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South Florida Business Journal

Study: Cost-Savings of Private Prisons Doubted


Privatizing Florida's prison system has done little to lower costs
or reduce recidivism rates compared to prisons operated by the state,
according to a report released Friday by the Florida Center for Fiscal and Economic Policy.

"Florida's experience with privatized prisons raises serious
questions about whether the taxpayers are getting their money's worth,"
FCFEP Executive Director John Hall said in a news release.

Privatization gained momentum in the last 20 years, with six of the
state's 62 prisons run by two private companies - Nashville,
Tenn.-based Corrections Corp. of America (NYSE: CXW) and Boca Raton-based The Geo Group (NYSE: GEO).

Florida law requires that the use of private contractors to operate
prisons must result in a cost savings of at least 7 percent over a
state-operated facility. However, the report noted that the state uses
a "complex and problematic process" to determine actual cost savings
because of the difficulty in comparing public and private prisons.

The report notes that prisoners who are more costly to handle, such
as those who are high security risks and those with extensive medical
issues, are usually housed in public prisons. In addition, most of the
public prisons were built a long time ago and don't provide the kind of
architectural advantages to supervision and custody that the newer,
privately operated prisons do.

"Even the Office of Program Policy Analysis and Governmental
Accountability, which is charged in state law with determining cost
savings, warns that its figures are problematic because of the
difficulty in finding comparable public and private prisons," the
report notes.

Also, while private prisons are required to provide education,
behavioral and substance abuse programs to help reduce recidivism,
there is no data to indicate they work, the report states.

The report comes at a time when prison occupancy rates are on the
rise. Florida has seen prison occupancy more than double between 1992
(47,012) and 2008 (98,192).

Florida's rate of incarceration was 3.6 inmates per 1,000 residents in 1992 and 5.4 per 1,000 in 2008, according to the report.

The report concludes that several steps need to be taken, including
an analysis by an objective research organization, to determine whether
a prison should be operated by a private or public organization.

It also recommends that the procurement process be examined and that
comparable cost information be developed, along with follow-up audits.

Click here to read the full report.


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