Private Correctional Facilities - Case Study Example

? Private Correctional Facilities Private Correctional Facilities Introduction The American correctional system has experienced an unparalleled growth during the last couple of decades, as congressional records reveals that prison numbers have grown by over 400% with 2.3 million inmates in state, regional or federal detention centre, and a further 5.1 million under probation (U.S. Department of Justice, 2013). Estimates places United States as having 25% of the total global prisoners’ numbers, something that has created unprecedented overcrowding like in California jails, hence, requiring more growth in correctional facilities. As a result, both state and federal governments have argued for privatization or public-private partnerships, because they are experiencing not just financial difficulties but administrative challenges in managing the correctional facilities. Private correctional facilities currently account up to 23% of both state and federal facilities (Nelson, 2005). Since these problems are made worse by existing tougher crime strategies and budgetary constraints, the main objective of contracting prison facilities is to effect cost savings, while avoiding massive capital expenditures and at the same time relieving the overcrowded jails. Current research, reviews and literature on the benefits and shortcomings of private correctional facilities is filled with contradictions and contentions. As such, there is so much controversy regarding the role of private contractors in managing the prison system, something that presents a policy challenge for concerned authorities. In spite of this, there are nearly 158 private correctional facilities in operation across 30 states, and holding nearly 120,000 inmates. However, this numbers mirrors only a small portion of United States entire correctional facilities. There are not so many systematic analyses of privately administered prisons, something that makes it hard to perform a thorough assessment of the services they offer to prisoners as compared to public facilities. Thus, the aim of this case is to evaluate existing private correctional facilities operations and impacts in order to come up with efficient ways for them to deliver correctional services. Background From the beginning of 18th century, some states offered private contractors deals for managing of prison but at a fixed costs, and it was not until 1885, that thirteen states signed agreements with private entities that stipulated leasing out of prisons and employees (Ammons, Campbell, & Somoza, 1992). However, from the start of the 20th century state governments began contracting out prison services in order to manage the rising expenses associated with the ever-increasing functions of penal institutions. In particular, private facilities catered for services ranging from vocational training, inmate transportation, medical and mental care, in addition to food preparation. Even though San Quentin prison in California was the first facility built and fully operated by a private enterprise, the last the decades has seen the state public correctional facilities experiencing massive overcrowding, with estimates giving the facilities a 137.5% overcrowding rate (U.S. Department of Justice, 2013). In 2009, California was ordered by the court to to reduce the overcrowding in just less than two years since they had become a threat to the inmates health. In 2011, U.S. Supreme Court later affirmed this decision with 2013 being the compliance date. This meant that, both California local and state governments had to decrease its inmate population by nearly 39,000 (Gilroy, Summers, Randaz, & Kenny, 2011). Hence, the state government came up with a policy of realignment whereby responsibility for convicted inmates housing was changed to county jails, which then instituted a massive policy of privatization and public-private partnership. This policy has seen the overcrowding, which has reduced by almost 37,000 although still high nationally, and translating to 150% (Hakim & Blackstone, 2013). This pressure arising from a considerable increase in incarceration levels coupled with mounting correctional operational expenses has pushed the idea of privatization of correctional facilities to be at the forefront (Vardalis & Becker, 2000). Hence, the increasing shift to private contractors raises questions regarding the moral and legal impact of profit driven organizations have on the inmates themselves, the benefits if any such facilities bring to local communities, and whether the cost analysis are ultimately beneficial to the governments. As noted by Hakim & Blackstone, private companies are compensated by states governments based on the number of prisoners they house (2013). Therefore, the more they have prisoners with lengthier sentences the more they are paid to keep the bed spaces. In effect, the private facilities profit margin depends on the total population they have. Most state governments spend over 7% of their broad fund revenues on correctional facilities and incarcerations, with California spending more than 10% (Hakim & Blackstone, 2013). The private correctional facilities in California are mostly found in smaller cities, which do not possess powerful economic bases. The facilities have progressive prisoner rehabilitations programs, which ensure that prisoners who go back to the local communities are empowered. For instance, they apply job training and evaluations programs, psychological counseling, in addition to conducting substance abuse counseling and family counseling. Analysis Advantages Firstly, even though the level of performance and quality is almost similar in both public and private facilities, the main benefit of private facilities is that they relieve overcrowding of state prisons. The facilities help the government to fulfill the need of having more prison bed capacities, while concurrently minimizing operational costs. Secondly, as observed by Nelson (2005), the use of private correctional facilities enhances the state government’s flexibility in terms of their correctional policy. By contracting, the states will not experience high demand for existing prison cells, in the end avoid overcrowding or being forced to build expensive facilities under a constrained borrowing capacity. Furthermore, the local legislators or the justice system would not have to reduce punishments, or stop being tough on certain crimes like drugs use, simply because their jails are full, something that would pose a serious security threat to local communities (Vardalis & Becker, 2000). Therefore, private correctional facilities are crucial as equilibrating means for linking prison cells supply and demand. In terms of cost saving several studies reveal that privately operated facilities reduce the government expenditures on prison by about 10 to 20 percent , however, Hakim & Blackstone observes that by contracting state and local governments are able to save marginal amounts in terms of their long term operation costs (2013). They note that contractors save the state government the cost of building new facilities, reduction of operational costs mostly due to efficient managements of labor costs, in addition to effective administration and enhanced flexibility in their procurement procedure. This is because the private enterprises are not burdened by either unionized government employees or burdensome and inflexible government procurement processes. Another benefit is that private contractors tend to ensure there is expediency and accountability from recognized compliance bodies (Nelson, 2005). In particular, private managers are able to mobilize speedily and effectively unlike governments, and this ensures there is specialization in distinctive undertaking. Most of the private correctional facilities do have state of the art equipments, innovative designs and extensive application of Information technology. As such, this makes them to be more efficient in terms of operations and value specifications. Therefore, the states are able to minimize and even share their liability exposure in the management of these facilities. Another advantage is that the existence of private correctional facilities enhances competition, and this competition drives public facilities to constrain their spending in a balanced manner. As such, privatization of correctional facilities will save them from high costs arising from increasing efficiency. This is more so in states that have smaller prisons, which makes them not to take advantage of economies of scale (Hakim & Blackstone, 2013). Furthermore, private enterprises do offer the state governments’ construction financing, which then permits the states and local governments to pay for only those capacities they require, instead of shouldering long-term debts that are burdening (Vardalis & Becker, 2000). In particular, private enterprises tend to build correctional facilities under minimal timeframes compared to government penal construction projects, which are filled with bureaucracies and red tapes. For instance, a private contractor built a 350-bed facility in Florida in just under five and a half months at a cost of $14,000 for every bed, while the government had estimated to built it within two and a half years but at a much higher cost of $26,000 for every bed (Hakim & Blackstone, 2013). In addition, private facilities offer economic development opportunities for local communities through hiring of locals and the buying of products from local businesses. Another multiplier effect on the local communities is that, privately run facilities remit both income tax and property taxes to local and state governments, and this can be used to fill the budget gaps. For instance, in California and Florida several private correctional facilities have remitted over $26 million to both state and regional governments in taxes (Hakim & Blackstone, 2013). Such incomes are then helps the locals to avoid tax rises and the governments to avoid expensive borrowing to take care of the prison facilities and other related services. Impact on Local Communities Gran recognize that local communities’ reactions to privately operated correctional facilities are based on both intent and subjective factors (2007). He asserts that the monetary evidences are objective while the doubts regarding harmful social outcomes are simply subjective and based on little application. Therefore, it is highly likely that a region can be able to reap some economic gains from privately operated correctional facilities, but these are mostly long-term gains and they are not necessarily bigger economic boosts. For instance, most rural economies have mostly allowed the construction of new prison facilities as a source of stable income. The local leaders hold the view that private correctional facilities are recession-proof growth mechanisms that brings about long term effects through increasing income disparities, and reduction in concentrated poverty though employment (Gran, 2007). Moreover, local officials are seeking more federal funds, since the law requires that census data counts the correctional facility inmates as residents of that region the facility is located, and the more they are the more the more the local governments gets in terms of federal funds dispersed based on population formulas (Vardalis & Becker, 2000). Even though in most states high paying facilities jobs like unit supervisors or head of department are occupied by outsiders since they need highly certified personnel, a considerable number of jobs are created and even such people still settle in the region and contribute to the local economy growth. Vardalis & Becker observes that private correctional facilities provide direct jobs to the local people in form of guards, wardens, physicians, nurses, and cooks (2000). The facilities also bring about businesses not just for local food suppliers or filling stations, but restaurants and hotels, which accommodate the inmates families. Additionally, before renovating or reconstruction of correctional facilities the state requires that the local government improves its infrastructure such as roads, water supply and sewer system, and this helps the locals to have better basic services, especially when they are dilapidated. Other infrastsratural developments include expansion of county jails, and modernization of local courthouses. However, the outcomes are not always the same since some local governments are forced to borrow more in order to fix the infrastructure or to raise taxes. Furthermore, the unepmloyement levels does not dramatically goes down since the jobs offered by these facilities are not as many as initially expected (Austin & Coventry, 2001). Contracting private entities to operate correctional facilities does not lessen the state government ethical or legal responsibility in guaranteeing proper treatment of prisoners and the surrounding communities’ safety (Vardalis & Becker, 2000). The officials ensure that ethical obligations are fulfilled through clearly written contracts that are extensively monitored. The local law enforcement agents are part of the process and they assess the security situation while providing necessary security arrangements. Moreover, the citizens are also ensured of safety since private correctional facilities personnel are also allowed to use force and seek assistance from law enforcement agents to quell riots, violence or prevent escapes. As such, the presence of such facilities does not diminish property values, since the authorities have ensured public concerns are addressed in the contractual obligations and strict reinforcement guidelines (Nelson, 2005).. Notably, the local and state government through the Request for Proposal policies ensures that the private firms adhere to expected outcomes comprising liquidated damages, in case they fail to uphold predictable staffing levels, or they do not affect inmate correctional and behavioral change programs (Vardalis & Becker, 2000). Hence, quality concerns, supervision, and inmates control are not essentially forfeited for cost-savings. Cost analysis Statutory requirements in California just like most states requires that budgetary savings when transferring to private correctional facilities should be as a minimum of between 5%-10% (Hakim & Blackstone, 2013). The California state government saves nearly $164 million every year, and the 2011 data reveals that California has been able to accommodate 8,021 inmates within five privately operated correctional facilities, hence spending much lower costs of $3,200 to $7,800 for every inmate (Gilroy & ettal, 2011). The California state auditor also reports that in 2011, the state was able to pay a much lower cost of $61 to $72 for every inmate accommodated in private facility per day, as compared to the average of $104 which is spent for every prisoner in public facilities every day (Hakim & Blackstone, 2013). Therefore, when the state avoids constructing a new correctional facility by sending prisoners to contract prisons, it avoids capital costs or long run expenses comprising short-term costs, depreciation, as well as principle plus interest payments in bonds used in financing the constructions. Overall, the contract costs have not surpassed the appropriated amounts during the fiscal year mentioned. Most of the private correctional facilities are financed via government released securities referred to as lease-revenue bonds or otherwise certificates of participation (Hakim & Blackstone, 2013). The data also reveals that California standard cost per day of incarceration through private contracting for every inmate amounts to $ 32.20, unlike the over $35.79 used for every prisoner in public facilities (Hakim & Blackstone, 2013). In essence, such private correctional facilities have saved California taxpayers billions of dollars in terms of avoiding construction of other prison facilities. Furthermore, since the state and local government compensated the firms at $42.72 for every inmate, indirect expenses are usually integrated within the short-term cost and Hakim & Blackstone estimates the indirect cost ranges between $3.72-$6.64 for every inmate each day (2013). Therefore, private facilities have additional costs which government or state-operated facility incurred but under a less costly range. It is also evident that while California uses the highest underfunded expenses with each prisoner using $15.18 every day, other states saving vary from between $0.55-$4.44. Hence, California had an average savings of around 32.20% to 58.61%, since the high competition from private facilities produces savings through better performance (Hakim & Blackstone, 2013). Private correctional facilities costs include direct operational costs comprising of personnel salaries, food, and medical expenses. Indirect expenses comprise local and central office management, IT services, planning, and resources development. Even though, nonspecific health care schemes are a component of the bargain during negotiations, insurance and overhead charges are additional cost for private facilities. The private facilities are also under public-private partnerships subcontract services, especially for educators, psychologists, and IT personnel. As such, contracting out saves state other major expenses like adjudication of prisoners complaints, prisoners transfers, liability insurances, parole hearings, auditing and performing of background checks on likely personnel during training and administration of personnel records (Hakim & Blackstone, 2013). Evidently, underfunded employees expenses amount to around $4.252 billion out of the completely unaccounted expenses of $5.4 billion or nearly 78% of unaccounted personnel expenses. The other unaccounted expenses include capital and inmates medical expense. California and Florida private correctional facilities seem have no unfunded expenses, hence making them better compared to states like Oklahoma, Mississippi and Kentucky that have more 20% of their liabilities being unfunded private correctional facility expenses (Gilroy, Summers, Randaz, & Kenny, 2011). In terms of medical expenses, California private correctional facilities have offsite upper limit medical cost, in order to safeguard them from unforeseen medical costs. In terms of onsite medical expenses, all states make it the responsibility of the private contractor. However, those facilities under public-private partnerships do have their own medical personnel to offer care. In California and Mississippi, private prison contractors have to provide medical cover to inmates for up to the first 72 hours, after which treatment in any other outpatient facility shifts to the state to cater for. It is only the state of Oklahoma, which has a unique inmate medical cover, which calls for the private correctional facilities to take care of the medical expenses for every prisoner, if it is between $50000 and $100,000 (Hakim & Blackstone, 2013). Nevertheless, the major factor that affects the development of private facilities is the lack of prospect for legislatures to give them contracts. Therefore, given that, contract terms are increasingly being strict and calling for more spending the private firms are presented with the real risk of being less profitable. This is something that can make investors and financiers to shy away from investing in them. Effect on Employees Working in these facilities can be demanding and sometimes hazardous, and each year several correctional personnel are injured during altercations with inmates. Most of the correctional personnel operate an 8-hour per day work schedule going for five days a week, but on revolving shifts (Austin & Coventry, 2001). The officers also operate on weekends and public holidays, and most of them work in paid overtimes. Employees from the private correctional facilities come from the same industry pool as those from public facilities and they go through similar training. The most common impact on the employees from contracting prison services is mostly immediate, and they include underfunded pensions and renewed or eliminated healthcare terms (Nelson, 2005). This is because the private facilities effort to avoid these costs in order to avoid auxiliary costs. Hakim & Blackstone also observes that, private correctional employees tend to demand less from their firms since they realize that the state legislatures will favor more private facilities to be constructed due to overcrowding, and this can be a threat to their jobs (2013). Notably, the average annual salary for lower ranked staffs comprising the guards and jailors amounts to $ 28,380 (U.S. Department of Justice, 2013). On the contrast, the wages offered to government or state operated correctional facilities, are significantly much higher compared to those given to private facilities employees. While the Federal Government correctional personnel get an average wage of around $50,830 annually, the state operated ones pay their personnel an average of $38,850, even as local government operated facilities pay an average of $37,510. However, private correctional facilities pay an average of $28,900 annually (Hakim & Blackstone, 2013). In addition, job promotion prospects are based on attainment of education and level of experience in observance of facility policies, convention, and operations. In addition, less than 5% of private correctional facilitates personnel are unionized. Majority of the employees in private correctional facilities do not enjoy benefits such as health insurance, pensions, or being paid during off-duty days. In California, it is only the state government that pays some of the facilities employees’ pension and retiree healthcare expenses, even as others are paid partially. Due to such terms, the yearly personnel turnover for these private correctional facilities is around 52 percent, which is greater than the 12-25 % annual turnover for public facilities employees (Hakim & Blackstone, 2013). In terms of management, private facilities apply more managerial systems with the adoption of technological innovations and training. For instance, Florida and California have effective employees and management cooperation through mutual learning, joint training sessions, in addition to adoption of proficient administration approaches. Competition arising from these private correctional facilities seems to constrain public facilities employees’ wages. This is because staffing patterns are increasingly being consolidated, especially for managerial positions (Hakim & Blackstone, 2013). Effect on Prisoners Approximately 10% of the private correctional facilities inmates are re-incarcerated under a period of twelve months as compared to fourteen percent of California public inmates (Hakim & Blackstone, 2013). The contracts private companies have signed stipulate that they maintain the inmates productively occupied mostly via jobs programs and vocational offerings (Gilroy, & ettal, 2011). The inmates’ physical maintenance must be guaranteed through improved upkeep and sanitation. The Vocational initiatives comprise certified lessons in common specialty trades like IT and computers, masonry and plumbing. Furthermore, the inmates have to be trained to be competent personnel through work assignments and in-prison programs, which are based on adult education curriculums. They are also allowed to follow-up complaints though procedures like counseling and spiritual services. Physical analysis, personal counseling, and vocational evaluation are also included in the contracts. The aim of these active programs is to ensure that inmates’ intelligence gathering skills are enhanced, and that they become accountable. Furthermore, the program seeks to ensure that the inmates’ chances of Recidivism are reduced since they are effectively prepared to get some form of employment opportunities (Austin & Coventry, 2001). The facilities are also required to allow the inmates visitation and phone privileges, with the main goal being the improvement of inmates’ morale and that communication is taken very seriously, especially between the staff and inmates, in order to minimize tensions. The contractors’ cognitive and behavioral initiatives are structured based on evidence-based theory, such that innovative programs are delivered. Even though documentation of both public and private inmate health-care services are low due to the effects of overcrowding, the inmates in private correctional facilities are offered extensive medical records follow-ups. In addition, they are given sick-call logs, the contractor covers both inpatient, and outpatient medical expenses although up to a certain limit, but with the inclusion of dental treatment and mental health services (Austin & Coventry, 2001). Disadvantages Private enterprises are not able to meet certain responsibilities in the penal code due to their nature as profit driven entities with no political obligations. Some private correctional facilities have continued to face various lawsuits arising from abuse charges, violence, neglect, criminal death, and mismanagement (Gran, 2007). Secondly, these facilities most often do have contracts which exclude housing gravely ill or perilous inmates, this then overrides the overall goal of correctional facilities of incarcerating and offering best practices on retribution and crime control. Thirdly, since the industry lacks many private companies there is a high risk of having monopolies, especially via political ingratiation or favoritism. This can undermine the liberties and constitutional rights of prisoners given that private firms do have the financial incentives (Gran, 2007). The private facilities are also known for cutting corners to attain high profit margins, and this implies disregarding performance issues. In particular, they tend to cut labor costs through reduced wages and operating with a minimal numbers of employees. Furthermore, they tend to eliminate benefits like healthcare benefits and retiree benefits, in order to cut costs (Vardalis & Becker, 2000). Another expense usually not included by private correctional facilities in their financial calculations is the cost to the state and local government for supervising contract performance (Hakim & Blackstone, 2013). In particular, states incur a lot of money when conducting monitoring of these facilities in-house performance. This includes expenses in administering inmate classification, discipline and several central office procedures. For instance, Oklahoma, California and Tennessee still have 75% of indirect costs used mostly in conducting the monitoring and only saving 25% (Hakim & Blackstone, 2013). Given that local and state governments are, being forced to scrutinize strictly the private institutions for accountability reasons, the long-term costs of these monitoring ultimately increases the cost of them acquiring privatized services, especially due to increased costs incurred from prison litigations. Furthermore, the stipulations of these contracts exposes the state, local and federal government to hefty lawsuits and subsequent compensation packages after termination of contracts, since the contracts lack enforcement remedies that can effectively safeguard them (Gran, 2007). Recommendations The state should come up with a strategy for administering employees’ transitions during the privatization stage. Monitoring should strictly review compliance and performance so that the state and local government public protection interests are safeguarded. New federal and state legislation should ensure that public safety officials are able to undertake collective bargaining with the private correctional facilities, so that they comply with similar public disclosure regulations. Secondly, in order for private correctional facilities to recruit willing and more qualified personnel, they need to increase their pay to levels similar or above those paid to public correctional facilities personnel. Fundamental benefits like pension and health care should be accorded to the employees just like their federal counterpart, in order to fill the current staff deficit. Furthermore, they need to come up with innovative system that avoids placing their personnel under burdensome hours or unplanned shift, so that the facilities can have high retention rates. Both educational requirements and training should be made rigorous, and train their personnel in more specialized instructions and management skills. Conclusion This case study observes that private correctional facilities function in a similar manner and even better than publicly operated facilities. Secondly, they save both local and state government long term costs, especially the costs associated with building new correctional facilities. Thirdly, the level of supervision and monitoring for private correctional facilities is stricter and based on comprehensive contractual obligations, something that ensures there is oversight and accountability. However, public confidence is still low and more legislative and contractual obligations should be instituted, in order to raise public perception and confidence regarding their safety records. Even though they do not bring massive economic benefits to local communities, private correctional facilities are a constant source of revenue for the local governments. The facilities do not just bring long-term economic benefits like taxes, but also have multiplier benefits through creation of jobs and business tenders. Nevertheless, private correctional facilities need to implement innovative approaches regarding corrections. They also need to increase salary compensation and work benefits in order to attract and maintain experienced personnel. As such, future studies should not just be based on similar facility types, but should incorporate institutional capacity and the prisoner demographics. Moreover, they should factor in the time dimension by being done after long-term periods rather than just one-time assessments. References Ammons, D. N., Campbell, R. W., & Somoza, S. L. (1992). The Option of Prison Privatization: A Guide for Community Deliberations. University of Georgia. Austin, J., & Coventry, G. (2001). Emerging Issues in Privatized Prisons. Washington DC: US Department of Justice, Office of Justice Programs. Gilroy, L. C., Summers, A. B., Randaz, A., & Kenny, H. (2011). Public-Private Partnerships for Corrections in California:Bridging the Gap between Crisis and Reform. Scramento, CA: Reason Foundation and Howard Jarvis Taxpayers Foundation. Gran, B. (2007). Holding Private Prisons Accountable: A Socio-Legal Analysis of 'Contracting Out' Prisons. Social Justice , 34 (4), 173-194. Hakim, S., & Blackstone, E. A. (2013). Cost Analysis of Public and Contractor-Operated Prisons. Philadelphia, PA: Temple University Center for Competitive Government . Nelson, J. (2005). Competition in Corrections: Comparing Public and Private Sector Operations. Alexandria, VA: The CNA Corporation. U.S. Department of Justice. (2013). The Federal Prison Population Buildup: Overview, Policy Changes, Issues, and Options. Washington DC: Congressional Research Service. Vardalis, J. J., & Becker, F. W. (2000). Legislative opinions concerning the private operation of state prisons: The case of Florida. Criminal Justice Policy Review , 11 (2), 136-148. Read More