House of Representatives finance committee presses Corrections on $490M budget, health-contract exit and federal gang indictment

The Finance Committee of the Puerto Rico House of Representatives questioned the Department of Correction and Rehabilitation on May 6 about its FY2027 budget request, a pending change in the department’s health-services contractor and allegations tied to a federal indictment of prison gang members.

Chair of the committee (identified in the record as the presiding officer) opened the hearing and asked the agency to summarize operations and the budget. The department’s secretary (identified in testimony as the head of the Department of Correction and Rehabilitation) said the agency’s FY2027 request asks the legislature for about $490,000,000 from the general fund—roughly $274.5 million for payroll, $157.8 million for operations and $57.6 million for pay‑go—up about $46.3 million from the current year’s appropriation.

Committee members pressed the secretary and agency staff on specific line items, staffing and transition risks. Julio Ortiz, director of budget and finance, confirmed the agency projects a current general‑fund budget of about $443,000,000 and said the department requested additional lines to cover recruitment, overtime and salary adjustments. The department also requested roughly $19.2 million specifically to address recruitment, salary adjustments and overtime in its staffing plans.

On human-resources matters, the secretary described a legislated pay increase for correctional officers effective Dec. 16, 2025, and said about 3,547 employees (roughly 61 percent of the plantilla) benefited. He told members that the annualized cost of that wage increase would be about $35.5 million and that the department continues to face recruitment and retention challenges requiring further budget support.

Health-services contract and transition
The committee focused substantial attention on the department’s intention to end its contract with the current health-services provider. The secretary said he sent a notice of intent to terminate the provider on July 1, 2025, and that the department issued four public solicitations covering physical and mental health services for adults and juveniles. He said roughly 12 firms initially expressed interest; two firms later withdrew and about 10 remained under review.

The secretary told the committee he reconstituted a review committee and requested an independent expert (perito) to assess transition costs and timing before final award. He emphasized the department will notify the federal court monitor and juvenile tribunal if a new provider is selected for juvenile services. "Mientras ellos estén, yo tengo que asegurarles, por lo menos, exigir que se cumpla," the secretary said, underscoring that the department will continue to require contract compliance while the provider remains in place.

Members asked whether the transition would increase costs. The agency said it has not yet produced a precise estimate and that the contracted perito will evaluate transition expenses and timelines; the committee ordered a formal preliminary report within five days and requested the names and ownership of the remaining proponent companies.

MAPFRE settlement and recovery funds
The secretary summarized a long-running insurance dispute arising from Hurricane María that concluded recently with a negotiated transaction with MAPFRE. He said the transaction totaled about $34 million before adjustments and that the net payment received by the department was in the high‑$20 millions (exact figures to be provided to the committee). Members asked for precise documentation and asked the department to submit the settlement details for the committee’s records.

Federal indictment, contraband and investigations
Representatives brought up a December federal grand‑jury indictment alleging that 34 people tied to an internal prison gang (referred to in the record as group 31) engaged in a pattern of corruption, trafficking of contraband and privileges for certain inmates. A member asked whether the department or its investigations office had records showing staff participation or administrative failures that contributed to the alleged scheme.

The secretary said the publicly available federal indictment largely names inmates and that federal investigative activity remains ongoing. He told the committee the department has received information and has coordinated with federal authorities in prior cases, and he confirmed the department has internal channels for receiving and investigating allegations; however, he declined to characterize ongoing federal investigative details. The department reported contraband seizures of about $3.4 million in 2024 and about $6.4 million in 2025 and said the seizures included cell phones and controlled substances.

Data corrections and juvenile counts
Members identified inconsistencies in the agency’s written materials (juvenile population was listed as 58 in one paragraph and 85/76 in tables). Agency staff reviewed the records in the hearing and corrected the table; the secretary reported the up‑to‑date juvenile count as 75 (81 males and four females at the time of the presentation).

Follow-up and committee direction
The committee directed the department to provide a set of follow‑up materials within five days: (1) the preliminary procurement report identifying the 10 remaining proposers and their ownership/representatives, (2) the final MAPFRE settlement figures and supporting documentation, (3) an itemized list of items where the agency says it has realized procurement savings, and (4) the status of recovery funds and FEMA/other claims. The agency agreed to deliver the materials and to return for further oversight as needed.

The hearing recessed at the close of questioning; the committee scheduled an afternoon session at 2 p.m. with the Department of Recreation and Sports.

(Reporting based strictly on the hearing transcript and the documents the agency cited; the committee asked the agency to submit several clarifying documents requested on the record.)