Economics of Drug Policy and the Drug War

21. Growth in State Spending on Corrections in the US

"State correctional spending patterns reflect the rise in the prison population that began in the early 1980’s and persisted until 2010.17 Expansion of the state prison population required increased spending for capital infrastructure, the state employee workforce, and the administrative needs of the judicial system. From fiscal 1986 to fiscal 2012, spending from state funds18 for corrections increased by 427 percent
from $9.9 billion to $52.4 billion (without adjusting for inflation).19 By comparison, total spending from state funds increased by 315 percent over the same time period.
"For many states, the effect of disproportionate growth in correctional spending led to a larger share of general fund dollars going to corrections. Since the mid 1980’s, the share of general fund budgets going to corrections doubled in 15 states and increased by at least half in 31 states.20 In the aggregate, corrections spending has gone from 4.7 percent of general fund spending in fiscal 1986 to 7.0 percent in fiscal 2012, an increase of 2.3 percentage points. This additional 2.3 percent of state general funds was equivalent to $15 billion in fiscal 2012.21
"Corrections expenditures, as a percent of spending from total state funds, (general funds, other state funds and bonds), have remained more stable, and the rate of increase has been lower compared to the growth in general fund spending. Corrections spending as a share of state funds has gone from 3.6 percent in fiscal 1986 to 4.6 percent in fiscal 2012, an increase of 1 percent.22 This figure has
remained more stable due to the rise in earmarked funds or trust funds in other program areas besides corrections that designate revenues for specific purposes set by statute. For example, higher education derives much of its state funding from designated revenue streams outside the general fund. To some extent, this trend may have insulated other program areas from budgetary pressures related to increased general fund spending for corrections."

"State Spending for Corrections: Long-Term Trends and Recent Criminal Justice Policy Reforms," National Association of State Budget Officers (Washington, DC: NASBO, Sept. 11, 2013), p. 4.

22. State Expenditure Per Prison Inmate

According to the federal Bureau of Justice Statistics, in 2010, state corrections institutions spent $37.3 billion to imprison a total of 1,316,858 inmates. BJS estimates that the mean expenditures per capita was $28,323. There was a wide range in state spending: the bottom 25th percentile averaged only $21,417, the 50th percentile averaged $29,094, and the 75th percentile averaged $40,175.

Kyckelhahn, Tracey, "State Corrections Expenditures, FY 1982-2010" (Washington, DC: US Dept. of Justice Bureau of Justice Statistics, Dec. 2012), NCJ239672, Table 2, p. 4.

23. Spending on Substance Abuse and Addiction

"• The federal government spent $238.2 billion on substance abuse and addiction or 9.6 percent of the federal budget. If substance abuse and addiction were its own budget category, it would rank sixth in size--behind social security, national defense, income security, Medicare and other health programs.
"• State governments, including the District of Columbia and Puerto Rico, spent 15.7 percent of their budgets ($135.8 billion) to deal with substance abuse and addiction--up from 13.3 percent in 1998. If substance abuse and addiction were its own budget category, it would rank second behind elementary and secondary education. States spend more on substance abuse and addiction than they spend on Medicaid, higher education, transportation or justice.
"• Local governments spent conservatively $93.8 billion on substance abuse and addiction or 9.0 percent of local budgets, outstripping local spending for transportation and public welfare."

National Center on Addiction and Substance Abuse at Columbia University, "Shoveling Up II: The Impact of Substance Abuse on State Budgets" (New York, NY: CASA, May 2009), p. 2.

24. State Drug Reforms As Cost-Saving Mechanisms

"In general, states are targeting criminal justice reforms to address the cost drivers of correctional budgets in such a way that public safety is not put at risk. For example, 21 states have amended drug offense classification and penalties since 2010.26 Justice reforms that seek incarceration alternatives for drug offenders have demonstrated cost savings and improved outcomes, especially for non-violent drug offenders. Texas appropriated $240 million in the 2008-2009 biennium for correctional programs focusing on treatment, rehabilitation and enhanced local supervision and discretion. The state’s reforms led to $443 million in estimated savings that were utilized for other areas of the corrections budget.27 Justice reinvestment reforms are relying more on local government discretion as well, to enhance probation and parole oversight. Twenty states have enacted graduated sanctions for technical parole violations to help states reduce prison costs and the number of inmates.28
"Despite the demonstrated successes of criminal justice reforms, cost savings have yet to produce an overall decline in corrections spending. However, the policy reforms are improving the way states spend money for corrections, and the outcomes show better results for individuals and citizens. Over time, the cost savings from smart, criminal justice polices may lead to correctional spending declines, an outcome that would benefit all of state government."

"State Spending for Corrections: Long-Term Trends and Recent Criminal Justice Policy Reforms," National Association of State Budget Officers (Washington, DC: NASBO, Sept. 11, 2013), p. 5.

25. Growth in State Spending on Corrections, 1986-2001

"State spending for corrections increased from $65 per resident in 1986 to $134 in 2001 (table 1). Per capita expenditures for State prison operations alone rose from $49 in 1986 to $104 in 2001.
"At an average annual increase of 6.2% for total State correctional spending and 6.4% specifically for prisons, increases in the cost of adult incarceration outpaced those of health care (5.8%), education (4.2%), and natural resources (3.3%).
"Although correctional spending grew at a faster rate than many other State boards and programs (including court payments between 1986 and 2001, it remained one of the smaller cost items. For example, the outlay for education, at $374.5 billion, was nearly 10 times larger, and that for welfare, at $260.3 billion, was nearly 7 times larger."

Stephan, James J., "State Prison Expenditures, 2001," Bureau of Justice Statistics (Washington, DC: US Department of Justice, June, 2004), NCJ202949, p. 2.