DB730

Prisons, Privatization of

from  The Encyclopedia of Criminology and Criminal Justice

This entry on the privatization of prisons provides a thorough overview of private prisons. It focuses on the strengths and weaknesses of moving from a public forum to a private enterprise, as well as on the impetus for moving from public to private; it evaluates the literature regarding the success (i.e., cost savings) of the movement; and gives some examples of private companies that have moved into the public domain.

· capitalism

· corrections

· prisons

A private prison is a correctional facility that is operated by a business and has a contract with a government agency. This can include taking over an existing facility or building and operating a new prison for a profit. The contract stipulates that the business will provide most of the services needed for operating the facility, including staff, food, and medical care. Many of these facilities are built to house out-of-state offenders and the business is paid per diem for each inmate. Several of the companies that operate private prisons are publicly traded (Chang and Thompkins 2002). In 2003 the Bureau of Justice Statistics reported that private prisons held a small percentage of all state prisoners (about 6%) and a slightly higher percentage of federal prisoners (about 12%). New Mexico, Alaska, Montana, Wyoming, and Oklahoma hold at least a quarter of their inmates in privately operated prisons.

As early as the 1600s British prisoners were transported to America to work for private industry. In the 1800s, private companies operated numerous penitentiaries. Most noted is the Louisiana state prison and New York's Auburn and Sing Sing prisons (Gillette 1999). The use of prison labor to subsidize costs and make a profit was common. States like Kentucky, Louisiana, Tennessee, and California all leased prison labor to prevent financial losses (Schneider 1999). In time, these arrangements were met with opposition from businesses, who opposed the unfair competition this type of labor presented. In 1842, New York legally restricted the use of prison labor and eventually other states did so as well.

Private prisons as we know them today began in Texas in 1983 after the Percy Amendment of 1979 was enacted to legalize privatization (Price and Riccucci 2005). The Percy Amendment focused on prison industry projects and required that certain conditions be afforded inmates before projects could be approved. These conditions focused on wages—paying inmates fairly, taxing income—voluntary participation, and consulting with unions about fair wages. The Percy Amendment was expanded by the Crime Control Act of 1984 (also referred to as the Prison Industries Enhancement Program), which supported several new projects (Walker 1996). Shortly thereafter, Florida and Tennessee opened privately operated prisons. The 1980s were met with an increasing prison population due in large part to the war on drugs. During this period drug arrests increased 87.6%, and from 1990 to 2000 increased 45% (Mitchell and Lynch 2011). By 2000, the United States had more than 2 million people incarcerated and facilities were 20% over capacity (Beck and Karberg 2001). The cost for housing state and local inmates was estimated at $43 billion a year and localities started to look to private companies to help save money (Schiraldi and Greene 2002). The general wisdom was that corporations could run and build prisons with the same or better quality for less money. This conventional thinking that businesses could do any job cheaper, faster, and more efficiently than a government agency was a part of the American desire for market-economy solutions. It also echoed a general distrust of government and was a mainstay of politics, with President Ronald Reagan leading the charge to privatize.

By 1988, there were 20 private facilities in nine states and bed counts ranged from less than 100 beds in smaller facilities to as many as 600 beds in larger ones (see Lundahl et al. 2009). Likewise, the classification of private prisons changed from mostly minimum security to those with medium and maximum levels. It appears that the use of private facilities was on a steady increase from the 1980s through 2000. Since that time the growth in prison populations has been at the federal level and the use of private facilities has steadily increased.

Private prisons not only exist in the United States but around the world. According to the Prison Privatisation Report International, private facilities can be found in countries, such as Brazil, the Czech Republic, France, the United Kingdom, South Africa, and Canada. In 2004, Australia had 17% of prisoners in private facilities, the United Kingdom had 10%, and the United States had 7% (Gran and Henry 2007–2008).

The debate over private prisons has been highly politicized and much of the research has been inconclusive. Some of the arguments for private prisons include cost-effectiveness, innovative approaches to rehabilitation, their ability to provide higher-quality services, their role in helping to alleviate overcrowding, and the success of privatization in other areas—many of which are also found in corrections, such as food service. Likewise, arguments against privatization include the ethical conflict of interest, the lack of evidence supporting cost-effectiveness or higher quality of service, and the lack of long-term obligations which private companies have to communities.

While the research has failed to produce conclusive judgments about whether private facilities are better than public ones, some of the findings have supported both sides of the argument. Public facilities are more likely to offer education programs. Harlow (2003) indicated that 12.4% of private prisons lacked educational programs compared to 8.8% of state facilities and all federal prisons had programs. In addition, private prisons were less likely to offer other types of programming, including psychological and sex offender counseling (Wright 2010). Moreover, a 1998 report concluded that there was no evidence that private prisons would offer greater quality services (McDonald et al. 1998).

The cost benefits of private prisons have been stated to yield 20% savings. The promise of saving state and local governments' money has been the central argument for proponents. In 1996 the General Accounting Office (GAO 1996) reviewed studies of private and public prisons and found that there was little difference and did not result in substantial savings. In a subsequent study in 2001 the Bureau of Justice Assistance reported similar findings, and concluded that the average savings from privatization were only about 1% and that much of those savings were due to lower wages and fewer benefits.

In 2004 Blakely and Bumphus reported that private prisons had 50% more assaults on inmates and staff than public prisons (Blakely and Bumphus 2004). Creating a safe environment is largely dependent on a stable, high-quality staff. Other states report that private prisons save money because they can “cherry-pick” which prisoners they want. Private prison contracts often limit the types of inmates to those who are less of a security risk and have fewer health or mental problems. This selection process allows private facilities to save money by not offering additional services necessary for these inmates. Public facilities do not have the opportunity to select which inmates to care for and are therefore forced to provide services that private prisons can avoid. The result is that public prisons have medical costs that can be as much as a third higher than those of private prisons (Oppel 2011).

Others argue that there is an inherent conflict of interest when private companies benefit from imprisoning people. They contend that making money is in direct opposition to the goals of human service and rehabilitation of offenders (Ogle 1999). If private prisons make money based on a per diem, then it is in their best interest to house more inmates and to keep them there longer.

There is also the consideration of what happens when the private company no longer wants to be in the prison business. In 2000, Littlefield, Texas built a detention center that was operated by a private company. When state budgets were cut, the out-of-state inmates that were generally housed in the facility for a fee were no longer available and the private company decided to end its operations contract. This left Littlefield with more than 100 job losses and an empty detention facility, in which the taxpayers still have a monthly $65,000 mortgage (Burnett 2011).

The taxpayer burden has also been a topic of opposition. When states and localities decide to build a new correctional facility there is taxpayer input because citizens must vote on the funding. Private prisons do not require taxpayer input because they handle the financing through private revenue. This leaves the taxpayers with the burden of the expenses through the contract obligation but without voter approval (Burnett 2011).

The vast majority of the literature on private prisons focuses on whether they are cost-effective and provide better levels of service. Some of the most cited studies include Perrone and Pratt (2003), Pratt and Maahs (1999), and Segal and Moore (2002). Pratt and Maahs (1999) conducted a meta-analysis of the cost-effectiveness of private and public facilities. They found that while modest savings existed at the private prisons, the amounts were not substantial enough to provide budgetary relief. Perrone and Pratt (2003) investigated the quality and cost-effectiveness in a systematic review of nine studies. They found that when taking into account indicators such as conditions in the facility, management, security, and a variety of other variables, neither private nor public prisons appeared to be clearly advantageous. The systematic review by Segal and Moore (2002) found that private prisons were overwhelmingly more cost-effective and provided higher-quality services. These results have been questioned because they deviate so drastically from what a host of other studies have shown, and some question the lack of complexity in their analysis (Lundahl et al. 2009). There are also some studies that contend that private and public facilities cannot be properly compared due to differences in their physical structure and inmate populations, thereby making it impossible to determine which is more cost-effective (Price and Riccucci 2005).

The two private companies that provide the majority of private prison management in the United States are Corrections Corporation of America (CCA) and GEO Group. CCA is a publically traded company that was established in 1983 and provides services to federal, state, and local agencies (www.cca.com). CCA provides prison construction and management of correctional facilities. According to their website, CCA is the fifth largest corrections system in the nation, with exception only to the federal government and three state systems. They have more than 60 facilities and the majority of them are company owned. CCA employs more than 17,000 people and the company website boasts their recognition for being among “America's Best Big Companies” in Forbes magazine and ranking as a “Top 50 Military-Friendly Employer” in G.I. Jobs magazine. CCA earned $1.67 billion in 2010 with 50% from state contracts and 43% from federal contracts (Corrections Corporation of America Annual Report 2010).

The GEO Group is a private corporation that also specializes in corrections management. GEO was founded in 1984 and was formerly known as Wackenhut Corrections Corporation. As Wackenut they gained their first corrections contract with the Bureau of Immigration and Custody Enforcement in 1987 (www.geogroup.com). In 2002, Group 4 Falk (now G4 S) acquired Wackenhut and a year later they repurchased their shares. Subsequently, Wakenhut Corrections Corporation changed its name to the GEO Group, Inc. in 2003. According to their website, they operate 118 facilities in the United States, Australia, South Africa, and the United Kingdom. In 2010, they earned $1.27 billion in revenue and 66% of that was from US contracts (GEO Group Annual Report 2010). In August 2010, GEO Group purchased Cornell Companies, another private corrections company. The acquisition of Cornell shifted the majority of private prisons in the United States to either GEO Group or CCA (McDonald et al. 1998).

While the data do not conclusively find that private prisons are any better or show significant financial savings, CCA and GEO Group both stress their commitment to quality services and fiscal efficiency on their websites. CCA lists guiding principles that reflect the company's dedication to quality, safety and security, innovation, and cost-effectiveness amongst other things. They also indicate that they offer a variety of rehabilitation and educational programs including those focusing on addiction, preparation for the General Educational Development test (GED), and life and employment skills. CCA's website also indicates the economic benefits their company provides to localities, such as paying an array of taxes and providing jobs.

GEO Group, on the other hand, go a little further on their website by not just stressing the quality of services and commitment to being a good services provider, but also actually listing projected savings. On GEO's Partnership Advantages website, they indicate that partnering with their company can save 20–30% on facility development in part because projects are completed in less time and they utilize fixed-price contracts. They also project 10–20% savings in facility management based on the ability to promote competition for services.

The number of private prisons has grown in recent decades as a result of increases in the number of arrests. The latter, however, has recently started to decline. According to the Bureau of Justice Statistics, at the end of 2009 the rate of imprisonment had decreased for the second year in a row, from 506 per 100,000 in 2007 to 502 per 100,000 in 2009. Such decreases have been seen in larger states like Texas and California as well. California reported the largest decline, which was four times that of other states (Glaze 2010). The decline in inmates can largely be attributed to decreasing probation and parole violations, diversion of low-level offenders, quicker release times for low-risk offenders, and a plethora of reentry programs. These decreases in inmates can create problems for localities that have facilities with empty beds but still need to make payments. For example, Hardin, Montana defaulted on bond payments due to the decrease in inmates in their minimum-security prison (Burnett 2011).

It appears that private prisons in some capacity are here to stay. In 2001, Representative Ted Strickland of Ohio introduced the Public Safety Act to Congress, which would ban the use of private prisons for federal prisoners. Senator Russell Feingold of Wisconsin also introduced a companion bill in the Senate. As of 2003, the bills have been referred to subcommittees but no further action has been taken.

Although there has been a decline in the number of inmates across the United States, this decline is mostly at the state level. The federal government has implemented immigration policies that will increase the number of inmates. In 1996, the Immigration Reform Act was passed and expanded the number of deportable offenses for noncitizens. Likewise, the 2010 Arizona immigration legislation increases the power of law enforcement to question and detain any person that cannot prove citizenship. These types of policies will undoubtedly increase the number of immigration detainees, thereby increasing the need for private prisons.

SEE ALSO: Illegal Immigrants and Corrections; Prison Administration; Prison Work; Prisons.

References

 Beck, A. J.; Karberg, J. C. (2001) Prison and jail inmates at midyear 2000. Bureau of Justice Statistics Bulletin. US Department of Justice, Office of Justice Programs Washington, DC. http://bjs.ojp.usdoj.gov/content/pub/pdf/pjim00.pdf, accessed January 24, 2011. 

 Blakely, C. R.; Bumphus, V. W. (2004) Private and public sector prisons: A comparison of selected characteristics. Federal Probation 68(1), 27-31. 

 Burnett, J. (2011) Private prison promises leave Texas towns in trouble. National Public Radio. http://www.npr.org/2011/03/28/134855801/private-prison-promises-leave-texas-towns-in-trouble, accessed January 24, 2013.

 Chang, T. F. H.; Thompkins, D. E. (2002) Corporations go to prisons: The expansion of corporate power in the correctional industry. Labor Studies Journal 22, 45-69. 

 Corrections Corporation of America. www.cca.com, accessed January 24, 2013.

 Corrections Corporation of America (2010) Annual Report. http://ir.correctionscorp.com/phoenix.zhtml?c=117983&p=irol-reportsannual, accessed 24 January, 2013. 

 General Accounting Office (GAO) (1996) General Accounting Office, Private and Public Prisons: Studies Comparing Operational Costs and/or Quality of Service. General Accounting Office Washington, DC. www.gao.gov/archive/1996/gg96158.pdf, accessed January 24, 2013. 

 GEO Group (2010) Annual Report. http://phx.corporate-ir.net/phoenix.zhtml?c=91331&p=irol-reportsannual, accessed January 24, 2013. 

 GEO Group, Inc. www.geogroup.com, accessed January 24, 2013.

 Gillette, B. (1999) Ethical considerations can't be dismissed in privatization process. Mississippi Business Journal 21. www.msbusiness.com, accessed January 24, 2013. 

 Glaze, L. (2010) Correctional Populations in the United States, 2009. Bureau of Justice Statistics. http://bjs.ojp.usdoj.gov/content/pub/pdf/cpus09.pdf, accessed January 24, 2013. 

 Gran, B.; Henry, W. (2007-2008) Holding private prisons accountable: A socio-legal analysis of “contracting out” prisons. Social Justice 34(3-4), 173-194. 

 Harlow, C. W. (2003) Education and Correctional Populations. US Department of Justice Washington, DC. 

 Lundahl, B. W.; Kunz, C.; Brownell, C. et al. (2009) Prison privatization: A meta-analysis of cost and quality of confinement indicators. Research on Social Work Practice 19, 383-394. 

 McDonald, D.; Fournier, E.; Russell-Einhorn, M.; Crawford, S. (1998) Private Prisons in the United States: An Assessment of Current Practices. Abt Associates Cambridge MA. 

 Mitchell, O.; Lynch, M. J. (2011) Criminal justice, race and the war on drugs. In Parsons-Pollard, N. (ed.), Disproportionate Minority Contact Current Issues and Policies. Carolina Academic Press Durham NC, pp. 139-158. 

 Ogle, R. S. (1999) Prison privatization: An environmental Catch-22. Justice Quarterly 16, 579-600. 

 Oppel, R. A. (2011) Private prisons found to offer little in savings. The New York Times (May 18), p. A1. 

 Perrone, D.; Pratt, T. C. (2003) Comparing the quality of confinement and cost-effectiveness of public versus private prisons: What we know, why we do not know more, and where to go from here. The Prison Journal 83(3), 301-322. 

 Pratt, T. C.; Maahs, J. (1999) Are private prisons more cost-effective than public prisons? A meta-analysis of evaluation research studies. Crime & Delinquency 45, 358-371. 

 Price, B. E.; Riccucci, N. M. (2005) Exploring the determinants of decisions to privatize state prisons. American Review of Public Administration 35(3), 223-235. 

 Schiraldi, V.; Greene, J. (2002) Cutting Correctly: New State Policies for Times of Austerity (Policy Report). Justice Policy Institute Washington, DC. 

 Schneider, A. L. (1999) Public-private partnerships in the US prison system. American Behavioral Scientist 43(1), 192-208. 

 Segal, G. F.; Moore, A. T. (2002) Weighing the watchmen: Evaluating the costs and benefits of Outsourcing Correctional Services. Part II: Reviewing the Literature on Cost and Quality Comparisons. Reason Public Policy Institute Study no. 290. http://www.prisonpolicy.org/scans/reason/50b944ab1f7 d1cb15 d8943c0c334df56.pdf, accessed January 24, 2013. 

 Walker, J. T. (1996) Ashurst-Sumner Act. In M. D. McShane; F. P. Williams (eds.), Encyclopedia of American Prisons. Garland Publishing, Inc New York, pp. 41-43. 

 Wright, K. (2010) Strange bedfellows? Reaffirming rehabilitation and prison privatization. Journal of Offender Rehabilitation 49, 74-90. 

Further Readings

 Culp, R. F. (2005) The rise and stall of prison privatization: An integration of policy analysis perspectives. Criminal Justice Policy Review 16, 412-442. 

 Shichor, D. (1995) Punishment for Profit: Private Prisons/Public Concerns. Sage Thousand Oaks CA. 

Nicolle Parsons-Pollard Laura J. Moriarty

 Copyright © 2014 by John Wiley & Sons, Ltd.

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Parsons-Pollard, N., & Moriarty, L. J. (2014). Prisons, privatization of. In J. S. Albanese, Wiley series of encyclopedias in criminology and criminal justice: The encyclopedia of criminology and criminal justice. Wiley. Credo Reference: http://ezproxy.liberty.edu/login?url=https://search.credoreference.com/content/entry/wileycacj/prisons_privatization_of/0?institutionId=5072

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