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Executive Summary

Prison privatization does not save taxpayers money, nor does it improve prison operations. Recent studies and cases around the United States prove that privatizing not only fails to solve public problems, but also leads to new ones. Ultimately, communities pay the price for prisons built and run for profit.

The General Accounting Office, the congressional watchdog agency, recently stated that it "could not conclude whether privatization saves money." Other independent analyses show that in many cases, it costs more to incarcerate inmates in private facilities than in state prisons.

Hidden costs often inflate profits for private firms managing prisons. Understaffing, low wages, less-qualified staff, poorer benefits, and inferior working conditions are common business practices within private facilities. While costs appear to be lower, the public ultimately pays for this "savings." Documented escapes of rapists and murderers, rioting, and inmate abuse in prisons run by private companies have jeopardized the safety of communities and increased the bottom-line for taxpayers.

Despite these threats, citizens have less say in the building of new, privatized prisons. Traditionally, the public has had a voice in financing penitentiaries. Citizens can vote whether a government can issue bonds, or loans, to construct prisons. Tax revenues back these bonds. Privatization, however, removes the public from the decision-making process. A corporation can build a prison and lease it to the government. Companies can also raise capital through Real Estate Investment Trust, or REITs, in which stocks are sold to investors. In both cases, private firms and shareholders can benefit, while the government — and taxpayers — are liable for the prison's performance, and left holding the bag if it fails.

Poor performance by a firm operating a prison can be devastating for a community. Underqualified staff and lax management resulted in a bloodbath in one prison in Ohio, and acknowledged but unreported drug use and weapons smuggling by employees within one privately owned facility in Tennessee. When prison management is tied to profit-making, cutting corners results in deadly consequences.

In addition, contracting increases opportunities for corruption. Politicians can exchange lucrative prison contracts or assistance with private prison financing schemes for campaign contributions. Firms offer highly paid jobs to former public officials who can help them obtain contracts.

Conflicts of interest and the rights and well-being of inmates are also at issue. When prisons exist in a quasi-judicial status with an emphasis upon savings and profits, due process may be undermined. A firm may benefit monetarily from extended sentences, and wardens who do not answer to the public may cast a blind eye toward excessive physical force against inmates.

Incarcerating criminals is and should remain a fundamental responsibility of government. The bottom line for sworn state and local correctional officers is to protect our communities from those behind prison bars. The bottom line for corporations is profits.

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