The return of the Legislature next week will feature an intense debate on not just how to reduce prison overcrowding in response to the recent ruling by federal judges, but also on how to save cut prison spending as part of the state's budget crisis. A lot. And fast.

There was a smattering of tidbits today on the subject of prisons -- not quite actual news, but also not just chatter. It began with a background briefing for reporters by Senate GOP staffers, laying out data they believe proves false the belief that California's prisons are full of non-violent offenders that can easily be released.

It appears Republicans either don't have, or aren't ready to share, an alternative to Governor Schwarzenegger's framework for how to reduce spending and lower the prison population. As of the end of July, state prisons were way over capacity at some 167,000 inmates (there's Number 1).

But in regards to the latter -- a need to cut spending by $1.2 billion (there's Number 2) in the current fiscal year -- the Republican talking points are likely to be simple. Cut administrative costs. Cut spending on rehabilitation. Fight the court mandate to spend big bucks on prison health care.

Later this afternoon, corrections secretary Matthew Cate spoke with reporters as a sort-of rebuttal to some of the GOP points. Cate said on budget matters, time is definitely money; the state loses $3 million in possible savings every day a prison budget deal isn't struck (there's Number 3). He said the governor's proposal (which seems to exist mainly as a broad sketch for now) could lower the inmate population by as many as 27,000 in the first year alone.

But watch for legislative Republicans to argue that the solution should be building more prisons, not releasing prisoners. Senate GOP staff today pointed out data showing the inmate population grew by only 4% between the summer of 1999 and now (there's Number 4) while total the corrections department staff grew by 37% (there's Number 5) and medical personnel staffing increased by 219%.

One particular flash point could be the state's juvenile facilities, long criticized and litigated for their conditions and revamped in recent years. Senate GOP staff say the data shows there are now 2.4 staffers (there's Number 6) for every juvie offender. This follows along the public web comments this week of one Republican, Sen. George Runner (R-Lancaster).

Secretary Cate said today that Schwarzenegger intends to cut the juvenile budget "signficantly," most notably by closing one of the existing six juvie facilities. He declined to say which one.

It seems likely that majority Democrats in the Legislature would want more reforms beyond those called for by Schwarzenegger, but there's also a sense that Dems and the Guv could resolve their differences relatively easily.

"To some extent, there does seem to be sort of a consensus emerging that overcrowding is a real problem," said federal prison health care receiver Clark Kelso on Monday.

But tell that to legislative Republicans. One staffer in today's Senate GOP background briefing suggested that a quick closing of the ranks between Democrats and the governor would probably spark GOP legislators to ramp up their PR campaign on the perils of "early release," defining that volatile concept as broadly as possible and appealing to universal concerns about public safety.

The cost overruns in the operation overseen by receiver Clark Kelso have been the subject of Capitol rumor for months. But the high price tag was only confirmed over the last 24 hours, first by comments made during a budget conference committe hearing on Tuesday and later by Kelso himself.

The $487 million overbudget problem, known as a "deficiency" in government parlance, is in the receiver's contract medical services operation, according to Kelso. That's the part of prison health care that sends inmates to medical facilities outside of prison walls when deemed necessary. "These are expenditures for out-of-prison hospital and specialty care," said Kelso in a phone interview this afternoon.

"There's a lot [of inmate care] that does have to be sent out," he said, "because we don't maintain that level of care within the prison."

Kelso said the range of medical treatments vary, from inmates with liver disease to those who have foot injuries and need podiatry services. The receiver said that his staff has known that such services were running over budget since the end of 2008, and have been working to implement planned efficiences sooner than expected as a result.

For some perspective, consider that the state budgeted $359 million for contract medical services in the 2008-09 fiscal year, which means that the actual expenditure will be $846 million... 136% more than expected. In fact, the entire prison health care receiver budget was just under $1.8 billion. This revelation pushes that total well over $2 billion.

Legislators say they were unaware of the cost overrun. "If he is half billion dollars over budget, he's certainly going to have to show us where and why," said Assembly Speaker Karen Bass.

Kelso said that he's constantly aware of the necessary balance between the state's fiscal woes and the court directive to provide health care for prisoners that doesn't violate the U.S. Constitution. But some lawmakers remained unconvinced.

"We need to make sure that the law-abiding citizens of California are not getting short-changed," said Sen. Bob Dutton (R-Rancho Cucamonga), "just because of some inmates that are getting more benefit than they are deserving." Dutton's comments came during a break from Wednesday's long the joint budget conference committee hearing, where citizen after citizen begged for social services programs not to be cut.

A budget spokesman for Governor Schwarzenegger said that the administration learned of the higher prison health care costs a few weeks prior to the revised budget released on May 14. As such, Schwarzenegger's budget takes into account the costs as part of its $2.3 billion in higher-than-expected costs for state government this year. The governor is expected to submit another $3 billion in budget cuts at the end of the week, cuts that come on top of the $5.6 billion in reductions offered at the start of this week.

U.S. District Judge Thelton Henderson denied a petition from Governor Schwarzenegger and Attorney General Jerry Brown to replace the receivership with the more limited powers of a special master.

State officials argued that the receivership has met its goals of ensuring that California prison health care is of a quality required by the U.S. Constitution. They also criticized receiver Clark Kelso for the level of spending being proposed, and the kinds of services the money would go towards providing.

The 24-page ruling from Henderson is probably best summarized by the following passage:

"Based on the entire record in this case, the Court is far from confident that Defendants [the state] have the will, capacity, or leadership to provide constitutionally adequate medical care in the absence of a receivership, and Defendants have presented no evidence to the contrary."

Henderson went on to write that the receivership will be disbanded once the work is done... which, again, he believes it is not.

[UPDATE 1:40 pm - In a written statement, corrections secretary Matthew Cate says the administration will appeal today's ruling. "While the state is committed to providing a constitutional level of care to inmates," said Cate, "we must do so in an economically viable way. The return of control of inmate medical care to the state is the best way to accomplish this."]

It's been a bumpy few months for relations between the receiver, the Schwarzenegger administration, and Brown. Following calls for the receiver's money requests to be rejected, and a January audit that questioned previous spending decisions by the previous receiver, Schwarzenegger and Brown teamed up to go after proposals for prisoner services that included "yoga rooms."

Today's decision is probably not unexpected, considering Henderson is the judge who created the receivership in the first place. "I look forward with renewed commitment to working collaboratively with state officials and agencies," said Kelso in a written statement, "to achieving our shared goal of improving prison medical and health care."

State Auditor Elaine Howle's new report raps the knuckles of the receivership program for not following proper proceduresl, though the knuckles rapped belong the guy who used to be prison health care receiver: Robert Sillen. Sillen was replaced in January 2008 by Clark Kelso, a law professor who's been called upon to fix a number of state government messes in recent years.

The audit (summary here, full report here) concludes that under Sillen's watch, the receivership operation spent $26.7 million on IT goods and services without following proper competitive bidding procedures. The auditor says that one of two processes could have been used: state government's competitive bidding process, or an "alternative" method for the receivership approved by U.S. District Judge Thelton Henderson, who created the receivership a few years back as part of a long-running lawsuit against health conditions in the prisons.

"Staff at various levels," says the audit, "had little, if any, understanding about the competitive bidding requirements imposed by the federal court."

The audit also says that "wok environment" in the receivership offices discouraged staffers from raising concerns about how the IT money was being spent.

In a press release, Kelso said he's taken steps to fix the problems created before his arrival, and to ensure the IT services in question are "appropriate and in the best interest of the state."

[update 10:39 a.m. -- Kelso told reporters in a conference call this morning that he's referred the matter to Attorney General Jerry Brown. Those could be interesting conversations, given Brown's ongoing attack against Kelso's $8 billion prison health care plan.]

Clark Kelso, the federal court appointed receiver for prison health care, decided today to pull the trigger on formal legal action to get $8 billion he says is needed to bring medical standards up to a constitutionally guaranteed level.

The action comes after legislative action stalled back in May on a bond package to pay for prison health care. Kelso's filing with the court asks for $6 billion to build new health care facilities, and another $2 billion to complete projects at existing facilities.

And as for the headline... that's a factoid mentioned by Kelso today designed to get the attention of lawmakers, who remain at loggerheads over a new budget. He estimates that if a court rules against the state in this new lawsuit, the costs in the current 2008-09 fiscal year would be $3.1 billion... potentially bringing the budget shortfall up to more than $18 billion.

For now, it seems, Governor Schwarzenegger is maintaining optimism. "The administration will continue to work cooperatively with the receiver and the Legislature to provide the necessary funding for the receiver's efforts," said gubernatorial spokesman Aaron McLear.

Late Monday night, the governor's office confirmed that no employees of either the California Highway Patrol or the California Department of Forestry and Fire Protection would have their paychecks cut back... assuming Schwarzenegger's order ends up going into effect (something that was hotly debated yesterday).

"Employees with critical public safety roles, including all of CalFIRE and CHP, are exempt from the governor's executive order," said gubernatorial spokesman Aaron McLear by email.

Still unclear, however, is how many employees of another public safety entity -- the state Department of Corrections and Rehabilitation -- would be exempt from a minimum wage-only paycheck. The issue of prison employees remains unresolved... in part, after the federal court-appointed receiver for prison health care, Clark Kelso, suggested almost 90% of the department's 66,000 employees should be exempt... due to the critical nature of their jobs.

Kelso's statement drew a quick response last week from Schwarzenegger's top lawyer, Andrea Hoch, who wrote to Kelso that such a determination is "beyond your authority."

Nonetheless, the "who is and who isn't exempt" issue across all state agencies is important... because it has a real impact on whether the governor's payroll actions can actually save the state the money his advisers said it would, money he says is needed to keep from running out of cash.

[UPDATE: For more information, see new posting on "Schwarzenegger v. Chiang?"]

I mean funny like I'm a clown? I amuse you? I make you laugh?"

The new federal court receiver for prison health care, Clark Kelso, has a reputation for a calm and reasoned demeanor. And yet, I can't get Joe Pesci's tough guy character from Goodfellas out of my mind.

This morning, Kelso filed documents with U.S. District Judge Thelton Henderson again demonstrating his intentions to get the money he says is needed to bring California's prison health care up to constitutional standards.

Kelso's new filing adds Controller John Chiang to the state officers listed as defendants. The receiver also filed a request to begin a legal discovery process at Chiang's office to examine the state's bank accounts.

“The reason is simple," says Kelso's filing. "The State has declined to fund major capital projects the Receiver considers essential to fulfilling the charge given to him by this court. As a result, the Receiver may find it necessary to ask this court to order the Controller to draw warrants on the State Treasury to provide the Receiver with the necessary funds."

Today's action is just the latest ratcheting up of the pressure. Last month, Republicans in the state Senate refused to provide votes for a $7 billion bond proposal to improve prison health care.

Part of the problem, said Assembly GOP Leader Mike Villines, is the price tag. Villines, in comments to reporters on Wednesday, said the proposal is the equivalent of giving a mid-size city lavish health benefits.

"We have someone [Kelso] saying they need $7 billion for 180,000 population," Villines said. "It seems astronomical, and it doesn't seem well justified."

Goodfella Tommy DeVito wouldn't like that answer. And it seems doubtful Kelso or the federal courts will, either.

UPDATE [3:30pm] In a written statement, Controller Chiang paints a gloomy picture if the courts simply come in and pluck the money needed from the state's bank account: "If the Court does order the State to make payments as requested by the Receiver, we would be forced to tap transportation, victim’s compensation, mental health and other special funds earmarked by voters for specific purposes. Such action likely would invite protracted and costly litigation at taxpayer expense."