In April 2011 the American Civil Liberties Union of Ohio (ACLU) released an expansive report entitled Prisons for Profit: A Look at Prison Privatization, which draws strongly on the experiences of other states with heavily-privatized prison systems. The report concludes that privately-operated prisons result in little or no savings and may in fact end up costing more than state-run correctional facilities.

Ohio Governor John Kasich is a proponent of prison privatization, as are some of his close associates. For example, Donald Thibaut, Kasich’s former congressional chief of staff whom he acknowledges as his closest friend, founded a lobbying firm, The Credo Company, in March 2010. Among Credo’s clients is Nashville, Tennessee-based Corrections Corporation of America (CCA), the nation’s largest private prison company with $1.6 billion in gross revenue in 2010.

Robert F. Klaffky and Douglas J. Preisse worked on formulating strategy and policy in Kasich’s gubernatorial campaign. They are partners in the lobbying firm of Van Meter, Ashbrook & Associates, which represents the GEO Group – the second-largest private prison company in the U.S. Further, Kasich appointed Gary C. Mohr as director of the Ohio Department of Rehabilitation and Corrections. Before his appointment, Mohr spent five years working as a correctional consultant, mostly for CCA, and served as a managing director for CCA from 2007 to 2009.

Governor Kasich, who ran against special interests that had their “snouts in the trough” of public spending, has publicly stated he will not be giving his friends and close campaign advisors any special treatment. Nonetheless, Kasich came out strongly in favor of further prison privatization, soliciting bids to sell the Lake Erie Correctional Institution, the North Coast Correctional Treatment Facility, the Grafton Correctional Institution, the North Central Correctional Institution and a no-longer-used youth prison in Marion. The five facilities are owned by the state, but Lake Erie and North Coast are already privately operated. The plan is for private prison companies to own and manage all five prisons.

Kasich touted the sale as a budget-boosting measure that would generate an estimated one-time cash infusion of up to $200 million. He claimed that the increased privatization of prison operations would save the state millions of dollars in operating expenses. He also has sentencing reform on his political agenda.

A lawsuit to block the prison sale was filed by ProgressOhio, but the court declined to issue a temporary restraining order and allowed the sale to proceed. See: State ex rel. ProgressOhio.org v. State of Ohio, Court of Common Pleas of Franklin County (OH), Case No. 11CVH08-10647.

Ultimately, on September 1, 2011, Ohio ended up selling only one state prison, Lake Erie, for $72.7 million. The buyer, CCA, will be paid to house state prisoners at the facility; this was the first time a state has ever sold a public prison to a private company.

Additionally, the state will merge the North Coast facility, which was operated by private prison firm MTC, with the Grafton Correctional Institution. Both will now be run by the state. The North Central prison will be operated by MTC as will the juvenile facility in Marion, which will be reopened as an adult prison.

The ACLU report explores the question of whether privatizing prisons actually results in savings for state governments. Noting that about nine percent of U.S. prisoners are housed in private prisons, the report cites several studies to show that the costs of using a private facility are very close to those of a publicly-owned and operated prison. If long-term costs are calculated into the equation, private prisons may actually be more expensive – which was the finding of a 2010 Arizona state audit.

Many studies show minimal savings through prison privatization. Those savings are achieved by paying employees less than in the public sector and giving them fewer benefits, hiring fewer employees and cutting back on programming for prisoners, all of which may have long-term negative effects on public safety.

Ohio incarcerated 51,113 prisoners in June 2009 at an average annual cost of $25,254 each. The state’s prison population is projected to reach 52,546 by the end of 2011.
Currently, 4.4% of Ohio prisoners are held in privately-run prisons.

The ACLU report indicates that the interests of the tax-paying public and private prison companies are at odds. The public wants prisoners incarcerated for as long as necessary, but they also want them to be rehabilitated so they will return to their communities as productive, law-abiding citizens. Thus, it is in the public’s best interest to offer education, vocational training and other rehabilitative programs.

Private prison companies want to make money for their shareholders. To do so, they need to keep their prison beds full and cut non-essential expenses. Therefore, the companies benefit from longer prison sentences regardless of whether prisoners are rehabilitated.
This works in opposition to sentencing reform. For example, CCA’s 2010 annual report stated, “The demand for our facilities and services could be adversely affected by ... leniency in conviction or parole standards and sentencing practices....”

Private prison firms also do not want to spend money on rehabilitative programs, which would work against their interests by reducing the recidivism rate. Studies indicate that states with a greater percentage of their prisoners in private prisons have higher recidivism rates.

One New Mexico study found that guards at a CCA-run women’s prison issued disciplinary infractions to prisoners at eight times the rate of their male counterparts in state facilities. This lengthened the prisoners’ sentences and in effect increased CCA’s profits. Not only did this practice cost the taxpayers more money to incarcerate the women for longer periods of time, it undermined the public’s trust in the justice system.

This was but one illustration cited in the ACLU report related to the opposing interests of taxpayers and private prison companies. In a nutshell, the more the taxpayers pay, the more private prison firms make.

Taxes are another issue in prison privatization. Private prison companies often tout how much money they will be contributing to a community’s tax base. However, once private prisons begin operating they are reluctant to pay up. For instance, CCA refused to pay local taxes in Cleveland in the 1990s and ended its contract when the city insisted on collecting the taxes. In other cases, private prison companies have challenged tax assessments or faced lawsuits due to non-payment of taxes.

In 2002, the IRS sued CCA over its improper use of real estate tax shelters to avoid federal taxes. CCA settled the suit by paying millions in back taxes.

The oddest aspect of Governor Kasich’s rush to privatize prisons in Ohio is the fact that private prisons have a dismal history in that state. In 1997, CCA opened the Northeast Ohio Correctional Facility in Youngstown, “staffed it with guards who had little or no experience in corrections – and then imported 1,700 of the most violent inmates from Washington, D.C., to fill what was supposed to be a medium-security prison.” There were 13 stabbings, two murders and six escapes in the first fourteen months of the prison’s operation, resulting in a class-action lawsuit and $1.65 million settlement. [See: PLN, Aug. 1999, p.14; Nov. 1998, p.6; June 1998, p.14]. When local residents complained of the danger the private prison posed to their community, CCA blew them off.

“It’s nice if your community is happy with you – that’s an extra,” remarked CCA co-founder Doctor Crants. “But the business is built around providing a valuable service to our customers.” And CCA’s customers are not members of the public but rather the government agencies they contract with.

That is yet another reason against privatizing prisons. When things go wrong, prisons that are under governmental control and the public officials who oversee them are responsible to the public. Private prison companies answer only to their shareholders; they are not in business for the public good.

The ACLU report suggests real sentencing reform as the answer to expanding prison expenditures and budgetary woes: If fewer people are incarcerated, there will be less need to rely on private prison companies to house them.

In addition to the ACLU of Ohio’s report on prison privatization, another organization, Policy Matters Ohio, also released a report in April 2011 related to the cost effectiveness of prison privatization. “The state’s method for calculating the hefty savings it has claimed for private prisons does not stand up well to scrutiny. It has shifted substantially and in some cases mysteriously and inexplicably, from biennium to biennium,” the report stated. “And a detailed examination of the calculations over the last six years shows them to be riddled with errors, oversights and omissions of significant data and potentially tainted by controversial accounting assumptions that many experts consider deeply flawed.”

Other recent reports on private prisons were issued by the American Federation of State, County and Municipal Employees (Making a Killing: How Prison Corporations are Profiting from Campaign Contributions and Putting Taxpayers at Risk) in May 2011, and by the Justice Policy Institute (Gaming the System: How the Political Strategies of Private Prison Companies Promote Ineffective Incarceration Policies) in June 2011.

Further, on November 2, 2011 the ACLU National Prison Project released a report titled Banking on Bondage: Private Prisons and Mass Incarceration, by staff attorney David Shapiro. The comprehensive 57-page report concludes that “mass incarceration provides a gigantic windfall for one special interest group – the private prison industry – even as current incarceration levels harm the country as a whole.”

All of the reports cite significant problems with prison privatization.

Sources: “Prisons for Profit: A Look at Prison Privatization,” ACLU of Ohio (April 2011); Columbus Dispatch; Associated Press; www.drc.ohio.gov; www.aclu.org

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