Do Private Prison Companies Really Do It Cheaper and Better? Bob Donley Reports

LBN’s Bob Donley reports that the debate about how prisons should be run is heating up. One thing providing the heat is the existence of private prisons and the notion that the companies who run these prisons can do a better and more economical job of it than a state corrections department can.

But, as Donley points out, the central issue in times of tight state budgets is cost. Private prisons have been around for about three decades (see LBN’s earlier reports on private prisons for more information). The big selling point was that private companies could do the job for less. The industry has grown since then to the point that nearly ten percent of all prisons are privately operated.

Most of these prisons are operated on the state level. Donley says that Arizona has been a big supporter of private prisons. The state’s voters, mostly Republican, have a history of supporting policies that favor businesses and keep government small. Arizona has recently set a new standard for contracts with private prisons. It now guarantees a 100% occupancy rate to its contractors. Arizona Democrats complain that the arrangement guarantees the prison companies a profit and healthy prisoners.

The “healthy prisoner” part of the deal is significant. Arizona recently analyzed these programs. The study disclosed that, without adjusting for medical costs, the average daily cost for inmates in private prisons was $57.97 as opposed to $60.66 for a state prison. However, the study was adjusted to take account of medical costs, the results flipped with daily per inmate costs cheaper in state-run prisons at $48.42 compared with $53.02 in private prisons.

If this analysis were to hold true in other states, Donley says, “it would seem to undermine the key argument in favor of private prisons,” the argument that private prison can do the job for less.

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