SB 0921 - Fiscal Note

Fiscal Note - SB 0921 - Telephone service for prison inmates

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3880-02

BILL NO. Perfected SCS for SB 921

SUBJECT: Department of Corrections

TYPE: Original

DATE: April 2, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	$0 to ($10,000,000)	$0 to ($10,000,000)	$0 to (Unknown)
Total Estimated Net Effect on All State Funds	$0 to ($10,000,000)	$0 to ($10,000,000)	$0 to (Unknown)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 3 pages.

FISCAL ANALYSIS

ASSUMPTION

The Office of Administration (OA), Division of Purchasing and Materials Management states that this legislation requires contracts for collect call telephone service for correction institutions to be awarded to the lowest and best bidder based on the costs to recipients of the calls. In addition, it allows the Division of Purchasing to renegotiate existing contracts for collect call telephone service for these institutions.

The state has received approximately $26,000,000 from May 1996 through January 1998 for prison inmate telephone services contracts. OA assumes that if these contracts are awarded based on call costs to called parties, bidders would have no incentive to offer a percentage commission to the state for these calls. In order to offer the lowest call cost, bidders would no longer offer a commission to the state, but instead would offer the lowest cost per call since that would be the sole factor in evaluating the lowest bid.

Under current contracts, the state receives a certain percentage of the cost of each telephone call. OA assumes the state will receive approximately $10,000,000 in commissions for FY98. Current contracts can be renewed until June, 2000. Assuming the commission received by the state would be similar to FY98, this proposal would result in a loss of commissions of $10,000,000 in FY99 and FY00 if the current contracts are not renewed. OA further assumes the fiscal impact of this proposal in FY01 and beyond cannot be determined since the potential commissions the state might have received is not known.

The Department of Corrections (DOC) assumes this proposal would have a minimal impact on their agency. However, DOC further assumes the impact on state revenues may be significant.

Oversight assumes that any prison inmate telephone services contract could contain provisions requiring that the state maintains a certain percentage for the cost of each telephone call as to minimize the loss of revenue to the state.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE
Loss of revenue from prison	$0 to	$0 to	$0 to
inmate telephone service contracts	($10,000,000)	($10,000,000)	(Unknown)
FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
ESTIMATED NET EFFECT	$0 to	$0 to	$0 to
ON GENERAL REVENUE	($10,000,000)	($10,000,000)	(Unknown)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

DESCRIPTION

This proposal requires the Department of Corrections to accept the lowest and best bid based on the cost of calls to recipients when contracting for collect call telephone service for correctional institutions. The Office of Administration may renegotiate existing contracts to reduce costs to called parties.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Corrections

Office of Administration

Division of Purchasing and Materials Management

Jeanne Jarrett, CPA

Director

April 2, 1998