How JailGeek helps local jails capture every allowable expense in federal detention reimbursement
The President’s FY2027 Budget makes one thing clear: immigration enforcement, federal detention, and border security remain national priorities. The Working Families Tax Cut Act provides $75 billion specifically for ICE’s mass deportation initiative, including funding to activate up to 100,000 single adult detention beds. For local jails, that means more federal detainees and more pressure to ensure your Intergovernmental Agreement reflects your true operational costs.
But increased demand doesn’t automatically translate into fair reimbursement. The gap between what facilities are paid and what they actually spend continues to widen. And one of the biggest contributors to that gap is indirect costs.
What Are Indirect Costs?
Direct costs are easy to identify: officer salaries, medical supplies, inmate meals, utilities for housing units. These are the line items that appear naturally in any facility budget.
Indirect costs are different. They are the expenses that support your facility’s operations but aren’t tied directly to a specific inmate or housing unit. Examples include:
- Sheriff’s Office costs (Command Staff; Detectives; Canine Officers and their dogs; possibly Dispatch; and possibly Road Patrol Deputies)
- County Administrative overhead (finance, HR, procurement, executive leadership)
- Facility depreciation and capital improvements
- Information technology and record-keeping systems
- Maintenance and janitorial services shared across the facility
- Legal and compliance support
- Training programs for staff
These costs are real. They are necessary. And under federal cost principles (OMB Circulars), they are allowable expenses that should be included in your IGA rate calculation.
Why Indirect Costs Are Routinely Missed
Most facilities use traditional accounting methods to calculate their per diem rates. Those methods focus on direct costs because they are easier to track. Indirect costs require allocation, distributing a portion of shared expenses across different cost centers (federal vs. non-federal inmates, for example). Further, some counties hired outside companies to prepare countywide cost allocation plans, but those plans are not focused on federal detention expenditures and often underestimate some costs while over exaggerating others.
Allocation of jail related costs is complex. Without a clear methodology, many facilities either under-allocate indirect costs or omit them entirely. The result is a per diem rate that captures only a fraction of your true operational expenses.
The FY2027 Budget reinforces the administration’s focus on efficient, accountable spending. That’s good news for facilities that can document their true costs. But for facilities that rely on incomplete data, it means continued underpayment.
What the FY2027 Budget Means for Your IGA
The Budget provides $40.8 billion for the Department of Justice, a 13 percent increase over 2026, including substantial investments in the Bureau of Prisons and USMS operations. While the documents don’t explicitly call out IGA funding, the broader enforcement expansion makes increased bedspace demand a near certainty.
Facilities that have renegotiated their IGAs recently are positioned to benefit. Facilities that haven’t are likely leaving money on the table, particularly when it comes to indirect costs.
How JailGeek Captures Indirect Costs
JailGeek’s FairRate™ software was built to solve this exact problem. Unlike generic accounting systems or manual spreadsheets, FairRate is specifically designed for federal detention cost analysis.
Our proprietary algorithms identify and document every allowable cost category, including:
- Indirect Sheriff’s Office Costs — Command Staff; Detectives; Canine Officers and their dogs; possibly Dispatch; and possibly Road Patrol Deputies)
- Indirect County administrative overhead — Finance, HR, IT, and executive leadership costs that support detention operations
- Facility depreciation and maintenance — Building costs that traditional accounting overlooks
- Staffing differentials — The true cost of specialized personnel, training, and overtime
- Medical expenses beyond basic care — Mental health services, specialist care, and off-site treatment
- Transportation and security costs — Vehicle expenses, officer time, and security protocols
- Intake and processing expenses — Booking, classification, and initial medical screening
Each of these categories represents revenue leakage when not properly documented. Together, they can represent 20-30 percent of a facility’s true operating costs. However, without the correct allocation, the cost will not be accepted by USMS, and the agency will not assist the Sheriff’s Office in figuring out the correct allocation. Instead, USMS will just return the application to the Sheriff to try again. Out of frustration, the Sheriff will often just forego those indirect costs.
Core+™: Replicating the Federal Methodology
Where FairRate provides the foundation, a comprehensive analysis of your actual costs, Core+™ takes the next step. Core+ replicates and enhances the USMS’s own presumptive rate methodology, giving you unprecedented insight into how federal analysts will evaluate your indirect cost allocations before you submit your IGA application.
When both sides of the table are working from the same methodology, negotiations become about documentation, not persuasion.
The Bottom Line
The FY2027 Budget reinforces the federal government’s need for cost-effective detention solutions. Facilities that can document their true costs, including indirect expenses, are positioned to secure fair reimbursement. Those who rely on incomplete data will continue to leave money on the table.
JailGeek exists to make that documentation process straightforward. Our solutions have helped facilities across 30+ states recover more than $43 million in recouped costs with a 98% success rate in negotiating improved IGAs.
If your facility houses federal detainees, or expects to under the FY2027 enforcement priorities, now is the time to ensure your IGA rate reflects your true operational costs.
To learn more, visit jailgeek.com or request a demo to see what your facility could recover.