Cca Private Public Partnership in American Corrections Promotional Brochure
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A Primer on Private Sector Success in Managing Prisons Public-Private Partnership in American Corrections T oday, federal, state and local governments • Industry founded in 1983 with Corrections Cor- face intense fiscal challenges. Budgets poration of America’s relationship with the Bureau must become smarter, and political lead- of Immigration and Customs Enforcement ers are examining innovative approaches for long- • Approximately 14% of Federal inmates are in term cost control. A proven strategy is the use of private prisons public-private partnerships to deliver a few key gov- • Approximately 6% of State inmates are in pri- ernment services. Corrections is a prime example vate prisons - the construction and operation of prisons, jails and detention centers. meeting A Growing Need “There is considerable evidence that private prisons actually improve quality and cut costs …Privatization can offer increased innovation, access to expertise, improve quality and enhanced accountability.” Geoffrey Segal Director of Government Reform, Reason Public Policy Institute (RPPI), January 2002 An estimated 2.2 million individuals are incarcerated in our country today and rates of inmate population growth continue to rise annually. More than 14 percent of all federally sentenced offenders and approximately 6 percent of state prisoners are currently managed by privately-operated corrections management companies - and those figures are growing. Today, more than 100,000 inmates are housed at approximately 150 privately-operated facilities across Over the past 20 years, prisons operated by the private sector have become an increasingly important component of America’s correctional system. When the first contract was awarded in the early 1980s, private prisons were viewed as a radical experiment. Now, federal, state and local correctional agencies routinely partner with the private sector to build and manage correctional facilities. the United States. More than 30 states, the District of Columbia, all three federal corrections agencies (the Federal Bureau of Prisons, the U.S. Marshals Service and the Bureau of Immigration and Customs Enforcement), along with dozens of local county agencies now partner with private management companies. Numerous states — including Alaska, Colorado, Hawaii, Idaho, Mississippi, Montana, New Mexico, Oklahoma, Tennessee, Wisconsin, Wyoming and Vermont — house between 20 to nearly 50% of their inmates in private facilities. Texas has the largest overall privatization program with more than 40 facilities capable correctional officers and policy makers who believe Privatization Results in Slower Growth of Public Corrections Expenditures prisons managed by the private sector in partner- • From 1999-2001, states with public-private ship with local government play a beneficial role in partnership experienced lower growth in their the correctional system. public corrections system costs. Privatization us- A growing body of independent research stretch“The empirical evidence is consistent with economic theory, which predicts that with privatization, costs will fall and quality (however defined) may rise.” * Harvard Law Review May 2002 ing back over a decade lends support to legislators, age resulted in reduced growth in daily costs for of handling nearly 30,000 inmates. A review of the most up-to-date studies focusing on the public corrections system by 8.9%, about 4.45% per each budget year. Even more important, the presence of competition Today, with the majority of states facing severe bud- cost, quality and safety suggests that private prisons in a traditionally government-operated service has get shortfalls, and the Federal Bureau of Prisons ex- measure up extremely well to government facilities. changed the landscape of corrections significantly. periencing rapid growth in inmate populations and While results vary from state to state, private pris- The healthy partnership that is growing between construction needs, competitive sourcing is seen as ons consistently have been found to deliver levels public and private corrections is enhancing the an attractive complement to government-run cor- of quality and safety that equal or exceed govern- quality of services, keeping operational costs in rectional operations. ment-run facilities at a significant cost savings. check and raising the overall levels of standards for the United States corrections industry. But like other innovative approaches to providing By generating significant savings both in the con- raise valid questions. Do these public-private part- struction phase and during ongoing operations, nerships really work? How well do private prisons How Does Public-Private Partnership Fit Into an Overall Corrections Strategy? private prisons allow their government partners measure up against government-run facilities? Are Studies suggest that competition from private to dedicate scarce resources to other pressing pri- private prisons safe? prisons benefits government-run facilities as well. public services, prison privatization has critics who orities, including health care, education and public works projects. Benefits of public-private partnerships • Enhanced quality of services • Operational costs contained more efficiently • Increased levels of standards and accountability Savings Through Public /Private Partnership $20M $455 MILLION Average Non-Privatized State Annual Corrections Expenditures Potential Savings on Public Costs from the Private Sector’s Lower Operating Costs A study by Vanderbilt University professors found • In 2001, the average Department of Corrections Corrections systems that develop long- the use of privatization by state corrections depart- expenditures in states without private prisoners term strategies that include public- ments resulted in lowering the rate of growth in were approximately $455 million. If the “aver- private partnerships have achieved those states’ public corrections operating expendi- age” state were to introduce public-private part- effective results, representing significant tures. Among the study’s findings: nership, potential savings for one year could be savings to taxpayers. approximately $20 million in the public system’s operating costs alone. Additional savings would come from the private sector’s contracted lower prison construction and management. The article operational costs (numerous studies estimate asserts, “Throughout the nation and the world, vig- private management contracts average 5 to more orous competition among public and private firms A Governor’s Assessment than 20% lower than public operating costs). is used to reduce the high cost of incarceration, As Colorado Governor Bill Owens states Of those studies, 22 found that private prisons gen- while maintaining the high quality of service local in a CCA annual report, “Privatization erate significant budget savings. The most rigorous communities expect.” The report also contends that, of government services introduces of these reports found savings generally fell in the “Through competitive contracting for detention ser- competition to public sector areas that range of 11-17%. (RPPI, January 2002) vices, the government can take full advantage of the were once immune from such initiatives. competitive pressures inherent in the free market.” This competition makes governmental The 2001 Corrections Yearbook suggests these esti- (Washington Policy Center, “Private Prisons: A Sen- agencies operate in a more cost- mates may be modest. Its latest report indicates that sible Solution”, 2001) conscious fashion and challenges the average daily cost of housing an inmate in state public officials to look at new ways of and federal prisons was $61.04 compared to $43.62 in private prisons - a savings of nearly 29%. • Evidence suggests that the greater the percentage of privatization, the lower the rate of growth in costs per public prisoner. From 1999-2001, states with no privatization had an 18.9% growth in daily costs for public prisoners. In stark comparison, states with more than 20% of privatization experienced only 5.9% growth. States with less than The Reason Public Policy Institute (RPPI), examined 5% of prison privatization experienced a 12.5% A report by the Wisconsin Policy Research Institute doing business.” Colorado presently has growth in public corrections expenditures. (James indicates that Wisconsin’s substantial use of out- about 15% of their inmates in privately- Blumstein/Mark Cohen Report, “The Interrelationship of-state private prisons since 1998 has saved the operated facilities. Governor Owens Between Public and Private Prisons,” April 2003) State significant dollars and recommends that state has suggested a 70/30 ratio of public leaders should expand Wisconsin’s use of corrections to private as optimal for the long-term privatization. The report gives options to Wiscon- corrections strategy for the state. In the early 1990s, the State of Tennessee compared costs at private and government prisons. During the comparison period, costs at government prisons declined by 4% -- a testament to the benefits of competition. (Douglas McDonald, et al., “Private Prisons in the United States: An Assessment of Current Practice, 1998) A research report by the Washington Policy Center concludes that one solution for the nation’s correctional challenges is competitive contracting for sin policymakers to consider including authorizing privatization with provisions for guaranteed sav- ing a Wisconsin private prison and privatizing other Do Privately Operated Prisons Really Save Money? prison services. (Wisconsin Policy Research Institute, A series of studies conducted by corrections agen- “Corrections Privatization Generates Savings and Bet- cies, think tanks and academic professionals con- ter Services”, February 2003) firm that private prisons produce substantial cost ings, selling prison assets to private firms, authoriz- savings, both in the initial construction phase and on an ongoing operational basis. 28 studies that compared cost data for private prisons to government-run facilities in different states. 60 50 40 30 20 10 0 Public vs. Private Sector Cost $61.04 Public Sector Cost $43.62 Private Sector Cost Report from the States… • A series of Arizona studies compared a 444bed private prison to 15 government-run prisons and found cost savings of between 11-17 percent. (Charles W. Thomas, Arizona Joint Legislative Committee, August 1997; “Public-Private Prison Comparison,” Arizona Department of Corrections, October 2000) savings as high as 23 percent. (Texas Criminal Jus- Why Are Prisons Operated by the Private Sector More Cost Effective? tice Policy Council studies, 1991-2001) First, private firms are free from time-consuming • A report by the Texas Criminal Justice Policy Council found that private prisons produced cost The Immigration and Naturalization Service had quent overtime expenditures.” Moreover, “... private estimated a construction time of 30 months and a firms are free from many bureaucratic purchasing cost of $26,000 per bed. (RPPI, January 2002) rules and can often buy supplies at lower cost than the government.” (Harvard Law Review, May 2002) and costly government procurement rules that “The experiences of Texas, Louisiana and • The Michigan Department of Corrections es- often delay construction. While governments typi- New Mexico demonstrate that private According to an analysis by the U.S. Department timates that a private youth correctional facility cally require 36-60 months to build a prison, private prisons are a good alternative for states of Justice, private prison operators also are able to saves between $2.5 million to $6.9 million annually firms can complete the work in about half the time, seeking to reduce cost and improve quality generate savings because their labor costs are lower based on comparisons with similar state-run facili- generating significant savings on construction in their corrections services.” than labor costs in public prisons. While many pri- ties (Michigan Privatization Report, Winter 2003). costs. One private firm set what must be a record by Washington Policy Center 2001 building and opening a 100-bed juvenile correction vate corrections companies offer competitive wages, their benefit levels may be lower. According to the facility in less than 90 days. (Cathy Lazere, “Privatiz- Wisconsin Policy Research Institute the State of Wis- The State of New Mexico partners with the ing Prisons,” CFO: The Magazine for Senior Financial consin, in the case of correctional officers, pays 44.3 private sector for approximately 45% of Executives, February 1997) the state’s inmate population. In a study of New Mexico’s corrections expenses by the Albuquerque Journal (May 23, 2002), the newspaper found that the average daily cost/inmate in the state’s 5 private-run prisons was $52.08 compared to $91.53 in 5 state-run facilities. While there may be service factors that contribute to this difference, the private facilities are saving the state over $40 million per year on the 4,471 inmates housed in these private operations. Report from the States… • In Delaware County, PA, a group of private firms built a prison in two years less than it took government authorities to build a similar facility Second, private prisons apply innovative construc- cents in benefit costs for every dollar paid in salary. tion techniques and modern correctional technol- A private operator’s benefit levels for correctional of- ogy that ensure not only a safe environment, but ficers may typically run up to 30 cents for every sal- also reduce costs. These design efficiencies allow ary dollar, figures that are more in line with business private prisons to reduce administrative expenses applications. Savings generated from these various and operating budgets. cost efficiencies result in lower contracted per diems by the private sector. in a neighboring county - at a cost savings of 40 In addition, private prisons are also not subject to percent ($56 million vs. $93 million). As a result, government civil service requirements that often Delaware County is saving an additional $1.5 mil- hinder efficient personnel management. As a Har- lion every year in lower debt costs. (Paul Kengor, vard Law Review article put it, “Because they are Allegheny Institute Report No. 99-09, 1999) not bound by civil service rules in managing their Are Costs Lower at Private Prisons Because They Operate Only Lower Security Facilities? personnel, private prisons use roughly one-third Some critics of contracting corrections responsibili- the administrative personnel of government prisons ties to the private sector have argued that the pri- and use incentives to reduce sick time and conse- vate sector has had success because it has primarily • A 350-bed facility was completed in Houston, TX in 5 1/2 months at a cost of $14,000 per bed. dealt with minimum security inmates -- those who the secure housing of 45,669 inmates in prisons with compared to only 10% of government-run prisons. order. No privately run prison has ever been placed present management with the least problems. medium security levels or higher and 23,238 inmates Nearly 85% of facilities operated by CCA are ACA under court order for problems with conditions. CCA vs. Public Sector Security Level Comparison in prisons with minimum/medium security or lower. accredited. (American Correctional Association, Com- Public Sector amines security levels at public and private sector This focus on operational excellence is one of the repeat a crime upon their release and are re-incar- corrections facilities. The chart includes comparisons main reasons why, according to a 1998 report by cerated. Both public and private sector corrections between CCA (the largest private provider of correc- the Council of State Governments, over 18 percent agencies strive to reduce recidivism rates by offering tions) and the public sector. of state agencies cited high quality service as a ra- programming for inmates to change behaviors. 14% 30% Close 8% CCA High/Max 4% 3% Multi 43% 17% The rate of re-incarceration can be another indicator of quality. More than 50% of all sentenced inmates tionale for contracting for private prisons. (RPPI, Low Medium Data taken from the 2001 Corrections Yearbook ex- 30% 13% Minimum 5% mission on Accreditation for Corrections, 2001) Do Private Prisons Sacrifice Quality for Lower Costs? No, in fact, there is strong evidence that private prisons outperform government-run facilities on a wide 33% variety of quality measures. Of 18 quality studies analyzed by Reason Public Pol- Actually, private prisons have experience with correctional facilities of all sizes and security levels. Private firms have built and operated jails, prisons and detention centers that house inmates ranging from minimum to maximum-security levels. They currently manage juvenile and adult facilities and institutions that serve both male and female inmate populations. The 2001 Corrections Yearbook reported that as of January 1, 2001, the private sector was responsible for According to research by Lonn Lanza-Kaduce and January 2002) Scott Maggard of the Center for Studies in CriminolSeveral states have turned to private ogy and Law of the University of Florida, recidivism prisons to lift court orders, imposing the rates for private prisons in Florida were nearly 14% meeting of court-mandated standards as lower than government-run prisons. To help reduce a condition of the contract. recidivism rates and return inmates to productive Reason Public Policy Institute January 2002 icy Institute, all but two found that private prisons lives, CCA and other private firms have developed effective, targeted programs in the areas of education, vocational training, religion, counseling and sub- perform as well or better than government prisons. In addition to independent quality studies and ACA stance abuse. Several of these programs - such as (RPPI, January 2002) These findings are confirmed accreditation, there are other ways to compare how CCA’s LifeLine, an intensive, long-term therapeutic by other data. private prisons perform next to government-run fa- community substance abuse treatment program - cilities. One method is to review the history of court have become models for other corrections facilities. The American Correctional Association has established rigorous accreditation standards - 450 separate criteria that measure quality of management, operation and maintenance. As of 2001, some 45% of private prisons won accreditation by the ACA orders and litigation directing correctional authorities to improve their facilities. In 2001, according to RPPI, 13 states had their entire corrections departments Are Privately Managed Prisons Safe? under court order to relieve unsatisfactory conditions Yes, privately managed prisons have strong records and 15 states had at least one facility under court of safety. Operating safe prisons, jails and detention centers is the foremost goal of any corrections system Report from the States… – public or private. Private corrections managers • Researchers from Louisiana State University have stringent contractual obligations that promote comparing public and private prisons found that safe environments, including staffing patterns and private facilities “reported fewer critical incidents, training mandates for all correctional officers. Inter- provided safer work environments for employees nal and external audits are routinely conducted, and and safer living environments for inmates, and private operators who follow American Correctional had proportionally more inmates complete basic Association standards must adhere to strict opera- education, literacy, and vocational training cours- tional guidelines that promote safety and security. es.” (Harvard Law Review, May 2002) Private operators are held to an extremely high standard of accountability. These private companies are at continual risk of losing their management contracts or facing financial penalties if they do not meet perfor- • A study for the Arizona Department of Corrections found that private prisons demonstrated superior performance in public safety issues. (Arizona Department of Corrections, 1997) mance expectations of their customers. These rigorous standards improve operational security levels. Although data comparing safety issues at private and government-run prisons is less widely available than cost and quality data, private firms have overall performed well. In fact, CCA’s escape rate in adult prisons is significantly lower than the average rate for the public sector. From 1999 to 2001, the escape rate in adult public sector prisons was 5.51 per 10,000 inmates.* From 2003 to 2005, CCA experienced only a 0.10 escape rate per 10,000 inmates. The Increasing Call for Competitive Sourcing Over the past two decades, more than half of all states, all federal and numerous local agencies, legislators and governors have concluded that private providers can play an integral role in their corrections systems. The best research available shows that public-private partnerships lead to better-run and more efficient correctional systems overall. The U.S. government and nationally-recognized organizations are making stronger cases every day for com- petitive sourcing by state, federal and local agencies. ful spending added during the boom years.*** • At the federal level, President George Bush has • Another nationally known institute has recog- voiced that agencies should be required to compete nized that when government begins to embrace out a certain percentage of commercial functions competition, government employees’ services be- each year. He has called on federal agencies to com- come much more competitively-priced themselves. pete at least ten percent of these positions in 2003. A commentary gives the example that the Office of The White House expects savings from competitive Management and Budget asked private printers if sourcing to range between 20 and 30 percent.* they could beat the Government Printing Office’s quote for printing the 2004 federal budget. The GPO • At the state level, a recent national report that offers ten strategies for cutting state budget deficits recommends applying antitrust to government by introducing competition in service delivery. The report notes that not only will private vendors pro- cuts its price 23 percent ($108,370) and kept the work. The commentary also references that charter schools in Philadelphia have implemented benchmarking systems that the public school system is now working to emulate in similar fashion.**** duce savings through innovation, advanced technology and a commitment to customer service but Public-private partnership works in all areas of gov- also competition will challenge public employees ernment. Corrections, with a 20-year track record in to find ways to enhance efficiency. Another of the competitive sourcing, may simply be the best indus- report’s recommendations is to turn capital assets try example this nation has that partnership does into financial assets by selling or leasing govern- indeed lower costs and improve quality. ment assets and enterprises.** • Similarly, a significant conclusion in a report by a national think tank stated that states should explore opportunities to save money by privatizing state services, thus turning current budget problems into opportunities to weed out excessive and waste- *The President’s Management Agenda, Office of Management and Budget, Fiscal Year 2002 ** Show Me the Money: Budget-Cutting Strategies for CashStrapped States, The American Legislative Exchange Council and The Manhattan Institute for Policy Research, July 2002 *** States Face Fiscal Crunch after 1990s Spending Surge, CATO Institute Briefing Papers, February 2003 ****Privatization Watch, Reason Public Policy Institute, Feb. 2003 Resource Reference Guide Listed below are a number of recent studies and reports that CCA has recognized as offering useful information about public-private partnerships, specifically in corrections, but also in general government services as well. If you would like to obtain copies of these findings, a CCA representative is happy to assist . The list follows this format: Title of research Authors/Publishers/Researchers Date of publication Where to obtain a copy “The Interrelationship Between Public and Private Prisons: Does the Existence of Prisoners Under Private Management Affect the Rate of Growth in Expenditures on Prisoners Under Public Management” James Blumstein and Mark Cohen April 2003 www.apcto.org “The Pros of Privately-Housed Cons: New Evidence on the Cost Savings of Private Prisons” Rio Grande Foundation April 2003 www.riograndefoundation.org “Mangos to Mangos: Comparing the Operational Costs of Juvenile and Adult Correctional Programs in Texas” Criminal Justice Policy Council, prepared for the 78th Texas Legislature, 2003 First Quarter 2003 www.cjpc.state.tx.us/reports/alphalist/2003cpd.pdf “Lock in Savings with Prison Privatization” Michigan Privatization Report; Published by the Mackinac Center for Public Policy Winter 2003 www.mackinac.org/5022 “Corrections Privatization Generates Savings and Better Services” Wisconsin Interest Publication; Published by the Wisconsin Policy Research Institute, Inc. Winter 2003 www.wpri.org/WIInterest/Vol12No1/Duff12.1.pdf “States Face Fiscal Crunch after 1990s Spending Surge” (conclusion, page 14) CATO Institute Briefing Papers February 12, 2003 CCA representative “Rational Justice Policy: Findings and Recommendations (A Report to the Oklahoma State Senate)” Oklahoma Alliance for Public Policy Research, Inc. February, 2003 www.ocjrc.net/publications.asp “Privatization Watch – ‘Commentary: Is There A Trend Here?’” Reason Public Policy Institute February 2003 www.rppi.org/isthereatrend.html “Private Prisons and the Public Interest: Improving Quality and Reducing Cost through Competition” Washington Policy Center February 2003 www.washingtonpolicy.org/ConOutPrivatization/ PBGuppyPrisonsPublicInterest.html “Privatizing Iowa’s Prisons” Public Interest Institute January 2003 www.limitedgovernment.org “Mississippi Department of Corrections’ FY 2002 Cost Per Inmate Day” Report #443 Mississippi Peer Review Report December 17, 2002 www.peer.state.ms.us/reports/rpt443.pdf “Show Me The Money” (pages 6-8) American Legislative Exchange Council and The Manhattan Institute July 2002 www.alec.org and www.manhattan-institute.org “Developments in the Law – The Law of Prisons” Harvard Law Review May 2002 CCA representative “Weighing the Watchmen: Evaluating the Costs and Benefits of Outsourcing Correctional Services” Reason Public Policy Institute January 2002 www.rppi.org/ps290.pdf “Private Prisons: A Sensible Solution” Washington Policy Center August 2001 www.washingtonpolicy.org/ConOutPrivatization/ PBMontagueCOPrivatePrisons.html 10 B urton Hills Boulevard • Nashville, TN 37013 • www.correctionscorp.com