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Strapped for cash and experiencing soaring costs to maintain over crowded jails, Michigan counties are overdue for privatization. Van Eaton cites substantial cost savings in more than a dozen other states where jail operation and management has been privatized. Michigan state government should allow our 83 counties the freedom to employ this promising option. 26 pages.
Today in Michigan, no county jail is operated or managed by a private firm. That's not because the idea is a bad one, but only because out-of-date state laws effectively forbid this promising option to county officials. This is an unfortunate situation because the evidence that "corrections privatization" works is piling up in other states.
At the present time, over-crowding in Michigan's correctional facilities has reached the point where it threatens the very foundations of the state's criminal justice system. Much media attention has focused on state prisons; too little attention has been paid to the problem at the level of a more fundamental component of criminal justice, the county jail.
Operated by the county sheriff, the county Jail stands closest to the people and is, therefore, more directly subject to the will of citizens as they exercise their power to vote sheriff candidates in or out of that office. Nonetheless, over-crowding in the state's prisons has caused judges to impose jail sentences on criminals whose crimes would ordinarily have required their being sent to prisons. As a result, county jails around the state have been burdened with too many assigned inmates. Additionally, their costs and character have been dramatically affected by virtue of the types of people now assigned to them in short-term efforts to relieve the numbers problem at, the prisons.
Virtually every observer of the scene predicts that taxpayers will have to accept higher taxes to finance expansion of county jail space. However, not, even the Michigan Sheriffs Association really knows how much it: actually costs – in terms of the scarce economic resources absorbed by the jail system – to build and operate county Jails in Michigan! Results from MSA surveys indicate that those who are directly responsible for operating jails do not, in fact, know what it really costs and National Institute of Justice surveys strongly suggest that: under government operation, prison and jail construction and operating costs throughout the nation are routinely underestimated. While there are many reasons for this lack precision in government's assessment of cost – none of which have to do with the suggestion that sheriffs and jail administrators will fully fudge the figures – this much is abundantly clear: the costs (in both time and money) at building and operating jails under traditional government techniques in Michigan is enormous and growing.
A private sector corrections industry in America is now well-established. It has developed a documented track record for Wilding and operating minimum, medium and now maximum security facilities at costs well tinder the lowest best estimate of public sector costs. Unlike government: entities, private, for-profit firms must know and account, for all costs. With the bid prices on which they contract with county governments as a given," the private firms then earn a profit only to the extent that they operate facilities in ways that most, efficiently use resources and discourage disruption by inmates. A poorly-run jail is a costly jail and a well-run jail can be a profitable one. Unique to the private sector are the "bottom line" incentives which have led private firms to provide both a humane environment and a low-cost operation. In Tennessee and Florida and a number of other states where this is underway, the beneficiaries of corrections privatization have been taxpayers, county government, the inmates themselves and the private companies involved.
The nation's oldest and largest private corrections firm operates many facilities across the country and is providing service at least as good and at substantial, proven savings over what governments do the job for. Experience suggests that the full range of privatization options would offer many benefits in Michigan as well Facilities could be built faster and smarter. Methods for evaluation, accountability and control would be stronger. Politically unpopular bonding issues and tax hikes could be alleviated. Moreover, conditions are now such in Michigan's jails that there is virtually no way private sector involvement – properly implemented – could do worse than is now the case in the state. Michigan should take advantage of, the growing number of successful private firms in this field arid the new body of cost-effective techniques and technology those firms are generating.
Objections being raised to corrections privatization here are essentially the same as those already successfully handled in other states. Without undermining the legitimate role of government in determining the demand for imprisonment – including sentencing and certain standards within the facilities – privatization can become an effective arrangement in Michigan to resolve the problems of supply and operation. It's time to clear away the obstacles and allow this option for county governments in Michigan.
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This Executive Summary is based on a Mackinac Center Report., "Jail Overcrowding in Michigan: A Public Problem with a Private Solution?" by Dr. Charles D. Van Eaton. Copies of the full 30-page report are available for $10.00 from the Center.
Copyright 1989 by The Mackinac Center. Nothing in this Executive Summary should be construed as an attempt to aid or hinder the passage of any particular legislation before Congress or the state legislature.
Dr. Charles D. Van Eaton is a senior Policy Analyst with The Mackinac Center, a private, non-profit educational organization.
Everyone who has bothered to take a hard look at the issue (and that, unfortunately, is a distinct minority of Americans) knows that in virtually every political jurisdiction in the country where the criminal justice system operates corrections facilities of one size or another, jail overcrowding has become such a serious problem that it threatens to destroy the very foundation of the system itself. Why is there such a problem? Two reasons: citizens have increasingly come to demand that criminals be put behind bars for longer periods of time regardless of the conditions under which they must live; and citizens have generally refused to accept the additional taxes required to expand the current system under which correctional facilities are built and managed.
How bad is overcrowding? Writing in 1987, Dr. James K. Stewart of the National Institute of Justice – Department of Justice – (hereafter referred to as NIJ) observed that while state and federal prison populations were increasing by approximately 74 percent from 1979 to 1986 to a level of about 550,000 persons (adding another 277,444 persons held in local jails brings the overall increase to near 95 percent), total nationwide facility capacity failed to keep pace. [1] According to the Bureau of Justice Statistics of the Department of Justice, and allowing for regional differences in the measure of what constitutes "prison capacity", in mid-1986 state prisons across the nation were operating at 105 percent of their highest measured capacity and 124 percent of their lowest measured capacity. At the same time federal prisons were operating at 127 percent and 159 percent of their highest and lowest capacities, respectively. [2] Adding to this overcrowding problem is the fact that many of these prisons are structurally out-of-date (in 1986 the average prison cell was 40 years old and 10 percent of prisoners were found to be confined in facilities built before 1875) and totally unable to accommodate many of the individuals with special oversight needs who have been assigned to them. [3]
Given this state of affairs, one can understand why at the present time 43 states and the District of Columbia are either under court order to improve living conditions or are facing litigation challenging their operations. [4] Therefore it is clear that, sooner or later, billions of dollars will have to be spent to bring correctional facilities in line with the legal mandate which has been laid upon those who operate them – if the current system for building and operating corr ectional facilities is the only system used.
In response to these problems, and in the absence of immediate access to the economic resources required to build and/or expand facilities, some states have been forced to invoke emergency provisions allowing the early releaseof over 21,420 prisoners; and in 18 states over 8,000 prisoners whose crimes were such that they would ordinarily have been sentenced to prisons, have been assigned to county jails which were never designed to hold them. Whatever this action may have done to relieve prison overcrowding, it has done nothing to relieve overcrowding in general – it has merely placed additional burdens on equally crowded county jails. [5] Indeed, in what has now become part of the corrections industry's folklore, a frustrated Tennessee sheriff facing an overcrowded county jail decided to take matters into his own hands: he handcuffed some of his inmates to a state prison fence all day to protest a federal court order barring entry into the state's already overcrowded prison system. [6]
At the national level it is fair to say that the "crisis on our streets" has now become the "crisis in our prisons": Citizens do not want criminals released to the streets; they do not want to pay higher taxes to build new facilities or expand old facilities; and even when they are prepared to consent to additional government outlays and taxes to cover these outlays, they do not want prisons built near residential centers, If there is a solution, what is it?
In 1983, in concert with the Michigan Prison Overcrowding Project, the State of Michigan's Department of Management and Budget, Office of Criminal Justice, (hereafter referred to as DMB) looked at survey data for the period 1977 through 1982 to examine the problems faced by county sheriffs in the management of countyJails. [7] In 1984 and 1985 the Michigan Sheriffs' Association (MSA) investigated the same topic [8] and then, in a 1988 follow-up, added additional data and recommendations. [9] What all these reports revealed is that Michigan's prisons and, derivatively, its countyjails, face the same overcrowding problems faced by the nation's prisons.
Unfortunately, in most discussions of the prison-jail overcrowding problem, the unique role played by the local county sheriff is often either overlooked or relegated to a secondary role. Once a law-breaker has been arrested and before he has been property tried and convicted, the county jail is used as a holding and processing center. Moreover, after conviction, and depending upon the nature of the crime and the sentence given, the county jail will often be used either to hold the individual before transfer to prison or will be the point where the full sentence will be served. Thus one may say that the county jail is the most fundamental component of the criminal justice system. In this context, to ignore the responsibilities and pressures placed upon the county sheriff is a critical mistake: the county sheriff is the only law enforcement officer directly elected by the people and filly subject to their discontent when things are not as they expect them to be. In addition to meeting citizens' demands that he be actively involved in apprehending criminals, he is required by law to accommodate all other components of a state's criminal justice system through his management of a county jail. In fulfilling the latter charge, as MSA's 1984 study notes [10], in some circles the county jail has become something never envisioned by the average person: the social agency of last resort "saddled with a mixture of one-time delinquents, small-time losers, violent criminals, and social misfits." If this was not enough responsibility for a county's elected chief law enforcement officer, all the studies noted above joined in concluding that in the face of overcrowding in the state's prison system (prisons, in contrast to jails, hold persons sentenced to terms exceeding one year) some Michigan courts are now sentencing to county jails those individuals who, in the absence of prison overcrowding, would ordinarily have been sent to prison. Thus, the overcrowding problem – already evident in county jails throughout the state – is likely to grow worse unless something is done quickly to increase the supply of jail space at the county level, if not space at the state prison level.
Exactly how bad is the current overcrowding problem in Michigan's county jails? The 1983 (DMB) study noted that during the period it reviewed, Michigan's 83 counties were operating 77 jai} facilities which varied in size from a capacity of it 11 to a capacity of 753. Five counties operated lockups and one county did not operate a detention facility. In addition to conventional jail facilities, five counties – Wayne, Oakland, Kent, Genesee, and Ottawa – operated satellite facilities ranging from jail annexes and emergency overflow areas: to security and work release camps. In 1983 the state-wide average age of county jail facilities was 21 years with Keweenaw County's lockup facility (built in 1886)the oldestand Wayne County’s new downtown jail (at that time scheduled to open in fate 1983) the newest. In DMB's 1983 report it was noted that the rated capacity of all jail and satellite facilities (excluding the Detroit House of Corrections) had increased from approximately 6,600 in 1978 to 7,000, an overall increase of 7%. However, over the same period (1978 – 1983) the daily population figures increased from 5,000 to 6,200, an overall increase of 25%. [11]
MSA's November, 1984, study and its 1985 and 1988 follow-ups note that jail overcrowding had actually grown worse since the initial DMB report. Thirty-four percent of sheriffs reported overcrowding in the past, 56.6% reported overcrowding at the time of the 1985 survey, and 74% expected overcrowding to be a problem in the future. Indeed, in 1984 some 30% of sheriffs reported that space limitations in their facilities were such that during certain periods they had been forced to incur annual costs exceeding $1 million to house inmates at facilities in other counties. [12]
MSA reports that by late 1988 the annual number of intakes into the county jail system had risen to over 200,000 and the number of felons within the county system had increased from less than 22 percent to over 50 percent. Counties had increased bed space by over 3C percent from 1984 through late 1988, (to a total of 9,290 jail beds) yet inmates had increased by over 45 percent in the same period so that jail population through 1988 was growing 33 percent faster than available bed space; two out of three county jails were operating at over 100 percent of capacity during each month; and conservative projections. MSA suggested that until something was done to address these problems, all jails in the state would be operating at over 100 percent capacity within the next ten years. [13]
Overcrowding is not the only problem facing Michigan's county jails. All jails in the state are under the mandated oversight of the Michigan Department of Corrections. In its 1985 follow-up study, MSA reported that over 70% of county jails were out of compliance with at least one area of state facility standards. Sheriffs surveyed by MSA whose jails were out of compliance reported that to bring their facilities up to state mandated standards would cost an estimated $470,000 or more. The total cost of bringing all county jails into compliance was estimated to exceed S25.5 miilion. [14]
In the presence of inadequate facility space, another serious problem emerges. Not all jail inmates are alike. If they were, the fact that there may currently be more beds than prisoners in Michigan's county jails would quickly suggest that there is not now anything which could be called a jail "overcrowding problem." However the fact is that in virtually every county jail in the state there are one or more so-called "protective custody" inmates who, penal experts agree, require special attention. Included in this class of inmates are the mentally ill, alcohol abusers, juveniles, the elderly, the chronically il1, drug abusers, those who are suicidal, and those who can be characterized as "passive obligatory homosexuals". Almost 80% of the sheriffs reported that housing the mentally ill was creating a management problem in their jail. Detention of alcohol abusers was a problem in almost 58% of jails. In 1985 some 44% of sheriffs reported that drug abusers were creating a new and growing problem. Overcrowding has added to problems with suicidal inmates, homosexuals and juveniles. (The detention of juveniles in jail requires segregation from tie adult population by sight and sound. A sheriff, to be in compliance with legal requirements, would be compelled to empty an entire wing to detain one child.) Finally, over 75% reported that in the face of growing staff and space demands placed upon county jails by these "special" cases, present facilities and staff levels are totally inadequate to handle the tasks assigned. [15]
The cost of constructing a prison or jail facility is enormous and usually underestimated. Cost estimates for construction vary according to region, type of facility, program needs, and legal restrictions on the use of prison labor but, in their 1985 study of prison costs Charles H. Logan and Sharla P. Rausch cite a Department of Justice study which estimated that based on 1982 dollars, average per-bed construction costs in 1985 were $26,000, $46,000, and $58,000, for minimum, medium, and maximum security prisons respectively. [16] (Since actual expenditures are made at current prices rather than "real inflation-adjusted prices", translating these figures into current 1983 dollars would suggest that the above per-bed construction cost figures today would be closer to $31,000, $54,000, and $68,000 for minimum, medium, and maximum security facilities respectively.)
However large these cost estimates appear to be, the Department of Justice report makes it clear that, by virtue of traditional government budgeting and accounting practices, they do not include such considerations as land purchase, financing costs, cost overruns and hidden costs. With specific reference to financing costs, for example, if construction of a minimum security facility at current-dollar prices were financed by a 20-year bond at 10 percent interest, the real cost would be not $54,000 per bed but closer to $93,000 per bed.
Is it valid to insist that government take long-term financing costs into account and directly allocate these costs to Corrections Department budgets when considering a new corrections facility? That depends upon what costs are understood to be. Economists may not know much, but they do know what costs are. Production costs are the value of alternative goods and services foregone by virtue of choosing to use scarce economic resources for the production of one good or service over other goods and services which these resources could have produced. Private firms act as if they understood this. Therefore, when planning a major construction project they know that they must take account of financing costs for the simple reason that those who supply them with credit will demand that the project show promise of generating additional sales revenues from, consumers sufficient to attract and hold scarce economic resources – e.g., lenders have numerous opportunities to allocate credit to all kinds of projects which use scarce economic resources for the production of goods and services desired by consumers and will ration the supply of credit to one borrower against another based on their evaluation of the value consumers place on the product of these projects. Therefore, such costs must be paid or financing cannot be obtained. Those denied credit or those forced to obtain credit on less favorable terms may not like this, but that' s the way it works in a world where resources are scarce relative to the uses to which resources can be put.
It is standard textbook procedure for a private firm to introduce financing costs into the equation when calculating the 'net present discounted value" of a new plant or building and then to follow with a calculation of the "net present discounted value" of expected future revenues produced by the new facility. If "present cost" exceeds "present estimated net revenues", the building will not be built – unless, of course, the firm, intends to go bankrupt. But since governments are not private firms, what useful purpose is served by insisting that financing costs be calculated and directly allocated before a new jail is constructed?
Even though governments do not "sell" anything in the sense in which private firms sell things, they do incur financing costs and have to obtain funds to coverthese costs in the same credit markets used by private firms. These funds must come either from additional taxes or from reductions in outlays on other government programs. To the extent that citizens' resistance to higher taxes can be overcome, financing costs are likely to be "paid" through increased resistance to future taxes for competing programsit; non-law-enforcement areas of government. Why? Because citizens desire private sector goods and services in addition to public sector goods and services.
When citizens consent to pay higher taxes they have consented to having fewer private goods and services than they otherwise could have had. But this does not mean that they have given up their desire for more private goods and services. The continuing desire to have more, rather than less, private goods and services is so pervasive that once increased taxes have been granted, the ability of local governments to acquire additional future taxes for other public sector projects is virtually eliminated. Therefore a new ;ail can be said to have been paid for through the sacrifice of not only private goods and services but also through the sacrifice of other future public sector physical infrastructure.
If, as is often the case, new taxes cannot be obtained and other government programs have to be cut back to release funds for prison construction, again the full cost of a new jail facility may be said to have been "paid" through the sacrifice of other worthwhile government services. Therefore a local government which acts as if financing costs are not part of the cost of building a new jail or prison and fails to calculate these costs "up-front" before moving forward with the project will find, sooner or later, that the significantly higher demands on government cash flows occasioned by financing costs will make it difficult, if no impossible, for them to fund other areas of government at the same old annual rates of increase. If and when that happens, the new jail or prison may some day come to be surrounded by a community in which all other elements of public infrastructure have receded into a state of advanced physical decay. The unhappy moral of the story is that costs are costs and will be paid one way or the other whether we like it or not.
Even if we have taken financing costs into account and think we know what it will cost to build a new prison facility , we may find that there is even more to jail costs than initially meets the eye. In a study which surveyed 15 states, Cory and Gettinger, [17] found that cost overruns on prison construction averaged 39 percent over the amounts initially estimated and budgeted. The cost overruns they found included the effects of inflation during the years from bid to completion and other "hidden costs" such as architect and agency fees, government construction supervision, equipment and insurance. Unlike the private sector which is compelled to be "product focused', the public sector is constrained by numerous procedural requirements which force it to be heavily focused on "process'". Therefore when attention has to be given to having all elements of government "sign-off" on each and every aspect of financial outlay decisions, significant amounts of time will be consumed. The larger the project (and jails and prisons are not small' projects) the larger the amount of time consumed in meeting the requirements of 'process" and 'procedure' and the higher the cost of final product. In the specific case of a proposed Connecticut prison facility, Cory and Gettinger found that an initial cost estimate of $50,000 per bed actually ended up costing the state $62,000 per bed, a near-25% increase. [18]
Taking all these factors into account, economist Gerald Funke has argued that a 500 bed prison which costs $30 million to build and which has conservatively estimated per-bed annual operating costs of S14,000 , could end up costing $350 million over a thirty-year period. [19]
Once a jail has been built, money must be allocated for its daily operation. In general , net annual operating casts for a specific jail facility are calculated as thecost of personal services plus other operating costs, minus revenues. Something called "facility cost' is net annual cost divided by 265. Dividing facility cost by the number of beds yields average daily cost per inmate. [20] Funke's estimate of annual per-bed operating costs of $14,000 noted above, means that he is estimating average daily cost per inmate of $28 and annual inmate facility costs of $5,110,000 in his hypothetical 500 bed prison. However as is the case with construction costs, operating costs vary widely. The most common estimate is an annual average operating cost of $15,000 per inmate. [21] Yet in their study of incarceration costs, Cory and Gettinger argue that evidence from their 15 state survey also shows a consistent pattern of underestimating annual per-bed operating costs due to the failure of prison authorities to take into account such things as staff fringe benefits; interagency services supplied by other units of government and charged to budgets elsewhere in the government network-, and other off-budget items. Careful analysis of state corrections budgets have shown actual annual per-bed operating costs to be about 30 percent to'03 percent higher than "official budgets" would suggest. [22] Therefore it is altogether possible that the true per-inmate annual cost of operation is not $15,000, as official figures suggest, but closer to $20,000.
In addition to being difficult to estimate, it is dear that the costs of building and operating corrections facilities are quite high by virtually any standard – certainly higher than even knowledgeable people would assume. Nevertheless, there is absolutely no question that money would solve the prison and jail overcrowding problem in Michigan as well as in every other political jurisdiction – federal, state, or local – where correction facility overcrowding exists. Therefore the relevant questions are: When preparing to address overcrowding problems using traditional government "within system" means, do we really know what it costs to build and operate prisons and county jails and; are citizens prepared to pay the present and future costs required to expand these facilities using "within system" means?
Both the DMB and MSA studies of the overcrowding problem in Michigan county jails surveyed sheriffs on what it cost them to operate their jails. Based on these data, both studies calculated the per-inmate daily costs of operating the state's county jails.
The DMB's analysis of county jails over the 1978 — 1982 period reports a 1981 per-inmate daily operating cost of 552.46 in the Detroit-Southeastem area of the state. For the Upper Peninsula-Northern Lower Peninsula area of the state, daily per-inmate costs were calculated to be $34.26. In the rest of the state (essentially the out-Detroit, Southern Lower Peninsula area) daily per-inmate cost was $26.37. The state-wide average daily cost – clearly skewed by the higher costs found in the Wayne County-Southeastern portion of the state – was $38 or $14,494 per-inmate-per-year. [23] But, as the DMB report makes dear, these costs are based on estimates provided by the sheriffs surveyed. As the Department of Justice study noted above makes dear, there is a general tendency throughout the nation for true costs to be underestimated – not because respondents willfully underestimate, but because many costs are charged to the budgets of other government agencies which provide services to county jails. Nevertheless, even though charged elsewhere, these are still costs in the only sense which matters to the community: they represent absorption of present and future scarce economic resources which have the potential of producing equal or greater value to all citizens. Failure to take direct and accurate account of these cots when attention is focused on jails does not eliminate these costs, it merely disguisesthem and causes decisions to be, made with less information than the public is entitled to have in a democratic society.
The MSA studies also provide estimates of daily inmate costs from data submitted by 71 of the state's 77 county jail operators. About one-half of those reporting to MSA gave a daily cost greater than or equal to $25 per inmate with the highest being $93. Based on these reported data, the state-wide average daily operating cost per-inmate in a Michigan county jail – as of March, 1984 – was $28, not $38 as reported to DMB by the sheriffs. According to MSA, if the $28.00 figure can be considered to be accurate, the annual 1984 cost of housing an inmate in a Michigan county jail was approximately $10,220-per year . [24]
The MSA was careful to indicate that its survey estimates of daily costs per-inmate should be taken with "a grain of salt." Self-reporting, MSA noted, is not the best measure ofobtaining precise data and cost estimates are only accurate to the extent that respondents used the same basis for calculation. "Only to the extent that costs such as staffing, food services, maintenance ofthe physical plant, and other services are taken into account equally by all respondents, can real daily costs be reflected. We are not sure that all respondents calculated costs in the same manner. Therefore, our cost figures should be taken as qualitative and reflective rather than precisely quantitative"(emphasis added). [25]
DMB's figures suggest annual per-inmate operating costs of $14,494 and average per-day inmate cost of $38, based on survey results generated in 1981. MSA's figures suggest annual per-inmate operating cots of $10,220 and average per-day inmate cost of $28, based on survey data generated in 1984. How much change had occurred in Michigan's county jails in three years to suggest that per-inmate daily costs could have faller by over 26 percent?
If wages, fringe benefits, food, supplies, and general upkeep and maintenance costs had remained unchanged between the time of DMB's 1981 Cost Survey and MSA's 1984 cost survey, the only thing which could explain the substantial difference in daily inmate operating costs reported by the state's sheriffs would have teen a dramatic increase in average daily population in the state's county jails. According to the DMB survey, the 1981 average daily county jail population was 6,239. [26] According to the MSA, the average daily population in the state's county jails as of March, 1984, was 6095. [27] Average daily population counts are not difficult to obtain: all that is involved is a simple head count. Given that Michigan's sheriffs have been on record in expressing their concern about overcrowding and the need for funds to) expand jail facilities, A is not likely that daily population figures would have been underestimated. In truth, any mistake in population estimates would probably have erred in the direction of overcounting.
Given virtually unchanged population figures between 1981 and 1984 as reported by sheriffs to the DMB and MSA, the only other explanation for MSA's reported lower daily per-inmate operating costs compared to DMB's per-inmate daily operating costs would have to have been falling prices for the economic resources (labor, maintenance, supplies, etc.) sheriffs use to operate their jails between 1981 and 1984. Given that the national Consumer Price Index reveals prices some 14.2% higher in 1984 than they were in 1981, one would be pressed to assume that the prices sheriffs had been compelled to pay for the economic resources needed to operate a jail had fallen by almost 26 percent while prices in general were rising in all other areas of national economic activity.
Why the difference in the DMB and MSA figures? Did sheriffs over estimate their costs in their 1981 report to the DMB or did they underestimate their operating costs in their response to the 1984 MSA survey? On the assumption that Michigan's sheriffs did the best they could to report their operating costs to both surveys, there remains only one other explanation as was nationally true in the Department of Justice survey noted above, so it is also true in the survey of Michigan county jails, no one – including sheriffs – really knows what it actually costs to operate a jail.
Michigan sheriffs, like sheriffs in other states, may be quick to counter that they know what it costs to operate their jails because they're the ones who "count out the money" every day. However the public has the right to ask if there are any services rendered to inmates or to jail employees from any other sources of government – including county health departments; county payroll and pension management offices; county public defenders; county schools; county libraries; county roads and grounds crews; or any other units of government (state or federal) whose contribution to tie continual existence of a jail – including its inmates and employees – are not directly charged dollar-for-dollar to the county sheriff's department generally, and the county jail specifically. If there are – and such is the case virtually everywhere in the nation – then the sheriff is not actually giving a true account of what his office extracts from citizens for the management of his county jail. I want to emphasize that such oversight is purposeful and sinister. It is the result of the highly segmented nature of government accounting and cost allocation procedures. In truth the sheriff may not know the value of all resources tied-up in fulfilling his jail management responsibilities.
In its May, 1988 report, MSA indicated that about 10 percent of counties indicated that they plan to build a new jail facility; 20 percent plan to add an annex to existing facilities; and about 40 percent plan major renovations to existing facilities. [28] In its earlier, August, 1985 follow-up to its major 1984 study of Michigan jails, MSA accepted data provided by sheriffs and projected the need for 1600 additional beds at an estimated cost in excess of 58.5 million. [29] Such a cost estimate implies that the sheriffs believed that they would be able to add these beds at a cost of no more than $5,313 per additional bed.
Granted, one could expect that an addition to an already existing facility would cost less per-bed than a totally new facility, in view of the Department of Justice's study indicating per-bed construction costs of $58,000 (current 1988 dollars with absolutely no cost overruns) for a new medium security prison (not to mention the cost of a maximum security facility) [30], it seems highly unlikely that even with the most careful planning Michigan's sheriffs could have added 1,600 new beds at a cost of no more than $5,313 per bed. If they could, Michigan's taxpayers would be as well served in having their sheriffs sell construction services to other prison and jail jurisdictions as they are having their sheriffs apprehending criminals and holding them in jails following their convictions.
This last observation is respectfully given. No one is saying that Michigan's sheriffs are not doing the best they can. Rather it is given to note that, like operating costs, construction costs are not dearly known – even by those to whom the responsibility of calculating costs has been given. Clearly, before we move to solve the jail overcrowding problem by calling upon citizens to fund the construction and operation of new county jail facilities through traditional "within system" government means, we at least ought to have a dear picture of what it will actually cost to build and operate these facilities. Despite the best efforts of DMB and MSA to obtain tie necessary information on the physical dimensions of jail overcrowding and the prospective financial dimensions of a solution, we ought to know what we're talking about. There is good reason to believe that we don't.
Prison and jail overcrowding is a national as well as a Michigan problem. Failure to do something about this problem threatens to destroy one of the most important elements of our criminal justice system, namely, that part which assures the majority of law-abiding citizens that those who commit crimes will be removed from society for the full period of time prescribed by law. Moreover, when and if such people are returned to society, citizens expect that they will have been sufficiently changed by their period of incarceration to no longer constitute a threat to others. That overcrowding virtually assures that our current prison and jail system cannot meet these ends is self-evident.
The foundation of the criminal justice system is the county jail. Perhaps for good reasons, judges have begun to place increasingly heavier weight on this foundation. The Michigan Sheriffs' Association notes that criminals who would have ordinarily been sentenced to prison are now being sentenced to local jails because, in the face of prison overcrowding, judges have increasingly come to exhibit greater confidence in the proposition that those sentenced to jails rather than prisons will be incarcerated for the time assigned. In addition, jails are seen to have the added advantage of keeping those sentenced under the oversight of the one who has traditionally been more directly responsible to local voters, namely, local sheriffs. Moreover, the fact that jails keep criminals closer to home and family is believed to improve the prospects of their return to useful life upon release. Thus, the character of Michigan's county jails has changed dramatically in the face of prison overcrowding. Demands unknown in the past are now being made upon facilities which were never intended to carry the burdens now assigned to them.
With change in the demands made upon local sheriffs and the jails they manage has come the need to expand old facilities and build totally new facilities. The problem is that in Michigan, as in the nation as a whole, the cost of building and operating jails has reached the point that local communities are either unwilling or unable to finance their expansion and/or construction. Moreover there is evidence which suggests that even those most directly responsible for the management of jails don't know how much they cost to build and operate.
One solution offered by the Michigan Sheriffs' Association – as bold in its implications as are proposals far "privatizing" jails – is to essentially turn over the oversight and control of Michigan's county jails to an independent State Jail Council along with the requirement that state funding be established to assist count/ jails in meeting standards set forth by the proposed Council. [31] While MSA suggests that such Council could be housed in a state agency such as the Department of Management and Budget, they make it dear that their preference would be to have it established through the Sheriffs' Association. Funds appropriated by the state would then be administered by this Council With the oversight of the MSA.
The MSA proposal for establishment of a state agency to take responsibility for the financing and operations oversight of local county jails is interesting for two reasons. First, it would do something local sheriffs have traditionally argued should never be done when proposals to move the oversight and operation of jails away from local sheriffs to a private entity have been offered: take local jails away from the direct democratic control of local citizens acting through their local sheriff. Second, despite its bold tone, it is really nothing more than one more step along the path of trying to solve old problems, no matter how extraordinary their scale may have become, by further application of old "within system' means. That is, in the face of growing demands made upon jails, the assumption is that the only solution to a problem – which can fairly be called a product of "government failure" – is to strengthen and expand the range of government financing and operational control over the local county jail system.
For Michigan's troubled county jails, there may be another way – an "out of system" way. Already a dozen states as well as certain Federal law enforcement branches have begun to address their jail and prison problems by moving to have the private sector manage government-owned jails and prisons under direct contract with government, or build, own , and manage jails under contract to units of government. This movement is called "Privatization." The next section of this report provides a brief history of this process, including current information on cost differences between private and public corrections facilities; acknowledges the objections which have been raised against this activity; and attempts to answer these objections.
"Privatization" refers to the process whereby functions performed by government are transferred to the private sector. For many government services, this transfer can be accomplished in several ways, including user fees, voucher funding, and outright load-shedding. Corrections, however, presents certain economic, legal, and political issues that, in the near future, will likely limit privatization attempts to a single method: contracting out. [32] Given that the first prisons in America were privately owned and operated (Pennsylvania's early prisons were operated by Quaker societies) the current discussion of privatization in corrections could just as easily be called the "reprivatization" of corrections. [33]
Short of turning the entire facility over to a private entity, there has long been a private sector presence in Federal, State, and County corrections facilities through the practice of contracting out of one or more correctional facilities services previously supplied in-house by government employees. A survey released in 1984 by the National Institute of Corrections indicated that such private sector involvement takes the form of services provided by nonprofit groups who concentrate their efforts in adult community treatment centers, halfway houses, and some juvenile facilities [34]: and for-profit firms who provide food preparation, transportation, health (including mental health and drug treatment), community medical treatment, education (including vocational and college-level classes) facility construction, staff training, and facility maintenance. Corrections officials who have made use of private firms for these services have indicated that their decision to use such firms was based upon their discovery that such firms offered greater efficiency and quality than could be obtained "in house" and they expected to make even greater use of such sources of supply in the future. [35] Indeed, even some who are currently critics of the full privatization of prison and jail management , not to mention private sector ownership and management of corrections facilities, support contracting out one or more activities which must, by law, be made available to those who are lodged in jails and prisons. [36]
What is new and controversial is something which goes well beyond having the private sector provide essential services to corrections facilities. It is having private firms take charge of all aspects of a jail, including full management and oversight of jails owned by government through a specific contract with government, as well as construction, ownership, and management of a corrections facility on contract with government. The only difference between these two elements of jail privatization is ownership. In the first "full privatization" approach, government retains ownership of the corrections facility; in the second, every part of the facility is owned by the private firm.
In June, 1987 NIJ published a report on the extent of full privatization of corrections facilities and issued suggestions on proper contracting procedures to public officials who might be considering this approach to solving the problem of jail overcrowding in the face of their limited access to the financial resources needed for solving the problem through traditional 'within system' means. [37] At the time of their survey, NIJ found that approximately 1,200 adults – as distinct from juveniles – were held in secure (emphasis added) correctional facilities privately operated for state and local governments in the United States. NIJ offered a partial list of non-government corrections facilities showing among theinstitutions, by jurisdiction, the following:
(a) State of Kentucky, Marion Adjustment Center, 200 males, minimum security, for-profit contractor.
(b) State of Florida, Beckham Hall Community Correctional Center, Miami, 171 males, unsupervised work release, for-profit contractor.
(c) Bay County, Florida, Jail and Annex, 350 men and women, medium to maximum security, private, for-profit contractor.
(d) Hamilton County (Chattanooga), Tennessee, Silverdale Detention Center, workhouse, 340 men and women, medium to maximum security, for-profit contractor.
(e) Ramsey County, (St. Paul), Minnesota, Roseville Detention Center, 42 females, not-for-profit operator.
NIJ notes further that during the period of Is survey, many states contracted extensively for work release, prerelease, and other nonsecure detention space. California contracted for 1,700 nonsecure beds, Alaska had contracted-out a correctional restitution center, and 5 of Illinois' 15 community correctional centers were privately operated. Furthermore, NIJ indicated that companies or organizations were operating secure (emphasis added) juvenile facilities in 12 States; including Pennsylvania, Tennessee, Massachusetts, and Florida. [38]
Since the publication of NIJ's report, Professor Samuel Jan Brakel of Northern Illinois University School of Law has added additional information on the extent of jail privatization. Given the fact that private firms have had a long history of providing specific services to corrections facilities, as noted above, Brakel argues that the only thing which is unique and controversial in the current jail privatization discussion is the recent rapid expansion of 'the transfer of full management and/or ownership responsibilities of correctional institutions housing sizable populations under substantial security restrictions (emphasis added) – that is, 'primary' facilities or 'real' prisons – from government into the hands of private entrepreneurs who are in the business for profit' [39]. In the year and a half following the NIJ report, Brakel could report that the number of private correctional facilities had grown to some 25 to 30 good-sized facilities, totaling 3,000 beds under private management and preliminary awards to private companies for another 2,500 beds yet to be constructed had already been made. [40]
Why has this occurred? The first and obvious answer is that public officials faced with escalating costs and rising jail populations have been looking for some solution that might help alleviate the burden and think that the private sector may have at least a partial answer to the problem. Anthony Travisono of the American Correctional Association has been quoted as saying that, 'Many public officials hate running jails and find it attractive to get the problems off their backs while saving tax money." [41] Indeed even the Wigan Sheriffs' Association – which laments the growing burden of overcrowded jails but unlike some New Mexico sheriffs, has not yet accepted the idea that the private sector might offer a solution – quotes an unnamed retiring Michigan sheriff who sat, 'A is a sad day when ea sheriff coming into office discovers his job is not so much one of law enforcement as it is one of jail management". [42]
The second: and rat always so obvious, answer is that the private sector – both nonprofit and for-profit – has developed a track record for being able to build and operate correctional facilities more efficiently than the public sector. (Efficiency has only one definition: it means getting more quality and quantity for a given dollar spent or, conversely, unchanged quality and quantity for fewer dollars spent.)
The first private high-security facility dates back to 1975 when RCA (now General Electric) established the Intensive Treatment Unit, a 20-bed, high security, dormitory style training school for delinquents at Weaversville, Pennsylvania. RCA had this facility up and operating within two weeks after the State Attorney General ruled that Juveniles could no longer be kept in the same facility as adults. The second appeared in 1982 when the State of Florida turned over the operation of the Okeechobee School for Boys to the Eckerd Foundation. Prior to this decision – indeed the reason for this decision – the ACLU had filed a lawsuit against the state for "cruel and abusive conditions of confinement in this facility. [43] By the end of 1984, the U.S. Immigration and Naturalization Service (INS) had contracts with two private companies for the detention of illegal aliens. The first company, Behavioral Systems Southwest, had been setting up and running detention centers – totaling 350 beds in Arizona, California, and Colorado – for the I NS since 1983. The second, Corrections Corporation of America (CCA), constructed and opened a $5 million, 350 bed detention center in Houston in 1984. Currently the State of Texas has four 500-bed medium security prisons under contract – two each to CCA and the Florida-based Wackenhut Security Corporation. The Hamilton County, Tennessee, facility noted above is operated by CCA. Southwest Detention Facilities owns and operates jails for several counties in Texas and Wyoming. [44]
This listing is not intended to be exhaustive, only to indicate that as Michigan considers the problems of overcrowding in its county jails, there are private firms which are already helping other states and counties address similar problems through the application of what f call "outside system" means. Moreover, besides the nonprofit foundations which supply corrections facilities services, as of December, 1988, there were at least seven for-profit firms which stand ready to supply such services [45] and there are twelve states which have passed legislation to permit state and county government to make use of such privately supplied correctional services.
On October 1, 1985 the Corrections Corporation of America acquired operation of Bay County, Florida's, main jail at a negotiated daily rate of $24 per prisoner. (Recall from above that Michigan sheriffs' daily state-wide average per-inmate operating costs ranged from $28 per bed to $38 per bed, depending on whether the MSA or the DMB report was the more accurate.) The Bay County Sheriff had requested the County to appropriate 837 per day for operation of the jail. At the time the County was facing numerous lawsuits from inmates and the State Department of Corrections due to overcrowding. CCA immediately remodeled the old 196-bed downtown jail complex at a cost of $700,000 to bring it into State compliance. (That's $3,571 per bed. The reader is asked to remember that the Michigan Sheriffs Association, based on data supplied by the state's county sheriffs and noted above, indicates that 70% of the state's 7,263 beds in place at the time of its 1984 survey were out of compliance with State Corrections Department standards and that it would take in excess of $26.5 million to bring them into compliance. That's more than $5,000 per bed.)
Following remodeling of the old jail, CCA designed and built an expandable 175-bed work-camp facility for $4.3 million. {That's $24,571 per bed for a new – from the ground up – facility. Recall that the Department of Justice study noted above found that when traditional government-built facilities finally came on line, the cost was near $58,000 per bed or more). A further provision of the County's contract with CCA required the company to secure $15 million of liability insurance. CCA retained all former jail employees and hired additional staff . Employee salaries were raised; the new work-camp was air conditioned; a full-time medical staff was added, giving the facility something it had never had before: and, again for the first time, all prisoners were issued pillows.
In response to this private sector lake over" of a government jail, State Representative Dick Locke, who had at one time been a sheriff s deputy, introduced legislation to outlaw private jails and prisons in Florida (recall that the nonprofit Eckerd Foundation was already operating a secure juvenile facility in the state). But Representative Locke did the most extraordinary thing in this day of 'accuse first and investigate later': he visited the CCA jail in Bay County. Fixing it, as he told tie Panama City News Herald "the cleanest and best operated jail I've ever been in," he withdrew his proposed legislation.
Corrections Corporation of America saves Bay County, Florida, over $700,000 per year compared to what it would have cost them to operate the jail under old 'within system' means. Moreover, there is now a new and expanded jail and the County has not had to pay a dime to settle lawsuits because all inmate suits were dropped following the changes initiated by the private contractor. In addition to -he $700,000 saved, the County saves up to $2,000 per day on its road crews without displacing another single employee because improved conditions in the jail under CCA's operation has allowed tie secure release of So workers per day for road work. Finally, CCA makes money on its operation of the Bay County jail. (More on the question of whether or not private firms can, in fact, make money operating jails without doing things which reduce the quality of prison services, will be given below). [46]
When CCA took over operation of the Silverdale Correctional facility in Hamilton County, Tennessee, they immediately remodeled the kitchen; hired full-time medical staff and a full-time counselor-chaplain; added professional dietitians: and made numerous other changes. CCA's contract with Hamilton County, Tennessee, calls for a daily charge of $21 per inmate and saves the local government 12.5% compared to what it used to cost them to operate the facility. No county staff were dismissed and additional staff were hired. CCA covers all its costs at Silverdale and earns only a modest profit. [47]
The new 350-bed minimum security facility completed in Houston, Texas, by CCA in 1984 under contract to the Immigration and Naturalization Service was brought on line in fiveand one-half months at a cost of $14,000 per bed. INS's own estimate for building the facility for itself was two and one-half years and $24000 per bed. CCA's daily charge is $24 per inmate, which covers construction and operating costs [48].
When a private firm takes over operation of a government Fail or when it builds, owns, and manages a jail on contract for government, all costs – absolutely all costs – associated with the construction and operation of that facility must be taken into account by that firm in its bid to government for the right to have the job. Such costs include amortization of the capital costs of the building (i.e., annual depreciation charges); all labor costs, including employee pensions and other fringe benefits; the costs of medical and psychological staff when the contract calls for the presence of such staff; all food costs for prisoners' meals; and all costs associated with recreation, education, and other elements of a jail which are "customary'. It is not always the case – indeed it may seldom be the case – that all the costs listed above will be directly allocated to a local sheriffs budget for operation of a jail. Certainly the annual depreciation charge on the jail itself is not charged for the simple reason that governments do not take account of capital depreciation, despite the fact that physical capital uses scarce resources which wear out through use. Therefore soon loss of physical capacity is a true cost and, thereby, should be counted.
Full privatization of the type discussed in this report is till quite new. But not new is the fact that correctional administrators annually "farm out" numerous services related to the efficient operation of a corrections institution. This suggests, but does not prove, that private firms could do all aspects of corrections cheaper than government. To date the experiences of CCA in its operation of sense facilities in Tennessee, Florida, and Texas; the experience of U.S. Corrections Corporation in its operation of the Marion Correctional Facility in Kentucky: the experiences of CCA and Behavioral Systems Southwest in their construction and operation of secure facilities for the INS, strongly suggest that, indeed, the private sector can do the job for less. Given the serious nature of the problem, one would hope that all officials would pursue the data and theoretical literature which has already beer published to determine if, in fact, my assertion is valid. Professor Charles Logan has developed, and continues to develop, a bibliography of works in this area. To date, there are at least 400 such studies available. [49] In a word, no one need function in ignorance of this issue.
If, in fact, private firms can do the job for less, why are they able to do it? Because they have to do it for less, they have no choice in the matter. Their profit is the difference between what it costs them to deliver the service and the price the unit of government being served is willing to pay. Therefore all their attention has to be focused on product quality and security because a well-run jail is more secure and less likely to suffer breakdown from riots. Therefore, a well-run corrections facility is cheaper to operate. They have to focus on product rather than allow themselves to become bogged-down in bureaucratic procedure because time is money and it's their money that's being wasted when process takes precedence over product. They have to operate it for less because they operate on the basis of a time-specific contract which can be re-bid by other operators at some time in the future. If they fail to take account of their costs on a daily basis; if they run the facility in a way which causes inmates to file suits; if they fail to maintain adequate security; they will lose the contract and be eliminated from contract consideration by all other corrections jurisdictions in the country. For private firms, doing the job well and doing it for less than government – private firms are always going to be in competition with government in the corrections "market" – is everything. The truth is that not one of the things listed here need apply to government operation of a corrections facility. This is not to say that government operators are not dedicated people because they are. It's just to say that theirs is an entirely different 'market' environment from that in which private firms must operate.
It is not surprising that virtually all the principals currently operating for-profit private corrections companies are former state corrections officers (emphasis intended). These people have been trough the system and they know from long experience how bureaucratic focus on process takes away from attention to product outcome. (CCA has seven former state corrections officials on its staff and all its corrections facility directors are former government prison wardens. Buckingham Security of Pennsylvania was formed by a former Pennsylvania State prison warden.) As Mr. Gay Vick of CCA – who formally deigned prisons for the Commonwealth of Virginia – told me, the focus on process rather than product cost him six weeks to make one change in door design when he was working for Virginia; with CCA the same problem could be solved in six hours (his emphasis).
Private prison operators can build for less by using more innovative design and building technology without having to go through the long multi-agency contract-negotiation process which characterizes government construction. Moreover, knowing that design dictates staffing – i.e., labor costs – attention will be immediately given by private firms to the manner in which any given deign affects long-run costs. A design which aims at creating greater oversight and control capabilities for a single guard station (whether it be a design which broadens the open range of `sight control' from a single station or computerizes a locking system) will – for each guard station eliminate (compared to conventional design) over a twenty-four-hour day and seven day week – allow for five fewer guards and five fewer annual salaries, with no loss in internal security. As Samuel Brakel notes in his survey of the current literature on private sector prisons, "better facility design has already resulted in significant manpower savings and improvements in daily operational efficiency." [50]
To this point in the modern history of privatized corrections facilities, there is no question that the private sector is, so far, doing the job for less. But they do not do it for less because – in some magical sense – private prison designers and operators are better or smarter people than public sector prison designers and operators. In fact, they are largely the same people who at one time operated public corrections facilities. They do it for less because, when they enter the arena to submit a bid on a contract drawn up by government, they are forced – as argued above – to function in an environment totally different from that in which public sector prison designers and operators function.
Recall from above that virtually all the actors in the private, for-profit, corrections industry are former state corrections officials (emphasis intended). They a11 operated in the government sector and when operating in that sector they were required to operate according to rules and procedures which took no direct account of what it actually cost to do the job assigned. They all learned that bureaucratic procedures, in and of themselves, did nothing to enhance the quality of service they were required to give to both criminals and citizens. They learned, from first-hand experience, that bureaucratic procedures, whether in giant private firms such as General Motors Corporation or public "firms" such as county government, aim more at protecting those who operate systems than at those who "consume" the goods and services for which the entity was initially created to deliver. Thus they have moved from the public sector to the private sector to acquire the freedom to put into action all they know about how prisons should be operated without having the impediments of useless rules and regulations placed in their way.
A former Texas prison official, David Myers, oversaw CCA's operations of the Bay County, Florida, jail for the first 17 months of its operation. From the vantage point of a seasoned administrator, he told Randall Fitzgerald of the Readers' Digest, "The corrections officer was always at the bottom of the criminal justice system in government....Positions in jails and prisons were too often staffed with people who couldn't cut it in law-enforcement jobs, friends of the sheriff or superintendent .... But with us, the corrections officers are it, they're the top." [51] That is the environment a private firm has to create to run a jail efficiently and such environment, not magic, is the source of greater cost efficiency in private sector construction and management of corrections facilities.
Before any unit of government contemplates legislation authorizing the contracting-out of jail operations, it must be recognized that there are groups which strongly object to such activity.
Privatization of secure corrections facilities began to accelerate in 1984 with the construction and contract-operation of the large INS facility by Corrections Corporation of America and with CCA's management contract with Hamilton County, Tennessee, for a large secure-facility jail. In its report of these activities in July, 1984. U.S. News & World Report, noted that a survey by the National Institute of Corrections found that 75 percent of state corrections directors would not consider contracting out an entire prison to private firms. Some officials indicated concern about being held legally liable if contract guards mistreated inmates. Others were doubtful that private sector firms could actually deliver the services at the costs they quoted. Public employee unions objected on the grounds that private firms would hire unqualified guards at less money than the low pay many prison guards already earned. Other critics argued that it would not be moral for private, for-profit, firms to hold people behind bars for profit. Only government, they contended, should have the power to limit people's freedom. [52]
As Michigan contemplates legislation permitting local governments to explore privatization of minimum and/or medium security corrections facilities, the objections offered by the Michigan Sheriffs' Association have to be considered. Generally these objections can be found in a study done for MSA by Public Sector Consultants, Inc., (hereafter referred to as PSC) of Lansing, Michigan, and drafted in June, 1983. [53] Although there is nothing really new in the objections offered – they are, in fact the standard objections offered by the National Sheriffs' Association – they deserve to be considered by anyone who wants to be better informed on the issue. In what follows I propose to list these objections and attempt to counter the arguments offered in opposition to privatization of corrections facilities.
In its introduction to its analysis of the issue for the Michigan Sheriffs' Association, PSC admits that from a fiscal standpoint, privatization is, at first glance, undeniably attractive due to the recognized ability of the private sector to deliver greater value at a lower price while simultaneously earning a profit. Nevertheless, MSA – through PSC – objects to privatization on the grounds that critical legal issues are raised by this practice.
PSC cites federal court decisions which note that despite having contracted with a private entity, a county remains liable for any constitutional deprivations caused by the policies or the customs of the private entity; and court decisions which state that inmates confined in private correctional institutions must be afforded the same rights and duties, privileges and obligations, and remedies, and liabilities as those confined in public facilities. (PSC, pages 5 and 6). Therefore, because every inmate is constitutionally guaranteed due process, every such dispute holds the potential for federal civil rights action and results in MSA's raising questions as to whether or not the power to incarcerate can be delegated. Citing additional federal court rulings which argue that contracting out detention facilities in itself violates no inmates' rights so long as access to due process is preserved, PSC informs MSA that virtually all the activities attendant to the operation of a secure detention facility can be delegated (emphasis intended) if government is willing to assume ultimate liability, should such liability emerge (emphasis intended). (PSC, page 6 and 7).
Moreover, PSC's report to MSA acknowledges that such authority as private prison operators possess derives directly from governmental contracts and applicable state statutes. Inmates, MSA recognizes in knowing or unknowing opposition to the argument continually made by ACLU opponents of privatized corrections facilities, are not denied their freedom by private firms, but by government. "Inmates are incarcerated directly as a result of the workings of state and local law", not by the actions of a private prison contractor. (PSC, page 8) Therefore, as MSA argues through PSC, privatized jails open the grave possibility of "exposing the state and its political subdivisions to costly, and perhaps futile, litigative defenses in future court decisions aimed at making local governments fully liable for the actions of their private sector penal vendors." (PSC, page 8).
As MSA surely knows, liability of the contracting government agency is based on thepremise that corrections is an essential aspect of the police powers of "Mestate, county, or municipality. [54] Despite its expression of concern suggesting that an irresponsible private vendor would impose heavy liability burdens on local corrections officials, in a seemingly contradictory passage in the same context, MSA virtually acknowledges that government is better protected against direct liability when facilities are operated by private vendors than it is now. In its analysis for MSA, PSC notes that since the 11th Amendment generally bars citizens from federal court suits against their own state or its political subdivisions, a private company would be far more open to prisoner suits than would a state prison operator if for n[ other reason than it's easier to sue a private firm than it is to sue government.
Therefore, in opposition to the argument that private firms can do the job for less, PSC and MSA argue that private firm would be compelled to carry costly liability insurance which would raise their costs well above what it would cost government to build and operate jails. (PSC, page 5) In other words, MSA knows that the real liability for problems in a corrections facility operated by a private vendor would fall on that vendor, not the county. [55]
In expressing concern about the cost to the private contractor of obtaining insurance to cover legal liability should a prisoner sue for violation of civil rights, MSA is dearly arguing that primary liability will lie with the private vendor and the private vendor would have to incur costs not currently incurred by government-operated jails. (Emphasis intended). This expression of concern derives from the assumption that a private vendor will virtually always do a poorer jab of operating a jail and looking after inmates' civil rights than would a government operator.
Yet in its 1988 analysis for MSA, PSC notes that just in the preceding year, more than 19,000 prisoner civil rights suits were filed against the federal penal system alone. An equal number of suits have been filed against state prisons and county jails. Therefore, under current "within system" techniques of jail management, States and their political jurisdictions are not directly threatened with the loss of money from such suits – indeed, sheriffs currently boast of their lack of need to incur insurance costs against the possibility of financial loss – they are threatened with the loss of something more fundamental: legal power and democratic control over the operation of the correctional facility. When bad management brings courts into the picture, power over the facility (which means the power which citizens have over the facility) is removed from the state or county and given to non-elected judges.
But a private vendor, as the target of choice, would lose money. Therefore it is always (emphasis intended) in the private vendor's interest to operate a corrections facility in a manner which dramatically reduces the probability of such suits. No such incentive currently resides in government operation of corrections facilities. If the concern is about protecting the civil rights of inmates, private vendors promise better performance than government operators because their potential financial costs for failure to properly manage are real, potentially knowable, and insurable. Therefore, such costs will certainly be taken into account when contracts are bid – as they are in every private contract currently in place where private firms operate corrections facilities, and operate them for less than it had previously cost government.
However, if the concern is about the potential for legal liability passed upward to units of government in the event suits are filed by inmates – and that seems to be MSA's only concern – it should be acknowledged that, given the condition of government-operated facilities in the absence of privatization – government operators, as attested by the thousands of suits which have already been filed, are extraordinarily open to such suits now. and are losing control of the facilities they operate. It is difficult to believe that private operators who must focus on maintaining their operations in ways which assure security and which minimize grounds for costly suits – since, as noted above, well-managed facilities are less costly to operate and, therefore, more profitable to operate – would bring greater threats for legal liability on local governments, than already exists.
"I'm concerned", one sheriff told me, "about what would happen if a prisoner escaped from a privately operated jail." His concern, though not explicitly stated, was about the use of deadly force. The analysis done on this issue for MSA by PSC states the issue as follows "in a democratic society, the rights to imprison citizens against their will, to exercise force to prevent escapes, and to impose penalties on those who violate penal rules and regulations are powers vested in government ...the degree to which such powers can be delegated remains under litigation in the courts even to this day ...to the extent that private firms cannot exercise these powers, the effectiveness of their detention efforts is gravely diminished ...Conversely, to the extent that such powers are abused, the contracting government as well as the private offender remain liable." (PSC, page 8).
All secure jail facilities are facilities to which people who are expecting to serve an extended period of time will be assigned. Such people will want to escape if they can. What would happen if such a prisoner were to escape from a government-operated jail – and such escapes happen all over the country all the time? The answer is that every element of law enforcement – state, county, and municipal – would be brought to bear to apprehend the escapee. When apprehended, he would be brought back to jail. What would happen if someone escaped from a secure privately-operated jail? Exactly the same thing!
The real issue here is not whether or not someone might escape or whether or not all that which usually attends the daily operation of a secure facility and which characterizes a government operated facility will be allowed to characterize the daily operation of a private-firm facility. The issue is the power to delegate. If that power is legal, then all the issues noted above can, and should be, carefully addressed in the contract between the unit of government and the private vendor. If the power to delegate is not present, the issue is irrelevant and all private corrections facilities are illegal.
Presumably, no government entity can, in the final sense, "delegate' ,.s corrections responsibilities since it is prohibited from alienating entirely its police powers. [56] In practice, governments are already able to "dodge" this responsibility since individuals acting in their capacities as government employees are granted a qualified immunity against claims arising out of their "official" actions, depending on the discretion allowed, and the responsibility of, the official. [57] At the present time, no such immunity appears available to private corrections firms and several states have incorporated specific, and more stringent, provisions concerning liability. Private corrections firms understand this and have written specific provisions into their contracts with government units to indemnify government for any lawsuits brought relative to the operation of facilities.
Some argue that the issue is not whether or not government can delegate the operation of a jail to a private firm, with all the activities which attach to such operation, but where ultimate responsibility far what goes on in the jail lies. In the case often cited by those who oppose privatization – Medina v. 0'Neill – the INS's defense of no-state action was denied when a guard from a privatized security firm accidentally but negligently shot and killed one inmate and wounded another. But what was not questioned by the court was the power to delegate the operation of the facility to a private firm. Delegation was accepted as a given. (emphasis intended) What was at stake in this case was where ultimate responsibility lies. The court ruled that it lies with the state. [58] The solution to such potential problems lies in contracting which assures indemnification by the private contractor. Such language is standard in all current contracts and moves the legal delegation issue of jail operation to the status of no issue at all.
One final note on the delegation question: Professor Ira Robbins of the American University School of Law is a strong opponent of prison and jail privatization. Yet, as he has noted in this general context, the delegation of central state authority to subagencies, both public and private, is one of the most common and unavoidable features of modem government and that no such delegation has been invalidated by the United States Supreme Court, nor any lower courts, in over 50 years. [59] The question, therefore, is what is so special about delegating the operation of a corrections facility? The answer may lie less in questions of law than it does in questions of political philosophy.
Many of the moral-social control arguments against privatization sound a lot like simple, old-fashioned, prejudice against private, for-private, activities in general. Far example, in its analysis of the issue for MSA, PSC offered the following argument.- "A penal system predicated on profit, with no incentives to reduce overcrowding or to consider alternatives to incarceration, might actually provide incentives to build more jails and fill them to capacity ...a low occupancy rate, with greater rehabilitative services, on the other hand, could be inconsistent with the goals of a well conceived business plan" (PSC, page 13). Prisoners, rights groups, the ACLU, and the American Federation of State, County and Municipal Employees Union have made similar arguments. It is worth noting, however, that those who would make this class of argument virtually never suggest that those who support expanded government support of day care facilities would find it in their economic interest to join the fight against abortion on the grounds that fewer babies born would mean less need for government funding of day care facilities. Therefore it is hard not to believe that this argument covers what may fairly be called the simple "self-interests" of certain groups which do not like the prospect of private-sector economic competition in corrections facilities. [60]
PSC offers another popular and vaguely disguised anti-private-firm argument to the effect that government would be subject to "low-balling' by private firms in order to destroy the capacity of government to supply future prison services in competition with private firms: "Safeguards must be raised adequate to prevent a contractor from making an initially low bid to obtain a contract and then raising his prices after local government can no longer expeditiously resume the task of jail operation" (PSC, page 15). Putting the case in its correct economic context reveals the absurdity of the argument. " A private firm knowingly offers a bid which fails to cover its costs over the three-or-more-year life of the contract. During this time of financial loss the firm has to go into continual debt to cover its operating expenses. When the contract comes up for renewal, the firm will demand a price sufficiently high enough to guarantee not only a profit over the life of the new contract, but high enough to cover all the losses incurred in the old contract so that far the full period of both contracts, the firm will have shown a profit sufficient to satisfy its creditors and shareholders."
Of course the obvious problem with this argument is that when the contract comes up for renewal, the price the firm would have to extract would be so high that other firms in the industry would find it easy to outbid the firm and win the contract. Thus the firm would never be able to cover its costs and earn a profit sufficient to attract capital and remain in business. The moral of this story – as even those who find it difficult to understand why firms cannot afford to go an for years losing money in the hopes of being able to make it back in a distant future they can not possibly envision – is that while private entrepreneurs may be greedy, they are certainly not stupid. And neither are those who lend them money to finance their operations.
No one is advocating that government abandon its responsibility for corrections facilities. Indeed, government cannot abandon this responsibility because it has been given this responsibility by the people. Professor Charles Logan of the University of Connecticut at Storrs and a Senior Fellow at the National Institute of Justice, makes the following argument about the legal foundations of responsibility and delegation of authority in corrections. The state does not own the right to punish, but derives its authority – as it derives all its powers and authority – solely from the consent of the governed. It follows, he contends, that this authority may, with similar consent, by delegated further to subsidiary trustees provided that they, too, are ultimately accountable to the people and subject to the same provisions of law that direct the state. It is the law, Logan argues, not the civil status of the actor, that determines whether any particular exercise of authority – including the use of physical force or other coercive measures – is legitimate. [61]
The question of a state's legal right to delegate its authority to protect and punish has already been decided. Liability still remains and liability can and is being handled through precise contract language. Moreover, no one advocates delegation to determine sentences; this is a due process issue and the state will always retain its primary responsibility to assure due process. The Michigan Sheriffs' Association has expressed concern, noted above, about the exercise of powers by a private jail contractor in matters dealing with what is actually a due process issue related to determining when a prisoner can receive "good time" off his sentence. (PSC, page 5). If there is any comfort, MSA can be assured that no private contractor has ever attempted to take this responsibility away from government. Indeed, CCA, in its standard management contract, includes language to the effect that "the County will be responsible for the computation of inmate sentences, including but not limited to computation of good time awards, discharge dates, and parole eligibility dates." [62]
Clearly, the present overcrowding crisis in Michigan's prisons and county jails demands a solution. The sums of money which will be required to solve this problem are so vast using traditional "within system" means, that it is highly likely that the public will simply refuse to pay. If and when that happens, the criminal justice system could collapse.
With what I call "outside system" means available through the private sector, it would be a mistake to accept the charge that private corrections firms are a threat to a state or local government operator of a corrections facility. In contracting out for private sector prison management, the state does not leave the field of play; it actually improves its ability to win against those who break tie law. Private firms promise greater efficiency. Greater efficiency amounts to the acquisition of increased economic resources – resources which can then be assigned directly to the street to deter crime.
In a careful contractually designed partnership with a private vendor – and absolutely every advocate of the private sector corrections industry argues strongly for careful and complete contracting which specifies all duties and responsibilities and provides for competition in both space and time – all that has been created when the talents of private jail operators is brought to bear on the problem of jail overcrowding is another layer of responsibility which adds to the solution, not abandonment of government responsibility.
Moreover – and this is frank and valid criticism of current jail conditions – conditions are now such in Michigan's jails that there is virtually no way a private vendor could do worse than is now being done. Indeed, under private contracting, government monitoring would undoubtedly be tighter than it is now. No one – especially the private contractor who must bear direct financial responsibility for poor conditions and the high operating costs generated by poor conditions – would allow conditions to become worse.
Corrections privatization contemplates a partnership from which both sides may profit. No one has proposed the total abandonment of government's corrections responsibilities. But when present estimates indicate that, nationally, prison and jail construction proceeds at a cost of some $65-70 million per week, [63] and government continues to fail behind, a refusal to consider private-public sector participation in Michigan would be nothing short of irresponsible.
James K. Stewart, Testimony Before the President's Commission on Privatization. The Report of the President's Commission on Privatization, Washington, D.C.: March 1988, at 146.
Ibid, at 146
Ibid, at 147
Ibid, at 147
Ibid, at 148
Randall Fitzgerald, When Government Goes Private, New York: University Books, 1987, at 107.
Michigan Department of Management and Budget, Criminal Justice Division and Prison Overcrowding Project, "Report on Michigan's County Jails. 1978-1983", Lansing, MI: 1984.
Michigan Sheriffs' Association and Prison Overcrowding Project, "Report on Michigan's County Jails 1984", Lansing, MI: 1984.
Michigan Sheriffs' Association and Prison Overcrowding Project, "County Jails, 1985", Lansing, MI: 1985.
DMB, supra note 7, at 3
Ibid, at 7
MSA 1984, supra note 8, at 59.
Michigan Sheriffs' Association, "Report on County Jails, 1988", Lansing, MI: November, 1988, at 5.
MSA 1985, supra note 5, at 3.
Ibid, at 5.
Charles H. Logan and Sharla P. Rausch, "Punish and Profit: The Emergence of Private Enterprise Prisons", Academy of Criminal Justice, Justice Quarterly, VI. 2 Number 3, Washington, D. C.: September, 1985.
B.Cory and S. Gettinger, Time to Build? The Realities of Prison Construction, New York: Edna McConnell Clark Foundation, 1984. cited in Logan and Rausch, Supra note 17, at 306.
Logan and Rausch, supra note 16, at 305.
G. Funke, "Who's Buried in Grant's Tomb? – Economics and Corrections for the Eighties and Beyond", Alexandria, VA: Institute for Economics & Political Science, Cited in Logan and Rausch, supra note 16.
DMB, supra note 7, at 8 & 11
E.W. Zedlewski, "The Economics of Disincarceration," National lnstitute of Justice Report, Washington, D.C.: U.S. Department of Justice, May, 1984. Cited in Logan Rausch, supra note 16 at 310.
Cory and Gettinger, as cited in Logan and Rausch, supra note 16, at 310.
DMB, supra note 7, at 8 & 11.
MSA 1984, supra note 8, at 17, 21, 22, & 48.
Ibid at 48.
DMB, supra note 7, at 6.
MSA 1984, supra note 8, at 19.
MSA 1988, supra note 13, at 9.
MSA 1985, supra note 9, at 4.
Logan and Rausch, supra note 16, at 313.
MSA 1988, supra note 13, at 6.
Judy Grant and Diane Bast, "Corrections and the Private Sector: A Guide for Public Officials", Chicago, IL: The Heartland Institute, May 4, 1987, at 1.
William Nagel, "The New Red Bam: A Critical Look at the Modem American Prison", (1973), cited in Grant and Bast, supra note 32, at 15.
Camille and George Camp, "Private Sector Involvement in Prison Services and Operations", Washington, D.C.: Criminal Justice Institute for the National Institute of Corrections, February 1984, at 17.
Ibid at 5 & 7.
This suggestion is strongly made in a study done for the Michigan Sheriffs' Association by Public Sector Consultants, Inc., Lansing, M1., June 1, 1988. at 16 & 17.
National Institute of Justice, U.S. Department of Justice, "Research in Brief", Washington, D.C. : June, 1987.
Ibid at 22.
Samuel Jan Brakel, "Privatization and Corrections," Santa Monica, CA: The Reason Foundation, January, 1989, at 3.
Ibid at 4.
As quoted in U.S. News & World Report, July 2, 1984, at 45.
MSA 1984, supra note 8, at 2.
Logan and Rausch, supra note 16, at 307.
Ibid, at 307.
The companies are: Corrections Corporation of America (TN); Buckingham Security (PA); U.S. Corrections Corporation (KY); Behavioral Systems Southwest (CA); Wackenhut Security Services, Inc. (FL); General Electric Corporation (PA); and Southwest Detention, Inc. (TX).
The information on CCA's Bay County, Florida, experiences Comes from The Role of Privatization in Florida's Economic Development, Miami, FL: the Law and Economics Center of the University of Miami and The Local Government Center of The Reason Foundation, Santa Monica, CA. 1987, at 11 — 13; The Corrections Corporation of America, 28 White Bridge Road, Nashville, TN; Conversations with the Editor and Reporters for the Panama City News Herald, Panama City (Bay County) Florida; and Randall Fitzgerald, supra note 6, at 109 — 111.
Ibid.
Lynn Adkins, "If Taxpayers Won't Build New Prisons, Business Will," in Dun's Business Month. June, 1984. Cited in Grant and Bast, supra note 32, at 6.
Charles Logan, "Privatization and Corrections: A Bibliography". Washington, D.C.: the National Institute of Justice, January, 1989.
Brakel, supra note 39, at 6.
Fitzgerald, supra note 46, at 111.
U.S. News & World Report, supra note 41, at 46.
Public Service Consultants, Inc., Lansing, MI: June, 1988.
J. Michael Jr., "Thoughts About Prisons for Profit", in Does Crime Pay? An Examination of Prisons for Profit (1985) as cited in Grant and Bast, supra note 32, at 9.
Ibid, at 10.
Ibid, at 9.
Ibid, at 10.
Brakel, supra note 39, at 14.
Ibid, at 14.
Ibid, at 27.
Charles Logan, "The Private Prison: The Moral Case", London: The Adam Smith Institute, 1988.
Corrections Corporation of America Management Contract, as cited in Grant and Bast, supra note 32, at 9 and 17.
Brakel, supra note 39, at 24.
The author wishes to thank the many people who contributed to this report. The people interviewed gave of their time and expertise graciously – even when they did not share the author's conclusions.
A very special thanks to Professor Charles Logan of the National Institute of Justice; Mrs. Diane Bast of the Heartland Institute; and Mr. Gerald Hicks, Sheriff of Hillsdale County, Michigan.
Charles D. Van Eaton is an economist and Senior Policy Analyst with The Mackinac Center for Public Policy.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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