Arizona Prison Cost Claims are Questionable

Commentary

Arizona Prison Cost Claims are Questionable

Letter to the Editor Submitted to the Arizona Republic

The Republic is correct that there’s “no universally accepted method when comparing private and state-run prison costs.” So why did it unquestioningly endorse the claim that private prisons are costlier? (“Fact Check: Are state prisons cheaper than private prisons?,” Oct. 21)

Cost comparisons are tricky. When a government agency compares itself to its private sector competitor, there’s an inherent incentive to paint itself in a flattering light. Further, public and private entities use different budgeting and accounting methods, complicating “apples-to-apples” comparisons.

A good example is the Corrections Department report cited as the source of the “private is costlier” conclusion. It underestimated or omitted a range of costs associated with retiree pensions and benefits, facility construction, prison healthcare, and legal claims. It relied on oversimplified averages, obscuring the widely fluctuating costs of individual prisons. And, it ignored the significant state and local taxes private prison operators pay, unlike their public sector peers.

A Joint Legislative Budget Committee analysis addressing some of these shortcomings concluded that the private sector was less costly, not more.

With more deficits looming, it’s important that policymakers and the public get an accurate view of prison costs that doesn’t understate or misrepresent the benefits of privatization.

Leonard Gilroy is director of government reform at Reason Foundation

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.