Study Casts Doubt On Whether Private Prisons Save Money

Colorado Independent
In the wake of news that private prison corporations are spending millions of dollars lobbying for tougher immigration laws comes a study that says privatizing prisons does not save taxpayers any money and may increase costs in some cases.
With five private prisons currently operating in Colorado, the state seems to be benefiting from the arrangement.
From The New York Times:

The conviction that private prisons save money helped drive more than 30 states to turn to them for housing inmates. But Arizona shows that popular wisdom might be wrong: Data there suggest that privately operated prisons can cost more to operate than state-run prisons — even though they often steer clear of the sickest, costliest inmates.
The state’s experience has particular relevance now, as many politicians have promised to ease budget problems by trimming state agencies. Florida and Ohio are planning major shifts toward private prisons, and Arizona is expected to sign deals doubling its private-inmate population.
The measures would be a shot in the arm for an industry that has struggled, in some places, to fill prison beds as the number of inmates nationwide has leveled off. But hopes of big taxpayer benefits might end in disappointment, independent experts say.
“There’s a perception that the private sector is always going to do it more efficiently and less costly,” said Russ Van Vleet, a former co-director of the University of Utah Criminal Justice Center. “But there really isn’t much out there that says that’s correct.”

Corrections Corporation of America owns and operates three prisons in Colorado. The GEO Group operates one and Community Education Centers operates one, according to state records. One CCA facility is currently empty as is one GEO prison.
According to Katherine Sanguinetti, director of public relations for the Colorado Department of Corrections, the question of whether private prisons save the state money is a complicated one.
“It has been a challenge for states to determine whether private prisons save money,” she told The Colorado Independent. “It is not an apples to apples comparison,” she said.
Currently, there are 4290 Colorado prisoners housed in private prisons. The state pays the for-profit companies $59.10 per day per prisoner. This compares to a cost of $88.60 per prisoner per day in state facilities. If that looks like an apples to apples comparison favoring private prisons, rest assured there is more to it than that.
The state pays a variety of other costs associated with prisoners held privately. It picks up much of their medical costs, all of their clothing costs and all of their transportation costs. Additionally, only the easiest to care for prisoners are housed in private prisons, which are all minimum or medium security. State law requires that all maximum security prisons be owned and operated by the state. Any prisoner with unusual medical needs is housed in a state facility as well, Sanguinetti said.
On a prisoner to prisoner basis, it is hard to say whether or not it is more cost-effective to house prisoners privately. The real benefit to the state, Sanguinetti says comes when prisons need to be built. It is practically impossible for the state to build a new prison in this economic environment.
“When the prison population was growing, it made sense for them (private companies) to build prisons in Colorado,” she said. Today, though, the prison population in Colorado is actually declining and some of the private prisons in the state are empty, while another houses prisoners from out of state.
The only cost to Colorado of using private prisons is the per prisoner/per day fee agreed to in annual contracts with the firms running the prisons. Those companies take the risk of building the prisons and further take the risk that the state could choose not to renew a contract in any given year, Sanguinetti said.