Crossroads Correctional Center

Crossroads Correctional Center outside Shelby is operated by CoreCivic, a private prison contractor.

Negotiations between the state and a private prison operator to give the state back about $34 million to help with budget woes have fallen through.

The idea for some sort of deal between the state and CoreCivic, which the state pays to run the private prison in Shelby, was hatched right before the start of the November special session of the Legislature.

Republican state lawmakers proposed that Gov. Steve Bullock, a Democrat, agree to extend CoreCivic’s contract to run the prison beyond its expiration next July in exchange for CoreCivic giving the state about $34 million. That's the amount Montana has paid into a use-fee account that could be tapped if the state chooses to buy the prison at some point.

The issue arose during the special session, which was called to address what was then an anticipated $227 million shortfall in the state budget due to lower-than-expected revenues and the most expensive fire season in state history. Democrats called the move an attempt by Republicans to tie the governor's hands. Republicans said they were simply presenting options to offset budget cuts.

Though emails showed a stalled deal between Bullock and CoreCivic during the special session, the governor's staff said in November they didn't see wisdom in extending the contract because criminal justice reforms might one day make the prison's roughly 500 beds unnecessary.

Budget Director Dan Villa and Reginald Michael, director of the Department of Corrections, traveled to Nashville, Tennessee, on Tuesday to meet with CoreCivic representatives.

The state’s first offer, which was rejected, was to pay $63 per prisoner per day through June 2021 in exchange for $34.1 million from CoreCivic.

The state also asked for CoreCivic to pay for two full-time employees that would provide treatment to prisoners addicted to methamphetamine, two employees to teach vocational education programs, and one to teach family and parenting skills. The state also asked for human rights training to take place quarterly for prison staff.

Villa said those requests were “to get parity between programs offered at Montana State Prison and at Shelby.”

The final offer made by the state was for $69 per prisoner a day to get $32.3 million from the use-fee account and the state would pay for the additional programming and training.

CoreCivic’s final offer, Villa said, was $72.14 a day, with a later bump to $75.58 a day to get $35.7 million for the state.

Villa said it didn’t make sense for the state to pay that high of a rate, especially when the rates to other social services providers were slashed during efforts to balance the budget last year. 

He added he felt the state made a “very fair offer” and said even without a deal, the Department of Corrections will work to address getting more treatment options for prisoners housed at Shelby.

“Building in a provider-rate increase for one private prison provider in Shelby before we even entertain the conversation of what our mental health (and) disability provider rates will look like next session is something we clearly cannot accept,” Villa said.

The state pays $109 per prisoner per day at Montana State Prison in Deer Lodge, but Villa said costs are higher there because it has a 24/7 infirmary and houses the neediest patients in addition to offering more treatment programs. The state’s offers to CoreCivic were also on par with what the state pays counties to house its prisoners, Villa said.

What’s not clear is what the failed negotiations now could mean for 2019, when the state’s contract with CoreCivic expires. Options range from the state ending the contract, continuing it, or buying the prison with the user-fee account as it was originally set up for. Even if the state bought the prison, it could still be operated by a third party.

Villa said the state is done negotiating with CoreCivic at this point on any sort of deal to access the money in the user-fee account, but will revisit the issue in advance of the end of the contract in 2019.

“At this point I hope they come back to us with a reasonable offer. If not, there are certainly other private prison operators who would be interested. There may be nonprofits who would like to get into that line of work,” Villa said. “We certainly can’t let 500-plus bad guys just roam around the streets of Montana, so we will work toward a solution.”

During the November special session, Republicans didn’t outright set up a scenario where money from CoreCivic was required to balance the budget. But they did pass a bill that called for the first $15 million from a deal with the company going to replenish the state's fire fund and the rest used at the governor’s discretion for patching up agency budgets that were slashed to help balance the budget.

Villa said Thursday there’s $40 million in the fire fund and that the account would be made whole by additional transfers from the state general fund if required. That was set up under another piece of legislation during the special session. The state’s share of firefighting costs from last year was $74.2 million

CoreCivic managing director of communications Steven Owen said Thursday he feels there's still a way to find “common ground.”

“Discussions focused on CoreCivic making a one-time payment to the State of Montana, increasing staff wages and enhancing existing inmate programming to further help offenders successfully re-enter society. CoreCivic fully supports each of these three critical objectives. To that end, our most recent offer during negotiations was to provide a $35.7 million one-time payment, increase officer wages by 11.5 percent, expand sex offender and vocational education programs while only increasing the per diem rate by 4.2 percent," Owen said in an emailed statement.

"We at CoreCivic always believe there is a way to find common ground and after negotiations ended we expressed our continued commitment to work with Montana policy makers to find a path forward.”

Rep. Rob Cook, R-Conrad, said in a phone call Thursday that the CoreCivic offer was fair and the state should have accepted.

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“I’m disappointed that the governor didn’t take it,” he said.

The money that would have immediately become available to the state under the company’s offer would have helped “relieve some of the pressure” on the Department of Public Health and Human Services, Cook said. That agency is the largest in state government.

The $49 million cut to the health department's budget during the special session, as well as earlier reductions, is prompting the state to consolidate offices of public assistance and drastically scale back spending on mental health services and targeted case management. That decline in state support has caused some operations, like a women’s housing and treatment center in Billings, to close their doors.

“And let’s be truthful here, these cuts are disproportionately rural,” Cook said.

Cook said the cuts have meant that some of his constituents now have to drive to Great Falls for mental health or other services.

“The closest we get to that is 60 miles,” he said. Other towns in his district are farther from the urban center.

Cook’s district, House District 18, covers Shelby, where the CoreCivic prison is located.

Sen. Llew Jones, R-Conrad, said that if the governor had accepted the company’s offer, it would have made a significant difference for Department of Public Health and Human Services operations.

“Life-changing, in some areas,” he said.

Jones, who chairs the Senate Finance and Claims Committee, said he was encouraged to see that the state and CoreCivic were communicating.

“I don’t see this as as much of a failure as a beginning,” he said. “They’re now at least speaking again.”

As for 2019, when the current contract expires, Jones said he hoped the state would do its part to negotiate a fair deal. Otherwise the private prison company could simply walk away, leaving the state in a difficult position.

“And say, ‘Fine, boys, we’re not operating for this,'” Jones said, channeling what the prison company might say to state officials next year. “'Find a home for 700 people. See ya.'”

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State Bureau reporter for The Independent Record.

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