by James A. Bacon

In 2015 the Commonwealth of Virginia spent $1.13 billion operating state prisons holding 25,000 inmates. Is the state spending too much imprisoning people, or too little? Could it spend the money better? Those are questions we need to ask as Virginia faces a future of chronic fiscal stress. As I have blogged previously, we need to re-think state government from top to bottom, stem to stern.

James V. Koch, president emeritus of Old Dominion University and the lead author of “The State of the Region: Hampton Roads 2016,” applies economic thinking to the way Virginia deals with crime, incarceration and rehabilitation. His analysis doesn’t fit traditional “liberal” or “conservative” views of the problem, which makes it all the more worth thinking about.

The modern era of prison administration in Virginia began in 1994 when, at the urging of then-Governor George Allen, the General Assembly abolished parole for violent offenders. A tougher parole law, combined with a three-strikes-and-you’re-out law, precipitated a surge in Virginia’s prison population as offenders served longer sentences. The cost of running the prison system increased from 2.82% of total state expenditures in 1993 to 3.79% in 2002, making it one of the fastest-growing categories of state spending. Although absolute costs have continued to increase, prison’s share of state spending declined to 3.21% in 2015 as crime rates fell and the size of the prison population leveled off.

A central issue that Koch addresses is to what extent the get-tough approach on sentencing and parole contributed to the decline in crime rates. Are we keeping more offenders than necessary in prison and running up the cost of corrections more than we need to?

His review of the literature led Koch to conclude that “incapacitation” — taking criminals off the streets — is one of several factors accounting for Virginia’s decline in crime. “The available reputable research concerning the determinants of crime rates does not point to a single cause for the declines we have observed,” he writes. “Even so, the consensus is that increased incarceration probably [accounts for] 10 to 15 percent of observed declines in these rates.”

Here’s where it gets interesting:

It seems likely that the law of diminishing returns applies to law enforcement and imprisonment. Arrests focused on the most serious crimes and habitual criminals likely will reduce crime rates; however, as the volume of arrests increases, less serious crimes receive more attention and less dangerous criminals are arrested. Hence, each incremental arrest generates a progressively smaller decline in crime rates.

What this says to me is that the incapacitation strategy does work, but it needs to be fine-tuned.

Virginia spends $28,000 per inmate on average to operate its prisons, according to Koch’s data. Presumably, the cost of incarcerating less dangerous inmates in low- and medium-security prisoners is somewhat lower, but let’s use that number for purposes of comparison. What is the cost of operating an outpatient substance abuse program? Half? Two-thirds? And how does the recidivism rate from substance abuse programs compare to the recidivism rates for prison? If Virginia could take 5,000 substance abusers out of prison and treat them in outpatient programs cost $14,000 a year, could the state could save $70 million — and turn more offenders into productive citizens in the bargain?

Those numbers are purely illustrative. But they provide an idea of the kind of economic thinking Virginia needs to apply to its corrections system.