Disparity in fee split raises questions about Tammany work-release program

The contracts between St. Tammany Parish Sheriff Jack Strain and two private companies that run his work-release programs are far less financially advantageous for Strain’s office than similar deals a number of other Louisiana sheriffs have struck with private work-release firms.

Each day Strain receives $3 to $3.50 in state funds for each inmate who lives at one of the private St. Tammany programs and works in the parish. That compares to $8 to $10 a day in state funds typically paid to other sheriffs by a similar company that runs several work-release programs in Acadiana and around Baton Rouge.

Records show the program in Covington run by Northshore Workforce LLC has netted Strain’s office — and thus saved Tammany taxpayers — at least $200,000 each year for the past few years. The firm, which Strain picked for the job in 2008, is run by Marlin Peachey, Strain’s campaign treasurer and a former warden of the parish jail.

It’s too early to measure the contributions of the second program, which is based in Slidell and has been in private hands for only a few months. That program is run by St. Tammany Workforce Solutions, a new company formed by people who also have ties to the sheriff. The firm pays $4,600 a month to rent a building owned by Strain’s office, where, for nearly two decades, the sheriff ran a work-release program overseen by deputies. Strain signed the deal with St. Tammany Workforce over the summer, saying the Slidell program was going to run a deficit if he didn’t turn it over to a private operator.

Strain did not conduct a formal solicitation of bids before awarding either of the two deals.

In Covington, the sheriff’s money comes from the $3 per-diem payment Northshore hands over to Strain’s office for each man housed at its 230-bed facility. That’s about one-fifth of what the state Department of Corrections pays the sheriff for each prisoner. Northshore keeps the rest — some $3.4 million since early 2010.

Like all other operators of work-release programs in Louisiana, Northshore has one other major source of revenue: inmates’ wages. State law allows work-release operators — whether sheriff’s offices or private firms — to keep 62 percent of the gross wages earned by inmates in their charge, up to a daily maximum of $63.50 for each worker.

Those rules apply statewide, including for work-release programs operated directly by sheriffs — which comprise the vast majority of such operations in Louisiana. For the privately run programs, it’s up to the sheriff to negotiate how the per-diem payment is split.

A number of other sheriffs who opted to privatize work-release — including those in Terrebonne, Livingston, Iberia and East Baton Rouge parishes — have managed to land much sweeter deals for their offices than Strain has. Each of those sheriffs keeps well over half the money the state pays to house inmates in the privately run programs in their parishes.

Louisiana Workforce, the private firm that runs all of those programs, in most cases returns $10 per day to the sheriff for each inmate it houses. Because the state pays only $15.29 per day for inmates in work-release programs, that leaves only $5.29 for the operator.

Paul Perkins, the owner of Louisiana Workforce, said says that fact puts a lot of pressure on him to make sure all of his inmates are employed and are in the best-paying jobs he can find for them. The lion’s share of his revenue comes from inmate wages, he said, though he declined to specify what proportion.

“If I don’t hustle and get good-quality jobs for these guys, I don’t make it,” he said, adding that he canceled his firm’s contracts in Pointe Coupee and St. Martin parishes because he was losing money.

The other major private work-release operator in the state, LaSalle Management, runs programs in five parishes in north Louisiana. However, its work-release programs are nearly impossible to compare to the private ones in south Louisiana because they are subsets of LaSalle’s larger deals to build and run parish jails.

Were Strain to sign a deal with Northshore Workforce that raised his per-diem share to $9 — still less than Louisiana Workforce generally pays to sheriffs — it would put an extra $500,000 a year in his office’s accounts instead of going to the private company. And if he struck a similar bargain with St. Tammany Workforce, Strain could likely double that windfall.

St. Tammany Workforce sends $3.50 of each $15.29 per-diem payment it gets from the Department of Corrections to the sheriff.

Strain signed the contract with St. Tammany Workforce in June. He did not advertise for bids or proposals; instead, he gave an interview to the weekly Slidell Independent newspaper in which he announced he was seeking a private operator for the program. He said four individuals or groups, whom he has declined to name, contacted him after that story appeared, and he then decided to award the deal to St. Tammany Workforce.

That firm’s principals include Allen Tingle, the owner of a construction firm, and Brandy Hanson, a former Sheriff’s Office employee who has several relatives who still work there.

Strain, likewise, did not seek bids or proposals when confecting the deal for the Covington program. In that case, he has said that various businessmen, led by construction company owner Jimmy Laurent, approached him about starting a work-release program there. Laurent brought Peachey on board to run the program, and Strain gave the new firm the contract.

The original deal between the Sheriff’s Office and Northshore Workforce was much more generous to the sheriff: It said he would get to keep $9 of the per diem for each inmate in the program. But the deal was renegotiated in 2009, when the program was still just getting started, on much more favorable terms for the company.

Under that contract, the sheriff got none of the per diem payments when the work-release facility’s population was 125 or less, and he got $6 per inmate per day if the population passed 147.

A new deal signed last year simplified things, giving the sheriff a flat $3 per day for each inmate, regardless of the population.

Both of the St. Tammany deals expire in mid-2016.

Through a spokesman, Strain said it is “irresponsible” to compare the program operated by Northshore to those in other parishes because some of the other programs rent space from sheriffs, whereas Northshore built its own facility.

“The idea behind beginning a private transitional work program in western St. Tammany was to provide the workforce benefits to our community without having taxpayers foot the multimillion-dollar investment required to start such a project,” Strain said.

“Local businessmen took the risk and did all the work. Other local businessmen and women now benefit from the reliable workforce the program provides.”

Whether or not it makes as much money for the Sheriff’s Office as programs in other parishes, Strain said, the program has still saved his office at least $200,000 per year, while allowing inmates to earn a few dollars to send to their families.

In a telephone interview, Strain added that “it’s not just about the money.”

The operators he has chosen to run both of his programs have deep ties to the community and have St. Tammany’s best interests at heart, he said.

“I selected people to run these programs who would make a difference and who cared about their communities,” Strain said. “This is a very specialized kind of business that has only a very specialized kind of person interested in it. And that’s people who are interested in doing something good for the community.”

“This may surprise you,” he added, “but not everything is about the almighty dollar.”

Good-government advocates, however, question whether the public can feel confident about contracts awarded without real competition, to people with links to the sheriff.

“Generally speaking on a statewide level, there is a question here about whether no policy is good policy, especially when so many people stand to profit. And especially if the decision-making process is antiquated in the sense that it is non-competitive and lacking transparency,” said Robert Travis Scott, president of the Public Affairs Research Council of Louisiana. “With use of the best advice available, the sheriffs statewide might be well-served to take it upon themselves to craft consistent standards in Louisiana for avoiding conflicts of interest in the contracting process and in the use of labor.”

Rafael Goyeneche, president of the watchdog Metropolitan Crime Commission, said the disparity in the per-diem sharing from parish to parish raises questions.

“I think the sheriff has a fiduciary responsibility to either (a) maximize revenue or (b) reduce costs, and the only way you do that is with a competitive bid process,” Goyeneche said. “Now, he can’t put the genie back in the bottle. He signed a contract and is bound by it through 2016. But I think at the conclusion of that contract, it would be in the best interest of the public to open this up to bid to see if he can maximize revenue or reduce costs.”

“You learn by every experience. So here’s a learning opportunity to maybe improve the financial position for the Sheriff’s Office in 2016.”