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Analysis: As prison closes, state still reckons with debt



If you’ve got to keep paying for something, you might as well use it.

That, more than anything, might be the logic behind the announcement from Mississippi Corrections Commissioner Marshall Fisher last week that the state prison system intends to seek new uses for the recently closed Walnut Grove Correctional Facility.

Fisher said last week saying the department is considering using the 1,500-bed facility as an alternative to prison, as a facility to house prisoners after parole violations, or to help prisoners prepare to re-enter society.

Mississippi was already awash in prison beds, and the surplus got larger after lawmakers in 2014 cut prison sentences to reduce the number of state inmates. Now, there are too many lockups and not enough inmates to fill them all.

Bringing new life to the Leake County prison would give corrections officials something to show each year when they seek money to pay the debt associated with Walnut Grove.

Grace Simmons Fisher, a department spokeswoman who is not related Marshall Fisher, said the department owes almost $194 million overall on Walnut Grove and three other private prisons — East Mississippi Correctional Facility near Meridian, Marshall County Correctional Facility and Wilkinson County Correctional Facility.

She couldn’t break down exactly how much the state owes for each. But it’s clear from bond documents the debt is largest at Walnut Grove — as much as $91 million. That’s in part because the prison is the newest, having opened in 2001. Walnut Grove and East Mississippi were also more expensive because each has 1,500 beds, while the two older prisons have 1,000 apiece.

The state borrowed $93.6 million for Walnut Grove in 2010, and bond documents showed no payments were due until Aug. 1 of this year. The state refinanced $61.2 million this year, and paid off at least $2.6 million of the principal on Aug. 1.

Overall, the state is scheduled to be paying $21.8 million a year on the prisons’ debt until 2027. That comes out of money that lawmakers appropriate to the Corrections Department for private prisons — $74.6 million this year.

The debt grew out of the five private prisons that lawmakers authorized between 1994 and 1998, when inmate populations were growing quickly. For at least three, separate local authorities were created to borrow money to build the prison, leasing it to the state.

Using that structure meant the state didn’t have to borrow money under its own name. Thus, lawmakers didn’t have to approve the spending during their yearly haggle over how much money will be bonded. It also meant the borrowing didn’t crowd out more popular projects such as university buildings or museums. Instead, local agencies borrowed through the Mississippi Development Bank, an agency that allows others to sell bonds at lower interest rates because they can use the state’s credit rating.

The Walnut Grove bonds were refinanced this summer, only weeks after Marshall Fisher announced the prison’s shutdown. The bond statement issued to investors reassured them that the Department of Corrections would keep paying.

“Despite the closure of the Walnut Grove facility, the department is obligated under the loan agreement, the note and the Walnut Grove lease to make payments sufficient to pay debt service on the Walnut Grove bonds,” it said.

The document cites the example of Leflore County’s Delta Correctional Facility. When the state closed the facility in 2002, it kept repaying money that Leflore County had borrowed on the state’s behalf for five more years, until 2007.

While Leflore County operates part of that prison today as a county jail, the rest remains closed. At least it’s paid for.


» Jeff Amy has covered politics and government for The Associated Press in Mississippi since 2011. Follow him at: http://twitter.com/jeffamy . Read his work at http://bigstory.ap.org/author/jeff-amy .


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