It is safe to say Santa Ana’s jail is the city’s most controversial edifice.
First of all, part of it is filled with undocumented Mexican immigrants due to a deal in which the city rents jail beds to Immigration and Customs Enforcement (ICE) for a daily rate of $105 per inmate. This reality infuriates Latino activists who argue that the ICE deal is a morally unconscionable arrangement for a city that is almost 80 percent Latino.
And even with the ICE contract, and another with the U.S. Marshalls Service, the jail has been a fiscal albatross — running a multi-million-dollar deficit since it was built nearly 20 years ago in response to a decade-long crime wave in the late 1980s and early 1990s.
It is because of this set of facts that City Council members this year asked the city manager to present them with alternatives for a sustainable plan to operate the jail without the ICE contract and, if that’s not possible, options to “terminate jail services” altogether. City staff has yet to make their presentation, and have given no indication as to whether it is forthcoming.
So Voice of OC decided to see what we could figure out.
We discovered a complicated situation. Council members have suggested outsourcing the jail to another agency like the county. But Councilman Vincent Sarmiento acknowledged in an interview this week that contracting prospects aren’t so bright.
“That’s a tough nut to crack,” said Sarmiento, who was the only council member to return a reporter’s calls.
The other option, shuttering the jail would be costly, not to mention politically perilous. The primary financial issue is the payments on the bond city officials floated in the 1990s to pay for construction of the police administration building and the jail.
The payments on the bond total $9 million annually, and city officials say the jail’s portion of that cost is just over $3 million. This is a fixed cost, covered in part by the city’s contracts to jail federal inmates, and, barring a refinancing, will total approximately $27 million between now and when the bond is paid off in 2024, City Manager David Cavazos told the council earlier this year.
Beyond the bond payments, however, the picture is far less clear.
In recent years, city officials have provided conflicting balance sheets for the jail’s annual operating costs. The main difference between them is one includes indirect City Hall costs like payroll processing.
Under the most recent accounting provided to Voice of OC by Finance Director Francisco Gutierrez the jail’s operating cost this fiscal year is $19.7 million, which includes the bond payment but not the indirect City Hall expenses.
Now for the revenue side of the ledger. The ICE and Marshall Service contracts bring in $14.9 million annually. And the city deducts $4.6 million from the overall cost for what officials call the “city benefit,” which is the part of the jail that would stay open – even if it were no longer housing inmates — so police can keep booking arrestees at the city jail and avoid the oftentimes more lengthy booking process at the county jail.
Add $14.9 million to $4.6 million and you get $19.5 million, which means the jail will operate at a roughly $200,000 deficit this fiscal year.
So, given that the city is on the hook for the $3 million bond payment regardless of whether the jail stays open or not, it would cost the city $2.8 million annually to shutter the jail, versus $200,000 annually to keep it open.
Setting aside the moral arguments, this accounting indicates it doesn’t make financial sense to close the jail because of the significant impact to the city budget.
But there is another accounting, one that was laid out in a memo to the City Council in 2014.
In this calculation city officials included what they call “indirect” City Hall costs, which are the jail’s share of costs like city management and payroll processing. With those additions, the jail cost went up to $22.9 million in the 2014-15 fiscal year, according to the memo.
Revenue from federal detainee contracts that fiscal year was expected to be $16 million, and the city benefit was $4.3 million. So when subtracting the revenue and city benefit from the $22.9 million total cost, the annual operating deficit would be calculated at $2.6 million.
If the bond payments were the only fixed cost attributable to the jail, then this calculation indicates that it’s not such a painful financial decision to close the jail. Under such a scenario, the difference between closing the jail and keeping it open is approximately $400,000.
But city officials say that’s not the case. The indirect city hall costs are built-in and not going away, they said. For example, the city’s payroll processing doesn’t stop if the jail closes. Plus the over $4 million referred to as the city benefit is in reality still a cost that, if possible, would be best to offset with revenue.
So that brings us back to square one. The federal detainee contracts help offset the cost of the jail debt to the city budget. Closing the jail means losing those contracts, and the city budget over the next eight years would take a cumulative hit that could reach well over $20 million.
Then there are political ramifications. For example, the jail employs dozens of officers, and council members have in the past openly fretted about laying off so many at once.
That being said, the city’s current financial picture indicates that if the desire was there, the budget could withstand the hit that closing the jail would deliver.
City Manager David Cavazos has made a big deal this year about the city’s surplus cash, including a general fund budget surplus for $11 million and another $2 million from the sale of properties on Bristol Street.
This year’s surplus alone would cover nearly half of the overall cost to shutter the jail. But is spending the surplus in such a way at all politically feasible?
The short answer is no, not really.
Consider that the same activists who want the jail shut down have also clamored for crime prevention programs – like after school activities and day-care – in response to a shooting spree that has plagued Santa Ana streets in recent months.
Council members meanwhile have signed off on other important initiatives, such as $400,000 in services for homeless people, police body cameras and park renovations.
“Once the city agreed to build and operate a jail, I think were there a lot of unanswered questions,” Sarmiento said. “And we’re kind of left with the difficulty of managing it.”
Please contact Adam Elmahrek directly at [email protected] and follow him on Twitter: @adamelmahrek