No one is held accountable for budget overruns at the state Department of Corrections, which has already overspent its nearly $6 billion budget by more than $500 million this year, Department of Finance officials said Thursday.

The troubled department, which has blown its budget every year since 1998, has been allocated far less than it needs to cover pay raises for correctional officers and mandatory policy changes that require more staff, said James Tilton, the Finance Department official in charge of the corrections budget.

Because they know the spending plan does not come close to meeting their needs, Tilton told an Assembly budget oversight committee, prison wardens and other administrators have become accustomed to simply ignoring it. And no data are available to show wardens whether their staffing schedules fit within the budget, he said.

"Very bluntly, in my opinion, the budget became meaningless to the Department of Corrections," Tilton said.

Tilton and corrections officials, speaking at a hearing that was part of an ongoing series on ways the state can save money in next year's budget, told Assembly members they were working on a plan to make the department's budget reflect its real spending needs. Next year, they said, wardens who go over budget will lose their jobs.

"I met with the wardens and I explained in language I don't believe could be any clearer: If next year they don't live within their budget, they will not be wardens," said Kevin Carruth, undersecretary of the Youth and Adult Correctional Authority, the state agency in charge of the Department of Corrections.

The budget problems are just one more issue facing the department, which already has been under legislative and court scrutiny for the unauthorized hiring of 1,000 prison guards, the mistreatment of inmates and staff discipline problems.

A U.S. District Court judge said last week that he would give the state one more chance to improve guard discipline before placing the department under federal oversight.

As legislative scrutiny of the system intensified, Gov. Arnold Schwarzenegger this month appointed former Gov. George Deukmejian to head a panel on prison reform.

Deukmejian, who presided over a dramatic expansion of the state's prison system in the 1980s, will cull the best recommendations from existing prison reviews and will report directly to the governor every 30 days. The panel will examine everything from staff training and ethics to cost-saving measures.

The Department of Corrections budget has risen $1.6 billion in the past five years, a 41 percent increase, according to the governor's budget proposal. The administration attributes the increases to staff pay raises, the rising cost of health care for inmates and the unauthorized spending.

Assembly members, who described the department's financial situation as "stunning" and "incredible" Thursday, called for the Schwarzenegger administration to report back with details of proposed solutions.

"It's a decay of fiscal responsibility to the point where it seems almost chaotic," said Assemblyman Rick Keene, R-Chico.

Tilton described the general outlines of a plan to make sure the cost of running the department has a fundamental correlation to the budget. The administration wants to establish a staffing schedule that is tied to the budget and a system of allotting specific amounts for contingencies that require temporary staffing increases.

Also, he said, the administration will set up a system in which wardens can come forward before they overspend if they are having problems meeting their needs within their budgets.

In addition, the administration is preparing a list of $400 million in cuts to the Department of Corrections that will be ready next month, before the governor presents his revised budget.

But as lawmakers prepare to consider prison spending for next year, they also will be faced with this year's spending problems. The Department of Finance is expected to ask lawmakers to approve an additional $500 million for prisons to make up for recent overspending.

Some of the responsibility, Tilton said, lies with administrators who went ahead and spent money without authorization. But some responsibility, he said, lies with policy-makers who drew up years of budgets that did not take into account raises negotiated in employee contracts and other mandatory spending.

"There's lots of blame to go around," he said.