Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Department Of Corrections

Selected Scope Financial Audit For the Period
July 1, 1994, through March 31, 1997

 

Public Release Date: July 18, 1997 No. 97-37

Agency Background

The Minnesota Department of Corrections was created in 1959 to consolidate state correctional functions under one agency. The department is a service and regulatory agency which provides correctional facilities and community programs for adjudicated delinquent and adult felons. The Governor appointed Mr. Gothriel J. La Fleur commissioner of the department effective August 5, 1996.

During fiscal year 1994, the department initiated a restructuring of the industries program at the correctional facilities. The department created a unit called MINNCOR to centralize control over management, production coordination sales, marketing, designing, purchasing, and accounting operations of the industries program.

The department also administers several programs funded by dedicated receipts. Among these programs are work programs associated with counties, indirect cost allocation, special projects, aid to victims, shared services with other state agencies, and reimbursement agreements with counties.

Conclusions

The Department of Corrections operated MINNCOR as a business enterprise beginning in fiscal year 1995. Continued losses required the General Fund to subsidize MINNCOR. While it has implemented some changes to its business practices, the deficit for fiscal year 1996 increased over fiscal year 1995. Preliminary fiscal year 1997 data shows, however, that MINNCOR's operating results may be improving. We noted that MINNCOR was unable to determine the profitability of individual products and services. We also identified several issues related to billings, written agreements, and the accounting system.

The Department of Corrections has several programs that have dedicated revenues and are accounted for in the Special Revenue Fund. We noted that the General Fund was incurring costs on behalf of the Special Revenue Fund. This resulted in several programs having excessive fund balances. We also noted several problems in the accounting for Special Revenue Programs. These issues included failing to analyze the rates charged for housing nonstate inmates, no contracts with local governmental units, and not matching revenues and expenditures in the same fund for the Sentencing to Service Program.

 

Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155