responsibility of local communities. Some 59% of all justice system employees (1,357,153) are employed at the local level. (See Table 2.10.) In 2001, $50.7 billion, some 70% of all funds spent on police protection, came from county or municipal governments. (See Table 2.2.)

The Bureau of Justice Statistics reported in Prison and Jail Inmates at Midyear 2003 (May 2004) that between 1995 and 2003, the number of inmates in local jails rose from 507,044 to 691,301. (See Table 2.11.) The average annual increase in jail inmates from December 31, 1995, to June 30, 2003, was 4%. However, at the end of June 2003, local jails were operating at 6% below their rated capacity. Prison and Jail Inmates at Midyear 2003 also reported that local authorities supervised an additional 71,371 offenders in such alternative programs as work release, weekend reporting, electronic monitoring, and community service.

COSTS AND CONSEQUENCES

The costs of corrections for the United States have been rising in absolute terms, not simply as a reflection of a growing population. In the 1980–99 time period, the number of people held behind bars would have increased more than three-fold even if the U.S. population had remained unchanged. In 1980 some 139 people were in state and federal prisons for every 100,000 U.S. residents. By 2003 that ratio had increased to 482 people, according to Prisoners in 2003 (Bureau of Justice Statistics, November 2004). Justice Expenditure and Employment in the United States, 2001 (Bureau of Justice Statistics, 2004) reports that in 1982, correctional expenditures amounted to $39 for every man, woman, and child in the United States; by 2001 that cost had climbed to $200. During this period, the phenomenon of crime has increased in absolute terms, and more of the nation's resources have had to be expended on its consequences than in previous times.

Responses to rising costs have been variable and include some of the following:

Authorities have responded to budgetary pressures by crowding more people into available space and have thus caused increased crowding in correctional facilities. Crowding has been most serious in federal facilities, somewhat less so on average in state prison systems, and least in local jails, especially the smallest ones.

The number of adult correctional facilities increased from 1,464 in 1995, to 1,668 in 2000, according to

Census of State and Federal Correctional Facilities, 2000 (Bureau of Justice Statistics, 2003).

Privately run prisons and jails have been created on the theory that the private sector can do the job at lower cost. Because privately run prisons would be free of the bureaucracy and politics of state-run prisons, and not subject to mandatory use of unionized labor, it was believed they could be more cost effective than public prisons. So far, studies have shown mixed results, with some communities reporting great savings while others report no significant differences. A 1996 study by the U.S. Government Accounting Office, reported in Emerging Issues on Privatized Prisons (Washington, DC: Bureau of Justice Assistance, 2001), shows no clear evidence that privatization saves money. Despite the uncertainty, the privately run prison population has grown at a faster rate than the correctional population as a whole. At year-end in 2003, according to the Bureau of Justice Statistics (Prisoners in 2003), 95,522 prisoners were in privately operated facilities. (See Table 2.12.) Nationwide, some 6.5% of all prisoners are in privately run prisons, most in the South and West. The six states having at least 25% of their prison population housed in private prisons are New Mexico (44.2%), Alaska (30.6%), Montana (29.3%), Oklahoma (26.4%), and Wyoming (26.3%).