Failure to manage the crisis of the growing federal prison system and its enormous budget could hinder the Department of Justice’s (DOJ) programs designed to protect national security, according to an annual report by the Office of the Inspector General issued earlier this month.

The report, “Top Management and Performance Challenges Facing the Department of Justice,” identified six main challenges the DOJ faced in 2013 and what it should focus on in the new year. Topping the list is the federal prison system, which is taking up more and more of the DOJ’s budget each year and possibly threatening other areas under the department’s jurisdiction, said Inspector General Michael Horowitz in a memo to Attorney General Eric Holder.

“The costs of the federal prison system continue to escalate, consuming an ever-larger share of the department’s budget with no relief in sight,” Horowitz wrote. “In the current era of flat or declining budgets, the continued growth of the prison system budget poses a threat to the department’s other critical programs – including those designed to protect national security, enforce criminal laws, and defend civil rights.”

There are approximately 219,000 inmates and detainees in the federal prison system, and overcrowding has been a problem since 2006. In November 2013, the Federal Bureau of Prisons was operating its facilities at approximately 36 percent over rated capacity, with medium security facilities operating at approximately 51 percent over rated capacity. This overcrowding affects the safety and security not only of the inmates, but of the staff and correctional officers who are responsible for inmates’ safety.

DOJ has issued corrective plans each year since 2006 to address the issue, but “even under the scenario outlined in the department’s plan, which assumes it will be fully funded and implemented in each of the next five years, the Federal Bureau of Prisons projects that its system-wide crowding will continue to rise to 44 percent over rated capacity by 2018,” the report says.

One factor contributing to the increase in the number of prisoners in the federal system is the trend to prosecute at the federal level instead of at the state or local level. “By one estimate, the number of federal criminal offenses grew by 30 percent between 1980 and 2004,” according to the report, which adds that there are now more than 4,000 offenses carrying criminal penalties in the United States Code.

Also adding to overcrowding is the decrease in the number of transfers of inmates through the DOJ’s International Prisoner Treaty Transfer Program, which allows some foreign national inmates from treaty nations to serve the remainder of their sentence in their home country. Foreign nationals made up 26 percent of federal inmates in August of 2013 and 46 percent of federal defendants in 2012, according to the report. But from 2005 to 2010, the report found that DOJ “rejected 97 percent of foreign national inmates’ requests to transfer, and that in fiscal year 2010, less than 1 percent of the 40,651 foreign national inmates in the Federal Bureau of Prisoners’ custody were transferred to their home countries to complete their sentences.

“While some of the factors involved in this outcome were beyond the department’s control…the Office of the Inspector General found that if only 5 percent of eligible inmates who had never previously applied were transferred to their home countries, the Federal Bureau of Prisons would remove 1,974 inmates from its prisons and save up to $50.6 million in annual incarceration costs.”

This cut in costs would have been helpful as the DOJ’s discretionary budget has been reduced from $28.3 billion in 2012 to $25.5 billion in 2013, while the budget for the Federal Bureau of Prisons has more grown from $4.3 billion in 2001 to $6.4 billion in 2013, consuming 25 percent of the DOJ’s discretionary budget. According to the President’s most recent budget, the cost of correctional activities will continue to rise through at least 2018. “By that time, if the Federal Bureau of Prisons’ budget increases at the same rate projected for all federal correctional activities and the department’s budget remains flat, the Federal Bureau of Prisons’ budget will consume over 28 percent of the department’s discretionary budget,” according to the report.

This increase of funding for federal prisons could result in less money being available for other department priorities that were identified as top challenges by the Inspector General’s report, including cybersecurity as Internet access across the globe continues to increase.

The Director of National Intelligence’s March 2013 “Worldwide Threat Assessment of the U.S. Intelligence Community” emphasized the cybersecurity threat and the increased pace of attacks, with the Government Accountability Office reporting that federal agencies reported an average of more than 130 incidents per day during 2012. DOJ recognized this top challenge prior to the Inspector General’s report and made it a priority by requesting $668 million specifically for cybersecurity in 2014, an increase of 16 percent from 2013.

The majority of the increase will go to the FBI’s Next Generation Cyber Initiative, which helps address cybersecurity threats in the nation and will be used to add 50 special agents and 50 computer scientists to increase cyber investigation capabilities and victim identification. In addition, the report also suggests that DOJ and the FBI ensure that all of its agents are trained in basic cyber investigatory techniques and “provided with adequate cyber tools to conduct their investigations.”

The report further recommends that DOJ cooperate with the private sector and share information about cyber threats so it can prepare for and defend itself against cyberattacks. President Obama issued an executive order in February requiring DOJ to share cyber threat information with private sector entities The report adds that DOJ should “move aggressively” to implement the order and “ensure that it solicits the input of all key private sector constituents about what information, in what form, would be most useful to receive.”

Also identified as a top concern for the DOJ was the need to balance national security and civil liberties, especially after a summer of leaks from former federal contractor Edward Snowden created a new dialogue on the programs the National Security Agency (NSA) is using to gather intelligence on citizens and non-citizens.

“Recent disclosures concerning the government’s data collection and surveillance processes have sparked public debate over mass surveillance and government secrecy, and in doing so have underscored the difficulty of operating national security programs while also respecting the public’s expectations of privacy, a key civil rights and liberties concern,” the report explains, adding that while most attention has been paid to the programs authorizing the acquisition of national security information, less has been paid to the storing, handling, and use of that information.

The Inspector General’s report recommends that the DOJ ensure that civil liberties are not being violated by examining how information collected through NSA programs is used in investigations and whether evidence from prior investigations can be reused.

“After information has been lawfully collected for one investigation, crucial questions arise about whether and how that information may be stored, shared, and used in support of subsequent investigations,” the report said. “Similar questions arise about the impact on civil rights and liberties of conducting electronic searches of national security information and about whether and how information obtained in a national security context can be used for criminal law enforcement.”

Also identified as top challenges facing DOJ are the need to protect taxpayer funds from mismanagement and misuse, ensuring effective and efficient law enforcement, and restoring confidence in the DOJ as top challenges facing the department.

“Public trust in the department, its senior officials, and its employees is essential to every aspect of the Department’s operations,” the report said. “The Department must ensure that it strengthens and maintains its reputation for integrity, fairness, and accountability of its personnel and its operations.” To read the report in full, visit the Department of Justice’s websitehere.