Misaligned incentives and the scale of incarceration in the United States

In 1996, California passed the California Juvenile Justice Realignment bill (SB 681) which made counties responsible for a higher cost to incarcerate youths in California Youth Authority (CYA) facilities. Data from before and after the change in pay structure went into effect showed reduced incarceration rates when the financial burden was shifted from the state to local governments. The author suggests that misaligned incentives played a role in decreasing youth incarceration. 

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Key Findings:

• States are typically responsible for prison costs while county employees determine time spent in custody.
• After SB 681 passed, the number of youths sent to CYA facilities dropped by an estimated 40 to 60 percent.
• After SB 681 was adopted, counties paid $150 per month for offenses categorized one to three, such as murder or armed robbery. 
• For less serious offenses categorized five to seven, fees were based on a sliding scale; for example, residential robbery or assault with a deadly weapon cost counties $1300 and $2600  for parole violations and misdemeanors.
• Juvenile probation officers are the primary decision-makers in juvenile cases; after assessing the youth’s risk factors, they send the case to juvenile court, dismiss or divert it. 
• Many youth cases were dismissed or diverted after the adoption of SB 681; with the increased use of dismissals and diversions, the probability of a youth being sent to CYA decreased by 42 percent.
• There was not an immediate increase in offending as the use of juvenile interactions decreased.