The U.S. Supreme Court's pending decision on how California must address its colossally overcrowded prisons is about the unconstitutional state of inmate health care. But it's also about money.

Specifically, the hundreds of millions of dollars the state spends each year to house prisoners it does not technically have space to incarcerate.

The federal courts ordered California to release some 40,000 inmates to improve medical services; the state is challenging that order, which has put the issue before the top court.

Gov. Arnold Schwarzenegger embraced the mandate as a budget-cutting proposal, projected to save more than $300 million by the 2011 fiscal year. The state Legislative Analyst's Office found the governor's estimated savings were probably a bit inflated, but otherwise endorsed the effort.

The state's current proposal for satisfying the order does not include a large-scale prisoner release. Instead, California would primarily shift inmates to county jails and out-of-state prisons, while adding more beds to existing facilities.

Whether California's prison population and expenses shrink significantly depends on the Supreme Court.

Soothsayers among the legal punditry expect early release to go forward in some form based on the comments and questions [PDF] aired during oral arguments this week.

Not all of the justices were comfortable with releasing a large volume of felons.

Justice Samuel Alito raised the specter of rising crime rates but more substantively questioned the logic behind the planned early release. To quote Alito verbatim:

"But why order the release of around 40,000 prisoners, many of whom, perhaps the great majority of whom, are not going to be within the class in either of these lawsuits? Why order the release of all those people, rather than ordering the provision of the construction of facilities for medical care, facilities to treat mental illness, hiring of staff to treat mental illness?"

The simple answer to Alito's question is money.

Upgrading health facilities would cost state taxpayers an estimated $8 billion, the legislative analysts found two years ago.

Early release, of course, is not the only available option. AB 900, signed into law three years ago, will shift a portion of the prison population to county jails, though how many and when are open questions.

Assemblyman Jose Solorio, D-Santa Ana, said there's "no political appetite" for early release, which is why the capacity at county jails is of such concern. Solorio co-authored AB 900.

The legislation authorized the sale of more than $7 billion in bonds to build county-level corrections facilities. Progress on these projects has been slow, due in part to more money problems.

AB 900 included $2.6 billion to construct re-entry facilities - transition centers for inmates during their first year after release.

But that sizable investment won't cover the expense of running the facilities. As the legislative analysts explained:

"The cost to operate reentry facilities will also be significant. According to the department, the added annual operating costs for the proposed reentry facility in Stockton will be about $41 million when fully activated. Based on the department's estimate, the total annual operating cost when all reentry facilities are fully activated could reach $650 million.

This is in addition to the $195 million annual debt service for the lease revenue bonds used to construct these facilities. Thus, when fully implemented, the infill bed plan and reentry facilities combined could increase General Fund costs by $1.3 billion annually."

The sum total number of 40,000 inmates to release is based on another number, 137.5 percent.

California's prison facilities are at 176 percent capacity [PDF], as of the California Department of Corrections and Rehabilitation's count on Wednesday. The federal court overseeing the state prisons decided that the population must be reduced until the facilities are only at 137.5 percent capacity.

In truth, the state need only release or transfer 27,502 prisoners to meet the mandate. The Supreme Court will decide if California must stick to that number, and how quickly, some time next year.