Al Doc State Financial Audit June 2006
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Report on the Department of Corrections State of Alabama Montgomery, Alabama October 1, 2003 through September 30, 2006 Filed: June 1, 2007 Department of Examiners of Public Accounts 50 North Ripley Street, Room 3201 P.O. Box 302251 Montgomery, Alabama 36130-2251 Website: www.examiners.state.al.us Ronald L. Jones, Chief Examiner 07-295 Table of Contents Page Report to the Chief Examiner Exhibit #1 A Schedule of Cash Receipts, Disbursements and Balances General Fund 1 Exhibit #2 Officials 2 Exhibit #3 Board Members – Alabama Corrections Institution Finance Authority 3 ___________________________________________ Department of Corrections State of Alabama State of Alabama Department of Examiners of Public Accounts Ronald L. Jones Chief Examiner P.O. Box 302251, Montgomery, AL 36130-2251 50 North Ripley Street, Room 3201 Montgomery, Alabama 36104-3833 Telephone (334) 242-9200 FAX (334) 242-1775 Honorable Ronald L. Jones Chief Examiner of Public Accounts Montgomery, Alabama 36130 Dear Sir: Under the authority of the Code of Alabama 1975, Section 41-5-14, we submit this report on the Department of Corrections, State of Alabama, for the period October 1, 2003 through September 30, 2006. SCOPE AND OBJECTIVE This report encompasses an examination of the Department of Corrections (the “Department”). The objective of the examination was to determine whether the Department was in compliance with applicable laws and regulations of the State of Alabama. CONTENTS OF REPORT This report includes the following components: 1. Report to the Chief Examiner – contains information pertaining to the function or purpose of the Department, Department operations, state legal compliance, and other matters. 2. Financial Information – contains financial information for the Department that was derived from accounting records maintained by the State Comptroller’s Office (Exhibit 1). 3. Other Information – contains information pertaining to the Department Officials and Board Members of the Alabama Corrections Institution Finance Authority (Exhibits 2 and 3). COMMENTS The Department of Corrections was established by the Code of Alabama 1975, Sections 14-1-1 through 14-1-18. The Department is under the independent direction, supervision and control of a Commissioner of Corrections, who is appointed by and serves at the pleasure of the Governor. The Commissioner is required to devote full-time to his official position. Before entering upon the duties of office he is required to take the constitutional oath of office and execute to the State of Alabama a bond to be approved by the Governor for the faithful performance of his duties. 07-295 A The Commissioner has the authority to appoint no more than three deputy commissioners, who shall serve at his pleasure, and to define their duties. Their salaries are set by the Commissioner but cannot exceed the salary paid to the Commissioner. The Code of Alabama 1975, Section 14-1-15, states that all duties, responsibilities, authority, power, assets, liabilities, property, funds, appropriations, contractual rights and obligations, property rights and personnel, whether accruing or vested, by operation or law, which were previously vested in the Board of Corrections under the Code of Alabama 1975, Section 14-1-1 through 14-1-12, are hereby vested in the Governor of the State of Alabama. This includes the operation of a system of diversified prison industries, maintenance of necessary records on prisons and inmates, provisions for apprehension of escaped convicts, and responsibility for clothing and travel expenses for discharged convicts. The Department currently operates the following correctional facilities: Correctional Institutions Work Release Centers Out-of-State Facilities Bibb Correctional Facility Bullock Correctional Facility Davis Correctional Facility (*) Donaldson Correctional Facility Draper Correctional Facility Easterling Correctional Facility Elmore Correctional Center Fountain Correctional Facility Frank Lee Youth Center Hamilton A & I Holman Correctional Facility Kilby Correctional Facility Limestone Correctional Facility Red Eagle Honor Farm St. Clair Correctional Facility State Cattle Ranch Staton Correctional Facility Tutwiler Prison For Women Ventress Correctional Facility Alex City Work Release Atmore Work Release Birmingham Work Release Camden Work Release Childersburg Work Release Decatur Work Release Elba Work Release Hamilton Work Release Loxley Work Release Mobile Work Release S. Louisiana Correctional Center Pine Prairie Corrections Community Work Centers Pre-Release Center Childersburg Community Work Center Loxley Community Work Center Childersburg Boot Camp Montgomery Pre-Release Center (*) The Fountain Correctional Facility handles administrative duties for the Davis Facility. The Montgomery Work Release became a Pre-Release Facility on June 12, 2006. The Bullock Work Release Center closed July 31, 2006. 07-295 B The following is the inmate population in Alabama State prisons at September 30: Year Population 2006 2005 2004 23,642 23,874 23,756 The Department operates from the following funds, which are maintained in the State Treasury: • Fund 101 General Fund – used to account for the Department’s general operations. • Fund 382 Special Revenue – used to account for the Department’s operations not paid by the General Fund appropriations. • Fund 432 Corrections Industries/Industrial Revolving Fund – used to account for the Department’s industries operations. • Fund 533 Drug Demand Reduction Fund – used to account for all penalties pursuant to Division 7, Demand Reduction Assessment Act, the Code of Alabama 1975, Section 13A-12-280. • Fund 923 Corrections Farms – used to account for all farm operations. The audited financial information of the Department is included in the basic financial statements contained in the State of Alabama’s Comprehensive Annual Financial Reports. This information is presented in a separate column for the Department with the exception of the General Fund, Prisoner’s Money on Deposit (PMOD) and the Institutional Canteen Funds. The receipts and disbursements for the General Fund are presented in Exhibit 1 and receipts and disbursements for the Institutional Canteen and PMOD funds are presented below for the 2003-2004 and 2004-2005 fiscal years, from information furnished by the Department. Fiscal Year Fund Receipts 2005 2004 2005 2004 PMOD – 807 PMOD – 807 Canteen – 816 Canteen – 816 $25,841,194.98 $25,868,280.23 $15,166,898.09 $14,252,777.41 Disbursements $25,940,129.84 $26,446,270.75 $10,123,125.33 (1) $ 9,487,134.10 (2) (1) $3,687,636 of this amount consists of profit distributions to the Department. The Canteen Fund had a profit of $1,356,137 that was transferred to the Institutional Contingency Fund. (2) $3,574,233 of this amount consists of profit distributions to the Department. The Canteen Fund had a profit of $1,191,410 that was transferred to the Institutional Contingency Fund. 07-295 C Bank accounts are maintained by correctional facilities throughout the state to account for nonoperating funds. Five funds are maintained at the major institutions and four funds are maintained at the work release centers. These bank accounts are as follows: • Prisoner’s Money on Deposit (PMOD) – These funds represent money owned by individual inmates. The Department of Corrections holds and administers this money during the inmate’s incarceration. • Institutional Contingency Fund (ICF) – These funds were established and are maintained for the benefit of the inmate population at each of its facilities. Receipts to this fund are from canteen profits, interest earned on inmate funds and various other sources. • Institutional Revolving Fund – The funds in these bank accounts are petty cash funds that are used to pay discharge and transportation expenses to inmates upon their release. • Institutional General Fund – These funds represent money received from various sources including: work release salary commissions, transportation fees, meal receipts, rent revenue, utility receipts, and other miscellaneous income. • Institutional Canteen Fund (major institutions only) – These funds are used to account for sales from each institution’s canteen. The canteens are used exclusively by inmates. The Department owned approximately 22,000 acres of land at September 30, 2006. Additionally, the Department owned nonconsumable personal property recorded at $34,360,247 at September 30, 2006. This property consists of office furniture, office equipment, computer equipment, communications equipment, medical equipment, weapons, kitchen equipment, automobiles, trucks and other equipment. We compared the nonconsumable personal property in the custody of the Department with the property records maintained by the Property Inventory Control Division of the State Auditor’s Office. No discrepancies were noted. The Department had consumable inventory recorded at a cost of $2,693,319 at September 30, 2006. This inventory consists of food, clothing and other miscellaneous items. A comparison was made between the records of land held by the Department of Corrections and the land records maintained by the Department of Conservation. Numerous differences were noted between the two listings. It appears as though significant progress has been made in the efforts to reconcile the two agencies’ records. The Department of Corrections and the Department of Conservation are currently working together to resolve these differences. 07-295 D The Department of Corrections was a defendant in several lawsuits related to healthcare for prisoners at specific locations. These lawsuits had significant implications for the entire Department of Corrections and all of its facilities. The case Laube v. Campbell was filed on August 20, 2002 and resulted in a settlement agreement entered into in June 2004. This lawsuit cited conditions, medical care and mental health treatment at Tutwiler Prison for Women and the Birmingham Work Release Center. A settlement agreement was entered into in June 2004 and is being monitored by Dr. Bob Greifinger from New York and Dr. Jacqueline Feldman from the University of Alabama Birmingham. This case is still pending in the U. S. District Court, Middle District of Alabama (Judge Myron Thompson). The case Leatherwood v. Campbell was filed on November 21, 2002 on behalf of all HIV-positive inmates at Limestone Correctional Facility. This case resulted in a settlement agreement entered into in April 2004 and the Court appointed a monitor, Dr. Joseph Bick of California. Dr. Bick made his final visit to the Limestone Correctional Facility in November 2006. This case has been settled. The case Baker v. Campbell was filed on May 13, 2003. This was a class action lawsuit where the plaintiffs were all inmates incarcerated at the St. Clair Correctional Facility. The Department entered into a settlement agreement, which was approved by the Court on August 31, 2004. The Court appointed a Court monitor, Dr. John Robertson from New Mexico, who conducted his final review in May 2006 and the settlement agreement was concluded on June 30, 2006. Another case, Gaddis v. Campbell was pending in 2003 when the Naphcare contract was cancelled; however, this case has been settled. Several other cases involving healthcare where the Department and Naphcare were named as plaintiffs are also in the process of being settled. Alabama Corrections Institution Finance Authority The Alabama Corrections Institution Finance Authority was created by the Legislature in 1965 with authorization to issue up to $10 million in bonds, acquire land for and construct certain prison facilities, and to dispose of the Kilby Prison Property. When the last of its bonds were paid out in 1981, its active responsibilities ceased. With the passage of Act Number 85-125 of the first Special Session of 1985, the Legislature reactivated the Alabama Corrections Institution Finance Authority. The Board of Directors of the Authority consists of the Governor, the Commissioner of Corrections, the Director of Finance, the Lieutenant Governor and the Attorney General. The State Treasurer serves as custodian of funds for the Authority, but is not a board member. The Governor serves as President; the Commissioner of Corrections serves as Vice-President; the Director of Finance serves as Secretary and the State Treasurer serves as Authority Treasurer. Performance Based Budgeting Documented below are the Department’s actions taken to meet the key goals, objectives and performance indicators included in the General Fund appropriation Acts 2000-408, 2003-437, and 2004-562. 07-295 E Goal I – To develop, in conjunction with the Legislature and the Governor, a performance based budget. Objective – To develop meaningful, pragmatic and measurable goals and objectives for the total appropriations from the State General Fund to the Department of Corrections (DOC). Performance Indicator 1. Goals, objectives and performance indicators for the Department of Corrections’ total appropriation from the State General Fund will be submitted by the Commissioner of the Department of Corrections to the Joint Legislative Committee on Finances and Budgets by October 1st of the respective fiscal year. Actions Taken – The Department of Corrections prepared a performance-based budget to be submitted to the Joint Legislative Committee on Finances and Budgets for the 2003-2004, 2004-2005 and 2005-2006 fiscal years. The Department also implemented SMART planning and budgeting for the 2005-2006 fiscal year. Goal II – To maintain a constitutional corrections system. Objective – To maintain a constitutional corrections system by safely and securely incarcerating inmates committed to the Department. Performance Indicators 1. The Department of Corrections will implement a new comprehensive inmate medical contract with increased mental healthcare. Actions Taken – The Department of Corrections entered into a medical services contract with MHM Correctional Services, Inc. for increased mental healthcare for inmates. The contract covers the period from November 3, 2003 through October 31, 2006 which may be extended for two additional one year terms. 2. The Department of Corrections will implement uniform policies and procedures throughout all state correctional facilities. Actions Taken – The Department of Corrections has developed administrative regulations that are implemented throughout all correctional facilities operated by the Department. Goal III – To provide safe confinement of convicted offenders. Objective – To foster a safe and drug free correctional environment. 07-295 F Performance Indicators 1. The Department of Corrections will provide ongoing seminars and guest lectures concerning preventive measures for drug abuse and complete healthcare, both physical and mental. Actions Taken – The Department of Corrections has several drug abuse programs to assist inmates. Physical healthcare was also conducted by the Department. Correctional Officers and support staff were provided advanced mental healthcare training on a regular basis by the Department. 2. The Department of Corrections will continue to inspect and conduct maintenance on sprinkler systems and kitchen hood systems. Actions Taken – Five facilities were selected for review. Three of the five facilities did not have kitchen hood inspections performed and two facilities did not have sprinkler/extinguisher inspections performed for one or more of the fiscal years examined. Goal IV – To provide treatment and rehabilitative opportunities. Objective – To provide an environment that enables positive behavior changes. Performance Indicators 1. The Department of Corrections will provide opportunities for inmates to participation in “Faith Based Honor Dorms” and “Employment and Transition Programs”. Actions Taken – The Department of Corrections has “Faith Based Honor Dorms” that are available to all qualifying inmates. The Department also offers “Employment and Transition Programs” for inmates 25 years old and younger through the Youthful Offenders Grant. 2. The Department of Corrections will transfer more inmates into the work release program. Actions Taken – The Department of Corrections transferred 1,991 new inmates into the work release program in fiscal year 2004. 3. The Department of Corrections will increase the number of inmates employed by Correctional Industries and Agriculture. Actions Taken – Correctional Agriculture had 405 inmates employed at the end of fiscal year 2003 and 700 inmates employed at the end of fiscal year 2004. This is an increase of 295 inmates. Correctional Agriculture decreased the number of inmates employed from 700 in fiscal year 2004 to 449 in fiscal year 2005, a decrease of 251 inmates. Correctional Industries had 768 inmates employed at the end of fiscal year 2003 and 771 inmates employed at the end of fiscal year 2004. This is an increase of 3 inmates. Correctional Industries also decreased the number of inmates employed from 771 in fiscal year 2004 to 695 in fiscal year 2005, a decrease of 76 inmates. 07-295 G 4. The Department of Corrections will provide more basic educational programs to increase educational levels. Actions Taken – The Department of Corrections offers adult and vocational education courses through the Department of Postsecondary Education to increase the inmates’ educational level. Goal V – To maintain management of convicted offenders. Objective – To provide executive leadership, policy development and departmental administrative support. Performance Indicators 1. The Department of Corrections will preserve its administrative regulations. Actions Taken – The Department of Corrections has preserved its administrative regulations. 2. The Department of Corrections will increase the number of grants received. Actions Taken – The Department of Corrections received eleven grants in fiscal year 2003 and ten grants in fiscal year 2004, a decrease of one grant. 3. The Department of Corrections will inspect and monitor the correctional facilities. Actions Taken – Three facilities were sampled. Each facility sampled was subjected to various inspection and monitoring procedures. One facility did not provide inspection reports for fiscal year 2004. Goal VI – To continue low cost of operations. Objective – To operate the Department in a cost efficient and effective manner. Performance Indicators 1. The Department of Corrections will increase the number of counties participating and receiving reimbursement funds for Community Corrections Programs. Actions Taken – The Department of Corrections had 20 counties participating in the Community Corrections Programs in fiscal year 2003 and 22 participating in fiscal year 2004, an increase of two counties. There were 23 counties participating in the Community Corrections Program in fiscal year 2005, an increase of one county from the total that participated in fiscal year 2004. 07-295 H 2. The Department of Corrections will conduct financial internal audits of all institutions and work release facilities for compliance with state and departmental financial reporting requirements. Actions Taken – The Department of Corrections conducted internal financial audits of each facility for compliance with state and departmental financial reporting requirements. Goal VII – To recruit, hire, train and retain employees. Objective – To recruit, hire, train and retain employees to maintain adequate staffing at all facilities and divisions. Performance Indicators 1. The Department of Corrections will participate in job fairs to recruit Correctional Officers. Actions Taken – The Department of Corrections has conducted job fairs to recruit correctional officers during fiscal years 2004 and 2005. 2. The Department of Corrections will increase the number of applicants taking the Correctional Officer I exam. Actions Taken – The Department of Corrections conducts various job fairs to increase the number of applicants taking the Correctional Officer I exam. 3. The Department of Corrections will provide advanced training to officers and support personnel. Actions Taken – Two Regional Training Centers were reviewed. reviewed provided advanced training to officers and support personnel. Each center Goal VIII – To develop Statewide Community Corrections Program. Objective – To develop Statewide Community Corrections Program to ensure public safety and awareness. Performance Indicators 1. The Department of Corrections will present information to the Governor, Legislature and general public via periodic reports in pursuit of safety in the community. Actions Taken – The Department of Corrections has not prepared periodic reports to present to the Governor, Legislature and general public. 07-295 I 2. The Department of Corrections will establish a taskforce of community leaders and wardens to discuss the communities’ concerns about ensuring safety and possible ways to provide meaningful work and treatment opportunities. Actions Taken – The Department of Corrections has not established a taskforce of community leaders and wardens to discuss the communities concerns about ensuring safety and possible ways to provide meaningful work and treatment opportunities. However, the Commissioner and Director of Community Corrections perform various speaking engagements to promote the program. FINDINGS AND RECOMMENDATIONS Finding We reviewed the internal control policies and procedures affecting the ability of the Department to provide appropriate security for computer data and programs through the proper use of security software features and management policies. Computer data and programs are at risk of loss and corruption through error or intentional acts. The Department does not change its mainframe passwords on a regular basis nor do they have appropriate management policies to maintain proper segregation of duties between programmers and the system administrator. Also, the Department test new applications on live operating data which runs the risk of losing data. According to Department of Corrections' personnel, they will convert to State of Alabama’s Central Accounting System, AFNS in 2007. Also, a new internet-based system will be implemented in October 2007. These two systems should eliminate the internal control problems listed above. Recommendation The Department should change passwords on a regular basis to ensure access is only granted to authorized users, that duties are properly segregated in order to ensure employees do not perform conflicting duties and test applications should not be run on live operating data. Finding An adequate system of internal controls should be in place to ensure that an audit trail exists that accurately reflects the receipt and disposal of donated assets. As part of our examination, we tested the acquisition and disposal of State Property. During the period examined, the Department received a donation of used portable police radios and chargers from the City of Birmingham. The radios and chargers were subsequently donated to the Forestry Commission by the Department. However, we were not provided with adequate documentation to substantiate the receipt and disposal of the portable radios by the Department. We did physically locate the radios at the Forestry Commission; however, it was only after the Department had conducted an internal investigation relating to the whereabouts of the radios. 07-295 J Recommendation The Department should implement internal controls to ensure that donated property can be tracked from the point of acquisition to disposal. Finding The Code of Alabama 1975, Section 14-6-81 states that the Department of Corrections shall “…….make a detailed report to the Governor after each visit of the number of inmates in each such jail, prison and almshouse, their condition as to health, the condition in which the buildings are kept, the arrangement for the sanitation of buildings and grounds, the cost of the management of such institutions and of keeping the inmates and whether the money appropriated for such purposes is properly expended therefore, and it shall at the same time give a copy of its report to the county commission, city council, or other board or body having control over the jail, prison or almshouse dealt with in such report, together with such recommendations for the betterment of the conditions thereof as it may deem necessary.” During our review, we noted that the Department has not submitted detailed annual jail inspection reports to the Governor for the 2004, 2005, and 2006 fiscal years. Recommendation The Department should ensure detailed jail inspection reports are prepared and submitted to the Governor. Finding The Code of Alabama 1975, Section 15-18-174 (2) states, the Department Corrections shall “make an annual report to the prison oversight committee of the Legislature and the Alabama Sentencing Commission regarding the effectiveness of diversion of offenders from state and local correctional institutions. This annual report should also include data showing the impact of diversion of offenders by race, gender, and location of the offender.” The Department did not provide annual reports to the respective entities for the 2004, 2005, and 2006 fiscal years. Recommendation The Department should ensure annual reports are provided to the prison oversight committee and Alabama Sentencing Commission as required by the Code of Alabama. 07-295 K STATUS OF PRIOR FINDINGS All of the findings contained in the prior report have been resolved and the recommendations have been implemented with the exception of the following: Finding The Code of Alabama 1975, Section 14-3-7 states that the Board of Corrections shall keep a record of all state and county convicts, showing the date of conviction, crime, sentence, county and court in which convicted and such other information as the Board may prescribe. The Department does not keep a record of county convicts. This has been a finding in the past five examinations. Recommendation The Department should seek legislation to have the above statute modified to exclude county convicts from the Department’s record-keeping responsibilities or the Department should implement a record-keeping system for county convicts. Finding During our examination of the Department we also followed up on prior findings in the Report to the Chief Examiner pertaining to the Birmingham and Loxley Work Release Centers. The Department charges inmates in the Work Release and Supervised Intensive Restitution Programs a $31.50 fee for positive drug tests and a transportation fee of $2.50 for a one-way and $5.00 for a roundtrip. Additionally, inmates utilizing the services of the medical contractor are assessed a $3.00 co-pay fee per visit for medical treatment initiated by the inmate. It appears that the Department of Corrections does not have specific legal authority to charge these fees. This has been a finding in the past four examinations. Recommendation The Department should only charge fees authorized by law. 07-295 L Schedule of Cash Receipts, Disbursements and Balances General Fund For the Period October 1, 2003 through September 30, 2006 2005-2006 Receipts Appropriations - State General Fund Total Receipts 2004-2005 $ 324,282,715.00 $ 293,720,271.00 $ 266,608,663.00 324,282,715.00 293,720,271.00 266,608,663.00 Disbursements Personnel Costs Employee Benefits Travel In-State Travel Out-of-State Repairs and Maintenance Rentals and Leases Utilities and Communication Professional Services Supplies and Operating Expenses Transportation Equipment Operations Grants and Benefits Capital Outlay Transportation Equipment Purchases Other Equipment Purchases Reversion to General Fund Total Disbursements and Reversions Receipts Over (Under) Disbursements Beginning Cash Balances 145,824,042.75 46,936,409.06 585,858.37 34,911.39 2,002,264.12 1,620,149.79 16,443,056.70 65,231,067.62 17,822,490.08 2,677,954.32 4,182,055.82 198,597.43 111,286.02 507,239.02 217,207.00 304,394,589.49 136,698,251.15 44,332,818.53 310,806.49 33,862.69 1,927,554.80 1,584,531.75 13,475,304.12 70,660,939.31 17,528,241.31 2,219,423.11 2,220,401.19 206,157.37 134,085,439.07 37,376,600.99 244,955.53 29,198.79 1,606,584.16 740,137.69 12,802,135.94 60,218,750.84 17,589,222.67 2,150,106.60 3,206,173.63 538,572.79 225,758.22 210,077.78 291,634,127.82 226,780.48 10,056.88 270,824,716.06 19,888,125.51 2,086,143.18 (4,216,053.06) 9,362,973.92 7,276,830.74 10,718,781.99 Correction of Prior Year Allotment Ending Cash Balances Department of Corrections State of Alabama 2003-2004 774,101.81 $ 29,251,099.43 $ 1 9,362,973.92 $ 7,276,830.74 Exhibit #1 Officials October 1, 2003 through September 30, 2006 Officials Mr. Richard Allen Commissioner Department of Corrections 301 South Ripley Street Montgomery, AL 36130 Mr. Donal Campbell (1) Commissioner (1) Donal Campbell resigned effective February, 2006. Department of Corrections State of Alabama 2 Exhibit #2 Board Members Alabama Corrections Institution Finance Authority October 1, 2003 through September 30, 2006 Term Expires Board Members Hon. Bob Riley President Montgomery, AL January 2011 Hon. Richard Allen Vice-President Montgomery, AL January 2011 Hon. Donal Campbell Vice-President Montgomery, AL Resigned February 2006 Hon. Drayton Nabers, Jr. Secretary Montgomery, AL Resigned June 2004 Hon. James Allen Main Secretary Montgomery, AL January 2011 Hon. Bill Pryor Member Montgomery, AL Resigned April 2004 Hon. Troy King Member Montgomery, AL January 2011 Hon. Lucy Baxley Member Montgomery, AL January 2007 Department of Corrections State of Alabama 3 Exhibit #3