SACRAMENTO — The California Department of Corrections is overspending its budget by more than $544 million, and perhaps far more, largely because of pay hikes, overtime and other benefits granted to prison guards by Gov. Gray Davis and the Legislature last year.
In a letter submitted to the Department of Finance, Corrections officials said the cost overrun would have been even greater -- $732.6 million -- had they not moved to cut other costs associated with running the nation's largest prison system.
Though the department has overspent its budget for years, the $544.8-million deficit is the largest ever registered by the prison system, and is believed to be the largest deficit ever incurred by a state department.
The shortfall amounts to more than 10% of the $5.1 billion that Davis and the Legislature earmarked earlier this year for the state's adult prison system. By comparison, the department incurred $140 million in unexpected costs during the previous two years.
The department attributes the largest single chunk -- $184 million -- to increases of nearly 7% this year in salaries for prison officers and raises for other prison employees. Another $168.5 million results from the department's need to increase payments to the employees' pension fund, in part because of past stock market declines, but also because increased salaries had added to retirement pay.
"Negotiated labor agreements providing for general salary increases and increased retirement contributions have dramatically added to the department's expenses," said the letter, signed by Corrections Director Edward S. Alameida and delivered to the Department of Finance on Wednesday.
Additionally, the department estimates that it will need $87.7 million more to cover merit salary increases in the 2003-04 fiscal year, and $52 million for unexpected overtime costs.
"This is very preliminary," Wendy Still, the Corrections Department's chief budget officer, said Friday. "It is based on two months of budget data."
Finance officials are reviewing the request, and probably will seek to pare it back. The Legislature and incoming Gov. Arnold Schwarzenegger must decide whether to pay all or a part of the deficit.
Schwarzenegger spokesman H.D. Palmer called the deficit "eye-popping by anyone's standards," and added that Corrections' budget would be "added to the platter of ugly fiscal issues that the governor-elect is going to have to address."
