The Department of Corrections has been reducing Pennsylvania’s state prison population, but corrections costs continue to rise, with much of that due to personnel costs.
Of the department’s requested increase in funding – nearly $190 million – for Fiscal Year 2016-17, $73.7 million are for pension costs, $24 million for employee benefits and approximately $51.8 million for contracted pay increases, Corrections Secretary John Wetzel told the Senate Appropriations Committee during his agency’s budget hearing.
“We’ve got the prison population going in the right direction now, but the costs aren’t going down,” said Senate Judiciary Committee Majority Chairman Stewart Greenleaf, R-Montgomery.
There were 49,914 inmates in the state system at the end of December 2015, with Gov. Tom Wolf’s FY2016-17 budget proposal assuming that population will decline to 49,587 during the next year. According to the department, the current inmate population hasn’t been this low since March 2009.
Picking up on that in Wetzel’s written testimony, Sen. Kim Ward, R-Westmoreland, noted the inmate population might be as low as it was in 2009, but the department’s budget is over $800 million more now than it was in 2009.
“That’s salary and benefits,” responded Wetzel.
“Bottom line on our budget: generally when you look at increases, it’s personnel costs,” Wetzel explained. “With the caveat … that the investment we make in our staff is important. We don’t want to be a state that is not competitive, and does not get the best and the brightest, because this is a very difficult job.”
He said his department’s pension costs have grown by 772 percent over the last 10 years, something over which both he and senators acknowledged he has little control.
However, the pension situation isn’t going to diminish anytime soon, given that payments toward the state’s massive unfunded pension liability won’t decline for the next couple of decades. But the expectation is they won’t continue to increase for much longer, assuming another recession doesn’t hit like in 2008-09.
“Pension costs are a significant piece, but pension costs are going to level off … in the next few years,” said Senate Appropriations Committee Majority Chairman Pat Browne, R-Lehigh, later adding that Senate Republican efforts at pension reform seek to reduce the risk of those pension costs “escalating again.”
So if pension costs level off, and workers’ compensation costs can be kept in line, “it’s purely management of personnel,” said Browne about future department costs as Corrections and the Board of Probation and Parole are merged, as anticipated by the Wolf administration. The administration expects the effort to produce about $10 million in savings.
“We obviously know that the most important component of this endeavor is to improve the system of corrections [and] probation and parole in the commonwealth, and offer the best system for public safety of our citizens,” said Browne, but he qualified that by saying state officials still need to come up with a plan to “balance our books and still meet our obligations.”
“For us to communicate to our constituents that what we’re doing is necessary, and the financial decisions we’re making are necessary, we at least have to have some confidence that the personnel management decisions within the department are things that are being made because that’s the way we need to make them, there’s no other way to make them and still meet our obligations,” Browne cautioned Wetzel.
Senators and Wetzel both identified personnel management – specifically the use of overtime – as needing improvement, which could eventually help to relieve some of the department’s cost pressures.
“It doesn’t provide much confidence to us when there are seven people in the department, as reported to us, that earned $100,000 of overtime last year,” said Browne. “Is that necessary? I don’t know.”
Wetzel argued overtime costs only marginally more, about $1.50 per hour, than regular pay, and it accounts for about 5 to 6 percent of the department’s total personnel expenditures.
Wetzel also explained a recent hiring freeze didn’t help the overtime situation, nor did the agreement the department reached regarding the way it now handles mentally-ill inmates.
“Overtime last year peaked at slightly over $100 million, and if you look at our overtime over a cycle, you can see any time we do a hiring freeze … you’ll see a peak in our overtime,” explained Wetzel. He later clarified overtime costs were $105 million for FY2014-15, they’re expected to be $96 million for the current year, and $90 million for FY2016-17.
“The end of the 2013-14 budget we had about a six-month hiring freeze in order to make it through 2014 on budget,” he said.
“Last year, and now it’s coming down this year, a combination of the hiring freeze and, at the same time, you’ll remember around … the summer of 2014 is when we made the agreement for our mentally-ill inmates, increasing the out-of-cell time for seriously mentally-ill inmates, and that requires us to increase staff costs,” said Wetzel.
“The way we delivered that [the agreement] quickly was to do it through overtime,” he said.
Wetzel also noted about 360 individuals (out of nearly 10,000 security staff system-wide) are currently out of work, on disability leave of one form or another, which provide increased pressure for overtime.
A 2012 audit by the Office of Auditor General suggested one way to reduce overtime is to hire more corrections personnel.
The department’s personnel shortage has improved since the end of the hiring freeze, from between 800 and 900 officer vacancies following the hiring freeze to, currently, 300, said Wetzel, and he agreed more work needs to be done, but he was cautious about promising additional hires.
“If we would significantly reduce overtime and significantly increase staff, I just hope we’re not back here next year and the questions are ‘why do you have so many staff, when you had less staff before?’” said Wetzel.
He said some overtime is “good,” such as when it’s used for unscheduled, short-term employee absences. Even if the vacancies were entirely eliminated, there are still those out on disability leave, Wetzel noted.
“One of the things we’re working on, that will hopefully give us a better blueprint for when overtime makes more sense is an overtime optimization initiative” the department is working to employ, said Wetzel.
“It suggests to you where the break-even point is,” said Wetzel, noting the use of it at one state facility did suggest additional hires could save $1 million a year. Wetzel did caution, though, that it takes nine months before new hires can actually count toward the state’s complement of corrections personnel.
“So when we hire people, it pays off the next year, and I think that’s what’s reflective of overtime going down this year from the hires we made last year,” Wetzel said.
But beyond the dollars and cents of the situation, senators cautioned too much overtime could burn out corrections officers, potentially creating safety problems.
Wetzel said overtime worked last year by each staff member worked out to about one shift per pay period, but he agreed that no one wins with too much overtime.
“Too much overtime for a staff member is certainly not good, and we haven’t struck a good balance with that yet,” said Wetzel.