PRISON SHOPPING SPREE: CAMERAS, TVS, CARS, GUITARS

Sacramento -- California corrections officials allowed contractors
hired to run drug abuse treatment programs in state prisons to go on
taxpayer-funded shopping sprees that led to the purchases of electric
guitars, plasma televisions, $26,000 camcorders and cars.

Even as the prison system faced annual criticism for overspending its
budget by hundreds of millions of dollars, contractors racked up big
bills on all kinds of items that seemed to have little to do with
helping prisoners kick drug habits, according to state documents.

In a department that has recorded spending deficits in each of the
last eight years and which provides few rehabilitation programs for
prisoners, interviews and documents show little oversight of
substance-abuse treatment programs. A Chronicle investigation, aided
by some documents given to the newspaper by a lawmaker who will hold a
hearing on the matter Monday, found:

- -- A program at Pleasant Valley State Prison in Coalinga (Fresno
County) spent $95,127 on items including two guitars, a digital piano,
a portable stage, a camcorder and a digital camera at the end of the
2002-03 fiscal year, when Gov. Gray Davis made emergency cuts to
school funding as the state faced a record deficit.

- -- A contractor providing drug treatment in four prisons throughout
the state was authorized to spend $500,000 on moviemaking equipment in
the 2003-04 fiscal year, when the prison system was reporting a record
$500 million deficit. The equipment included two camcorders valued at
$26,750 each, two 50-inch plasma-screen televisions at $6,423 each,
and two video camera lenses for $22,000 each.

- -- The same contractor, Amity Foundation, took three California
parolees and six counselors to Tucson in 2000 and put them to work
painting, fixing shingles and repairing an air conditioner at an
Amity-owned ranch. Four participants interviewed by corrections
officials said they were told the foundation was preparing for an
upcoming inspection.

The buying binges came at the end of fiscal years in which money had
gone unspent, and, instead of sending the cash back into state coffers
or hiring more drug counselors, prison administrators approved the
expenses despite some staff objections.

"These are preposterous expenses of money," complained state Sen.
Jackie Speier, D-Hillsborough. "What we have is the ultimate abuse and
affront to the taxpayers of this state."

The contractors either justified their expenses as legitimate for the
purposes of drug counseling, or could not be reached for comment.

Closer Look

Speier will hold a hearing Monday that is expected to provide an
inside look at drug treatment in California prisons. In a rare move,
Speier, chairwoman of a Senate government oversight committee, has
subpoenaed five corrections employees, requiring them to testify.

The employees are expected to say that their superiors directed them
to allow contractors to spend money on moviemaking equipment, musical
instruments and vehicles that the corrections employees argued were of
little relevance to rehabilitation.

The hearing comes as Gov. Arnold Schwarzenegger's administration
continues to struggle to fix myriad problems plaguing prisons.
Spending is soaring at overcrowded prisons, recidivism rates in
California remain among the highest in the nation, and a federal judge
has expressed his lack of confidence in the administration by
appointing a receiver to oversee prison health care. The governor's
top corrections officials also face difficult state Senate
confirmation hearings this summer to keep their jobs.

The state's sprawling prison system administers 34 contracts with
vendors charged with helping inmates and parolees deal with addiction.
Few could argue the help isn't needed: estimates suggest at least 65
percent of the state's inmates have a substance-abuse problem.

But programs are sparse. A department that is expected to spend $8
billion in the next fiscal year sets aside about 3 percent of its
budget for inmate education and drug-abuse-prevention programs,
despite "ample evidence that prison education and substance-abuse
programs have a positive impact on recidivism," according to a report
issued in 2004 on California's prison system that was led by former
Gov. George Deukmejian.

But there is ample evidence to suggest that not all of the money
California spends on drug treatment for inmates and parolees is well
spent.

Money is often left over for treatment programs because contractors
can't or don't hire enough staff, according to one whistle-blower who
is expected to testify Monday, and documents show that corrections
administrators are reluctant to return the money for fear of receiving
less funding in subsequent years.

The whistle-blower, Jonathan King, who oversaw drug-treatment programs
at Pleasant Valley State Prison, wrote in a letter to Speier that
counselor spots frequently went unfilled and that often "untrained
clerical staff" ran therapy sessions that included "showing them
(inmates) Hollywood movies or declaring a 'recreation day' and letting
inmates play cards, Monopoly and dominoes."

And a confidential report by the state Inspector General's Office,
which acts as a watchdog over state prisons, confirmed that the head
of the corrections office overseeing drug-rehab programs in 2003 and
2004, Jim L'Etoile, justified the money spent on the musical
instruments to other employees by saying they should protect the
contractor from "being ripped off during the following fiscal year."
The statement suggests that E'toile believed that future contracts
would not be reduced if the organization spent all the money that it
was allocated in a given year.

L'Etoile, who is now head of the parole division in the Corrections
Department, declined to comment.

Corrections officials admit some oversight problems -- a December 2005
audit commissioned by the Schwarzenegger administration and released
to The Chronicle found that the prison system issues contracts that
set no performance standards and that there is uneven monitoring of
the programs for inmates inside state prisons and for parolees.

In essence, groups paid by the state have little incentive to run
effective programs that help inmates end the drug habits that often
precipitate a life of crime.

But a spokesman for the department said some changes had been
made.

"Under the previous administration, contract controls were
insufficient to protect inappropriate purchases by contractors," said
Todd Slosek, a spokesman for the department.

"As a result, new policies were developed to review and approve
purchases," he said, noting prison staff had more power to vet how
contractors were spending money.

Nonetheless, Speier said her hearing will show that many of the
problems that have plagued the department are still in place and that
Schwarzenegger, who took office in late 2003, has failed to rein in
"an out-of-control department."

"This is a governor who stood there with a broom in his hands saying
he was going to clean up government," she said. "He said he was going
to tear up the credit card and control spending. He has failed."

The contractors who spent the money defended their expenses, noting
they were approved by corrections officials and were for legitimate
use in their programs.

"It's not unusual for a program to have musical instruments," said
Michael Hawkey, chief financial officer of Mental Health Systems,
which spent the money at Pleasant Valley State Prison. "That's a
common thing for a therapeutic community."

The Cars

Corrections employees are expected to testify Monday that Mental
Health Systems also bought cars with end-of-the-year money for a
Fresno program. Hawkey said he was unfamiliar with the purchase but
suggested vehicles might be needed to take parolees in residential
rehabilitation programs to appointments with parole agents or to job
interviews.

Amity CEO Rod Mullen said in an interview that the trip to Arizona was
a retreat that did include drug rehabilitation programming. He said
physical labor "is a fundamental aspect of the program" that teaches
cooperation. He denied that the work was done in preparation for a
site inspection.

Mullen also said the moviemaking equipment was intended to make
training videos for drug-treatment counselors.

He said "the quality of the equipment was not over the top" and the
films could have saved the department money by allowing counselors in
far-flung prisons to watch videos instead of traveling across the
state for training.

"It was an idea that we had talked about with the department for
several years," Mullen said.

While department officials gave Amity permission to buy the equipment,
Amity instead entered into lease agreements that allowed for lower
monthly payments but added more than $38,000 to the cost, according to
Amity financial documents obtained by The Chronicle.

Slosek, the corrections spokesman, said the department was doing an
audit of the ill-fated moviemaking equipment project to ensure "that
every penny spent is accounted for."

The expenses on instruments and other items at Pleasant Valley State
Prison has been questioned by the state Inspector General's Office.

In a 2004 report on the purchases, the office noted that some of the
items purchased -- notably the cameras -- are generally not allowed in
prisons.

And internal prison memos show that one camera was apparently kept at
the home of the program director, while much of the rest of the music
equipment caused problems at the prison because there was no room to
store it, according to another memo.

"The sheer volume of the items purchased has created a strain on the
warehouse operation," reads the memo.