The key to any savings initiative would be to have per diem rates appropriately benchmarked based on the specific security levels of the inmates being housed. Also, it would be important that the per diem rates being compared account for the same portfolio of services such as transportation and health care. A carefully executed contract, with costs allocated appropriately, would be the primary driver of whether a partnership with a third-party vendor could achieve savings.
The fiscal year 2011-12 MDOC budget includes $47.9 for the "Cost-Effective Housing Initiative", which requires the Department to explore alternative housing arrangements, such as through public-private partnerships, privately owned facilities, or third-party contractors operating State-owned facilities. The appropriated amount would fund up to 1,750 beds at a per diem rate of $75. As demonstrated above, a per diem of $75 would represent savings if it were associated with higher-security prisoners, but would lead to a net cost increase if it were for lower-security prisoners.
Fiscal Analyst: Dan O'Connor
Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. 877/1112