Private prisons are efficient, cost-effective

Guest Opinion//March 30, 2012

Private prisons are efficient, cost-effective

Guest Opinion//March 30, 2012

An editorial in The Arizona Republic last month, “Let’s Get Facts On Private Prisons,” encouraged lawmakers to make policy decisions on public-private partnerships in corrections based on data supported by facts.

The Arizona Chamber of Commerce and Industry wholeheartedly agrees.

When it comes to the use of private facilities to address Arizona’s overcrowded prisons, the benefits are clear.

Many credible and responsible national studies — by respected authors from Vanderbilt University, Harvard Law Review and the Reason Foundation, to name a few — have concluded that private sector corrections can be carried out at industry-leading standards of service with demonstrated savings to taxpayers. Overall, the cost savings of public-private partnerships in corrections have been affirmed by more than 20 studies performed by universities, think tanks and government entities. This research supports a conservative estimate that private prisons offer cost savings of between 10 to 15 percent.

As cited in a recent report by the Arizona Department of Corrections, comparing public to private corrections costs can be a challenging exercise.

Certain costs — like monitoring the performance of the private sector — should be and have been included in the overall costs of private prisons. By the same token, costs on the public sector side — such as the costs of actually building the prison, its upkeep, and employees’

pension and benefit costs — should also be reflected on the public ledger.

If Arizona was to modernize all of its existing facilities, the cost to the state’s taxpayers would likely be in the hundreds of millions of dollars. That cost savings alone justifies the value proposition of public-private partnerships.

Not only does the private sector have new, innovative facilities, but the private sector invests its own capital in the construction, allowing Arizona to target its limited bonding capacity to building roads and schools.

In addition to the state’s ability to defer prison capital costs, public-private partnerships allow the state to control pension liability costs, since private sector employees are not on the state retirement system, but rather receive benefits through a traditional

401 (k) retirement account.

Also, unlike public prisons, private prisons in Arizona pay property taxes and contribute to the tax base of local communities, resulting in reduced tax bills for Arizona homeowners.

The recent RFP released by the state for up to 2,000 private prison beds requires the private sector to meet more than 40 pages of performance measures and includes more than 30 reports that must be completed by the contractor to ensure contract compliance.

Failure to meet these and other standards results in monetary offsets or termination of the contract by the state. These safeguards are appropriate and demonstrate to taxpayers that the contractor is living up to the terms the agreement.

Private correctional facilities have been able to meet their responsibilities by being efficient, innovative and flexible, all at a lower cost.

I would encourage those opposed to private prisons to talk to folks in communities that have facilities in their own backyards and ask them how the industry has been received. You will find that private prisons strive to adhere to the tenants of being good corporate citizens, and take their commitment to the communities they call home, as well as Arizona as a whole, very seriously.

— Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry.