County Executes New Jail Contract

LIBERTY, July 18, 2012 – Recently County Judge Craig McNair and Sheriff Henry Patterson executed new Jail Contract with Community Education Centers Inc. the current Jail Contrator.

County Attorney Wes Hinch forwarded the following comments along with a copy of the signed contract as a reply to our Open Records Request.

Jail management is a specialized service. Only a handful of companies operate jails in our area and all of them, like all successful businesses, are "in business" to make a profit. Moreover, historical highs in fuel costs, utilities, supplies, wages, employee benefits, insurance rates, medical costs (for inmates), etc. have increased costs of operation. Consequently, Liberty County anticipated that any new contract for operation of its jail facilities after December 2011 would require a rate increase.

Although I was not in office when Liberty County built the "New" jail over 20 years ago, it appears our facilities were designed to house approximately 375 inmates, far in excess of historical County demands. It appears the County intended to use revenues from the excess capacity to defray the construction and operating costs. In fact, that model functioned as intended for many years. Recently, however, circumstances have changed. I have been told, the US Marshals and the Immigration (ICE) agencies have experienced a reduced need for oursourced inmate housing.

Historically, federal agencies paid Liberty County about $52/day for inmate housing. Under previous contracts, it cost Liberty County about $46/day to house inmates. Consequently, the County was able to realize a profit of approximately $6/day for each federal inmate housed in our jail. Housing federal inmates at even a nominal profit helped us to spread operation costs over a larger population and defray total costs of operating the jail facilities. While I have been unable to document historical federal inmate populations housed in the Liberty County Jail, or the direct causes of reduced federal inmate numbers, it does appear that populations (and therefore revenue) from federal sources have decreased significantly.

All of this occurred at a time when the original contract was subject to renegotiation. Regardless, the prior contract provided for termination by either party on 6-month's notice and continued unprofitability would have justified unilateral termination by CEC even if the contract had not been scheduled to expire. In 2011, CEC gave notice of its intent to decline the extension of its contract absent an increase in rates. The county solicited bids and received only two responses, both of which proposed rates in excess of $75/day to begin January 1, 2012.

Faced with the drastic increases in proposed management costs, the County Judge asked the Sherrif's Department to estimate the cost of taking over jail operations. The SO estimated costs for 200 inmates at $4,569,322.00/yr., well in excess of the rate proposed by CEC's sliding scale ($61.40 x 200 x 365 days = $4,482,200.00) or LaSalle ($62.00 x 200 x 365 = $4,526,000). In addition, the County explored taking over portions of the operations, such as contracting with other providers for medical and dental services. In the end, it appeared that no significant savings would be realized by the County assuming responsibility for medical and dental services.

When no additonal extensions at the $58/day could be negotiated, the County had to make a decision: continue with CEC, hire LaSalle, or take over the jail. Despite speculation about what the operation "should" cost, no-one could formulate a plan for continued operations at a lower rate. Consequently, the Contract was awarded to CEC at the rate of $71.25/day (for populations below 159).

It is important to note that even though LaSalle's bid was nominally lower, they demanded a 2-year contract with no "early termination" clause thereby allowing the company to amortize start-up costs. Conversely, CEC agreed to continue with a bi-lateral option to terminate with 6-months notice. That was very important because just days before the Commissioners' Court was to vote on the matter, a report appeared alleging that other similarly sized counties WERE, in fact, operating more econominally.

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