The New Mexico Corrections Department made $3.7 million in questionable payments to three contractors from fiscal years 2007 to 2010, according to an audit released Wednesday by State Auditor Hector Balderas. The invoices to the three contractors were not clear enough to determine what services were provided.

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The audit said one company, HEI Inc. of Albuquerque, overcharged the department $180,000 for four backup electrical generators. The audit said about $2 million in payments went to the company but invoices were “not descriptive enough to identify the good or services” provided to the department.

The audit said the department was overcharged $48,000 by Santa Fe-based Advantage Asphalt on one project and there was a “lack of support to substantiate payments” of $397,000 to the company. Auditors found nearly $1.3 million in unsupported costs billed by Omni.

The Corrections Department’s former facilities manager, Laurie Chapman, has already been indicted on 30 counts of bribery for allegedly accepting $237,000 from one of the contractors, Omni Development Corp. The overcharging came during difficult years for the state budget and the administration of Gov. Bill Richardson.

Auditor Balderas is running for U.S. Senate in 2012 as a Democrat.

By contract New Mexico can levy penalties against GEO Group and Corrections Corp. of America (CCA) when staffing vacancies at the facilities they manage in Hobbs, Grants, Clayton and Santa Rosa stay at 10 percent or more for 30-consecutive days.

That penalty has been triggered regularly, state records show and the new report by the Legislative Finance Committee (LFC) confirms.

Staffing levels at three of the four privately operated facilities hovered above 10 percent for much of last year, state records show. And at the fourth facility, the vacancy rate was above the 10 percent trigger in six of the 13 months the state records covered.

The LFC report, issued last week, reached the $18 million figure after finding that the two firms had triggered $5 million in penalties last year because their facilities had higher vacancy rates than allowed by contract. The LFC then assumed similar vacancy trends at three of the facilities for the four years previous, and two years previous at the fourth facility, which has only been open for two years.

The state’s corrections secretary, Joe Williams, has defended not collecting the penalties, saying the state’s contracts with the two firms gave him discretion to fine the two companies and he chose not to.

Corrections agency doesn’t track vacancies at private prisons

But the 11-page LFC report found that Williams’ agency never regularly tracked vacancy rates at the four facilities, meaning it did not even know how much the state was forgoing in money by not penalizing the two firms.

“NMCD does not regularly compile vacancy rates, contractor staff pay rates, contractor vacancy savings or review potential penalty amount in its central office, but should do so immediately,” the report said.

The report also noted that the state appeared to have been spending “large sums of contract funding on vacant private prison staff positions.”

Williams, who worked for GEO as a warden prior to becoming the state’s corrections secretary, did not have a response to the legislative report Monday other than a one-sentence statement: “We will be reviewing the report and we will present our response to the LFC.”

While the potential penalties to the two firms amounted to more than $18 million, the savings to the two firms by not fully staffing their facilities was larger, the LFC report noted.

The $18 million in potential penalties equals the salaries the companies did not pay, the report said. Add in benefits that also were never paid by the two firms, and the amount saved is more than $22 million, the LFC report said.

Representatives of both firms could not reached for comment Monday.

Williams has subsequently asked GEO, which manages three of the four facilities, to “perform this analysis and provide other information to ‘defend my position’ of not enforcing contract penalties,” the report noted.

But the LFC report said Williams and his agency should have performed this task all along “to assist in decision making” about whether to penalize the companies or, if not, provide a “rationale for why not to enforce agreed upon contractual provisions.”

Williams’ decision not to collect the penalties from the two firms has put him on a collision course with state lawmakers, some of whom are questioning the action.

Williams acknowledged to The Independent two weeks ago that he hadn’t penalized the two companies because, he said, they were doing an outstanding job managing the four facilities.

The issue of the uncollected penalties comes at a time when state government is scrounging for every dollar because of hard economic times.

The building controversy also threatens to stir up a long-simmering debate over New Mexico’s decision years ago to pay private firms to operate several of its correctional facilities. Critics have long vilified the agreements as a giveaway to private, out-of-state companies while some state lawmakers have quietly wondered if the companies are making out-sized profits.

In our part of the world, Arizona’s finances are so bad that it is contemplating putting its prisons into private hands, reports the New York Times. “State officials will soon seek bids from private companies for nine of the state’s 10 prison complexes that house roughly 40,000 inmates, including the 127 here on death row,” the paper reports. “It is the first effort by a state to put its entire prison system under private control.”

A non-budget-related story out of Wisconsin shows how a movement beginning there aims to give the state schools superintendent ‘super duper powers’ to intervene in failing schools, including suggesting curriculum changes. The reason: Wisconsin wants to compete better for federal education grants, the Milwaukee Journal Sentinel reports.

Rhode Island, meanwhile, may be the first state to try to track swine flu through electronic data, the Associated Press reports.

Newspaper web sites are not holding onto ad dollars, even as Internet advertising is creeping back in a sour economy. More and more advertisers may plan big splashes for the big newspaper sites — Washingtonpost.com, nytimes.com and the Wall Street Journal — but they are more often spreading dollars to Internet-based ad exchanges like Advertising.com from AOL and DoubleClick Ad Exchange from Google, which dominate the buying and selling of extra space, the New York Times reports.

Are more newspapers beginning to move their websites toward the pay model? Advertising Age takes a stab at that issue, and answers with ‘Well, maybe.’

And after the recession, what’s next for newspapers. Editor & Publisher ponders that question in a thoughtful piece quoting people who get paid to think about such things.

I knew the state wasn’t alone in cutting what it spends on state prisons, but here comes proof of that: a new survey paid for by the Pew Charitable Trusts.

Twenty three states trimmed spending on what they spend to house prisoners for the budget year that began in July, according to the survey which was conducted by the New York-based research organization, the Vera Institute of Justice.

Only 33 states responded to the survey, but it says something that 23 of those states trimmed spending in this area.

New Mexico had trimmed its corrections expenditures by 4 percent, the survey says.

Other states, like Georgia, Idaho, Kansas and Nebraska, cut much more per capita than New Mexico did.

It just proves that cutting prison costs is a national trend, as this Stateline.org story explains.

The suit, filed today in federal court, claims that prison guards at the Northeast New Mexico Detention Facility teased and taunted the prisoners and a female guard videotaped the naked men. After the two-hour lockdown ended, employees told the inmates that they couldn’t find the key to the shower room door, so the inmates were given the option of crawling through a filthy cinderblock hole in the shower room wall or waiting for guards to find the key.

Several prisoners developed skin conditions after the incident and were denied treatment, the lawsuit charges.

The director of corporate relations for the GEO Group, which manages the prison, declined to comment on the lawsuit, writing in an e-mail: ”As a matter of policy, our company does not comment on litigation related matters.”

“New Mexico has one of the largest percentage of inmates housed in privately-run prison facilities in the country,” Bryan J. Davis, a cooperating attorney for the ACLU of New Mexico, said in a press release.

“These prisons go up, the employees don’t receive adequate training, and the inmates suffer the consequences. It’s irresponsible on the part of the private prison companies and the state that contracts with them.”

The lawsuit seeks compensatory and punitive damages against the GEO Group and several employees.