Oklahoma Corrections Study Merits Scrutiny

Barbara Hoberock at the Tulsa World reports today that the Oklahoma Department of Corrections has done an internal study which they claim shows that the state has similar or lower costs per prison bed than private prisons. Unfortunately, having scanned the ODOC’s website, they haven’t made a copy of the report available so that we can review their methodology, so at this point I think it’s best to take the study with a grain of salt, because the reported findings raise more questions than answers. First, some context from Hoberock’s article:

The findings were released to the state Board of Corrections last week. [Department of Corrections Director Justin] Jones said the department is required to report rates to the board each year. “We are either less than the private per diems or extremely competitive,” he said.

The cost to house an inmate in a public, medium-security bed is $44.35 a day, compared with $49 for a bed in a Corrections Corporation of America lockup and $44.83 for a bed in a GEO prison, Corrections Department figures show.

Jones said the public rates were calculated before the agency’s most recent budget cuts, so they do not include recent cuts in contracts with private prisons.

The daily cost to house an inmate in a maximum-security state prison is $63.70, compared with $64.50 in a CCA prison, the department says.

Some red flags here:

  • These numbers don’t jive with the ODOC’s own data reported in its March 2009 Facts and Figures publication. There it clearly shows a medium security per-diem rate of $56.10, and a maximum security per-diem rate of $70.04. Both are clearly higher than either the public or private per-diems cited in the article. It may be that these are old figures, it may be that they’re an average of all facilities (public & private), or it may be that the ODOC’s new report ignores important costsââ?¬â?it’s hard to tell without more information. Regardless, the discrepancies warrant further review of the new study’s methodology.

    It may even be that budget cuts and other system changes have actually reduced medium-security per diems by 20 percent in 6 months (from $56 to $44). I seriously doubt it, but for the sake of argument let’s say it’s accurate. In that case, I’d say that the outcome would then validate the findings of the Vanderbilt University study discussed in Reason Foundation’s Annual Privatization Report 2009, which found that states can better keep their corrections budgets in check by partnering with the private sector to deliver correctional and detention services. In essence, the study demonstrated that the injection of competition with private prisons worked to drive cost efficiency in the public prisons. But again, this interpretation is dependent upon the idea that the state managed to bring costs down by 20 percent this year, which just doesn’t happen very often in government.

  • Does the new study factor in the capital costs of the prisons (several hundred million for roughly 5,000 new beds) the state would need to build to house the thousands of inmates currently incarcerated in private prisons? A true apples-to-apples cost comparison would need to factor that in. It’s easy to make the public sector look very cost competitive when you start ignoring significant costs like these. Throw in tens of millions in annual debt service for a public bond issue to build new prisons, and the public sector per-diem rates will starts to look a lot different. If the goal is to compare the value for money for public prisons vs. privateââ?¬â?which should be the underlying question, right?ââ?¬â?then you can’t just wish away major costs, nor the societal trade-offs for pursuing public debt for prisons, as opposed to funding other priorities (or just not adding to the debt burden in the first place).
  • Similarly, did the ODOC factor in those costs borne by the state outside of the corrections budget? What about legal expenses? How about risk management and insurance coverage (states are usually self-insured for these sorts of things, which is probably not in the corrections budget? What about facility maintenance, HVAC systems and the likeââ?¬â?are those costs captured in the corrections budget or handled by another agency? What about overhead and utility costs? The list goes on, which is why (a) it’s tricky to do good public-private cost comparisons (especially when they’re done by the contracting agency itself, who may have an incentive to game the numbers out of self-preservation), and (b) the reported findings of the ODOC report should be taken with a major grain of salt. As they stand today, the numbers are not transparent.

In fact, this is what makes this statement so ironic:

However, Jones said the evaluation is deceiving because the state system also supports an agricultural operation and has different inmate health care costs than private prisons do. The public system does not transfer inmates with severe health problems to the private prisons, he said. “We still have costs they don’t have,” he said.

And the private prisons have costs the state doesn’t have, like taxes for one. Again, a key reason why a true value for money analysis would look at all of these factors, shared costs and unique costs alike, to try to get to an accurate public-private cost comparison.

I’m not the only one who’s skeptical at this point:

Sen. Anthony Sykes, R-Moore, the chairman of the Senate Appropriations Subcommittee on Public Safety and Judiciary, said the analysis was based on assumptions and did not appear to take into account factors that cannot be ignored. He said the state has a long history of maintaining a balance between public and private prisons.

“It appears that DOC has used this analysis to justify having private prisons and halfway houses bear the entirety of the 5 percent cut ordered by the Office of State Finance and that no cuts are being imposed on public facilities,” Sykes said. “At the very least, this action by DOC places the state in potential breach of contract.”

I don’t want to speculate on motivation, but knowing that the study is being released at the same time as the state is requiring the private prisons to bear the entire burden of agency budget cuts demands serious scrutiny of the ODOC analysis. The implication is that Oklahoma has achieved something no other state (or nation) hasââ?¬â?maximum efficiency in their public prisons, to the point that they should be spared any cuts at the same time that many other state services are.

Let’s get realââ?¬â?most states are in a fiscal crisis. No one should be off limits when it comes time to spread the cuts around state government. Whenever some agency claims that it should be given special treatment, it should generally be interpreted as a self-interested attempt to protect its budget. Ask most state agencies and they’ll tell you they too have one thing or another that deserves protection from spending cuts. If policymakers listened to all of them, significant spending reductions in state government would be few and far between.

Ã?” Reason Foundation’s Annual Privatization Report 2009
Ã?” Reason Foundation’s Privatization Research and Commentary