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Federal Register / Vol. 86, No. 142 / Wednesday, July 28, 2021 / Rules and Regulations
suggests 81% of prison and 96% of larger jail contracts cover costs.
69. Prison Contracts with Revenues Under the New Interim Caps. Revenue analysis shows that the bulk of prisons likely would be commercially viable at rates capped at $0.12 per minute i.e., the contracts have perminute costs less than the cap after allowing for a possible $0.02 per minute site commission allowance. In 2018, approximately 74% of prisons had perminute revenues net of commissions of less than $0.12 per minute hereinafter low perminute revenue prisons. The Commissions new interim caps should not impact these contracts. Further, these contracts, with rare exceptions, should be commercially viable. If that were not the case, providers would not have voluntarily accepted such contracts.
That result is all the more probable since providers may supplement their call revenues through automated payment and paper billing fees not accounted for in capping rates received by providers at $0.12
per minute. While the revenue analysis includes revenues from automated payment and paper billing fees, the rate caps only apply to calling fees. Thus, providers can
earn additional revenues through automated payment and paper billing fees. The remaining 26% of prisons have revenues, net of commissions, that are greater than or equal to $0.12 per minute hereinafter high perminute revenue prisons. Thus, the new interim caps will potentially affect cost recovery for these prisons.
70. Table 10 compares high and low perminute revenue prison contracts. For both sets of prison contracts, the Table gives the mean value for seven contract characteristics, as well the p-value from a two-sided difference in means statistical testwith a lower p-value indicating a lower likelihood that the difference in the two means is due to random error. For example, a p-value of 0.05 says that if the two means were the result of samples from two identical populations, that outcome would only be observed in 5% of cases. Apart from the variables Total Revenue Per Minute and Revenue Minus Commission Per Minute, each of the variables included is likely to be related to a contracts costs. The difference in means between the two groups for the five plausible cost-determining variables is not statistically significant at the 95% confidence
level, except for minutes, which should cause the low per-minute revenue contracts to have higher, not lower, costs. The similarities along cost-determinative characteristics suggest that to the extent that a $0.12 per-minute rate cap is viable for low per-minute revenue prisons, it should also be viable for high per-minute revenue prisons.
Commissions per minute may be a proxy for differences in contract regulatory environmentsfor example, correctional authorities that seek high site commissions may have other common characteristics that influence costs, including other services they require under an inmate calling services contract. The Commission places less weight on the facility data given that the providers acknowledged they had limited abilities to accurately report such data. Revenues per minute and revenues net of commission per minute are statistically higher for the high per-minute revenue contracts since the Commission defined the groups by whether they had lower or higher per-minute revenues. In any case, revenues do not, independent of minutes, cause costs, and the Commission controls for minutes.

TABLE 10MEAN CHARACTERISTICS FOR PRISON CONTRACTS BY REVENUE TYPE
High per-minute revenue contracts
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Total Revenue Per Minute
Commission Per Minute
Revenue Minus Commission Per Minute
Facilities Per Contract
Average Daily Population
Contract Includes Urban Facilities
Minutes
Observations

71. An alternative method to analyze whether a $0.12 per minute cap for prisons is commercially viable is to consider the perminute cost allocation associated with the high per-minute revenue prison contracts. As before, 74% of prisons could be expected to recover costs since their revenues are already below $0.12. Of the remaining 26%, which the Commission labeled high per-minute revenue prisons, 27% have allocated perminute costs below $0.12. Of all the high perminute revenue prisons, nine contracts had costs less than $0.12 per minute and 25
contracts had costs greater than or equal to $0.12 per minute. This suggests that 81% =
74% + 26% 27% of all prison contracts could cover their costs with a rate of $0.12.
To the extent that the providers unaudited costs are overstated, or that unit costs will fall as reduced rates expand call volumes, this number would be higher.

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72. Contracts for Larger Jails with Revenues Under the New Interim Caps. Revenue analysis shows the bulk of larger jail contracts are likely to have per-minute costs less than the interim cap of $0.14 per minute and would therefore be commercially viable at that capped rate. In 2018, approximately 65% of contracts for larger jails had perminute revenues net of commissions of less than $0.14 per minute hereinafter low perminute revenue jails. The Commissions new interim caps should not impact these contracts. Further, these contracts, with rare exceptions, should be commercially viable. If that were not the case, providers would not have voluntarily accepted such contracts.
That result is all the more probable since providers may supplement their call revenues through automated payment and paper billing fees not accounted for in capping rates at $0.14 per minute. The
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$0.24
$0.04
$0.20
1.91
6,665
0.32
15,482,499
34

Low per-minute revenue contracts $0.12
$0.05
$0.07
5.39
12,018
0.49
41,681,215
95

P-Value for two-sided difference in means test 0.00
0.54
0.00
0.21
0.20
0.09
0.05

remaining 35% of larger jails have revenues, net of commissions, which are greater than or equal to $0.14 per minute hereinafter high per-minute revenue jails.
73. The Commission finds that costdeterminative characteristics for high perminute revenue jails are similar to those for low per-minute revenue jails. This implies a $0.14 per minute rate cap would ensure the vast majority of contracts for larger jails are viable. Table 11 compares cost-determinative characteristics between high and low perminute contracts. A lower p-value indicates a lower likelihood that the difference in the two means is due to random error. The difference in means between the two groups for the listed plausible cost-determinative variables are not statistically different at the 95% confidence level.

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