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Florida: Cost Savings and Benefits of Prison Privatization Non-Existent

by David M. Reutter

“Florida’s experience with privatized prisons raises serious questions about whether the taxpayers are getting their money’s worth,” concludes an April 2010 policy brief report released by the Florida Center for Fiscal and Economic Policy. The report questions methods used to determine whether private prisons cost less to operate or are more effective at reducing recidivism.

“Between 1989 and 2008, the rate of crime in Florida significantly decreased,” the report states. Violent crime dropped by 41%, property crimes by 46% and the total crime index declined by 46%. Yet the number of Florida’s prisoners grew 108% in comparison to the average 78% rate of prison population growth nationwide over the same time period.
State policymakers, swayed by the potential to save money and reduce recidivism through prison privatization, allowed private companies to manage correctional facilities in Florida. The authorizing statute requires private prisons to operate at a 7% savings over state-run facilities. See: Florida Statutes § 957.07(1).

By 2008, six of Florida’s prisons – Bay, Gadsden, Graceville, Lake City, Moore Haven and South Bay – were operated either by the GEO Group or Corrections Corporation of America (CCA), holding 7,725 state prisoners.

On their face, private prisons appear to save taxpayers money. In 2008, private prisons cost $17,216 annually per prisoner compared to $18,980 per prisoner at state-run facilities.

However, the report notes this is deceptive. Prisoners in public prisons are more costly due to their higher security levels and expensive medical care. Additionally, older public prisons “do not offer the architectural advantages to supervision and custody that the newly constructed privately operated prisons have that lower operational costs.”

Florida’s oversight of its prison system is unique among states that use private prisons.
The Department of Management Services (DMS) handles the procurement process and contract management, which includes a daily on-site presence. To ensure that security standards are maintained, the Florida Department of Corrections conducts random inspections at private prisons. While this dual oversight system can be effective, “in many cases, it causes coordination and accountability problems.”

The report found no support for the rationale to use private prisons, as “[t]here is no compelling evidence that the privatization of prisons has actually resulted in [the statutorily required 7%] savings.” As to recidivism reduction, “the contracts and contract monitoring are focused on inputs (e.g., inmate program participation requirements) and do not include any provisions to ensure the desired outcomes of reduced recidivism.” In fact, several studies have found that prisoners released from private prisons may have higher recidivism rates. [See: PLN, Dec. 2009, p.11].

To ensure that taxpayers receive the desired result from prison privatization, the Florida Center for Fiscal and Economic Policy recommended that the Department of Corrections have primary responsibility for procurement and contract management. Private prison firms that bid on state contracts should be required to make their best and final offer rather than being advised of a per diem rate, and bids over the per diem established by the state should be considered non-responsive and rejected.

Additionally, the Office of Program Policy Analysis and Government Accountability should conduct studies to determine if the state or a private company can best realize construction and operational savings in newly-built prisons. The Auditor General should conduct annual audits to ensure that the statutorily-required 7% savings actually occur.
Finally, the report recommends that the Prison Per-Diem Workgroup meet regularly.

Some issues not addressed in the report include fraud, mismanagement and lack of meaningful oversight of privately-operated prisons. For example, Florida’s Office of Program Policy Analysis and Government Accountability issued a report in December 2008 that found the DMS’ oversight of private prisons had significant weaknesses. [See: PLN, Aug. 2009, p.18].

Further, prior state audits revealed that Florida had overpaid GEO Group and CCA more than $4.5 million for vacant job positions and maintenance that was never performed. [See: PLN, Nov. 2007, p.38; June 2007, p.32].

Source: “Are Florida’s Private Prisons Keeping Their Promise?” Policy Brief, Florida Center for Fiscal and Economic Policy (April 2010)

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