Summary of Report 97-015

November, 18 1996

Report Number 97-015

Overall Conclusion
The analysis of prison unit costs has identified units and areas which have higher cost variances. These variances may identify opportunities to reduce expenditures or to alleviate risks associated with potentially inadequate expenditures.

This report presents cost analysis as a management tool to help target units and areas needing more attention by management. This report can help identify areas of cost savings, develop risk analysis, and identify the best unit management practices already in place. Emphasis should be placed on the areas and units with the cost variances, rather than the actual dollar amounts of the variances.

Key Facts and Findings
Our analysis of 13 cost categories at 57 prison units identified significant variances from expected costs. The most significant variances come from travel and miscellaneous fees and services. Significant variation from the expected cost is an indication of potential risk. Management intends to perform further evaluation of the cost variances. Areas of potential risks generally fall into two categories:

- High cost variances ranged from 2.5 percent to 37.7 percent. These cost variances indicate areas where cost savings potentially could be realized.

- Low cost variances ranged from -2.3 percent to -46.3 percent. These cost variances may indicate areas where adequate resources have not been dedicated. Not dedicating appropriate resources can lead to risks such as buildings not being properly maintained or inmates not being properly secured.

Management needs to improve the accuracy of data maintained, expand the budgeting process to include unit budgets, and better identify industry operation cost.

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