Q&A: DOC's Paul Schnell

Commissioner: Reserves could fund prisons 'a week, maybe two' with no budget deal

He insisted closure would never happen. But Gov. Tim Walz on Monday also said that a strict reading of the state Supreme Court’s 90th Minnesota State Senate v. Dayton ruling, suggests the state’s prisons could actually close if a public safety budget deal is not reached.

The governor also said his administration is working with Department of Corrections Commissioner Paul Schnell’s office on contingencies to keep the prisons open through a worst-case scenario.

Session/Law approached Schnell on Tuesday to sound him out about those efforts. Here’s an edited transcript of our conversation.

Session/Law:  As the governor put it, you’re trying to figure out what a “bare-bones, lights-on DOC” looks like during a government shutdown. I wanted to hear a little bit more from you on what you think is possible? 

Paul Schnell: One of the challenges is what are the constitutional requirements that we have. If we're going to issue sentences to people and incarcerate them for terms of incarceration, then we have a constitutional obligation to provide them with a safe and secure environment, to provide them with food and to provide them with clothing. All of those kind of reasonable accommodations.

S/L: Health care as well, which is also a constitutional requirement. 

Schnell: Right. And so those constitutional requirements are not something that we can discourage or go around. There are federal protections in place. And that's really what will guide a lot of a lot of our staffing plans.

We are working on staffing plans and putting that all together. We’re looking at what does it take to provide for the bare bones and yet meet our constitutional and core statutory obligations in the facilities—security being probably one of the most important features. The security probably will not be bare bones and health care will not be, because of the constitutional requirements. 

So a lot of the questions are around programming, education and treatment, some of those things that are not constitutionally required. We also need to make sure that we're not inhumane in the course of that, because that's also our constitutional requirement. So these are all the things that we have to really balance. 

While it was not necessarily germane, we went back and looked at some of the things that the Special Master reviewed in 2011 [during a previous government shutdown], just to see how that compared to kind of a bare-bones operation. I know that the court decision since then puts a lot of that in question. But we at least wanted to go back and just look historically at what were some of those considerations. 

S/L: The federal American Rescue Plan relief money is COVID money. Is there any chance that your expenses could qualify for those?

Schnell: At least my limited understanding—and I am not the expert—is I don't believe so. Because there would have to be some level of a COVID connection to the shutdown. That would be a hard stretch, I think. So I don’t think those ARP monies would be applicable to cover us in the short term. 

We just have an obligation—much like people who are committed to a state hospital on a mental health commitment. If we’re going to assume that level of control over someone, we just have to fulfill our constitutional obligation. And the state, regardless, does not have the ability to stop providing those services because the United States Constitution demands it. 

S/L: Let's say June 30 passes with no public safety budget deal. I don't hear you saying you're going to do this, but even if you required prison guards to work without pay, you'd still have major expenses. If you were to pay staff as the governor insists you would, where does the money come from? 

Schnell: We do have small amounts of reserves—that are not intended for that purpose. For instance, MINNCOR [Industries, the DOC’s jobs training program] has a cash balance. That is really contingency money. It's about $10 million to $12 million dollars. 

It doesn't take long for us to burn through $10 million or $12 million dollars, when you're talking about a $600 million a year budget. But that could be used for essential services. So we would have the cash to operate for a very limited period of time. The focus is on needing to keep the lights on and so that’s where the money would come from. 

I think the other thing—at least the hope—would be that when the legislature does finalize that budget, they could go back and retroactively fund some of those activities that we had to provide constitutionally. 

S/L: What is the purpose of that MINNCOR reserve?

Schnell: Remember, MINCORR is obligated to be self-sustaining. It has no general fund money in it. That's why we have that reserve fund, because they have to be able to manage changes in business flow and that kind of stuff. Because 100% of their dollars they have to generate. 

Now that begs the other question: Do we continue operating MINNCOR? Because, remember, that's not general fund money. That is a separate enterprise that is, obviously, a program of the DOC. But it has to cover its own staff, too. It hires security personnel as well as people who work with the incarcerated population, in terms of the services and the products that they build and deliver. So it's a really complicated thing.

While we are planning for the worst-case scenario, we are hoping for the best, as is everyone. 

S/L: So just to be clear, that MINNCOR money is put on reserve to react to any changes in the business environment, and it's just held on hand?

Schnell: It simply is. So they do a lot of printing, right? That's a good example. They run a big printing shop and they do a lot of printing for the state? Or license plates—they print the license plates for the state. Any machinery that they buy, MINNCOR owns that, MINNCOR purchases that. There are no capital funds. They have to be able to capitalize that—fund that—themselves. So it's entirely self-sustaining without taxpayer dollars. 

Me: So what's your estimate of how long you could actually survive on those reserves? 

Schnell: Not long. We have a couple other small pots of funds. Maybe we have another $5 million to $8 million. So it would be about $20 million total. It's not going to last long, just to cover base operations and daily payroll. I don't even know what our daily payroll is, but it would be pared down a little bit, security-wise.

The other thing is that we still have to pay our health care contract. Because of the constitutional requirements, that contract must continue—the doctors and the specialists that we contract with to provide medical care to the people in our population. That has to be paid, no matter what. 

We could probably last a week, maybe two. It doesn't take long. 

S/L: Have you been given any insights into how the budget negotiations are going?

Schnell: I know that there is progress and challenges and tough discussions, ups and downs. I think it is challenging. But from what I am hearing, progress is being made. I’ve just been looking forward to being on the final side of this. 

S/L: Do you share the governor's concern that the court ruling could actually mean a shutdown turns into a real shutdown for prisons, constitution be damned, and they would actually close? That if you truly didn't have the money, you'd have no choice?

Schnell: I just can't fathom that. I can’t even fathom what that would be like with our obligations. But I think that is a legitimate concern and question. 

S/L: Are you confident that this is all going to work out?

Schnell: At a personal level, I take what I am hearing from our legislative leaders—and I know that the governor has been committed to trying to help make this stuff come together—so I feel positive that we're going to get there.

I hope it's sooner than later.