What's costlier than a government run prison? A private one
Private companies like CCA also generally promise to build prisons in 18 to 24 months roughly half the time it takes to build a public prison, another appealing quality to governments dealing with swelling prison populations.
Private contractors can also cut costs by building facilities for one state's prisoners in another, less expensive state. CCA operates the Saguaro Correctional Center in Eloy, Ariz., which exclusively houses inmates from Hawaii, because construction and labor costs are much cheaper in Arizona than Hawaii.
Law enforcement locked out of prison?
Arizona Attorney General Goddard says that his state Department of Corrections has nearly zero oversight over the prisons that house out-of-state inmates in his state.
"They don't have to show proof of financial responsibility, they don't have to comply with Arizona prison construction standards, they don't have to report disruptions. . .and both the training and staffing is up to the private operator," Goddard says. "There were a couple of private prisons that went on lockdown and refused to allow the Department of Corrections to come in."
Despite claims from companies like CCA, the jury seems to be out on whether private prisons end up saving governments money. An audit by the accounting firm MAXIMUS conducted for Arizona compared the cost of public and private corrections facilities in 2007 and found that, on average, private facilities ended up saving the state $5.49 per inmate per day.
But more recently, an internal Arizona Department of Corrections report released in February 2010, found that, in 2009, those savings narrowed to around $2.75 per inmate per day, and in certain instances, private facilities were found to cost even more per day than public ones.
"There's nothing definitive saying publics are better or privates are better. There's a lot of propaganda," says Michel Jacobson, director of the Vera Institute of Justice, a non-partisan research organization.
The Urban Institute's John Roman argues that at times private prisons also lack the incentive to help prepare inmates to return to society, leading to a higher rate of recidivism (inmates returning to prison) and a higher overall cost to the prison system.
Whether the prison provides rehabilitation services depends on the company's government contract, which is largely dictated by politics.
"We will offer whatever the public customer wants us to offer," says Hyman of Cornell Companies Inc., the third largest private corrections company in the country, which on Thursday finalized a merger with the second largest, the GEO Group.
But even Hininger, CCA's CEO, admits that many states are asking for a reduction in prisoner rehabilitation services. "That does have a negative impact on potential recidivism," says Hininger.
The private corrections industry has managed to weather the economic storm better than many other industries, and it's gearing up for what it sees as a lucrative future. The unavoidable reality is that the U.S. prison population continues to grow, leading more governments to look at creative ways to solve both its economic and prison system's challenges.
While most states may not have gone as far as Arizona, governments are starting to look more favorably at outsourcing their prisons. And CEOs like Hyman sound a little like hoteliers during the economic boom: "I cannot think of an industry that has such strong medium-to-long term growth potential behind it, driven by a need for beds."