Temple economics professors: Private prisons make fiscal sense

BY SIMON HAKIM AND ERWIN BLACKSTONE Published: May 17, 2013
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Like other state governments, Oklahoma's is grappling with serious budgetary pressures. Among the many issues state lawmakers face is a staggering $16 billion in unfunded public-sector retiree benefits. To address these challenges, elected leaders should consider a time-tested and proven solution: contractor-operated prisons.

In a recent study on the issue, we examined government data from Oklahoma and nine other states, including often-overlooked unfunded retiree benefit information. Oklahoma has four such facilities that generate between 16.77 to 36.77 percent in long-term cost savings without sacrificing the quality of services offered. Long-run savings in other states we studied range from 12.46 to 58.37 percent.

Oklahoma first began using contractor-operated prisons in 1998 to ease overcrowding. Since then, instead of building new public facilities, Oklahoma has contracted with private prisons so that new prisons aren't needed. This is a significant money saver for the state.

In addition to the savings generated by the private facilities themselves, we also found that competition yields better performance for private and public facilities. As more contractors compete, both groups work to provide lower-cost, higher-quality service. For example, we found evidence that such competition has affected staffing patterns in Oklahoma public prisons, leading to advances such as the consolidation of some case manager roles and improved food services.

Critics of contractor-operated prisons argue that they generate savings at the expense of quality. Our research found no evidence of this. The private facilities generally met independent industry standards, such as those established by the American Correctional Association, and, in several cases, private facilities offered more rehabilitation programming than their public counterparts. For instance, one contract with a private prison operator in Oklahoma requires 80 percent of inmates be involved in education and job training programs, a rate the facility has consistently met.



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