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Public Safety & Corrections
Corrections Services

¹Plus $11,949,000 tied to issuance of Louisiana Correctional Facilities Corporation Lease Revenue Refunding Bonds, Series 2002.

Corrections Bond Refinancing

• As mentioned above, $11.9 million in funding for 259 positions in Probation and Parole will be realized due to a reduction in debt service if the Louisiana Correctional Facilities Corporation can complete a sale of Corporation Lease Revenue Refunding Bonds in FY03.
   
• The bond sale was approved by the State Bond Commission on June 20, 2002.
   
• As of the August meeting of the Joint Legislative Committee on the Budget, Corrections indicated the Department was having trouble obtaining insurance for the bonds. Thus, they have not yet been issued.
    
• When the bonds are finally issued, a BA-7 will be submitted to the Joint Legislative Committee on the Budget for approval of the funds and associated T.O. of 259 positions for Probation and Parole.
   
• The situation creating the need to issue this bond sale is a complex one.
    
• The Department liquidated two unused parcels of land belonging to the Louisiana Correctional Facilities Corporation for the purpose of using the funds to match federal grant money for prison construction and maintenance. These two parcels of land are part of an original bond issuance in 1986 (refinanced in 1993), which included a total of five parcels of land. Correctional facilities were built on three of the five parcels, which has left the two parcels in question. Corrections currently leases these parcels, (one in Union Parish, one in East Carroll Parish), for agricultural purposes and uses the proceeds to offset lease payments made to the Correctional Facilities Corporation.
   
• The Louisiana Correctional Facilities Corporation sought to issue revenue refunding bonds not to exceed $45 million for the purposes of defeasing the bonds issued in 1993, thus allowing the two vacant parcels of land to be freed from their current status as security for the bonds. This refunding allowed for the defeasance of the 1993 bonds by paying the costs of issuance of the bonds and funding an escrow fund, and including any bond insurance policy premium and any debt service reserve policy. This refunding increased debt service for Corrections because the 1993 bonds cannot be prepaid. The additional debt service time period has been set at five years beyond the original term of the 1993 bonds, to 2008. Corrections will repay the debt service on the refunded bonds from rental payments made to the Louisiana Correctional Facilities Corporation. This action will effectively reduce the annual debt service payments from $17 million to $5 million, thus freeing up approximately $12 million to be used to fund the Probation and Parole positions mentioned above.
   
• Corrections anticipates the sale of the two vacant parcels of land will bring approximately $3 million. This money will be used to match federal funds at approximately a 10:1 rate, thus bringing in about $30 million in federal grant money. This money will be used for a variety of Corrections projects, particularly the skilled nursing component at Elayn Hunt Correctional Center. It should be noted that the federal VOITIS (Violent Offender Incarceration Truth In Sentencing) funds Corrections seeks to match will expire in two years, thus the necessity of the Department obtaining liquid funds as soon as possible.
   

Inmate Population

• As of April 2002, Louisiana had approximately 35,840 adult inmates. Of this total, 19,964 were being held in state facilities and 15,873 were being held in local jails.
• Sheriffs' Housing of State Inmates will no longer be in the Department of Corrections budget from FY03 onward (It has been moved to Schedule 20 - Other Requirements by the Division of Administration). The program was appropriated $144,921,284 in HB1 for FY03. This amount is approximately $8.7 million under-funded due to the fact that projected population decreases from sentencing reform legislation passed during the 2001 Regular Legislative Session has yet to be realized. This funding was not restored during deliberation on HB1, although $472,949 extra was appropriated for 71 work-release beds at the Lafayette Community Correctional Center.
   

• Approximately $16.8 million was provided in FY02 for a pay raise for prison guards and probation and parole officers. This pay raise has been annualized for FY03, plus additional money for merit increases for FY03.

Background on Swanson Correctional Center for Youth - Madison Parish Unit (formerly Tallulah Correctional Center for Youth)
  

• The Louisiana Department of Corrections took over operation of Swanson-Madison on Sept. 25, 1999, after several years of allegedly incompetent management by the private management company, investigations by the U.S. Department of Justice, and negative public outcry about conditions at the institution. The facility had first opened its doors in 1994.
    
• In FY 01, the Legislature reduced the appropriation for Swanson-Madison by $400,000, which eliminated funding for inflation on debt service payments (Total FY 01 budget - $20 m.). In FY 02, the Legislature reduced the appropriation for Swanson-Madison by $1 million. For FY 03, the budget for Swanson-Madison was held at its FY 02 level prior to the $1 million cut (Total FY 03 budget - $17.2 m.).
    
• It currently costs the state $115.49 a day to house a juvenile offender at Swanson-Madison. Of that total, $23.19 is spent to cover lease payments for the facility, and $92.30 is spent for operational costs.
    
• As of May 30, 2002, there were 371 juvenile offenders housed at Swanson-Madison.
    
• The debt service paid on Swanson-Madison by the state is approximately $3.2 million per year. The debt service on the facility was refinanced in 1997 at $32 million for 20 years. Corrections indicates that approximately $26 million is in reserve on this refinancing. If the state were to buy the facility outright at $26 million, Corrections estimates it would cost the state $2 million a year, which is $1.2 million less than the current annual debt service payment.

• During the 2002 Regular Legislative Session, the situation involving Swanson Correctional Center for Youth - Madison Parish (formerly the Tallulah Correctional Center for Youth) Unit was the cause of much debate on both sides of the Capitol.
    
• In the House Appropriations Committee, approximately $17.2 million for Swanson-Madison was cut from HB1, and transferred to another portion of the Office of Youth Development's budget. Under the House Appropriations Committee plan, the $17.2 million was to be used for relocation expenses for the juvenile offenders housed at Swanson-Madison. During action on the House floor, however, this money was restored to Swanson-Madison to be used for housing juvenile offenders. The capacity at Swanson-Madison is 408 juvenile offenders, although the facility is rarely filled to capacity.
    
• Once HB1 crossed over to the Senate, the Finance Committee considered re-cutting Swanson-Madison from HB1, but ultimately rejected the idea largely due to differing reports on how long it would take the Department of Corrections to safely relocate the juvenile offenders currently in Swanson-Madison (some scenarios called for temporarily relocating some of the juveniles into segregated areas of adult facilities, an act which could invite scrutiny by the Federal government); whether or not Corrections would need to build new cell blocks at existing institutions; and whether or not juveniles currently housed in other state facilities would need to be moved to make room for transferees from Swanson-Madison.
    
• Another complication in the ongoing deliberation concerning Swanson-Madison was the threat from some rating agencies to lower the state's bond rating if it failed to appropriate funds for Swanson-Madison. Most of this controversy is based upon a clause in the contract between the Department of Corrections and the Town of Tallulah and Trans-American Development Associates, Inc. This clause seems to indicate the contract for the facility could be terminated if the Legislature ceases its funding. The rating agencies maintain that the state should honor its contractual obligations, even if the contract for the Tallulah facility is regarded as a "bad deal" for the state by some, because the debt service on the facility would still be outstanding, leaving the bonding agencies and insurers holding the bag. The rating agencies have threatened to lower the state's bond rating if the Tallulah contract is terminated.