New Vanderbilt research finds that states can save a substantial amount of money if they use a shared system of both privately and publicly managed prisons. The savings don’t come from the use of private prisons alone, but
“The fundamental conclusion is that, over that six-year period, states that had some of their prisoners in privately owned or operated prisons experienced lower rates of growth in the cost of housing their public prisoners,” said James Blumstein.
The researchers found that states could save up to $15 million from their yearly department of corrections budgets for the management of public prisons if they introduced the use of privately managed prisons. Those savings stemmed from a reduced rate of growth in the state’s per diem expenditures on publicly held prisoners of around 3 percent per year. Any direct savings from the use of private prisons constituted additional savings.
Blumstein said that from 1999 to 2004, the overall average cost of housing a prisoner in a public facility grew by almost 5 percent in states without a private prison population. States that had some prisoners in privately run prisons had their average cost go up less than 2 percent. States with less than 10 percent of prisoners under private management experienced an average growth rate of almost 2 percent in the per diem cost of housing publicly managed prisoners. For states in which 10 percent to 20 percent of prisoners were under private management; the average growth in the rate of per diem costs for housing publicly managed prisoners was 1.36 percent; and the comparable statistic for states with 20 percent or more private prisoners was 0.36 percent.
While one inference is that the growth in per diem spending on public prisoners is negatively related to the percent of a state’s private prisoners, Blumstein warned that these particular findings should be regarded as tentative or suggestive, not definitive, given the small number of states with more than 20 percent of their prisoners under private management.
The study can be found in the forthcoming volume of the Virginia Journal of Social Policy and the Law and at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=441007.
Initial work on this project was partially funded by the Corrections Corporation of America and by the Association for Private Correctional and Treatment Organizations. Subsequent research was funded by the Owen Graduate School of Management and Vanderbilt Law School.
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