U.S. Department of Justice
Office of Justice Programs
Bureau of Justice Statistics
Special Report

State Prison Expenditures, 2001[Download Full Report in PDF]

June 2004, NCJ 202949

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be available. To view a list of all in the series go to

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By James J. Stephan
BJS Statistician

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Highlights

States spent $29.5 billion for prisons in 2001,
about a $5½ billion increase from 1996, after
adjusting for inflation

* Prison operations consumed about 77% of State correctional
costs in FY 2001. The remaining 23% was spent on juvenile
justice, probation and parole, community-based corrections,
and central office administration.

* State correctional expenditures increased 145% in 2001
constant dollars from $15.6 billion in FY 1986 to $38.2
billion in FY 2001; prison expenditures increased 150% from
$11.7 billion to $29.5 billion.

* Excluding capital spending, the average cost of operating
State prisons in FY 2001 was $100 per U.S. resident, up from
$90 in FY 1996.

* Outlays for new prison construction, renovations, equipment,
and other capital account activities amounted to less than 4%
of total prison expenditures in most States.

* Spending on medical care for State prisoners totaled $3.3
billion, or 12% of operating expenditures in 2001.
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Correctional authorities spent $38.2 billion to maintain the Nation’s
State correctional systems in fiscal year 2001, including $29.5
billion specifically for adult correctional facilities. Day-to-day
operating expenses totaled $28.4 billion, and capital outlays for
land, new building, and renovations, 1.1 billion.

The average annual operating cost per State inmate in 2001 was
$22,650, or $62.05 per day. Among facilities operated by the
Federal Bureau of Prisons, it was $22,632 per inmate, or $62.01
per day.
In a followup to a study based on FY 1996 data, this report
presents unique statistics on the cost of operating State
prisons in FY 2001. Information was obtained by extracting
corrections data from each State’s responses to the U.S.
Census Bureau’s annual Survey of Government Finances. Item
categories were standardized across jurisdictions, and
reported figures were verified with State budget officials.

Expenditures are the total amounts paid for prison operations,
including interest on indebtedness. Figures are net of amounts
derived from revenue-generating activities such as farm and
industrial production and services.

The increase in cost of corrections outpaced
the cost of health, education, or natural
resources

State spending for corrections increased from $65 per resident
in 1986 to $134 in 2001. 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 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.

State correctional expenditures include the cost of operating
prisons and related institutions. Such institutions are
reformatories; prison farms; centers for the reception,
evaluation, and classification of inmates; and correctional
facilities exclusively for the criminally insane or for the
treatment of drug and alcohol addiction. State correctional
expenditures are primarily for operating adult facilities.
Other spending pays for juvenile correctional activities,
adult parole boards and programs (including court programs),
and correctional administration not associated with specific
penal institutions.

States spent $29.5 billion on prisons
in fiscal 2001

State prison expenditures totaled $29.5 billion in fiscal year
2001. Adjusted for inflation, this was approximately $5.5
billion more than was spent in FY 1996.

California reported the largest prison expenditure, $4.2
billion, and North Dakota the smallest, $26.8 million.

As a non-State activity, correctional spending by the Federal
Bureau of Prisons (BOP) was outside the scope of this report.
However, outlays for its operations in FY 2001 amounted to
$3.8 billion, or about 11% of the Nation’s prison expenditure.

Operating costs averaged $22,650
per inmate in fiscal year 2001

State prison operating expenditures totaled $28.4 billion in
fiscal year 2001. This total, divided by the number of
prisoners, produced a nationwide average annual operating
cost per inmate of $22,650. Adjusted for inflation, the
equivalent figure in 1996 was $22,515.

The average operating cost to incarcerate one inmate in the
Federal Bureau of Prisons system during FY 2001 was $22,632.

The $28.4 billion State operating cost, divided by the U.S.
resident population, resulted in a nationwide average
operating expenditure of $100 per person. The highest costs
per resident were recorded in the District of Columbia
($251), Alaska ($243), and Delaware ($204). The lowest costs
per resident were in West Virginia ($34), North Dakota ($38),
and New Hampshire and Minnesota ($48 each).

State correctional systems with integrated jail-prison facilities
may have higher operating costs than other jurisdictions because
the costs of housing jail inmates are included as State
expenditures. Of the six States with integrated jail-prison
systems in 2001, four had average annual operating costs per
resident above the average for States not operating integrated
systems.

Compared to 1996, prison spending in 2001 revealed a greater emphasis
on facility operation

Over three-fourths of the States spent 96% or more of prison funds
on current operations such as salaries, wages, benefits, supplies,
maintenance, and contractual services. In 1996 State spending on
current operations accounted for 94% of total expenditures.

The District of Columbia, Hawaii, Alaska, Tennessee, and Utah
allocated all or nearly all prison expenditures to current
operating activities. By contrast, Nebraska spent the lowest
proportion (79%), followed by Missouri (83%), Wisconsin (84%),
and Wyoming (86%).

Salaries, wages, and benefits made up about two-thirds of State
prison operating expenditures, nationwide, in 2001. Other
operating costs comprised about a third. Other operating costs
covered a wide variety of outlays, such as inmate health care,
food, utilities, supplies, fees, commissions, and contractual
services.

A majority of States spent 4% or less of prison expenditures on capital projects

Thirty-seven jurisdictions used 4% or less of all prison dollars
to finance new construction, renovations, major repairs,
equipment, land, buildings, and other nonrecurring outlays during
FY 2001. Among this group, the District of Columbia, Alaska, Hawaii,
and Utah spent less than 1%. Four other States allocated significant
proportions of prison funds to capital projects: Nebraska (21%),
Missouri (17%), Wisconsin (16%), and Wyoming (14%).

Spending on State prison capital projects decreased 25% from 1996 to 2001

Total capital expenditures of State prisons, adjusted for
inflation, declined 25% from $1.5 billion in FY 1996 to
$1.1 billion in FY 2001.

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Many factors associated with variation in prison costs

Much of the variation between States in the cost of operating
prisons was outside the influence of correctional officials:
differences in the cost of living, variation in prevailing
wage rates, climate, and other factors. Although important,
they were beyond the scope of this study.

However, certain corrections-related factors were possible to
analyze. For example, employee salaries, wages, and benefits
consumed more than half of prison operating expenditures.
Their influence was measurable by comparing inmate-to-staff
ratios with operating costs per inmate. High inmate-to-staff
ratios were most common in States reporting low average costs
per inmate, and low inmate-to-staff ratios predominated in
States with high average annual costs per inmate.

Cost savings may also have been made from the operation of
larger capacity prisons. Eight of the 10 States with average
annual operating expenditures per inmate over $30,000 had an
average number of inmates per facility under 800. By contrast,
3 of the 7 States with average annual operating expenditures
per inmate under $15,000 had an average number of inmates per
facility over 800.

Transfer payments, which included intergovernmental monies
from one government to another as well as intra-governmental
payments from one department or agency to another, varied
significantly by State. In the 1996 State prison expenditure
study, when these payments were last identified separately,
departments of corrections in the South received about 8% of
their total expenditures from transfer payments, compared to
about 4% in other regions.
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More than three-fourths of State prison capital expenditures were
for new construction, renovations, and major repairs, including
fees and services of architects, engineers, appraisers, and
attorneys. In FY 2001 these components consumed nearly the
entire capital account in Missouri (99%) and Washington (97%).

The second-largest capital expenditure was for equipment purchases
and installations, including furnishings, office equipment, motor
vehicles, and other devices having a useful life of more than 5
years. The average outlay was approximately 23% of total capital
spending. In Alaska, Delaware, Nevada, and Utah, however, equipment
accounted for the entire capital spending category in FY 2001.

The purchase of land, rights-of-way, existing structures, title
searches, and related costs (not shown in table 4)included less
than half of 1% of State prison capital expenditures, nationwide.
Four States reported outlays in this category that exceeded 2%:
Oregon (4.6%), New Mexico (3.9%), Florida (3.4%), and Arkansas
(2.3%).

Over a quarter of prison operating costs for basic living expenses

Prisoner medical care, food service, utilities, and contract
housing totaled $7.3 billion, or about 26% of State prison
current operating expenses.

Inmate medical care totaled $3.3 billion, or about 12% of
operating expenditures. Supplies and services of government
staff and full-time and part-time managed care and fee-for-
service providers averaged $2,625 per inmate, or $7.19 per
day. By comparison, the average annual health care
expenditure of U.S. residents, including all sources in FY
2001, was $4,370, or $11.97 per day.***Footnote: U.S.
Department of Health and Human Services, National Center for
health Statistics, citing Centers for Medicare and Medicaid
Services in Health, United States, 2003, table 116.***

Five States reported annual medical costs per inmate above
$4,000: Maine ($5,601), New Mexico ($4,665), California
($4,394), Massachusetts ($4,049), and Alaska ($4,047).
Three States spent less than $1,000 per inmate: Louisiana
($860), Montana ($922), and Kentucky ($960).

Factors beyond the scope of this report contributed to the
variation in spending levels for prisoner medical care.
Lacking economies of scale, some States had significantly
higher than average medical costs for everyone, and some
had higher proportions of inmates whose abuse of drugs or
alcohol had led to disease. Also influencing variations in
expenditures were staffing and funding of prisoner health
care and distribution of specialized medical equipment for
prisoner treatment.

Food service in FY 2001 cost $1.2 billion, or approximately 4%
of State prison operating expenditures.

As a percentage of total prison operating costs, South Dakota
and Hawaii allocated the largest proportions to food services,
11.3% and 8.2%, respectively, and North Carolina and Oregon
allocated the smallest proportions, 0.7% and 1.8%.

On average nationwide, State departments of correction spent
$2.62 to feed inmates each day. Pennsylvania ($5.69) and
Washington ($5.68) reported the largest amounts, followed by
Maine ($5.03), Hawaii ($4.87), and Iowa ($4.81). North
Carolina indicated the lowest cost ($0.52), followed by
Alabama ($0.72), Mississippi ($0.81), and Louisiana ($0.96).

Reports of low food costs often reflected prisoner-operated farm
and food processing operations. or example, Mississippi State
Penitentiary, Parchman, and South Mississippi State Penitentiary,
Leakesville, grew a wide variety of fruits, vegetables and grains,
and raised livestock for other Mississippi prisons. Prison
enterprises in North Carolina operated a cannery, a meat
processing plant, warehouses, and trucks to deliver food and
equipment to correctional facilities statewide.

Utility services for electricity, natural gas, heating oil, water,
sewerage, trash removal, and telephone in State prisons totaled
$996 million in FY 2001.

Utilities accounted for about 3.5% of State prison operating
expenditure. Among individual States, they consumed the most
in Alabama (5.7%), New Hampshire and Virginia (5.6%), and the
least in Rhode Island (0.5%), and Montana (1.5%).

Daily utility costs ranged from a high of $5.43 per inmate in
Massachusetts, $4.52 in Alaska, and $4.50 in Maine to a low of
$0.55 in Rhode Island, $0.89 in Louisiana, and $0.92 in
Montana.

40 State correctional systems paid others to house some prisoners

All but 11 States had expenses relating to the contract housing
of prison inmates in private facilities, local jails, other
States’ facilities, or Federal facilities. The 11 States not
reporting con- tract housing costs for inmates in FY 2001 were
Alabama, Iowa, Kansas, Illinois, Maine, Massachusetts, Missouri,
New Hampshire, North Carolina, Washington, and West Virginia.

Contract housing averaged 6% of operating expenses, nationwide.
However, seven States spent more than 3 times this proportion:

Montana spent $26.1 million, all of it to house inmates in
private facilities. Louisiana paid $171.1 million, 81% of
it to house inmates in local jails; and Tennessee spent
$150.7 million, about a third of it to hold inmates in
private facilities and two-thirds in local jails.

Methodology

Following a procedure similar to that used to produce State
Prison Expenditures, 1996, BJS asked government finance
specialists at the U.S. Census Bureau to identify each
State’s corrections function codes, as reported in the FY
2001 Survey of Government Finances. Census staff entered this
information into a data base, using a standardized format
provided by BJS.

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The data to produce the graph in the Highlights on page 1 are
available with other tables of the report on the BJS
website <www.ojp.usdoj.gov/ bjs>. These data include inflation-
adjusted costs for total State corrections and prisons as well
as costs per U.S. Resident.
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This data extraction procedure included both inter- and
intragovernmental transfer payments, and clarified missing,
repetitious, and out-of-range data items.

Both department of corrections and State central office budget
specialists were asked to review the originally submitted numbers.
These officials worked with the Census Bureau to eliminate
duplicate reports, interpret expenditure codes, and understand
organizational functions and accounting procedures.

Budget officials sharpened the scope of the study by including
expenditures for central office personnel who performed prison
activities and deleting outlays that pertained to probation and
parole services, juvenile corrections, and nonresidential
community corrections — areas outside the prison function.

Upon final approval by each State’s designated financial
reviewer, Census staff completed the data adjustment
phase of the project with a 100% response rate for total
and operating expenditures.

Underreporting

Correctional expenditures shown in the Highlights figure may be
underreported. As the result of discussions between State budget
officials and U.S. Census Bureau specialists in government
finance who collected the data for this report, the total cost
to operate State prisons in FY 2001 was 1.1% higher than
originally reported to the Census Bureau in the 2001 Survey of
Government Finances.

Factors which contributed to the revised FY 2001 State prison
spending figure included adjustments for central office staff
assigned to prison, probation, parole, and juvenile activities;
elimination of duplicate fund reporting; and access to final
numbers following State submissions of preliminary numbers in
the Survey of Government Finances.

Data limitations

Expenditure data published in State Prison Expenditures, 2001
and State Prison Expenditures, 1996 were reported by State
budget officials, based on categories established by the
Census Bureau’s annual Survey of Government Finances. Previous
State prison cost data published by BJS were reported by
correctional facility operators.

Adjusting for inflation

State government expenditures for fiscal years 1996 and 2001
were inflation-adjusted in 2001 constant dollars, as
appropriate for State and local government spending. The
following annual chain-type price indexes for gross domestic
product were employed as divisors and unadjusted
expenditures as dividends to produce inflation-adjusted
expenditures in 2001 constant dollars:

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The Bureau of Justice Statistics is the statistical
agency of the U.S. Department of Justice. Lawrence A.
Greenfeld is director.

James J. Stephan wrote this report and coordinated
data collection, under the supervision of Allen J.
Beck. Tracy L. Snell provided statistical
verification. Tina Dorsey and Tom Hester produced
and edited the report. Jayne Robinson prepared the
report for final printing.

Howard Trott, Shelley Blake, and James Batton of the
U.S. Census Bureau, Governments Division, Finance
Branch coordinated the data extraction process and
verified the information reported by State officials,
under the direction of Steven Owens. Pamela Butler
prepared the data for review by State contacts, under
the direction of Charlene Sebold.

June 2004, NCJ 202949 C
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