Symposium: Prison Privatization and Public Budgeting: A Meta-Analysis of the Literature

Article excerpt

ABSTRACT. Corrections is one of the largest growth industries of the 1990s. Correctional budgets are increasing faster than almost any other category in the public sector, consuming greater and greater shares of state, county, and federal budget appropriations. Faced with the dilemma of these growing costs, legislators are exploring privatization as a cost saving measure. Privatization can take many forms (e.g. privatizing services, privatizing construction, and privatizing operations at the institutional level), but privatizing prison operations is arguably the most controversial attempt at cost saving. There is an abundance of literature on the subject that influences legislators and public opinion but there are relatively few empirical studies that actually compare costs. In reviewing the prison privatization literature, conclusions regarding cost savings are mixed. The purpose of this paper is to assess the quality and quantity of empirical research on cost effectiveness of private vs. public prison management and to assess the impact of that research on the conclusions drawn in the privatization literature.


Local and State appropriations for correctional expenses have been increasing faster than any other category of public sector spending. Between the years 1971 and 1985, for example, local and state government spending rose at an average rate of 10.1 %, while corrections costs grew 15 % on average each year, which is almost 50 % faster than other governmental costs (McDonald, 1989). Correctional budgets continued to rise in the early 1990's, while government budgets for other services such as public education, child-care, welfare, health care, and other human services were cut due to a severe economic recession.

Prison construction and operation has also become a major development industry and, consequently, an increased drain on public budgets due to the rapid and continuous growth of prison populations since the 1980s. For example, prison populations increased 134% from 315,974 in 1985 to 738,894 in 1990. This growth was a result of the "get tough" social control programs of the Reagan and Bush era, as well as the War on Drugs (Sechrest and Shichor, 1993). Those politicians (and their supporters) who are the most vocal in their demands for maintaining law and order and getting tough on criminals tend to be the most fiscally conservative.

As corrections continues to consume a greater and greater share of state and county budget appropriations one of the major issues facing legislators is the determination of costs, which increased by 240% between 1979 and 1985 (McDonald, 1989). Bond initiatives for prison construction failed to pass in several states in the early 1990's, while in other states they were passed by only a narrow margin (Shichor, 1995).


The rising crime rates, increasing prison population, and the skyrocketing budgets cost of corrections have resulted in a search for alternative solutions. One attractive alternative continues to be the privatization of prisons and corrections; this is due mainly to claims of curbing public expenditures and relieving prison overcrowding. Privatization advocates claim that the private sector can deliver a variety of goods and services traditionally provided by the public sector, at less cost and with more efficiency. Privatization proponents cite such successes with hard services such as building maintenance, health and food services, and even garbage collection as well as with capital costs (Carroll, Conant, and Easton, 1987; Robbins, 1995).

The use of privatization in various corrections programs is not new. In the 1820s, the houses of refuge in New York, the first juvenile institutions, were privately funded and operated. Many of the private community alternative and diversion programs developed as a result of Law Enforcement Assistance Administration (LEAA) and Office of Juvenile Justice and Delinquency Prevention (OJJDP) grants in the 1970s (Durham, 1989; Rogers and Mays, 1987). …