ARIZONA HOUSE OF REPRESENTATIVES
Forty-eighth Legislature – First Regular Session
Minutes of Meeting
House Hearing Room 1 -- 1:30 p.m.
Chairman Pearce called the meeting to order at 1:55 p.m. and attendance was noted by the secretary.
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Mr. Adams |
Mr. Kavanagh |
Mr. Rios P |
|
Mr. Biggs |
Mr. Lopes |
Mr. Schapira |
|
Mrs. Burges |
Ms. Lopez |
Mr. Weiers JP |
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Ms. Cajero Bedford |
Mr. Lujan |
Mrs. Groe, Vice-Chairman |
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Mr. Campbell CL |
Mrs. McLain |
Mr. Pearce, Chairman |
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Mr. Clark |
Mr. Murphy |
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Committee Action
H.B. 2038 – HELD H.B. 2051 – DP (16-0-0-1)
H.B. 2204 – DPA – S/E (17-0-0-0) H.C.R. 2008 – DPA (17-0-0-0)
Speakers Present
Elana Dawson, Majority Intern
Mike Huckins, Majority Research Analyst
Jennifer Daily, Lobbyist, Arizona Education Association
Ryan Peters, Majority Assistant Research Analyst
Representative Mark Anderson, Sponsor of H.C.R. 2008
Kim Cordes-Sween, Fiscal Analyst, Joint Legislative Budget Committee
Martin Lorenzo, Fiscal Analyst, Joint Legislative Budget Committee
Lorenzo Martinez, Senior Fiscal Analyst, Joint Legislative Budget Committee
Dora Schriro, Director, Arizona Department of Corrections
Tixoc Munoz, Corrections Officer, Lewis Complex, Arizona Department of Corrections
Leatta McLaughlin, Fiscal Analyst, Joint Legislative Budget Committee
Jake Corey, Fiscal Analyst, Joint Legislative Budget Committee
John Arnold, Director, School Facilities Board
(Names of persons who did not speak, pages 2 and 3)
CONSIDERATION OF BILLS
H.B. 2038, schools; substantial rapid decline – HELD
Chairman Pearce announced that H.B. 2038 will be held.
H.B. 2051, motorcycle safety fund – DO PASS
Vice-Chairman Groe moved that H.B. 2051 do pass.
Elana Dawson, Majority Intern, explained that H.B. 2051 removes the $150,000 cap from the Motorcycle Safety Fund (Summary, Attachment 1).
Chairman Pearce stated that this is a fee motorcyclists pay in addition to registration, which was capped in the past. The bill gives spending authority for the money dedicated to this cause. The fund was moved sometime back to the Governor’s Office of Highway Safety from the Motor Vehicle Division, which eliminated the need for one full-time equivalent and saved some money.
Question was called on the motion that H.B. 2051 do pass. The motion carried by a roll call vote of 16-0-0-1 (Attachment 2).
Names of persons in support of H.B. 2051:
Bryan Ginter, representing self
Paul Price, Arizona Confederation of Motorcycle Clubs
Bobbi Hartmann, Designated Lobbyist, American Brotherhood Aimed Towards Education
Name of person neutral on H.B. 2051:
Thomas Van Dorn, Detective-Attorney, Arizona Association of Chiefs of Police; Phoenix Police
H.B. 2204, appropriation; character education office – DO PASS AMENDED - S/E
S/E: character education office
Vice-Chairman Groe moved that H.B. 2204 do pass.
Vice-Chairman Groe moved that the three-page proposed Pearce S/E amendment to H.B. 2204 dated 1/22/2007 10:40 AM (Attachment 3) be adopted.
Mike Huckins, Majority
Research Analyst, explained that the proposed S/E amendment to
H.B. 2204 transfers responsibility for administering the character education
program to the Arizona Department of Education (ADE) from the K-12 Center at
Northern Arizona University (NAU), eliminates the annual cap of $1,500 on state
matching grants for character education and transfers any unspent character
education monies from NAU to ADE (Summary, Attachment 4; Proposed S/E
Amendment, Attachment 3).
Vice-Chairman Groe recognized persons in favor of the S/E amendment to H.B. 2204:
Tammy Linn, Arizona Department of Education
Christy Farley, Executive Director, Northern Arizona University
Vice-Chairman Groe recognized persons opposed to the S/E amendment to H.B. 2204:
Bryan Ginter, representing self
Michael Smith, Associate, Arizona School Administrators
Jennifer Daily, Lobbyist, Arizona Education Association, advised Mr. Lopes that she believes Michael Smith’s objection was to the bill as it was introduced. As far as she knows, everyone in the education community supports the S/E amendment, as well as the K-12 Center.
Question was called on the motion that the three-page proposed Pearce S/E amendment to H.B. 2204 dated 01/22/2007 10:40 AM (Attachment 3) be adopted. The motion carried.
Vice-Chairman Groe moved that H.B. 2204 as amended do pass. The motion carried by a roll call vote of 17-0-0-0 (Attachment 5).
H.C.R. 2008, school district expenditures; authorization – DO PASS AMENDED
Vice-Chairman Groe moved that H.C.R. 2008 do pass.
Vice-Chairman Groe moved that the two-line proposed Pearce amendment to H.C.R. 2008 dated 1/22/07 3:21 PM (Attachment 6) be adopted.
Ryan Peters, Majority Assistant Research Analyst, explained that H.C.R. 2008 allows expenditures in excess of the Constitutional aggregate expenditure limitation for FY 2006-2007 and is effective on final passage of the affirmative vote from two-thirds of each Legislative chamber (Summary, Attachment 7). The proposed amendment reflects a technical correction for the aggregate amount actually exceeded by the schools (Attachment 6).
Representative Mark Anderson, Sponsor, stated that this bill is very simple, important and necessary.
Question was called on the motion that the two-line proposed Pearce amendment to H.C.R. 2008 dated 1/22/07 3:21 PM (Attachment 6) be adopted. The motion carried.
Vice-Chairman Groe moved that H.C.R. 2008 as amended do pass. The motion carried by a roll call vote of 17-0-0-0 (Attachment 8).
PRESENTATIONS
Arizona Department of Corrections
Kim Cordes-Sween, Fiscal
Analyst, Joint Legislative Budget Committee, reviewed the Arizona Department
of Corrections (ADC) JLBC Baseline – Executive Comparison noting that the
Executive funds $14.2 million more in General Funds in 2007 and $87.2 million more
in 2008. She provided an overview of the FY 07 Bed Shortfall indicating that
the Executive proposes a
$14.1 million 2007 supplemental, of which $4.7 million is due to the bed
shortfall
(Attachment 9, Pages 1-6).
Martin Lorenzo, Fiscal Analyst, Joint Legislative Budget Committee, reviewed Bed Related Issues (Attachment 9, Page 7). He indicated to Mr. Biggs that the per diem rate increase to $65 is an assumption that ADC will no longer be able to contract for an additional 2,700 beds at the previous rate. He related to Mr. Lopes that there is a difference between JLBC ($0) and the Executive ($10.0 M) recommendations in start-up costs for 3,000 beds because it is currently unknown if ADC will be the successful bidder.
Chairman Pearce said there is an RFP process underway now, so it is presumptive to assume the cost since ADC may or may not be the successful bidder. If so, the cost will be negotiated.
Mr. Lorenzo reviewed Operational Issues, One-Time Adjustments, Other Fund Adjustments and Total Funds FY 2002-FY 2008 (Attachment 9, Pages 8-11). He noted that the handout contains the standard JLBC and Executive Comparison, which provides additional information on each of the issues discussed (Pages 12-14), and the last page indicates that ADC has not yet submitted the five-year strategic plan as required by statute. He indicated to Mrs. McLain that the five-year plan was due January 1, 2007 and ADC is currently working on it.
He advised Vice-Chairman Groe that
the only other report ADC has not submitted is the
FY 2005 operating costs per capita report that was due in July 2006, but should
be available by the end of the month.
Mr. Rios asked if the inmate growth of 2,344 in the last 12 months compared to 965 last year is due to better law enforcement, more crime, no plea bargains in Maricopa County or less inmates being released. Mr. Lorenzo answered that JLBC is attempting to determine what caused the increased population. Various factors are involved, including those he mentioned.
Chairman Pearce noted that Driving Under the Influence (DUI) enforcement was accelerated and there has been a focus on violent crimes and repeat offenders. He is also interested in knowing what populations are increasing.
Senator Rios noted that JLBC staff mentioned placing beds almost everywhere in some of the prisons and using tents. He is concerned about the safety of Corrections Officers (CO) and wondered if that was taken into account. Mr. Lorenzo responded that the 1,386 temporary beds ADC is in the middle of adding were not approved by JLBC or the Legislature. ADC may be able to answer how it affects the safety of COs.
Mr. Rios asked why beds were not contracted out perhaps to the jail district in Pinal County or somewhere else as opposed to tents. Chairman Pearce remarked that ADC does some contracting with counties; in fact, one of the counties recently wanted out of the contract and decided not to take inmates anymore, but Navajo County still does. Some inmates do well in very minimal security environments such as tents. Soldiers and Boy Scouts live in tents, and there is a huge cost savings to capital, but classification is important because the risk to COs and the public is always the first obligation.
Mr. Kavanagh asked for the
incarceration cost per inmate back to 2002 or even 10 years, corrected and not
corrected for inflation. Mr. Lorenzo agreed to provide the information, noting
that JLBC adds a marginal rate of approximately $3,500 per inmate housed in
state facilities. Those costs vary depending on whether an inmate is going to
the state population or will be absorbed in private or provisional beds;
however, he can provide specific figures for each.
Mr. Kavanagh requested an aggregate of both.
Lorenzo Martinez, Senior
Fiscal Analyst, Joint Legislative Budget Committee, explained to
Mr. Lopes that the AzNet charges in the handout are for the state’s telephone
system, which is currently transitioning. The telemedicine program is
administered by the University of Arizona (UA), which partners with many prison
sites to provide telemedicine services, so there may be a slight connection with
AzNet, but the majority of costs for telemedicine are separate.
When Mr. Lopes asked if telemedicine has fulfilled its potential and saved money in the health care system at ADC, Mr. Martinez said he believes the telemedicine program attempts to track savings that occurs as a result of using telemedicine in all of the areas it ventures into, including the prison system. He will follow-up to see if dollar amounts are available.
Dora Schriro, Director,
Arizona Department of Corrections, related that ADC regularly updates its
outcome results and posts the top ten accomplishments on the ADC Web page
(Attachment 10). The five-year strategic plan was submitted and is somewhere
between the ninth floor and being downloaded, but she can provide paper copies to
the Members.
Referring to a handout, she addressed Population Overview (Attachment 11, Pages 2-4). She stated that as ADC took in nearly 20,000 inmates in FY 2007, nearly 18,000 were released, which is an average 188 net increase on a monthly basis. Of the nearly 18,000 that were discharged, the average time served was 20 months. Four out of five will continue the sentence with three to six months on community supervision, but relatively short sentences, by and large, are being seen. A surprisingly large number are with ADC for less than six months. The statutes are set up so inmates serving less than a year go to the county jails and inmates serving more than a year go to ADC, but due to shock incarceration and DUI four-month mandatory to prison, coupled with probation revocation, ADC has a large number of inmates for a short time.
Chairman Pearce said it used to be a fairly good standard that anyone in excess of a year went to prison and anyone under a year went to the county jails. He suspects those are mainly DUIs who serve three months or less. Ms. Schriro answered that some of the DUI population that may have been kept in jail go to ADC with some time served, coupled again with some probation revocations through the court who are then sent to ADC for fairly short periods of stay.
Mr. Kavanagh noted that the pie chart shows 16 percent of parolees revoked, but he understands parole was abolished in Arizona. Ms. Schriro answered that ADC has a small number who are still eligible under the old code for parole, but the majority go to ADC having to serve 85 percent of the sentence in prison and 15 percent under community supervision, which she could not fit into the wedge; it is really community supervision. Chairman Pearce stated that it is not considered parole today, but there is a tail when inmates are released, and some still return.
Ms. Schriro stated that more inmates are entering ADC than leaving. A daily snapshot of the last month of the fiscal year and the last day of December 2006 shows that the majority of the population is still serving time for violent crimes, but a surprisingly large number of people are doing time for drug and property offenses. ADC regularly monitors changes in populations, and in FY 2006 when the 180-bed increase per month occurred, the largest of the five biggest reasons identified was a significant increase in commitment for Class 6 possession of drug paraphernalia. In the scheme of things, it is the lowest class of felony, but represents the largest increase in terms of population at ADC.
Ms. Schriro stated that she reported in the past that ADC had even larger numbers of technical revocations from probation, but counties that used to return inmates to ADC as technical for generally failing to comply with the conditions of supervision are now pursuing new charges for possession of paraphernalia, so maybe more funding and intervention in the community could save funding for state beds. Some of the other reasons are general drug possession commitments at Class 4, which are individuals with previous drug activity now being charged at a higher level. That may suggest the diminished impact of Proposition 200 several years ago, which afforded the opportunity for diversion to probation early in a criminal career concerning drug activity. There have also been increases in Class 6 felonies, notably shoplifting and possession of burglary tools, which seem to be closely connected to drug use, as well as a significant increase in Class 2 felonies, which are more serious, such as kidnapping, sexual conduct with minors, manslaughter, armed robbery and child molestation. The biggest shift is from Maricopa County because of the county’s population growth.
Chairman Pearce remarked that the percentages are in line with the population, so it looks like the counties are fairly consistent in sentencing schemes, i.e., Maricopa County is 65 percent plus of the population of the state, which is the percentage of population ADC is receiving from Maricopa County. Ms. Schriro offered to look at demographics in terms of the crime-prone population to see if it is also in line with the commitments.
Chairman Pearce suggested that maybe there should be a revisit of who goes to the county jail versus prison. Ms. Schriro stated that ADC would be glad to staff any exploration of the issue.
Chairman Pearce indicated that he believes in truth in sentencing and a lot of issues with the sentencing structure need to be revisited. Violent crime was on the rise, and he believes there has been a reduction in crime in the last few years because of tough sentencing policies throughout the nation. Ms. Schriro commented that there have also been many advances in technology. Senator Jim Waring and former Representative Laura Knaperek, in particular, explored other methods of managing certain types of offenders, particularly those on probation. With DUIs, for example, technology now has a breathalyzer as part of the apparatus, which is very useful.
Ms. Schriro stated that as a
result of the unprecedented growth, ADC has been attempting to manage the
population by adding beds wherever possible in existing facilities, not only
state facilities, but private facilities with which ADC has long-term contracts
in Arizona
(Attachment 11, Page 5). ADC is in the process of creating an additional 1,386
beds, of which 666 are on-line, and the rest are expected to open as close to
March 1, 2007 as possible.
Chairman Pearce noticed that ADC requested $1.6 million for unbudgeted temporary beds and renovations and questioned how much has been spent and what happens if the Legislature does not back it. Ms. Schriro responded that ADC has a statutory and constitutional obligation to house that population, which is done primarily by adding beds to existing facilities, both public and private. In some instances, tent beds are also added, so the $1.6 million is for durable goods, such as the cots or beds, whether it is adding additional single beds or double bunking single beds, as well as the footings and additional tents. The Executive handout contains a breakdown showing the costs associated with managing that extra population (Attachment 12).
Chairman Pearce noted that the money is not budgeted and he is concerned that an unforeseen emergency was created for the Legislature to provide funding. Ms. Schriro noted that ADC requested to be funded at a rate of 160 inmates per month, but the Legislature provided funding at a rate of 100 inmates per month. ADC does not have the authority to turn people away, so she is managing the population to the best of her ability.
Chairman Pearce remarked that for years, ADC ignored a statutory provision to privatize the women’s prison with 3,000 beds, which was modified last year to allow ADC to build, and in the Special Session 2,000 beds were funded, 1,000 public and 1,000 private. Public safety is a number one priority and the Legislature will probably do whatever can be done to make sure there is enough space for people sent to prison. He asked if she has a backup plan if that funding is not provided. Ms. Schriro answered that she will continue to manage as best as possible. She knew going into this year that ADC was about $17 million short due to underfunding of the pay plan as was acknowledged by JLBC in previous presentations, but there is still a shortage at the end of the year. She believes an exceptionally good job of managing has been done within existing resources, especially in light of the population.
Mr. Weiers conveyed that he, former Representative John Allen and Mr. Murphy visited Perryville Prison and saw a building with a gas leak underneath and a building with roof damage from a water leak, both of which could not be used. He asked if those were repaired and if beds were placed in the buildings. Ms. Schriro said those repairs were made and all of the available space is being utilized.
Ms. Schriro stated that in
addition to creating temporary beds, ADC is also seeking money through the
Executive request to increase provisional beds by bringing 1,000 on-line in
July 2007 and an additional 1,000 in September 2007, and beyond that, to fund
the rate increase for replacement provisional beds. Regarding the increased
per diem rate, the contracts in Newton, Texas and Reeves, Texas were cancelled
by the providers who entered into contracts with other jurisdictions willing to
pay a higher rate. ADC continues to explore the availability and cost of beds,
and based on current conversations with providers, the cost to replace those
beds will be about $65 per bed per day. An RFP was issued and the responses
are being evaluated, so she will soon know the actual cost.
Chairman Pearce asked if the higher cost is partly due to lack of capacity because California contracted for private beds. Ms. Schriro stated that California has had some impact, but actually had a large retreat from the number of beds being procured because of state issues that are being worked out in court. The bulk of the increase in available utilization is because of Immigration and Customs Enforcement (ICE) procuring more beds, and other states are looking for interim measures as well.
Ms. Schriro stated that ADC also
has a contract in Watonga, Oklahoma that expires
June 30, 2007, so in order to be positioned, hopefully, to stay there or place
those beds at another location, it is included in the possible anticipated rate
increase. Additionally, as noted by JLBC, there is a plan to evaluate a number
of existing prison sites for future expansion. The request by the Executive to
be funded out of Other Monies will actually be appropriated to the Arizona
Department of Administration (ADOA) and the estimate of $2 million is ADOA’s
estimate of the cost to procure the services of architects and engineers to
ascertain current costs to build out various locations. Finally, monies are
requested for ADC to continue to participate in the 3,000-bed competitive bid
process.
Mr. Kavanagh noted that $600,000 will be provided to prepare the bid and $10 million if ADC wins the bid to set up the beds. He asked if the $10 million expense will be added into ADC’s bid or be separate. Ms. Schriro acknowledged that any of the monies spent for development and delivery will be included in the per diem.
Ms. Schriro reviewed the CO Series Pay Plan, noting that as a result of the pay plan that started on July 1, 2006 ADC is now attracting and filling vacancies at a rate of about 50 per month, which is a net increase (Attachment 11, Page 6). There are still 390 vacancies, but that is a marked improvement. It should take the better part of 2007 to fill the vacancies. The goal is to have a vacancy rate no worse than the average statewide vacancy rate. She stated that initiatives that attributed to the positive outcomes, besides the CO series pay plan, are CORP Return to Work, ADC veterans eligibility for new GI Bill benefits, an accelerated employment process, expanded advertising, RUSH revised, an employee incentive plan and expansion of the van pool (Attachment 11, Page 7).
When Chairman Pearce asked how successful CORP Return to Work has been, Ms. Schriro advised that everyone eligible was contacted, but the results so far are modest as about 15 people returned to work. She asked for consideration to expand the window for an additional year because from talking to people, it has been discovered that it is easier to keep someone who is currently with ADC rather than having a break in service and returning, during which time many are engaging with others.
She related that by substantially accelerating the employment process a bonafide offer can be made to an applicant in a week. The background check and physical have been accelerated so those are completed before the person goes to the Correctional Officer Training Academy (COTA), so the only thing left is whether or not the person successfully graduates from COTA. Since COTA starts every Monday, the applicant can begin training the next week. The van pool has also been helpful in holding on to and attracting employees.
Ms. Schriro stated that Sergeants, Lieutenants and Captains who total 930 across the facilities, are experiencing considerable disparity in comparison to colleagues even after the appreciable increase approved last year (Attachment 11, Page 8). Also, the disparity is particularly pronounced within the agency where two-thirds of the COs earn more than Sergeants, greater than half the Sergeants earn more than the Lieutenants, and Lieutenants earn 42 percent more than Captains, which creates a huge disincentive for promotion (Attachment 11, Page 9). As the population continues to grow and people reach retirement, it is critical to not only groom next year’s managers, but to create the financial opportunity for promotion.
Vice-Chairman Groe asked if long-tenured Lieutenants, Sergeants and Captains are leaving because of retirement issues or going to other law enforcement agencies. Ms. Schriro answered that exit interviews are conducted. Some are early retirement and others are just leaving, but in most cases do not stop working, but go to work for other colleagues, which pay significantly more for the same responsibilities.
Mrs. Groe asked if any mention is given to overtime issues, hours or the salary. Ms. Schriro answered that salary was the case last year, particularly with line staff. Those who move into a supervisory position recognize they are responsible for more people and more time, so she does not believe that is the issue for them as much as it is for line staff. Overtime has been more challenging in terms of how to manage and motivate subordinates to stay and progress their careers at ADC.
Vice-Chairman Groe stated that concern was expressed in past hearings that ADC was promoting people that do not have the skills or time on the job necessary to fulfill a supervisory position. Ms. Schriro said because of the rate of attrition and vacancies in all positions, the average years of service has dropped over time prior to promotion; however, she believes all of the individuals in supervisory positions are well qualified.
Ms. Schriro stated that a number of legislative initiatives were established to enhance sanctions and expand supervision strategies for sex offenders who make up a significant percentage of the ADC population, and even those who serve longer sentences will eventually be discharged (Attachment 11, Page 10). Research indicates that treatment, coupled with effective post-release supervision, is the best way to ensure that the public is protected from recidivism, so ADC is seeking a modest increase for sex offender treatment in order to not be so far behind with the large number of felons who warrant some fairly intensive intervention before discharge.
Chairman Pearce asked if a breakdown is available on sex offender recidivism according to classification Levels 1, 2 or 3 returning to the community with treatment and without treatment. Ms. Schriro said most of the studies she has seen are broken down by the type of sex offense, not the level, but she could try to do that.
Chairman Pearce remarked that there is no statewide standard for sex offender classifications, which is left up to communities, so a person could be a Level 1 in Mesa but a Level 2 somewhere else, which is inappropriate and could possibly be fixed statutorily.
Ms. Schriro related to Mr.
Kavanagh that recidivism is defined as re-offending after three years. Some
studies go further, but the typical benchmark is three years. Mr. Kavanagh asked
for a comparison of recidivism rates between those who receive treatment and
those who do not.
Ms. Schriro agreed, noting that the handout refers to those who receive treatment.
Chairman Pearce indicated that if
someone has not re-offended in 10 years, chances are that person will not re-offend.
He asked the rate of sex offenders re-offending after 10 years.
Ms. Schriro said she does not know, but will get back to him.
Vice-Chairman Groe asked for information regarding the definition of intensive treatment, the cost for each part of the program, and the time an inmate spends in intensive treatment.
Ms. Schriro stated that ADC is striving to fully engage the population in a combination of school work and treatment so inmates are prepared for release (Attachment 11, Page 11). Three out of four has a documented need for substance intervention. ADC is seeing a large increase in inmates who use and abuse drugs, particularly methamphetamine, and research suggests that this population would benefit from a more particularized kind of modality. Some early studies are showing improvements, not only in drug use reduction, but recidivism. ADC wants to start a modest pilot program that would target inmates who are methamphetamine abusers.
Mr. Weiers noted that Maricopa County has had incredible results with a fairly new program, which he encouraged Ms. Shriro to contact the county about.
Ms. Schriro stated that the Executive request contains $4 million for vehicle replacement for vehicles in the fleet with extraordinary years of service and remarkable numbers of miles (Attachment 11, Page 12). Most are involved in customer transportation, so she is concerned about keeping the vehicles on the street exposed to breakdowns and the difficulties that would present for local law enforcement. The six vans are the last of the vans to transport ADC staff. There is also an Executive request for $2.5 million for replacement equipment, which includes essential items like control panels for control rooms, metal detectors, etc. She reviewed the Supplemental Budget for FY 2007 in relation to creating 1,386 temporary beds for rapid growth (Attachment 11, Page 13). She and Chairman Pearce discussed the request for four additional security posts.
Ms. Schriro stated that the rest
of the supplemental budget is for the bed plan in relation to bid preparation
for the competitive RFP, utilities and health care inflation. She indicated to
Mr. Lopes that ADC has telemedicine at all of the complexes, which is partly
attributed to the $6.3 million savings in health care that was achieved last
year, so it does make a difference and reduces transports out of facilities.
Mr. Weiers noted that the buildings at Perryville Prison are quite a distance from each other, so 15-seat cage vans used for prisoner transportation are used to transport people between the buildings. A prisoner drove up in the van, and he and other people got in the back, while the prisoner got in the front and drove, which was very odd.
Mr. Kavanagh remarked that he is
very sympathetic to the need for increases, which all ranks need. He was in
the Police Department in New York, but is surprised in looking at the salaries
of Maricopa, Pima and Pinal counties that there is an unbelievable spread
between the COs and Captains. In New York, Sergeants make about 20 to 25
percent more than the policemen, Lieutenants another 15 percent, and Captains
10 percent on top of that, so there is about a
50 percent difference between the policemen and Captains, while these other
agencies literally have 100 percent. He asked what ADC is aiming for. Ms. Schriro
answered that she worked in New York City Corrections for a number of years,
but this is normal for Arizona. The primary goal this year is to achieve
equity in ADC and then alleviate some of the disparity between ADC and the
counties.
Mr. Kavanagh speculated that the money is not being divvied out in a very fair manner. Chairman Pearce said all of the agencies have their own funding scheme, but sometimes the upper level positions have a lot of internal discretion, and the difference is sometimes amazing.
Mr. Campbell requested the ethnic breakdown of the inmate population, inmates who abuse methamphetamine and the correctional supervisors. Ms. Schriro indicated that the ethnic breakdown of the population is available on the ADC Web site on a document called Corrections At A Glance, but she will provide the rest of the information.
Mr. Adams recognized that Ms. Schriro has a difficult job at a very important department and expressed appreciation for the work she does. He asked for a copy of ADC’s internal report on a recent incident in the Florence Prison where an apparent classification error resulted in the death of an inmate. Ms. Schriro stated that the report is 40 pages and she would be glad to make copies available by the end of the day.
Mr. Rios stated that the CO pay package for the past fiscal year was partially funded by overtime and compensatory pay. He asked if using that money causes difficulty in paying overtime and comp time. Ms. Schriro replied that is the reason for the shortfall this year. ADC was underfunded the pay increase by about $17 million and the current shortfall is about $14 million, so it was possible to overcome some of that shortfall, but there is still a deficit. There is no request in the budget for overtime and comp pay for COs.
Mr. Murphy surmised that the disparity and underpayment of the upper positions could be solved by changing the priority of how each position is paid using available resources. Ms. Schriro contended that ADC does not have the ability to solve the problem without the Legislature’s assistance. Personal monies are spent within the allocation and compensation is awarded to staff being hired or promoted in keeping with ADOA personnel rules, so within those constraints, monies are used to the best of their ability. The large disparity can only be corrected through an infusion of new money. The alternative would be to begin hiring new CO IIs at a lower salary, which would completely defeat the purpose of the pay plan to attract people by offering competitive salaries.
Mr. Murphy said he understands that, but the Legislature does not set salaries for the various positions. Ms. Schriro replied that ADOA approves the pay ranges and sets the mid points for each of the positions.
Mr. Murphy noted that every year an adjustment is made to raise salaries to attract new COs, but every other agency, Maricopa County in particular, immediately raises salaries too, so ADC will never catch up. He asked how ADC can become competitive. Ms. Schriro responded that everything possible is being done to recruit and retain, and also to recognize the staff. It is the intrinsic job satisfaction that primarily causes people to remain at ADC. For example, the opportunity to work with crime victims that no one else in law enforcement does and to achieve long-term outcomes for the state by the work that is done with the population. However, when a good faith effort is not made to keep abreast of the others, the horrific vacancies that were experienced prior to the pay plan are experienced.
Mr. Murphy stated that he appreciates the very difficult job of COs and hopes the resources can be provided to pay COs what they are worth.
Mr. Kavanagh indicated that if ADC receives the $6.2 million, he would like to know the salaries for those three positions.
Tixoc Munoz, Corrections Officer, Lewis Complex, Arizona Department of Corrections, testified that salaries between CO IIs and Sergeants are unbelievable. He makes $3 more per hour than the Sergeant that supervises him and is responsible for 1,000 inmates and 65 officers. In some cases, he makes $1.50 more per hour than the Lieutenants and the same money as a Captain who is responsible for 105 officers plus more than 1,000 inmates. He probably would not accept a promotion to Sergeant because he would have $3.00 per hour deducted from his salary.
Chairman Pearce stated that a similar problem existed in the Sheriff’s Office and it is a policy issue. He asked why there is not an automatic increase when someone is promoted.
Mr. Munoz replied that can be fixed if the Legislature would implement a pay plan with step plans for years. When someone promotes to a supervisory position such as Sergeant, that person does not receive pay increases except one time at seven percent out of the base pay. COs who work at Lewis Complex receive a stipend, which Sergeants do not receive.
Chairman Pearce remarked that is a problem, but he is not so sure it cannot be fixed internally. He does not believe legislation is necessary to have a policy that it is a step up for someone to take on additional responsibility, but a pay plan approved by ADOA, which has the ability to set a policy allowing the Director to guarantee a pay raise within that range. Ms. Schriro advised that she went to ADOA and sought approval, so funding is needed to implement the changes that were approved.
Chairman Pearce said that is not the issue; some adjustments are needed. Ms. Schriro stated that JLBC and Executive staff met on this and perhaps should get together to demonstrate why all of the available dollars have been allocated. Chairman Pearce stated that he would like to be involved in addressing the problem.
School Facilities Board
Vice-Chairman Groe assumed the Chair.
Leatta McLaughlin, Fiscal
Analyst, Joint Legislative Budget Committee, reviewed the School Facilities
Board (SFB) Programs, FY 2008 General Fund Amounts, JLBC Baseline Adds
$120 M for New Construction, Executive Proposes $399 M for New Construction,
New School Facilities Funding History – FY 2008 Continues Cash Financing
Enacted in FY 2006 (Represents General Contribution–not actual spending), Other
Executive New Construction Proposals and New Construction Lease-Purchase and
Debt Service Costs (Attachment 13,
Pages 1-8).
Jake Corey, Fiscal Analyst, Joint Legislative Budget Committee, reviewed the Long Term Impact of Debt Financing New School Construction, SFB New Construction Expenditures (Continue to Cash Finance vs. Lease-Purchase Financing) at 6% Interest and at 5% Interest, SFB New Construction Outstanding Debt Under Lease-Purchase Financing and the Long-Term New Construction Debt Service as a Percentage of General Fund Expenditures – 5% vs. 6% Over 30 Years (Attachment 13, Pages 9-14).
Chairman Pearce resumed the Chair.
Vice-Chairman Groe asked what is
owed in debt service payments now with the creative financing that was used in
the past. Mr. Corey replied that in terms of new construction, SFB has about
$800 million in outstanding debt, which does not include interest over the long
term. As far as interest on that, since it is from the agreements entered into
from 2003-2005, it is generating about 4.25 or 4.50 percent rates. Interest
rates over the last few years have been at a historical level, so projecting in
the future is difficult, which is the reason for the scenarios using 5 and 6
percent. The 6 percent is used because it is fairly close to the 10-year
average for
10-year treasury bonds, and currently, when the SFB borrows money, the interest
rate incurred is about equal to those. The 5 percent scenario is closer to
what SFB is borrowing at now.
Ms. McLaughlin reviewed Building Renewal Funding (Attachment 13, Page 15).
Mrs. McLain, referring to the 12.2 percent inflation factor, asked why it is so high when inflation has been much lower in the last few years. Ms. McLaughlin answered that is the inflation adjustment adopted at the JLBC meeting in October 2006.
Ms. Lopez stated that she serves on JLBC, which has been considering increasing the per square footage funding that has been way underfunded so that the state has gotten way behind in looking at not only the regular inflation rate but the construction inflation rate, which is much higher than the inflation rate for other areas. Even 12.2 percent is still below what it should have been. The problem that has created is schools are built that are not appropriate for a learning environment.
Ms. McLaughlin reviewed Building Renewal Formula Changes, Building Renewal Lawsuit, Building Renewal Funding History–Total Funding Provided = $712.5 M GF, SFB Total Funds FY 2002–FY 2008 (Attachment 13, Pages 16-18). She noted that a comparison document of the JLBC and Executive budgets appears on Pages 19 and 20, followed by the SFB’s five-year strategic plan.
Vice-Chairman Groe said she noticed in the past presentation from JLBC in regard to ADC that there was additional money for leap year operation and asked if that is addressed in this budget. Mr. Corey answered that the little he knows about the ADC budget is that part of the projection on how much the cost will be is the cost per bed per day. The way the SFB process works is that the agency approves most of the new school construction in the spring, but meets once a month, so it really does not depend upon the number of days per year. SFB then looks at making adjustments throughout the year if the school districts come back in, but in terms of building new schools and maintaining the schools, he does not see any issue like that.
John Arnold, Director, School Facilities Board, commended Ms. McLaughlin and Mr. Corey for doing a terrific job. He noted that the Members were provided with a handout prepared by the Governor’s Office of Strategic Planning & Budgeting (OSPB) that details the differences between the JLBC and Executive budgets (Attachment 14).
Mr. Arnold related that SFB has 15
people and manages a $600 million per year program. Every school district is
assigned a liaison who is a technical building construction professional to
help with building renewal, develop new construction plans, make sure new
schools are built according to standards and within budget, help with
preventative maintenance plans, inspect every school district in the state at
least once every five years, conduct preventative maintenance inspections and a
host of other things for 228 school districts. Four of these people cover the
entire state and are dreadfully overworked. In addition, construction
inflation in Arizona has been dramatic over the last few years. When Students
FIRST began, school districts were awarded a formula amount, SFB would tell
them to build the school and when it was done, SFB would look at it. A few
years ago, districts started saying there was not enough money in the formula
to build the school and more money is needed over the formula. Money over the
formula is state money, so SFB has an additional responsibility to provide
oversight for that money, and therefore, does a more thorough review of the
plans. School districts still go out and do the design, hire the contractor
and negotiate the price for the contractor, but the information is taken to SFB
to make sure it is market price. Since June 2006, those four people reviewed
13 projects that were over the formula amount and on average were able to
reduce the price
8.4 percent or $860,000 per project, which is a direct savings to the General
Fund of
$11.2 million; however, this takes a tremendous amount of time away from their
other responsibilities, so he is asking for two more people to improve on and
continue that effort.
Mr. Arnold stated that last year, the Legislature and Executive agreed to fund voluntary full-day kindergarten for school districts in the state and funded the maintenance and operations side, but not the capital side.
Chairman Pearce interjected that an agreement was reached between the Legislature and the ninth floor that if the school district chose to move forward on that proposal, the school district would fund the capital expenses.
Mr. Arnold stated that most school districts have been able to implement full-day kindergarten over the last year; however, low-wealth districts that are growing and did not have excess space have had to sacrifice other programs or have larger class sizes to bring in full-day kindergarten, and those are the districts that need it.
Mr. Rios remarked that some school districts in his county are growing very fast and want to provide the best education for young people, and full-day kindergarten is something many young families and people want. Those school districts were not part of that deal.
Chairman Pearce submitted that the school districts did not have to go forward with all-day kindergarten. The school districts were provided with funds and were told how it could be used, and if it was used to expand all-day kindergarten, the school districts would need to assume the capital expenses. He believes it is written in the law. He and Mr. Rios agreed to discuss the issue later.
Mr. Arnold said another area the SFB would like to address is energy efficiency (Attachment 15, Page 4). Over the next 20 years, based on population projections from the University of Arizona (UA), the SFB will build between 600 and 700 new schools. Current state laws are fairly good on requiring state buildings, including schools, to be energy efficient, but a better job can be done; therefore, what SFB asked and what the Governor recommends is increasing the funding formula by 5 percent and dedicating that money for energy efficient items. SFB would analyze each project and use the funding in the best way possible. Potential energy upgrades include Energy Management Control System, efficient HVAC, light sensors/duel switching and CMU furring, which, based on a 100,000 square foot school, can improve the energy efficiency approximately 34 percent. That is a tremendous amount of savings for 600 or 700 schools over the next 20 to 50 years.
Mr. Arnold reviewed new school construction statistics to date. He clarified that the SFB budget is growing from $250 million last year to the request of $450 million this year because other revenue sources over past years will be gone in FY 2008, the bulk of which are lease-to-own proceeds that were issued in 2003, 2004 and 2005, so those other revenue sources will have to be replaced with cash. The total expenditure has only grown about 12 percent, which is consistent with inflation (Attachment 15, Page 5).
Regarding Lease-To-Own
(Attachment 15, Pages 6-7), he reviewed a 20-year outlook that suggests the
cost of the program will stay well ahead of the cost of debt service, assuming
that it is done year after year, which as far as he knows, no one is suggesting
right now. Some benefits are that long-term users pay for the asset. A school
will be around for 50 to 75 years. The people who live in Arizona today build
and pay for the school and lease-to-own allows the state to spread some of the
cost from the current taxpayer base onto people who move to Arizona
20 or 30 years from now.
Chairman Pearce indicated that there is an assumption that everything will be really good down the road, but priorities change every day, and when there is the capacity to pay cash, to go into debt is absolutely fiscally irresponsible. To step away from that to spend the money elsewhere on a socialist program is irresponsible to the taxpayers of the state.
Mr. Rios remarked that he supports the lease-purchase position because he wants to use some of that money to expedite freeway and highway construction. If that is a socialist program, then so be it.
Chairman Pearce indicated that there is another plan to do that. One of the few areas debt makes sense is probably in freeway construction because of the cost of right-of-way acquisition, etc., but it does not make sense to mortgage his home every year, which is what would happen with this.
Mr. Arnold stated that school construction should not be viewed as an operating cost; it is a capital expenditure. SFB is expanding scholastic infrastructure by about 60 percent over the next 20 years and is going to buy 600 to 700 new schools, which should be viewed as a single asset the same way as transportation infrastructure, a sewer infrastructure, etc. This is a scholastic infrastructure. He does not see the difference, and all those other capital infrastructures are generally paid through capital funds. He added that the market is very unusual this year. The cost of financing is less than the cost of inflation. The real cost of money is more than the cost of financing, which has to do with the unusual economic conditions in Arizona. The state is growing like gangbusters, the construction market is overtapped, construction inflation has gone ballistic and is well above national inflation.
Mr. Clark said he appreciates that, but asked when that has held true for a 20-year period. He is worried that lease-to-own will be like full-day kindergarten where there are some more expenses that were not anticipated. Mr. Arnold said he would not suggest those conditions will hold through the next 20 years and the projections SFB put together do not sustain that; it is the condition the state is in now.
Mr. Arnold referred to
assumptions relating to the cost of the new construction program (Attachment
15, Page 8). JLBC assumed a population growth rate of 2 percent and 3 percent
for inflation. SFB worked it between 2000 and 2006 when the growth rate in Arizona
was
3.37 percent and inflation on construction has been 4.92 percent for a combined
rate of
8.92 percent, while the Executive’s projection for the out years used 7.79
percent. The hope is that growth does not sustain itself at 3.37 percent, but will
taper off a bit over time. He brings that up because JLBC suggests that by
2040, 33 years from now, the cost of the new construction program will be $1.7
billion per year on the 5 percent growth rate. Using 7.79 percent, it is
$4.5 billion per year, so he believes the real cost of new construction is
going to be significantly higher than JLBC predicted.
Mr. Rios noted that Mr. Arnold requested a few additional FTEs and gave good information about how much money people in those positions saved the state, which he hopes everyone will consider. Chairman Pearce stated that he listened very carefully to that and would like some more discussion because the Legislature has an obligation to save money where it makes sense, and he believes it is worth entertaining.
Without objection, the meeting adjourned at 4:51 p.m.
________________________________
Linda Taylor, Committee Secretary
February 5, 2007
(Original minutes, attachments, and tape are on file in the Office of the Chief Clerk.)
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COMMITTEE ON APPROPRIATIONS
16
January 24, 2007
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