On The Money: Pay To Play?

An out-of-state company that contributed hundreds of thousands of dollars to Capitol politicians – has secured an exclusive contract with the State – worth nearly $700 million.

Critics say this deal is a prime example of pay-to-play politics at the Capitol – and it involves California prisoners – who have become a very valuable commodity for Corrections Corporation of America – a private prison operator based in Tennessee.

California's prisons are costing taxpayers roughly $8 billion a year. (Proposed 2010-11 Corrections Budget | Proposed 2010-11 California Budget)

Overcrowding is so extreme, the Courts have threatened to order the release of up 40 thousand prisoners. Governor Schwarzenegger declared an emergency four years ago, paving the way for ten thousand inmates to be shipped to Arizona, Mississippi and Oklahoma.

But a $23 million contract to send prisoners out of state – has now mushroomed into a nearly $700 million deal for Corrections Corporation of America (CCA).

"When you look at a contribution pattern like you see here, it's really a classic case of pay-to-play politics," said Derek Cressman, Regional Director of State Operations for Common Cause, a government watchdog group.

Campaign finance records show the Tennessee firm gave $100,000 to Governor Schwarzenegger's ballot measure last year for budget reform.

And this year, the same company donated $10,000 to the Meg Whitman for Governor campaign,  and $25,000 more to the California Republican Party.

Corrections Corporation of America also contributed $5,000 to the Jerry Brown for Governor campaign and more than $17,000 to the California Democratic Party.

CCA also gave thousands of dollars to State lawmakers – Democrats and Republicans – most of them incumbents – a total of more than a quarter of a million dollars to elected officials.

CCA also spent nearly $300,000 to lobby the Governor's Office, the Legislature and prison officials about the out-of-state prisoner programs.

CCA netted a multi-million dollar contract that critics say was no coincidence.

"The fact that they're putting money in really looks like they're greasing the skids to get a lot more money out," Derek Cressman of Common Cause told CBS 13.

CCA declined our interview request – but sent a statement saying in part, "…we are no different than – and in fact, play a much smaller role in this arena – than many individual Californians, special interest groups and businesses."

For the full CCA statement, click here.

But the CCA contract has now been amended several times, resulting in today's nearly $700 million price tag.

"And so we had a hearing along these lines and found that there was no competitive bidding," said Assemblyman Hector De La Torre, chair of the Assembly Committee on Accountability and Administrative Review. 

The South Gate Democrat told CBS 13 that other firms – and other states – were very interested in housing California's prisoners. The Department of Corrections and Rehabilitation said two vendors did bid for the initial contract – but one dropped out.

"CCA was the only one that had the cell capacity with the perimeter security and the programming necessary to take care of the offenders in the way that California takes care of them," said Scott Kernan, Undersecretary of Operations for the California Department of Corrections and Rehabilitation.

The CCA contract expires next year – and there's a call at the Capitol for more transparency.

Assemblyman De La Torre told CBS 13, "It has to look like all other competitive bidding processes so that the taxpayer will know that they're getting the best deal when we're sending prisoners out of state."

Are taxpayers in fact getting the best bang for the buck?

"We have no idea," De La Torre said.

The CCA contract is due to expire in June 2011 and there is growing pressure at the Capitol to reject any expansion – unless it's opened up to competitive bidding.

The report from the Fair Political Practices Commission: "The Fifteen Special Interests that Spent $1 Billion to Shape California Government" (.pdf)

If you see examples of wasteful spending – send us an e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at twitter.com/mikeluery.