Tuesday, December 28, 2010

Privatization and the fallacy of zero fiscal notes on criminal penalty enhancements

This story out of Maine included an interesting chart depicting what proportion of each state's prison population is housed in privately-run facilities:

FWIW, Texas reliance on private prisons - where the state pays contractors by the head to lock up inmates -  puts the lie to statements in "fiscal notes" from the Legislative Budget Board (LBB) that criminal penalty increases generate no significant costs. Because 11.6% of our inmates are in private facilities, we pay extra for every additional person who enters a Texas prison. Even when new prisoners go into state-owned units, beds are fungible, prisoners are frequently moved around, and system-wide the marginal extra cost of each new inmate will still equal the cost of an extra private prison bed - probably somewhere in the $15-17,000 range.

If the state owned all its own facilities, it would be arguable that the cost of adding inmates would be de minimis - as LBB maintains - because fixed costs and staffing make up most of the expense. But when the state contracts with private companies to house 11.6% of its prisoners, every extra prisoner must be paid for, even if the state budget indulges in the convenient fiction that housing more inmates is free.

RELATED: The Maine article also referenced this 2006 analysis (pdf) of the pros and cons of privatization from the Congressional Research Service which I hadn't seen before. See more coverage of private prisons from our pals at Texas Prison Bidness.


Anonymous said...

Any statistics on juveniles who are housed in private correctional facilities by TYC or counties?

Gritsforbreakfast said...

I don't know any stats offhand. TYC did shut down its Coke County facility which was run by a private firm after some scandalous revelations. I believe, but am not certain, that the agency still contracts for some halfway houses. I'm sure some of the counties contract for services, but I couldn't immediately point you to details. Maybe other commenters will know a source for that info and share it with us.

Texas Maverick said...

The "white" states also seem to be looking at best practices concerning criminal justice according to annual reports I've read. One might come to think that the lobbyists for private concerns are not interested in constructive ways of protecting the public, just fulfilling their contract. Am I a skeptic, you bet I am. Greed always wins over justice unless Grits shines the flashlight in their direction.

Anonymous said...

Private prison providers sell beds the same way that hotels book rooms. With a daily rate for each bed (or room) filled with a client. Their operating costs and profit margin are built into the daily rate charged. Furthermore, the lower the vacancy rate the higher their profits - so, they want as many people as possible confined.

To use an analogy - leasing prison beds from a private provider rather providing public prison capacity is like using paper plates for every meal rather than buying a set of dishes. The initial (start up) costs are lower with paper plates but with each meal served on paper plates the cost per meal increases. With a set of dishes the per meal costs of a set of dishes declines with each meal served.

It is important to remember that there is a public expenditure for every inmate in public or private confinement. There is no free lunch.