SANTA FE, N.M. (AP) -- New Mexico's corrections system needs to better prepare inmates for their release back into communities because about half return to prison within five years, according to a legislative audit released Thursday.

By reducing inmate recidivism, the state can save money on corrections and slow a growing prison population, the audit found. But if nothing is done, New Mexico will run out of prison space within in the next decade and will have to consider building a new prison or expanding existing ones, according to the audit by the Legislative Finance Committee.

The population of male inmates will exceed prison capacity in about seven years, based on current growth trends.

Auditors said the average cost of an inmate is $34,000 a year in New Mexico, compared with $7,300 for the average per pupil cost of educating a public school student.

On average, 53 percent of New Mexico inmates return to prison within five years of their release, the report said. Currently, 44 percent of prison inmates are what auditors described as ``returning offenders'' who have an average of three prison stays.

New Mexico's recidivism rate is similar to other states, according to a study last year by the Pew Center on the States. Based on a survey of 41 states, including New Mexico, the group found that a national average of 43 percent of inmates released in 2004 were back in prison within three years.

New Mexico's recidivism rate was 44 percent during that period.

Legislative auditors said the Corrections Department could reduce recidivism by focusing on programs with a proven success record, such as drug treatment, vocational and adult education courses and correctional industries that offer inmates a chance to work. The report faulted the prison system for not targeting treatment based on inmate needs or risks.

``Instead prisoners can choose their own programming, often based on the amount of good time the program awards,'' auditors said. So-called good time allows inmates to qualify for early release.

The state's budget squeeze has added to the prison system's problems. There have been cuts to successful court-supervised drug treatment programs, which are intended to help keep offenders out of prison, auditors pointed out.

Corrections Secretary Gregg Marcantel expressed support for the audit in a statement to the committee. He said the department was taking steps to lower recidivism without jeopardizing public safety.

The agency is filling vacancies in its probation and parole staff, he said, as well as working with a university on a business plan for correctional industries.

A program is under consideration for sex offenders who have trouble getting a parole plan that allows their release and instead end up remaining in prison while on parole.

``The report clearly articulates the challenges the NMCD must overcome to successfully prepare for increases in incarceration and implement recidivism reduction programs and initiatives,'' Marcantel said.

The state spent nearly $300 million last year to incarcerate an average of 6,700 inmates and oversee 18,000 that are on parole, probation and in community corrections programs.