About Money

People who look for cost savings are routinely disappointed.

Professor Elaine Rizzo of St. Anselm College and Prof. Margaret Hayes of Regis College researched private prisons for the Citizens Advisory Board of the New Hampshire State Prison for Women. They concluded:

  • “[T]he available evidence does not support the contention that private corrections are more cost-effective or efficient than those publicly operated.”

Arizona, a leader in private prisons, required a cost analysis of its private prisons. Arizona’s internal review found

  • Arizona broke even in minimum security; public facilities cost $46.59 per day and private facilities cost $46.56 per day.
  • Arizona lost money in medium security facilities; public prisons cost $48.42 per day, private prison cost $53.02 per day, a loss of more than $1,600 per prisoner per year.

Arizona’s response to the finding was not to reduce private prisons. It was to end the requirement for cost analysis.

In Ohio, the law requires that private prison save at least five percent – or it’s not worth the trouble and risk. During four years studied, the savings came in a 4.7%, 3.6%, and 1.3, with one year showing private prisons were more expensive by 3.5%.

Despite failing to achieve the required savings, Ohio continues to privatize. Why? (1) Because the political interests are increasingly entrenched, and (2) with staff laid off and infrastructure committed, it’s hard to go backwards.

Florida requires a savings of 7% in private prisons. The state, however, was unable to compare the costs because of constant cherry picking of inmates and unwarranted shifting of populations. The official analysis concluded, “the state is now housing a disproportionate share of inmates requiring extra medical and mental health care …. As a result, the requirement that the private prisons operate a 7% lower cost than state facilities is undermined.”

County jails in Florida that tried going private are bringing the work back in house. In August 2010, Hernando County produced $1 million in savings on a budget of $10.9 million in its first year moving back from CCA into public hands. When the new sheriff resumed operations, he upgraded the jail’s technology, overhauled security and deployed staff more efficiently—though he still has to fix the leaky roof, rusty doors and long-term water damage. “If they had performed routine maintenance as they should have and as their contract required, this building would look 10 times better,” he said.

Staff changed too. Most of the 177 former CCA employees lost their jobs and were invited to reapply. The sheriff hired only 45 of them. The rest failed background checks or didn’t meet his standards. “I don’t understand why a few of them weren’t in jail,” he told the Tampa Bay Times.

The most recent, large-scale meta-analysis of private prison costs found:

“Cost savings from privatizing prisons are not guaranteed and appear minimal.”

Three big reasons to doubt private prison cost comparisons:

1. Private prisons can cherry-pick inmates. Contract prisons can admit only healthy inmates or transfer them out after they get sick or difficult to manage. Costs are shifted to public prisons. 

2. Private contractors can bid low and raise costs later. States are routinely tempted by low bids then disappointed by the actual savings, if not the management or maintenance of the facility. In Liberty County, Texas, the cost rose from $46.40 in 2011 to $72.75 in 2012.

3. Comparing apples-to-oranges. Minimum security inmates cost less to confine than high security inmates; healthy inmates require less healthcare than sicker ones. Private prisons often allege savings based on unfair comparisons.

 

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