Privatization & Government Reform Newsletter

Criminal Justice Reforms Prompt Evolution in Private Sector Rehabilitation Offerings

In various ways, private sector providing programs to help offenders reintegrate into society

Detractors of private prisons often cite a supposed conflict between privatization and the growing trend towards criminal justice reforms and reduced prison populations. However, this mistaken view misses the forest for the trees, as the private sector continues to evolve in different ways in terms of how it provides the programs needed to help offenders effectively reintegrate into society.

First, there are the private prisons themselves. If you talk to state departments of corrections that actually hire private prison operators, one of the oft-cited reasons for doing so is that the private sector has a long-track record of providing more inmate education and rehabilitation programs than their government-run peers, typically as a contract requirement.

It’s difficult to quantify this difference, as comprehensive national data on prison programs are not collected. But a 2009 report by the Kentucky Legislative Research Commission compared the state’s three contracted prisons with similar state-run facilities and found that each of the privately operated facilities offered more programming than their state-run peers. And in 2012, the Florida Chamber of Commerce compiled state data on educational, vocational and life skills programming in two privately operated facilities relative to over 20 state-run prisons and found that 80 percent of inmates at the two private facilities participated in personal improvement programs, while just over 20 percent did so in the state-run prisons.

The United Kingdom is taking this concept even further, having launched a pilot program in one of its privately operated prisons that offers a financial incentive to the private operator if they are able to reduce the rate of re-offending by inmates once they’re released.

It’s also useful to look beyond the prison walls, as many of the sensible criminal justice reforms being pursued in various states today are aimed at promoting more effective and less costly alternatives to incarceration, such as community corrections and residential reentry programs.

The private for-profit and nonprofit sectors have long played a role in delivering services in these non-prison contexts, and we’re likely to see that increase in the coming years. Some of the biggest private prison companies have begun to diversify their operations in recent years by acquiring companies in the community corrections and home detention services, for example, and they have begun to step up as players in partnering with governments to deliver day reporting centers, which integrate educational, vocational and life skills training with community supervision and one-stop shop access to social services and housing assistance.

Last, one of the more exciting and promising developments in recent years has been the emergence of a concept called “social impact bonds,” in which private philanthropic organizations, social impact investors, nonprofits or other nongovernmental organizations finance and implement new recidivism reduction programs on behalf of governments under a pay-for-success contract model. As the model goes, the private financiers raise capital to support the work of nonprofits in providing educational, life skills and vocational programs to inmates nearing release from prison, and if the interventions are demonstrated to reduce instances of re-offending—and thereby save public funds from avoided prison costs—then the investors get repaid by governments. If recidivism rates do not fall sufficiently, then governments do not pay and investors risk their investments, which concentrates the focus on implementing evidence-based practices that deliver results.

A wide mix of financiers—including Goldman Sachs, Merrill Lynch, the Rockefeller Foundation, Bloomberg Philanthropies and the Kresge Foundation—are participating in the early recidivism-based social impact bond programs that have been launched in New York City, New York State and Massachusetts over the past two years, and more are set to come online in coming years.

All of this goes to show that as states are rethinking their approach to criminal justice and are growing more averse to increasing the prison population, the private sector’s role in corrections is also evolving rapidly. There is more breadth and depth than ever in what services private companies can provide to governments in terms of helping offenders transition back into society, giving lie to the notion that the private sector is only interested in an ever-expanding prison state. Rather, the marketplace, in various ways, is interested in seeking to capitalize on reducing incarceration levels, improving social outcomes and benefitting the governments responsible for ensuring the effective rehabilitation of offenders in the criminal justice system.

Leonard Gilroy is director of government reform at Reason Foundation and is the editor of the Privatization & Government Reform Newsletter, available here. This article was featured in the April 2014 edition of the newsletter.

Leonard Gilroy is Director of Government Reform





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