prison privatization

Administration & Society 2014, Vol. 46(3) 255 –275

© 2012 SAGE Publications DOI: 10.1177/0095399712451897

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451897AAS46310.1177/00953997124518 97Kim and PriceAdministration & Society © 2012 SAGE Publications

1East Carolina University, Greenville, NC, USA 2Medgar Evers College of the City University of New York, Brooklyn, NY, USA

Corresponding Author: Younhee Kim, East Carolina University, Brewster Building A-115, Greenville, NC 27858, USA. Email: [email protected]

Revisiting Prison Privatization: An Examination of the Magnitude of Prison Privatization

Younhee Kim1 and Byron E. Price2

Abstract

This study examines the effects of capacity-oriented and institutional-based factors on the proliferation of prison privatization by extending the first generation of empirical research. This study found that correction expen- ditures, prison capacity, and regional identity are factors that significantly affect the magnitude of prison privatization, whereas political pressures, government ideology, and unionization were found not to have a significant influence on the growth of private prisons. The results imply that, once adopted, prison privatization became institutionalized over time and suggest that state governments should develop well-structured evaluation systems for private prisons to ensure and maintain effective correction management.

Keywords

institutional constraints, organizational capacity, prison privatization, public– private partnership

Article

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The private correctional industry in the United States has expanded since the mid-1980s. This trend was bolstered by an increased emphasis on the priva- tization of minimum-security prisons. In addition, the nation’s economic downturn over the past 10 years, coupled by discrepancy between the demand and supply of additional space, led many states to consider prison privatiza- tion. Expansion of the private correctional industry has continued unabated, although reservations about the effectiveness of prison privatization still lin- ger. Most states privatized their prisons under the guise that private prisons were more cost-effective, provided better quality, and offered a viable alter- native to publicly funded prisons. However, as most voters do not want to pay higher taxes, legislators have refused to support the financing and construc- tion of new prisons. This sentiment is echoed by Lukemeyer and McCorkle (2006) who found a relationship between taxpayer willingness to transfer such costs to the private sector and the public’s low tolerance for financing prisons.

Since the mid-1980s, debates surrounding the applicability of prison privatization continue to be ideologically driven. Most conservatives favor prison privatization, and conversely, most liberals oppose prison privatiza- tion (e.g., Gold, 1996; Pozen, 2003). A 1996 report by the U.S. General Accounting Office (U.S. GAO, 1996) provided fodder for prison privatiza- tion opponents when they found that there was no discernible difference between private prisons’ and public prisons’ ability to provide better quality services or their ability to provide the service at a lower cost. Although the privatization trend waned after 1996, it has recently reemerged largely due to government strategies that emphasize the use of innovative entrepreneurial opportunities, which create economic development through competition (Morris, 2007), to overcome fiscal challenges.

Despite some positive aspects of prison privatization, evidence of improved operational efficiency and service quality of private prisons has remained inconclusive (e.g., Lundahl, Kunz, Brownell, Harris, & Van Vleet, 2009; Perrone & Pratt, 2003; Segal & Moore, 2002). Persistent debates over prison privatization, which focus primarily on cost reduction and quality improve- ment in an effort to fill a gap between the steady growth of private prisons and inconclusive evidence of their effectiveness and efficiency (Lukemeyer & McCorkle, 2006), may overlook legitimate concerns with the practice of privatization. Although there are extensive studies on prison privatization, only a few have conducted empirical investigations to explain the impact of political influences on the proliferation of prison privatization. Although these studies limited in scopes as they fail to evaluate the trends of prison privatization over time, findings suggest that government decisions to privatize

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prisons are heavily influenced by political pressures and ideological tenden- cies rather than economic constraints (e.g., Jing, 2010; Nicholson-Crotty, 2004; Price & Riccucci, 2005).

These mixed results dominated by either economic or political conditions, however, still remain enduring questions about what factors best explain the magnitude of ongoing prison privatization with an inclusive manner. With years of prison privatization experience, states seem to believe private pris- ons may create organizational competitiveness by retaining institutional expectations for the technical efficiency and institutional values (Ogle, 1999). Interests in prison privatization, therefore, can be institutionally shaped depending on different societal structures, as the institutional logics are “symbolically grounded, organizationally structured, politically defended, and technically and materially constrained” (Friedland & Alford, 1991, pp. 248-249). Institutional stance can explain the stability and routinized interests of prison privatization management.

The continuation of prison privatization over time may be influenced not only by internal constrains of fiscal and operational capacities but also by political pressures and institutional reactions to these conditions. An expanded scope of study or time frame may also allow for comprehensive study of how economic and political factors affect ongoing prison privatization practices. Brief study time frames, which are typically common in the literature, are insufficient and do not offer critical insights into the mainstream of prison privatization management. Using time-series cross-sectional data over the 8-year period from 1999 to 2006, this study examines the justifications for the magnitude of continuous private prison operations in terms of capacity- oriented concerns and institutional-based arrangements.

Rationalization of Prison Privatization A review of the literature on prison privatization reveals a comprehensive discussion of the implications of prison privatization from various perspec- tives, with special attention to economic, legal, and political implications, and within the framework of the public–private partnership. As the market of private prisons has gradually increased during the past two decades, pub- lic debates seem to have moved from symbolic grounds of desirability to managerial assessment of efficiency (Lowery, 1999; Savas, 2000). Beyond experimental trials, the current focus on prison privatization has sought to evaluate performance and cost-effectiveness. On the legal front, prison privatization has been a murky option for governments, particularly given questions regarding the ethical dilemma surrounding making profits from

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justice, the liability of private services (Thomas, 1987), and the legitimacy of delegating correctional functions to an entity that benefits from punish- ment. These normative concerns have contributed to the steady stream of criticism directed at the idea of prison privatization with special attention on accountability and legitimacy (Johnson, 1990; McDonald, 1990; Savas, 1987).

Other discourse on the prison privatization emphasizes economic motiva- tions that appear to have greater influence over administrative decisions (Nicholson-Crotty, 2004). Whereas political perspectives shape ideological rhetoric to justify prison privatization policies, privatizing prisons offers leg- islatures alternative solutions for managing political concerns and budget shortfalls (Chang & Thompkins, 2002). Privatization is expected to minimize government spending on correctional business, thereby reducing the size of government, and to reflect a “get tough on crime” stance, which results not only in decreased government expenditures but also in reduced fiduciary bur- den on taxpayers (Morris, 2007).

Prison Management With Private Sector Involvement Public–private partnerships in the correctional system allow state govern- ments to manage their largest prison populations and to create market opportunities for no extra per capita correctional cost to taxpayers. Prison overcrowding places the state at greater liability and increases operational costs. These consequences have placed a strain on state governments and have forced many to seek public–private partnerships in the correctional arena. The public–private partnership enables state governments to maintain their competitive advantages in correctional services by transferring overbur- dens in costs, capacities, and political conflicts to the private sector, which stands ready and willing to take risks through greater involvement in the operational stages of prison privatization (Jefferies & McGeorge, 2009). Because the emergence of privatization in the correctional field can be attrib- uted in part to government’s inefficient allocations of cost and revenues (Le Grand, 1991), to keep up with a growing prison population, the rationality of privatization is directly applied to correctional service provision to transfer increased challenges to the private sector (Morris, 2007).

The roles of private companies in the current correctional system range from partial operational administration with no ownership to full prison oper- ations with ownership of prison facilities by private companies (Pozen, 2003). Although correctional management is not fully privatized in many states, some state governments have managed to maintain various degrees of

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private prison contracts for specific operational services, such as food and recreational services, vocational training, sanitation services, and medical services. Implementing privatized prison services not only allows states to take advantage of cost-related business practices (e.g., reducing overall costs and minimizing service start-up costs) but also provides for flexible manage- rial tasks (e.g., providing short-term access to expensive services and increas- ing responsiveness to customers).

Results from the 2002 Council of State Government national survey, which was administered to 50 state public administrators, revealed the major reasons for privatizing states’ correctional services as follows: shortage of state personnel (50.7%), cost savings (36.6%), flexibility (27.1%), fast imple- mentation (20.6%), increase of political support (13.5%), high quality service (12.5%), increase of innovation (9.5%), and other (14%; Chi, Arnold, & Perkins, 2003). Outcomes from an earlier survey conducted in 1997 and administered to 28 state correctional departments demonstrate that many of the same reasons to privatize, such as reducing overcrowding, speed of acquiring additional beds, gaining operational flexibility, operational cost savings, construction cost savings, improving caliber of services, and reduc- ing legal liability exposure, still exist today (McDonald, Fournier, Russell- Einhourn, & Crawford, 1998). Although performance of private management in correctional services has not been precisely reported, recent studies also found that state governments with private prisons reduced operational costs and improved service quality (U.S. GAO, 1997; Segal & Moore, 2002), which may lead states to develop their organizational capabilities for better performance of prison management (Grant, 1996). The present study groups explanations of ongoing privatization management into financial and opera- tional capacity-oriented concerns, and political and institutional-based managements.

Financial and Operational Capacity-Oriented Concerns Prison privatization is largely influenced by organizational economics. An emphasis on economic development allows state governments to support ongoing prison privatization facilities, as state governments with financial difficulties find it increasingly hard to maintain expensive correctional services (Tannenwald & Cowan, 1997). Mattera, Khan, LeRoy, and Davis (2001) also reported that economically depressed communities tend to sub- sidize private correctional systems as a strategy to foster economic development. The interdependency of public–private partnerships in prison privatization,

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therefore, can be explained by a state’s economic and operational capacities. The continuation of prison privatization is shaped by a state’s internal capa- bilities and financial and operational capacities to improve its overall perfor- mance. State governments attempt to utilize the prison privatization platform to maximize organizational capabilities for diversifying their economic resources efficiently and to create new opportunities for continuous develop- ment of organizational competitiveness. As state governments have become focused on improving their overall cost efficiency, the magnitude of private prisons could be dependent on financial and operational capacities.

Correction expenditures. By the end of the century, state governments had spent 7% of their entire budgets on correction operations (Greene & Schiraldi, 2002), and state direct correctional expenditures increased at an average annual rate of 9.2% from 1980 to 2006 (Bureau of Justice Statistics [BJS], 2009). In a time of budget constraints, the high cost of imprisonment has fueled a reexamination of correctional management and the benefits of priva- tization (Austin & Coventry, 2001; Pratt, Maahs, & Stehr, 1998). Based on the growth of expenditures, prison privatization seems to be a new cost cut- ting approach for overcoming budget shortages by applying competition in prison operations (McDonald & Carlson, 2005; Montague, 2001; Nink, 2009) without sacrificing services and staff quality. This study hypothesizes that states with high correction expenditures tend to have high magnitude of pri- vate prison operations.

Prison capacity. In response to the dramatic increase in prison population, a major impetus of prison privatization is to facilitate a quick offering of flex- ible space with little political pressures (Austin & Coventry, 2001). Prison capacity is generally evaluated by the availability of space and staff and ade- quate number of program activities for accommodating inmates. It requires that prisons reserve capacity to run and manage their facilities efficiently, have effective protocols for addressing maintenance issues, and ready the prisons to handle emergencies (Beck & Harrison, 2001). If states operate prison systems above their highest capacity, having privatized prisons may provide adequate justification to external stakeholders due to the lack of the space and resources. States with low prison capacities tend to have more private prisons than states with high prison capacities. This study, thus, pro- poses a negative relationship between the operational capacity and the mag- nitude of prison privatization.

State tax and expenditure limitations. State tax and expenditure limitations (TELs) are initiated to restrict the growth of governmental budgets on both the tax side and the spending side (Waisanen, 2008). By the end of 2008, 30 states were operating their fiscal mechanisms under TELs; 23 states

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limited spending, 4 states limited taxes, and 3 states limited both spending and taxes. Impacts of expenditure limiting legislation may control cases of exceeding a spending level. As a by-product of expenditure limits, state gov- ernments attempt to substitute private prisons for their correctional services. Although there is lack of empirical evidence on the impact of TELs for a decision of prison privatization, Jing (2010) found a positive impact of TELs but with no statistical significance. This control device encourages state gov- ernments to consider the private prison possibility for managing issues between fiscal pressures and the growth of in-house correctional services. This study proposes that states with TELs tend to be positive on the magni- tude of prison privatization.

Political and Institutional-Oriented Concerns Although a major driving force of prison privatization is based on economic justification, recent empirical studies bring attention to the importance of political influences. In the political literature, the conservative perspective appears to have the most currency with its calls for tougher sentences, private correctional administration, and demands for strict law enforcement (Chang & Thompkins, 2002). Policy makers have reacted to these increased calls from conservatives by instituting more criminal justice policies and imple- menting more social controls and measures, which in turn have translated into a high degree of justice mechanisms in which these arrangements are nested (Sexton & Lee, 2006). Prison-related projects, however, were not highly ranked on voters’ priorities in the 1980s and 1990s due to budget pres- sures and high tax burdens (Harding, 2001). Conservative resistance to “big government” served as an impetus for the privatization of prisons (Nicholson- Crotty, 2004). Thus, emerging prison privatization is not a strange concept for settling the conflicts between political controls and expensive govern- ment responsibilities. States are able to increase their overall punishing capacity with less direct obligation to political pressures when applying privatization to prisons (Jing, 2010). Overall, these organizational behaviors to prison privatization are socially constructed by political interests and soci- etal boundaries (Friedland & Alford, 1991).

Government ideology. Old-fashioned partisanship in legislative and govern- ment functions has greatly influenced the prison privatization. Republicans are likely to be more conservative than Democrats and prefer an ideology, which favors market solutions (Daley, 1996). If conservative inclination is dominated in legislatures and governments, a decision to privatize prisons is much more likely to be supported (Gallagher & Edwards, 1997). Price and

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Riccucci (2005) found a positive association between conservative ideology of state governments and prison privatization. The Republican government platform (e.g., Reagan and Bush administrations) advocated the virtues of competition that allows private sector involvement in service provision to produce more outputs (Pozen, 2003). As such, ideological conservatism shapes a supportive environment for prison privatization policies (Nicholson- Crotty, 2004). This study proposes that states with more conservative gov- ernment ideology tend to have a high magnitude of prison privatization.

Union density. The cost reduction of correction services through privatiza- tion is largely achieved by managing staff in terms of the size, the payment of lower wages and benefits, and the provision of less in-service training to staff. Unions or associations similar to unions, thus, tend to be opposed to any kind of privatization in general. For example, the American Federation of State, County, and Municipal Employees (AFSCME) as one of the strongest unions in the United States has been against prison privatization. Parenti (2003) found that unions functioned to either minimize the magnitude of pri- vate prisons or terminate the decision of prison privatization management. Bureau of Labor Statistics (2007) estimated that protective service occupa- tions (e.g., police officers, criminal investigators, correctional officers, detec- tives, security guards, and firefighters) had the highest unionization rates (34.7%) in 2006, which is second place after the education, training, and library occupation group (37.3%). These correctional unions vigorously advocate for government policies to protect their job security and other finan- cial benefits. As a result, a high union density seems to be negative influence on the magnitude of privatized prisons.

Regional identity. Regional identity tends to assume precedence over politi- cal and economic status, governance, and social subjectivity. Paasi (2003) asserted that a region becomes “institutionalized” and identifies the “struc- tures of expectations” in its social and cultural contexts (p. 478). A link between regions and the tendency of prison privatization should be a consid- erable factor in predicting the adoption of a particular policy. The geographic pattern of prison privatization has been uneven. Southern and western states seem to be more favorable toward prison privatization than other areas (Pozen, 2003; Price & Riccucci, 2005). Those states in the southern and west- ern regions can be characterized by having a high degree of institutionaliza- tion over privately managed prisons, and thus they are somewhat expected to behave a high degree of resistance to change (Zucker, 1991). This institu- tional approach is consistent with the degree of prison privatization that has been operated differently in particular locations (Friedland & Alford, 1991). The factor of whether a state is located in a southern or a western region itself should be a meaningful factor to determine the extent of prison privatization.

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This study proposes that states in southern and western regions have a posi- tive influence on the magnitude of private prisons, more so than those located in other regions, such as the north or midwest.

Data and Method Using a data range of 1999 to 2006, this study constructs an expanded time- series for states with privately operated prisons to test the effects of the deter- minants on the continuous support of prison privatization using multiple sources. Although some states have decided to adopt private prisons since the mid-1990s, most consistent, reliable data series on private corrections for a majority of states are available since 1999. This study excludes years before 1999 to reduce any bias driven by case selection. A total of 34 states are included in the time-series cross-sectional data pool. State prisoners held in private facilities, total state inmates, and prison capacity data were col- lected from prisoners of BJS. Correction expenditures and union density were collected from Government Finance Statistics of U.S. Census Bureau and Labor Force Statistics of Bureau of Labor Statistics. The presence of TELs was collected from National Conference of State Legislatures. This study used government ideology scores developed by Berry, Ringquist, Fording, and Hanson (2007). The duration of prison privatization was traced by various state correction data series.

Measures Dependent variable. The dependent variable is the percentage of state

inmates held in private facilities. State inmates held in private facilities and state prison population were year-end numbers. The trend of annual private prisons per state presented in Appendix A is somewhat less consistent, but the ratio of inmates occupied in private facilities tends to increase over the period, except 5 states (California, Indiana, Oklahoma, South Dakota, and Wisconsin). The annual percentage rates across 34 states slightly changed over the period 1999 to 2006, which is less than a 1% change annually, except 1999-2000 (1.11% change) and 2004-2005 (1.26% change). The average per- centages, however, are considerably different by states illustrated in Figure 1. New Mexico operated the highest rate of the inmate population in privatized prisons at 42.2%, whereas South Carolina maintained the lowest rate at 0.07% over the period 2001 to 2006.

Independent variables. Correction expenditures are calculated as a ratio of state total expenditures to the correction expenditures. BJS estimates the highest and the lowest percentage of prison capacity based on rated, operational,

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and design capacities. One issue with the three measures is that they appear to duplicate each other, and the rated and design capacity are not reported consistently over the period 1999 to 2006. Consequently, the highest or the lowest prison capacity is dominated by only one or two factors. Therefore, using the estimated values of prison capacity may not represent the status of all three factors in one package. Thus, this study used operational capacity, with the logarithmic function as a proxy of prison capacity, which is the num- ber of possible inmates accommodated in terms of a facility’s staff, existing programs, and services reported at the end of years (Beck & Harrison, 2001). In this case, three states (i.e., Nevada, Ohio, and Virginia) will be excluded from the data set as those states have less than two observations. This study used 31 rated capacity values to replace missing values of the operational capacity to hold three states, as the results with three states are identical, comparing the results without three states. The duration of TELs is counted by existing years of TELs after enacting such legislation.

The government ideology score was computed by a weighted average of the ideology scores for the five major actors in state government (i.e., the governor and two major parties in each legislative chamber) from 1960 to 2006. The ideology scores were measured by the register voting scores of state congressional delegations, the election results, the partisan division of state legislatures, the party of the governor, and various assumptions regarding voters and state political elites from 1960 to 2006 (see Berry, Ringquist,

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Figure 1. The average percentage of state inmates in private facilities, 1999 to 2006.

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Fording, & Hanson, 1998). The scale ranged from 0 (the most conservative) to 100 (the most liberal). The union density presents the percentage of labor union members or association employees similar to a union, including the public and the private sector. As there are no consistent yearly based public- sector union member data per state over the period 1999 to 2006, using infor- mation developed by Bureau of Labor Statistics is useful to understand a level of unionization in each state. Regional identity is grouped into two geo- graphical regions coded as dichotomous variables (1 = southern and western, 0 = otherwise).

Control variables. As the rate of privatized prisoners has been influenced by previous years, the duration of experienced prison privatization should be con- trolled across states. The duration of prison privatization management, also, may indicate the organizational learning effect based on previous experiences. The duration is counted from the 1st year of prison privatization adopted. The length of gap in privatization across 34 states ranged from 1 year to 23 years. The descriptive analysis is summarized in Table 1. The correlation results presented in Appendix B also indicate that none of the variables has a multi- collinearity problem in a typical cutoff value of .80.

Model Specification The effects of various factors on the continuing prison privatization were assessed with a fit population-averaged panel-data model by using a general- ized estimating equation for the state cluster, which allows attention to

Table 1. Descriptive Statistics, the Period 1999 to 2006.

Variables Observations M SD Minimum Maximum

Inmates in private facilities (%) 244 11.62 11.44 0.03 44.21 Correction expenditures

lagged (%) 244 2.98 0.85 1.09 5.19

Prison capacity 245 9.56 1.30 6.86 12.03 TELs 245 9.71 10.74 0 29 Government ideology 245 43.45 27.33 2.50 97.50 Union density 245 11.08 5.89 2.30 25.80 Southern and westerna 245 0.72 0.45 0 1 Duration of privatization 245 9.67 5.48 1 23

Note: TELs = tax and expenditure limitations. aSouthern and western: AL, DL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, AK, AR, CA, CO, HA, ID, MT, NV, NM, WA, WY; north central and northeast: IN, MI, MN, ND, OH, SD, WI, ME, NJ, PA.

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unequally spaced observations in time presented in the cross-sectional data set. This model was adopted after considering several methodological issues to estimate a robust linear fit. As this study used a time-series cross-sectional data set, common methodological issues were taken into account before finalizing the model.

First, this study addressed an endogeneity issue by changing a lag struc- ture of the model because there could be potential to reverse causality between the degree of prison privatization and correction expenditures. McDonald et al. (1998) found the contradictory and inconclusive effects of privatization on expenditures. As this study argued, if correction expenditures tend to increase, state governments are willing to search an alternative way (i.e., privatizing prisons) to balance costs overruns. Private prison management can provide correctional services at lower cost (Benson, 1998). In contrast, increasing the number of inmates held in private prisons does not always cause high cor- rectional expenditures in general (Lukemeyer & McCorkle, 2006). Thus, there is less chance of the endogeneity problem that the magnitude of inmates detained in private prisons lead to high correction expenditures. Although this study made a strong argument on the relationship between a degree of prisoners held in private facilities and correction expenditures, the indepen- dent variable was lagged by 1 year to maintain the robustness of the model. In this case, an estimated lagged effect should be interpreted with caution, as having a lagged effect often leads to larger total effect than previously suspected.

Autocorrelation was also controlled in the model, as the dependent vari- able indicates a considerable autoregressive process that denotes the corre- lated lags of the independent variables on the dependent variable. For correcting autocorrelation, two approaches can be broadly applied, which are either including a lagged dependent variable in a model specification or using an AR(1) estimator (Keele & Kelly, 2006). As adding a lagged dependent variable can be correlated with some independent variables (Beck & Katz, 1995), an AR(1) model was adopted in this study to correct temporal time preceding of the independent variables on the dependent variable. This treatment should reduce any inaccuracy of inference due to the time lags of the independent variables.

Results In the full model presented in Table 2, the correction expenditures factor has a strong positive influence on the magnitude of prison privatization, whereas

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prison capacity is negatively associated with the degree of private prisons as this study hypothesized. Although controversial arguments on the impact of prison privatization over correction expenditures have been debated, a few studies reported that private prisons typically reduced operational costs com- pared with state prisons (Lukemeyer & McCorkle, 2006; Segal & Moore, 2002). The significance of correction expenditures on the degree of prison privatization revealed in this study is not in line with previous empirical studies (e.g., Jing, 2010; Price & Riccucci, 2005). It is somewhat expected as the scope of this study differs from those studies using multiyear data. When the correctional operation comes to privatization, a fiscal concern will be the front line priority to determine the magnitude of private prisons although state correction expenditures seem to be stationary over the period.

The rate of state prisoners held in private facilities depends on shortages in prison operational capacity. This finding leads us to confirm that the level of private prisons is largely determined by whether states run their prisons over their operational capacities. These significant results of both variables are the same as in the fiscal and capacity-oriented model in which the magni- tude of prison privatization is mainly influenced by financial and operational capacities.

The duration of TELs is not significant at either the 1% or the 5% level, although it is significant at the 10% level. This result indicates that TELs are not a substantial predictor of the magnitude of prison privatization. The

Table 2. Population Averaged Models With a Generalized Estimating Equation.

Model 1 Model 2 Model 3

Correction expenditures lagged

0.289** (0.126) 0.273** (0.119)

Prison capacity −2.995*** (1.043) −3.441*** (1.027) TELs −0.017 (0.170) −0.017* (0.170) Government ideology −0.010 (0.013) −0.009 (0.012) Union density −0.188 (0.119) −.041 (0.110) Southern and western 7.708*** (2.515) 9.292*** (3.192) Duration of privatization 0.423*** (0.156) 0.253 (0.162) 0.419** (0.191) Observations 243 244 243 Waldo χ2 26.76*** 17.41*** 41.15***

Note: TELs = tax and expenditure limitations. Standard errors in parentheses. *Significant at .10 level. **Significant at .05 level. ***Significant at .01 level.

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negative direction of TELs is opposite of the proposed hypothesis. When a decision for prison privatization is initially made, the presence of TELs is positive to adopt the privatized prison operation, but such legislations may control the size of private prisons over time because state governments have continuously funded private prisons.

In terms of the political and institutional-oriented concerns, the regional identity factor has a strong positive impact on the rate of private prisons, which states in the southern and western regions have proactively imple- mented to maintain privatized prisons at a certain level. Although neither government ideology nor union density is a significant factor to predict the magnitude of privatized prisons, both directions indicate negative association with the rate of private prisons as this study proposed. The insignificance of government ideology can be explained that political pressures over policy agendas are resistant in the short run, but decision makers are free to pursue constraining political pressures in the long run (Powell & DiMaggio, 1991). The government ideology may be critical when the prison privatization oper- ation is initially decided, but the scale of ongoing prison privatization over the years will not be much affected by politics as the political ground was already identified. Once the organizational commitments are made to adopt prison privatization, maintenance of private prisons may be dominated by institutional persistence.

Similarly, unionization may also have less direct negotiation power for determining the magnitude of private prisons after those prisons have begun operation, especially in the case of overcrowding prison population. With only political and institutional-oriented factors in Model 2, government ide- ology and unionization were not statistically significant on the level of pri- vate prisons, which was consistent in the full model. The control variable, the duration of privatization, has a significant positive impact on the level of prison privatization at the 5% level. That is, states with longer privatization experiences tend to retain the privatized prison operation.

Conclusion The prevailing justification for prison privatization in the United States points to the lack of government competitiveness under economic and political pressures although the results of previous studies were not consis- tent to support those reasons for the decisions of prison privatization (see Austin & Coventry, 2001; Jing, 2010; Morris, 2007; Nicholson-Crotty, 2004;

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Price & Riccucci, 2005). State governments with privately managed correc- tion facilities expect to have more innovative, cost-effective prison manage- ment, which allows states to improve the competitiveness advantage by allocating more internal resources other than correctional services.

This study extended the first generation of empirical research to examine the determinants for the magnitude of ongoing prison privatization over the period 1999 to 2006 and found that the magnitude of private prisons is largely influenced by government capacities and institutional concerns rather than political aspects. The findings of this study are contrary to prior empirical studies of this issue. Regional identifiers were the strongest predictors of the magnitude of prison privatization, which resonates with previous studies. These results imply that once prison privatization has been adopted, the matter of private prisons tends to become a routinized government opera- tion, so that the level of ongoing prison privatization is less sensitive to government ideology, unionization, and TELs. Due to the nature of stability and routinized interests on prison privatization, state governments should develop well-structured evaluation systems for privately managed prisons to maintain effective correction management and to control private companies’ maladministration.

Although this study carefully examined the impacts of capacity-oriented factors as well as political and institutional-based factors on the magnitude of prison privatization over the years, there were some inevitable limitations. The major limitation is bounded by data availability to extend the first gen- eration of prison privatization research with time-series cross-sectional data. For example, government fiscal capacity may have a significant factor to influence the rate of private prisons, as low fiscal capacity tends to subsidize continuously private correctional facilities (Mattera et al., 2001). Future research may consider including more measures for government capacities with reliable data series.

The most current debates over the virtues and weaknesses of prison priva- tization have seen a clear separation between advocates and opponents, who have been largely tied to accountability, democratic responsibility, legal lia- bility, and service quality. Correction service is a major symbolic function of government and is a justifiable institutional device. Although Savas (2000) noted that the trends of privatization are shifting from an ideological concern to the political and economic issues, ethical and legal dimensions are still critical in prison service provision. Further research may incorporate a case study to address the ethical, legal, and service quality concerns.

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Appendix A The Annual Percentage of Inmates Held in Private Prisons by the End Year

1999 2000 2001 2002 2003 2004 2005 2006

Alabama 5.80 0.94 1.15 0.03 Alaska 35.12 33.14 31.70 30.92 30.62 30.57 28.37 33.16 Arizona 5.36 5.39 5.16 6.69 7.45 12.84 14.34 14.52 California 2.83 2.79 2.79 2.86 2.13 1.79 1.64 1.79 Colorado 13.70 13.02 15.32 13.89 18.82 21.60 Florida 5.42 5.49 5.52 5.55 5.44 5.06 6.97 6.83 Georgia 7.13 8.47 9.93 9.64 9.72 9.18 9.80 9.61 Hawaii 23.82 23.49 22.94 24.84 25.36 27.95 30.95 32.09 Idaho 8.26 21.03 22.44 20.41 21.52 19.81 23.41 27.02 Indiana 4.85 4.92 4.36 3.90 2.83 2.67 0.47 4.94 Kentucky 11.10 8.50 6.66 10.26 9.84 9.80 11.31 12.54 Louisiana 9.04 8.75 8.20 8.20 8.09 7.91 8.18 8.28 Maine 1.28 0.66 0.65 0.42 1.49 1.58 0.99 0.90 Maryland 0.57 0.54 0.54 0.53 0.51 0.55 0.57 0.53 Michigan 0.65 0.94 0.92 0.91 0.97 0.98 Minnesota 1.34 3.51 8.19 10.75 Mississippi 18.79 15.96 16.93 15.13 14.94 22.61 23.30 23.07 Montana 24.58 31.76 32.66 29.27 29.25 30.07 25.51 27.30 Nevada 5.91 5.07 4.69 4.14 New Jersey 7.99 8.39 9.31 9.33 9.67 9.38 9.50 9.51 New Mexico 36.55 40.34 43.82 43.01 44.21 42.11 43.27 44.13 North Carolina 4.49 1.06 0.60 0.51 0.64 0.60 0.58 0.52 North Dakota 8.92 3.96 2.07 2.64 3.32 Ohio 4.18 4.25 4.22 4.25 4.31 4.53 4.23 Oklahoma 27.81 29.90 29.23 27.67 26.39 25.32 23.80 21.75 Pennsylvania 1.31 1.34 1.31 0.89 1.19 2.17 South Carolina 0.03 0.09 0.19 0.03 0.06 0.06 South Dakota 1.84 1.72 1.24 1.10 0.83 0.19 0.29 0.36 Tennessee 15.45 15.84 15.54 16.81 19.88 19.72 19.58 19.91 Texas 7.14 8.85 10.08 10.35 9.93 9.92 10.36 10.82 Virginia 4.75 5.21 4.96 4.65 4.45 4.41 4.44 4.22 Washington 2.27 1.97 5.12 5.43 Wisconsin 16.76 21.04 16.05 15.61 8.40 0.35 0.10 0.11 Wyoming 16.40 16.37 28.27 30.34 26.34 28.08 41.33 37.04

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Appendix B Correlations

1 2 3 4 5 6 7 8

1. Inmates in private facilities (%) 1 2. Correction expenditures lagged (%) −.01 1 3. Prison capacity −.43** .01 1 4. TELs .26** .01 .08 1 5. Government ideology −.05 −.01 .01 .03 1 6. Union density (%) .06 .02 −.14* .08 .21** 1 7. Southern and western .40** .08 .15* .44** .05 −.35** 1 8. Duration of privatization .14* −.00 .40** .28** .11 −.10 .34** 1

Note: TELs = tax and expenditure limitations. Correlation significant at *p < .05. **p < .01.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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Author Biographies

Younhee Kim is an assistant professor of political science at East Carolina University. Her research interests focus on performance management, public entrepreneurship, and information technology and e-governance. Her recent publications have appeared in Journal of Technology Transfer, Administration & Society, and Public Performance & Management Review.

Kim and Price 275

Byron E. Price is the dean of the school of business at Medgar Evers College of the City University of New York. His research focuses on prison privatization, caused-based entrepreneurship, reentry, social justice, supportive autonomy models and educational reform. His recent publications have appeared in International Journal of Criminology and Sociological Theory and International Journal of Public Administration.