One of the most controversial aspects of prison growth during the last
two decades has been the increased role of private prison companiesfirms
that build and/or operate prisons. As needs for prison beds have grown,
for-profit corporations like Corrections Corporation of America (CCA),
Wackenhut Corrections Corp. and Cornell Companies Inc. have aggressively
sought to fill the demand. Indeed, some critics charge that they've helped
create that demand by lobbying at state and national levels for tough
criminal sentencing laws. Nationally, private companies house about 5
percent of the nation's local, state and federal inmates.
Private prison firms have been less active in the Ninth District
than elsewhere, largely because our incarceration rates are lower
than other markets but also because of state government resistance.
The Upper Peninsula of Michigan, North Dakota and South Dakota have
no private prisons, though officials are considering one in North
Dakota's Pembina County. Montana and Minnesota each have one private
prison. Wisconsin has none, but the Stanley prison was built privately
and later sold to the state. Moreover, Wisconsin contracts with
four private prisons in Oklahoma, Tennessee and Minnesota to house
over 4,000 inmates, about a fifth of its total prisoner population.
Though privatization is not a major trend in the Ninth District,
it has beckoned to local policymakers over the years because private
firms proffer one key advantage: lower cost. When Minnesota decided
to build a state prison in Rush City, for example, Cornell claimed
it could run it for $10 to $15 below initial state government estimates
of nearly $70 per prisoner per day. CCA offered a similar bid. Wackenhut
declared it could trim costs even further. After a lengthy debate,
legislators rejected the offers, both from disbelief about the bids
and distaste about handing over to a for-profit entity what has
commonly been a public function.
But the question remained: Could states save money by sending their
prisoners to private prisons?
Cutting costs or quality?
Prison corporations say their costs are lower because their facilities
are managed more efficiently than state-run facilities. A more significant
cost-savings, though, likely comes from their use of nonunion labor.
Since labor costs account for about two-thirds of prison operating
costs, lower wages can result in significant savings.
But critics of private prisonsincluding labor unionsargue
that such cost-cutting results in lower-quality staff, with significant
consequences. Poorly trained guards and higher turnover increase
the risk of escapes, inmate violence and prisoner mistreatment,
say critics. The cost of poor quality is then shifted onto the public
sector, as county or state police deal with escapees, court systems
cope with prison lawsuits and public hospitals treat injured inmates.
Deadly incidents at private prisons in Youngstown, Ohio, and elsewhere
have given credence to the arguments.
At this point, the facts with regard to cost efficiencies are inconclusive.
The U.S. General Accounting Office reviewed the issue in 1991 and
1996 and twice concluded that there was not enough evidence to show
whether private prisons were more or less expensive than public
prisons. A 1998 national review of prison privatization by Abt Associates
similarly found that there was no clear proof one way or the other.
Other studies reach similar conclusions.
What is clear is that states and local communities considering
private prison proposals shouldn't offer major concessions or subsidies.
Economic multipliers seem to be limited and correctional cost savings
haven't been proven.