N.J. funding for halfway houses raises questions

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Andrea Clurfeld

N.J. funding for halfway houses raises questions / By ANDREA CLURFELD Gannett New Jersey/

A close friend, political contributor and adviser to Gov. Chris Christie is a top-ranking employee of Community Education Centers Inc., the largest company providing the state with treatment centers for former inmates.

Christie has said the state is in dire financial straits and has made massive cuts in his proposed fiscal 2011 budget, but funding for the treatment centers -- traditionally known as halfway houses -- is set to increase $3.1 million. It's one of the rare programs to receive additional funding under Christie.

The final treatment center budget under the state Department of Corrections will be $64.6 million, if the Legislature approves the budget.

Deborah Howlett, executive director of New Jersey Policy Perspective and a former official in Gov. Jon S. Corzine's administration, said, "I've heard Gov. Christie say many times not to take a cup of coffee from someone. With othersocial services programs being cut to the bone, a program that could benefit a friend is increased. Why?"

*Longtime Christie adviser William J. Palatucci, a senior vice president and general counsel for Community Education Centers in West Caldwell, told Gannett New Jersey he's "deregistered as a lobbyist" and "will not lobby inNew Jersey on behalf of CEC."*

*Palatucci's relationship with Christie goes back at least to the 1990s.
Palatucci helped run Christie's gubernatorial campaign last year and was co-chair of the governor's inaugural committee. Palatucci personally has contributed $26,650 to the GOP since 1985.*

CEC has contributed a total of$372,350 to both parties during that time, mostly to Democrats, and its chairman, John J. Clancy, has contributed $138,525, mostly to Democrats.

Michael Drewniak, press secretary for the governor, said: "Bill Palatucci has been involved with Mr. Clancy's company for a very long time. Mr. Clancy's bids will be judged on their merits, and that's the only consideration that is involved. Any suggestion of outside influence is not based on the facts."

According to Corrections Commissioner Gary M. Lanigan, his department currently contracts for a total of 3,029 beds in residential treatment programs. During the course of a typical year, anywhere from8,500 to8,800 inmates go through treatment facilities as a way to help them re-enter society, according to the DOC.

Lanigan said Friday that legislation passed last year mandated the Department of Corrections must maintain 100 percent occupancy in the beds under contract. Previously, 95 percent occupancy was required. That change in the law accounts for the proposed $3.1 million budget increase, he said.

The state is in the process of awarding new contracts for the treatment programs. The final decision, expected June 30, will be made by Lanigan, following a review both by an evaluation committee and state budget officials who examine the finances of each company submitting bids, DOC spokesman Matt Schuman said.

Eight vendors currently have contracts with the DOC.

CEC's relationship with the state is complex. CEC, a for-profit company, "does not hold any state contracts," company spokesman Christopher Greeder said.

But CEC provides services for a nonprofit, Wall-based company called Education and Health Centers of America. "They hold the contracts,"
Greeder said.

Palatucci was listed as a paid director of development for Education and Health Centers, while Clancy, the CEO and chairman of CEC, was listed as the paid president, according to the nonprofit's 2009 IRS tax report.

Under pay-to-play laws,a for-profit business receiving $50,000 or more through agreements or contracts with New Jersey public entities is required to file annual disclosures of its contributions with the election commission, according to the Department of Treasury.

Pay-to-play disclosure laws were passed in recent years to prevent undue influence, or the appearance of undue influence, by political contributors in the state's multibillion-dollarcontracting process.

However, because the nonprofit Education and Health Centers is awarded the contracts with the state, the for-profit CEC -- which provides the bulk of services for the Education and Health Centers contracts -- is not required to file pay-to-play disclosures with the commission.

Nonprofits, and any political contributions by its officers, were made exempt from the 2005 pay-to-play reporting laws in 2008.

Palatucci said he spoke with Christie after he was elected and told him he would no longer lobby on behalf of CEC in New Jersey. "The governor accepted this," he said.

Lanigan said Palatucci's relationship with the governor "no way impacts the process. My job is to keep up a firewall, to make sure the process has not been tainted."

In the current contract Education and Health Centers has with the Department of Corrections, CEC provides 1,687 beds -- 1,226 in assessment centers and 461 in treatment programs, Lanigan said. Most of CEC's New Jersey beds are in Newark and Trenton.

The rate charged the department is $62 per inmate per day in a treatment program and between $70 and $75 in an assessment center, he added.

An assessment center is a facility an offender goes to after being released from prison.

That inmate then will be placed in a treatment center for substance, behavioral or other problems.

The department spent $61.5 million this budget year and plans to spend
$64.6 million in the next fiscal year, which starts July 1, according to the state budget.

Joseph Marbach, dean of the College of Arts & Sciences at Seton Hall University, says the state owes the public more of an explanation. "Why is this portion of the budget going up whenso many things are being slashed?" Marbach said. "What's the underlying reason? Anything that might benefit Mr. Christie's friend, Mr. Palatucci? Somebody's going to benefit from government, one way or another. The governor has been very vocal in criticizing these kinds of relationships. For consistency's sake, you'd think Mr. Palatucci would take a leave of absence or recuse himself while Mr. Christie is in office."

Palatucci said he is "anadvocate for alternatives to incarceration, and none of that requires me to lobby for CEC. ... I told the governor in January, 'I'm not going to talk to you about my company.'"