The Kentucky Chamber of Commerce is recommending that the state increase its use of private prisons to ease pressure on the corrections budget. According to The Courier-Journal (emphasis mine):
The chamber cited figures from the Department of Corrections that show the average annual cost of housing an inmate in the three privately run prisons in Kentucky is $2,500 less than the average cost in the 13 facilities operated by the state.
"We do not present that as a panacea but clearly one of the items that needs to be considered if you are interested in (saving) $2,500 per inmate," chamber President and CEO Dave Adkisson said during a meeting last week of the General Assembly's interim joint Judiciary Committee.
The state's prison population — about 21,000 — is the fastest-growing in the nation and could reach 31,000 within 10 years, according to a recent report by the Pew Center on the States.
Kentucky spends about $500 million a year to house prisoners, compared with $7 million in 1973. Even adjusting for inflation, the state spends about 14 times as much to house inmates now than it did then. [...]
As of Friday, 6 percent of Kentucky's total prison population — 21,386 — was housed in one of the three private prisons.
State corrections officials are less sanguine about expanding the use of private prisons, saying that it has been "very useful" to the state but does not need to be increased. They also cite higher medical costs at state-run facilities than the private institutions as one potential explanation for the cost disparity.
I'd counter that increasing competitive contracting in corrections would help to drive down both medical and incarceration costs, based on the experience of numerous other states. As discussed in Reason Foundation's new Annual Privatization Report 2009, a 2008 study published by Vanderbilt University found that states that contracted with private corrections companies significantly reduced their prison costs compared to states that did not.
Study author James Blumstein says, "The fundamental conclusion is that, over that six-year period, states that had some of their prisoners in privately owned or operated prisons experienced lower rates of growth in the cost of housing their public prisoners—savings in addition to direct cost savings from using the private sector." In addition to saving money at privately operated prisons, the study found that public facilities that remain under state operation also had reduced costs. States could save an average of $13-15 million per year (based on an average of $493 million in state corrections expenditures) through the introduction of private prisons, according to the study.
Private prisons are playing a critical role in helping states deliver quality correctional services and programming and easing the financial burden on cash-strapped states during the ongoing recession. The Kentucky Chamber is definitely on the right track here.