Colorado’s halfway houses will get an independent financial audit for the first time in 20 years, after a ProPublica investigation found a lack of oversight contributes to a system where more people end up incarcerated than rehabilitated.

A new state law directs Colorado’s Division of Criminal Justice to hire a third-party auditor to evaluate the finances of halfway houses every five years, including the costs imposed on residents of the facilities. The findings of the first audits will be presented to lawmakers by July 1, 2025.

“The goal is to make sure [halfway house programs] are working the way they were intended and to evaluate if they have the funds to meet those expectations,” state Rep. Emily Sirota, a Denver Democrat who co-sponsored the bill, told ProPublica. “We need the necessary data to assess that.”

There are three ways people typically arrive in Colorado’s halfway houses: Some are sentenced by a judge to community corrections in lieu of jail or prison; others are finishing a prison sentence; and the rest are ordered to complete halfway house programs as a condition of parole.

This fiscal year, lawmakers allocated $87.7 million — nearly 16% of the state’s public safety budget — to the state’s 26 halfway houses. That money is funneled to local community corrections boards or governments that contract with either community or private operators to run the facilities.

A majority of these 26 halfway houses are owned by companies specializing in detention and community-based supervision. Three firms operate 15 of the facilities.

The new law follows a yearlong ProPublica investigation that found the facilities often imposed punitive policies on residents, while lacking adequate employment training and effective drug treatment programs and passing along costs that sank residents into debt. One barrier to reform, the investigation found, was a lack of transparency for lawmakers to gauge their effectiveness.

The system’s failures are costly as only 35% of people successfully complete a program and stay out of the criminal justice system for at least two years, according to state data from 2009 to 2021. The result is Coloradans are billed twice: first to fund residents’ time in halfway houses and again when they end up behind bars.

The last independent audits of the system occurred in 2001 and 2004 and were done by the Office of the State Auditor, an independent agency within the Colorado legislative branch. Those audits detailed a long list of concerns, including halfway house operators’ “low levels of compliance” with state standards and little enforcement of those standards by state or local regulators.

While the Office of Community Corrections oversees the system, 22 community corrections boards also regulate what happens at individual facilities. ProPublica found that many boards haven’t audited the facilities they oversee in five years, or ever, meaning operators make millions of dollars from state contracts with minimal oversight.

“Few boards actually provide any type of systematic program oversight,” auditors wrote.

In addition to the audits required by the new law, the Division of Criminal Justice will expand the scope of its internal audits — including access to nutritional meals, grievance policies, how early release is calculated and how facilities handle client property.

Tajuddin Ashaheed, a case manager at the Second Chance Center, an Aurora-based reentry nonprofit, said requiring financial transparency of halfway house operators is long overdue.

Facilities “operated for a long time in impunity,” said Ashaheed, who spent 10 years in prison and now serves on the state’s Commission on Criminal and Juvenile Justice. “To have something, a program like community corrections, running with no real oversight, that’s absurd,” he said. “Twenty years? That’s ridiculous.”

How Much Do Halfway House Programs Cost to Run?

The question of whether Colorado’s halfway house system is appropriately funded has been discussed by state lawmakers for at least the last two decades.

The Division of Criminal Justice, as well as legislative staff tasked with evaluating budgetary proposals, have struggled to calculate the cost of community corrections programs because many are run by private entities that aren’t required to report their finances despite receiving millions in taxpayer funding. Most of what’s known about their finances comes from self-reported data that is difficult to verify.

The audits mandated by the new law could help answer the question.

“If it turns out that the amount of funding isn’t adequate to provide the level of services that we are expecting or hoping for, then that will provide us information,” said Katie Ruske, the manager of the Office of Community Corrections. “We don’t really know what we’re gonna learn or find out.”

Justin Brakke, a nonpartisan senior legislative budget and policy analyst at the Colorado State Capitol, proposed the financial audits to lawmakers during a December briefing. A bipartisan group of four lawmakers on the Joint Budget Committee sponsored the bill.

State Rep. Shannon Bird, the committee’s vice chair and a Democrat from Westminster, cited the need for greater transparency and accountability during a follow-up hearing, referencing ProPublica’s reporting on an overdose death at a Colorado Springs halfway house. Family members had called the facility pleading with staff to check on their loved one, but he was found dead the following day. The overdose death was the third to occur in an eight-month span at the facility run by ComCor Inc. and came after a string of limited-scope state audits that identified serious issues that went unresolved.

“That’s just one story. But it is sort of elevating this concern about how safe people are and the quality of the service that the state is getting,” Bird said during the December hearing.

Mark Wester, the executive director of ComCor Inc., said in response to ProPublica’s reporting on the death that staff followed all protocols and that an investigation by El Paso County employees found no deficiencies in the facility’s response to the incident. Wester denied ProPublica’s request to review the county’s investigation, and in response to a public records request the county said it found no documentation of such an investigation.

Since then, at least one other person has died of an overdose at a facility run by ComCor Inc. — which recently rebranded as Embrave — according to a coroner report obtained by ProPublica.

“Community Corrections including Comcor Inc is dealing with the increased threat of overdoses driven by fentanyl and other substances,” Wester said in a written statement. “In response to this trend, Comcor became a certified Harm Reduction Facility through the Colorado Department of Public Health and Environment.”

Pete Carey, the executive director of El Paso County’s Justice Services Department, said in a written statement that the county is strengthening its oversight of community corrections facilities, including ComCor Inc. It helped create the 4th Judicial District Community Corrections Authority, which will oversee halfway house contracts instead of the local community corrections board, and has hired a compliance specialist.

“El Paso County is dedicated to ensuring that community corrections vendors comply with our standards and expectation for safety and security,” he wrote.

A New State Task Force Focused on Reentry

Separately, a new state task force will explore how to improve reentry services, including community corrections. The task force, which was convened by the Colorado Commission on Criminal and Juvenile Justice, a policy group within the state’s Department of Public Safety, had its first meeting on April 11.

Ashaheed, who will serve on the task force, said he hopes the group focuses on removing financial obstacles and assisting with career development, instead of low-paying jobs. But, he said, he is so far disappointed by the committee’s lack of racial and ethnic diversity — as well as how few of its members have experienced reentering society after incarceration.

Recent changes, such as the Denver City Council’s decision to cut ties with for-profit halfway house operators and replace them with more evidence-based programs, give him some hope, he said.

He wants the task force to build on “some of the positive changes that have happened,” Ashaheed said. “It’s still yet to be determined how well we’re actually going to do.”