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Prepared by the New Mexico Corrections Department
Financial Management Bu

 ANNUAL FINANCIAL REPORT
OF THE NEW MEXICO CORRECTIONS DEPARTMENT
FOR THE FISCAL YEAR ENDING JUNE 30, 2016
TABLE OF CONTENTS
INTRODUCTORY SECTION

Page

Official Roster

iii

Organizational Chart

iv

List of Abbreviations

v

FINANCIAL SECTION
Independent Auditors' Report
A.

MANAGEMENT'S DISCUSSION AND ANALYSIS (required supplementary information)

B.

BASIC FINANCIAL STATEMENTS

vi-viii

1-10

Government-Wide Financial Statements
Statement of Net Position

11

Statement of Activities

12

Fund Financial Statements
Governmental Fund Financial Statements
Balance Sheet- Governmental Funds

13

Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net
Position

14

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental
Funds

15

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities

16

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and
Actual - General Fund

17

Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and
Actual - Community Corrections Special Revenue Fund

18

Proprietary Fund Financial Statements
Statement of Net Position - Proprietary Fund

19

Statement of Revenues, Expenses, and Change in Fund Net Position - Proprietary
Fund

20

Statement of Cash Flows - Proprietary Fund

21

Agency Fund Financial Statement
Statement of Fiduciary Assets and Liabilities - Agency Fund
Notes to the Financial Statements

22

23

 C.

OTHER SUPPLEMENTAL INFORMATION
General Fund
Schedule of Revenues &·Expenditures - Budget and Actual, By Fund
General Operating Fund, SHARE System Fund 90700

59

Probation and Parole General Operating Fund, SHARE System Fund 91500

60

Combining Balance Sheet General Fund Types

61

Combining Statement of Revenues, Expenditures and Changes in Fund Balance
General Fund Types

62

Schedule of Revenues & Expenditures - Budget and Actual, By Program
Program Support

63

Inmate Management and Control

64

Special Appropriations - Fund 90700

65

Community Offender Management

66

Community Corrections - Vendor Operated

67

Special Appropriations - Fund 90200

68

Reconciliation - Budgetary Schedules to Financial Statements

69

Schedule of Special Appropriations

70-71

Schedule of Revenues and Expenses, By Enterprise

72-74

Schedule of Revenues and Expenses, Cleaning Products, by Facility

75

Schedule of Revenues and Expenses, Textiles, by Facility

76

Schedule of Revenues & Expenses - Budget and Actual
(GAAP Budgetary Basis) Corrections Industries Division

77

Agency Fund
Schedule of Changes in Assets and Liabilities
Schedule of Vendors
Performance Measures
D.

78
79
80-83

COMPLIANCE SECTION
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance With Government
Auditing Standards
Summary Schedule of Prior Year Audit Findings
Schedule of Findings and Responses
Exit Conference

84
86
87-112
113

 NEW MEXICO CORRECTIONS DEPARTMENT
OFFICIAL ROSTER
JUNE 30, 2016

Administrative Officials

Gregg Marcantel
Joe W. Booker, Jr.
Alex Sanchez
Mark Myers
Paul Montoya
Jerry Roark
Anna Martinez
James Brewster
Tim Oakeley
Rose Bobchak

Secretary of Corrections
Deputy Secretary of Operations
Deputy Secretary of Administration
Chief of Staff
Acting Director of Administrative Services
Director of Adult Prisons Division
Acting Director of Corrections Industries Division
General Counsel
Director of Information Technology Division
Director of Probation and Parole Division

Corrections Industries Commission
John Ian Serrano
Jay Armijo
Nick H. Brown
Harold Foreman
Paul Robert Alexander
Alfred Porter

Chair
Vice Chairman
Member
Member
Member
Member

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 NEW MEXICO CORRECTIONS DEPARTMENT
List of Abbreviations
JUNE 30, 2016

APO

-

Adult Prisons Division

ASD

-

Administrative Services Division

cc

-

Community Corrections I Vendor Run [Program]

CID

-

Corrections Industries Division [Program]

COM

-

Community Offender Management [Program]

CNMCF

-

Central New Mexico Correctional Facility

CTA

-

Corrections Training Academy

DFA

-

Department of Finance and Administration

EDB

-

Education Bureau

GSD

-

General Services Department

HSB

-

Health Services Bureau

IMAC

-

Inmate Management and Control [Program]

ISP

-

Probation and Parole Intensive Supervision [Program]

ITD

-

Information Technology Division

NMCD

-

New Mexico Corrections Department

PNM

-

Penitentiary of New Mexico

PPD

-

Probation and Parole Division

PS

-

Program Support [Program)

RCC

-

Roswell Correctional Center

sec

-

Springer Correctional Center

SHARE

-

Statewide Human Resources, Accounting, and Management Reporting System

SNMCF

-

Southern New Mexico Correctional Facility

WNMCF

-

Western New Mexico Correctional Facility

v

 Timothy M. Keller
State Auditor

Sanjay Bhakta, CPA, CGFM, CFE, CGMA
Deputy State Auditor

State of New Mexico

OFFICE OF THE STATE AUDITOR

INDEPENDENT AUDITOR'S REPORT
Mr. David Jablonski, Acting Secretary, Corrections Department
New Mexico Corrections Department
Report on Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund, the aggregate remaining fund information, and the budgetary comparisons for the general fund and
major special revenue funds of State of New Mexico Corrections Department (Department), as of and for the year
ended June 30, 2016, and the related notes to the financial statements which collectively comprise the Department's
basic financial statements as listed in the table of contents. We also have audited the financial statements of each of
the Department's individual SHARE funds, the fiduciary fund and the budgetary comparison for the enterprise fund,
presented as supplementary information, as defined by the Government Accounting Standards Board, in the
accompanying combining and individual fund financial statements as of and for the year ended June 30, 2016, as listed
in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation,
and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatements, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards applicable
to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.

vi

2540 Camino Edward Ortiz, Suite A, Santa Fe, New Mexico 87507
Phone (505) 476-3800 * Fax (505) 827-3512
www.osanm.org * 1-866-0SA-FRAUD

 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund
information of the Department, as of June 30, 2016, and the respective changes in financial position and where
applicable, cash flows thereof and the respective budgetary comparisons for the general fund and major special
revenue funds for the year then ended in accordance with accounting principles generally accepted in the United States
of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects
the respective financial position of each of the individual SHARE funds and the fiduciary fund of the Department as of
June 30, 2016, and the respective changes in financial position thereof and the respective budgetary comparison for
the enterprise fund for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Emphasis of Matters

As discussed in Note 2, the financial statements of the Department are intended to present the financial position, the
changes in financial position and, where applicable, cash flows of only that portion of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the State of New Mexico
that is attributable to the transactions of the Department. They do not purport to, and do not, present fairly the financial
position of the entire State of New Mexico as of June 30, 2016, the changes in its financial position, or, where applicable,
its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States
of America. Our opinion is not modified with respect to this matter.
Other Matters

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion
and analysis on pages 1-10 be presented to supplement the basic financial statements. Such information, although not
a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers
it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary information
in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries
of management about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our
audit of the basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Department's basic financial statements, the combining and individual fund financial statements, and the budgetary
comparisons. The agency fund schedule of changes in assets and liabilities and the other schedules listed as "other
supplemental information" in the table of contents are presented for purposes of additional analysis and are not a
required part of the basic financial statements.
The agency fund schedule of changes in assets and liabilities and the other schedules listed as "other supplemental
information" are the responsibility of management and were derived from and relate directly to the underlying
accounting and other records used to prepare the basic financial statements. Such information has been subjected to
vii

 the auditing procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures
in accordance with the auditing standards generally accepted in the United States of America. In our opinion, the
agency fund schedule of changes in assets and liabilities and the other schedules listed as "other supplemental
information" are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory section, performance measure schedule and vendor schedule have not been subjected to the auditing
procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or
provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 30, 2016 on our
consideration of the Department's internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is
an integral pa of an audit performed in accordance with Government Auditing Standards in considering the
Departm t's nt rnal control over financial reporting and compliance.

1

)0_

sJJ::

Santa Fe, New Mexico
November 30, 2016

viii

µ,~

 MANAGEMENT'S DISCUSSION AND ANALYSIS
The New Mexico Corrections Department's (Department's) Management Discussion and Analysis (MD&A) is designed
to (a) focus the reader on the Department's significant financial issues, {b) provide an overview of the Department's
financial activities, (c) identify changes in the Department's financial position, including its ability to address challenges
in future years, (d) identify any material deviations from the approved budget, and (e) identify issues or concerns with
its funds for the current year.

HIGHLIGHTS AND ACCOMPLISHMENTS

Financial Highlights. The Department's net position increase by $1,194,131 for FY16: governmental net position
increased by $1,631,659 and the business-type net position decreased $437,529.

The Corrections Industries Division is classified as a business-type activity. For fiscal year (FY) 2016, the Corrections
Industries Division had a decrease in net position of $437,529. Operating revenues increased by $326,672 and
operating expenses also increased by $1,017,169 over the prior period.
The Corrections Industries Division
implemented several new programs in FY 16. These new programs account for the much of the increases in the
operating revenues and expenses.
Total costs for all Department Programs were $325,048,422. This consists of $316,261,326 for the governmental
activities and $8,787,096 for the enterprise activities.

Accomplishments.

The ASD continues a program for accounting, finance, budget and purchasing staff to provide standardized training to
reduce errors and increase efficiency Department-wide. Site visits from ASD staff to the facilities were initiated in FY
2016 to review business processes between the facilities and ASD. Lessons learned from these visits will be utilized to
revise current operating procedures to enhance the overall business operations of the Department.
Infrastructure emergencies caused by a growing deferred maintenance need of approximately $300 million dollars at
state-owned facilities continued to be a major problem that the Department is constantly facing. NMCD is addressing
this major problem by increasing its maintenance and repairs line item along with enhancing oversight of routine
maintenance.

- 1-

 USING THIS ANNUAL REPORT

This annual report is presented under the Governmental Accounting Standards Board (GASB) pronouncement #34.
The primary focus in State government is on both the Department (government-wide) and the major individual funds
and the financial statements that comprise them. Both perspectives (government-wide and major funds) allow the user
to address relevant questions, broaden a basis for comparison and enhance accountability. Although the Department
is one of several agencies within the State of New Mexico Government, the Primary Government focus in this financial
report is the Department and not the State of New Mexico as a whole.
The components of presentation include Management's Discussion and Analysis (MD&A), Government-wide financial
statements and fund financial statements, and Required Supplementary Information (RSI). These items along with
their subcomponents are addressed in the following sections contained within this report.

Management's Discussion and Analysis

The purpose of the MD&A is to provide an objective and easily readable analysis of the government's financial
activities based on currently known facts, decisions, or conditions. It provides an analysis of the government's overall
financial position and results of operations to assist users in assessing whether the financial position has improved as
a result of the year's activities. Additionally, it addresses analyses of significant changes that have occurred in funds
and significant budget variances.

Government-Wide Financial Statements

The government-wide financial statements are designed to be corporate-like in that all governmental and businesstype activities are consolidated into columns that add to a total for the Primary Government and consist of a statement
of net position and a statement of activities. These statements should report all of the assets, liabilities, revenues,
expenses, and gains and losses of the government. Both statements distinguish between the governmental and
business-type activities of the primary government. Fiduciary activities whose resources are not available to finance
the government's programs are excluded from the government-wide statements.
The government-wide financial statements of the Department are divided into two categories:

>-

Governmental Activities - Most of the Department's basic services are included in the governmental
activities. State appropriations and federal grants finance most of these activities. The funds included in
Governmental Activities for the Department are the General Operating Fund (including Probation and Parole
activities and the Building Fund), the Community Corrections Special Revenue Fund, and ARRA Fund.

>-

Business-type Activities - The Department's Corrections Industries Division charges customers a fee for
goods and services. These activities are accounted for as a business-type activity.

Fund Financial Statements

Fund financial statements consist of a series of statements that focus on information about the major governmental
and enterprise funds. Fund financial statements also report information about a government's fiduciary funds.
Governmental fund financial statements are prepared using the current financial resources measurement focus and the
modified accrual basis of accounting. Proprietary fund financial statements (enterprise funds) and fiduciary fund
financial statements are prepared using the economic resources measurement focus and the accrual basis of
accounting.

- 2-

 Emphasis on fund financial statements is on the major funds in either the governmental or business-type categories.
Non-major funds (by category) or fund type are summarized into a single column. Due to the limited fund structure of
the Department, all funds have been classified as Major Funds.
The Department has three types of funds:

>-

Governmental funds - Most of the Department's services are included in governmental funds which focus on
(a) how cash and other financial assets, that can be readily converted to cash, ftow in and out and (b) the
balances left at year-end that are available for spending. The governmental fund statements provide a
detailed short-term view that help the user determine whether there are more or fewer financial resources
that can be spent in the near future to finance the Department's programs. Since this information does not
include the additional long-term focus of the government-wide statements, reconciliation between the
government-wide statements and the fund financial statements is provided for governmental-type activities.

>-

Proprietary funds - Goods and Services for which the Department's Corrections Industries Division charges
customers a fee are reported as proprietary funds. Proprietary funds, like the government-wide statements,
provide both long and short-term information.

>-

Fiduciary funds - Fiduciary funds are used to report assets held in trustee or agency capacity for others and
therefore are not available to support Department programs. The reporting focus is upon net assets and
changes in net assets and employs accounting principles similar to proprietary funds. The fiduciary funds are
not included with the governmental-type funds since these funds are not available to support the
Department's programs. The Department's fiduciary fund is the Inmate Trust Account.

Notes to the Financial Statements

The notes to the financial statements consist of notes that provide additional information that is essential to a user's
understanding of the basic financial statements. The notes to the financial statements can be found starting on page
23.

Infrastructure Assets

GASB #34 requires that infrastructure assets (roads, bridges, traffic signals, etc.) be valued and reported within the
Governmental column of the Government-wide Statements. Additionally, the government must elect to either
depreciate these assets over their estimated useful life or develop a system of asset management designed to
maintain the service delivery potential. The Department does not own a material interest in any infrastructure assets
and therefore is not required to report on this portion of GASB #34.

Budgetary Comparisons

GASB #34 requires budgetary comparison statements for the general fund and for each major special revenue fund
that has a legally adopted annual budget to be presented as Required Supplementary Information (RSI). The
budgetary comparison statements present both the original and the final appropriated budgets for the reporting period
as well as the actual inftows, outflows and balances, stated on the government's budgetary basis.
These are also required by the Office of the State Auditor under 2.2.2 NMAC, the Statements of Revenues and
Expenditures - Budget and Actual are also presented. This information is provided at the approved budget level to
demonstrate compliance with legal requirements.
Corrections Industries Division is required by NMSA 1978 §33-8-6, section 0, item #1, to present a detailed financial
statement for each enterprise in each facility. This information has been included as a fund financial statement.

-3-

 FINANCIAL ANALYSIS OF THE DEPARTMENT AS A WHOLE

Table A·1
The Department's Net Position

Govern mental Activities
Current and Qhe r Assets
Capital and
Non-Current Assets
Total Assets
Current Liabillties
Long-Term Liabilities
Total Liabilities
Net Position
Investment in Capital Assets
Restricted
Unrestricted
Total Net Position

Total
Percentage
Change

Total*

Business-Type Activities

FY2015
$ 47,648, 120

FY2016
$ 58,632,696

FY2015
$ 5,142,608

FY2016
$ 5,098,191

FY2015
$ 52,790,728

FY2016
$ 63,730,887

27,295,579
74,943,699

26,400,446
85,033,142

588,954
5,731,562

860,935
5,959,126

27,884,533
80,675,261

27,261,381
90,992,268

-2.23%
12.79%

30,639,400

39,097,183

519,630

1,184,723

31,159,030

40,281,906

30,639,400

39,097,183

519,630

1,184,723

31,159,030

40,281,906

29.28%
0.00%
29.28%

27,295,579
14,225,958
2,782,762
44,304,299
$

26,400,446
20,198,780
(663,267)
45,935,959
$

588,954
4,622,977

860,935
3,913,468

$ 5,211,931

$ 4,774,403

27,884,533
18,848,935
2,782,762
49,516,230
$

27,261,381
24,112,248
(663,267)
50,710,362
$

* Inter-fund balances have been eliminated in the total column

Net Position: Table A-1 summarizes the Department's net position for the fiscal year ending June 30, 2016. Net
position for Governmental Activities and Business-type Activities were $45,935,959 and $4,774,403 respectively. Total
Department net position for fiscal year 2016 is $50,710,362. However, most of those assets are either restricted as to
the purposes for which they can be utilized or are invested in capital assets (buildings, equipment, etc.) The
unrestricted net position in Governmental Activities is ($663,267) at the end of the fiscal year.

In the Business-type activities, the restricted amount of $3,913,468 cannot be used in governmental activities. The
Department generally can only use these net positions to finance the continuing operations of its business activities,
such as working capital requirements.

-4-

2015-2016
20.72%

-2.23%
27.92%
-123.83%
2.41%

 TableA-2
Changes in the Department's Net Position

Governmental Activnies
Revenues

FY2015

Business-Type Activities

FY2016

FY2015

Total
Percentage
Change

Total

FY2016

FY2015

FY2016

2015-2016

Erogrnm Bfl~fll)Ufl:;]
Charges for Ser\1ces
Operating Grants&
Contributions
G@eral Be veoues
State General Fund
Pppropriations, net of reverskms
Others
Transfers - Internal Activities
Total Revenues
Expenses
PublicSafety- Corrections
Increase (Decrease) in Net Fbstion
Beginning Net Position
Prior R3riod Adjustment
Beginning Net Position Restated
Ending Net Position

$

4,353,027

$

4, 111, 109

387,966

345,024

289,709,600
17,583,815

300,887,000
12,549,852

$

7,854,019

$

8,180,691

151,428

$

168,877

12,291,800

0.69%

387,966

345,024

-11.07%

289,709,600
17,735,243

300,887,000
12,718,729

12,207,046

$

3.86%

312,034,408

317,892,985

8,005,447

8,349,568

320,039,855

326,242,553

0.00%
1.94%

304,656,771

316,261,326

7,769,927

8,787,096

312,426,698

325,048,422

4.04%

7,377,637
36,926,662

1,631,659
44,304,299

235,520
4,976,412

(437,528)
5,211,931

7,613, 157
41,903,074

1, 194, 131
49,516,230

-84.31%
18.17%

36,926,662

44,304,299

4,976,412

5,211,931

41,903,074

49,516,230

$ 44,304,299 $

45,935,958

$

5,211,932

$

4,774,403

$

49,516,231

$

50,710,361

Changes in Net Position: The Department's change in net position for the governmental activities in fiscal year 2016 increased by
$1,631,659. (See Table A-2). A significant portion, 91.42%, of the Department's revenue comes from State General Fund
Appropriations, 4.82% comes from charges for services, and 3.76% comes from other revenue sources. (See figure A-1).
Figure A-1
Sources of Revenues for Fiscal Year 2016

Others
4.82%

Charges for
Services
3.76%

General
Fund

Approp.
91.42%

- 5-

2.41%

 Functional Expenses for Fiscal Year 2016
Business-Type Activities
Program revenues of the Department's business-type activity (Corrections Industries) increased from $7,854,019 to
$8,180,691 and expenses increased by approximately 13.00% percent from $7,769,927 to $8,787,096.

Governmental Funds
FigureA-2

Out-of-System
Beds
25.1%

Other
13%

Capital Outlay
.6%
Personal
Services &
,----Employee
Benefits
43%
Other

Medical
Services
14.5%

Services
3.8%

The Department's total expenditures for government-type funds during the fiscal year were $316.3 million.
Approximately half (43%) of the expenditures of the Department are in the area of personal services and employee
benefits. Over half (55%) of the total budgeted positions are for Correctional Officers. The Department continues to be
aggressive in recruiting correctional officers to fill vacant posts, in order to reduce overtime.
The second largest area of expenditure within the Department is in the category of "Other" costs (38. 1%), which
incorporates travel, maintenance, food, supplies, operating costs, and capital outlay. Of the total amount expended in
this functional area during fiscal year 2016 approximately 25. 1% was for the housing male and female inmates in
contract prisons, and the remaining 13% was for the other operating costs.
Expenditures in the contractual services category accounted for 18.3% of the Department's expenditures, with
approximately 14.5% of these expenditures directly related to medical services for inmates and about 1% are related to
other contractual services. Less than one percent of the total expenditures were for capital outlay with the majority of
those costs being for machinery and equipment. The governmental activities increase in Public Safety - Corrections
expense of $11,604,555 was due to an increase in inmate costs, population and facility maintenance.

- 6-

 Fund Balance
The Department, in its governmental funds, reported a combined fund balance of approximately $24.0 million,
approximately $2.7 million greater than last year's amount.
General Fund Budgetary Highlights
The New Mexico State Legislature makes annual appropriations to the Department. Adjustments to the appropriated
budget require approval by the Budget Division of the Department of Finance and Administration with review by the
Legislative Finance Committee.
Supplemental and special appropriations are not reftected in the actual beginning account balances.
Over the course of the year, the Department adjusts its budget as authorized in the Appropriation Act. These budget
adjustments fall into three categories:
~

Budget adjustment requests made during the fiscal year to allow the Department to utilize funds where
needed.

~

Budget adjustment requests that increase or decrease other state funds based on actual revenues.

~

Budget adjustment requests that adhere to required operating budget cuts in compliance with Legislative
actions.

-7-

 Capital Assets and Debt Administration

At the end of fiscal year 2016, the Department invested a total of $26.4 million in governmental-type activities and $.9
million in business-type activities for a total amount of $27.3 million in a variety of capital assets. This amount
represents an overall net decrease (including additions and deletions) of $.6 million (2.15%) from the prior fiscal year.
Accumulated depreciation increased by $2.3 million (5.64%) over the prior period.

Table A-3
Department's Capital Assets
Dollars in Millions

Buildings and Improvements
Improvements other than Buildings
Machinery and Equipment
Automotive
Depreciation

Governmental
Activities

Business-type
Activities

FY2015 FY2016

FY2015 FY2016

36.0
3.7
21.9
2.9
(37.2)
27.3

36.0
3.7
22.8
3.3
(39.4)
26.4

1.0

1.0

2.2
1.0
(3.6)
0.6

2.5
1.1
(3.7)
0.9

Total%
Total
Change
FY2015 FY2016 2015 - 2016
37.0
0.00%
37.0
3.7
0.00%
3.7
24.1
25.3
4.98%
3.9
12.82%
4.4
5.64%
(40.8)
(43.1)
27.9
27.3
-2.15%

Additional detailed information about the Department's capital assets is presented in Note 4 to the financial statements.
GASB Statement #34 requires the recording and depreciation of infrastructure assets such as roads, bridges, traffic
signals, etc. The Department does not own any infrastructure assets.

Short-Term Debt

The Department did not have any short-term debt other than compensated absences associated in fiscal year 2016.
More detailed information regarding the Department's short-term debt is presented in Note 10 to the financial
statements.

-8-

 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The New Mexico Corrections Department (NMCD) FY17 operating budget was increased by 2.9 percent or $9.3 million
to $327. 7 million, from the FY16 appropriated budget. The increase was to support the Department's inmate population
growth and medical costs increases and salary increases appropriated by the State legislature. The Department is
experiencing increasing inmate population growth and again was under funded in FY16 and FY17. As a result, the
Department requested and received a supplemental of $13.0 million dollars in FY16, primarily in the other costs
category to support inmate population growth in our private prisons and increased medical costs.
In fiscal year 2016, the New Mexico prison population increased by approximately 2.4 percent. Per the New Mexico
Sentencing Commission, the Department's high population in FY16 was at 7,518 or 2.4 percent increase in population
from FY15 high population. The Department experienced a decline in inmate population in fiscal years 2008 through
2009 after a high of 6,887 in fiscal year 2007, however the population growth returned in fiscal year 2010. The New
Mexico Sentencing Commission estimates New Mexico's total inmate population will increase in FY17 and is projected
to grow at an average rate of 1.6 percent per year from fiscal year 2016 to 2026. With the current rate of growth, the
estimates show that New Mexico will have an offender population of 8,457 by the end of fiscal year 2026.
The Corrections Industries Program (Cl) had a 13.0 percent increase in actual revenues from FY15 to FY16. Cl was
able to increase their sales by taking over canteen services for all of the Department's public facilities and the food
services for the Penitentiary of New Mexico and for the Training Academy. Cl is developing other types of enterprise
programs as a means of growing their programs and revenues in the future.
For fiscal year 2016, the Department had an actual general fund base increase of $4.9 million after a general fund
appropriated reduction which only partially covered a portion of inmate population growth and medical costs increase.
With this increased expense, the Department continued to maintain strict budget measures and flat contracts (no
inflation increases) and in some cases reduced contracts but was still unable to ensure the budget was balanced. The
Department would have ended FY16 in a deficit but requested and received a $13.0 million supplemental primarily in
the other cost category to support inmate growth and in contractual cost to cover increased medical costs. The
Department also, increased funding in the salaries and employee benefits category to cover a shortage in Program
Support.
The Department requested a total budget of $331.4 million from all funding sources for fiscal year 2017, which is a 3.9
percent increase from FY16 operating budget. The general fund request was $302.5 million. The request included an
increase for inmate growth and increased medical costs. The Department received an-operating budget of $327.7
million which was later reduced in FY17 by $4.5 million. The Department again did not receive sufficient funding to
support inmate growth and did not receive sufficient funding for the mandatory treatment of Hepatitis C and other
medical costs. Additionally, advancements in prescription medication for the treatment of Hepatitis C prompted NMCD
to begin treatment for infected inmates in FY16. The cost of treatment runs anywhere between $75 thousand upwards
of $100 thousand per inmate. With the ambiguity of inmate growth and the costs to treat Hepatitis C, NMCD will
request supplemental funding again in FY17 and will continue to maintain strict budget measures.

-9-

 CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT

This financial report is designed to provide citizens, taxpayers, customers, legislators, and investors and creditors with
a general overview of the Department's finances and to demonstrate the Department's accountability for the funds it
receives. If you have any questions about this report or need additional financial information, contact:

New Mexico Corrections Department
Administrative Services Division
Attn: Blanca Sena, FMB Bureau Chief/CFO
4337 NM 14
Post Office Box 27116
Santa Fe, New Mexico 87502-0116

- 10 -

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF NET POSITION
AS OF JUNE 30, 2016

Governmental
ActMties {:)
ASSETS
Investments, State Treasurer
Petty Cash
Receivables, net of allowance for doubtful accounts
Federal Grants Receivable
Other Receivables
Due from Other State Agencies
Inventories
Prepaid Items
Total Current Assets
Capital Assets:
Buidings
Improvements Other than Buil:lings
Machinery and Equipment
Automotive
Less Accumulated Depreciatbn
Total Capital Assets, net of depreciation

Total Assets
LIABILITIES
Accounts Payable
Vouchers Payoole
Payroll Benefls Payable
Payroll Taxes Payable
Accrued Wages Payable
Compensated Absences Payable:
Expected to be paid within one year
Due to State General Fund
Receipts Hel:I in Suspense
Due to Other State Agencias
Due to Local Governments
Unearned Revenue
Other Liabilities
Total Liabilities
NET POSITION
Net Investment in Capital Assets
Restricted for.
Subsequent Years Expenditures
Unres trk::ted - Deficl
Total Net Positbn

$ 53,376,400
2,075
250,374
25,757
17,488
1,189,389
3,731,325
39,887
58,632,696

Business-type
Activities

$

1,236,318
566
5,098, 191

35,982,436
3,714,246
22,860,429
3,316,074
(3914721739)
26.400,446
85,033,142

$

7,606,082
16,154,951
1,659,401
500,852
2,157,991

2,407,513
2,250
1,451,544

$ 55,783,913
4,325
1,701,918
25,757
17,488
1,189,389
4,967,643
40,453
63,730,887

1,003,511

36,985,947
3,714,246
25,337,528
4,381,538
(43,157,878)
27,261,381
90,992,268

2,477,099
1,065,464
(31685, 139)
860,935
5,959, 126

- $

$

4,473,995
2,742,358
20
20,568
3,770,474

1,022,858
21,379
6,933
24,608
80,710

7,606,082
17,177,809
1,680,780
507,785
2,182,599

10 490
39,097 ,183

10,000
18 235
1,184, 723

4,554,705
2,742,358
20
20,568
3,770,474
10,000
28 725
40,281,906

26,400,446

860,935

27 ,261,381

20,198,780
(663,267)
$ 45,935,959 $

3,913,468
4,774,403

(*) Inter-fund balances have been eliminated.

The accompanying notes are an integral part of the financial statements

- 11 -

Total

24,112,247
(663,267)
$ 50,710,362

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Governmental
Activities
Expenses
Publb Safety- Corrections
Corrections Industrtes
Program Revenues
Charges for Services
Operating Grants & Contributions
Changes in Net Position:
Net Program (Expense) I Revenue
General Revenues:
General Fund Appropriation
Inter-Agency Transfer-In
Inter-Agency Transfer-Out
Reversions to the State General Fund
Other Revenue
Unrestricted investment earnings
Capital Transfer-In
Total General Revenues and Transfers

$ (316,261,326)

Business-Type
Activities

-

$

(8,787 ,096)

Net Position beginning

8,180,691

12,291,800
345,024

(311,805,194)

(606,405)

(312,411,599)

313,436,853

6,483
145,539
16,855
168,877

300,887,000
659,375
(150,602)
(2,739,815)
366,320
14,566,597
16,855
313,605,730

1,631,659

(437,528)

1,194,131

4413041299

Net Position- Ending

$

4519351958

4915161230

512111931

$

4 774 403

The accompanying notes are an integral part of the financial statements
- 12 -

$ (316,261,326)
(8,787,096)

4, 111, 109
345, 024

300,887 ,000
659,375
(150,602)
(2,739,815)
359,837
14,421,058

Change in Net Position

Total

$

5017101362

 NEW MEXICO CORRECTIONS DEPARTMENT
BALANCESHEET·GOVERNMENTALFUNDS
JUNE 30, 2016

ASSETS
Investments, State Treasurer
Petty Cash
Receivables, net
of allowance for doubtful accounts
Federal Grants Receivable
Due from Fiduciary Fund
Other Receivables
Due from Other State Agencies
Due from Other Funds
Due from State General Fund
In ve nto ries
Prepaid Items
Total Assets

General Fund
SHARE System
Fund
$ 49,884,426
2,075

Community
Corrections
Special
Revenue Fund
SHARE
System Fund
90200
$ 3,491, 97 4

Total

$ 53,376,400
2,075

250,374
25,757

250,374
25,757

17,488
1,189,389

17,488
1, 189,389

3,731,325
39,887

3,731,325
39,887

$

55,140,722

$ 3,491, 97 4

$ 58,632,696

$

7,602, 136
15,106,871
1,650,936
496,509
2,147,720
2,740,030
2,328
20
20,568
3,770,474
10,490
33,548,082

$

$

LIABILITIES AND FUND BALANCES
Liabilities:
Accounts Payable
Vouchers Payable
Payroll Benefits Payable
Payroll Benefits & Taxes Payable
Accrued Wages Payable
Due to State General Fund
Stale Dated Warrants - Due to SG F
Receipts Held in Suspense
Due to Other State Agencies
Due to Local Governments
Other Liabilities
Total Liabiltties
Fund Balances:
Reserved for.
Nonspendable
Restrk:ted
Unassigned
Total Fund Balance

1,075, 106

$

55,140, 721

7,606,082
16,154,951
1,659,401
500,852
2, 157,991
2, 740,030
2,328
20
20,568
3,770,474
10,490
34,623, 188

2,416,869

3,770,729
20, 198, 780
40,000
24,009,508

$ 3,491, 97 4

$ 58,632,696

3,770,729
17 ,781, 911
40,000
21 ,592,639

Total Liabillties and Fund Balance

3,946
1,048,080
8,465
4,343
10,271

2,416,869

* Includes SHARE funds 90700, and 91500.

The accompanying notes are an integral part of the financial statements

- 13 -

 NEW MEXICO CORRECTIONS DEPARTMENT
RECONCILIATION OF THE BALANCE SHEET· GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
FOR THE YEAR ENDING JUNE 30, 2016

Amounts reported for governmental activities in the statement of net positions are different because:

Amounts reported for governmental activities i1 the statement of net position are different because:

Total Fund Balances· Governmental Funds
(Governmental Funds Balance Sheet)

$

24,009,508

Amounts reported for governmental activities i1 the Statement of Net Positbn are
different because:
Capital assets used in governmental activities are not financial resources and
therefore are not reported in the funds. These assets consist of:
Buildings
Improvements other than buildngs
Machinery and Equipment
Automotive
Accumulated depreciation
Total Capital Assets

$

35,982,437
3,714,246
22,860,429
3,316,074
(39,472,739)
26,400,447

Some liabiities are not due and payable in the current period and therefore are not
reported in the funds.
(4,473,995)

Compensated Absences Payable
Net Position of Governmental Activities (Total Net Positbn of Governmental Activities)

The accompanying notes are an integral part of the financial statements
. 14.

$

45,935,959

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDING JUNE 30, 2016

General Fund
SHARE System
Fund
Revenues
Charges for Services
Intergovernmental
Institutional Sales
Investment Earnilgs
Miscellaneous
Federal Grants and Contributions
Total Revenues

$

Expenditures, Current
Personal Services &
Employee Benefits
Contractual Services
Other
Expenditures, Capital OuUay
Total Expenditures

Excess (defoiency) Revenues over Expenditures
Other Financing Sources (uses)
State General Fund Appropriations
Inter-Agency Transfers-In
Inter-Agency Operating Transfers-Out
Reversions to State General Fund
Net Other Financing Sources (uses)
Net Change in Fund Balance
Fund Balance, Begilning of Year
Fund Balance, End of Year

$

2,335,440
937,124
797,999
14,421,058
334,937
345,024
1911711582

Community
Corrections
Special Revenue
Fund
SHARE System
Fund
90200

$

40,546

Total

$

2,375,986
937,124
797,999
14,421,058
359,837
345,024
191237p28

24,900
65 446

134,727,445
51,518,928
119,843,569
119751095
308,065,036

763,161
6,204,904
179,258
7,147,322

135,490,605
57,723,832
120,022,826
1975095
315,212,359

(288,893,455}

lJ ,081,876}

(295,975,332}

294,261,901
659,375
(150,602)
(2,739,815}
292,030,859

6,625,099

300,887,000
659,375
(150,602)
(2,739,815}
298,655,958

6,625,099

3,137,404

(456,777)

2,680,626

18,455,235

2,873,646

21,328,881

21,592,639

$

2,416,869

$

*Includes SHARE fund 89800, 90700, and 91500.

The accompanying notes are an integral part of the financial statements
- 15 -

24,009,507

 NEW MEXICO CORRECTIONS DEPARTMENT
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Net Change in fund balances· Total Governmental Funds
(Statement of Revenue, Expenditures and Changes in Fund Balance)

$ 2,680,627

Arrounts reported for governmental activities in the Statement of Activities are
different because:
In the Statement of Activities, certain operating expenses · compensated absences
(sk;k and annual leave) are measured by the arrounts earned during the year. In the
Governmental funds, however, expenditure for these items are measured by the
amount of financial resources used (essentially, the amounts actually paid). The
decrease (increase) in the iability for the year is:
Compensated Absences

(153,834)

Governmental funds report capital outlays as expenditures. However, in the Statement
of Activities the cost of those assets is allocated over their estimated useful lives and
reported as depreciation expense. In the current period, these amounts are:
Capital Outlay
Transfers-Out of Capital Assets
Depreciation Expense
Excess of Depreciation Expense over Capital Outiay

$

The Statement of Activities reports the loss on the sale of Capital Assets, while the
Statement of Revenues, Expenditures and Changes and Changes in Fund Balance
reports the proceeds. The reconclinq amount is the difference:

Change in Net Position of Governmental Activities
(Statement of Activities)

The accompanying notes are an integral part of the financial statements
- 16 -

1,975,094
(16,858)
(2,809,141)
(850,905)

(44,229)

$ 1,631,659

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Budgeted Amounts

Actual Amounts
Modified Accrual
Basis

Original

Final

$ 15,821,600

$ 16,200,241

232,700
16,054,300

757,983
16,958,224

18,826,558
345,024
19, 171,582

Expenditures, Current
Personal Services &
Employee Benefits
Contractual Services
Other
Expenditures, Capital Outlay
Total Expenditures

135,297,200
46,943,000
119,111,800
158,200
301,510,200

135,209,885
55,687,326
120,679,740
158,200
311,735,151

134,727,445
51,518, 928
119,843,568
1,975,094
308,065,036

Excess {deficiency) Revenues
over Expenditures

(285,455,900)

(294,776,927)

(288, 893, 455)

285,199,800
256,100

294,261,901
250,000
299,477

294,261, 901
659, 375

Revenues
Other State Funds
Federal Funds
Total Revenues

Other Financing Sources (uses)
State General Fund Appropriation
Inter-Agency Transfers-In
Budgeted Fund Balance
Operating Transfers-Out
Reversions to State General Fund
Net Other Financing Sources (uses)
Net Change in Fund Balance

$

34,451

$

$

Fund Balance, Beginning of Year

3, 137,404

2,626,317
(412, 959)
2,213,358

482,440
4,168,398
836, 172
(1,816,894) *
3,670, 115

5,883,473

409,375
(299,477)
150,602
(2!7391815)
(2,479,315)

(150,602)
(2! 739! 815)
292,030,859

294,811,378

285,455,900

$

$

Variance
Favorable
(Unfavorable)

$

3,404, 158

18,455,235

$

Fund Balance, End of Year

21,592,639

* Amounts have been reclassified for financial statement purposes. The budget for capital outlay expenditures is
included in the "Other" expenditure category budget.

The accompanying notes are an integral part of the financial statements
- 17 -

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
COMMUNITY CORRECTIONS SPECIAL REVENUE FUND
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Budgeted Arrounts
Original
Revenues
Other State Funds
Federal Funds
Total Revenues

$

Expenditures, Current
Personal Services &
Employee Benefits
Contractual Services
Other
Expenditures, Capital Outlay
Total Expenditures
Excess (deficiency) Revenues
over Expenditures
Other Financing Sources (uses)
State General Fund Appropriation
Transfers-In
Budgeted Fund Balance
Operating Transfers-Out
Reversions to State General Fund
Net Other Financing Sources (uses)
Net Change in Fund Balance

34,600

Final

$

34,600

Actual Amounts
Modified Accrual
Basis

$

65,446

Variance
Favorable
(Unfavorable)

$

30,846

34,600

34,600

65,446

30,846

876,500
4,192,500

876,500
6, 185,899
210,000

763, 161
6,204,904
179,258

113,339
(19,005)
30,742

5,069,000

7,272,399

7,147,322

125,077

(5,034,400)

(7,237,799)

(7,081,876)

155,923

4,421,700

6,625,099

6,625,099

612,700

612,700

5,034,400

7,237,799

$

$

(612,700)

6,625,099

$

(456,777)

Fund Balance, Beginning of Year

$

2,873,646

Fund Balance, End of Year

$

2,416,869

The accompanying notes are an integral part of the financial statements
- 18 -

(612,700)

$

(456,777)

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF NET POSITION
PROPRIETARY FUND
JUNE 30, 2016

ASSETS
Current Assets:
Investments, State Treasurer
Petty Cash
Receivables (net of allowance for doubtful accounts)
Inventories
Prepaid Items
Total Current Assets
Noncurrent Assets:
Capital Assets:
Machinery and Equipment
Buidings and Improvements
Automotive
Less Accumulated Depreciation
Total Non current Assets
Total Assets

$ 2,407,513
2,250
1,451,544
1,236,318
566
5,098,191

2,477,099
1,003,511
1,065,464
(3,685,139)
860,935
5,959,126

LIABILITIES
Current Liabilities:
Vouchers Payable
Accrued Wages Payable
Payroll Beneftts Payable
Payroll Taxes & Benefits Payable
Compensated Absences Payable
Unearned Revenue
Other Liabilities
Total Liabiities

1,022,858
24,608
21,379
6,933
80,710
10,000
18 235
1,184,723

NET POSITION
Net Investment in Capital Assets
Restr~ted Net Position- STA

860,935
3,913,468

$ 4,774,403

Total Net Posttbn

The accompanying notes are an integral part of the financial statements
- 19 -

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET POSITION
PROPRIETARY FUND
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

OPERATING REVENUES
Sales

$8,180,691

OPERATING EXPENSES
Cost of Goods Sold:
CostofMaterials Used
Direct Labor (inmate payrolO
Manufacturi_ng and Administrative Overhead
Change in Work in Process and Finished Goods Inventory, Net
Depreciation Expense
Total Operating Expenses

5,953,688
216.750
2,488,871
13,280
114 507
8,787,096

OPERATING INCOME (LOSS)

(606,405)

Nonoperating revenue(expense):
Interest on Deposits with State Treasurer
Miscellaneous Income
General Fund Subsidy
Total nonoperating revenue I (expense)
CHANGE IN NET POSITION

6,483
145,539
16 855
168,877
(437,528)

Total Net Position, Beginning of Year

5,211,931

Total Net Position, End of Year

$4,774,403

The accompanying notes are an integral part of the financial statements
- 20 -

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Cash Flows from Operating Activites:
Cash Received from Customers
Cash Payments to Supplers for Goods and Services
Cash Payments to Employees for Services
Cash Payments to Inmates for Services

$ 7,597,095
(6,280,291)
(1,518,824)
(216,750)
(418,770)

Net Cash Provided by for Operating Activites
Cash Flows from Capital and Related Financing Activities:
Purchase of Capital Assets
Net Cash Used by Capital and Related Financing Activities

(369,633)
(3691633)

Cash Flows from Investing Activities:
Interest Income
Miscellaneous Income
Net Cash Provided by Investing Activites

6,483
145 539
1521022
(636,381)

Net Increase (D:lcrease) in Agency Interest in SGFI P
Investments, State Treasurer at Beginning of Year (including petty cash)
Investments, State Treasurer at End of Year Qncluding petty cash)

3,046,144

$ 2,409,763

Reconciiation of Operating Income to Net Cash Provkled by Operating Activities:

$

Operating Income (Loss)
Adjustments to Reconcile Operating Income to Net Cash Provided
by Operatilg Activities:
Depreciation

(606,405)

114,507

Changes in Assets and Liabiities:
(Increase) Decrease in Accounts Receivable
(Increase) Decrease in Prepakl Expenses
(Increase) Decrease in Interest Receivable
(Increase) Decrease in Inventory
Increase (Decrease) in Allowance for Uncollectible Receivables
Increase (Decrease) in Accounts Payable
Increase (Decrease) in Compensated Absences Payable
Increase (Decrease) in Accrued Wages Payable
Increase (Decrease) in Payroll Taxes & Benefits Payable
Increase (Decrease) in Other Liabilites

(583,813)
508
218
(8,877)
619,611
16,081
4,706
7,709
16,985
187,635

Total Adjustments and Changes

$

Net Cash Provided (Used) by Operating Activities

The accompanying notes are an integral part of the financial statements
- 21 -

(418,770)

 NEW MEXICO CORRECTIONS DEPARTMENT
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
AGENCY FUND
AS OF JUNE 30, 2016

Inmate Trust
Account
ASSETS
Cash
Due from Others

$ 2, 144,688

Total Assets

$ 2,557, 154

412,466

LIABILITIES
Due to Others
Deposits Hekl for Others

606,475
119501679
$ 2,557, 154

$

Total Liabilities

*Please refer to Schedule of Changes in Assets and Liabilities on page 78 for detail information.

The accompanying notes are an integral part of the financial statements
- 22 -

 NEW MEXICO CORRECTIONS DEPARTMENT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDING JUNE 30, 2016

TABLE OF CONTENTS

NOTE 1:

HISTORY, OATH AND ORGANIZATION ................................................................................................ 24

NOTE 2:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ...................................................................... 26

NOTE 3:

CASH ....................................................................................................................................................... 38

NOTE 4:

CAPITAL ASSETS .•...............................................................................•................................................. 41

NOTE 5:

RETIREMENT PLANS (STATE PERA & ERB) ....................................................................................... 42

NOTE 6:

RETIREE HEALTH CARE ....................................................................................................................... 42

NOTE 7:

FUNDS HELD IN TRUST BY OTHERS ...................•.................................•.........•..........•.........•.............. 43

NOTE 8:

CONCENTRATIONS AND INTERFUND TRANSACTIONS .................................................................... 43

NOTE 9:

OPERA TING LEASES ............................................................................................................................. 44

NOTE 10:

CHANGES IN SHORT-TERM LIABILITIES ............................................................................................. 45

NOTE 11:

CONTINGENT LIABILITIES (CLAIMS & JUDGMENTS) ........................................................................ 45

NOTE 12:

OTHER FINANCING SOURCES AND OPERA TING TRANSFERS ........................................................ 46

NOTE 13:

FUND BALANCE...................................................................................................................................... 47

NOTE 14:

JPA AND MOU DISCLOSURE ................................................................................................................ 48

NOTE 15:

SHARE CASH BALANCES ..................................................................................................................... 58

NOTE 16:

SUBSEQUENT EVENTS .......................................................................................................................... 58

NOTE 17:

RELATED PARTY .................................................................................................................................... 58

NOTE 18:

SUBSEQUENT PRONOUNCEMENTS .................................................................................................... 58

. 23 -

 NOTE 1:

HISTORY, OATH AND ORGANIZATION

The New Mexico Corrections Department (the Department), a cabinet level department, was created by an act of the
legislature of New Mexico in 1978. §9-3-2 NMSA 1978, states that "The purpose of the Corrections Department Act. ..
is to create a single, unified department to administer all laws and exercise all functions formerly administered and
exercised by the corrections and criminal rehabilitation department and to ensure a comprehensive criminal justice
system in New Mexico".
The Oath of the Department is "We commit to the safety and well-being of the people of New Mexico by doing the right
thing, always". To perform this oath, the following departmental organization has been established in part by Chapters
9 and 33, NMSA 1978:
Office of the Secretary

The Secretary is empowered to organize the Department and its divisions and may transfer or merge functions
between divisions in the interest of efficiency and economy. The Administrative Services Division provides overall
support.
Adult Prisons Division

The Director of the Adult Prisons Division reports to the Deputy Secretary of Operations. The Adult Prisons Division is
the largest division within the New Mexico Corrections Department, incarcerating approximately 6,800 inmates in six
state-owned and operated prisons and five privately operated facilities. Ten of the eleven facilities house male inmates.
All female offenders are housed in one facility. The Adult Prisons Division oversees the Health Services Bureau, which
includes medical and mental health. The Classification Bureau, Records Bureau, Security Threat Intelligence Unit and
Emergency Preparedness are also part of the division.
Administrative Services Division

The Director of the Administrative Services Division is responsible to the Deputy Secretary of Administration and in its
commitment to the safety and well-being of the people of New Mexico, by doing the right thing always, provides agency
divisions and programs with direction, support, guidance and oversight over all fiscal, human resource and property
management activities. Bureaus within the Division ensure an internal control structure exist to enable compliance with
statutory, regulatory and departmental administrative requirements while identifying opportunities to more efficiently
and effectively operate the department. Administrative services are offered through Budget, Financial Management,
Human Resource, Internal Audit and Compliance, and Property Management. Staff in each Bureau is in the forefront of
efforts to promote accountability and transparency in state government by providing quality service. They serve as the
central point of contact with external agencies.
Information Technology Division

The Chief Information Officer of the Information Technology Division is responsible to the Deputy Secretary of
Administration for providing the highest quality technology-based tools and services to create and maintain strong
information technology systems to support agency staff and promote agency efficiency and accountability. ITD is
divided into five sections - Infrastructure, Applications, Project Management, Business Analysis and Database. This
structure supports the alignment of Information Technology with the goals of the business.
Office of the General Counsel

The General Counsel of the Office of the General Counsel is responsible to the Secretary of the Department and is
responsible for managing all legal affairs for the New Mexico Corrections Department. There are five attorneys and a
general counsel in the division, There are also paralegals who work with the attorneys at large and handle
administrative duties as well.
The Division also manages litigation, conducts training, reviews policies, contracts and legislation and serves as a
liaison to external legal organizations. Representation involves advising institutions and probation/parole officers in
various areas of the law, and defending the Department in prose inmate civil law cases and employment matters.

- 24 -

 The office includes the EEO Officer investigates matters involving employment discrimination, sexual
harassment/discrimination and various types of other work related complaints, and provides training on employment
discrimination and other related topics.
The office of Professional Standards (OPS) conducts administrative investigations throughout the state and review
allegations of staff misconduct. The office is part of the office of the Secretary.
Office of Recidivism Reduction

The Director is responsible to the Deputy Secretary of Operations to reduce the potential for reincarceration by
providing prisoners in state custody, and former prisoners on probation or parole, with the comprehensive
programming and support services necessary to prepare for, and maintain, successful community reentry and
reintegration.
Probation and Parole Division

The Director of the Probation and Parole Division is responsible to the Deputy Secretary of Operations "to provide for
public safety through a balance of supervision, enforcement and the provision of program services to increase the
probability of offenders becoming law-abiding citizens." To accomplish this mission Probation/Parole's mindset requires
a dual perspective: the responsibility to enforce the conditions of probation and parole and to provide services to assist
the offender's rehabilitation and reentry into the community.
Training Academy Division

The Director of the Training Academy Division reports to the Deputy Secretary of Administration to prepare effective
correctional officers, probation and parole officers and staff and develop strong, effective leaders through continual
review, revision and adaptation of existing curriculum and the development of new training that addresses current
issues and needs
Corrections Industries Division

The Director of the Corrections Industries Division is responsible to the Deputy Secretary of Administration to enhance
the rehabilitation, education and vocational skills of inmates through productive involvement in enterprises and public
works of benefit to state agencies and local public bodies and to minimize inmate idleness. CID is administered without
appropriated funds and is self-supporting. The Division is financed through a revolving fund, from which all operating
expenses are paid. As the manufacturing and services arm of the Corrections Department, the Division employs 39
staff and supervisory personnel to manage an average of 375 inmates in 13 programs at eight different facilities around
the state.
Corrections Industries Commission

The Corrections Industries Commission is responsible for advising the Secretary of the Department and establishing
policy within the Corrections Industries Division. The Commission consists of seven members appointed by the
Governor. Terms are generally for four years with one or two members being replaced each year.

- 25 -

 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements for the New Mexico Corrections Department (the Department) have been prepared in
accordance with Generally Accepted Accounting Principles (GAAP} as applied to governmental units. The
Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and
financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and
Financial Reporting Standards that along with subsequent GASB pronouncements (Statements and Interpretations),
constitutes GAAP for governmental units. More significant of these accounting policies are described below.
The Department complies with GASB #34 and as part of this Statement, there is a reporting requirement regarding the
government's infrastructure (road, bridges, etc.) The Department does not own any infrastructure assets and therefore
is unaffected by this requirement.
The Department has since implemented the provisions of GASB #37 and GASB #38 effective July 1, 2000 and GASB
#51 effective July 1, 2009.
The Department also implemented the provisions of GASB #54 effective July 1, 2010. In the governmental fund
financial statements, fund balances are classified as non-spendable, restricted, or unrestricted (committed, assigned,
or unassigned). Restricted represents those portions of fund balance where constraints placed on the resources are
either externally imposed or imposed by law through constitutional provisions or enabling legislation. Committed fund
balance represents amounts that can only be used for specific purposes pursuant to constraints imposed by formal
action of the Legislative and Executive branches of the State. Assigned fund balance is constrained by the
Legislature's and Executive Branch's intent to be used for specific purposes or in some cases by legislation. See page
37, item 12 and Note 13 on page 48 for additional information about fund balances.
A. FINANCIAL REPORTING ENTITY

The chief executive of the Department is the Secretary, who is appointed by the Governor of New Mexico and is a
member of the Governor's Cabinet. The Department is a component unit of the executive branch and these financial
statements include all funds, account groups and activities over which the Department Secretary has oversight
responsibility.
The Department is not included in any other governmental "reporting entity" as defined in Section 2100, Codification of
Governmental Accounting and Financial Reporting Standards. Even though the Governor appoints the Secretary, that
person has decision-making authority, the power to designate management, the responsibility to significantly influence
operations and primary accountability for fiscal matters.
In accordance with the criteria set forth in GASB # 61 for determining component units, the Department does not have
component units.
B. BASIC FINANCIAL STATEMENTS

The basic financial statements include both government-wide (based on the Department as a whole} and fund financial
statements. The reporting model focus is on either the Department as a whole or major individual funds (within the fund
financial statements). Both the government-wide and fund financial statements (within the basic financial statements)
categorize primary activities as either governmental or business type activities. In the government-wide Statement of
Net Position, both the governmental and business-type activities columns are presented on a consolidated basis by
column using the economic resources measurement focus and the accrual basis of accounting and incorporates longterm assets and receivables as well as long-term debt and obligations. Additionally internal activity has been
eliminated at this level of presentation.
The government-wide Statement of Activities reflects both the gross and net cost per functional category (education,
labor, transportation, etc.), which are otherwise being supported by general government revenues. The Statement of
Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants.
The program revenues must be directly associated with the function or a business-type activity. The Department
includes only one function (public safety and corrections).

- 26 -

 The net cost (by function or business-type activity) is normally covered by general revenues (taxes, intergovernmental
revenues, interest income, etc). Historically, the previous model did not summarize or present net cost by function or
activity. The Department does not currently employ indirect cost allocation systems.
This government-wide focus is more on the sustainability of the Department as an entity and the change in aggregate
financial position resulting from the activities of the fiscal period.
The fund financial statements are similar to the financial statements presented in the previous accounting model.
Emphasis here is on the major funds in either the governmental or business-type categories. Non-major funds (by
category) or fund type are summarized into a single column. Due to the limited fund structure of the Department, all
funds have been classified as Major Funds.
Totals on the business-type activities fund statements match the business type activities column presented in the
government wide statements, since there are no reconciling items.
The governmental fund statements are presented on the current financial resources measurement focus and modified
accrual basis of accounting. This presentation is deemed appropriate to (a) demonstrate legal compliance, (b)
demonstrate the source and use of liquid resources, and (c) demonstrate how the Department's actual experience
conforms to the budget or fiscal plan. Since the governmental fund statements are presented on a different
measurement focus and basis of accounting than the government-wide statements' governmental column, a
reconciliation is presented on the page following each statement, which briefiy explains the adjustment necessary to
transform the fund based financial statements into the governmental column on the governmental-wide presentation.
The Department's fiduciary fund (agency fund) is presented in the fund financial statements. Since by definition these
assets are being held for the benefit of a third party (inmates entrusted to the Department) and cannot be used to
address activities or obligations of the government, these funds are not incorporated into the government-wide
statements.
C. BASIS OF PRESENTATION

The financial transactions of the Department are maintained on the basis of funds, each of which is considered a
separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund balance, revenues, expenditures or expenses, and other financing
sources or uses. Government resources are allocated to, and accounted for, in individual funds based upon the
purpose for which they are to be spent and the means by which spending activities are controlled. The various funds
are summarized by type in the accompanying financial statements. The various funds are reported by generic
classification within the financial statements.
The reporting model, GASB Statement 34, sets forth minimum criteria for the determination of major funds based on a
percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or governmental and
enterprise combined. Due to the fund structure of the Department, all funds have been classified as major funds.
The Department uses the following fund types:
Governmental Fund Types

The focus of Governmental Fund measurement (in the Fund Financial Statements) is based upon determination of
financial position and changes in financial position (sources, uses, and balances of financial resources) rather than
upon net income. The following is a description of the Governmental Funds of the Department.
General Fund:
The General Fund is the general operating fund of the Department. It is used to account for all financial resources
except those required to be accounted for in another fund. The General Fund sources are comprised of SHARE
System Fund 89800 - Building Fund, SHARE System Fund 90700 - General Operating Fund, and SHARE System
Fund 91500 - Probation &Parole Fund.
General Fund revenues are both earned and appropriated. Sources of non-reverting revenue included in the General
Fund are from:

- 27 -

 Permanent Fund Income and Land Income (§19-1-17) to which the Department is a beneficiary.
Probation and Parole Fees (§31-20-6NMSA1978 and §31-21-13.1NMSA1978).
Special Revenue Fund

The Special Revenue Fund is used to account for the proceeds of specific revenue sources (other than expendable
trusts or major capital projects) that are legally restricted to expenditures for specified purposes. The Special Revenue
Fund is the Community Corrections Grant Fund, SHARE System fund number 90200.
Statutory Creation: §33-9-3 NMSA 1978 "There is created in the state treasury a special fund to be known
as the "community corrections grant fund."
Use of Funds: §33-9-3 NMSA 1978 "The fund shall be for the purpose of providing programs and services
for the diversion of criminal offenders to community-based settings."
Reverting Status: §33-9-3 NMSA 1978 "All money appropriated to the fund or accruing to it as a result of gift,
deposit, investments or other sources shall not be transferred to another fund or encumbered or disbursed in
any manner except as provided in the Adult Community Corrections Act."
Proprietary Fund Types

The focus of Proprietary Fund measurement is upon determination of operating income, changes in net position,
financial position, and cash fiows. The generally accepted accounting principles applicable are those similar to
businesses in the private sector.
Enterprise Fund

Enterprise funds are required to account for operations for which a fee is charged to external users for goods and
services and the activity (a) is financed with debt that is solely secured by a pledge of the net revenues, (b) has third
party requirements that the cost of providing services including capital costs, be recovered with fees and charges or (c)
has a pricing policy designed for the fees and charges to recover similar costs. The Corrections Industries Revolving
Fund (SHARE System fund 07700) represents the Department's only business-type activity and is included as a major
fund.
Statutory Creation: § 33-8-7 NMSA 1978 "There is created in the state treasury a fund which shall be
administered by the department secretary as directed by the commission and which shall be known as the
"corrections industries revolving fund."
Revenues:§ 33-8-7 NMSA 1978 "All income, receipts and earnings from the operation of enterprises shall be
credited to the fund." "All interest earned on money in the fund shall be credited to the fund."
Use of Fund: § 33-8-7 NMSA 1978 "Money deposited in the fund shall be used only to meet necessary
expenses incurred in the maintenance, operation and expansion of existing enterprises and in the
establishment, maintenance, operation and expansion of new enterprises."
Reverting Status: § 33-8-7 NMSA 1978 "No part of the fund shall revert at the end of any fiscal year."

Fiduciary Fund Types

Fiduciary funds are used to report assets held in trustee or agency capacity for others and therefore are not available
to support Department programs. The reporting focus is upon net position and changes in net position and employs
accounting principles similar to proprietary funds.
Agency Fund

Agency funds are used to account for assets held by the Department in the capacity of trustee or agent. The agency
fund (SHARE System fund 55700) is custodial in nature (assets equal liabilities) and do not involve measurement of
results of operations.
- 28 -

 Non-Current Governmental Assets/Liabilities
GASB Statement #34 eliminated the presentation of Account Groups, but provides for these records to be maintained
and incorporates the information into the Governmental column in the government-wide Statement of Net Positions.
D. BASIS OF ACCOUNTING
Basis of accounting refers to the point at which revenues or expenditure/expenses are recognized in the accounts and
reported in the financial statements. It relates to the timing of the measurements made, regardless of the measurement
focus applied.
The Government-wide Financial Statements and the Proprietary and Fiduciary Fund Financial Statements are
presented on an accrual basis of accounting. The Governmental Funds in the Fund Financial Statements are
presented on a modified accrual basis.

The enterprise fund is accounted for using the accrual basis of accounting. Revenues are recognized when earned and
expenses are recognized when incurred.
Modified Accrual
All governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual
basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available.
"Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the
current period. The Department considers funds available if received within "60 days" after year-end. Expenditures are
generally recognized under the modified accrual basis of accounting when the related liability is incurred. The
exception to this general rule is that principal and interest on general long-term debt, if any, is recognized when due.
In applying the "susceptible to accrual" concept to intergovernmental revenues pursuant to GASS Statement #33,
Accounting and Financial Reporting for Nonexchange Transactions the provider should recognize liabilities and
expenses and the recipient should recognize receivables and revenues when the applicable eligibility requirements
including time requirements, are met. Resources transmitted before the eligibility requirements are met, under most
circumstances, should be reported as advances by the provider and deferred revenue by the recipient.
Operating Revenues
For the purposes of the enterprise funds, operating revenues, include sales income from business operations. All
other revenue is considered non-operating.
E. BUDGETS AND BUDGETARY ACCOUNTING
The New Mexico State Legislature makes annual appropriations to the Department, which lapse at fiscal year end.
Legal compliance is monitored through the establishment of a budget (modified accrual basis) and a financial control
system, which permits a budget to actual expenditure comparison. Expenditures may not legally exceed the legal level
of budgetary control. "Per Section 9 of the General Appropriation Act of 2012, all agencies, including legislative
agencies, may request category transfers among personal services and employee benefits, contractual services and
other. Therefore, the legal level of budgetary control would be the appropriation program level (A-Code, P-Code, Rcode, and Z-Code). The A-Code pertains to capital outlay appropriations (general obligation/severance tax or state
general fund). The P-Code pertains to operating funds. The R-Code pertains to American Recovery & Reinvestment
Act (ARRA) funds. The Z-Code pertains to special appropriations." The budget amounts shown in the financial
statements are both the original appropriation and the final authorized amounts as legally revised during the year. As
per the General Appropriation Act, Laws of 2012, Chapter 19, Section 3, Item M, "for the purpose of administering the
General Appropriation Act of 2010 and approving operating budgets, the state of New Mexico shall follow the modified
accrual basis of accounting for governmental funds in accordance with the manual of model accounting practices
issued by the department of finance and administration. The budget is adopted on the modified accrual basis of
accounting except for accounts payable accrued at the end of the fiscal year that do not get accrued by the statutory
deadline per Section 6-10-4 NMSA 1978. Those accounts payable that do not get paid timely or accrued by the
statutory deadline must be paid out of the next year's budget."
- 29 -

 Each year the Legislature approves multiple year appropriations, which the State considers as continuing
appropriations. The Legislature authorizes these appropriations for two to five years; however, it does not identify the
authorized amount by fiscal year. Consequently, the appropriation is budgeted in its entirety the first year the
Legislature authorizes it. The unexpended portion of the budget is carried forward as the next year's beginning budget
balance until either the project period has expired or the appropriation has been fully expended. The budget
presentations in these financial statements are consistent with this budgeting methodology.
The budgetary basis differs from the basis of accounting required by Generally Accepted Accounting Principles
(GAAP). Significant differences between the budgetary basis and GAAP include the following:
1.

The budget includes encumbrances (obligations for unperformed contracts for goods or services). GAAP
does not include encumbrances, for multi-year appropriations only.

2.

The budget statements are presented on modified accrual basis.

The Department follows these procedures in establishing the budgetary data refiected in the financial statements:
1.

No later than September 1, the Department submits to the Legislative Finance Committee (LFC), and the
Budget Division of the Department of Finance and Administration (DFA), an appropriation request for the
fiscal year commencing the following July 1. The appropriation request includes proposed expenditures and
the means of financing them.

2.

Budget hearings are scheduled before the New Mexico House Appropriations and Senate Finance
Committees. The final outcome of sthose hearings is incorporated into the State's General Appropriation Act.

3.

The Act is signed into Law by the Governor of the State of New Mexico within the legally prescribed time
limit, at which time the approved budget becomes a legally binding document.

4.

Not later than May 1, the Department submits to DFA an annual operating budget by appropriation unit and
object code based upon the appropriation made by the Legislature. The Budget Division of DFA reviews and
approves the operating budget, which becomes effective on July 1.

5.

Formal budgetary integration is employed as a management control device during the fiscal year for the
General, Special Revenue, Capital Projects and Enterprise Funds.

F. ENCUMBRANCES
With the Laws of 2004, Chapter 114, "General Appropriations" establishing the modified accrual basis of accounting for
governmental funds as the budgetary basis of accounting for the State of New Mexico, there are no encumbrances
outstanding at year-end. In cases where the appropriations do not lapse at year-end, the encumbrances outstanding
are re-encumbered for the same amount outstanding at year-end and do not constitute expenditures or liabilities
because the commitments will be honored during the subsequent year. The Department does not have appropriations,
which are multiple year appropriations that do not lapse at year-end.

G. ASSETS, LIABILITIES AND FUND BALANCE
1.

Deposits and Investments

At year end, the carrying amount of the Department's deposits was $2, 144,688 and the bank balance was $2,291,484.
The difference represents outstanding checks, deposits, and other reconciling items. In addition, there was $4,325 of
petty cash.
The Department has defined Investments as Interest in the State General Fund Investment Pool (ISGFIP) with the
New Mexico State Treasurer's Office (STO). State law requires the Department's cash investments to be managed by
- 30 -

 the STO. The investments will include cash on deposit with the State Treasurer's Office, cash on hand, investment
pools, and demand deposits. Other types of investments that the STO may make with state funds are statutorily
defined: U.S. Government and Agency obligations, commercial paper, corporate bonds, money market mutual funds,
certificates of deposit, overnight repurchase agreements, and asset-backed obligations. For purposes of cash flows,
Corrections Industries considers all highly liquid investments, which are on deposit with the State Treasurer in interest
bearing accounts to be cash or cash equivalents. GASB 40 disclosure related to the above items held within the New
Mexico State Treasurer's Office, the reader should refer to separate audited financial statements prepared by the STO
which will disclose the categories of risk involved.
The fair value of the investments maintained at the New Mexico State Treasurer's Office is as follows at June 30, 2016.
Investment
New Mexico State Treasurer's Office:
General Fund Investment Pool

Maturities

Fair Value*

1 day to 3 years

$ 55,783,913

Total Investments or Cash Equivalents

$ 55,783,913

* Refer to Note 3 to see individual fund detail regarding holdings held at the New Mexico State Treasurer's Office.

Interest Rate Risk: The Department does not have an investment policy that limits investments maturities as a means
of managing its exposure to fair value losses arising from increasing interest rates. The New Mexico State Treasurer's
Office does have an investment policy that limits investments maturities to five years and less on allowable
investments. This policy is means of managing exposure to fair value losses arising from increasing interest rates.
This policy is reviewed and approved annually by the New Mexico State Board of Finance.
Credit Risk: The New Mexico State Treasurer's Office pool is not rated.
2.

Accounts Receivable:

Accounts receivable are recorded in the General and Enterprise funds. Where appropriate, an associated allowance
for doubtful accounts has been established. Enterprise fund receivables originate from the operations of Corrections
Industries related to the sales of goods and services. General Fund receivables include amounts receivable from other
state agencies and local governments relating to various joint powers agreements (JPA) for inmate work crews and
billings for reimbursement of costs associated with housing county inmates in Department operated facilities.
The Department complies with Article IV, Section 32 of the New Mexico Constitution as it pertains to the remission or
forgiveness of debts due to the state or to municipalities. The Department continues to track and communicate with
vendors that are listed within its' outstanding accounts receivable listing to recover outstanding balances still owed to
the Department. The Department has a receivable in the amount of $572,514 owed from Corizon which is not
considered collectible. The allowance amounts for the General and Enterprise funds at June 30, 2016 are $691,337
and $254,048, respectively. In fiscal year 2016, the amount of allowance for financial statement purposes is listed
below.
Accounts Receivable consists of the following:

Accounts Receivable

General Fund
$
941,712

Enterprise
Fund
$ 1,705,592

Total
$ 2,647,304

(6911337)

(2541048)

(9451385)

$ 1,451,544

$ 1,701,919

Less: Allowance for doubtful accounts
Net Accounts Receivable

$

250,374

- 31 -

 3.

Federal Grants Receivable:

Various reimbursement procedures are used for federal awards received by the Department. Consequently, timing
differences between expenditures and program reimbursements can exist at any time during the fiscal year.
Receivable balances at fiscal year-end represent amounts expended during the fiscal year that are related to a federal
grant, however the reimbursement for the expenditure was not received prior to the end of the fiscal year.

4.

Due to I Due from Other State Agencies

These amounts represent receivables and payables arising from transactions between the Department and other State
agencies. Balances in these accounts relate to (1) joint powers agreements (JPA) between the Department and
various other State agencies to provide inmate work crews, (2) goods and services provided to the Department by
other State agencies, and (3) other items required to be accrued from other agencies per GAAP.
Inter-agency receivables and payables as of June 30, 2016 consist of the following:
lnteragency Receivables

Fund Type
General Fund

SHARE
Fund
Number
00700

Totals

Due From
other Agencies

$

1, 189,389

$

1, 189,389

Due From
SHARE
Agency
Number

Due From
SHARE Fund
Number

33700
34100
70000
80500
52100
52100
52100
52100
95000

60100
76100
12802
20100
19900
21300
95300
95600
12150

Amount
1,039,348
64,515
5,986
23,644
82
17,941
1,669
4,084
32, 120
1,189,389

lnteragency Payables

Fund Type

SHARE
Fund
Number

General Fund
General Fund

00700
91500

General Fund
General Fund
Totals

00700
91500

Due to
SHARE
Agency
Number

Due to
SHARE Fund
Number

211
20,357

33300
63000

82800
05200

2,668,575
73, 783
2,762,926

34100
34100

85300
85300

Due to other
Agencies

$

$

- 32 -

Amount

$

$

211
20,357
2,668,575
73,783
2,762,926

 5.

Inventories

Supplies inventory are maintained on a consumption basis of accounting where items are purchased for inventory and
charged to the budgetary accounts as the items are consumed. Inventories held by the General fund, in the amount of
$3,731,325 consist of generic supplies and materials in the various department operated correctional facilities.
Inventories are valued using the average cost method. A portion of the amount reported in non-spendable fund
balance represents inventories and indicates that supplies inventories are not available expendable resources for
Department programs.
Enterprise fund inventories consist primarily of furniture, textiles, and other items held for resale. Inventories are valued
at estimated cost, using the first-in, first-out method, which does not exceed net realizable value.
Components of the Corrections Industries (enterprise fund) inventories are as follows:

$

Raw Materials
Work in Process
Finished Goods

349,104
101,435
785,779

Total Inventory
6.

Prepaid Items

These amounts represent prepayment of postage and fuel, which has benefit to the Department beyond the fiscal year,
ending June 30, 2016. Prepaid items are expensed when consumed under the consumption method. Therefore, these
items are allocated to the fiscal year in which they are used. A portion of the amount reported in non-spendable fund
balance represents prepaid items.
7.

Capital Assets

Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost.
Contributed assets are recorded at the fair market value as of the date received. Additions, improvements and other
capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and
maintenance are expensed as incurred. Pursuant to §12-6-10 NMSA 1978, (effective June 17, 2005), the State's
capitalization policy threshold was changed from $1,000 to $5,000 requiring agencies to capitalize only acquisitions
greater than $5,000. Assets purchased prior to the new capitalization threshold were not removed from the agency's
listing but will remain on the inventory list and will continue to be depreciated until the asset is fully depreciated.
Depreciation on all assets is provided on the straight-line basis over the estimated useful lives with no salvage value.
The Department utilizes IRS Publication 946 to estimate the useful lives on capital assets as follows:
Building and Improvements - 40 years
Improvements other than Buildings - 20 years
Machinery and Equipment
Other Personal Property - 12 years
Software - 3 to 7 years
Furniture and Fixtures - 10 years
Automotive - 5 years
GASB Statement #34 requires the recording and depreciation of infrastructure assets. Infrastructure assets include
roads, bridges, traffic signals, etc. The Department does not own any infrastructure assets.
Construction period interest, if any, is capitalized in the proprietary fund. There was no construction period interest
capitalized in 2016. The Department has one internally generated intangible asset (software), which is capitalized.

- 33 -

 8.

Compensated Absences

Qualified employees are entitled to accumulate annual leave according to a graduated leave schedule of 80 to 160
hours per year, depending upon length of service and employee's hire date. A maximum of thirty working days (240
hours) of accumulated annual leave may be carried forward into the beginning of the calendar year and any excess
leave is lost.
When employees terminate, they are compensated for accumulated unpaid annual leave as of the date of termination,
up to a maximum of 240 hours. Accumulated annual leave is not expected to be liquidated with expendable available
financial resources and is reported in the long-term liabilities.
Qualified employees are entitled to accumulate sick leave at the rate of one day for each calendar month of service.
There is no limit to the amount of sick leave that an employee may accumulate. Once per fiscal year in either January
or July, employees may elect to be paid for 50% of accrued sick leave in excess of 600 up to 720 hours, but not to
exceed 120 hours (net 60 hours can be paid). In the case of retiring employees, up to 200 net hours in excess of 600
hour minimum limit, can be paid. All sick leave balances from 600 to 720 hours have been recorded at 50% of the
employee's current hourly rate in the long-term liabilities.
Compensatory time may be granted by to individuals when overtime is needed. Employees not exempt from the FLSA
may accrue up to 240 hours of compensatory leave. Employees exempt from the FLSA may accrue up to 160 hours of
compensatory leave.
The non-current portion (the amount estimated to be used in subsequent fiscal years) for Governmental Funds is
maintained separately and represents a reconciling item between the fund and government-wide presentations.
Annual leave and sick leave (in excess of 600 hours up to 720 hours) is accrued in the enterprise fund and reported as
a fund liability.
9.

Due To State General Fund (Reversions)

Reversions to the State General Fund by the Department are based on the definitions of both reverting and nonreverting funds. Reversions are calculated by applying the total actual revenue amount to the total expended amount at
fiscal year-end less any amounts that are determined to be non-spendable, restricted or assigned.
Reverting Funds. These are all funds that are not identified by law as non-reverting. Such funds are in excess of
budgeted expenditures and budgeted and actual revenues. Examples of such reverting funds currently generated by
the Department are miscellaneous revenues, sales and services revenues, and payments for care. Revenues for JPA,
are reimbursements for actual costs, and as such, are a receivable due to the Department. Any amounts collected for
these revenues over estimated budget are revertible funds, since they would be replacing reverting general fund that
was temporarily used to support such activities. Reversions for JPA revenues are dependent on two criteria: 1) Period
of receipt (current year versus prior year) and 2) Period of accrual (revenue recognition).
Non-Reverting Funds. All funds, which are either appropriated to or earned by the Department and by law or statute,
are not required to be reverted to the state treasury upon completion of a fiscal period or project. The Department
currently classifies the following revenues and sources as non-reverting.

i)

Enterprise Funds/Other State Funds - Corrections Industries Revolving Fund (Fund 07700). All
revenues generated from sales and services and from other types revenues, which are specifically
earned by and applied to the Corrections Industries Division, are non-revertible funds, except for
any appropriated General Fund or grant funds awarded to this specific organization. Budget is
established in Corrections Industries, program code P533. [Section 33-8-7 NMSA 1978]

ii)

Building Fund (Fund 89800). Revenues, which support the Building Fund, are non-revertible. The
source of the revenues is from State Permanent Fund income, both Regular and Charitable. The
State Investment Council distributes this income to the Department on a monthly basis.
Additionally, any unexpended balance of this fund is classified as cash balance. These revenues

- 34-

 support expenditures for the payment of maintenance and repairs at the Central Office and
Training Academy Complex [Section 33-1-18, 33-1-19 and 33-2-2 NMSA 1978)
iii)

Community Corrections Grant Fund (Fund 90200). General Appropriations made to this fund do not
revert to the State General Fund. Additionally, any unexpended appropriations to this fund are
classified as Cash Balance, which is made up from either designated or undesignated cash
balance or from non-expended budgeted cash balance. Revenue and expenditure budget is
established in Community Corrections Vendor run program code P534. [Section 33-9-3 NMSA
1978)

iv) Permanent Fund Income (Fund 90700). Revenues, which support the general operating expenditures
at the Penitentiary of New Mexico and identified as such, are non-revertible. The source of these
revenues is from State Permanent Fund income, both Regular and Charitable. The State
Investment Council distributes this income to the Department on a monthly basis. Budget for
revenues and expenditures are established in Inmate Management and Control, program code
P531. [Section 33-1-18, 33-1-19 and 33-2-2 NMSA 1978)
v)

Land Income (Fund 90700). Revenues, which support the general operating expenditures at the
Penitentiary of New Mexico and identified as such, are non-revertible. The source of these
revenues is from Land Income, both Regular and Charitable. The State Land Office distributes this
income to the Department on a monthly basis. Budget for revenues and expenditures are
established in Inmate Management and Control, program code P531. [Section 33-1-18, 33-1-19
sand 33-2-2 NMSA 1978)

vi)

Probation and Parole Fees (Fund 90200 and 91500). All Probation and Parole fees collected by the
Department are non-revertible funds. Accordingly, all budgeted Cash Balance revenues from
these fees that are not used to support current year operations are also not revertible to the State
General Fund. Revenue and expenditure budgets are established in both Community Corrections,
program code P534 and in Community Offender Management, program code P534. [Section 3120-6 and 31-21-13.1NMSA1978)

vii) Grant Funds (All Funds). Grant funds from any governmental source, such as Federal or State, direct or
indirect, do not revert to the State General Fund unless specifically identified in the grant contract
or appropriation law. In some ·cases, any over drawn grant funds may be reverted to the State
General Fund or be reverted to the granting agency. Currently, all grants in operation by the
Department, except for the State Criminal Alien Assistance Program (SCAAP) award, are in the
form of a reimbursement basis, whereby reimbursement for grant costs is requested from the
granting agency after the grant related expenditure has occurred. [Section 6-5-10 NMSA 1978].
When the funds pertaining to the SCAAP award are received, the funds are deferred until budgeted
by the Department.
Unexpended and unencumbered cash balances of certain funds revert to the State General Fund at year-end. For
certain funds, cash recoveries during the fiscal year from stale dated warrants and prior year reimbursements are also
due to the State General Fund.

- 35 -

 Current year reversions Due to the State General Fund as of June 30, 2016 were as follows:

General Fund
Current Year:
FY 16 Reversions
Plior Year:
FY15 Reversion
Total Reversions

SHARE
System Fund
90700
47,206

$

$

8

Total

$

47,214

2,619,244

73 572

2,692,816

2,666,450

73,580

2,740,030

2, 125

203

2,328

73,783

$ 2,742,358

Stale Dated Warrants
Total Reversions Due to General Fund

SHARE
System Fund
91500

$ 2,668,575

$

10. Deferred Inflows/Outflows

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows
of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of
net position that applies to a future period(s) and so will not be recognized as outflows of resources
(expenses/expenditures) until then. The department did not have any items that qualified for reporting in this category
as of June 30, 2016.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows
of resources. This separate financial statement element, deferred inflows of resources, represents a consumption of
net position that applies to a future period(s) and so will not be recognized as inflows of resources (revenue) until then.
The Department did not have any items that qualified for reporting in this category as of June 30, 2016.
11. Fund Balances

The Department has implemented GASS 54-Fund Balance Reporting and Governmental Fund Type Definitions. The
pronouncement will provide modifications to, and additional types of, fund balance classifications. This statement will
enhance the usefulness of fund balance information to provide more consistency among the classifications and will
establish reporting standards for all governments that report governmental funds. The definition of each classification
is summarized below:
Non-Spendable Fund Balance
The portion of fund balance that includes amounts that cannot be spent because they are either (a) not in spendable
form or (b) legally or contractually required to be maintained intact. This includes items that are not expected to be
converted to cash, for example, inventories and prepaid amounts.
Restricted Fund Balance
The portion of fund balance that reflects constraints placed on the use of resources (other than non-spendable items)
that are either: (a) externally imposed by creditors (such as through debt covenants) grantors, contributors, or laws or
regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation.
Committed Fund Balance
This is the portion of fund balance that can only be used for specific purposes pursuant to constraints imposed by
formal action of the government's highest level of decision-making authority. The Legislature and the Governor are the
highest level of decision-making authority for the Department.

- 36 -

 Assigned Fund Balance
This is the portion of fund balance that are constrained by the government's intent to be used for specific purposes, but
that are neither restricted nor committed. The body or official authorized to assign amounts to a specific purpose is the
highest level of decision-making authority for the Department. The Legislature and the Governor are the highest level
of decision-making authority for the Department.
Unassigned Fund Balance
This is the portion of fund balance that is residual classification for the general fund. This classification represents fund
balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific
purposes within the general fund.
H. REVENUES, EXPENDITURES AND EXPENSES

Substantially all governmental fund revenues are accrued.
Expenditures are recognized when the related fund liability is incurred except for the following permitted by generally
accepted accounting principles:
Prepaid items and inventory costs are reported in the period when inventory items are consumed, rather than in the
period purchased.
It is the practice of the Department to use available unrestricted resources first unless otherwise specifically directed to
use restricted resources.
I. NET POSITION

The government-wide and business types Fund Financial Statements utilize a net position presentation. Net Positions
are categorized as investment in capital assets, restricted and unrestricted.
Net investment in Capital Assets - is intended to reflect the portion of net positions which are associated with nonliquid, capital assets less outstanding capital asset related debt. The net related debt is the debt less the outstanding
liquid assets and any associated unamortized cost.
Restricted Net Position - are liquid assets (generated from revenues and not bond proceeds), which have third-party
constraints placed on their use either by (1) external groups such as creditors, grantors, contributors or laws or
regulations of other governments or (2) law through constitutional provisions or enabling legislation limiting their use.

The Department follows GASB 46 "Net Assets Restricted by Enabling Legislation". The government-wide
statement of net position reports $50, 710,362, of which $24, 112,24 7 is restricted by enabling legislation.
Unrestricted Net Position - represent all other unrestricted liquid assets that do not meet the definition of "restricted
net position" or "invested in capital assets".

J. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
K. PROGRAM REVENUES

Revenues that (1) originate from the program or from parties other than the government's taxpayers or citizens as a
whole and (2) reduce the expenses of the function that has to be financed by general revenues. Revenues of this type
can originate from a governmental source, but the proceeds are a charge for services or products produced by a
government agency, where that agency is considered a vendor within the market place. Additionally, program
revenues are fees charged by the government agency that are used to support a specific operation of that
governmental unit.
- 37 -

 The Department classifies the following types of revenues as program revenues: (1) All revenue received by
Corrections Industries for the sale of goods or services, (2) Permanent Fund Income and Land Income of which the
Department is a beneficiary, and (3) other charges for services such as Concession Merchandise, Institutional Sales,
Payment for Care - Individuals, etc.

NOTE3:
A.

CASH
Pledged Collateral

Custodial Credit Risk - Deposits: Custodial credit risk is the risk that in the event of a bank failure, the Departments
deposits may not be returned.
In accordance with Section 6-10-7 NMSA 1978, deposits of public monies are to be collateralized in an aggregate
equal to 50% of deposits in excess of Federal Deposit Insurance Corporation (FDIC) insurance coverage. Deposits
are exposed to custodial risks if they are not covered by depository insurance. FDIC insures the deposits of
governmental accounts on a per Official Custodian basis as follows: the aggregate balance in demand deposits
accounts are insured up to $250,000 per Official Custodian and the aggregate balances in time and savings accounts
are insured up to $250,000 per Official Custodian.
On June 30, 2016, the Corrections Department had one bank account with a balance above $250,000:

Total Amount on Deposit
Less:Amountcovered by FDIC
Total Uninsured Funds

Wells Fargo
Bank
$ 2,291,484
(250,000)
2,041,484

Amount requiring collateral (50%) *

$

1,020,742

Detail of pledged collateral specific to this agency is unavailable because the bank commingles pledged collateral for
all state funds it holds. However, the State Treasurer's Office collateral bureau monitors pledged collateral for all state
funds held by state agencies in such "authorized" bank accounts.
* The New Mexico State Treasurer's Office is responsible to ensure that all accounts have collateral at the required
level for amounts in excess of FDIC coverage. The New Mexico State Treasurer issues separate financial statements,
which disclose the collateral pledged to secure these deposits, the categories of risk involved, and the market value of
purchased investments, which may differ from the cash deposited by the Department.

- 38 -

 NOTE 3:

B.

Cash (continued)

Schedule of Investment Accounts including cash held at the State Treasurer's Office

Name of DeEOSitO!}'.
General Fund:
NM State Treasurer
NM State Treasurer
N/A

Account Name

Fund TyEe

General Operatng
Probation and Paroe
Various

General
General
General

General Operatng

General

Correction Industries
Various

Enterprise
Enterprise

Inmate Master Trust Account

Agency Inmate Trust

Total General Fund Cash
Special Revenue Funds:
NM State Treasurer
Total Special Revenue Fund
Enterprise Funds:
NM State Treasurer
N/A
Total Enterprise Funds
Agency Fund:
Wells Fargo Bank New Mexico
Total Agency Fund Cash

- 39 -

 SHARE
System Fund
No.

Type of
Account

90700
91500
NIA

State Treasury
State Treasury
Petty Cash

90200

07700
NIA

55700

State Treasury

State Treasury
Petty Cash

Checking

Interest
Bearing

Bank/DFA
Statement
Balance at
06130/16

Reconciled
Book Balance
at 06/30/16

No
No
No

$ 41,046,113
8,838,313
2,075

$ 41,046,113
8,838,313
2,075

49,886,501

49,886,501

3,491,974

3,491,974

3,491,974

3,491,974

2,407 ,513
2,250

2,407 ,513
2,250

2,409,763

2,409,763

212911484

211441688

212911484

2,144,688

No

Yes

No

No

- 40-

 NOTE 4:

CAPITAL ASSETS

The changes in capital assets for the year are as follows:

Beginning
Balance 07/01/15
Governmental-type Activities:
Buildings and Improvements
Improvements other than Buildings
Machinery and Equipment
Automotive
Total Capital Assets at Historical Cost
Less: Accumulated Depreciation
Buildings and Improvements
Improvements other than Buildings
Machinery and Equipment
Automotive
Total Accumulated Depreciation

Governmental Activities Capital Assets, Net
Business-type Activities:
Buildings and Improvements
Machinery and Equipment
Automotive
Total Capital Assets at Historical Cost
Less: Accumulated Depreciation
Machinery and Equipment
Buildings and Improvements
Automotive
Total Accumulated Depreciation

Enterprise Fund Capital Assets, Net

$

35,982,437
3,714,246
21,856,119
2,917,225
64,470,027

Additions
$

27,295,580

$

$

1,003,511
2, 192,941
963,135
4,159,587

$

(282,331)
(272,749)
(555,080)

(238, 101)
(272,749)
(510,850)

17,997,718
1,498,399
17,664,976
2,311 ,645
39,472,739

$

(44,229)

$ 26,400,447

$

.

(16,855)
(16,855)

$

(16,855)

$
267,304
102,329
369,633

1,968,791
916,854
684,987
3,570,632
588,955

(834,047)

.

$ 35,982,436
3,714,246
22,860,429
3,316,074
65,873,186

1,283,037
164,152
1,269,835
92, 117
2,809, 141

$

$

16,855
16,855

$

255,126

1,003,511
2,477,100
1,065,464
4,546,075
1,999,637
922,695
762,807
3,685,139

30,846
5,841
77,820
114,507
$

16,855

$

All Capital Assets listed above are being depreciated. The Corrections Department does not have any Capital Assets
that are not being depreciated, such as land.
Depreciation expense for the current year is $2,809, 141 and $114,507 for the governmental and enterprise funds,
respectively. On the Statement of Activities, these amounts are included in the Public Safety-Corrections and
Corrections Industries categories, accordingly.

- 41 -

Ending
Balance
06/30/16

Deletions
$

$
1,303,496
671,598
1,975,094

16,714,681
1,334,247
16,633,242
2,492,277
37,174,447

$

Net
Transfers

.

$

860,936

 NOTE 5:

RETIREMENT PLANS (STATE PERA &ERB)

Compliant with the requirements of Government Accounting Standards Board Statement No. 68, Accounting and
Financial Reporting for Pensions, the State of New Mexico has implemented the standard for the fiscal year ending
June 30, 2016.
The New Mexico Corrections Department, as part of the primary government of the State of New Mexico, is a
contributing employer to two cost-sharing multiple employer defined benefit pension plan administered by the Public
Employees Retirement Association (PERA) and Educational Retirement Board (ERB). Overall, Total pension liability
exceeds Plan net position resulting in a Net pension liability. The State has determined the State's share of the net
pension liability to be a liability of the State as a whole, rather than any agency or department of the State and will not
be reported in the department or agency level financial statements of the State. All required disclosures will be
presented in the Comprehensive Annual Financial Report (CAFR) of the State of New Mexico.
Information concerning the net pension liability, pension expense, and pension-related deferred inflows and outflows of
resources of the primary government will be contained in the General Fund and the CAFR and will be available, when
issued, from the Office of State Controller, Room 166, Bataan Memorial Building, 407 Galisteo Street, Santa Fe, New
Mexico, 87501.

NOTE 6:

RETIREE HEALTH CARE

RHCA Plan Description
The Corrections Department contributes to the New Mexico Retiree Health Care Fund, a cost-sharing multipleemployer defined benefit post employment healthcare plan administered by the New Mexico Retiree Health Care
Authority (RHCA). The RHCA provides health care insurance and prescription drug benefits to retired employees of
participating New Mexico government agencies, their spouses, dependents, and surviving spouses and dependents.
The RHCA Board was established by the Retiree Health Care Act (Chapter 10, Article 7C, NMSA 1978). The Board is
responsible for establishing and amending benefit provisions of the healthcare plan and is also authorized to designate
optional and/or voluntary benefits like dental, vision, supplemental life insurance, and long-term care policies.
Eligible retirees are: 1) retirees who make contributions to the fund for at least five years prior to retirement and whose
eligible employer during that period of time made contributions as a participant in the RHCA plan on the person's
behalf unless that person retires before the employer's RHCA effective date, in which the event the time period
required for employee and employer contributions shall become the period of time between the employer's effective
date and the date of retirement; 2) retirees defined by the Act who retired prior to July 1, 1990; 3) former legislators
who served at least two years; and 4) former governing authority members who served at least four years.
The RHCA issues a publicly available stand-alone financial report that includes financial statements and required
supplementary information for the postemployment healthcare plan. That report and further information can be
obtained by writing to the Retiree Health Care Authority at 4308 Carlisle NE, Suite 104, Albuquerque, NM 87107.

Funding Policy
The Retiree Health Care Act (Section 10-7C-13 NMSA 1978) authorizes the RHCA Board to establish the monthly
premium contributions that retirees are required to pay for healthcare benefits. Each participating retiree pays a
monthly premium according to a service based subsidy rate schedule for the medical plus basic life plan plus an
additional participation fee of five dollars if the eligible participant retired prior to the employer's RHCA effective date or
is a former legislator or former governing authority member. Former legislators and governing authority members are
required to pay 100% of the insurance premium to cover their claims and the administrative expenses of the plan. The
monthly premium rate schedule can be obtained from the RHCA or viewed on their website at
www.nmrhca.state.nm.us.
The employer, employee and retiree contributions are required to be remitted to the RHCA on a monthly basis. The
statutory requirements for the employer and employee contributions can be changed by the New Mexico State

- 42 -

 Legislature. Employers that choose to become participating employers after January 1, 1998, are required to make
contributions to the RHCA fund in the amount determined to be appropriate by the board.
The Retiree Health Care Act (Section 10-7C-15 NMSA 1978) is the statutory authority that establishes the required
contributions of participating employers and their employees. For employees who are members of an enhanced
retirement plan (correctional officers), during the fiscal year ended June 30, 2016, the statue required each
participating employer to contribute 2.5% of each participating employee's salary, and each participating employee was
required to contribute 1.25% of their salary. For employees who are not members of an enhanced retirement plan
during the fiscal year needed June 30, 2016, the statute required each participating employer to contribute 2.0% of
each participating employee's annual salary; each participating employee is required to contribute 1.0% of their salary.
In addition, pursuant to Section 10-7C-15(G) NMSA 1978, at the first session of the Legislature following July 1, 2014,
the legislature shall review and adjust the distributions pursuant to Section 7-1-6. 1 NMSA 1978 and the employer and
employee contributions to the authority in order to ensure the actuarial soundness of the benefits provided under the
Retiree Health Care Act.
The Corrections Department contributions to the RHCA for the years ended June 30, 2016, 2015, and 2014 were
$1,686,696, $1,786, 135, and $1,625,907, respectively, which equal the required contributions for each year.
NOTE 7:

FUNDS HELD IN TRUST BY OTHERS

The Department, through the Penitentiary of New Mexico (PNM), is an income beneficiary of a portion of the State
Permanent Fund derived from trust lands assigned to PNM by the Fergusson Act of 1898 and the New Mexico
Enabling Act of 1910. These Acts together transferred surface acres and mineral acres of Federal Land to the Territory
of New Mexico. The grants stipulate that such lands are to be held in trust for the benefit of specifically identified state
institutions.
The Department is also an income beneficiary of a portion of the State Charitable, Penal and Reformatory Institutions
Permanent Fund derived from trust lands assigned to PNM by the Fergusson Act of 1898 and the New Mexico
Enabling Act of 1910.
Responsibility for the investment of the State Permanent Fund resides with the State Investment Officer. Because the
Department does not control the funds, they are not reflected in the accompanying financial statements. Income from
the trust is required to be used for the care and custody of adult offenders and is recognized in the general fund as a
component of other state fund revenues.
At June 30, 2016 the value of the State Permanent Fund investments held for the benefit of the Department was
$277,361,167 at market. Related investment income for the year then ended was $12,539,631.
The value of the State Charitable, Penal and Reformatory Institutions Fund investments held for the benefit of the
Department were 1/7th of the fair market value, which was $115, 731, 138 at June 30, 2016. Related investment income
from the trust for the year then ended was $750,897.

NOTE 8: CONCENTRATIONS AND INTERFUND TRANSACTIONS

Inmates at various institutions are required to work for the institutions or provide direct labor in the Corrections
Industries work programs reflected on pages 72 through 76. These inmates are compensated at nominal rates, and
their earnings are paid to the credit of the inmate trust accounts reported in the Agency Fund. During fiscal year ended
June 30, 2016 the Enterprise Fund incurred $216,751 in inmate wages expense.

- 43 -

 NOTE 9: OPERATING LEASES
LESSEE:
The Department is obligated for office space lease agreements for Probation and Parole Division field offices, copier
and mailing equipment leases Department wide, and GSD Motor Transportation Pool vehicle leases Department wide.
All are being accounted for as operating leases. Operating leases do not give rise to property rights or lease
obligations; therefore, all lease agreements include a cancellation clause and are contingent upon legislative
appropriation.

Future minimum annual payments under operating lease agreements for facilities, vehicles, and equipment are as
follows:

Year Ended June 30,
2017
2018
2019
2020
2021
Subsequent
Total Mnimum Lease Payments

$

$

2,856,006
2,644,545
2, 132,387
1,636,505
1,449,238
1,825,352
12, 544, 093

During the year ended June 30, 2016, general fund operating lease expenditures for facilities, vehicles, and equipment
totaled $3,854,950.
LESSOR:
The Corrections Industries Division is a lessor of corral space outside the secured perimeter of the prison facility in
Santa Fe, New Mexico. The following schedule identifies the amount of expected rent revenue for the general fund:

Year Ended June 30,
2017
2018
2019
2020
2021
Subsequent
Total Mnimum Lease Payments

- 44-

$

185,000
138,750

$

323,750

 NOTE 10:

CHANGES IN SHORT-TERM LIABILITIES

The changes in short-term liabilities for government type activities are as follows:

Compensated Absences:
Annual Leave
Compensatory Leave
Sk::k Leave
Total Short-Term Liabiities

Balance
Begnning
$ 3,626,111
633,438
60,612

Increase
$ 3,896,085
2,860,883
3,151,454

4,320,161

$ 9,908,422

$

$

(3,835,807)
(2,794,163)
(3,124,618)

Balance
Ending*
$ 3,686,389
700,158
87,448

$

(9,754,588)

$ 4,473,995

(~crease)

The changes in short-term liabilities for business-type activities are as follows:

Compensated Absences:
Annual Leave
Compensatory Leave
Sk::k Leave
Total Short-Term Liabiities

Balance
Beginning
59,302
$
4,847
480

Increase
$ 52,598
4,594
45, 163

64,629

$ 102,355

$

$

(35,917)
(5,829)
(44,528)

Balance
Ending*
$
75,983
3,612
1,115

$

(86,274)

$

(~crease)

80,710

*The estimated amount expected to be paid for Compensated Absences within one year is $4,473,995 which is listed
on the Statement of Net Position on page 11. The General Operating Funds typically have been used to liquidate
short-term liabilities like capital leases and compensated absences. The General Operating Funds used are SHARE
funds 90200, 90700, and 91500. The estimated balance of $80,710 for the business-type activities is expected to be
paid for within one year.

NOTE 11:

CONTINGENT LIABILITIES (CLAIMS &JUDGMENTS)

The Department as a State Agency defined in the New Mexico Tort Claims Act, is insured through the State of New
Mexico General Services Department, Risk Management Division. The Office of Risk Management Division pays
annual premiums for coverage provided In the following areas:
1.
2.
3.

Liability and civil rights protection for claims made by others against the State of New Mexico;
Coverage to protect the State of New Mexico's property and assets; and
Fringe benefit coverage for State of New Mexico employees.

In the case of civil actions or claims against the Department for financial damages, the Department's certificate of
insurance with Risk Management does not cover claims for back wages but does cover civil rights claims for other
compensatory damages.
The civil actions or claims against the Department for money damages are referred to the Risk Management Division
(RMD) for payment of any judgment or settlement and for some of these claims the Department and RMD could share
the liability for any monetary judgment or settlement. The potential risk of loss to the Department in these pending
legal cases is estimated to be $275,000 to $2, 155,000 and is deemed to be "slight to moderate" by the Department's
counsel and management and the potential loss would not materially adversely affect the financial statements.

- 45 -

 NOTE 12:

OTHER FINANCING SOURCES AND OPERATING TRANSFERS

Transfer In/Out:

During the fiscal year, the Department received and transferred funds between agencies. These amounts include: (1)
$300,887,000 of State General Fund Appropriations. (2) A total of $1,265,031 was received from various state
agencies. Detail of this amount is as follows: DFA Computer System Enhancement Fund - $250,000; General
Services Department for costs related to legal staff defending the Department in Pro Se cases - $256,063; Higher Ed
Department and Dept. of Public Safety - $243,716; and JPA Revenue from NM Department of Transportation and
Energy, Minerals and Natural Resources Department - $515,252. (3) The Department transferred to the State General
Fund as part of its reversions $2,695,358 (additional information regarding this amount can be found in Note 2-11
starting on page 37). The following is a breakdown of these transactions by fund:
SHARE
Agency I
Fund
State General Fund Appropriations
SHARE System Fund 90200
SHARE System Fund 90700
SHARE System Fund 91500

34101-85300
34101-85300
34101-85300

Total State General Fund Appropriations

Transfer In

$

Transfer Out

6,625,099
269,493,200
24,768,701

$

$ 300,887,000

$

256,063
2,858

$

lnter-P{J ency Transfers

SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 91500
SHARE System Fund 91500
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700
SHARE System Fund 90700

35000-35703
52100-19900
52100-20010
52100-21300
52100-95300
52100-95600
34100-00900
79000-12802
80500-20100
95000-12150
66500-06105
37000-79900
79000-12804
37000-79900
4200046400
66700-98900

40
60
625

77000-89800
77000-90700
77000-90700
77000-07700

34101-85300
34101-85300

Total State General Fund Appropriation/Reversions

- 46 -

1,265,031

$

160,254

150,602

$
$
$

150,602

16,855

16,655

$

Total lntra-P{JencyTransfers
State General Fund Reversions
SHARE System Fund 90700
SHARE System Fund 91500

13,676
20
145,833

$

Total lnter-P{Jency Transfers
lntra-ft-0 ency Transfers
SHARE System Fund 90700
SHARE System Fund 89800
SHARE System Fund 07700
SHARE System Fund 90700

68,711
50,018
1,669
1,651
250,000
23,648
390,345
220,068

$

167,457

$

$

2,668,575
73 783

$

$

2,742,358

167 457

 NOTE 13:

FUND BALANCE

Government Fund Balances - Restricted, Committed and Assigned
The Department's fund balances represent: (1) Restricted Fund Balance, which include balances that are legally
restricted for specific purposes due to constraints that are externally imposed by creditors, granters, contributors, or
laws or regulations of other government or imposed by law through constitutional provisions or enabling legislation; (2)
Committed Fund Balance, which include balances that can only be used for specific purposes pursuant to constraints
imposed by formal action of the Legislative and Executive branches; (3) Non-Spendable Fund Balance, which includes
amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required
to be maintained intact; (4) Assigned Fund Balance, which includes a portion of the fund balance that represents the
remaining amount that is not restricted or committed and are intended to be used by the government for specific
purposes, (5) Unassigned Fund Balance, which includes a portion of fund balance that is residual classification for the
general fund. This classification represents fund balance that has not been assigned to other funds and that has not
been restricted, committed, or assigned to specific purposes within the general fund. Committed, assigned, or
unassigned amounts are considered to have been spent when expenditures are incurred for purposes for which
amount in any of the unrestricted fund balance classification could be used.

The following is a summary of the Restricted Fund Balance amounts by fund type at June 30, 2016:
Governmental Funds
General Operating Fund (90700)
Probation and Parole Fund (91500)
Community Corrections Special Revenue Fund (90200)

$ 11,791,458
5,990,453
2,416,869
$ 20, 198,781

The Community Corrections Special Revenue Fund statutorily does not revert to the State General Fund. The
Department has requested to use $612,700 in its fiscal year 2016 budget request and $812,700 in its fiscal year 2017
budget request, thereby reducing the amount of the appropriation request.
The Department has a portion of fund balance in the amount of $3,770,727 that is Non-spendable. The Nonspendable amount includes prepaid expenses, inventories, and petty cash. The Department also has a portion of fund
balance in the amount of $40,000 listed as Unassigned Fund Balance in the Governmental Funds.

- 47 -

 NOTE 14:

JPA AND MOU DISCLOSURE

The Department was a party to the following Joint Power Agreements (JPA) and Memorandums of Understanding
(MOU) during fiscal year 2016:

NM Tort Claims Act- JPA #13-001J Between NMCD and General Services Department, Risk Management Division
(GSD/RMD) to provide legal representation of NMCD employees pursuant to the NM Tort Claims Act (Pro Se Cases).
Yearly allotment made to NMCD Office of General Counsel.

•
•
•
•
•
•

Responsible Party for Operations: GSD
Time Period: July 1, 2012 to June 30, 2016
Total Estimated Amount of Project- $249,817
Portion Applicable to NMCD: Income
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: GSD

Inmate Work Crews for City of Grants - JPA #09-006J between NMCD and the City of Grants to provide inmate
work crews for maintenance, beautification and enhancement at various locations in the City of Grants, NM.

•
•
•
•
•
•

Responsible Party for Operations: City of Grants
Time Period: December 5, 2008 to Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: City of Grants

Inmate Labor - JPA #14-521-0400-0143 between NMCD and the NM Energy, Minerals and Natural Resources
Department (EMNRD) To provide inmate forestry work camp that will provide training and labor for fire
suppression.

•
•
•
•
•
•

Responsible Party for Operations: EMNRD
Time Period: June 19, 2014 to Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: EMNRD

- 48 -

 NOTE 14:

JPA and MOU Disclosure (Continued)

Inmate Labor - JPA #02-521-05-012 between NMCD and the NM Energy, Minerals and Natural Resources
Department (EMNRD) To provide inmate labor to maintain NM State Parks.

•
•
•
•
•
•

Responsible Party for Operations: EMNRD
Time Period: July 20, 2001 to Indefinite
Total Estimated Amount of Project: $149,000.00
Portion Applicable to NMCD: $14,442.09
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: EMNRD

Inmate Labor - JPA #02-04J between NMCD and the Santa Fe Solid Waste Management Agency (SFSWMA) To
provide inmate labor to perform minor maintenance, beautification and litter control of the Caja Del Rio Landfill property
and other properties as directed by the agency.

•
•
•
•
•
•

Responsible Party for Operations: SFSWMA
Time Period: September 1, 2001 to Indefinite
Total Estimated Amount of Project: $90,000.00
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: SFSWMA

Inmate Labor- JPA #99-?J between NMCD and the City of Las Cruces To provide inmate labor to perform minor
maintenance, beautification and litter control of public areas and other properties as directed by the agency.

•
•
•
•
•
•

Responsible Party for Operations: City of Las Cruces
Time Period: July 28, 1998 to Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: City of Las Cruces

Inmate Labor- JPA #10-001J between NMCD and the City of Santa Fe to provide inmate labor.

•
•
•
•
•
•

Responsible Party for Operations: City of Santa Fe
Time Period: July 21, 2009- Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: City of Santa Fe

- 49 -

 NOTE 14:

JPA and MOU Disclosure (Continued)

Behavioral Health Services - JPA#1-7/96 between NMCD and the NM Department of Health to provide behavioral
health services.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: September 21, 2000- Indefinite
Total Estimated Amount of Project: As Needed
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Use of Old Main - JPA between NMCD and the Department of Military Affairs for operation and use of PNM Old Main.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: December 20, 2010- Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Filming at Old Main - JPA between NMCD and the Facilities Management Division of the General Services
Department and the Film Division of the NM Economic Development Department in order to make use of the old
Penitentiary of New Mexico (Old Main) by the motion picture industry for economic development.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: July 22, 2013- Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Legal Representation - MOU between NMCD and the NM Attorney General's Office for legal representation of
NMCD and its employees in federal and habeas corpus proceedings.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: June 10, 2009 - Indefinite
Total Estimated Amount of Project: $25,000.00+
Portion Applicable to NMCD: $25,000.00+
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

w

50

w

 NOTE 14:

JPA and MOU Disclosure (Continued)

Inmate Tracking - MOU between NMCD and the NM Human Services Department (HSD) for the tracking of all
inmates and parolees named as non-custodial parents in HSD Child Support Enforcement Cases.
•
•
•
•
•
•

Responsible Party for Operations: HSD/NMCD
Time Period: June 4, 2003 - Indefinite
Total Estimated Amount of Project: -0Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: HSD/NMCD

Training Personnel from Central America - MOU between NMCD and Department of State, Bureau for
International Narcotics and Law Enforcement Affairs (INL) for training and mentoring of corrections personnel from
Central America.
•
•
•
•
•
•

Responsible Party for Operations: NMCD/INL
Time Period: February 3, 2012- January 31, 2015
Total Estimated Amount of Project: Actual CosUReimbursement
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD/INL

Collective Bargaining Negotiations - MOU between NMCD and the State Personnel Office for the representation
during collective bargaining negotiations.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: May 4, 2005 - Indefinite
Total Estimated Amount of Project: $11,067.78
Portion Applicable to NMCD: $11,067.78
Amount Agency Contributed in Fiscal Year 2016: $
Audit Responsibility: NMCD

Inmate Labor- MOU between NMCD, and Department of Military Affairs (NMDMA) for inmate labor to perform
janitorial and maintenance services.
•
•
•
•
•
•

Responsible Party for Operations: NMDMA
Time Period: April 25, 2005 - Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMDMA

- 51 -

 NOTE 14:

JPA and MOU Disclosure (Continued)

Hepatitis C Medication and Pharmaceutical Consulting - MOU between NMCD, and Department of Health to
provide Hepatitis C medication and consulting to NMCD inmates with HCV Disease.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: June 21, 2004 - Indefinite
Total Estimated Amount of Project: Actual Costs
Portion Applicable to NMCD: Actual Costs
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

International and Domestic Terrorism Taskforce - MOU between NMCD, and the Federal Bureau of Investigations
(FBI) to form the New Mexico Joint Terrorism Taskforce.
•
•
•
•
•
•

Responsible Party for Operations: NMCD/FBI
Time Period: January 8, 2004 - Indefinite
Total Estimated Amount of Project: Income
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: FBI

10 Year Inmate Population Projections - MOU between NMCD, and the NM Sentencing Commission to develop
sound 10 year inmate population projections.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: September 26, 2011 - Indefinite
Total Estimated Amount of Project: $22,000.00
Portion Applicable to NMCD: $22,000.00
Amount Agency Contributed in Fiscal Year 2016: $
Audit Responsibility: NMCD

Regional Fugitive Task Forces - MOU between NMCD, and the United States Marshal's Service to form the regional
Fugitive Task Forces per the Presidential Threat Protection Act.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: October 6, 2013 - Indefinite
Total Estimated Amount of Project: Actual CosUReimbursement
Portion Applicable to NMCD: Actual Casi/Reimbursement
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD/US Marshal's Service

- 52 -

 NOTE 14:

JPA and MOU Disclosure (Continued)

Albuquerque Safe Streets Task Force - MOU between NMCD/PPD and the Federal Bureau of Investigations (FBI)
for inter-agency cooperation, and formalizing inter-agency relationships for policy guidance, planning, training, public
and media relations.

•
•
•
•
•
•

Responsible Party for Operations: NMCD/FBI
Time Period: April 8, 2009 - Duration of SSTF Operations
Total Estimated Amount of Project: Actual Costs/Reimbursement
Portion Applicable to NMCD: Actual Costs/Reimbursement
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD/FBI

2015 Financial Audit - MOU between NMCD and the Office of the State Auditor (OSA) to conduct the Fiscal Year
2015 Financial Audit.

•
•
•
•
•
•

Responsible Party for Operations: NMCD/OSA
Time Period: June 29, 2015 - December 01, 2015
Total Estimated Amount of Project: $110,000.00
Portion Applicable to NMCD: Actual Costs
Amount Agency Contributed in Fiscal Year 2016: $110,000.00
Audit Responsibility: NMCD/OSA

Representation for Collective Bargaining - MOU between NMCD, the Office of the Governor et al for cooperative
funding and representation for collective bargaining negotiations.

•
•
•
•
•
•

Responsible Party for Operations: NM State Personnel
Time Period: June 10, 2015 - Indefinite
Total Estimated Amount of Project: -0Portion Applicable to NMCD: $7,894.57
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Probation Supervision - MOU between NMCD and the Magistrate Courts of NM for NMCD to accept probation
supervision.

•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: June 14, 2013 - Indefinite
Total Estimated Amount of Project: -0Portion Applicable to NMCD:
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

- 53 -

 NOTE 14:

JPA and MOU Disclosure (Continued)

Probation Supervision - MOU between NMCD and the Department of Veterans Affairs (VA) to promote cooperation
between NMCD and VA regarding the supervision of probationers and parolees residing at a VA facility with a
residential rehabilitation treatment program in NM.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: December 1, 2012-July 30, 2015
Total Estimated Amount of Project: -0Portion Applicable to NMCD:
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Family Reunification Services - MOU between NMCD, Corrections Corporation of America and PB&J Family
Services to provide pre and post release family reunification services for female inmates who are mothers.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: March 28, 2013-September 30, 2018
Total Estimated Amount of Project: -0Portion Applicable to NMCD:
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Wheelchair Restoration - MOU between NMCD and Joni and Friends (JAF) for the restoration of wheelchairs to be
distributed through JAF's Wheels for the World program beyond U.S. boundaries.
•
•
•
•
•
•

Responsible Party for Operations: NMCD
Time Period: December 4, 2013-lndefinite
Total Estimated Amount of Project: -0Portion Applicable to NMCD:
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Legal Services-Cooperative Funding- MOU between NMCD and the Office of the Governor et al for cooperative
funding and legal services in connection to the pending lawsuit titled State of New Mexico v. American Federation of
State, County and Municipal Employees Council 18, AFL-CIO, CLC and Communication Workers of America, AFLCIO, New Mexico Supreme Court, Docket Number 33,792.
•
•
•
•
•
•

Responsible Party for Operations: NM State Personnel
Time Period: February 18, 2013-lndefinite
Total Estimated Amount of Project: $7,684.90
Portion Applicable to NMCD: $7,684.90
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

- 54 -

 NOTE 14:

JPA and MOU Disclosure (Continued)

Legal Services-Cooperative Funding - MOU between NMCD and the Office of the Governor et al for cooperative
funding and legal services in connection to State of New Mexico, Movant v. American Federation of State, County and
Municipal Employees Council 18, AFL-CIO, CLC and Communication Workers of America, AFL-CIO, CLC,
Respondent, D-202-CV-2009-09756 (Consolidated).
•
•
•
•
•
•

Responsible Party for Operations: NM State Personnel
Time Period: September 16, 2013-lndefinite
Total Estimated Amount of Project: $4,673.76
Portion Applicable to NMCD: $4,673.76
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Legal Services-Cooperative Funding - MOU between NMCD and the Office of the Governor et al for cooperative
funding of implementation costs/fees and attorneys' fee award plus gross receipts tax, in connection with State of New
Mexico vs. American Federation of State, County and Municipal Employees, Council 18, AFL-CIO, CLC and
Communications Workers of America, AFL-CIO, CLC, D-202-CV-2009-09756 (Consolidated), and underlying
arbitration awards.
•
•
•
•
•
•

Responsible Party for Operations: NM State Personnel
Time Period: March 27, 2014-lndefinite
Total Estimated Amount of Project: $
Portion Applicable to NMCD: $255,882.76
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

Region Ill Drug Task Force· MOU between NMCD and the Region Ill Drug Task Force for cooperation between
several law enforcement agencies for drug interdiction and intelligence.
•
•
•
•
•
•

Responsible Party for Operations: NMCD Et Al
Time Period: July 1, 2013 - Indefinite
Total Estimated Amount of Project:
Portion Applicable to NMCD: Actual Costs for Travel
Amount Agency Contributed in Fiscal Year 2016: -0·
Audit Responsibility: NMCD Et Al

Transport of State Inmates • MOU between NMCD and the County of Bernalillo to resolve disputes between the
parties and set forth the parties' resolution regarding the placement and removal of technical parole violators from the
Metropolitan Detention Center (MDC).
•
•
•
•
•
•

Responsible Party for Operations: NMCD/MCD
Time Period: March 6, 2008 - Indefinite
Total Estimated Amount of Project:
Portion Applicable to NMCD: Actual Costs for Travel
Amount Agency Contributed in Fiscal Year 2016: -0·
Audit Responsibility: NMCD/MDC

. 55 -

 NOTE 14:

JPA and MOU Disclosure (Continued)

Litter Control · MOU # 15-017 between NMCD and the New Mexico Transportation Department (NMDOT) to provide
inmates to perform minor maintenance and beautification on highways.
•
•
•
•
•
•

Responsible Party for Operations: NMCD/NMDOT
Time Period: June 26, 2014 - June 30, 2018
Total Estimated Amount of Project:
Portion Applicable to NMCD: Actual Costs for Travel
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD/MDC

Prison Rape Elimination Act (PREA) · MOU between NMCD and the Colorado Department of Corrections (CDOC) to
conduct PREA audits to insure compliance with PREA standards.
•
•
•
•
•
•

Responsible Party for Operations: NMCD/CDOC
Time Period: October 2, 2014- October 1, 2019
Total Estimated Amount of Project:
Portion Applicable to NMCD: Actual Costs for Travel
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD/CDOC

Prison Rape Elimination Act (PREAl • MOU between NMCD and the Hawaii Department of Public Safety (HOPS) to
conduct PREA audits to insure compliance with PREA standards.
•
•
•
•
•
•

Responsible Party for Operations: NMCD/CDOC
Time Period: October 2, 2014 - October 1, 2019
Total Estimated Amount of Project:
Portion Applicable to NMCD: Actual Costs for Travel
Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD/HDPS

Access Agreement MOU between NMCD and Lucky 8 TV LLC for access to NMCD facilities, employees and inmates
with respect to filming a documentary entitled "Rookie CO's) television series.
•
•
•
•
•
•

Responsible Party for Operations: NMCD/Lucky 8 TV LLC
Time Period: February 5, 2015 - Upon Date of Premier Broadcast of Last Episode.
Total Estimated Amount of Project:$
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

- 56 -

 Reimbursement Agreement MOU between NMCD and Lucky 8 TV LLC for reimbursement of NMCD for production
related overtime incurred by Correctional Officers engaged by the producer to provide services in connection to the
filming of the documentary "Rookie CO's" television series.

•
•
•
•
•
•

Responsibility Party for Operations: NMCD/Lucky 8 TV LLC
Time Period: February 5, 2015 - Upon Date of Premier Broadcast of Last Episode
Total Estimated Amount of Project: $
Portion Applicable to NMCD: -0Amount Agency Contributed in Fiscal Year 2016: -0Audit Responsibility: NMCD

- 57 -

 NOTE 15:

SHARE CASH BALANCES

Compliant with statute 6-10-3 (NMSA 1978), and to optimize state cash management and investment practices, funds
of various state agencies are deposited in the State General Fund Investment Pool (SGFIP). This pool is managed by
the New Mexico State Treasurer's Office (STO). Claims on the SGFIP are reported as financial assets by the various
agencies investing in the SGFIP.
DFA and STO implemented a comprehensive reconciliation model comparing aggregated claims in the SGFIP to the
associated resources at STO. IPAs, DFA, STO and the CAFR unit have reviewed the reconciliation model for FY 15,
and have deemed the process to be adequate and the related findings were either eliminated or significantly reduced.
$100M was identified that that had been reserved as a loss contingency, and has now been reinstated.
Calculated differences between STO and agency claims have remained stable over the past 12 months. Sufficient
resources are available to cover claims and there is no need to adjust the SGFIP for any specific business unit, and all
claims will be honored at face value.
The Department post audits deposits daily to mitigate the risk of misstatement of the Department's balances within the
Pool. In addition, as required by Section 6-5-2.1 (J) NMSA 1978, DFA/FCD is to complete, on a monthly basis,
reconciliation with the balances and accounts kept by the state treasurer and adopt and promulgate rules regarding
reconciliation for state agencies.

NOTE 16:

SUBSEQUENT EVENTS

The New Mexico Corrections Department (NMCD) has evaluated subsequent events through November 30, 2016
which is the date the financial statements have been issued and has determined no events require disclosure or
adjustment to the financial statements.

NOTE 17:

RELATED PARTY

The New Mexico Corrections Department had two related party transactions. The first is between the ASD Deputy
Secretary and Lucky 8. The ASD Deputy Secretary worked for the New Mexico Corrections Department and Lucky 8
during the fiscal year. The New Mexico Corrections Department received $95,000 in Revenue from Lucky 8 for the
Behind Bars television series. The other is between The New Mexico Corrections Department and the Corrections
Industries Division. Corrections Industries is a division of the New Mexico Corrections Department. Corrections
Industries generates revenue to finance inmate programming through the sale of goods and services. The New
Mexico Corrections Department paid Corrections Industries $3,430,608.47 for goods and services purchased during
the 2016 fiscal year.

NOTE 18:

SUBSEQUENT PRONOUNCEMENTS

In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than
Pension Plans, which is effective for financial statements for fiscal years beginning after June 15, 2016. The NMCD is
evaluating how this pronouncement will affect the agency.
In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions, which is effective for financial statements for fiscal years beginning after June 15, 2017. The
standard will be implemented during the fiscal year ended June 30, 2017. The NMCD is evaluating how this
pronouncement will affect the agency.
In March 2016, the GASB issued Statement No. 82, Pension Issues-An amendment of GASB Statements No. 67,
Financial Reporting for Pensions Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73,
Accounting and Financial Reporting for Pensions and Related Assets. The standard will be implemented during the
fiscal year ended June 15, 2017. Earlier application is encouraged. The NMCD is evaluating how this pronouncement
will affect the agency.
- 58 -

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES & EXPENDITURES - BUDGET AND ACTUAL BY FUND
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

GENERAL OPERATING FUND
SHARE FUND 90700

Original

Final

Actual
Amounts
Modified
Accrual Basis

$ 258,227,700

$ 269,493,200

$ 269,493,200

13,821 ,600
256,100
232,700
$ 272,538, 100

14,200,241
250,000
754,983
284,698,424

16,699,911
400,602
602,928
287,196,641

2,499,670
150,602
(152,055)
2,498,217

299,477

2,444,143

2,144,666

$ 272,538,100

$ 284,997,901

$ 289,640,784

$

4,642,883

$ 116,343,800

$ 115,842,091

$ 115,372,655

$

46,796,900
109,397,400

55,446,695
113,674,664

51,280,131
115,185,250
2,666,243

469,436
4,166,564
(1 ,510,586)
(2,666,243)

$ 272,538,100

$ 284,963,450

$ 284,504,280

Budgeted Amounts

REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Federal Funds
Total Revenues

Budgeted Fund Balance
Total Budgeted Revenues
EXPENDITURES
Personal Services &
Employee Benefits
Contractual Services
Other
Reversions
Total Budgeted Expenditures

- 59 -

Variance
Favorable
(Unfavorable)

$

$

459,170

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES &EXPENDITURES - BUDGET AND ACTUAL BY FUND
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

PROBATION AND PAROLE GENERAL OPERATING FUND
SHARE FUND 91500

Budgeted Amounts
Original
REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Mscellaneous Revenue
Federal Funds
Total Revenues

$

26,972,100
2,000,000

Final

$

24,768,701
2,000,000

Actual
Amounts
Modified
Accrual Basis

Variance
Favorable
(Unfavorable)

$

$
125,827

820
869
26,896,217

3,000
26, 771,701

28,972,100

24,768,701
2, 125,827

820
(2, 131)
124,516

Budgeted Fund Balance
Total Budgeted Revenues
EXPENllTURES
Personal Services &
Employee Benefits
C.Ontractual Services
Other
Reversions
Total Budgeted Expenditures

$

28,972,100

$

26, 771,701

$

26,896,217

$

124,516

$

18,953,400
146,100
9,872;600

$

19,367,794
240,631
7, 163,276

$

19,354, 790
238,797
6,633,413
73,572

$

13,004
1,834
529,863
(73,572)

$

2819721100

$

26}71}01

$

2613001573

$

471,128

- 60 -

 NEW MEXICO CORRECTIONS DEPARTMENT
COMBINING BALANCE SHEET GENERAL FUND TYPES
AS OF JUNE 30, 2016

General Operating
Fund
SHARE System SHARE System
Fund
Fund
90700
89800
Building Fund

ASSETS

- $

41,046,113
2,075

Probation & Parole
Fund
SHARE Sys tern
Fund
91500
$

$

49,884,426
2,075

Investments
Petty Cash
Receivables net
of allowance for doubtful accounts
Federal Grants Receivable
Other Receivables
Due from Other State Agencies
Inventories
Prepaid Items

$

Total Assets

$

- $

46 058,591

$

91082,132

$

55,1401722

$

- $

6,482,622
14,434,363
1, 634, 157
224,289

$

1,119,514
672,508
16,779
272,219

$

7,602,136
15,106,871
1,650,936
496,508

249,635
25,757
16,600
1, 189,389
3,495,515
33 507

8,838,313

Total *

740

250,375
25,757
17,489
1, 189,389
3,731,325
39 887

889
235,810
6 380

LIABILITIES AND FUND BALANCE

Liabiities
Accounts Payable
Vouchers Payable
Payroll Benefits Payable
Payroll Taxes Payable

1,860, 175
2,666,450
2, 125
20
211
3,390,366
3,816
30,698,594

Accrued Wages Payable
Due to State General Fund
Stale Dated Warrants- Due to SGF
Receipts Held in Suspense
Due to Other Stale Agences
Due to Local Governments
Other Liabilities
Total Liabilities
Fund Balances:
Restricted for.
Nonspendabe
Restricted
Unassigned
Total Fund Balance

3,528,539
11, 791,458
40,000
15,359,996

- 61 -

287,545
73,580
203
20,357
380,109
6,674
2,849,488

242,190
5,990,453
6,232,644

2,147,720
2,740,030
2,328
20
20,568
3,770,475
10,490
33,548,082

3,770,727
17,781 ,912
40,000
21,592,639

 NEW MEXICO CORRECTIONS DEPARTMENT
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
GENERAL FUND TYPES
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Revenues
Other State Funds
Federal Grants
Total Revenues

Building Fund

General
Operatilg Fund

Probation &
Parole Fund

SHARE System
Fund

SHARE System
Fund

SHARE System
Fund

89800

90700

91500

$

$ 16,699, 912
344, 155
17,044,067

2,126,647
869
2,127,515

115,372,655
51,280,131
113,253,411
1,931,839
28118381 036

19,354,790
238,797
6,590,158
43,256
2612271000

134,727,445
51 ,518,928
119,843,569
1,975,095
30810651036

(264}931969)

(24M9,485)

(2881893A54)

269 ,493, 200
659,375

24,768,701

(150,602)

(216661243)
267,486,332

(731572)
24,695,129

294,261,901
659,375
(150,602)
(217391815)
292,030,859

(150,602)

2,692,362

595,644

3,137,404

150,602

12,667,634

5,636,999

18,455,235

(0)

$ 15,359,996

Expenditures, Current
Personal Services &
Employee Benefits
Contractual Services
Other
Expenditures, Capital Outlay
Total Expenditures

Excess (deficiency) Revenues over Expenditures
Other Financing Sources (uses)
General Fund Appropriation
Operating Transfers-In
Operating Transfers-Out
Reversions to State General Fund
Net Other Financing Sources (uses)

$

Total*

$

(150,602)

Excess Revenues and Other Financing Sources
over (under) Expendttures & Other Financing Uses
Fund Balance, Beginning of Year
Fund Balance, End of Year

*Inter-fund balances have been eliminated in the total column.

- 62 -

$

6,232,643

$

18,826,558
345,024
19,171,582

21,592,639

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES &EXPENDITURES - BUDGET AND ACTUAL, BY PROGRAM
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

PROGRAM SUPPORT - P530

Budgeted Amounts
Original
REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Federal Funds
Total Revenues

$

12,978,800
461,600
256,100

Actual Amounts
Modified Accrual
Basis

Final

$

11,427,798
840,241

$

48, 168
12,316,207

13,696,500

Budgeted Fund Balance
Total Budgeted Revenues
EXPENDITURES
Personal Services &
Employee Benefits
Contractual Services
Other
Reversbns

Total Budgeted Expenditures

11,427,798
844,578
150,602
9,803
12,432,781

Variance Favorable
(Unfavorable}

$
4,337
150,602
(38,365)
116,574

2,444,143

2,444,143

$

13,696,500

$

12,316,207

$

14,876,924

$

$

10,396,300
932,100
2,368,100

$

9,392,443
845,451
2,043,862

$

9,392,443
845,451
2,019,829
2,619,201

$

13,696,500

$

12,281,756

$

14,876,924

$

$

- 63 -

2,560,717

24,033
(2,619,201}
(2,595,168}

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES &EXPENDITURES - BUDGET AND ACTUAL, BY PROGRAM
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

INMATE MANAGEMENT and CONTROL- P531

Budgeted Amounts
Original
REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Federal Funds
Total Revenues

$

245,248,900
13,360,000

Final

$

EXPENDITURES
Personal Services &
Employee Benefits
Contractual Servk:es
Other
Reversbns
Total Budgeted Expenditures

245,065,402
13,360,000

$

706,815
259,132,217

232, 700
258,841,600

245,065,402
15,855,333

Variance Favorable
(Unfavorable)

$
2,495,333

593, 125
261,513,859

(113,690)
2,381,642

49,477

Budgeted Fund Balance
Total Budgeted Revenues

Actual Amounts
Modified Accrual
Basis

(49,477)

$

258,841,600

$

259,181,694

$

261,513,859

$

2,332,165

$

105,947,500
45,864,800
107, 029, 300

$

105,149,648
47,151,244
106,880,802

$

105,080,473
47,083,084
106,865, 170
47,000

$

69,175
68,160
15,632
(47,000)

$

258,841,600

$

259,181,694

$

259,075, 727

$

105,967

- 64 -

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES &EXPENDITURES - BUDGET AND ACTUAL, BY PROGRAM
FOR THE FISCAL YEAR ENDING JUNE 30, 2016
SPECIAL APPROPROPRIATIONS - Fund 90700
Budgeted Amounts
Original
REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Federal Funds
Total Revenues

$

Final

- $

EXPENDITURES
Personal Services &
Employee Benefits
Contractual Seivces
Other
Reversbns

Total Budgeted Expendttures

13,000,000

250,000

$
$
$

13,250,000

13,000,000

Variance Favorable
(Unfavorable)

$

250,000
13,250,000

250,000

Budgeted Fund Balance
Total Budgeted Revenues

Actual Amounts
Modified Accrual
Basis

(250,000)

$

-

$

13,500,000

$

13,250,000

$

(250,000)

$

- $

1,300,000
7,450,000
4,750,000

$
$

899,739
3,351,596
6,300,251
42

$

400,261
4,098,404
(1,550,251)
(42)

$

- $

13,500,000

$

10,551,628

$

2,948,372

- 65 -

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES &EXPENDITURES - BUDGET AND ACTUAL, BY PROGRAM
FOR THE FISCAL YEAR ENDING JUNE 30, 2016
COMMUNITY OFFENDER MANAGEMENT - P534

Budgeted Amounts
Original
REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Miscellaneous Revenue
Federal Funds
Total Revenues

$

26,972,100
2,000,000

Actua I Amounts
Modified Accrual
Basis

Final

$

24,768,701
2,000,000

$

$
125,827

820
869
26,896,217

3,000
26,771,701

28,972,100

24,768,701
2,125,827

Variance Favorable
(Unfavorable)

820
(2,131)
124,516

Budgeted Fund Balance
Total Budgeted Revenues
EXPENDITURES
Personal Services &
Employee Benefits
Contractual Servk:es
Other
Reversbns

Total Budgeted Expenditures

$

28,972,100

$

26,771,701

$

26,896,217

$

124,516

$

18,953,400
146,100
9,872,600

$

19,367,794
240,631
7,163,276

$

19,354,790
238,797
6,633,413
73,572

$

13,004
1,834
529,863
(73,572)

$

28,972,100

$

26,771,701

$

26,300,573

$

471,128

- 66 -

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES &EXPENDITURES - BUDGET AND ACTUAL, BY PROGRAM
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

COMMUNITY CORRECTIONS- VENDOR OPERATED - P534

Actual Amounts
Modified Accrual
Basis

Budgeted Amounts
Original
Final
REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Federal Funds
Total Revenues

$

Budgeted Fund Bal.

4,421,700
34,600

$

6,625,099
34,600

4,456,300

6,659,699

612 700

612 700

$

6,625,099
65,446

Variance Favorable
(Unfavorable}

$
30,846

6,690,545

30,846
(6121700) *

Total Budgeted Revenues

$

5,069,000

$

712721399

$

6,690,545

$

(5811854)

EXPENDITURES
Personal Services &
Employee Beneftts
Contractual Servbes
Other

$

876,500

$

876,500
6,185,899
210 000

$

763,161
5,722,346
179258

$

113,339
463,553
30 742

Total Budgeted Expenditures

$

$

71272)99

$

6664 764

$

607 635

4192 500
5,0691000

* $612,700 was budgeted fund balance

- 67 -

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES & EXPENDITURES - BUDGET AND ACTUAL, BY PROGRAM
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

SPECIAL APPROPROPRIATIONS - Fund 90200

Budgeted Amounts
Original
Final
REVENUES
State General Fund
Other State Funds
Inter-Agency Transfers
Federal Funds
Total Revenues

$

- $

Actual Amounts
Modified Accrual
Basis

- $

Variance Favorable
(Unfavorable)

- $

482558

Budgeted Fund Bal.
Total Budgeted Revenues

$

$

EXPENDITURES
Personal Services &
Employee Beneftts
Contractual Services
Other

$

- $

Total Budgeted Expenditures

$

- $

-

$

482558

482 558

$

- $
482,558

- $

- 68 -

-

$

482 558

482558

(482,558)

$

(4821558)

 NEW MEXICO CORRECTIONS DEPARTMENT
RECONCILIATION· BUDGETARY SCHEDULES TO FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

The department has prepared budgetary schedules in the current year by program code.
budgetary schedules to the financial statements has been prepared below.

A reconciliation of the

Revenue

Expenses

Net Change in
Fund Balance

314, 092,858
6,690,545
320, 783,403

310, 804, 853
7, 147,322
317, 952, 175

3,288,005
(456,777)
2,831,228

12,432,781
261, 513,859
13,250,000
26,896,217
6,690,545

14,876,924
259,075,727
10,551,628
26,300,573
6,664,764
4821558
317, 952, 175

(2,444,143)
2,438,133
2,698,372
595,644
25,781
(4821558}
2,831,229

Net Changes in fund balance per statement of
revenues, expenditures and changes in fund balance

General Fund (90700 & 91500)
Special Revenue (90200)
TOTAL
Net Changes in Fund Balance per Budget Schedules

General Appropriatbns:
Program Support (P530)
Inmate Management and Control (P531)
Special Appropriations (Z Codes · 90700)
Probation and Parole (P534)
Community Corrections (P534)
Special Appropriations (Z Codes - 90200)
TOTAL

320, 783,403

- 69 -

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF SPECIAL APPROPRIATIONS
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Description

Authority

Appropriation
Period

SHARE
Fund

Total
Appropriations

For deferred maintenance at
Corrections faciltties statewide

Laws of2016,
Ch101, Sect5,
Item 46

2016

90700

$

172,721

For inmate populatbn growth
& overtime in hgh~evel
custody prison faciltties

Laws of2015, Ch
101, Sect 5, Item
48

2015-2016

90700

$

7,000,000

To address deferred
maintenance at Corrections
faciltties statewide

Laws of 2015, Ch
101, Sect 5, Item
49

2015-2016

90700

$

2,000,000

To document & archive
materials from the NM
oenitentiaJV riot of 1980

Laws of 2015, Ch
101, Sect 5, Item

2015-2016

90700

$

50,000

500,000

4, 186,589

50

For the planning phase to
implement a commercial off
the shelfoffender rrgmt
oroaram

Laws of 2015, Ch
101, Sect?, Item
22

2015-2017

90700

$

For inmate populatbn growth,
the treatment of hepatitis C
and other costs

Laws of 2016, Ch
11, Sect 5, Item

2016-2017

90700

$ 13,000,000

2015-2016

90200

$

For a transitional iving pilot
program

Prior Year
Expenditures

43
Laws of 2015, Ch
101, Sect 5, Item
47

500,000

$ 23,222, 721

- 70 -

$ 4, 1861589

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF SPECIAL APPROPRIATIONS
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Current Year
Expenditures

Prior Year
Reversion
Amount

Current Year
Reversion
Amount

Reserved
Fund Balance

Outstanding
Encumbrances

Unencumbered
Balance

$

$

172,721

2,813.411

831,075

1,168,925

49,958

0

42

164,799

335,201

6,181,772

6,818,228

482,558

17.442

$ 11,034,144

$

=$==4=2

$ 8,001 ,946

- 71 -

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES AND EXPENSES, BY ENTERPRISE
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Telemarketing

Furniture
Revenue from Sales

$

234,609

$

Cleaning
Products*

28,401

$ 462,318

SCFHorse
Res:.:ue
$

5,851

Textiles*

PNM
Canteen

$ 907,154

$3,273,964

Manufacturing Costs:
Costs of Materials Used:
Beginning lnventol)' - Materials
Materials Purchases
Net Material Transfers
Materials Available

80,654
110,466

895
254

27,679
328,486

142,402
543,826

2,614,759

191,120

1,149

356, 165

686,228

2,614,759

Less Ending lnventol)'
Cost of Materials Used

(102,834)
88,286

(641)
508

(28,695)
327,470

(108,690)
577,538

2,614,759

Direct Labor- Inmate Pay

31,045

19,740

49,908

Manufacturing Overhead:
Salaries
Benefits
ln-S:ate Travel
Maintenance & Repairs
Supplies
Contractual 2e rvk;es
Other Costs

131,49 3
69,408
226
8,338
15,315
2,000
1,431

99,819
40,311
5,768
9,414

22,794
6,751
176
2,752
24,518

3,307

2,530

Out-of-State Travel
Irrigation Fees
Depreciation

3,201

5,921
33,920
18,788

975

4,474
11,029
43,915
14,814
140

4,067

2,033

3,471

1,264

226
4,998
1,079

1,208

Miscellaneous
Total Manufacturing Overhead

179

229,419

1,079

62,974

76,405

162,090

60,785

Total Manufacturing Costs
Add Beginning Work in Process
Less Ending Work in Process
Total Cost of C?Qods Manufactured
Add Beginning Finished Goods
Less Ending Finished Goods
Net Finished goods Transfers
Total Cost of C?Qods Sold

348,750
72,181
(101,436)
319,495
116,866
(88,979)

4,788

396,365

76,584

759,368

2,725,452

4,788

396,365
81,880
(79,662)

76,584

759,368
389,588
(396,886)

2,725,452

347,382

4,788

398,583

76,584

752,070

2,725,452

Gross Profit

(112,773)

23,613

63,735

(70,733)

155,084

548,512

Allocated Overhead:
Facility Overhead
Sales &Marketing
Distribution Center
Central atice
Capital Contrib utbn (Transfer)

(14,397)
(1,684)
(3,521)
(106,267)

(204)
(426)
(10,958)

(3,320)
(6,938)
(20,269)

(42)
(88)
(611)

(6,513)
(13,613)
(67,567)

(23,506)
(49,131)
(170,834)

2,833

135,417

70,224

$ 440,458

Other lnrome (Expense)
Net In rome (Loss)

135
$

(238,507)

$

12,025

- 72 -

$

33,208

$

(71,474)

$

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES AND EXPENSES, BY ENTERPRISE
FOR THE FISCAL YEAR ENDING JUNE 30, 2016

$

PNM Oki
Main

Santa
Rosa Print

LLCC
Farm

35,366

$ 131,340

$ 209,885

2,370

32,517
63,862

3,684
6,500

2,370

96,379

2,370

Sales &
Marketing

Distribution
Center

Caitral Office

Food &-vcs
Program

$

-

$1,773,060

35 ,127

18,943

39,115
1,415,098

10,184

35,127

18,943

1,454,213

(37,112)
59,267

(2,662)
7,522

35 ,127

18,943

(68,470)
1,385,743

3,668

14,695

42,797

7,554

5,236

6,992

33,045
4,355
452
6,525
4,010
4,071

41,019
17,161

83,658
47,497
46 ,810
5,871
2,284

361,827
208,000
12,366
22,948
47,384
9,595
40,379

136,369
42,872
1,936
29,688
38,416
352,386
2,428

$

-

$ 110,717

28,744
10,789
731

10,303
3,767
3,190
33,846

296
17,873
924

3,756

8,086
10,564

1,959

2,230

42,124

26,732

63,022

109,286

1,959

59,357

192,106

430
753,139

630,827

69,060

183,248

52,278

59,357

234,787

777,318

2,023,562

69,060
19,580
(19,580)

183,248
1,650
(2,347)

52,278

59,357

234,787

777,318

2,023,562

69,060

182,551

52,278

59,357

234,787

777,318

2,023,562

(33,694)

(51,211)

157,607

(59,357)

(124 ,070)

(777,318)

(879)
(1,836)
(12,555)

(943)
(1,971)
(50,299)

(1,507)
(3,150)
(146,492)

59,358

(795)
122,408
(25,857)

458

3,516

$ (48,506)

$ (100,908) $

650,051
16,855

(250,502)

(12,730)
(26,607)
(23,932)

9,663
6,458

$

$

(28,314)

*Roll-up for Cleaning Products and Textiles on following pages.

- 73 -

$ (100,749)

$ (313,771)

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULEOFREVENUESANDEXPENSE~BYENTERP~SE

FOR THE FISCAL YEAR ENDING JUNE 30, 2016

Drug
Screening

$ 840,296

PNM
Livestock

$

7,212

PNM
Bakery

Roswell
Dairy Goat

Ro5Well
Dairy Cow

$

PNM
Landscaping
160,518

836,012

143

836,012

143

836,012

143
104

125
197

PNM Hoop
House

$

-

$ 8,180,691

-

$ 326,946
$ 5,975,846

-

6,302, 792
-

$

(349, 104)
5,953,688

21,605

4,106

$

216,751

71,070
36,730
3,099

902

1,044,660
502,662
70,438
112, 756
208, 146
449,297
92,395

43
9, 111
10,638
44,598
900

1,021

2,170
770

Total
Industries

700

8,086
567

1,337

5,581

8,721

2,649

889

4,277

5,581

8,721

115,269

66,192

836,012

889

4,381

5,581

8,721

137,017

70,298

836,012
218,750
(198,325)

889

4,381

5,581

8,721

137,017

70,298

856,437

889

4,381

5,581

8,721

137,017

70,298

8,787,096

(16,141)

6,323

(4,381)

(5,581)

(8,721)

23,501

(70,298)

(606,405)

(6,033)
(12,610)

(52)
(108)

114,507
430
2,603,377
8,773,816
72, 181
(101, 436)
8,744, 561
828,314
(785,779)

14,397
(1,150)
(2,409)
(356)

(14,054)
16,855
152, 022

$ (34,784)

$

6,163

$ (4,737)

(5,581)

(8,721)

- 74 -

34,339

$

(84,352)

$

(437,528)

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES AND EXPENSES,
FOR CLEANING PRODUCTS BY FACILITY
For the Fiscal Year Ending June 30, 2016

Revenue from Sales

WNMCF
Cleaning Prod
320,028
$

WNMCF
Plastics
142,290
$

Total Cleanilg
Products
462,318
$

11, 867
258,463

15, 812
70, 023

27,679
328,486

270,330
(81309}
262,021

85,835
(201386}
65,449

356,165
(281695)
327,470

2,696

3,225

5,921

25,026
13, 851

8,894
4,937

33,920
18,788

1,328

226
3,670

226
4,998

Manufacturing Costs:
Costs of Materials Used:
Beginning Inventory - Materials
Materials Purchases
Net Material Transfers
Materials Avaiable
Less Ending Inventory
Cost of Materials Used
Direct Laoor - Inmate Pay
Manufacturing Overhead:
Salaries
Benefits
In-State Travel
Mailtenance & Repairs
Supplies
Contractual Services
Other Costs
Out-of-State Travel
Irrigation Fees
Depreciation
Loss on Disposal of Equipment
Miscellaneous
Total Manufacturing Overhead

975

975

226

3,841

4,067

41,406

21,568

62,974

306, 123

90,242

396,365

306, 123
74,881
(66,570)

90,242
6,999
(13, 092)

396,365
81,880
(79,662)

314,434

84, 149

398,583

Gross Profit

5,594

58, 141

63,735

Alocated Overhead:
Faciity Overhead
Sales & Marketing
Distribution Center
Central Office
General Fund Subsidy
Other Income (Expense)

(2,298)
(4,803)
(9, 227)

(1,022)
(2, 135)
(11,042)

(3,320)
(6,938)
(20,269)

Total Manufacturing Costs
Add Beginning Work in Process
Less Ending Work i1 Process
Total Cost of Goods Manufactured
Add Beginning Finished Goods
Less Ending Finished Goods
Net Finished goods Transfers
Total Cost of Goods Sold

Net Income (Loss)

$

(10, 734)

- 75 -

$

43,942

$

33,208

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF REVENUES AND EXPENSES,
FOR TEXTILES BY FACILITY
For the Fiscal Year Ending June 30, 2016

-

WNMCF
Textiles
$ 493,575

Total
Texties
$ 007, 154

106,181
193,609

36,221
11, 895

338,322

142,402
543,826

299,700
(841363)
215,427

48, 116
(24132Z)
23, 789

CCATextiles
Revenue from Sales

$ 413,579

Manufacturing Costs:
Costs of Materials Used:
Begilnilg Inventory - Materials
Materials Purchases
Net Material Transfers
Materials Ava~able
Less Ending Inventory
Cost of Materials Used
Direct Labor - Inmate Pay
Manufacturing Overhead:
Salaries
Benefits
In-State Travel
Mailtenance &Repairs
Supplies
Contractual Services
Other Costs
Out-of-State Travel
Irrigation Fees
Depreciation
Loss on Disposal of Equipment
Miscellaneous
Total Manufacturilg Overhead

$

338,322

686,228
(1081690)
577,538

16,367

3,373

19,740

00,925
35,374

8,894
4,937

99,819
40, 311

5,768
9,292

122

5,768
9,414

Gross Profit
Alocated Overhead:
Facility Overhead
Sales &Marketing
Distribution Center
Central Offbe
General Fund Subsidy
Other Income (Expense)

338,322

3,307

3,307

3,471

3,471

148,137

Total Manufacturing Costs
Add Beginning Work in Process
Less Ending Work in Process
Total Cost of Goods Manufactured
Add Beginning Finished Goods
Less Ending Finished Goods
Net Finished goods Transfers
Total Cost of Goods Sold

Net Income (Loss)

Santa Rosa
Textiles

13,953

162,090

379,931

23, 789

355,648

759,368

379,931
98,196
(87,831)

23, 789
95,692
(95,692)

355,648
195,700
(213,363)

759,368
389,588
(396,886)

300,296

23,789

337,985

752,070

23,283

(23, 789)

155,500

155,084

(3,544)
(7,407)
(11,545)

(6,513)
(13, 613)
(67,567)

(2,969)
(6,206)
(56,022)

2 833

21833

$

(39,081)

$

- 76 -

(23,789)

$ 133,094

$

70,224

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHDULE OF REVENUES &EXPENSES - BUDGET AND ACTUAL
For the Fiscal Year Ending June 30, 2016
CORRECTIONS INDUSTRIES DIVISION

Actual
Amounts
GAAPBasis

Budgeted Amounts
Original
Final

Revenues
Printing and Reproduction
Sales
Other
Farm Products
Micrographb, Data Entry &
Telemarketing Services
Interest on Deposits
Capital Contribution (Transfer from General Fund)
Other Revenue
Total Revenues

$
11,855,600

11,855,600

8, 180, 691

(3,674,909)

2,400

2,400

4,500
11,862,500

4,500
11,862,500

6,483
16,855
145,539
8,349,568

4,083
16,855
141,039
(3,512,932)

437,528

437,528

Budgeted Fund Balance
Total Budgeted Revenues
Expenditures
Personal Services &
Employee Benefits
Contractual SeNices
Other
Total Budgeted Expenditures

$ 11,862, 500

$ 11,862,500

$

8,787,096

$ (3,075,404)

$ 1,570,200

$ 1,570,200

$

1,547,322

$

735,900
915561400

735,900
915561400

449,298
616751970

286,602
218801430

11,862,500

11,862,500

8,672,590

3, 189,910

114,507

(114,507)

Non-Budgeted Expenditures
Depreciatbn Expense

$ 11,862,500

Total Budgeted and Non-Budgeted Expenditures

- 77 -

$

$

$

Variance
Favorable
(Unfavorable}

$ 11,862,500

$

8,787,096

22,878

$ 3,075,404

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUND
For the Fiscal Year Ending June 30, 2016

Balance as of
June 30, 2015
ASSETS
Cash
Due from Others
Total Assets
LIABILITIES
Due to Others
Deposits HekJ for Others
Total Liabilities

$

2,182,909
346,242
2,529, 151

547,054
1,982,097
2,529, 151

- 78 -

Additions

$

Deletions

$
66,224
66,224

(38,221)

Balance as of
June30,2016

(38,221)

2,144,688
412,466
2,557,154

(31 ,418)
(31 ,418)

606,475
1,950,679
2,557,154

$

59,421

$

59,421

$

$

 NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF VENDORS
For the Fiscal Year Ending June 30, 2016
I/the

Agency

Number

I

Did Vendor
RFB#/RFP# {If

Agency Name

Agency Type

applicable}

State Agency

RFP #60-770-15-05163

Type of Procurement

New Mexico Corrections

770

IDepartment

RFP-lnmate Medical Services

New Mexico Corrections
770

IDepartment

770

iNew Mexico Corrections
IDepartment

770

INew Mexico Corrections
IDepartment

State Agency

State Agency

State Agency

RFP #60-770-15-05163

RFP #60-770-15-05163

RFP #60-770-15-05163

RFP-lnmate Medical Services

RFP-lnmate Medical Services

RFP-lnmate Medical Services

Vendor Name

Centurion Correctional
Healthcare of NM, UC
Correct RX Pharmacy Services,
Inc.

Corizon Health

Diamond Pharmacy Services

Win
Contract?

]Department

State Agency

RFP #60-770-15-05163

RFP-lnmate Medical Services

Wexford Health Soun:es

Amended
Contract

I

Physical address of vendor {City,
State}

toa

Brief Description of the
Scope of Work

Component
Unit, Name of
Component
Unit

$41,000,000 Medical Services
$11,000,000.00 Pharmacy Services

1593 Spring Hill Rd, Suite 600
Vienna, VA 22182

NA

NA

Inmate Medical Services

IN/A

No

$41,000,000 Medical Services
$11,000,000.00 Pharmacy Services

Correct RX Pharmacy Services, Inc.
1352 Chaiwood Road, Suite C
Hanover, Maryland 21076

NA

NA

Inmate Medical Services

N/A

No

$41,000,000 Medical Services
$11,000,000.00 Pharmacy Services

103 Powel Court
Brentwood, TN 37027

NA

NA

Inmate Medical Services

N/A

No

$41,000,000 Medical Services
$11,000,000.00 Pharmacy Services

645 Kotler Drive
Indiana, PA 15701

NA

NA

Inmate Medical Services

N/A

425 Holiday Drive

No

$41,000,000 Medical Services
$1~.~0,0@~00 Ph:armacy Services

NA

NA

Inmate Medical Services

N/A

Yes

iNew Mexico Corrections
770

$Amountof
$Amount of Awarded Contract

Did the Vendor
Did the Vendor
provide
provide
documentation of
documentation
eligibiHty for
of eligibility for inveterans'
state preference?
preference?

procurement
is attributable

- 79-

PA1S220

Pittsburgh,

 NEW MEXICO CORRECTIONS DEPARTMENT
PERFORMANCE MEASURES
For the Fiscal Year Ending June 30, 2016

DFA Pei·fonnance Based Budgeting Data System
Annual Performance Report

Type
Agenc~·:

:\lea sure

77000

FY16

FY16

Target

Result

:\let
Target

Year-End
Results l\'arrative

Corrections De1mtment

Program: P530

Program Support
The purpose of program support is to provide quality administrative support and oversight to the department operating units to ensure a dean
audit, effective budget, personnel management and cost-effective management infonuation system services.

Outcome

Percent turnover of probation and parole officers

10%

10%

Outcome

Percent turnorer of correctional officm in public facilities

10%

13%

0

NMCD is unable to meet the target for Com:ctiona! Officer
n1rnover. low and non-competitiw pay is the primary
reason for the turnom. Reviews of exit surveys show
officers resign due to !ow pay, exmsire overtime that keeps
them from their families and un1afe work conditions. The
un1afe condition1 include lack of staff, aging facilitie1 and
policy directi\'e to house fewer inmate1 in restrictive housing.

Output

Graduation rate of correctional officer cadets from the corrections
depa.rtment training academy

90%

78.6%

0

The petcentage in the preceding colulllll accounts for
com:ctional officm only and doe1 not account for
graduation and athition of probation'parole
offims.probationiparo!e officers are tracked by the
Probation/Parole Division. Santa Fe Academies (Breakdown
of Attrition): 23 cadets resigned; 4 cadets dismissed from
acadenl)~ 2 no shows: 2 cadets quit!migned prior to
attending the academy Satelitte Academies: 11 cadet;
resigned; 1cadet dismissed; 3 no shows

Outcome

Percent of employee union grievances resolved prior to arbitration

98%

98%

Quality

Percent of audit findings resolved from prior year

75%

33%

D NMCD has addressed the findings that have been reported
through the audit. Each finding has resulted in a correctire
action plan with associated monitoring plan.

Program: P531

Int111te Management and Control
The purpose of the imuate management and control program is to incarcerate in a humane, professionally sound n1'llmer offenders sentenced
to prison and to pfO\~de safe and secure prison operations. This includes quality hiring and in-service training of correctional officers,
protecting the public from escape risks and protecting prison staff, contractors and inmates from violence exposure to the extent possible
within budgetary resources.

Outcome

Percent of prisoners reincarmated back into the corrections department
within thirty-six months due to technical parole violations

20%

170

Output

Percent of eligible inmates who earn a general educational development
certificate

75%

76%

Output

Percent of participating inmates who have completed adult basic education

50%

52%
Page I of4

Thursday, November 17. 2016

- 80 -

 NEW MEXICO CORRECTIONS DEPARTMENT
PERFORMANCE MEASURES
For the Fiscal Year Ending June 30, 2016

DFA Performan<'e Based Budgeting Data System
Annual PHformance Re11ort

Type
Outcome

:\lea sure

FY16

FY16

Met

Target

Result

Target

D This measure reflects the percentage of indi\1d11ab re-

Percent ofpri1oners reincamrated into the corrections department system
within thirty-six months due to new charges or pending charges

20%

Percent of residential dmg abuse program graduates reincarcerated within
thirty-si.x months of release

15%

Output

Number of inmate-on-inmate assaults with serious injury

10

Output

Number of inmate--0n-1taff maults with serious injury

D

Output

Number of escape;i from apublicly run corrections department facility

D NMCD has upgraded equipment conducted training and bas

Outcome

21.8%

Year-End
Results i\'matire
incarcerated back into the corrections department due to
new or pending charges, this measure captures data on
inmates released during FYI 1. From FY09 to FY12 (the
yem prior to the release of these inDJates) New Mexico was
in an econoniic downturn that in1pacted the state's Gineral
Fund. Om this period. the NMCD budget was reduced by
12.6%. or S40.04 million. These budget cuts severely
in1pacted NM CD's capacity to smtain re-entry programs
vital to an inmate's success outside of prison. NMCD
remains comniitted to reducing recidivism in New Mexico,
as a matter of pubhc safety and as a cost-ming mechanism
for our slate. To this end, NMCD has made significant
efforts in reducing recidivism and is moving towards
investments in evidence bmd programming.

47%

D Addiction is a chronic illness, aod as a result, 40 to 60
percent of people who hare ao addiction relapse at !mt
once. Many factors related to prmntion of relapse hare to
do with continuing care in the inmate's community, social
supports, and e\"en po11ib!y a change in their enl"ironmeot
There is a lack of mbstance abuse treatment centm in New
Mexico aod waiting lists are long for many treatment
programs. This combined with the fact that many of our
inmates return to their pre\"ious neighborhood upon release
maim sobriety difficult. NMCD is partnering with an
outpatient c01lllllunity program in ao atten1pt to make
aftercare services more effectil"e and accessible to fernier
inmates once released in order to attempt to combat this
difficulty. \Ve are also looking at away to handoff these
inmates to aftercare programs in the community more
effective. such as referral\. etc.

21

D

fl'viwed polies related to trampor1s, inmate accountability
aod clmfication.
Output

Number of mapes from a secnre, privately operated corrections
department facility

Outcome

Percent of staodard healthcare requirement1 met by medical contract \"endor 100%

97%

D Due to sick call due to nursing and security shortages and
impro\·ement in health maintenance.

Output

Percent of inmate grievances resoll'ed infollllally

85%

Thursday, Norember 17, 2016

85%
Page 2of 4

- 81 -

 NEW MEXICO CORRECTIONS DEPARTMENT
PERFORMANCE MEASURES
For the Fiscal Year Ending June 30, 2016

DFA Perfonmmce Bnsed Budgeting Dntn System
Anmrnl Performance Report

Type

Measure

FY16

FY16

Target

Result

;\let
Target

Year-Encl
Results Narratire

,,

Outcome

Percent of 1ex offenders reincarcernted on a new sex ofien1e conriction
within thirty-sLx month1 of release on the previous sex offense conviction

15%

,,
0

Outcon1e

Percent of relea1e-eligible female inmates still incarcerated past their
scheduled relme date

10%

10%

Output

Percent of random monthly drog tests administered to at least ten percent of <1.5%
the inmate population that test positive for drog u1e

l.86%

Outcon1e

Percent of relea1e eligible male inmates still inmcerated past their
scheduled release dale

10%

9.4%

Outcon1e

Percent of sex oftenders incarcerated receiring sex offender treatment

75%

75%

011tcon1e

Percent of inmates pre-enrolled in medicaid at the time ofrelme

95%

71%

D Tue increase in positive durg tests is adirect result of the
influx of rnboxone.

DNMC'D continues to priortize medic aid pre-enrollments
through partnmhips with HSD. NMCD improred mry
quarter and expeds to reach target in FYI 7.

Program: P533

Comdions Industries
The purpose of the corrections industries program is to provide training and work experience opportunities for inmates to instill aquality
work ethic and to prepare them to perfonn effectively in an employment position and to reduce idle tin1e of imnafes \\illle in prison.

Outcome

Percent of inmates receiving vocational or educational training assigned to
conection1 industries

>20%

24%

Outcome

Percent of inmate hours lost due to sernrity issues

<10%

,,
8

Program: P534

Outcon1e

Quality

"

Community Offender Management
The purpose of the community offender n1111agement program is to provide progrrumning and supervision to offenders on probation and
parole, with emphasis on high-risk offenders, to better ensure the probability of them becoming law-abiding citizens, to protect the public
from undue risk and to provide intennediate sanctions and post-incarceration support services as acost-effective altemative to incarceration.

Percent of out-of-office contacts per month with oftenders on high and
extreme 111pervi1ion on standard caseloads

92%

Average standard caseload per probation and parole officer

95

95%

ltJ PPD has adopted aCommurunity Based Supervision Modi!
requiring PPD Officet1 who supervise high risk offenderi to
conduct face to face contacts in the conununity and not in a
traditional office 1etting. This si1pervi1ion approach coupled
with Evidence Based Treatment has proven effectiw in
reducing reddirislll

109

D PPD has atotal of378 FTE, PPD was ftmded for 3~
positions in FYI 7. uaring 64 po1iton1 unfunded. faen
with all PPO positions filled meloads will not meet
performance measures of95. PPD continues to hire and fill
positions as allowed by budget constraints and continue; to
utilize our human capital to the best of our ability to proride
effectire 1upe!Yi1ion.

Thursday, Norember 17, 2016

Page3 of 4

- 82 -

 NEW MEXICO CORRECTIONS DEPARTMENT
PERFORMANCE MEASURES
For the Fiscal Year Ending June 30, 2016

DFA Performance Based Budgeting Data System
Annual Pe!'fol'manee Repol't

Type

:\Iearnre

FY16

FY16

:\let

Target

Result

Target

011tput

Al'erage community corrections program caseload per probation and parole
officer

32

32

Output

Percent of ab1conders apprehended

26%

31%

Output

Number of offenders on the waiting list for intensil•e or high-risk
supeITision

<50

<40

Output

Percent of male offenders who giaduate from the men's recorny center and
are reincarcerated within thirty-six months

25%

18%

Percent of female offenders who graduated from the women's recovery
center and are reincarcerated within thiry-six months

25%

Output

Year-Encl
Remits Nanatire

ltJ On going evaluation of program, conduct regular audits to
ensure contract provider performance measures are met. In
addition to measuring program fidelity, it is important to
collect data on offender outcomes that can indicate what
strategies and programs are most effective at succmfu!ly
rehabilitating offendm. For example. ifa substantial
number of offenders enrolled in a particular progiam end up
Yiolating their probation terms, this could indicate that the
program is not effectire. More impo1tantly, progiam
outcome data will enable PPD policy makers to eYaluate,
replace ineffective progianis, improve undetperfom1i11g
programs, and expand 1uccessftil progiams. Data on
program outcomes can al10 help determine which programs
are most cost-effective in reducing recidivism and thus
mi1t policy makers in the allocation of limited financial
resources for probation.

18%

ltJ On going evaluation of program, conduct regular audits to
en111re contract proYider performance measures are met. In
addition to measuring program fidelity, it is impotiant to
collect data on offender outcomes that can indicate what
strategies and prog1an1s are most effectin at successfully
rehabilitating offenders. For example, if a substantial
number of offenders enrolled in a particular program end up
violating their probation terms, this could indicate that the
program is not effectire. More importantly, program
outcome data wi!I enable PPD policy makers to e\•aluate.
1eplace ineffective programs, imprm undetperforming
programs, and expand successful programs. Data on
program outcomes can also help determine which programs
are most cost-effective in reducing recidivism and thus
assist policy makers in the allocation of limited financial
mources for probation.

Page 4 of 4

Thursday, Norember 17, 2016

- 83 -

 Timothy M. Keller
State Auditor

State of New Mexico

Sanjay Bhakta, CPA, CGFM, CFE, CGMA
Deputy State Auditor

OFFICE OF THE STATE AUDITOR

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED
ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS

Mr. David Jablonski, Acting Secretary, Corrections Department
New Mexico Corrections Department
We have audited, in accordance with the auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States, the financial statements of the governmental activities, the business-type activities, each
major fund, the aggregate remaining fund information, and the budgetary comparisons for the general fund and major
special revenue funds, of the State of New Mexico Corrections Department (the "Department"), as of and for the year
ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Department's
basic financial statements, and the combining and individual funds and related budgetary comparisons of the
Department, presented as supplemental information, and have issued our report thereon dated November 30, 2016.

Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Department's internal control over
financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the
purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the Department's internal control. Accordingly, we do not express an opinion on the effectiveness of the
Department's internal control.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not
designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and
therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the
accompanying schedule of findings and responses, we identified certain deficiencies in internal control that we consider to
be material weaknesses and significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees,
in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely
basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected
on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and responses to be
material weaknesses as items 2011-006, 2016-005, and 2016-006.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material
weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies
described in the accompanying schedule of findings and responses to be significant deficiencies as items 2011-002, 2015001, 2016-003, 2016-007, 2016-008, 2016-009, 2016-010, 2016-011, 2016-012, and 2016-013.

2540 Camino Edward Ortiz, Suite A, Santa Fe, New Mexico 87507
Phone (505) 476-3800 * Fax (505) 827-3512
www.osanm.org * 1-866-0SA-FRAUD

 Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Department's financial statements are free from material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements; noncompliance with which could have a direct and material effect on the determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other
matters that are required to be reported under Government Auditing Standards and which are described in the accompanying
schedule of findings and responses as items 2011-003, 2011-004, 2012-001, 2012-003, 2015-002, 2016-001, 2016-002 and
2016-004.

Department's Responses to the Findings
The Department's responses to the findings identified in our audit are described in the accompanying schedule of
findings and responses. The Department's responses were not subjected to the auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on them.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result
of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This
report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the

entify's inte :1r:ro1 andrp1;ccoro~uni~~1~1her pu~ose

Offi e o the State Auditor
Santa Fe, New Mexico
November 30, 2016

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016
Summary Schedule of Prior Audit Findings

2011-002

Contract Billing and Rates Applied

2011-003

Lack of maintaining a tracking log for receiving money
order, checks, or cash to ensure properly making deposits
within the required time periods

2011-004
2011-006
2011-007
2012-001
2012-003
2014-001
2015-001
2015-002
2015-003
FA2015-004

Domicile to duty Vehicle
Medical Services Contract
Missing Capital Assets
Residential Housing/Trailer Court Benefits at Facilities
Compensated Absences
Payroll - Lack of supporting documentation (Background
checks)
Internal Controls over Disbursements
Payroll- Lack of supporting documentation (l-9s)
Lack of supporting documentation to support Performance
Measures Calculations
No Inventory of Equipment and Real Property

- 86 -

Repeat and Modified

Repeat and Modified
Repeat and Modified
Repeat and Modified
Resolved
Repeat and Modified
Repeat and Modified
Resolved
Repeat and Modified
Repeat and Modified
Resolved
Resolved

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
. JUNE 30, 2016

2011-002 Contract Billing and Rates Applied - (Repeat and Modified) (Significant Deficiency)

Condition:
During our review the contract between the New Mexico Corrections Department (NMCD) and a municipality we noted
verbiage that is unclear to the reader. The contract terms use a schedule to determine the annual rate, which is used
in the calculation of the standard per diem rate per inmate per day. This rate includes facility fees, base service fees,
incremental service fees and a monthly restoration to population program (RPP) fee. We found that the schedule does
not properly total and neither the contract provisions nor the schedule provide clear guidance as to how NMCD should
apply the rates. Further, we found that there was not documentation provided to substantiate the rate increases that
have occurred since the signing of the contract.
In addition we noted one instance out of six payment vouchers for the municipality totaling $113 were NMCD separately
reimbursed the municipality for special diet.
Although management amended the contract in the current fiscal year, the revised contract did not fully address the
concerns noted.
Criteria:
Proper accounting practices require adherence to contract requirements. Contracts should only be entered into when
terms and requirements are clearly established.
The contract states in, "Section 21.0 Food Service: "Restricted or special diets, prescribed by recognized medical or
religious authority, will be provided as required."
Effect:
Without clear contract terms, NMCD may interpret the verbiage incorrectly within the contract. Also, the Department
may have overpaid for an item.
Cause:
The summation of the facility use fees, base fees, incremental service fees and monthly RRP fee totals do not correctly
total, and is therefore unclear as to the correct monthly charges. Further, without proper documentation to support
annual increases it is unclear what the agency needs to pay to the municipality.
Auditors' Recommendation:
NMCD should only enter into contracts when contract terms are clearly stated and documented. The ambiguity in the
contract and the schedule need to be corrected and documentation regarding the annual increase needs to be retained.
In addition, we recommend that the Department review the contract to ensure that all aspect of the contract are being
followed.
Management Response:
The Department agrees that an amendment to the Agreement needs to be drafted to address the deficiencies and
clarifications in the fees methodology. An amendment will be completed by the Procurement Manager by the end of
the fiscal year. The Department will do as recommended and ensure reconciliations are completed between the
contract and invoices at each facility by the Business Managers.

87

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

2011-003 Lack of Maintaining a Tracking Log for Receiving Money Orders, Checks, or Cash to Ensure
Tracking of Deposits within the Required Time Periods-Repeated and Modified- (Other Non-Compliance)

Condition:
During our internal control testwork on cash receipt we noted one deposit, out of forty tested, of $7213.34 which was
not deposited within the required period.
Also, during our internal control testwork on inmate trust account cash receipt we noted one deposit (NENMDF), out of
thirty tested, of $40.00 which was not deposited within the required period.
Per results of testwork, it appears that NMCD has made progress towards implementing the corrective action plan from
prior year, however, the department needs to continue to work with staff to ensure they are following policies and
procedures.

Criteria:
According to Section 6-10-3 NMSA 1978, all public money in the custody or under the control of any state official or
agency obtained or received by any official or agency from any source, except as in Section 6-10-54 NMSA 1978
provided, shall be paid into the state treasury, before the close of the next succeeding business day after the receipt
of the money.
Effect:
The Department is not maintaining adequate controls over cash receipts, which increases the risk of theft or
embezzlement.
Cause:
Responsible individuals were not properly following procedures and there was a lack of enforcement of Department
policies.
Auditors' Recommendation:
The Department should ensure staff is properly trained and deposits monies in a timely manner.
Management Response:
The Department will continue to reiterate the importance of processing deposits within the required time period. As a reminder to
the business offices, a memo will be sent out by the Accounting Manager at completion of the audit.

2011-004 Domicile to Duty Vehicle-Repeated and Modified·(Other Non-Compliance)

Condition:
We noted, out of ten items tested, the following instances of non-compliance with policies and procedures related to
domicile to duty usage of vehicles:
•

•

In one instance, a mileage log was recreated based on mileage estimates from google maps and the driver's
travel calendar for the periods between May 25, 2016 and August 15, 2016 after the request for the sample
was sent on August 9th, 2016;
In one instance, vehicle assigned is not an actual take home vehicle, and therefore should not have been
included in the population listing;

88

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

2011·004 Domicile to Duty Vehicle-Repeated and Modified·(Other Non-Compliance)· continued

•

In three instances, the acknowledgment forms were signed after the vehicle was assigned to the individual.
Two of these were signed after the sample was requested.

Further, the auditor was unable to determine whether a complete and accurate population list was provided. The first
population provided contained 33 additional names over the population tested in the prior year with no explanation for
the significant increase in the number of assigned Domicile to Duty Vehicles. Seven of the names in the first population
were duplicate names. The second population provided contained 2 duplicate drivers and 27 drivers who were not
included on the first list, and omitted 2 key individuals who have historically had a Domicile to Duty vehicle assigned to
them. The second population also contained 7 vehicles shown as unassigned which were shown as assigned in the
first population.
Per the results of the testwork, NMCD management appears to have made limited progress in ensuring that employees
maintained vehicle logs and the other forms required by New Mexico Administrative Code and Department Policy.
Criteria:
Department's Use of State and Privately Owned Motor Vehicles Policy #CD-022000 establishes the guidelines for
maintaining a car log, submission and recording of usage in employee timesheet, earnings reporting on an employee's
paycheck, employee positions qualified for domicile-to-duty, and the required documents acknowledging the policy and
for tracking mileage.
Effect:
The Department is in not in compliance with its policies related to domicile to duty usage of vehicles. Further, the
Department does not have an adequate system of internal controls in relation to the tracking and use of state vehicles.
Cause:
The Department's monitoring procedures that are in place to review domicile to duty vehicle usage are not being
followed. In addition, some individual employees are not following the policy related to the use of state vehicles by not
completing mileage logs and/or the required forms.
Auditors' Recommendation:
The Department should maintain and review an updated roster or listing of domicile to duty employees and ensure that
those employees are in compliance with Department policy by completing the required forms and monthly mileage
logs.
Management Response:
The Department will meet with all business managers to discuss the audit findings and the importance of completing
their monthly reports accurately. A new excel spreadsheet has been generated to include all information that is relevant
to requirements of the Policies and Procedures. A check list of all relevant necessary documentation was created in
February 2017 for process vehicle assignments. Acknowledgment Forms will be signed before keys to vehicles are
released to the assignee. This will be completed immediately by the Fleet Coordinator supervisor or designee.

89

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2011-006 Medical Services Contract- Repeated and Modified (Material Weakness)

Condition:
During the fiscal year, the Department ended their contract with Corizon at the end of May and awarded 2 contracts
with Centurion based on a Request for Proposals (RFP) process. The Centurion contracts included one contract for
the medical services, and a separate contract for pharmaceutical services. These contracts began on June 1, 2016.
Corizon
• The Department paid the final invoices to Corizon in full without properly taking into account credits that were
owed to NMCD. Credits outstanding as of October 28th, 2016, consisted of $572,514; however, the
Department does not anticipate receiving these funds.
• Although the Medical Director had 3 doctors available to her for evaluating the services provided by the
Medical Services Contractor, these doctors are employed by the Contractor. Since the doctors are employed
by the Contractor, this is an apparent conflict of interest as the doctors are evaluating the quality of service of
their employer. This process is the same under the new contract with Centurion.
Request for Proposals for Medical Contract
• Although two separate contracts were awarded, one for pharmaceutical services and one for medical services,
the Department only maintained the documentation to support one evaluation for the overall contract. The
evaluations provided show that all of the vendors were evaluated the same regardless of whether they were
offering pharmaceutical only services, or also offering to provide the medical services contract. Based on
evaluation scores, one of the pharmaceutical only vendors scored the highest on the overall bid; however,
this vendor was ultimately not awarded a contract. and would not have been providing the full range of services
requested.
Per the results of testwork, it appears that the Department has made limited progress towards implementing the prior
year corrective action plan.
Criteria:
All costs should be completely supported before they are approved for payment; invoices should be processed only
when they adequately detail all costs that support what is being charged in the invoice. Section 13-1-158 NMSA 1978
establishes: "No warrant, check or other negotiable instrument shall be issued in payment for any purchase of services,
construction or items of tangible personal property unless the central purchasing office or the using agency certifies
that the services, construction or items of tangible personal property have been received and meet specifications or
unless prepayment is permitted under Section 13-1-98 NMSA 1978 by exclusion of the purchase from the Procurement
Code [13-1-28 NMSA 1978)."
The pharmaceutical services proposals and the medical services provider proposals should have been evaluated
separately during the RFP process. Additionally, the evaluation team should consist of individuals who have an
understanding of the services to be provided, to ensure a fair and effective evaluation of the proposals.
Cause:
Department staff were instructed to pay the final invoices from Corizon without consideration of any pending credits
due to the State. Lack of internal controls over the conflict of interest associated with the monitoring of quality of care
and other aspects of the medical services provider and pharmaceutical provider contracts.

90

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2011·006 Medical Services Contract- Repeated and Modified (Material Weakness) - continued

Effect:
The Department overpaid the medical services provider $572,514, based on calculated credits owed, and as of the
date of the report, the provider has not refunded the amounts in the 6 month period following the termination of their
contract. The Doctors available for use in reviewing the quality of care provided work for the company that they are
reviewing, and therefore, may not be as objective in their review and analysis .. Bid evaluations are misleading as all
vendors were compared the same regardless of services provided based on documentation maintained.
Recommendation:
The Department should contact Corizon and request the refunds that are due to the State. The Department should
carefully consider whether the doctors evaluating the quality of care can provide an objective and independent review
of their employer or consider alternative options for performing these reviews. Further, when evaluating proposals for
more than one type of service for which separate contracts will be issued, separate evaluations should be performed
to ensure that the vendors are being evaluated consistently by type of service proposed.
Management's Response:
Corizon:
The Department has hired a new Health Services Administrator, in December 2016, who will audit the deliverables on
the medical contract to ensure compliance with terms and conditions of the Contract. The Health Services
Administrator will provide oversight and accountability to the healthcare contract.
Request for Proposal for Medical Contract:
During the course of the evaluation of Medical RFP it was determined that it would be in NMCD's best interest to split
the scopes of deliverables and award two separate contracts. One for medical services and one for pharmaceutical
services as it was determined it would be most advantageous to NMCD in doing so upon analyzing all submitted
proposals. As such, two separate evaluations were conducted considering only medical criteria on the medical award
and similarly only factoring in pharmaceutical components for the pharmaceutical award. The medical contract was
awarded to Centurion and the pharmaceutical contract was initially awarded to Wexford Health Services, INC.
The contract for medical services was successfully executed on May 16, 2016. However, negotiations with the selected
vendor Wexford for the pharmacy services were never reached and a decision had to be made so as not to render the
RFP's pharmaceutical component null. The agency commenced negotiations with Centurion and a decision was
reached to also award the pharmaceutical contract to Centurion with Boswell as the subcontractor providing the actual
services under Centurion.
The Department relied on guidance from an oversight agency through the award phase. The submitted evaluation
report was subsequently approved for both the Medical and Pharmaceutical Contracts. The Department would have
made any adjustments to the evaluation report had a recommendation been made by the oversight agency.
It is understood that separate evaluations need to be conducted in the event that an RFP scope of work allows for
multiple awards with multiple components. It is agreed that evaluations must correspond with each awarded contract
all the while ensuring that each proposal was evaluated fairly and is reflected so in the evaluation report. The Agency
will ensure that evaluations are completed correctly as recommended.

91

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2012·001
Non-Compliance)

Residential Housing/Trailer Court Benefits at Facilities- Repeated and Modified- (Other

Condition:
During our audit procedures regarding housing/trailer court benefits, we noted the following:
•

•

•
•

One of eight CD-024901. 1forms reviewed was not signed by the Secretary or Designee. The form did contain
a note that verbal approval was obtained, however it was not clear who had verbally approved the form.
Additionally, a revised form was provided with a date of May 13, 2016 for the approving signature;
One of eight CD-024901. 1 forms reviewed did not have the approving signature of the Warden or other
appropriate signature since the new resident was the new warden for a location. Additionally, a revised form
with a signature dated August 18, 2016 was provided subsequently;
One of eight CD-024901. 1 forms reviewed did not contain the information required regarding type of pet,
which was not updated from prior year as this exact form was noted as an exception in the prior year;
For six of the eight housing samples reviewed, the date of occupancy was not listed, therefore the auditors
were unable to determine whether the forms were signed prior to occupancy or not.

Per the results of the testwork, it appears that the corrective action plan described in the FY15 management response
to this finding has been effective in ensuring that the required forms have the appropriate authorizations; however, the
Housing list was not maintained completely or accurately.
Criteria:
NMCD's policy titled "Institutional Residential Housing; Trailer Court Facilities, State Provided Phone Services"# CD024900. Part A establishes the criteria for assignment of residential housing/trailer court facilities to department
personnel. Sections 3 and 5 of Part A require pre-approval to be submitted in writing prior to assignment of housing.
Part C establishes rules governing all occupants of residential housing or trailer court facilities. Section 4 of Part A
requires employees to provide information regarding any household pets prior to occupancy.
Effect:
Noncompliance with NMCD's policies and procedures may cause employees to be incorrectly assigned residential
housing/trailer court facilities. Furthermore, fringe benefit calculations, or the lack thereof, may be incorrect or not in
compliance with IRS regulations.
Cause:
NMCD's policy titled "Institutional Residential Housing; Trailer Court Facilities, State Provided Phone Services"# CD024900 is not being followed.
Auditors' Recommendation:
NMCD should adhere to its policies and procedures regarding assignment of housing.
Management Response:
The Director of Adult Prison Division will review every form and sign off as reviewing prior to filing and documenting on
the housing log, effective immediately. He will also review the housing log once a quarter to ensure accuracy and note
such on the log. Incomplete and inaccurate documentation will be returned to appropriate person to be corrected. If
there are discrepa,ncies in documentation a memorandum will be attached with explanation. The Accounting Section,
in the Financial Management Bureau, will conduct periodic reviews to ensure adherence.

92

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2012-003 Compensated Absences - Repeated and Modified - (Other Non-Compliance)

Condition:
During our audit procedures regarding compensated absences we noted the following out of twenty-five balances
tested:
•
•
•

•

•

The overtime forms were not maintained to support their prior authorization to receive compensatory time in
lieu of payment for overtime worked, for 4 of the individuals who are classified as non-FLSA exempt.
2 individuals were allowed to use leave in excess of available time, total time used in excess of leave accrued
was eleven hours for a total of $145.
1 individual who is classified as non-FLSA exempt, showed an accrual of 79 hours of compensatory time
earned during the fiscal year, however, per the overtime forms provided, the individual only requested on one
form for 8 hours to earn compensatory time in lieu of payment. Documentation to support the remaining 71
hours of accrued compensatory time was not provided.
4 individuals who are non-FLSA exempt had accrued compensatory time balances in excess of the 240 hour
maximum, these individuals had a combined total accrual of compensatory time of 1,300 hours, 340 hours in
excess maximum number of hours allowed.
4 individuals who are classified as FLSA exempt had accrued compensatory time balances in excess of the
160 hour maximum, these individuals had a combined total accrual of compensatory time of 1,061 hours, 421
hours in excess of the maximum allowed time.

Per the results of testwork, it appears that NMCD has not made progress in implementing the prior year corrective
action plan to resolve this finding.
Criteria:
NMAC 1.7.4. 14 Section J establishes Agencies shall pay Fair Labor Standards Act covered, non-exempt employees
for overtime worked unless the employee, in advance, agrees in writing to compensatory time off. Employees may
accrue a maximum of 160 hours or 240 hours of compensatory time depending on their FLSA classification, unless
otherwise authorized by statute and shall be paid for accrued compensatory time upon separation.
Cause:
NMAC 1.7.4. 14 & 1.7.7.8 and NMCD's Overtime and Extra Hours Worked Compensation Policy #CD-035100 is not
being followed. Additionally, there does not appear to be a mechanism in place at NMCD control level to identify the
unallowed overages. Also, there does not appear to be proper review of employees' liability amounts related the yearend compensated absence liability.
Effect:
Without a monitoring process in place employees are accruing balances of compensatory time that exceed set policy
amounts and statutory requirements.
Recommendation:
NMCD should implement a monitoring process to ensure employees are not accruing balances of compensatory time
that exceed policy limits and statutory requirements.

93

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2012·003 Compensated Absences - Repeated and Modified - (Other Non-Compliance) - continued

Management Response:
In regards to overtime forms not maintained to support their prior authorization to receive compensatory time in lieu of
payment for overtime worked, for 4 individuals who are classified as non-FLSA exempt. This finding occurred because
PNM Roster Management shredded files without scanning documents for backup onto a secured drive. In order to
clear this finding the HR Bureau Chief will reach out to the Roster Management Coordinator to send out a directive, by
mid February of 2017, that all payroll related forms and documents maintained for overtime and/or leave slips be
maintained for a minimum of 4 years. HR will request that the documents be scanned on the J drive prior to shredding
or archiving.
For the finding stating, 8 individuals exceeded the maximum number of accumulated hours for earned compensatory
time, and although the Department did authorize the overage to be accrued, this authorization was not provided until
after the individuals balances had exceeded the maximum allowed, the HR Bureau Chief will work with the new acting
Cabinet Secretary to implement a process to remove the overage and/or a reasonable timeframe for individuals to use
the overage prior to the end of the current fiscal year. As a control mechanism HR will send out notifications to
employees whom are close to meeting the overage and cc their supervisor or Warden to minimize any future overages.
Finding 2015-001 Internal Controls over Disbursements - Repeated and Modified (Significant Deficiency)

Condition:
The Department requested a sole source procurement in the amount of $16,500,000 to extend the prior year
emergency contract with Corrections Corporation of America for the management of the Women's Facility at Grants.
The original contract with Corrections Corporation of America for the management of the Women's Facility at Grants
expired in June 2013 and the Department did not issue a new contract through a Request for Proposal method. Instead,
the Department requested an emergency procurement which extended the contract for two additional years.
In FY2016, the Department extended the contract previously classified as an emergency procurement as a sole
sourced contract to manage the facility for an additional 10 months instead of procuring a contract using appropriate
procurement methods.
During FY2016, the Department did complete an RFP process for the management of the facility prior to the end of the
fiscal year for a management contract which is effective for FY2017.

Criteria:
Per NMSA 13-1-127, A. The state purchasing agent or a central purchasing office may make emergency procurements
when there exists a threat to public health, welfare, safety or properly requiring procurement under emergency
conditions; provided that emergency procurements shall be made with competition as is practicable under
circumstances.
An emergency condition is a situation that creates a threat to public health, welfare or safety such as may arise by
reason of floods, fires, epidemics, riots, acts of terrorism, equipment failures or similar events and includes the planning
and preparing for an emergency response. The existence of the emergency condition creates an immediate and serious
need for services, construction or items of tangible personal property that cannot be met through normal procurement
methods and the lack of which would seriously threaten:

94

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2015-001 Internal Controls over Disbursements - Repeated and Modified (Significant Deficiency) .
continued

(1) the functioning of government;
(2) the preservation or protection of property; or
(3) the health or safety of any person.
Money expended for planning and preparing for an emergency response shall be accounted for and reported to the
legislative finance committee and the department of finance and administration within sixty days after the end of each
fiscal year.
Effect:
Inadequate internal control oversight and accounting practices can heighten the potential for fraud or misappropriation
of public funds. In addition, the department may not have obtained the best prices to run the facility. The department
is not in compliance with NMSA 13-1-127.
Cause:
The department did not plan to ensure a new contract was in place once the old contract had expired.
Recommendation:
We recommend that the Department implement a process to ensure all RFPs and new contracts are in place before
the old contract expires.
Management Response:
The Department did in fact go out to RFP. The RFP secured only 1 responder. Contractual negotiations which included
a Best and Final Offer process was arduous and took months to come to a compromise that both NMCD and the
respondent could agree on. The Agency had no choice but to request an emergency procurement. The Agency met
the criteria defining an emergency procurement with the health and safety of all inmates being the most crucial and the
functioning of government as the basis in meeting our statutory obligations. The Department has a statutory obligation
to secure the safety and well-being of inmates and the people of New Mexico by insuring criminals are confined.
Emergency Procurements entail the submittal of an emergency determination request to an oversight agency. If it is
determined that the agency has met the criteria in deeming it an emergency, the Department is allowed to proceed
with the emergency procurement method. The Department cannot procure thru the Emergency Procurement Method
without securing an approval.
While the Department strives to meet all Procurement Code regulations, the specialized services, at times, hinders our
ability to do so. The Department will make every effort to ensure that a new contract is in place prior to the expiration
of existing contracts. The Department is actively seeking services through a vendor in establishing a Contracts Tracking
system. A demonstration has been scheduled for February. It is a collaborative effort between the Information
Technology Division and the NMCD Procurement Manager.

95

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2015-002
Compliance)

Payroll-Lack of supporting documentation - Repeated and Modified - (Other Non·

Condition:
During our test work of payroll we noted the following exceptions:
•
•
•
•
•
•

Three of the twenty-five employee files did not have copies of the required forms from List A or List B of the
instructions for the 1-9 attached,
Eight of the twenty-five l-9s did not include the employees' date of hire,
Two of the twenty-five files did not have a copy of the employee's W-4,
For one of the twenty-five files reviewed, the allowances shown on the W-4 did not match the allowances
shown on the employee's pay stub,
The paystub for one employee showed deductions for union dues; however, the authorization form for this
deduction was not in the employee's file
One employee had a signed form approving the deduction of union dues from the employee's pay; however,
this deduction was not being taken.

NMCD showed significant progress in trying to implement the corrective action plan from the prior year by requiring
that all employees complete an 1-9 during fiscal year 2016 to have on file. All of the files sampled contained an updated
1-9 form; however, not all of the required documents were attached, and some forms were not properly corrected.
Criteria:
The Immigration Reform Act of 1986 (IRCA) requires that a properly completed Form 1-9 be on file for any employees
hired after November 6, 1986. 8 USC § 1324b - Unlawful Employment of Aliens requires the hiring entity to retain the
properly completed 1-9 Form for either three years after the hire date or one year after the individual has been
terminated, whichever is longer.
In addition, the personnel files should contain proper documentation to support payroll transactions.
Cause:
The Department is not following federal regulation Immigration Reform Corrections Act or 8 USC § 1324b Code.
The Department did not maintain proper documentation in the personnel files to support payroll transactions.
Effect:
The Department may not be in compliance with federal law, and personnel files do not contain information to support
payroll withholdings and deductions.
Recommendation:
The department should maintain proper documentation in the personnel files to support payroll transactions.
Management Response:
The Department concurs with the finding. One of the facilities failed to have a new 1-9 form and sufficient supporting
documentation filled out within three days of hire. NMCD is recommending that immediate active action be taken to
rectify and enforce compliance with Immigration Reform Corrections Act or 8 USC§ 1324b Code. The HR Bureau

96

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2015·002 Payroll-Lack of supporting documentation - Repeated and Modified - (Other Non·
Compliance) - continued

Chief will send out an email to the PNM supervisor informing the facility of the need to complete an 1-9 form along with
supporting documentation within a three month period from the hire date for that facility. The 1-9 form and supporting
documentation will need to be submitted to PNM HR. HR Staff will certify the form is filled out correctly and will need
to make copies. The HR Bureau Chief will also send out a directive to have all the past l-9's reviewed and the hire date
completed on the form by the end of the 2017 fiscal year. The correction to the hire filled will need to be initialed and
dated to be in compliance with Immigration Reform Corrections Act or 8 USC§ 1324b Code. As a quality assurance
measure the Department will send staff from Central Office Human Resource office to the facilities to ensure that files
are being maintained and up to date.
The department contends that we are not the record custodian for union deduction forms per the CBA, in this instance
noted by the auditor the employee's union dues started with another state agency (CYFD). NMCD does not need to
obtain a new union authorization form when transferring agencies and we have reached out to the union to obtain a
copy of the form. With this said, our agency will make every responsible effort going forward to help ensure any new
union deductions have a corresponding form on file.
As an internal control the HR manager will implement a check list of documents that should be maintained in the file to
help ensure that Human Resources is entering W-4's timely and request that a post audit of job data entries are
completed.
Finding 2016-001

Wright Express Fuel Card Usage-(Other Non-Compliance)

Condition:
Of the 10 Wright Express (WEX) invoices tested with a total expense of $8,695, we noted:
• 4 transactions where 48.197 gallons of Super Unleaded fuel were purchased at a total cost of $93,
• 2 transactions where 16.629 gallons of Unleaded Plus fuel were purchased at a total cost of $40,
• 3 transactions in the same day for a vehicle other than the vehicle for which the WEX card was assigned for
a total of 50.770 gallons of fuel at a cost of $84, and of these 3 transactions, 1 exceeded the fuel tank capacity
for the regularly assigned vehicle by 6.27 gallons,
• And 1 car wash for $19.99 which was charged to the incorrect expenditure line-item.
Criteria:
NMCD Policy CD-022002 and 1.5.3 NMAC identify the requirements related to fuel card purchases, which include the
following:

•

•
•

Gasoline credit cards are exclusively assigned to each State of New Mexico vehicle and not to the
employee. The card must remain with the assigned vehicle at all times and not in the employees'
possession.
A PIN (six digits) must be requested at least 24 hours in advance of anticipated use. Once a PIN has
been issued, the employee is not to share the PIN with anyone else or let someone else use the PIN.
The gasoline credit card is to be used only for State of New Mexico owned vehicles. It is never to be
used to purchase fuel for privately owned vehicles.

97

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016-001

•

Wright Express Fuel Card Usage·(Other Non-Compliance). continued

Employees may only purchase regular unleaded gas.

Effect:
The Department is not in compliance with the New Mexico Administrative Code and Department policy regarding fuel
card usage. Inadequate internal oversight and accounting practices may heighten the potential for fraud or
misappropriation of public funds.
Cause:
The Department has multiple accounts with Wright Express. Since these accounts are for fuel purchases made by
different facilities, only employees who work within that facility are authorized as purchasers on any particular account.
In instances where an employee borrows a vehicle from another division for which they are not set up as an authorized
WEX user, unless they can quickly be set up as an authorized user, they have no alternative besides using the fuel
card from their regularly assigned vehicle or paying out of pocket for the fuel and requesting reimbursement from the
Department later.
Auditors' Recommendation:
The Department should ensure that employees are trained to use fuel cards in accordance with the requirements of
the New Mexico Administrative Code and Department policy, and obtain timely explanations for any unusual
transactions which occur.
Management Response:
The business offices responsible for the payment of WEX billings will thoroughly review invoices and request an
explanation from the employee if purchases are not followed per NMCD policy and NMAC requirements, effective
immediately. As vehicles are checked out, they are also being reminded at that time not to pump anything other than
unleaded fuel. Business offices will also conduct training to inform employees of proper usage of the gas cards.

Finding 2016·002 Lack of Proper Approval for Travel Reimbursements Over $1,500 (Other Non-Compliance)
Condition:
Of the five individuals selected to test for proper approval of travel reimbursements over $1,500 in a Calendar Year,
one individual received $1,553 in a Calendar Year without the required Cabinet Secretary level of approval for two
reimbursement requests totaling $865, which were paid the same day and put the individual over the $1,500 threshold.

Another the travel voucher selected for review did not have a purchase order approved prior to the date of travel. The
initial request for reimbursement excluded various amounts for which receipts were available and attached to the
requisition, including reducing one receipt paid by 35 cents to keep the total payment at 11 cents shy of the $1,500
threshold at which the Cabinet Secretary's approval would have been required for payment and per Department Policy,
an Exempt Purchase Document must be processed through DFA for encumbrance. The trip was at the end of January,
then due to the inconsistencies in the receipts and amounts submitted for the initial reimbursement in February, then
subsequently at the end of June, five months after the original date of travel, the employee submitted an additional
request for reimbursement for approximately $380 worth of receipts for the remainder of what was owed on the original
travel. Also attached with the additional reimbursement request was a memo describing the MAPS violation indicating
that "it was just discovered that additional funds were owed to the individual," although several of the receipts
reimbursed were attached to the original voucher, but marked as "not being claimed." Further, several

98

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016·002 Lack of Proper Approval for Travel Reimbursements Over $1,500 (Other Non-Compliance) ·
continued

of the receipts attached were claiming the reimbursement for two meals purchased at a time, and the receipts indicated
that there were 2 guests present at the time of the purchase. The individual claiming reimbursement indicated that the
second meal was a "to go" meal for later; however, in one instance the purchase was made at 10:00 pm for two
hamburger meals ordered in which the hamburgers were to be cooked differently. The next day of travel showed no
missed meals during the day and a maximum claimed reimbursement for meals of $45 for out of state travel.
In addition, this same traveler on a different trip requested to change flights. A credit of $914 was available with Aquila
Travel after changing the flight as a refund for the original flight booked. This credit was allowed to expire as it was not
used within one year of the originally booked flight.
Further it was noted in one of the travel vouchers reviewed that an individual was reimbursed for upgrading his/her
airline ticket for comfort seating. NMCD does not have a policy allowing for this purchase.
Criteria:
Per 10-8-5 (I) NMSA 1978, any person who is not an employee, appointee or elected official of a county or municipality
and who is reimbursed under the provisions of the Per Diem and Mileage Act in an amount that singly or in the
aggregate exceeds one thousand five hundred dollars ($1 ,500) in any one year shall not be entitled to further
reimbursement under the provisions of that act until the person furnishes in writing to his
department head or, in the case of a department head or board or commission member, to the governor or, in the case
of a member of the legislature, to the New Mexico legislative council, an itemized statement on each separate instance
of travel covered within the reimbursement, the place to which traveled and the executive, judicial or legislative purpose
served by the travel.
NMCD Policy CD-024701 E(1) requires the Cabinet Secretary's approval of itemized travel expenditures when
cumulative travel costs exceed $1 ,500 during a Calendar Year.
NMCD Policy CD-024701 D(7) requires that if the proposed travel cost is $1,500 or more, an Exempt Purchase
Document must be processed through DFA for encumbrance.
Per Section 14 of Article IX of the Constitution of the State of New Mexico requires that the state shall not directly or
indirectly make any donation to or in aid of any person, association or public or private corporation.
Effect:
NMCD is not in compliance with its policies governing reimbursement of travel expenses. Travel reimbursement
requests were paid without the approval required by NMCD's policies and state statute. Additionally, NMCD paid $914
for a flight that was never taken, in violation of the Anti-donation clause of the Constitution of the State of New Mexico.
Cause:
NMCD implemented the use of the Travel Module to track cumulative travel expenses by employee and monitor the
$1 ,500 threshold, as well as other required approvals, on July 1, 2015. However, the first half of the year was tracked
manually and not all of the travel expenditures were transferred over into the new system.

99

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016-002 Lack of Proper Approval for Travel Reimbursements Over $1,500 (Other Non-Compliance) continued

The traveler changed flights as a result of combining two trips, one paid for by NMCD, and one paid for by another
organization. Credits with Aquila Travel as a result of changing flights are required to be used within one year, or they
expire.
Auditors' Recommendation:
With the implementation of the Travel Module which tracks the $1,500 threshold, NMCD, should ensure all travel is
properly recorded in the new module.

The practice of allowing the purchase of two meals, one to eat at the time of purchase and a "to go" order for later,
should be discontinued. The purchase of "to go" meals should only be allowed in limited circumstances such as when
travel occurs at odd times which would not allow the employee to find reasonable food options, or when travel occurs
in rural areas where food options may not be available.
Further, NMCD should ensure that whenever credits are available with a vendor, they are used in a timely manner
before the expiration date.
Management Response:
The Department anticipates that the finding related to the $1,500 threshold overage should be resolved in the current
fiscal year with the implementation of the Travel Module, which now encompasses the entire calendar year as of July
1, 2015. The Department concurs that a purchase order was not done prior to the out of state travel which will be
corrected by issuing purchase orders prior to all out of state travel going forward and will be monitored by the Adult
Prisons Business Manager. In addition, the Business Office will ensure that the recipient understands that by providing
a signature on the Itemized Schedule that it is considered final payment on that particular travel and they may not
submit receipts for additional reimbursement at a later date. In processing the receipts for the two meals, the processor
reimbursed the meals based on the statement of the employee that it was a "to go" meal and policy does not state that
it is not reimbursable however, this type of meal reimbursement will be discontinued and monitored by the Adult Prisons
Procurement Manager. The airline credit was issued by the airlines and not the travel agent; flights were unavailable
through that airline on subsequent travel therefore the credit expired. In the future, the business office will monitor
pending credits to ensure they are used timely.
Finding 2016-003 Internal Controls over Contracts and Procurement (Significant Deficiency)

Condition:
During our review of 6 contracts for compliance with the Procurement Code and Model Accounting Practices (MAPs),
we noted:
• One professional services contract file included a contract amendment which raised the hourly rate from $22
per hour to $25 per hour, the same rate as the other individual who bid to provide these services. No
documentation of the reason for the amendment was contained in the file, the explanation was prepared and
provided after requested.
o Additionally, based on the explanation provided, the expectation would be to award the contractor
additional hours as the scope of work added services to be provided at an additional location, not to
increase the price per hour.
• Payments under this same contract also exceeded the $50,000 threshold at which MAPS requires a formal
RFP to be performed. Total payments to the contractor during the year were $59,977, which does include
approximately $3,000 in Gross Receipts Tax.
100

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016-003 Internal Controls over Contracts and Procurement (Significant Deficiency). continued

•
•

For one professional services contract (for services less than $50,000) awarded, the one price quote which
appeared to be missing in the file was the quote for the vendor awarded the contract.
For one contract, a signed campaign contribution disclosure form was not maintained in the file.

Criteria:
Per MAPS FIN 4 P0-02a, the threshold for State Agencies to procure a Professional Services Contract to be procured
without a formal RFP process is $50,000.
Per Section 13-1-191.1 NMSA 1978, a contract that is executed may be ratified or terminated pursuant to Section 131-182 NMSA 1978 if the prospective contract fails to submit a fully completed disclosure statement pursuant to this
section.
Effect:
Inadequate internal control oversight and accounting practices can heighten the potential for fraud or misappropriation
of public funds. The department is not in compliance with certain sections of the Procurement Code and MAPs.
Cause:
The department did not maintain adequate supporting documentation to justify a contract amendment for a professional
services contract, vendor selection, and State Compliance. Additionally, in monitoring the maximum dollar amount of
a contract, the Department was utilizing the Procurement Code thresholds instead of the more restrictive MAPs
thresholds per DFA.
Recommendation:
We recommend the Department follow MAPs in addition to the Procurement Code when monitoring and awarding
contracts, and ensure that adequate supporting documentation is maintained in the contract file to support the vendor
selection and other State compliance requirements.
Management Response:
The Department agrees that a compensation increase must be justified with a corresponding identification in the scope
of work. The Department will ensure that all amendments identify justifications with compensation increases. A check
list was created immediately to ensure all document requirements are maintained to include the Campaign Contribution
Disclosure Form. All future amendments will ensure justifications correspond with compensation increases and will be
completed by the contract manager assigned to the contract or the Acting Bureau Chief of the General Services Bureau.
Finding 2016-004 Federal Grant Expenditures (Other Non-Compliance)

Condition:
The Department utilized state funding to pay $34, 134 in expenditures, in March and April of 2016, incurred for a Federal
Grant with an eligibility period of December 2, 2015, through January 31, 2016, for which the Department never
received reimbursement; therefore, the Department Federal Grant expenditures were paid with State Funding.

101

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016·004 Federal Grant Expenditures (Other Non-Compliance)- continued

Criteria:
The period of eligibility for the Federal Grant Funding was for December 2, 2015, through January 31, 2016. The
request for reimbursement (RFR) was due to the pass-through entity within 15 days of the expiration of the award
period. The award period to the pass through entity closed on March 31, 2016.
Effect:
The Department used $34, 134 in State funding to cover federal grant expenditures.
Cause:
The Department The Department sent a request for reimbursement to the pass-through agency; however, due to
turnover at the pass-through agency, they did not receive the a response until the end of fiscal year 2016 indicating
that the grant had been closed prior to the Department submitting their initial request for reimbursement.
Recommendation:
We recommend the Department monitor federal grant expenditures, eligibility periods, and reimbursement requests,
and communicate with applicable pass-through entities to ensure that grants funding will still be available prior to
incurring expenses.
Management Response:
NMCD and the Department of Public Safety have both agreed to dedicate positions to monitoring and ensuring compliance of
pass-through grant funding by the end of the fiscal year. This collaboration will also help to identify other funding opportunities for
NMCD. The Acting ASD Director is responsible for ensuring the Department complies with all grant requirements.

Finding 2016-005 Lucky 8 MOU (Material Weakness)

Condition:
The Department entered into a Memorandum of Understanding (MOU) with Lucky 8 TV, LLC for the production of the
television series Behind Bars: Rookie Year. The Department was unable to provide an accurate and complete tracking
of weeks for which the film crews from the production company were on site, or any tracking of expenses incurred by
the Department in relation to the production of the series. At the end of fiscal year 2015, the Department invoiced the
production company for approximately $2,000 for the additional overtime shifts worked by Department employees
associated with the production of the series; however, to date, payment for this amount has not been received, nor has
the Department received $40,000 of the amount billed in fiscal year 2016. In addition, the production company has
been allowed to film a third segment of the show at the Springer facility even though they still owe the state $42,000.

Additionally, an employee of the Department who left temporarily to work for the production company between October
2015 and March 2016 and then returned to the Department in March of 2016 was allowed to make the determination
of the amounts to be billed to the production company. The supporting documentation for one of the invoices was an
email from this employee to the production company and included a reference to waived fees of $20,000. Based on
records reviewed and interviews with several Department employees, there were other fees waived, but there was no
tracking of these amounts, and the waiving of fees was in effort to "build the partnership" between the Department and
the production company. The involvement of this employee in the determination of amounts billed and fees waived
appears to be a conflict of interest as not all of the decisions appear to be in the best interest of the State, and no
evidence was provided to support that the financial decisions in relation to the MOU were made by any other individual
within the Department.

102

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016·005 Lucky 8 MOU (Material Weakness)· continued

The $95,000 of revenues received from this MOU during fiscal year 2016, were recorded as revenues to the Corrections
Industries Division Fund. These revenues should have been recorded in the Departments other funds to reimburse
those funds for the expenses incurred in relation to the production of the series.
Criteria:
Government Conduct Act Section 10-16-1 through 10-16-18 NMSA 1978

Pursuant to Section 10-16-8 (A) NMSA 1978, Contracts involving former public officers or employees, a state agency
shall not enter into a contract with, or take any action favorably affecting, any person or business that is: (1) represented
personally in the matter by a person who has been a public officer or employee of the state within the preceding year
if the value of the contract or action is in excess of one thousand dollars ($1,000) and the contract is a direct result of
an official act by the public officer or employee.
Department policy CD-032200 Code of Ethics defines conflict of interest as any personal action or inaction motivated
by the possibility of personal gain or personal interest which adversely affects the interest of the Department or conflicts
with the person's duty to the Department.
Per section A of CD-032201, Personal Conduct:
3. Under no circumstances shall employees give rise to a conflict of interest or the appearance of a conflict of
interest with the State or with the NMCD.
4. Applicable personnel shall refrain from any conduct that adversely affects the interests of the NMCD or
adversely affects the employee's ability to perform his/ her duties.
5. Employee actions which adversely affect the NMCD or its interests or adversely affect the employee's ability
to perform his/her duties include, but are not limited to:
a. Any action which demonstrates negligence or intentional misconduct by an employee.
b. Any action which would fit within the definition of just cause, or misconduct as defined in the State Personnel
Board rules and regulations.
c. Any action which is reported in the newspaper, television other media, or through legitimate and proven
reports, which tends to show or does show the NMCD in a bad light or which could cause a negative perception
of the NMCD or its abilities to fulfill its obligations or duties.
Anti-Donation Clause Article IX Section 14 NM Constitution - Neither the state nor any county, school district or
municipality, except as otherwise provided in this constitution, shall directly or indirectly lend or pledge its credit or
make any donation to or in aid of any person, association or public or private corporation or in aid of any private
enterprise for the construction of any railroad except as provided.
Effect:
Inadequate internal control oversight and accounting practices can heighten the potential for fraud or misappropriation
of public funds. State funds were used to supplement the production of the television series. State regulations and
Department policies were violated.

103

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016·005 Lucky 8 MOU (Material Weakness)· continued

Cause:
The Department did not have a system on adequate internal controls in place to track the weeks that the production
crews were on site to bill in accordance with the contract, track and bill overtime shifts worked specifically for the
production of the series, ensure that decisions regarding billing and waived fees were not being made by an individual
who had worked for the production company, and ensure that State funds were properly reimbursed for expenses
incurred during the production of the series. The terms of the MOU between NMCD and Lucky 8 do not specifically
address how access to the facilities will be treated for billing purposes when the production crew is only onsite for a
couple of hours for a specific interview, or reference advertising fees or other costs of the production company.
Recommendation:
We recommend that the Department implement a system of internal controls to appropriately track expenses incurred
for billing purposes, add safeguards against related party transactions, comply with State regulations and ensure that
taxpayer funds are not being used to supplement the filming of the television series.
Management Response:
The Wardens will implement a process to track expenses incurred during filming by the end of the fiscal year. This will include
cross referencing overtime expense with roster management. When payment is made, NMCD will reverse expenses on the general
ledger.

Finding 2016·006 Untimely Reversion (Material Weakness)

Condition:
The Department will revert approximately $2,692,773 of fiscal year 2015 appropriations in fiscal year 2017.
Criteria:
Per Section 6-5-10 NMSA 1978, state agencies are required to revert all unreserved undesignated fund balances in
reverting funds and accounts as reflected in the central financial reporting and accounting system as of June 30 by
September 30 to the general fund.
MAPs FIN 3.8 (D 2) General Accounting Procedures - Year End Closing
Reversions a. Any unexpended or unencumbered balance remaining in the budget at the end of the fiscal year shall revert
to the General Fund or the source fund.
b. Based upon the date requirement set by the General Appropriation Act of each fiscal year, on or about August
31, 20XX is the submission deadline for the Reversion Notification form to FCD. At the end of the fiscal year,
agencies must not reserve unexpended amounts as part of fund balance.
c. September 30, 20XX is the deadline for entering Operating Transfers in SHARE for reversions due for the
previous fiscal year.

Effect:
The Department did not revert the approximately $2,692,773 in FY 2015 funds timely. In addition, the department is
not in compliance with state statute.

104

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016·006 Untimely Reversion (Material Weakness)· continued

Cause:
The Department intended to request that the unspent funds be re-appropriated; however, this was not done. In addition,
there was confusion regarding the requirement that agencies were not permitted to reserve the unexpended amounts
for future purposes.
Recommendation:
We recommend the Department revert the fiscal year 2015 funds to the State General Fund and ensure that staff
responsible for monitoring budget and reversions is aware of the requirements.
Management Response:
The Financial Management Bureau Chief will ensure reversions to the State General Fund are done in a timely manner
annually.
Finding 2016·007 Emergency Procurement Violations (Significant Deficiency)

Condition:
During our review of four emergency procurements for the fiscal year we noted:
•

For one instance totaling $531, 111 for the procurement of residential treatment services for substance abuse
or dual diagnoses offenders that did not comply with the Governor's office's guidelines on emergency
procurement. This justification does not appear to meet the definition of an emergency.

•

For four instances the Department could not provide documentation that money expended for the planning
and preparing for an emergency response, if any, was reported to the legislative finance committee and the
department of finance and administration within sixty days of fiscal year end.
For four instances the Department could not provide proof that within three business days of awarding an
emergency procurement, the Department provided the information required by state statute to the department
of information technology and the legislative finance committee.

•

Criteria:
Governor's Contract Review Guidelines Section 3(J) states, "[fjor emergency contracts, a true "emergency" must exist
(i.e. a threat to the function of government, lives, health, or property). Emergencies do not exist simply from a need to
procure the services "now", or from time pressure to implement a new contract."
13-1-127 (E) NMSA 1978 states, "[m]oney expended for planning and preparing for an emergency response shall be
accounted for and reported to the legislative finance committee and the department of finance and administration within
sixty days after the end of each fiscal year."
1.4. 1.63 NMAC states, "[w]ithin three business days of awarding an emergency procurement, the awarding central
purchasing office within a state agency shall: (1) provide the information required by statute to the department of
information technology for posting on the sunshine portal; and (2) forward the same information to the legislative finance
committee

105

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016-007 Emergency Procurement Violations (Significant Deficiency)· continued

Effect:
Inadequate internal control oversight and accounting practices can heighten the potential for fraud or misappropriation
of funds. Also, the department may not have obtained the best price. In addition, the Department does not appear to
be complying with the Procurement Code and the Administrative Code on emergency procurements.
Cause:
The Department did not adequately plan for the length of time required for DFA contract approval. The Department did
not maintain proper documentation in their procurement files to support compliance with state statute and the
administrative code.
Auditors' Recommendation:
We recommend the Department implement a process to ensure that all new contracts are in place before an old
contract expires. The Department should review its process for complying with rules and regulations and should
maintain proper documentation in the procurement files.
Management Response:
The Procurement Bureau Chief will ensure that all Emergency Procurements are processed as the Procurement Code
requires going forward. A check list has been created as of this response to accompany the Purchase Order to ensure
compliance with each step. The Procurement Bureau Chief will ensure that Business Managers refrain from using the
term "Emergencies" on internal purchase request where "Expedite" is the correct term. An email went out to all
Business Managers immediately upon acknowledgement of the finding.
2016-008

Exempt Procurement Violations (Significant Deficiency)

Condition:
During our review of exempt procurements for the fiscal year we tested ninety-seven exempt purchases:
•

•

Ninety-six instances totaling $77,817,927 did not comply with procurement code regulations in which only the
CPO may make determinations regarding exemptions. The Department is allowing the purchasing agents,
who are not certified procurement officers, to fill out the internal purchase request (IPR) form and determine
the exemption type and at no point does the CPO sign this request form or review this form instead the
purchasing department's accounting/auditing department reviews this form and approves the request in
SHARE.
One instance totaling $1,458 where the Department claimed an incorrect exemption type in which they simply
reference the overall exemption statute. The purchase order was missing any of the necessary letters which
actually document the exemption types provided by State Statute.

Criteria:
1.4. 1.94 NMAC states chief procurement officer duties, responsibilities and obligations and only a CPO may, "make
determinations, including determinations regarding exemptions, pursuant to the Procurement Code."
6-5-2(B) NMSA 1978 states, "The division [the department of finance and administration] shall issue a manual of model
accounting practices containing the procedures and policies prescribed pursuant to Subsection A of this

106

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

2016·008

Exempt Procurement Violations (Significant Deficiency)· continued

section and shall annually review and, if necessary, revise and reissue the manual. State agencies shall comply with
the model accounting practices established by the division, and the administrative head of each state agency shall
ensure that the model accounting practices are followed."
The Manual of Model Accounting Practices 2016, FIN 4.3 (B) states, "[s]tate agencies must cite the section of the State
Procurement Code and the specific item of the law (letter A-EE) that exempts the purchase from the requirements of
the procurement code."
Effect:
Purchases are being made under an exemption that may or may not meet the provisions for an exemption since
individuals who do not have the necessary training of a chief procurement officer are making the determination of
whether or not these purchases are exempt. Inadequate internal control oversight and accounting practices can
heighten the potential for fraud or misappropriation of funds. In addition, The Department is not complying with state
statutes.
Cause:
The Department did not adequately plan for regulations that had a start date of July 1, 2015 and continued to use old
procedures and practices. The Department does not appear to be adequately monitoring compliance with State Statute.
Auditors' Recommendation:
We recommend the Department revise their current procedures to comply with procurement code regulations to ensure
that only the CPO is making exemption determinations and that the determination is documented. The Department
should review their internal controls to ensure that all purchase orders are being reviewed for compliance with state
statute.
Management Response:
The Department understands the responsibilities and obligations of the CPO. The Department will take measures to
ensure all exemptions are only approved by the CPO. The Procurement Bureau Chief conducted training with all
Purchasing Agents to ensure exemption approvals are secured only thru CPO in October. Exemption approvals are
now being review by the Acting Procurement Bureau Chief as of this response.
2016·009 Corrections Industries Division Procurement Code Exemption (Significant Deficiency)

Condition:
During our review of internal controls and state compliance, we noted that the Corrections Industries (Cl) Division of
NMCD does not have a set of procurement rules which have been reviewed by the State Purchasing Division of the
General Services Department and then formally adopted by the Cl Board. During our review of exempt procurements
for the fiscal year, we tested fifty-one purchase orders that claimed exemption from the procurement code totaling
$4,533,377. Of these fifty-one purchase orders reviewed all purchases indicated on the purchase order, that the
purchase was exempt from the procurement code; however, without the formally adopted set of procurement rules, we
were unable to determine whether the purchases made by Cl were actually exempt or not.
During our review of exempt procurements for the fiscal year, we tested fifty-one purchases that utilized the
procurement exemption rules:

107

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

2016·009 Corrections Industries Division Procurement Code Exemption (Significant Deficiency)· continued

•

•
•
•
•
•

One purchase tested did not have the internal purchase request form in the purchase order documentation.
Two purchases tested had the incorrect exemption type listed on the internal purchase request. Forty-eight
internal purchase request forms left the exemption type blank, but were still signed off and approved.
We noted twenty-three instances out of fifty-one where the total purchase was under $5,000 and three quotes
were not obtained.
We noted twenty-five instances out of fifty-one where the total purchase was over $5,000 and three quotes
were not obtained.
We noted one instance out of fifty-one purchases where the internal purchase request (IPR) form did not
contain the appropriate signature needed for a purchase over $10,000.
We noted one instance out of fifty-one purchases where the change order request form does not have the
required approvals for change increases in excess of $500.
We noted one instance out of fifty-one where the purchase appeared to violate the anti-donation clause. $500
worth of gift cards were purchased with the note that "purchase is meals for inmates on detail with Corrections
Industries." However, it is unclear exactly how inmates could have used these cards since inmates are unable
to leave the facility and visit a private business.

Criteria:
Per 13-1-98(1) NMSA 1978, there is an exemption from the procurement code for the procurement of tangible personal
property or services, as defined by Sections 13-1-87 and 13-1-93 NMSA 1978, by the corrections industries division of
the corrections department pursuant to rules adopted bv the corrections industries commission, which shall be
reviewed by the purchasing division of the general services department prior to adoption;
NMCD's Procurement Regulations Policy #CD-113200(B) defines best obtainable price as, "lowest price obtained
when no fewer than three valid sources are contacted for quotes."
NMCD's Procurement Regulations Policy #CD-113201 (B)(2) states, "small purchases of goods or services having a
value not exceeding $5000 may be purchased by the Division's central purchasing office by issuing a direct purchase
order to a contractor based on the best obtainable price."
NM CD's Procurement Regulations Policy #CD-113201 (B)(3) states, "Goods or services having a value exceeding
$5000, excluding raw materials, require written price quotations from no fewer than three businesses, which must be
recorded and placed in the procurement file."
New Mexico Corrections Department Internal Purchase Request form states, that it is "to be used for purchase of all
goods, services, and travel requests." This form requires the signature and approval dates for the supervisor, Business
Manager, Chief/Regional Manager, CIO (for all IT purchases), Budget (>$5,000), Division Director (>$5,000), and the
Deputy Secretary (>$10,000).
The Anti-Donation Clause: NM Constitution Article IX 14 states, "[n]either the state, nor any county, school district, nor
municipality, except as otherwise provided in this constitution, shall directly or indirectly lend or pledge its credit, or
make any donation to or in aid of any person association or public or private corporation."

108

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

2016-009

Corrections Industries Division Procurement Code Exemption (Significant Deficiency)· continued

Effect:
All purchases made by Cl where made without formally adopt policy and potential through the improper use of the
exemption from procurement code. Also, inadequate internal control oversight and accounting practices can heighten
the potential for fraud or misappropriation of funds. Additionally, the Department may have violated the anti-donation
clause by purchasing and distributing gift cards.
Cause:
Corrections Industries has not developed and formally adopted a set of procurement rules in compliance with State
Statute, although purchases are still claiming this exemption.
Auditors' Recommendation:
Corrections Industries should develop a set of procurement rules in accordance with Section 13-1-98(1) NMSA 1978,
have these rules reviewed by SPD, and then formally adopt these rules as required by State Statute.
Management Response:
Because of long hours and travel times, the inmates can miss breakfast or dinner at the facility. In order to ensure we
provide inmates in our work crews with at least one hot meal per day per the ACA standard, Cl searched for other
outside food sources that would take a purchase order for gift cards. The cards are kept in a locked drawer. When
using the cards, all receipts are required to be submitted to the business office for reconciling. None of the cards are
given to anyone other than staff responsible for the inmate crews and only with authorization from the Director of
Corrections Industries. All cards and expenditures are accounted for.
The Corrections Industries Commission Meeting is scheduled for December 15, 2016. On the agenda is a policy
change to outline the exemptions. The recommended exemptions are for items for resale that are exclusive to a
particular manufacturer; for items that have been purchased through an approved contract; for public or private partners
providing an inmate program or inmate programming; or for sole-sourced items.
Once the commission has approved the request, Cl will submit it to the State Purchasing Division for approval. If
approved or with recommendations, the request will be presented to the commission for ratification. In the mean time,
Cl will seek three quotes for best obtainable price.

Finding 2016·010
Approval Signatures or Approval Dates Missing from Internal Purchase Requests
(Significant Deficiency)

Condition:
During our review of exempt procurements for the fiscal year, we tested ninety-seven exempt procurements:
•
•
•

One instance totaling $1 ,829,754 did not have the required internal purchase request form.
One instance totaling $16, 182 did not have the required approval date on the internal purchase request form.
One instance where the internal purchase request (IPR) form was missing the proper signature approval. The
IPR was missing the signature for the division director for a purchase greater than $5,000.

109

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016-010
Approval Signatures or Approval Dates Missing from Internal Purchase Requests
(Significant Deficiency) · continued

Criteria:
New Mexico Corrections Department Internal Purchase Request form states, that it is "to be used for purchase of all
goods, services, and travel requests." This form requires the signature and approval dates for the supervisor, Business
Manager, Chief/Regional Manager, CIO (for all IT purchases), Budget (>$5,000), Division Director (>$5,000), and the
Deputy Secretary (>$10,000).
Section 13-1-29(C) NMSA 1978 states, "[t]he purposes of the Procurement Code are to provide for the fair and
equitable treatment of all persons involved in public procurement, to maximize the purchasing value of public funds
and to provide safeguards for maintaining a procurement system of quality and integrity."
Effect:
These purchases made under an exemption from procurement code do not appear to have all necessary
documentation completed to make these purchases. Additionally, the department does not appear to have complied
with the state procurement code. Also, inadequate internal control oversight and accounting practices can heighten
the potential for fraud or misappropriation of funds
Cause:
IPR forms are not being properly reviewed to ensure management approval is obtained for all applicable purchases
prior to execution of the purchase order.
Auditors' Recommendation:
We recommend the department review their policies and procedures for reviewing IPR forms to ensure management
approval is obtained prior to processing purchase orders. Additionally, we recommend the Department provide
additional training as necessary to employees on how to complete and submit IPR forms including how to obtain the
appropriate signatures and dates required.
Management Response:
The Department will look at improving the approvals process on procurements and provide additional training to all
Business Managers in securing a more manageable process by utilizing the SHARE system as it was intended. The
Department is actively seeking a Purchase Request tracking system through a vendor as of the date of this response.
The Department is looking at implementing the new process by the end of February to ensure success by July 1 for
the upcoming fiscal year. The ASD Director and Acting Bureau Chief of General Services Bureau are collaborating on
the project.

Finding 2016·011
Use of Multiple Exemption Types on procurement of the same goods or services
(Significant Deficiency)

Condition:
During our review of the ninety-seven purchases we noted, the Department also writes into their contracts with other
counties' prisons that they contract with that certain items must be purchased exclusively through Corrections Industries
(the exact contract wording is "[t]he County shall purchase inmate clothing and inmate linens for the NMCD inmates
housed at the Facility from NMCD Corrections Industries").

110

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016·011
Use of Multiple Exemption Types on procurement of the same goods or services
(Significant Deficiency) · continued

Criteria:
Section 13-1-29(C) NMSA 1978 states, "[t]he purposes of the Procurement Code are to provide for the fair and
equitable treatment of all persons involved in public procurement, to maximize the purchasing value of public funds
and to provide safeguards for maintaining a procurement system of quality and integrity."
Effect:
The Department may not be allowing individuals that they contract with to procure goods and services at the best
obtainable price.
Cause:
The Department's request that contractors procure goods and services directly from their own enterprise fund without
a formally adopted set of procurement rules, as required by state statute.
Auditors' Recommendation:
We recommend the Department formally adopt procurement rules for Cl in compliance with State Statute.
Management Response:
The Department realizes that it misinterpreted the Corrections Industry Act. In particular 13-1-189(A), "[A]ll state
agencies shall purchase and all local public bodies may purchase items of tangible personal property and services
offered pursuant to the provisions of the Corrections Industries Act. As such, the Department will ensure that all
intergovernmental agreements with counties refrain from using the language "shall" relevant to the purchase of inmate
clothing and inmate linens. The Procurement Bureau Chief will work with Cl in formalizing procurement rules for the
Division to ensure compliance with NM Procurement Law.
Finding 2016-012 Misuse of Exemption Type (Significant Deficiency)

Condition:
During our review of exempt procurements for the fiscal year, we tested ninety-seven exempt procurements, we noted
four instances totaling $1,212 that do not comply with that exemption type that covers subscriptions, conference
registration fees and similar prepayments under $10,000.
Criteria:
Section 13-1-98(J) NMSA 1978 provided the following exemption to the procurement code, "J. purchases not exceeding
ten thousand dollars ($10,000) consisting of magazine subscriptions, web-based or electronic subscriptions,
conference registration fees and other similar purchases where prepayments are required."
Effect:
The Department is not in compliance with the Procurement Code. Inadequate internal oversight and accounting
practices may heighten the potential for fraud or misappropriation of public funds.
Cause:
The Department is not properly following the procurement code exemptions.

111

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
SCHEDULE OF FINDINGS AND RESPONSES
JUNE 30, 2016

Finding 2016-012 Misuse of Exemption Type (Significant Deficiency)· continued

Auditors' Recommendation:
We recommend the Department implement training for the employees to explain the exemptions codes and the
allowable uses of each.
Management Response:
The Department concurs with the finding. The CPO met with the Purchasing Auditors on February 21, 2017 to discuss exemption
and ensure they are used properly. All exemptions will be reviewed by two auditors for consensus before approval of any purchase
order using an EXE [exempt] origin.

Finding 2016·013

Inappropriate use of exemptions from procurement code (Significant Deficiency)

Condition:
During our review of exempt procurements for the fiscal year, we tested ninety-seven exempt procurements:
•
•

We noted one instance totaling $2,476, in which the exemption code which covers purchases from the
instructional material fund, was used but the purchase did not qualify for that exemption.
We also noted one instance totaling $1,24 7 in which the exemption code which covers purchases of travel
or shipping, was used but the purchase did not qualify for that exemption.

Criteria:
Section 13-1-99(1) NMSA 1978 allows for the exclusion from the requirement of procurement through the state
purchasing agent but not from the requirements of the Procurement Code, specifically, "I. purchases from the
instructional material funds."
Section 13-1-98(F) NMSA 1978 allows for "F. travel or shipping by common carrier or by private conveyance or to
meals and lodging."

Effect:
The Department is not in compliance with the procurement code exemptions. Inadequate internal oversight and
accounting practices may heighten the potential for fraud or misappropriation of public funds.
Cause:
The Department does not appear to be properly following the procurement code exemption.
Auditors' Recommendation:
We recommend the Department implement training for the employees to understand the exemptions codes and the
allowable uses of each.
Management Response:
The Acting Bureau Chief of General Services Bureau has begun training for Business Managers and Purchasing
Agents in the utilization of the Procurement Code in identifying the criteria and determining exemptions and
procurement methods as of the time the finding was identified.

112

 STATE OF NEW MEXICO
NEW MEXICO CORRECTIONS DEPARTMENT
Exit Conference
Year Ended June 30, 2016

An exit conference was held on November 30, 2016 and attended by the following:
Representing the Department:
David Jablonski, Secretary of Corrections
Joe W. Booker, Jr., Deputy Secretary of Operations
Phillipe Rodriguez, Budget Director, Administrative Services Division
Blanca Sena, Financial Management Bureau Chief/CFO
Antoinette Solano, Accounting Manager, Financial Management Bureau
Matilda Peralta, Accounts Payable Supervisor
Carl Ortega, Budget Bureau Chief
Kathleen Branchal, Deputy General Services Bureau Chief
Celina Padilla, AccountanUAuditor, Financial Management Bureau
Vicki Trujillo, AccountanUAuditor, Financial Management Bureau

Representing the State Auditor's Office:
Sanjay Bhakta, CPA, CGFM, CFE, CGMA, Deputy State Auditor
Anna Williams, CPA, Financial Audit Director
Chan Kim, CPA, Audit Manager
Lisa Jennings, Audit Supervisor
Kelly Mercer, Investigation Supervisor
Chelsea Martin, Senior Auditor

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