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Liberty for Sale: Should Ohio Prisoners be Commodities in a For-Profit Venture?

by German Lopez, Cincinnati CityBeat

In 1997, Corrections Corporation of America (CCA) opened a private prison in Youngstown, Ohio. The Northeast Ohio Correctional Center was to hold out-of-state prisoners with the promise of profits and tax revenue for Youngstown, a largely industrial city that had struggled economically since its steel industry went downhill in the 1970s and ‘80s. CCA quickly staffed the prison with inexperienced guards and then received 1,700 prisoners – most charged with violent crimes – transferred from Washington, D.C. Within a year, 20 prisoners were stabbed and two were murdered. Six escaped.

Public outrage came fast. Citizens in Youngstown demanded the prison be shut down. Local and national media outlets picked up the story. Mother Jones, a respected, independent investigative news magazine, reported that George McKelvey, then-mayor of Youngstown, told reporters, “Knowing what I know now, I would never have allowed CCA to build a prison here.” The city sued CCA to get the prison to abide by new safety standards.

CCA eventually shut down its Youngstown prison because having to abide by the new standards made it no longer profitable. The prison remained closed for a few years and then opened under a new model – as a holding center for people waiting for federal court hearings.

Today, the Youngstown example seems long forgotten. Last year Ohio became the first state to sell a state-owned prison to a private company. This deal, which was fully supported by Gov. John Kasich and the Republican-controlled Ohio legislature, sold the Lake Erie Correctional Institution to CCA, the same company that couldn’t handle running the Youngstown facility in 1997.

In the past, private prison companies built their own prisons, and at times state governments have asked private companies to manage state-owned prisons. But this is the first time in history a state prison has been sold to a private company, which will house the state’s prisoners for at least 20 years.

Ohio had actually planned to sell five prisons as part of its 2011-12 budget, but the state was only able to complete the Lake Erie deal because none of the other sales saved enough money.

Critics of prison privatization are not happy with the sale or the precedent it sets. Mike Brickner, a researcher at the ACLU of Ohio, citing the lessons of Youngstown, wants Ohio to remember the security and public policy risks behind private prisons. And Policy Matters Ohio, a left-leaning research organization, suggests that private prisons might not end up saving the state money anyway.

Private Problems

The primary concern over the private prison model is the possibility of a fundamental conflict of interest. America’s main private prison companies – CCA, Management and Training Corporation (MTC) and the GEO Group – make more money when more people are incarcerated. But it’s largely believed to be in the public interest to imprison as few people as possible and rehabilitate prisoners to be functional citizens. This presents a fundamental contradiction for policymakers: They want to hire private prison operators, but then private prison operators, which gain a substantial amount of power by virtue of owning and running prisons, push against policies the public wants and needs.

“The companies get paid a per diem for the number of people that are in their prison, so it’s in their interest to keep those prisons as full as possible,” Brickner says.

The conflict between costs and adequate safety measures presents real-life consequences. A study at George Washington University found private prisons have a 50 percent higher rate of prisoner-on-staff assaults and a 66 percent higher rate of prisoner-on-prisoner assaults than publicly managed prisons. Another study, in the Federal Probation Jour-nal in 2004, had similar results – it found that, compared to public prisons, private prisons have a 50 percent higher rate of prisoner-on-staff assaults and prisoner-on-prisoner assaults.

These examples suggest making prisons profitable by cutting costs might not be sustainable. A 2011 ACLU report, which Brickner co-authored, attributed the higher rates of assault in private prisons to poorly trained staff. The report not-ed high staff turnover rates at private prisons: 53 percent compared to 16 percent at public prisons. According to the ACLU, the high turnover rate creates a vicious cycle involving private prisons shuffling less experienced, poorly trained staff to replace former staff.

Focusing on the bottom line also presents problems for rehabilitative programs. The ACLU report found the two private facilities in Ohio have fewer rehabilitative programs than prisons managed by the state.

Brickner says this makes sense from a profit perspective: “It doesn’t make any difference to them whether or not a person eventually integrates back into society. Looking from a cynical approach, it actually helps them if that person (is convicted again) because they come back into their prison and they get money off them again.”

There is also the issue of accountability. In Ohio, the state Supreme Court has repeatedly ruled against anyone seeking public records from private entities doing public work. The court instead said private facilities – specifically a nonprofit community corrections organization in the case of Oriana House, Inc. v. Montgomery – do not fall under public records laws.

Brickner says Gov. Kasich’s proposal is unlike past proposals because it is not just leasing state prisons and letting private companies operate them. Instead, the state sold the land and prison to a private company. Brickner is worried that private ownership of the prison will make it more difficult for the state to take back the prison from CCA if something goes wrong.

But practicality is not the only reason for opposition and criticism of private prisons. The ACLU also opposes the private prison model from a philosophical standpoint.

“The model of prison privatization is that they earn their money off of incarcerating people, and we believe that incarceration is one of the greatest deprivations of liberty that the government can dole out to a person,” Brickner says. “We should not be in the business that private corporations earn money off the deprivation of liberty.”

Faulty Math

One of the more surprising assertions made by critics of private prisons is that privatization does not save money. If supporters of private prisons have one thing on their side, it’s that private prisons are supposed to be more efficient in order to generate profit.
While these companies certainly enjoy profits – CCA posted $162.5 million in net income for 2011 – it turns out those profits might not come at the benefit of taxpayers.

That was the conclusion of reports released by Policy Matters Ohio in 2011. The reports did not conclusively find private prisons cost more than public prisons, but they did find that the state is using some fairly shady math to get its savings numbers.

Zach Schiller, a researcher at Policy Matters Ohio, says the reports’ findings show the state’s claim that it’s getting more than 5 percent in savings, which is the legally required amount to allow a private prison operation, has not been adequately demonstrated.

The state did demonstrate an immediate, one-time profit on the sale of the Lake Erie facility. The facility cost about $43.9 million to build, and the state sold it to CCA for $72.8 million. That’s a $28.9 million profit.

Where problems arise is how the state calculates savings from ongoing contractual costs. Under the contract, the state has to pay two major fees to CCA: a per diem fee, which is how much the state pays each day for each prisoner held at Lake Erie; and an annual ownership fee, which is how much the state pays for using CCA’s facility to house prisoners. The question is whether these fees will cost the state more than managing the prison would have cost under public ownership.

Schiller says it’s possible the fees might be more expensive. He points to the faulty budget gimmicks unveiled in the Policy Matters Ohio reports. One such gimmick is the state’s assumption that each prisoner transferred to a private prison would result in one-to-one savings. In other words, if the state transferred 5 percent of its prisoners to a private prison, the state assumed it would produce 5 percent in prison health care savings.

But Schiller says that kind of assumption makes little sense. In reality, if the state is transferring 5 percent of its healthiest, safest prisoners to a private prison – somewhat likely, says Schiller, considering private prisons rarely house the most dangerous, unhealthiest criminals – that is not going to produce 5 percent in savings. On the contrary, healthy prisoners use considerably fewer health services, so it’s possible transferring 5 percent of prisoners could only produce a fraction of that in medical savings.

That budget trick was used repeatedly in the state’s numbers, including food and education programs, according to the Policy Matters Ohio report. This led Gerry Gaes, former research director at the federal Bureau of Prisons and visiting scientist at the National Institute of Justice, to call the state’s numbers “bogus” in the Policy Matters Ohio report.

“These get to be very specific, narrow criticisms, but, nevertheless, I think they undercut the state’s numbers,” Schiller says. “They make it difficult to have any confidence that we’re saving money.”

Schiller further noted the state’s announcement detailing what it will do with the prisons that weren’t sold. The state originally intended to sell five prisons. Instead, the state sold one and put two others under private management. The state also took the North Coast Correctional Treatment Facility that was originally managed by MTC, put it back under public ownership and combined it with Grafton Correctional Institution.

“What we found is the greatest amount of savings was not by private operation,” Schiller says. “It was by taking the one private facility back into public control and combining it with another [facility].”

Schiller acknowledges the merger could play a bigger role in the savings than public ownership, but he says, regardless, the example undermines the cost savings of privatization – and that’s all by using the state’s own numbers.

There are also problems that could pose more costs down the road for taxpayers. To Schiller, one troubling highlight of the deal with CCA is that the state must pay for 90 percent occupancy even if the prison isn’t 90 percent full. That means if the state were successful in reducing its prison population, it would still have to pay for 90 percent occupancy at Lake Erie.

Schiller says such a prison population reduction is unlikely, but if it came to pass within the next two decades it would force the state to either transfer prisoners to the Lake Erie facility or not make full use of the capacity it’s paying for.

But perhaps the most troubling part of the deal with CCA is how straightforward the company is with its intent to raise costs to the taxpayer for the sake of profit. The latest Policy Matters Ohio report on private prisons found part of CCA’s strategy for growth is “enhancing the terms of our existing contracts.” In other words, CCA will try to raise fees to make bigger profits by renegotiating its contract to include more income and less cost. The contract between CCA and Ohio will be renegotiated every two years.

To illustrate CCA’s tactic, Schiller points to a 2008 case in Colorado when CCA threatened to bring in out-of-state prisoners to fill up beds in one of its four facilities in Colorado if the state did not increase the per diem fee by 5 percent. Colorado eventually compromised with CCA by approving a 4.25 percent hike, but the state later rescinded the hike in the face of budget problems. Still, Schiller says this shows the extent to which CCA will go to make a profit at the expense of everyone else.

Cincinnati CityBeat repeatedly contacted the offices of CCA, the GEO Group and MTC, the three major private corrections operators in Ohio, so they could respond to criticisms leveled by the ACLU of Ohio and Policy Matters Ohio. MTC did not grant an interview before press time, and CCA and the GEO Group never responded.

Follow the Money

If private prisons are so bad, why do state governments continue allowing them? Brickner attributes this to an honest belief among policymakers that privatization is cheaper, but he also points to campaign contributions.

“We can’t ignore that there is a lot of money at play here,” says Brickner, citing the massive profits from private prison companies and the campaign contributions they give to politicians.

According to campaign contribution data from the Ohio Secretary of State, the GEO Group donated $10,000 to Kasich and $52,000 to the Republican Governors Association, which helped fund Kasich’s gubernatorial campaign, in 2010. Between 2003 and 2006, CCA gave $7,000 to Ohio Republicans and former Gov. Bob Taft. In 2010, CCA gave $50,000 to the Republican Governors Association. There were also reports that CCA gave $10,000 to Kasich’s transition fund in December 2010. Between 2007 and 2010, MTC donated a total of $99,000 to state policymakers.

That money might not seem like much in comparison to federal campaigns that raise millions of dollars a month. But in state terms, it’s a lot. Three contributors giving a few hundred thousand dollars is a decent amount of cash in the context of state elections, and that’s only what can be found in public records.

There are also some questionable connections between state officials and private prison companies. Kasich’s office in particular has been heavily involved with CCA in the past. Gary Mohr, director of the Ohio Department of Rehabilitation and Correction (ODRC), is a former CCA employee. Donald Thibaut, former chief of staff for Kasich when Kasich was in Congress, now works as a lobbyist for CCA. When he was a U.S. senator for Ohio, Ohio Attorney General Mike DeWine helped CCA reopen its Youngstown prison in 2004 with a federal contract.

Rob Nichols, spokesperson for Kasich, said he could not comment on private prison issues because the state is dealing with a lawsuit filed by the Ohio Civil Service Employees Association (OCSEA), a union for public prison staff, regarding private prisons.

Ohio state Senator Bill Seitz admits to accepting donations and even meeting with MTC officials, but he says that has little bearing on his support of private prisons.

“If I thought private prisons were going to not follow the program of sentencing reform and recidivism reduction through increased training and educational opportunities in prison, I certainly wouldn’t support privatizing prisons,” he says.

Brickner says it’s true that contracts with private prisons typically require them to keep similar standards to state prisons, but he says that’s not how it works in reality: “They may provide the same number of programs, but that doesn’t go into how effective the programs are. There isn’t really anyone monitoring or holding accountable the private prisons for how effective they are. That’s typically not worked into the contracts.”

In his defense, Seitz cited the Talbert House, a halfway house that he says is “among the most highly respected organizations in all of Hamilton County.” He added: “There’s nothing intrinsically evil about having private companies in this space. Many of them do a very fine job.”

Cincinnati CityBeat repeatedly attempted to contact the ODRC to answer questions regarding criticisms of private prisons and the possible conflict of interest presented by Mohr being director of the ODRC. The department refused to grant an interview. Instead, the ODRC offered a statement saying Mohr separated himself from the prison sale process. No further details were provided.

Alternative Reform

Regardless of what anyone thinks about private prisons, the fact is Ohio’s prisons are overcrowded. This is reflective of a nationwide problem. A 2008 study by the Pew Center on the States found that one in 100 Americans is behind bars.

Privatization offers what Brickner says policymakers see as an easy solution. Politicians typically want to keep an image of being “tough on crime,” but they also know costs have to be cut somewhere. With the belief privatization makes prisons cheaper, Brickner says politicians can have their cake and eat it too

The ACLU argues private prisons go after the symptoms of the problem, not the cause. If policymakers want to tackle the issue of prison costs, the ACLU says they should pass reform that makes imprisoning so many people unnecessary.

To the credit of Republicans that typically support private prisons, many have supported sentencing reform. Seitz in particular sponsored S.B. 337, which provides new ways for criminals to get their records expunged and allows released criminals to obtain a certificate of qualification from courts for employment. He also supported H.B. 86, which provides sentence-reduction incentives for prisoners to get job training and education programs while in prison. Both bills were passed by the Republican-controlled Ohio legislature and signed into law by Kasich.

But Brickner and the ACLU argue that’s not enough. Instead, they say policymakers should move away from private prisons, and push for more policies that stop putting nonviolent offenders behind bars. The ACLU cites the war on drugs as one policy that puts people in prison for nonviolent crimes.

Some organizations are pushing more forcefully against private prisons. The OCSEA is suing the state after union members were fired due to prison privatization, including the sale of the Lake Erie facility. The union claims it’s unconstitutional for the state to sell its prisons to private entities.

But Brickner is not convinced more reform is coming, and he doesn’t see Republicans backing down on private prisons anytime soon. He cites the experience of the 1990s, in which states jumped on board with prison privatization, only to back down by the early 2000s when clear problems arose – like those at Youngstown.

“Unfortunately, what we have to wait for the tide to turn is another round of safety issues at these facilities,” he says.

In other words, for policymakers to address concerns, Brickner believes history will have to repeat itself.

This article was originally published by Cincinnati CityBeat ( on September 19, 2012 in a longer version. This edited version is reprinted with permission.

Ed. Note: On September 25, 2012, the ODRC said it would not seek further privatization of state prisons. “We’re going to stay the course on those [sentencing reforms] and I think privatizing additional prisons would take away from that reform effort that we have, so I’m not anticipating privatizing any more prisons in the short term here,” stated ODRC director Gary Mohr.

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