Out of Control Policy Blog

Arizona Lawmakers Considering Major Prison Privatization Initiative in Budget Plan

As the Arizona Daily Sun reports, Arizona lawmakers are considering a budget proposal that would involve a major—and potentially groundbreaking—prison privatization initiative that sounds to my ears like a long-term lease of three state prisons in return a $100+ million upfront payment. Based on the article, it sounds like bidders would likely compete to both maximize the upfront payment to the state while minimizing annual operating costs for the state:

Republican legislative leaders are crafting a plan to farm out operation of three state prisons to private companies as a method of balancing the budget.

Rep. John Kavanagh, R-Fountain Hills, said he believes companies would pay the state at least $100 million in up-front cash for the right to operate the prisons. That would help lawmakers deal with an anticipated $3.3 billion deficit this coming year. And Kavanagh, who chairs the House Appropriations Committee, said the annual savings to the state for operating these three facilities could be $40 million.

At this point, lawmakers are looking at the state prison in Yuma which now houses about 2,300 inmates, the Perryville facility which has more than 4,000 beds, and the Eyeman unit of the state prison complex in Florence which at last count had close to 5,000 inmates. [...]

The idea of privately run prisons is not new. The state already contracts with private companies to house some inmates. But those deals involve facilities that private companies build on their own, with the state paying a specific daily charge for each inmate housed there. This would involve turning over already built -- and paid-for -- state facilities to private companies to operate, with the price the state pays based on bids received.

At last count, about 4,300 of the state's more than 40,000 inmates were housed in private prisons in Arizona. Another nearly 4,900 are housed in private prisons in other states.

I have always found it puzzling that Arizona:

  • has a robust private prison industry, with a number of private prisons holding federal prisoners (private prisons are the largest employer in Pinal County, for example);
  • contracts with private prison firms to house Arizona inmates in other states, but;
  • doesn't actually house Arizona inmates in Arizona private prisons.

Hence, this proposal seems overdue to me. In fact, it seems like a no-brainer:

  • You've already got a mature private prison industry on the ground in Arizona (read: you'd have robust competition), so this business is old hat. If the state trusts private prison companies to house its prisoners in other states, then there's no reason it shouldn't trust them to operate prisons within Arizona.
  • You've got infrastructure investors looking for all sorts of new and creative opportunities to team with experienced operators to invest in traditional and social infrastructure like prisons and schools. In fact, having just spoken at infrastructure investment conferences over the past few weeks held by Dow Jones and City & Financial, I can say that I kept hearing that same theme over and over. Investors are not just interested in toll road deals, to be sure. 
  • You've got a state with a massive budget deficit to close, so every dollar saved counts.

Expect those ideologically opposed to privatization to start throwing out a barrage of myths and fears. Here's one:

The proposal is likely to get a fight from Democrats -- and not just on philosophical grounds. Senate Minority Leader Jorge Garcia, D-Tucson, called the savings "funny money." He cited studies done by an outside consultant for the state Department of Corrections which show that, when all elements are considered, it actually costs taxpayers less to have the state operate prisons than it would to have them run by private companies.

Senate President Bob Burns, R-Peoria, said he put little stock in that report, saying it was prepared during the administration of Democrat Janet Napolitano who never was a supporter of private prisons.

From what I've seen in my short time so far in Arizona, I suspect that Sen. Burns is probably on target regarding the politics of the situation. More importantly, on the merits, recent research from Vanderbilt University Law School directly contradicts the findings of the referenced state report:

The researchers found that states could save up to $15 million from their yearly department of corrections budgets for the management of public prisons if they introduced the use of privately managed prisons. Those savings stemmed from a reduced rate of growth in the state’s per diem expenditures on publicly held prisoners of around 3 percent per year. Any direct savings from the use of private prisons constituted additional savings.

Blumstein said that from 1999 to 2004, the overall average cost of housing a prisoner in a public facility grew by almost 5 percent in states without a private prison population. States that had some prisoners in privately run prisons had their average cost go up less than 2 percent. States with less than 10 percent of prisoners under private management experienced an average growth rate of almost 2 percent in the per diem cost of housing publicly managed prisoners. For states in which 10 percent to 20 percent of prisoners were under private management; the average growth in the rate of per diem costs for housing publicly managed prisoners was 1.36 percent; and the comparable statistic for states with 20 percent or more private prisoners was 0.36 percent.

Private prisons have a long and successful track record in Arizona, so it is indeed encouraging to see policymakers crafting innovative budget proposals that build on existing, demonstrated strengths. In fact, if Arizona manages to pull off a groundbreaking deal, we may see other states take notice and follow suit.

» Reason's Privatization Research and Commentary

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Comments to "Arizona Lawmakers Considering Major Prison Privatization Initiative in Budget Plan":

Barbara | May 21, 2009, 12:03pm | #

Well, since I work at Perryville, privatizing that prison would affect me greatly. I have worked there for 9 years and now my retirement might be up in the air. Also, private prisons are more dangerous to work at. Even inmates who I have spoken to do not like private prisons due to them being unsafe. All the state needs to do is eliminate all the middle management. The state has created jobs for people who have already retired from corrections, thus double dipping. Take away the blackberrys and go back to pagers. Take away the cars. Eliminate ADWS. I believe if the state eliminated these costs, they could save more and the taxpayers than private prisons.

William | May 21, 2009, 12:28pm | #

A “SINGLE VOICE PROJECT” is the official name of the petition sponsored by: The National Public Service Council To Abolish Private Prisons (NPSCTAPP)


The National Public Service Council To Abolish Private Prisons (NPSCTAPP) is a grass roots organization driven by a single objective. We want the United States government to reclaim sole authority for state and federal prisons on US soil.
We want the United States Congress to immediately rescind all state and federal contracts that permit private prisons “for profit” to exist in the United States, or any place subject to its jurisdiction. We understand that the problems that currently plague our government, its criminal justice system and in particular, the state & federal bureau of prisons (and most correctional and rehabilitation facilities) are massive. However, it is our solemn belief that the solutions for prison reform will remain unattainable and virtually impossible as long as private prisons for profit are permitted to operate in America.

Prior to the past month, and the fiasco of Fannie Mae, Freddie Mac, AIG, Lehman Brothers, and now the “Big Three” American Automobile manufacturers, the NPSCTAPP has always felt compelled to highlight the “moral Bottom line” when it comes to corrections and privatization. Although, we remain confounded by the reality that our government has allowed our justice system to be operated by private interests. The NPSCTAPP philosophy has always been “justice” should not be for sale at any price. It is our belief that the inherent and most fundamental responsibility of the criminal justice system should not be shirked, or “jobbed-out.” This is not the same as privatizing the post office or some trash pick up service in the community. There has to be a loss of meaning and purpose when an inmate looks at a guard’s uniform and instead of seeing an emblem that reads State Department of Corrections or Federal Bureau of Prisons, he sees one that says: “Atlas Prison Corporation.”

Let’s assume that the real danger of privatization is not some innate inhumanity on the part of its practitioners but rather the added financial incentives that reward inhumanity. The same logic that motivates companies to operate prisons more efficiently also encourages them to cut corners at the expense of workers, prisoners and the public. Every penny they do not spend on food, medical care or training for guards is a dime they can pocket. What happens when the pennies pocketed are not enough for the shareholders? Who will bailout the private prison industry when they hold the government and the American people hostage with the threat of financial failure…“bankruptcy?” What was unimaginable a month ago merits serious consideration today. State and Federal prison programs originate from government design, and therefore, need to be maintained by the government. It’s time to restore the principles and the vacated promise of our judicial system.

John F. Kennedy said, “The time to repair the roof is while the sun is shinning”. Well the sun may not be shinning but, it’s not a bad time to begin repair on a dangerous roof that is certain to fall…. because, “Incarcerating people for profit is, in a word WRONG”

There is an urgent need for the good people of this country to emerge from the shadows of cynicism, indifference, apathy and those other dark places that we migrate to when we are overwhelmed by frustration and the loss of hope.
It is our hope that you will support the NPSCTAPP with a show of solidarity by signing our petition. We intend to assemble a collection of one million signatures, which will subsequently be attached to a proposition for consideration. This proposition will be presented to both, the Speaker Of The House Of Representatives (Nancy Pelosi) and the United States Congress.

Please Help Us. We Need Your Support. Help Us Spread The Word About This Monumental And Courageous Challenge To Create Positive Change. Place The Link To The Petition On Your Website! Pass It On!

The SINGLE VOICE PETITION and the effort to abolish private “for profit” prisons is the sole intent of NPSCTAPP. Our project does not contain any additional agendas. We have no solutions or suggestions regarding prison reform. However, we are unyielding in our belief that the answers to the many problems which currently plague this nation’s criminal justice system and its penal system in particular, cannot and will not be found within or assisted by the private “for profit” prison business. The private “for profit” prison business has a stranglehold on our criminal justice system. Its vice-like grip continues to choke the possibility of justice, fairness, and responsibility from both state and federal systems.
These new slave plantations are not the answer!

For more information please visit: http://www.npsctapp.blogspot.com or email: williamthomas@exconciliation.com
To sign the petition please visit: http://www.petitiononline.com/gufree2/petition.html


William Thomas
National Community Outreach Facilitator
The National Public Service Council To Abolish Private Prisons
P.O. Box 156423
San Francisco, California 94115

Angie Snipes | June 26, 2009, 11:43am | #

I heard it is going to make it's way to all of the prisons. Thus creating way lower pay and possible loss of jobs. I don't know.

HR | September 11, 2009, 11:07am | #

Well, it's done. It's not theory anymore. The Governor just signed yesterday and with that sold us. Jobs at risk. All those with their great plans never consider the impact it has on the people. They step on us and are not willing to cut cost where it should and could be cut without damaging the officers. This country is going down in a hand basket and it's going down fast.

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