Academic journal article Fordham Urban Law Journal

Apples-to-Fish: Public and Private Prison Cost Comparisons

Academic journal article Fordham Urban Law Journal

Apples-to-Fish: Public and Private Prison Cost Comparisons

Article excerpt

Introduction    I. Background       A. Studies with Favorable Findings       B. Equivocal and Adverse Research Results    II. Difficulties in Public-Private Comparisons    III. Cost-Shifting Factors       A. Prisoner Population Differences       B. Security Level Limitations       C. Medical Cost-Shifting         1. HIV, HCV, and Other Specified Medical           Conditions         2. Caps on Medical Costs         3. Prisoner Eligibility Criteria         4. Combining Medical Cost-Shifting Factors       D. Transportation Costs       E. Prisoner Labor Costs       F. Administrative Overhead       G. Law Enforcement and Criminal Prosecutions       H. Bed Guarantees       I. Long-Term Costs         1. Per Diem Increases         2. Deferred Maintenance         3. Recidivism Rates         4. Bond Financing       J. Fraud and Corruption    IV. Quality of Service Comparisons       A. Violence Levels       B. Staff Turnover       C. ACA Accreditation       D. Recidivism Rates Redux    V. Opportunity Costs Conclusion 


It sounds like such a simple question: do private prisons save money? The answer, however, is dependent on a number of factors--including how "saving money" is defined.

Consider that in 2013, the nation's largest for-profit prison company, Corrections Corporation of America (CCA), made $300.8 million in net profit on gross revenue of $1.69 billion. (1) Thus, the company achieved $300.8 million in savings over operational expenses at its prisons, jails, and other detention facilities. But how much of that $300.8 million went to taxpayers or reverted to state treasuries or county coffers?

None. Those "savings" went to CCA in the form of corporate profit.

Over the past three decades there have been dozens of reports and studies on and analyses of cost comparisons between public and privately-operated prisons--by academics, government agencies, and independent organizations--all attempting to answer the elusive question of whether private prisons save money. (2) This is not one of those attempts.

Instead, rather than trying to determine if prison privatization results in savings due to the shifting of costs from public agencies, this Article takes an opposite approach by identifying costs that are shifted from privately-operated facilities to the public sector. An examination of such cost-shifting factors is essential when evaluating cost comparisons, to better understand how private prisons externalize expenses while internalizing profits.

In short, public agencies want to save money while private prison companies have an inherent need to make money--and the latter necessarily comes at the expense of the former. (3)

Part I of this Article examines previous public-private prison cost comparison studies, while Part II discusses various factors that make such comparisons difficult. Part III provides an exhaustive look at cost shifting factors, whereby costs are shifted from private prisons to public contracting agencies, and Part IV examines quality of service comparisons--including levels of violence and staff turnover at private prisons, accreditation by the American Correctional Association, and recidivism rates. Part V addresses opportunity costs associated with privately-operated prisons, while the Conclusion proposes an alternative approach when considering whether prison privatization results in cost savings.


There is no dearth of research on whether privately-operated correctional facilities are more cost effective or provide equivalent quality of service in comparison to public prisons; numerous studies have reached equally numerous and disparate conclusions. (4) As noted by Alexander Volokh, an Associate Professor at Emory Law School, "somewhat surprisingly, for all the ink spilled on private prisons over the last thirty years, we have precious little good information on what are surely the most important questions: when it comes to cost or quality, are private prisons better or worse than public prisons? …

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