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Reason Foundation

Bluegrass Institute

Privatize Prisons, Unlock Savings

Kentucky proposal to open private prison is good business

Geoffrey Segal
August 11, 2004

Government reform expert and author David Osborne says "the fastest way to save money and increase value is to force public institutions to compete." Yet when political leaders try to introduce competition into the public sector, they are often met with stiff resistance.

For example, opponents are challenging plans by John Rees, commissioner of Kentucky's Department of Corrections, to allow private firms to bid for prison food services. This is not a new idea; 17 states already contract for food services in their prisons.

Union officials and politicians also are using the occasion to fight Gov. Ernie Fletcher's proposal to privatize a new prison facility in Elliott County. With the 14 existing state prisons reporting hundreds of empty beds at the end of June, Fletcher argues that Kentucky taxpayers should not be burdened down with another prison.

He rightly points out that privatizing the prison would bring in much-needed revenue by providing space to house inmates from other states. But opponents predictably argue that the state should go ahead and open the prison simply because it will bring jobs to a poor county.

The Lexington Herald-Leader's editorial writers note the fallacy of prison construction and operation as economic development.

"It is easy to sympathize with those in Elliott County who think they were promised these state jobs," said a recent Herald-Leader editorial. "But it is foolish for Kentucky to continue to invest in an outmoded development strategy, and call it progress."

Union officials representing state prison guards and the politicians who support them vehemently condemn any suggestion of privatizing prisons by suggesting that inmates will not be treated properly and taxpayers will not save money. Actually, union members and their political pals are afraid the governor's plan will save money, provide adequately for inmates and turn up the heat on Kentucky's state-owned prisons.

The evidence seems to support their fears. More than half of states use private prisons because they offer lower costs.

Research by the Reason Foundation identifies 28 studies comparing the cost of government prisons with their private counterparts that house 150,000 inmates across the country. Twenty-two of the studies conclude that private prisons cost taxpayers an average of 15 percent less than state facilities while six found the costs to be about the same. None of the reports found that private prisons are more costly.

It's not surprising that the research also shows that states that use private prisons also tend to see costs fall in their government-run penal institutions. Competition drives prices down — whether you're talking about grocery stores or prisons.

It's also not shocking that the trend toward privatizing services is expected to continue. A recent survey by the Council of State Governments reported that corrections officials expect contracting to increase in the next five years.

Time and again, critics clamor about the supposed poor quality of private prisons and contracted services. Yet eight out of nine studies identified by the Reason Foundation found that private prisons rank as high or higher in quality of care than their state-run counterparts.

Besides, do we really think that the incidents union officials point to as diminishing the quality of private facilities don't also happen in publicly operated prisons? All prisons must deal with inmate fights, rapes and attacks on guards.

The difference is that when chaos occurs in private prisons, employees lose their jobs and the facility is held responsible. Private corrections companies sometimes go out of business for failing to keep order.

When is the last time a government-run prison was shut down because a situation was handled poorly? Private prisons simply are more accountable than government facilities.

Opponents of privatization also express doubts about the training and wages of private prison employees. This concern does emphasize the need for sound contracts that clearly delineate pay, benefits and responsibilities.

Contracts give state officials power over how prison staffs are trained and their pay and benefit packages.

The truth is, most of the training required by private prison staffs goes beyond what the state requires for the staffs of government facilities. And while very few companies can compete with the taxpayer-backed benefit packages offered by the state, it stands to reason that private firms will prefer trained and experienced personnel in order to get their contracts renewed.

Allowing supply and demand to work will ensure that skilled guards and capable administrators will still be able to land jobs with good pay and adequate benefits. On the other hand, private prisons that try to get by with inexperienced or poorly trained staffs face the possibility of being shut down. That's the way it should be.

Privatizing prisons is not just common sense; it's sound policy that will unlock savings for taxpayers, provide for proper treatment of inmates while maintaining security for our Commonwealth.

Geoffrey Segal is director of privatization and government reform at Reason Foundation



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