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Oregon calculates the costs of incarceration and crime.

During the past 30 years, Oregon and the rest of the nation have increasingly turned to incarceration as a criminal justice policy. This is a review of how Oregon's system has changed, through an examination of the, relationship between increased incarceration and reduced crime in Oregon.

Oregon's first major shift in sentencing and incarceration policy during the past 25 years occurred in 1989, when Oregon switched from a parole matrix state to a sentencing guidelines state. Prior to 1989, the sentencing judge had wide discretion over both whether to impose a prison sentence and the length of the prison stay. In this "indeterminate" system, if the judge sentenced an offender to prison the board of parole decided when the offender would be released. Part of the parole board's release decision was based on avoiding overcrowding the existing prisons.

The principal goal of the current sentencing guidelines system is to ensure that offenders who commit similar crimes and have similar criminal histories receive equivalent sentences. Sentences are determined by the seriousness of the offense and by the criminal record of the offender. The guidelines eliminated the parole board review of sentence length, and narrowed the discretion of judges--change that increased the use of incarceration in Oregon.

The next major change in sentencing and use of incarceration occurred in 1994, when Oregonians voted to pass Measure 11, which increased the length of sentences dramatically for violent and sexual offenses. That vote had the greatest impact on the use of incarceration in the past 25 years. It was followed by the Repeat Property Offender Statute in 1997. Both of these statutory changes "overrode" the administrative rules of the guidelines, so that the longer sentence within the statutes controlled the offender's sentence. Each meant that more offenders would be sentenced to prison than would have, been if judges simply followed the guidelines. This report analyzes the changes brought about by these two measures by examining Oregon's use of incarceration; taxpayer costs; crime rates; and the relationship,: between incarceration and crime.

The Use of Incarceration

Criminologists measure the size of prison populations over time with a statistic called an "incarceration rate." This straightforward indicator is calculated by dividing the total number of people in prison at any time by the total population. In 1980, 1.20 in every 1,000 people in Oregon were incarcerated. In the most recent year estimated, 2007, the rate per 1,000 had tripled to 3.73. In the U.S. as a whole during this time period, the incarceration rate more than tripled, going from 1.29 to 4.49 people incarcerated per 1,000 (see Figure 1).

Although Oregon's incarceration rate remains below the national average, it has recently grown much faster than the national average. As Oregon's incarceration rate has grown, the state's population has grown as well. The state prepared for the increased incarceration rate by expanding its facilities, so the actual increase in prison beds has outpaced the incarceration rate. From 1987 to 1996, the number of offenders incarcerated doubled. From 1997 to 2006 the rate of growth slowed, but, the number of offenders incarcerated still grew rapidly at more than 67 percent for the 10-year period. (1)

The growth in incarceration is due in large part to the increase in sentence length for crimes against people. In 2008, at any given time, about 69 percent of offenders in the Department of Corrections (DOC) custody were incarcerated for crimes against people. Property offenders made up 18 percent, drug offenders made up 7 percent and the remaining offenders were classified as statute or other. Although person crimes made up only 7 percent of total index crimes reported to police in 2008, those convicted of such crimes go to prison more often and for a longer time than property or drug offenders. Oregon's incarceration rates for all property and violent offenders increased from 1998 to 2008, with the incarceration rate for property offenders increasing the fastest at nearly 81 percent. The incarceration rate for drug offenders remained flat. Although drug convictions are the most common type of felony conviction, relatively few drug offenders are incarcerated. Of felony drug convictions in 2008, only 8 percent went to the DOC, 10 percent were under local control (in county jails) and the remainder were sentenced to probation. Drug offenders incarcerated within the DOC are those convicted of drug manufacturing, delivery or possession of a substantial quantity--not simple drug possession.


Costs of the Criminal Justice System

The criminal justice system is made up of many parts funded by state, county and local tax dollars. Reliable data are available only for state spending. The largest portion of state spending is on incarceration. The DOC and Oregon Youth Authority (OYA) make up nearly three-fourths of the criminal justice budget. As the prison population has grown, the DOC's portion of the criminal justice budget has also grown.

Increasing the incarceration rate in Oregon has come at a price. During the past 25 years, the costs of the criminal justice system increased substantially. During this time, state general fund dollars spent per household on criminal justice have more than doubled (see Table l). (2) In the 1985-1987 biennium, in inflation adjusted dollars, 700 general fund dollars per household were spent on the criminal justice system. In the 2009-2011 biennium this is expected to rise to more than $1,400 per household.
Table 1. Inflation Adjusted per Household General Fund Spending

         85-87   09-11    85-87 to 09-11

DOC      $272    $840         209%

OYA      $109    $177          63%

Courts   $164    $245          50%

Police   $155    $163           5%

Total    $700    $1,426       104%

Source: Legislatively Adopted Budget

While state general fund spending per household on criminal justice has increased by 104 percent, breaking this down into greater detail will show where the largest increase has come. During this time period, the spending per household on state police has remained flat, while spending on courts increased by 50 percent--far less than the overall increase of 104 percent. The remaining components, the DOC and OYA, increased by nearly 167 percent. This can be broken down even further. During the past 20 years, inflation adjusted spending per household increased by 63 percent for OYA and 209 percent for the DOC. If the DOC were not included in the overall criminal justice spending, then per household state spending would have only increased by 37 percent.

DOC Spending

Spending within the DOC has increased largely because of increased sentence lengths, which have increased the number of inmates that need to be housed. Since 1995, four prisons have been built and five existing prisons have been expanded, adding more than 7,546 beds. In the next six years, one more prison is planned, adding another 532 beds.


Since 1995, the new prisons and expansions have been almost entirely funded through certificates of participation (COPs). This has created an increasing debt that is financed entirely with state general fund dollars. In the 1997-1999 biennium, the debt service was $63 million. By 2009-2011 the debt service for the DOC had jumped to $137 million--in inflation-adjusted dollars, an increase of 65 percent. During this same time, funding for program services aimed at reducing inmate recidivism, including inmate work, education, alcohol and drug, and all other mental health programs, saw a 6 percent decrease in inflation-adjusted dollars. While overall spending on program services decreased, the number of people incarcerated increased by 70 percent. So, on a per-inmate, cost-per-day basis the decrease was even greater. In inflation adjusted per inmate spending the debt service remained relatively flat, while program services fell by 45 percent (see Figure 2).

Crime Rates (3)

If increased taxpayer spending on the criminal justice system is the bad news, declining crime rates are the good news. Both violent and property crime rates are well below where they stood in 1980. The property crime rate has fallen by 47 percent in Oregon. This is a substantial decrease, and was larger than the decrease in the U.S. as a whole, where the property crime rate fell by nearly 40 percent. Crime rates in the U.S. and in Oregon follow similar trends, though there are clear differences. Oregon's property crime rate is higher than the national average, and the violent crime rate is well below the national average.

The violent crime rate in Oregon fell just as fast as the property crime rate. From 1980 to 1995, the violent crime rate was relatively flat in Oregon. Since 1995, Oregon's violent crime rate has fallen by 51 percent; this was the second largest drop of all 50 states. During this same time period, the violent crime rate dropped throughout the U.S. by 34 percent. In 2008, Oregon's violent crime rate was the 11th lowest of the 50 states.

The murder rate has also dropped substantially from peaks in the 1970s and 1980s in both Oregon and the U.S. Oregon's murder rate for the past nine years has been around two per 100,000 population. This is 67 percent lower than Oregon's peak in 1986.

Effects of Incarceration on Crime

Recent research indicates that incarceration significantly affects crime rates. National studies as well as a state study in Washington by the Washington Institute of Public Policy have found that a 10 percent increase in a state's incarceration rate leads to a 2 to 4 percent decline in the crime rate. (4) What can be said about this relationship? Is there a causal relationship between the two? Can policymakers decrease crime rates by incarcerating more offenders for longer periods of time?

This relationship has been debated by academics and scholars with some claiming there is little relationship between the two and others claiming there is a large and significant relationship. Those who believe there is a relationship, often credit one of two reasons for the correlation. The first is an incapacitation effect; people cannot commit crimes in our communities while they are behind bars. The second is a deterrent effect; potential offenders may choose not to commit crimes because of tougher penalties.

Since 1980, as Oregon's incarceration rate has increased the crime rate has decreased (see Figure 3). According to the DOC, in 1980, 1.11 individuals were incarcerated per 1,000 in the population. (5) By 2008 that number had grown to 3.85 per 1,000 in the population. During this time period crime rates dropped from nearly 67 per 1,000 to 35 per 1,000 in the population. A simple plot of the incarceration rate and the crime rate shows a similar relationship to previous research. However, this simple correlation does not take into account other factors that might influence crime.

Using statistical methods similar to those used by William Spelman of the University of Texas and Steve Aos at the Washington State Institute of Public Policy, this relationship was examined for Oregon. Factors that are thought to influence crime, such as the number of police officers, demographics and the local economy were controlled for in the analysis. (6) The results for Oregon were consistent with findings in similar studies, with a 10 percent increase in the incarceration rate leading to a 2.6 percent decrease in the overall crime rate. This effect was larger for violent crime, with a 10 percent increase in the incarceration rate leading to a 3.4 percent decrease in the violent crime rate. These findings suggest that policymakers can influence crime by influencing the rate of incarceration.


What does a 2.6 percent decrease in the crime rate from a 10 percent increase in the incarceration rate mean? If in 2007, Oregon were to have increased its incarceration rate by 10 percent, this would have required an additional 1,4597 beds, at an estimated cost of $107 million per year. This increase would have also resulted in an estimated decrease of nearly 10,000 index crimes. In terms of avoided crime by incarcerating one additional offender in Oregon, Figure 4 shows the number of crimes avoided per additional inmate and how that has changed over time.


In 1994, roughly 28 crimes were avoided by adding an additional inmate. As more offenders have been incarcerated, this number has steadily decreased. By 2007, an estimated nine crimes were avoided by incarcerating one more offender for one year. Economists call this the law of diminishing marginal returns. This law works in all industries. For example, as more Starbucks pop up on every corner, their return on investment will be lower. A new store will attract some new customers, but the most devoted customers are willing to drive the extra five minutes to the existing store. As more stores are built profits go down until it is no longer cost-effective to build another store. This principle applies to prisons as well. As the most prolific offenders are incarcerated, many crimes are avoided. As more offenders are incarcerated, those who are most likely to commit crimes are already behind bars. Therefore, newly incarcerated offenders are relatively less likely to commit crimes. This means fewer crimes are avoided by incarcerating them.

The final item is the cost-effectiveness of incarceration as a way of lowering the crime rate. The number of crimes avoided has been estimated above. If the cost of a crime and the cost of incarceration can be estimated, then a cost-benefit ratio can be easily calculated.

The costs of crime can be broken into two components, victimization costs and taxpayer costs. Victimization costs include lost property, lost productivity, required counseling and mental health services, social services, medical care, and quality of life. For example if an assault occurs there are a number of costs that the victim may incur. An ambulance may be called to respond to the incident. If injuries are involved, the victim will incur medical bills and lose time at work. The victim may need to seek counseling to deal with the assault. He or she may no longer feel safe and move to a new area. Many costs accrue for the victim, some of which are easily measured and some that are nearly impossible to quantify. A prominent national study has conducted thorough research to estimate these costs. (8)

Taxpayer costs are more easily quantified, however, they are still difficult to estimate because of limited data and the complexity of the criminal justice system. (9) The Washington State Institute of Public Policy has developed a model for estimating the cost of an arrest, conviction, incarceration, post-prison supervision and probation in their state. (10) Using a similar model, Oregon estimated costs for its state. (11)

With an estimate for victimization costs and taxpayer costs, the benefit of avoiding a crime can be estimated. Using the cost of incarceration and the benefit of avoiding a crime, a cost-benefit ratio can be calculated. Figure 4 shows that in 1995, incarcerating an additional offender led to 28 avoided crimes. By 2007 each additional incarcerated offender led to an estimated decrease of nine crimes. As the crimes avoided per additional inmate has decreased in Oregon, so has the cost-benefit ratio. In 1995, incarcerating an additional offender had a cost-benefit ratio of $2.78. (12) This means that for every $1 invested in incarceration, $2.78 in costs were saved through avoided crime. As decreasing marginal returns set in, this number decreased. In 2000, the cost-benefit ratio was $1.10. In the most recent year estimated, 2007, the cost-benefit ratio was only $0.91. This means that for each dollar invested in incarceration the avoided tax payer and victimization costs were only $0.91.


In Oregon, spending on criminal justice has increased during the past 25 years, as has the prison population; the crime rate has fallen. Research has shown that in Oregon, a 10 percent increase in the incarceration rate leads to a 2.6 percent decrease in the crime rate. As more offenders have been incarcerated in Oregon, the return on investment has decreased. By 2007, the benefit-to-cost ratio had dropped to $0.91.

Further research is necessary to determine the benefits and costs of programs designed to prevent crime and reduce recidivism. Work has been done in Oregon to create a cost-benefit model that can be used on programs that reduce recidivism. Work has also been done by DOC research staff to measure how effective prison and community programs are at reducing recidivism. Once effectiveness is measured, the cost-benefit model will be used to measure cost effectiveness.


(1) Source: Oregon Department of Corrections. Available at

(2) The courts portion of criminal justice costs includes roughly 50 percent of the Oregon Judicial Department general fund legislatively adopted budget, 75 percent of the Public Defense Services general fund legislatively adopted budget and the entire Department of Justice and District Attorney general fund legislatively adopted budget. The budget for the Judicial Department and Public Defense Services was broken out by their budget analysts to include only criminal expenses.

(3) Crime rates are calculated using the uniform crime reporting index crimes gathered by the Federal Bureau of Investigation. This allows for a valid comparison across states.

(4) Spelman, W. 2000. What recent studies do (and don't) tell us about imprisonment and crime. In Crime and justice: A review of research, volume 27, ed. Michael Tonry, 419-494. Chicago: University of Chicago Press; Aos, S. 2003. The criminal justice system in Washington state: Incarceration rates, taxpayer costs, crime rates, and prison economics. Olympia, Wash.: Washington State Institute of Public Policy; Spelman, W. 2005. Jobs or Jails? The Crime Drop in Texas. Journal of Policy Analysis and Management, 24(1): 133-165.

(5) Incarceration rates listed earlier in this paper were taken from the Bureau of Justice Statistics in order for them to be comparable to other states. This incarceration rate is taken from the DOC and includes those sentenced to the DOC for less than one year, which is why the rate is different from the one calculated by the Bureau of Justice Statistics.

(6) Please see the technical appendix (pp. 38-43) of the Oregon Criminal Justice Commission's January 2007 report to the Oregon Legislature available at

(7) This includes offenders sentenced to less than one year.

(8) Miller, T., M. Cohen, and B. Wiersema. 1996. Victim costs and consequences: A new look, research report. Washington, D.C.: National Institute of Justice. This study includes victims' out-of-pocket expenses as well as pain and suffering.

(9) The costs of arrest and conviction were estimated using Washington data since reliable data were not available for Oregon.

(10) Aos, S., P. Phipps, R. Barnoski and R. Leib. 2001. The comparative costs and benefits of programs to reduce crime, version 4.0. Olympia, Wash.: Washington State Institute of Public Policy.

(11) For a detailed cost-benefit methodology, see Wilson, Michael. 2009. Cost-benefit methodology. State of Oregon, Criminal Justice Commission. (September). Available at

(12) This does not include third-party benefits of avoided crime or the social benefit of justice being served.

Editor's Note: This article is an edited version of a section that appeared in the Oregon Criminal Justice Commission's January 2007 report to the state Legislature.

Michael K. Wilson is an economist with the Oregon Criminal Justice Commission.
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Title Annotation:CT FEATURE
Author:Wilson, Michael K.
Publication:Corrections Today
Geographic Code:1U9OR
Date:Feb 1, 2010
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