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TOO GOOD TO BE TRUE | PRIVATE PRISONS IN AMERICA
tion.
9
REEMERGENCE OF PRIVATE PRISON COMPANIES
Public policies adopted during the 1970s and 1980s facilitated an increase in prison
privatization. The War on Drugs and harsher sentencing policies, including
mandatory minimum sentences, fueled a rapid expansion in the nation’s prison
population.
7
The resulting burden on the public sector led private companies to
reemerge during the 1970s to operate halfway houses. They extended their reach in
the 1980s by contracting with the Immigration and Naturalization Service (INS) to
detain undocumented immigrants.
8
These forms of privatization “on the ‘soft’ end
of the correctional continuum” were followed by the reappearance of for-profit
prison privatiza
Established in 1983, Corrections Corporation of America (CCA) claimed an ability
to build and operate state and federal prisons with the same quality of service
provided in publicly operated prisons, but at a lower cost. One year later, CCA was
awarded a contract for a facility in Hamilton County, Tennessee, the first instance of
the public sector contracting management of a prison to a private company.
10
In
1985, CCA attempted to assume management of the entire Tennessee prison system,
but that offer was rejected by the state legislature after facing strong opposition over
CCA’s growing reputation for cost overruns and inmate escapes. Despite this
setback, the company garnered additional contracts in Texas, Tennessee, and
Kentucky by the end of 1987.
11
Other startups and more established corporations,
such as Wackenhut Corrections Corporation (now the GEO Group, Inc.), also
entered into the prison business.
Today, CCA and GEO Group collectively manage over half of the contracts in the
United States, which resulted in combined revenues exceeding $2.9 billion in 2010.
12
CCA, as the largest private prison company, manages more than 75,000 inmates and
detainees in 66 facilities.
13
GEO Group, as CCA’s closest competitor, operates
slightly fewer. Smaller companies, including Management & Training Corporation,
LCS Correctional Services, and Emerald Corrections also hold multiple prison
contracts throughout the United States.
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Developments in Privatization
Gary Johnson’s platform during his initial 1994 run for governor of New
Mexico included a pledge to privatize every prison in the state. By the time
he left office in 2003 44.2 percent of the state’s prisoners were in privately
run facilities.
14, 15
Ohio opened its first private prison in 2000 with the goal of saving $1.6
million per year.
16
This raised the number of inmates held privately in Ohio
from zero in 1999 to over 3,000 in 2010.
North Carolina canceled two contracts with CCA due to concerns about the
company’s failure to meet contract requirements and banned the practice of
bringing in prisoners from out of state. California instituted a similar ban and
Arkansas ended two contracts with Wackenhut (GEO) in 2001.
17
In 2004 Nevada Governor Kenny Guinn ended CCA’s contract with the
state after the company was alleged to have provided substandard services.
18
Vermont agreed to start sending prisoners to CCA facilities in Tennessee and
Kentucky in 2004.
19
This helped bring the proportion of inmates held
privately from zero in 2003 to over 20 percent in 2004. This trend led to
Vermont holding over 34 percent of its population privately in 2008, before
declining to 27 percent by 2010.
In 2011 California ended contracts for several GEO Group facilities as part
of its Criminal Justice Realignment Plan to reduce prison populations and
spending.
20
States such as Florida, Ohio, Arizona, New Hampshire, and Utah have been
considering beginning or expanding private prison contracting.
21, 22, 23
The form by which modern prison privatization occurs varies. Some facilities only
manage individuals from a certain region, while others hold inmates from across the
country. The latter of these situations complicates the already unwieldy task of
applying governmental regulations and oversight due to the variance in state laws and
bureaucracy. The transportation of inmates over far distances also negatively affects
prisoners’ ability to visit with family or consult with attorneys while incarcerated. The
scale of services involved in privatization also varies from prison to prison.
Companies may own and operate a facility, fully manage a state-owned institution, or
may only be partially responsible for operations.
24
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Change in Private Prison Populations, 1999-2010
25
Number in Private Prisons
Percentage of Population
Jurisdiction
1999
2010
Percent
Change
1999
2010
Percent
Change
Alabama
0
1,024
--
0
3.2%
--
Alaska
1,387
1,873
35%
35.1%
33.5%
-5%
Arizona
1,392
5,356
285%
5.4%
13.3%
146%
Arkansas
1,224
0
-100%
10.7%
0
-100%
California
4,621
2,170
-53%
2.8%
1.3%
-54%
Colorado
*
4,498
--
*
19.7%
--
Connecticut
0
883
--
0
4.6%
--
Delaware
0
0
--
0
0
--
Florida
3,773
11,796
213%
5.4%
11.3%
109%
Georgia
3,001
5,233
74%
7.1%
10.6%
49%
Hawaii
1,168
1,931
65%
23.8%
32.7%
37%
Idaho
400
2,236
459%
8.3%
30.1%
263%
Illinois
0
0
--
0
0
--
Indiana
936
2,817
201%
4.8%
10.1%
110%
Iowa
0
0
--
0
0
--
Kansas
0
0
--
0
0
--
Kentucky
1,700
2,127
25%
11.1%
10.4%
-6%
Louisiana
3,080
2,921
-5%
9%
7.4%
-18%
Maine
22
0
-100%
1.3%
0
-100%
Maryland
131
70
-47%
0.6%
0.3%
-50%
Massachusetts
0
0
--
0
0
--
Michigan
301
0
-100%
0.6%
0
-100%
Minnesota
80
0
-100%
1.3%
0
-100%
Mississippi
3,429
5,241
53%
18.8%
24.9%
32%
Missouri
0
0
--
0
0
--
Montana
726
1,502
107%
24.6%
40.4%
64%
Nebraska
0
0
--
0
0
--
Nevada
561
0
-100%
5.9%
0
-100%
New
Hampshire
0
0
--
0
0
--
New Jersey
2,517
2,841
13%
8%
11.4%
43%
New Mexico
1,873
2,905
55%
38.6%
43.6%
13%
New York
0
0
--
0
0
--
North Carolina
1,395
208
-85%
4.5%
0.5%
-89%
North Dakota
0
0
--
0
0
--
Ohio
0
3,038
--
0
5.9%
--
Oklahoma
6,228
6,019
-3%
27.8%
22.9%
-18%
Oregon
0
0
--
0
0
--
Pennsylvania
0
1,015
--
0
2%
--
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TOO GOOD TO BE TRUE | PRIVATE PRISONS IN AMERICA
Rhode Island
0
0
--
0
0
--
South Carolina
0
17
--
0
0.1%
--
South Dakota
46
5
-89%
1.8%
0.1%
-94%
Tennessee
3,476
5,120
47%
15.4%
18.7%
21%
Texas
11,653
19,155
64%
7.1%
11%
55%
Utah
248
0
-100%
4.6%
0
-100%
Vermont
0
562
--
0
27%
--
Virginia
1,542
1,560
1%
4.8%
4.2%
-12%
Washington
331
0
-100%
2.3%
0
-100%
West Virginia
0
0
--
0
0
--
Wisconsin
3,421
25
-99%
16.8%
0.1%
-99%
Wyoming
281
217
-23%
16.4%
10.3%
-37%
Federal
3,828
33,830
784%
2.8%
16.1%
475%
State
67,380
94,365
40%
5.5%
6.8%
24%
Total
71,208
128,195
80%
5.2%
8%
54%
GROWTH OF PRIVATIZATION, 1999-2010
26
States Contracting for Private Prisons
In 1999 private prison contracts existed in 31 states. That figure grew to 33 states by
2004, before declining to 30 by 2010. Between 1999 and 2010:
Six states -- Vermont, Ohio, Connecticut, Alabama, Pennsylvania, and South
Carolina began using private prisons.
Nine states completely eliminated their reliance on prison privatization. They
were: Arkansas, Kansas, Maine, Michigan, Minnesota, Nevada, North
Dakota, Utah, and Washington.
27
In addition, Wisconsin reduced its number
of privately held prisoners from 3,421 to 25.
Delaware, Illinois, Iowa, Massachusetts, Missouri, Nebraska, New
Hampshire, New York, Oregon, Rhode Island, and West Virginia did not
utilize private prisons at all.
Changes in Private Prison Populations
In 2010, the number of inmates held privately in the 30 practicing states ranged from
a low of 5 in South Dakota to a high of 19,155 in Texas. Overall:
Florida had the second largest population with 11,000 inmates. Colorado,
Tennessee, Georgia, Mississippi, Arizona, and Oklahoma held between 4,500
to 6,000 inmates privately in 2010.
Five states more than doubled the number of individuals in private prisons.
Idaho had the largest increase, holding 459 percent more inmates in 2010
25
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TOO GOOD TO BE TRUE | PRIVATE PRISONS IN AMERICA
than in 1999. Arizona, Florida, and Indiana each increased their population
by over 200 percent. Montana more than doubled its population. An
additional five states experienced increases of more than 50 percent –
Georgia, Hawaii, Texas, New Mexico, and Mississippi.
Wisconsin, South Dakota, North Carolina, California, and Maryland each
reduced their population by over 40 percent.
Private Prison Populations, 1999-2010
28
Overall Rates of Privatization
New Mexico had the highest proportion of its population held privately in both 1999
and 2010, with respective rates of 39 and 44 percent. By 2010:
Five additional states incarcerated more than a quarter of their prison
population privately – Montana (40 percent), Alaska (33.5 percent), Hawaii
(32.7 percent), Idaho (30.1 percent), and Vermont (27 percent).
Nine states held between 10 to 20 percent of their prison population
privately – Colorado, Tennessee, Arizona, New Jersey, Florida, Georgia,
Kentucky, Wyoming, and Indiana.
THE ISSUES OF PRISON PRIVATIZATION
The growth of prison privatization has been sustained by claims that privately
operated facilities are more cost efficient at providing services than publicly-run
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TOO GOOD TO BE TRUE | PRIVATE PRISONS IN AMERICA
institutions. A look at the evidence shows that this assertion is not supported.
Moreover, there are significant problems when incarceration is turned into a for-
profit industry.
Fiscal Savings through Cost Containment
Private prisons supporters assert that the private sector saves resources through
greater efficiencies. These claims are supported by some reports showing that private
prisons produce cost savings, largely through lower salaries and benefits by
employing mostly nonunion employees. It is also argued that governments can
benefit in the short term through the direct sale of correctional facilities to private
companies and can save money when constructing new facilities through public-
private initiatives, rather than solely through government funding. However, studies
have shown these benefits to be mostly illusory.
A 1996 report by the U.S. General Accounting Office (GAO) looked at four state-
funded studies and one commissioned by the federal government. The
methodologies and results varied across the studies, with two showing no major
difference in efficiency between private and public prisons, a third showing that
private facilities resulted in savings to the state of seven percent, and the fourth
finding the cost of a private facility falling somewhere between that of two similar
public prisons. Another study also found significant cost savings associated with
private prisons, but the GAO criticized the report for using hypothetical facilities in
its comparisons. The authors noted that they could not definitively conclude that
privatization would not save money, but also established that, “…these studies do
not offer substantial evidence that savings have occurred.”
29
Similar conclusions were reached in a 2009 meta-analysis by researchers at the
University of Utah that looked at eight cost comparison studies resulting in vastly
different conclusions. Of the eight studies, half of them found private prisons to be
more cost-efficient. The other four were evenly split between public facilities being
more cost-efficient and finding both types of prisons statistically even. This
information led the researchers to conclude that, “…prison privatization provides
neither a clear advantage nor disadvantage compared to publicly managed prisons”
and that “…cost savings from privatization are not guaranteed.” While not directly
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TOO GOOD TO BE TRUE | PRIVATE PRISONS IN AMERICA
resolving the question of whether private or public facilities are economically
superior, the report did find the value of moving toward prison privatization to be
“questionable.”
30
The GAO’s critique of the methodologies used in comparisons is not unique.
Former Bureau of Prisons Director of Research Gerry Gaes made similar
observations when reviewing two reports that found different levels of savings when
comparing the same three public prisons with a private facility. In his 2008 report for
the National Institute of Justice he observed that the more favorable study for
privatization did not adjust the data on the prisons to scale and failed to take into
account the proper amount of overhead costs for the private prison. Gaes noted that
these types of cost comparisons are deceivingly complicated and that current
research is highly limited.
31
Additional complications were raised in a 2004 study that found that state-run
prisons are generally left to take on a disproportionate number of expensive and
high-risk inmates. For example, inmates with minimum or medium levels of security
classification made up 90 percent of the private sector’s population, compared with
only 69 percent in the public sector.
32
Many of these results have been replicated in individual states. In Ohio, state officials
contend that private facilities regularly meet or surpass the legal requirement of
containing costs at least five percent below a state-run equivalent.
33
However, a
report by the nonpartisan Policy Matters Ohio criticized the state’s measurements for
comparing privately operated prisons to hypothetical public facilities, exaggerating
overhead and staff costs for public prisons, and failing to account for the higher
amount of expensive and high security inmates in public prisons. Holding these
factors to more realistic standards greatly reduced if not completely diminished the
purported advantages of private prisons.
34
In Arizona, which also has cost-saving requirements for private prisons, research
conducted in 2010 by the state’s Department of Corrections found that the state had
not saved money by contracting out minimum security beds, and that more money is
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