Abracadabra, presto, chango
Richard Krupp, Ph.D.
December 10, 2010
J. Clark Kelso, Federal Receiver for corrections in California, in the December 10, 2010 Sacramento Bee editorial, “Time to split up corrections department” came up with a magic formula to help with the state budget problems. Evidently, “The big money is not in waste, fraud or abuse (to be clear, more can be done to reduce waste, fraud and abuse in CDCR, but the magnitude of these savings would hardly make a dent in our general fund deficit).” The solution proposed includes; Spin off health care and parole, education, vocational, and other programs while squashing the juvenile function at the state level.
The Receiver’s office might want to look in the mirror when it comes to waste, fraud, and abuse. Three recent audit reports present some important facts:
California Prison Health Care Receivership Corporation: Use of State Funds for Fiscal Year 2007–08, Office of the Inspector General, June 2009.
- The receivership spent 154 percent more in fiscal year 2007–08 than in fiscal year 2006–07. This increase was primarily due to increased spending for the receivership’s expanding construction projects and associated consulting services.
- The receivership also spent $745,772 on legal services during the year.
- For fiscal year 2007–08, the receivership paid Maxor National Services Corporation (Maxor) $7.1 million to help improve the department’s prison pharmacy system.
Lost Opportunities for Savings within California Prison Pharmacies, Office of the Inspector General, April 2010.
- Contrary to expectation, there are almost no procedures for identifying and restocking medications. This managerial void costs taxpayers at least $7.7 million, and very likely close to $20 million, every year.
- CDCR spends more than two times the amount that the Federal Bureau of Prisons spends per inmate per day on medications, and more than three times the amount spent by the Texas Department of Corrections.
- In reviewing data for approximately 111,000 inmates in July, August and September of 2009, we found that 65 percent or 73,000 inmates received 403,000 prescribed medications. These 73,000 inmates averaged 5.5 prescriptions per inmate. Given the amount of money and the number of prescriptions involved, the potential for waste is significant.
- From 2000 to 2008, CDCR more than doubled its spending on inmates’ medications, yet the total inmate population increased only seven percent at its peak.
- Health care providers write prescriptions for many items that are not included on the formulary because they have limited medical necessity. Items such as sunscreen, fish oil, vitamin E, and cough drops.
- When staff allowed the auto-reorder system to place an order at one men’s prison, they received birth control pills; pharmacy staff who used the auto-reorder function at another men’s prison noted that they received a shipment of vaginal estrogen tablets.
California Prison Health Care Services: Improper Contracting Decisions and Poor Internal Controls, Bureau of State Audits, January 2009.
- The Means Used by Prison Health Services to Acquire the IT Goods and Services Violated Legal Requirements and Bypassed Internal Controls.
- Prison Health Services’ Staff Incorrectly Determined That They Could Completely Avoid Competitive Bidding Requirements When Acquiring Needed Goods and Services for a Proposed IT Network.
- Prison Health Services Violated Legal Requirements and Bypassed Internal Control Procedures in the Way It Used Purchase Orders.
- Prison Health Services’ Work Environment Discouraged Staff from Raising Concerns About Contracting.
Before applying off-the-cuff solutions to poorly defined problems, it would be wise to have input from knowledgeable corrections professionals. Splitting and spinning are more likely to introduce a number of unintended consequences that will drive up costs and reduce any ability to manage a very complex correctional system. Much of the fiscal bloating can be attributed to wasteful spending for inmate medical care and drug treatment programs. A cavalier attitude about fraud and waste by executive staff tends to filter down to line staff and create a cascading mess.