Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Public Safety and Military Affairs and Labor and Public Employment, to which was referred H.B. No. 177 entitled:

beg leave to report as follows:

The purpose of this bill is to allow the governor to contract for the private sector operation of correctional facilities, and to establish criteria necessary for an acceptable contract for the privatized operation of a correctional facility.

Your Committees received testimony in support of this measure from the Chamber of Commerce of Hawaii. Your Committees received testimony in support of the intent of this measure from the Department of Public Safety. Your Committees received testimony in opposition to this measure from the Community Alliance on Prisons, the Hawaii Government Employees Association, the United Public Workers, and a concerned citizen. Your Committees received comments on this measure from the Mayor of the County of Hawaii.

Your Committees find that privatizing the state corrections function represents a significant departure from the ordinary course of business, in that it transfers not only the day-to-day operation of a correctional facility but accountability and control over that function as well. Because of the possibility of the failure of a private entity to fulfill that function, as demonstrated by the occasional failure of private prisons on the United States mainland to control inmates, your Committees find that it is necessary to ensure that proper safeguards are retained so that the privatization of the prison is successful.

Moreover, while the idea of privatizing a government function is not new in itself, the privatization of correctional facilities represents a new paradigm in Hawaii because of the scope and breadth of that project. Your Committees find that there is a need to provide flexibility in contracting with a private entity, while at the same time ensuring the long-term viability of privatization through the satisfaction of criteria for evaluation of the project and the cost of the project. Therefore, before entering into a contract with a private entity for the operation of minimum security correctional facilities, your Committees find that there is a need to ensure that the private sector can in fact achieve this objective more efficiently and cost-effectively than the public sector.

Upon further consideration, your Committees have therefore amended this bill by:

1. Adding additional language to the purpose section (section 1 of the bill) to reflect the need for additional safeguards before entering into a contract with a private entity;
2. Amending section 2 of the bill to add a new part to chapter 353, Hawaii Revised Statutes;
3. Amending the first new section added to chapter 353 (section 353-A(1)), which allows the Governor to enter into and execute contracts with private entities to operate minimum security correctional facilities in the State, by requiring the Department of Public Safety to first determine whether the operation of such a facility can be implemented by the public sector as cost-effectively as the private sector while meeting the same plans, goals, objectives, standards, measures of effectiveness, wage, salary, conditions of employment, and employee benefit programs of the State. If the new program cannot be implemented by the public sector as cost-effectively as the private sector while meeting these objectives and standards, the Director of Human Resources Development is required to determine that certain conditions are met;
4. Adding a new section (353-B) to specify the conditions that the Director of Human Resources Development must determine are satisfied, including criteria relating to cost savings, cost comparisons, quality of services, qualifications of workers, nondiscrimination provisions, liability, termination for breach of contract, and other areas, and requires the Director of Human Resources Development, in consultation with the Department of Public Safety, to adopt rules to implement that section; and
5. Making technical, nonsubstantive amendments for the purpose of clarity.

As affirmed by the records of votes of the members of your Committees on Public Safety and Military Affairs and Labor and Public Employment that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 177, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 177, H.D. 1, and be referred to the Committee on Finance.