Managing the crisis of the growing federal prison system is a critical challenge facing the Department of Justice and is just one of six “Top Management and Performance Challenges Facing the Department of Justice” identified in the Office of the Inspector General’s (OIG) annual report based on oversight, work, research, and judgment.

Generally, the report doesn’t identify a top challenge, but because it represents a “critical threat to the department’s ability to fulfill its mission,” the OIG classified the federal prison system as the top challenge facing the department in 2014.

“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,” Inspector Michael Horowitz wrote in a memo to Attorney General Eric Holder. “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.”

Between fiscal year 2001 and fiscal year 2011, the discretionary budget for the federal prison system increased from $21.5 billion to $28.9 billion, respectively. However, in 2012 the budget was reduced to $28.3 billion and then cut in 2013 by 10 percent to $25.5 billion. At the same time, the Federal Bureau of Prisons’ facilities grew from approximately 157,000 inmates in 2001 to about 219,000 in December of 2013, causing the cost of the system to drastically increase and consume more of DOJ’s budget. Based on estimates from President Obama’s most recent budget, the cost of federal correctional activities will continue to rise through fiscal year 2018 and could consume more than 28 percent of the department’s discretionary budget if its budget remains flat.

While DOJ has introduced some measures, such as pursuing lower-cost alternatives in incarceration for low-level, non-violent crimes, the Office of the Inspector General said more steps are necessary to help cut costs.

Aiding in the increased costs of the federal prison system is significant overcrowding, a problem that has been recognized since 2006 as threatening safety and security of prisons. 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 significant overcrowding affects the safety and security not only of inmates themselves, but of staff and correctional officers who are responsible for inmates’ safety.

DOJ first identified prison overcrowding as a problem in 2006 and has identified it as an issue every year since, creating a corrective plan annually to address the issue. “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 and 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 treat 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, 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.”

The growth of the inmate population coupled with a decrease in the department’s budget has also kept the Federal Bureau of Prisons from reducing its inmate-to-correctional officer ratio, “which has remained at approximately 10-to-1 for more than a decade,” according to the report. In comparison, the five largest state correctional systems – California, Texas, New York, Florida, and Georgia – reported an inmate-to-correctional officer ratio of just 6-to-1 in 2005.

DOJ has requested more funding to hire 1,155 additional correctional officers in fiscal year 2014, but this could result in less money being available for other department priorities. Instead, the Office of the Inspector General recommends DOJ address the growing number of federal inmates.

Also identified as top concerns 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 that have created a new dialogue on the programs the 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 examine how the information collected is used in investigations and if once an investigation is closed, that same information can be used in a subsequent investigation, to ensure that civil rights and liberties aren’t being transgressed.

Another top challenge facing the DOJ is the ever increasing rate of cyber-attacks 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 has recognized this top challenge 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 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 also recommends that DOJ cooperate with the private sector and share information about cyber threats so it can prepare for and defend itself against cyber-attacks. President Obama issued an executive order in February, requiring DOJ to share cyber threat information with private sector entities and 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.”

The Inspector General’s report also identified 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 reads. “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.