California shelled out $20 million to outside consultants to squeeze savings out of the prison system. So far, the payoff looks modest compared with the price. Early budget talks were full of promises about hundreds of millions in cuts, but this spring’s budget updates scaled those projections way back. At the same time, the Department of Corrections and Rehabilitation requested roughly $100 million more in the May Revision to help cover rising workers’ compensation and related costs.
Consultant price tag and shrinking targets
The state’s Finance Department hired Boston Consulting Group under a contract worth up to $20 million to scrutinize operations at CDCR and other agencies, according to the Legislative Analyst’s Office. The savings story has only gotten less impressive from there. What began as a roughly $125 million savings target for CDCR in 2025–26 was trimmed to about $42 million in the May Revision, and future-year projections that once topped $600 million in savings fell into the low hundreds of millions. That slide, along with the new math, triggered pointed questions from lawmakers and budget staff when the May plan landed, as reported by The Sacramento Bee.
Workers’ compensation is eating the budget
CDCR’s own paperwork shows how much of the budget is getting swallowed by workplace injuries. Industrial workers’ compensation costs hit roughly $700 million in 2024–25 and now account for about 5% of the department’s annual spending, with open claims climbing about 4% each year since 2020, according to a recent Department of Finance budget change proposal. To help pay medical bills and wage replacement, the department asked for about $100 million more in the May Revision, per the Assembly. Union leaders say CDCR is still working through a backlog of COVID-era claims and have pointed to a March 2025 CDCR memo that warned of a recent “surge in violence” at several prisons, a warning the department publicized at the time.
What the consultants proposed and what is realistic
BCG zeroed in on procurement, inventory and headquarters staffing, flagging administrative changes that could trim overhead. The review identified roughly 137 positions in CDCR’s administrative ranks that could be eliminated. Those ideas and the details on how they might be carried out surfaced in budget hearings and are laid out in a CalMatters transcript. Officials told legislators that many of the proposed reductions are clustered at headquarters and in vacant jobs, which means near-term staffing impacts would likely be softened by attrition rather than sweeping, immediate layoffs.
Closing prisons still delivers the clearest returns
Budget analysts have been blunt that there is only so much juice to squeeze from office overhead. The Legislative Analyst’s Office estimates that closing a single state prison would save roughly $150 million a year in operating costs, a level of savings that dwarfs most of the consultant’s near-term proposals. Oversight documents and recent coverage have also highlighted substantial excess capacity across the system, including thousands of empty beds that have fueled calls for more deactivations and at least one additional targeted closure. Those options come with obvious political and community fallout, and officials frame the decision as a choice between settling for smaller, easier administrative savings or taking on the far tougher fight of shutting facilities to capture bigger structural savings.
For lawmakers, the math is not subtle. A $20 million contract can help uncover efficiencies, but the numbers suggest administrative tweaks alone will not fix the broader problem. Analysts say that if California truly wants hundreds of millions in lasting savings, it will have to pair those fixes with the politically painful work of cutting prison capacity.
