With severe overcrowding easing in state lockups, California is winding down a controversial deal with the nation's biggest private prison operator and will bring thousands of inmates housed in facilities as far away as Mississippi back to California within the next few years.

Currently, some 9,500 state inmates are serving sentences in prisons in Arizona, Mississippi and Oklahoma operated by the Nashville, Tenn.-based Corrections Corporation of America. As part of a strategic plan announced in April, the state Department of Corrections and Rehabilitation will transfer those inmates back to California facilities by 2016.

The return of the first group, 600 inmates housed in Arizona, will begin "immediately," said Corrections Secretary Matthew Cate. Another 4,000 prisoners will return to California in 2014.

Steve Owen, spokesman for the Corrections Corporation, confirmed the company agreed to modify its contract to lower the total number of California inmates housed in out-of-state facilities from 9,588 to 9,038 for this year. The contract guarantees 90 percent occupancy.

The revised contract will reduce California's fee to the private prison group by $67 million for the current fiscal year, according to corrections spokeswoman Dana Simas. The state will save another $14 million in 2012 by cutting staff positions for the program, which is administered in Sacramento.

California is paying the Corrections Corporation $61 to $72 per prison bed per day, making the original contract worth more than $280 million for 2012-13, according to the Legislative Analyst's Office and corrections department figures.

The group won its first contract with California in 2006 after then-Gov. Arnold Schwarzenegger declared a state of emergency in the prison system. Schwarzenegger said the action was necessary "to prevent death and harm caused by California's severe prison overcrowding."

The proclamation allowed officials to override a law that prohibits sending inmates outside the state without their consent. A year later, the Legislature also approved some out-of-state transfers as part of a prison construction bill. The Legislature's authority for those transfers expired last year, but the state continues to rely on the 2006 proclamation to keep inmates in out-of-state prisons.

Moving inmates out of California against their will proved controversial. Prisoner advocacy groups said keeping inmates far away from their families could undermine their chances of leading productive lives after release. Representatives from the prison guards union complained the program was taking jobs away from Californians.

But state officials praised the Corrections Corporation for making prison beds available on short notice and helping alleviate extreme overcrowding.

The California Emergency Services Act states that the governor "shall proclaim the termination of a state of emergency at the earliest possible date that conditions warrant." Corrections officials say that while conditions have dramatically improved, they do not know when the state of emergency will be formally lifted.

Last month, Gov. Jerry Brown signed into law an overhaul of California's penal system, which intends to cut billions in spending and comply with multiple federal court orders for improving inmate health care.

"The passage of our blueprint will show the federal courts that California is serious about ending the long-standing lawsuits overseeing much of our operations," Cate said.

California is under a court order to reduce its prison population to 137 percent of design capacity, or about 110,000 inmates. Since California began transferring authority over some offenders to counties as part of Brown's public safety realignment, the state inmate population has dropped by about 25,000 inmates.

However, Cate said the return of all inmates from out-of-state facilities is still dependent on the court increasing the population threshold to 145 percent of design capacity.

But even if the plan is fully implemented, it remains uncertain how much money it actually will save the state. According to department projections, "the elimination of the out-of-state contract beds will result in a reduction of $318 million General Fund and over 400 positions from the department's budget."

But as the Legislative Analyst's Office points out, bringing thousands of inmates back to California lockups will incur other costs, including housing and medical care.

What's more, the analyst's office asserts there could be significant savings elsewhere if California continued to keep some inmates in out-of-state facilities. That includes canceling several prison construction projects for a savings of about $155 million annually.

View this story on California Watch

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