CDC General Fund expenditures increased by $1.2 billion (30.1 percent) from FY 1998–1999 to 2002–2003. The majority of the increase occurred in the following areas:

• Salaries and Wages	$ 472,391
• Consultant and Professional Services-External	206,065
• Retirement	159,046
• Other Items of Expense	108,912
• Overtime	86,705
Totals	$1,033,119

These categories of expenditure account for 85.9 percent of the total CDC increase. The categorical amounts are discussed and analyzed below.

CDC’s personnel years (PY) increased by 2,804.8 (6.7 percent), from 41,684.7 in FY 1998–1999 to 44,453.5 in FY 2002–2003. The PY increases contributed to the increased salaries and wages, but several pay raises granted to custody employees (5 percent in FY 1998–1999 and 4 percent in FY 1999–2000 and 2000–2001) and non-custody employees (4 percent in FY 1999–2000 and 2000–2001) had a greater impact. As illustrated in Exhibit A-2-1, $342.6 million (72.5 percent) of the increases in salaries and wages occurred in the Institutions Program.

Consultant/Professional Services-External are costs associated with contractors providing goods and services. As illustrated in Exhibit A-2-2, from FY 1998–1999 to 2002–2003, expenditures for consultants and professional services increased by $206.1 million (69.3 percent), with the growth almost divided evenly between the Institutions Program ($146.9 million) and Health Care Services Program ($141.4 million). The Community Correctional Program was reduced significantly during this period.

The increase in the Institutions Program is primarily due to a program change of moving the Community Correctional Facility contracts from the Community Services Program to the Institutions Program in FY 2001–2002.

The Health Care Services Program provides physical and mental health care to the inmate population statewide consistent with adopted standards for quality and scope of services within a custodial environment. The Health Care Services Program operates various types of medical facilities at several institutions statewide, including four licensed hospitals, a skilled nursing facility and other specialized medical units and clinics. Because CDC’s facilities cannot meet the overall demand for necessary health care services, CDC contracts locally with external medical service providers such as hospitals, specialty care physicians and laboratories.

Consultant and professional service contracts in the Health Care Services Program increased by $141.4 million (143.2 percent) from FY 1998–1999 to 2002–2003. The major contributing factors for this increase were pharmaceuticals and medical services contracts. A BSA report issued in April 2004 identified internal control weaknesses in CDC’s contracting processes for medical services.

As illustrated in Exhibit A-2-3, retirement costs increased by $159.1 million (85.1 percent) from FY 1998–1999 to 2002–2003.

The downturn of the stock market in 2000–2001 and enhanced retirement benefits are responsible for the retirement costs increase. The state share of retirement contribution rates established for peace officers increased from 9.6 percent in FY 1998–1999 to 13.9 percent in FY 2002–2003. For employee classifications identified as “Safety,” retirement contribution rates increased from 9.4 percent in FY 1998–1999 to 17.1 percent in FY 2002–2003.

As illustrated in Exhibit A-2-4, $78.2 million (71.8 percent) of the total increase in “Other Items of Expense” for the period from FY 1998–99 through 2002–03 occurred in the Health Care Services Program. This program’s Other Items of Expense increased from $60.8 million in FY 1998–1999 to $139 million in FY 2002–03. Increased chemical, drug, medical and laboratory costs make up to 97 percent of the increases.

Overtime costs increased by $86.7 million (55 percent) from $157.6 million in FY 1998–1999 to $244.3 million in FY 2002–2003. As illustrated in Exhibit A-2-5, $81.5 million (94 percent) of the increase was incurred in the Institutions Program. This condition is further analyzed below.

CDC has received deficiency funding in most recent years which is directly related to institution overtime costs. Generally, when correctional officers are called in or kept over from their current shifts to backfill officers using leave, these officers are paid overtime; typically the most senior (who are paid at higher rates) are given first call, further ratcheting up the cost. A change to a provision in the most recent Bargaining Unit 6 Memorandum of Understanding has reduced CDC management’s ability to manage or track sick leave usage or increased overtime costs.

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