Audit: N.M. private-prison costs soar

New Mexico pays significantly more than nearby states to house inmates in private prisons, according to a report presented Wednesday to state lawmakers.

The 100-page audit by a Legislative Finance Committee review team says New Mexico's private-prison spending rose 57 percent in the past six years, while the inmate population increased only 21 percent.

"Business decisions across two administrations may result in New Mexico paying an estimated $34 million more than it should pay for private prison construction costs," the report says.

But Corrections Secretary Joe Williams defended the private prisons, saying the higher operating costs are justified.

The major private prison operator in the state is The GEO Group, which operates facilities in Hobbs and Santa Rosa and will operate a prison being built in Clayton.

GEO, formerly known as Wackenhut, was brought in to manage private prisons by former Gov. Gary Johnson and has been embraced by Gov. Bill Richardson.

New Mexico pays nearly $69 a day per inmate at the private prison in Hobbs and more than $70 at the prison in Santa Rosa.

In Texas, the cost is $34.66 a day. Colorado pays $50.28 a day for inmates at private prisons. In Oklahoma, the rate is $41.23. Other states listed in the study include Idaho, $42.30, and Montana, $54.58.

The LFC recommends New Mexico restructure its contracts with GEO for the existing facilities.

On the bright side, the report noted the state's contract for GEO's Clayton facility will have a more equitable fee structure. If the Hobbs and Santa Rosa contracts were renegotiated to conform with the Clayton deal, the state could save nearly $5 million a year, the report says.

Williams said Wednesday that his department will do his best to comply with the LFC's recommendations and plans to meet soon with private contractors to discuss proposed changes.

But Williams, who worked for Wackenhut before becoming secretary, said New Mexico's private-prison costs can't be compared with those in neighboring states. He said this state's inmates have more space, more programs and more security. Williams also said labor costs are higher here, driving up the cost of building prisons.

Williams denied the large amount of political contributions from GEO to Richardson and other state politicians is related to New Mexico paying more than other states for private prisons.

According to the Institute on Money in State Politics, Richardson received in excess of $42,000 from GEO, which is more than the corporation gave to any other politician nationwide running for state office in 2006. GEO also has contributed the maximum amount allowed to Richardson's presidential campaign while individual GEO executives gave another $9,000 to the campaign.

The company gave other New Mexico politicians nearly $80,000 in the last election, according to the institute's latest available figures.

The Corrections Department's official response to the audit said the state should be proud of the fact New Mexico depends on private prisons more than other states do. More than 40 percent of the state's prison population is in private facilities. The total inmate population in the state was 6,544 as of Wednesday.

"Instead of looking at the use of privatization in such a negative manner, New Mexico should be proud that we are leading the nation and that it is working so well," the department's response says.

New Mexico has paid for services it hasn't received from private prison companies, the report says. For instance, in 2004 the state required GEO to provide four mental-health staffers for a sex-offender unit. The company billed the state more than $300,000 for the positions. However the company did not hire new staff until 2005.

In general, the report says the state's approach to prison planning and construction is not in the taxpayer's best interests. The Corrections Department "lacks active long-term planning to accommodate inmate growth, leading to a disjointed approach to acquiring bed space that proves costly."

The report also says the Corrections Department needs better oversight to contain medical costs and to ensure adequate health care. The department recently terminated its contract with Wexford Health Services, which has been criticized for the quality of inmate health care. Williams said the state has recovered about $160,000 from Wexford for staffing shortages and improper billings.

The state is negotiating with Correctional Medical Systems, a St. Louis company, to take over the Wexford contract.

Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com