Richard C Brister. Prison Journal. Volume 76, Issue 3, September 1996.
Today, in the United States, federal and state prisons house more than 1 million men and women, not including an estimated 500,000 in jail facilities (Mollins, 1995, p. 34). The number of inmates continues to escalate at an estimated 1,500 new prisoners per week. This increase represents a growth at 10 times the rate of the U.S. population in the past 10 years. Put another way, an average of almost 400 out of every 100,000 people in the United States are in prison. In Texas, the count is 545 out of every 100,000 people (Stephenson, 1995, p. 121). Also in the United States, the cost of confining inmates has doubled in the past 5 years to a cost for taxpayers of almost 50 billion dollars annually (Stephenson, 1995, p. 121). In 1994, Texas budgeted more than 265 million dollars for capital expenditures on adult state departments of corrections. Capital expenditures in Texas included money to build new facilities, to renovate old facilities, and to purchase new equipment (Stephenson, 1995, p. 121). Forty-five states, including Texas, are under some type of court order or consent decree to curb overcrowding (Maio, 1995, column A6). Many diverse solutions have been proposed to meet the requirements of the court mandates. New prison construction, electronic monitoring, early release, reclassification of certain felony offenses to misdemeanors, and prison privatization are but a few. Probably the most controversial is the concept of privatization.
This article, in three parts, will address the concept of privatization and its potential to provide an effective method of relieving some of the burdens on Texas prisons. Part 1 will provide a historical summary of the early years of the Texas prison system and, coincidentally, the advent of privatization in Texas.
Part 2 is a compilation of evidence, primarily a synopsis of major debate issues, showing the degree to which the anticipated benefits of reprivatizing are being recognized in the United States and in Texas. Conspicuous by its absence in the synopsis, especially regarding prison quality, is the effect of the landmark case of Ruiz v. Estelle (1980) on prison management in Texas. In short, Ruiz mandated that certain basic requirements be met to pass constitutional muster—and the requirements apply to both private and public correctional institutions. It could be argued that the criteria by which prison management is judged in Texas are based on the most effective, yet economical, adherence to those judicial requirements. The scope of Ruiz is important and far-reaching, thus deserving of mention, but the scope of this evaluation is painted with a much broader brush on a much larger canvas.
Finally, as a point of reference, Part 3 provides a statistical snapshot of the current status of the privatization movement in the country and in Texas.
Part I. Historical Overview of Texas Prisons
A review of the formative years of the Texas Department of Corrections, and early experiments with the use of Texas inmates for private profit and production of public revenue, is important to understand both the history of privatization of Texas prisons and possibly the apprehension generated by its revival.
It has always been expected that prisoners incarcerated within the prison systems in Texas and other states pay their own way. To help defray the costs of their incarceration, inmates were often engaged as laborers and craftsmen in private sector activities. In the mid-1800s, it was not unheard of, even in Texas, for prisons to be operated in their entirety by private entrepreneurs.
In 1849, the first prison in Texas opened in Huntsville with 225 cells and three inaugural prisoners (Martin & Ekland-Olson, 1987, p. 13). After 5 years of operation, the prison housed enough inmates to justify the construction of a cotton mill. Although it rarely operated at a profitable level, the mill—manned by convicts from Texas, Louisiana, and Arkansas—assisted the Confederacy greatly from the production it generated and sold to the public (Martin & Ekland-Olson, 1987, p. 13). After the Civil War, demand for cotton products decreased significantly, leaving the 165 convicts in Huntsville increasingly idle and increasingly more expensive to house and maintain. New “opportunities” arose in 1865 when prisoners from the Huntsville unit were used to fill the labor void left by the abolition of slavery (Martin & Ekland-Olson, 1987, p. 13).
In 1866, to take advantage of the new opportunities presented, the Texas legislature passed “An Act to Provide for the Employment of Convict Labor on Works of Public Utilities” (Walker, 1988, p. 19). To implement this act, a body known as the Board of Public Labor was created. A provision in the act required the board to divide the prisoners into two categories. “First-class” prisoners were those convicted of murder, arson, rape, horse stealing, burglary, perjury or robbing and were not to be employed outside the walls of the prison. “Second-class” prisoners, those convicted of crimes not listed in the first-class designation, were employed at the board’s discretion on works of public utility outside the walls of the prison (Walker, 1988, p. 20). The act defined “works of public utility” as “the building of railroads, … all works for improvement of navigation of rivers, bays, channels and harbors; for irrigating lands; [and] all workings of mines of iron, lead, copper, or of gold” (p. 20). This employment consisted of projects conscripted by the state or by private individuals. Retaining control of the supervision and care of the convicts, the state yielded the labor of their charges and spelled out in considerable detail work and food requirements that were to be followed by employers of the prison labor. Groups were to be hired out in units of 100 or more, and private contractors were required to pay all expenses incurred in transportation of the prisoners from Huntsville to the work site (Walker, 1988, p. 21).
Advertisements, authorized by the board, were run in newspapers in Marshall, Houston, San Antonio, and Galveston and bids were received from private contractors. In February 1867, the board contracted 100 prisoners to the Airline Railroad and 150 to the Brazos Branch Railroad for $12.50 per month per man for a 12-month period (Walker, 1988, p. 21).
For a variety of reasons, this leasing experiment proved to be a failure and the inmates were returned to Huntsville upon termination of the contracts. Plaguing state officials were “serious and protracted disagreements” between the state and private contractors over their respective obligations, large numbers of escapes from the railroad camps, and contractors’ failure to make regular payments (Walker, 1988, p. 21). However, the idea of leasing the prison in its entirety did not lose popularity with the state.
This renewed interest resulted from the double problem Texas was facing of prison overcrowding and prison expenses that hit critical levels. Both problems were compounded with the return of the 250 railroad inmates because of the failed leases. The option of leasing the entire prison operation, including supervision and control of inmates, occupied the attention of state delegates as they convened in 1868 to draft a new state constitution (Walker, 1988, p. 22).
Of primary importance to the delegates were prison finances, inmate care, number of inmates, and types of crimes for which they had been convicted. At this time, the prison population was almost 500 inmates. Because of the size of the inmate population, three convicts would sometimes be placed in cells that measured 7[feet] x 5[feet] x 7[feet] (Martin & Ekland-Olson, 1987, p. 6). Even more alarming were the 13 inmates who were less than 14 years old—this prompting Governor Richard Coke to remark, “A serious defect exists in our prison system, in the promiscuous mingling, in this common receptacle, of children from nine years old upwards, with old, depraved and hardened criminals” (Martin & Ekland-Olson, 1987, p. 6). Worse yet, the overall condition of the convicts and their living quarters evoked expressions such as “deplorable,” “vermin-infested,” and “inhuman” from investigative committee members reporting to the delegates and the governor.
The initial leasing attempt by the state had failed. The root of all the misery—as it proverbially is of all evil—was money. The consequences of sizable debt, lack of money, outmoded manufacturing equipment, lack of an organized bookkeeping system, no specified food or clothing ration, and no record-keeping system for tracking supplies combined to create an overall scheme of mismanagement that inevitably resulted in a “source of great corruption and a drain on the treasury” (Walker, 1988, p. 23).
To combat this inevitability, the legislature again opted in favor of leasing the entire facility to outside bidders. Bids were let and on April 29, 1871 the state officially entered into a lease agreement with Ward, Dewey, and Company (WDC; Walker, 1988, p. 31). WDC took control on July 5, 1871 as part of a lease agreement for a period of 15 years ($5,000 per year for the first 5 years, $10,000 per year for the next 5 years, and $20,000 per year for the remaining 5 years). When WDC took over, the prison—appraised at a value of $236,099.32—contained 238 cells for 607 inmates and did not have a chapel, hospital, dining room, or eating utensils (Walker, 1988, p. 31).
After gaining control, WDC immediately made several improvements to the prison facilities, which included the construction of 40 additional cells, an infirmary, a dining room/chapel, and workshops with new machinery and equipment (Walker, 1988, p. 31). By the end of 1872, Huntsville State Prison had 944 inmates. Six hundred thirty-eight prisoners were employed on the premises, producing high-quality wool and cotton garments, furniture, doors, wagons, shoes, and so on. The other 306 convicts worked on construction crews for railroad companies in and around the Houston area (Walker, 1988, p. 32).
The statewide approval, by both the legislature and the media, of the initial improvements in living conditions did not last. Considerable debt from the construction of the new cells and workshops outpaced the revenue generated from inmate labor (Walker, 1988, p. 35). In addition, the continued growth in the prison population created a situation ripe for attacks by detractors of the convict-leasing system. It would be
other attacks, however—those of a physical nature perpetrated by prison guards and private lessees—that would be the ultimate downfall of Texas’ second experiment with privatization.
Government investigators, spurred by media reports, revealed atrocities that reminded prison authorities of conditions similar to those “Andersonville [Civil War] prisoners” (Walker, 1988, p. 37). Brutal punishment methods such as “the stocks” (walker, 1988, p. 60), “the horse” (Martin & Ekland-Olson, 1987, p. 7) “dark cells,” and “the bat” (Martin & Ekland-Olson, 1987, p. 14) reportedly left inmates “scarified in a most shocking manner” (Martin & Ekland-Olson, 1987, p. 7).
Other whippings and kickings “lavishly administered by guards and foremen of the work,” a “terrific amount of perversion that [lead] to knifings and killings” (Martin & Ekland-Olson, 1987, p. 7), an epidemic of self-maiming (usually the cutting of one’s “heel string”; Martin & Ekland-Olson, 1987, p. 14), and other barbarities visited on the inmates, and their revelation to the media and legislative committees mercifully led to the abrogation of the Ward-Dewey lease on April 2, 1877 (Walker, 1988, p. 43).
Given the economic conditions at the time, including the unlikelihood that the debt incurred over the first two leases could be retired through taxation, and given a fresh start upon the termination of the Ward-Dewey lease, the state again turned to privatization of the prison system. After a temporary, 6-month lease to a Galveston firm (Walker, 1988, p. 47), the state solicited sealed bids for a 5-year lease, beginning on January 1, 1878. A bid of $3.01 per month per prisoner secured the long-term contract in favor of Cunningham & Ellis—whose partners owned extensive acreage committed to the production of sugarcane (Walker, 1988, p. 49). For the bid price and $730.00 per month for the combined salaries of the directors, superintendent, physician, and chaplain, plus a $100,000 bond, Cunningham & Ellis (C&E) received the “state penitentiary at Huntsville, together with all the property … real, personal and mixed, pertaining or incident thereto, whether within or without the prison walls, and the labor of all the convicts now belonging or hereafter to be sent” (Walker, 1988, p. 49). To prevent the kind of inmate abuse and brutality that plagued earlier leases, provisions in the contract required C&E to “properly feed, clothe, and work the prisoners in accordance with the rules and bylaws of the prison system” and prohibited C&E from subletting the lease without consent from the governor. In addition, the lessee was expressly required to “hire good, reliable guards and to dismiss any guard [upon request] by the superintendent or one of the directors” (Walker, 1988, p. 49).
By all accounts, the C&E lease was very successful and extremely profitable for the state of Texas. Historians have noted that the comparative success of the C&E lease was due, in part, to the express provisions prohibiting “unnecessary inmate abuse.” When C&E assumed control of the prison, it had an appraised value of $239,000 and more than 1,600 inmates. During C&E’s reign as lessee, it instituted many improvements and additions in building and equipment, increasing the appraisal value of the prison to more than $450,000. Part of the increase in value was the construction, in 1878, of the East Texas penitentiary at Rusk. During the life of the lease, the state reportedly earned approximately $350,000 in addition to the value of the permanent improvements. The lessees fared better with an estimated $500,000 in “clear profit” over the term of the lease (Walker, 1988, p. 75).
Ironically, this profitability was the downfall of Texas’ third attempt at privatization. “If there were fortunes in it … for the lessees,” one newspaper opined, “why not the state derive the benefit?” (Walker, 1988, p. 77). Many citizens felt that “a great wrong [had] been inflicted on the state in a pecuniary way” (Walker, 1988, p. 77). Thus began the movement to abrogate the C&E lease. On March 30, 1883, Cunningham & Ellis, recognizing that the legislature would not ratify new contracts, asked the governor to surrender their leases and “be relieved of all responsibility regarding the prisons.” The legislature “accommodated” C&E the following day and voted to revoke the lease (Walker, 1988, p. 75).
The philosophy behind contract leasing did not die with the C&E lease. The Texas legislature simply reasoned that, using the same management ideas employed successfully by C&E, it could enjoy similar profitability. Not only did the state enter a new era of prison operation—that is, the state itself as a lessor of inmate labor—but it also embarked on a new avenue of profitability. Partly by choice, and partly out of necessity, the state committed a large percentage of the prisoner work to outside farm labor.
A restructured prison board and prison reorganization bill restoring management of the penitentiary to the state prohibited leasing of the prison, but it authorized the state to contract out labor and, if necessary, purchase prison farms to “work those convicts ‘not self-supporting’ at other labors” (Walker, 1988, p. 80).
To maximize the profit potential of farm labor, and to solve some of the recurring problems with leasing to private farms, the state initiated a long-term plan to purchase rich, Texas farm land. As Table 1 illustrates, in the period from 1883 to 1912—when the state of Texas operated as a lessor—sizable farms and acreage were purchased to meet the goals of the plan (Walker, 1988, pp. 97-100).
Throughout the entire period of state-run management of Texas prisons, outside farm labor netted more than $3.4 million in profits (Walker, 1988, p. 93). Beginning in 1884, at least 1,000 prisoners worked on state farms every year until 1912, with a peak of 2,363 in 1902 (Walker, 1988, p. 93).
Although the outside farm labor yielded less earnings per prisoner, it proved to be a far more attractive alternative in the long run because of its stability—specially compared with that of railroad work. The primary advantage was the certainty that larger farm forces could, with little exception, be kept working for the life of the contract. In addition, if private farmers failed to honor their agreements with the state, negotiating new contracts or moving prisoners to other farms were efficient and readily available options (Walker, 1988, p. 92).
Although the state-run farms were extremely successful at keeping large numbers of inmates productively employed, they were not, unfortunately, immune to the barbarisms regularly exposed on the private farms. Managers of state farms, just as anxious to reap rich returns from convict labor as previous private lessees, were often just as apathetic to the basic needs of the inmates. That apathy, and in many cases, brutality, combined with the efficiency of placing inmates on large state-owned agricultural holdings, were widely considered to be the catalysts that ultimately led to total state control of all Texas prisoners (Walker, 1988, p. 101).
Just as business competitors exerted the requisite pressure on the Texas legislature to bring the outside farm labor in, reform organizations exerted their influences and reported the results in various media. As Texas citizens became aware of the “ghastly conditions” in the private labor camps, the reformers unified and swept the nation into action (walker, 1988, p. 186). The editors of the McKinney Democrat-Gazette reported that “leasing out human beings to private corporations and individuals, and allowing them to be treated like dogs, is a burning shame and should no longer be tolerated by a civilized people.” The political edge on their editorials was even more pointed. The Rusk Press-Journal stated that
these State convict farms are a disgrace to Christian civilization and the man who pokes his head up in Cherokee as a candidate for the next legislature and who is not unequivocally in favor of abolishing them will be gloriously snowed under at the polls. (Walker, 1988, p. 186)
The public outcry prompted a legislative investigation that signaled the demise of the contract leasing system. Although all agreed that prison labor earned handsome profits, it did so “at a human cost too high to tolerate” (Walker, 1988, p. 186). So, in 1910, the 31st legislature met and produced a bill that reorganized the prison system and placed all Texas inmates under exclusive control of the state. By 1912, upon the termination of all outside contracts, the contract leasing system was officially abolished (Walker, 1988, p. 187).
Part 2 Back to the Future: A Return to Privatization
Texas’ experiment with privatization of its prisons consisted of a period from 1865 to 1870 when Texas inmates were contracted out as laborers and craftsmen in private industry, followed by an unsuccessful 7-year prison lease under Ward-Dewey, and finally a very successful prison lease under Cunningham & Ellis from 1878 to 1883. The C&E lease, because of its success, was not renewed in 1883 so that the state, using similar management techniques, could reap the benefits from contract leasing. The period between 1883 and 1912, when the state was the lessor, saw transitions on two fronts. The first shift came about with extensive purchases of farm acreage on which the prisoners were employed—this creating the distinctive plantation-like nature of Texas prisons. The second development—abolition of the contract leasing system in Texas—was a consequence of brutal inmate abuse and resulted in the reversion of the prison system to complete, state-run administration. Given Texas’ history with the private sector’s role in prison industries, it seems that there would be very little optimism for reexamining the option of privatization for Texas prisons. However, societal changes and the prospect of “innovative, cost-effective management” created a new ground swell of enthusiasm and ideas from enlightened legislatures as well as from the private sector. Until the 1990s, private prisons were considered “an onerous relic from a less humane past” (Wilkinson, 1988, p. 100) and, arguably, it is improbable that proponents of privatization are not aware of the “more unsavory aspects” of Texas’ prison history. More likely, many of them find little relevance in those aspects compared to current conditions (Yarden, 1994, p. 325). In addition, the equally unpleasant history of many public-operated prisons would, if not further their cause, certainly do little to hinder their efforts.
The Big Six Debate Issues and A Case for Privatization
As prison populations have risen over the years, so have the costs to manage them. And, just as the twin problems of expenses and overcrowding paved the way to private leasing in 1868, they have constructed similar private roads in the 1990s. In the 1800s, however, the principal issue, if not the only issue, was whether the prison system, through privatization, could be self-sustaining. Today, the issues are numerous, diverse, and complex. Certainly, cost is an issue, but opponents claim real cost savings can be realized only through the reduction in the quality of correctional services. Some suggest that the accountability level of a private contractor may be lower than that of a governmental agency. Other questions that are meaningful to the privatization debate are whether the government, by contracting prison operation to private firms, increases its legal liability exposure or whether the legal rights of inmates will be affected by privatization. Moreover, a hot issue is whether delegation of prison management responsibilities to private firms is even constitutional. By most accounts, these are the issues that Texas and other states will confront as they reconsider the concept of privatization (Bowman et al., 1992, p. 221).
Cost
Researchers have reported that U.S. taxpayers shell out $17 million per day to operate state-run prison facilities. At an estimated $60 per day per inmate, some have also noted that it would be cheaper to finance college educations for all of the inmates of the country (Robbins, 1987, p. 813). Proponents of privatization maintain that it does not have to be that expensive. They point to other, formerly government-run services, in which the private sector has operated more efficiently: 35% savings in garbage collection, 60% in building and road maintenance, and 50% to 60% in urban bus services (Yarden, 1994, p. 326). Why not prisons?
Many states, including Texas, that have enacted laws authorizing privately operated prisons, impose stringent requirements for contracting or renewal (Ammons et al., 1992, p. 23). Tennessee, for example, permits contract renewal only if the state’s evaluation “showed the contractor to be providing ‘at least the same quality of services as the state at a lower cost, or … services superior in quality … at essentially the same cost.'” (Ammons et al., 1992, p. 23). Both Texas and Florida require private operators “to meet all recognized standards and court orders and to operate at a cost of at least 10% lower than the state’s estimates of what its own cost of operation would be” (Ammons et al., 1992, p. 23). Besides, the notion that a private contractor, to maximize profits, would “cut corners” to the point of reducing security to a dangerously low level is illogical. Even the most generous interpretation of “cutting corners” still suggests noncompliance with statutory or policy guidelines. So, in addition to creating a risk to society, the private firm risks breaching its contract and losing all profits.
Because depreciation, debt service, insurance, and other “hidden costs not included in the state’s budget” make cost comparisons difficult, privatization supporters suggest that privately run prisons are more efficient even than the 5% to 15% advantage currently indicated by available data (Yarden, 1994, p. 327). Private firms can purchase supplies in bulk and negotiate better prices and values in the same environment in which the government relies on a time-consuming bidding process “wherein the low bid is not always the lowest market price” (Yarden, 1994, p. 327). Private contractors have reduced labor costs by “eliminating unnecessary overtime and reducing employee benefits—typically overinflated sick leave and retirements benefits paid to unionized government workers.” Lease-purchase financing agreements, which are not subject to debt limitations or voter approval—traditional obstacles to government bond issuance for prison construction—spread the cost over a long period of time and allow private prisons to be financed, sited, and constructed more quickly (Yarden, 1994, p. 328; see also Ammons et al., 1992, p. 100).
One example of this cost saving was a 350-bed illegal alien detention center constructed in Houston, Texas in 1984. Built for the Immigration and Naturalization Service (INS) by one of the leading prison management firms, Corrections Corporation of America (CCA), the center was completed in 5 1/2 months at a cost of $14,000 per bed. On the basis of previous experience, the INS estimated that it would have normally taken them 2 1/2 years at a cost of $26,000 per bed (Yarden, 1994, p. 328; see also Ammons et al., 1992, p. 100).
Another Texas study worth mentioning was published by the Texas Sunset Advisory Commission in 1991 (Thomas, 1995). The goal of the study was to determine whether two contractors, CCA and Wackenhut Corrections Corporation (WCC), had achieved the statutorily required 10% cost savings on their respective contracts. Each firm was contractually obligated to “design, construct and manage two 500-bed minimum security prisons.” After a determination of what the cost to Texas would have been in 1990 if the four prisons had been operated by the Texas Department of Criminal Justice (TDCJ), a comparison was made. The average estimated per diem cost for public operation of the facilities was $42.92 versus an actual payment to CCA and WCC of $36.76. The per diem cost savings to the state of $6.16 represented 14.35% or $4,496,800 per year (Thomas, 1995).
Quality
An “alternative argument” advanced by critics of privatization can be summarized as “Private prison management is not cheaper—but if it is, then it must be at the expense of quality service.” Disregarding the easy argument that “contracting could hardly do worse than some publicly-run prisons” (Ammons et al., 1992, p. 10), privatization advocates point out that market competition should ensure a high level of performance.
Opponents regularly argue that a conflict of interest inherently exists in private prison management—that private prisons make money by maintaining full occupancy and that there would be no incentive to monitor and improve rehabilitation programs or that private management would exercise capricious or arbitrary control over “good time” procedures. In rebuttal, advocates point out two salient facts: (a) State wardens have had little incentive as well and state rehabilitation has generally failed (Ammons et al., 1992, p. 10) and (b) notwithstanding modern private correction’s infancy, private firms have fared extremely well in the few surveys conducted to date.
At this point, it should be noted that this evaluation, as with many others before it, is based on the notion that “individual prisons should be judged primarily … [on] what goes on inside their walls—factors over which prison officials have considerable control” (Logan, 1992, p. 577). In other words, prisons are the medium by which society has said we must punish offenders. Unfortunately, it has taken many years and a few landmark court decisions to mandate that this punishment be done fairly and justly—and it is on this common ground that prisons can be judged both quantitatively and qualitatively. Therefore, punishment, rather than outcome-based theories such as rehabilitation and deterrence, provide the foundation for a comparison primarily because it is empirically easier to measure from one prison to the next (Logan, 1992, p. 577).
In his 1991 report to the National Institute of Justice, researcher and Sociology Professor Charles Logan summarized a punishment, or “confinement” model of imprisonment with the following mission statement:
The mission of a prison is to keep prisoners—to keep them in, keep them safe, keep them in line, keep them healthy, and keep them busy—and to do it with fairness, without undue suffering and as efficiently as possible. (Logan, 1992, p. 580).
According to Logan, the mission statement identifies eight distinct “dimensions of quality”—Security, Safety, Order, Care, Activity, Justice, Conditions, and Management—that are subject to empirical measurement (p. 580). Logan applied the quality criteria to a comparison of three women’s prisons in New Mexico: private, state, and federal. His summary of the study is as follows:
The private prison outperformed the state and federal, often by quite substantial margins, nearly across all dimensions [of quality]. The two exceptions were the dimension of Care, where the state outscored the private by a modest amount, and the dimension of Justice, where the federal and private prisons achieved equal scores… The private prison compared most favorably to the state prison when using data from the staff surveys and consistently but more moderately so when using data from official records… When the inmate surveys provided the data, however, the state prison moderately outscored the private on all dimensions except Activity… [T]he weight of evidence in this study supports the conclusion that by privately contracting for the operation of its women’s prison, the State of New Mexico improved the overall quality of that prison while lowering the cost. (p. 601)
Two earlier studies—one by Samuel Brakel, a researcher for the American Bar Association Foundation (Bowman et al., 1992, p. 225), the other sponsored by the National Institute of Justice (NIJ) and conducted by the Urban Institute (Bowman et al., 1992, p. 226)—were performed in 1988, with similar results. Brakel surveyed inmates at a Tennessee penal farm operated by CCA, and the NIJ compared public and private operations of two similar minimum-security facilities in Kentucky and “two matched pairs of secure treatment facilities for juveniles in Massachusetts. In both studies,
for a substantial majority of … performance indicators, the privately-operated facilities had at least a small advantage. By and large, both staff and inmates gave better ratings to the services and programs at the privately operated facilities; escape rates were lower; there were fewer disturbances by inmates; and in general, staff and offenders felt more comfortable at the privately operated facilities. (Bowman et al., 1992, p. 226)
Furthermore, in each case, the overall improved quality ratings were achieved at lower costs to their respective county or state governments (Dipiano, 1995, p. 171).
Accountability
A critical concern among privatization opponents is the issue of accountability—that private firms will be less accountable to the public than government operators would be (Ammons et al., 1992, p. 76). The irony that many supporters of privatization point out is that the very nature of contracting—the most obvious advantage of contracting—is that it markedly enhances accountability. Most contracts between public and private sectors are much more detailed than the “legislative mandates public corrections agencies are obliged to follow” (Bowman et al., 1992, p. 223). Contracts set forth goals to be reached, standards to be met, measurable yardsticks, and sanctions to be imposed if obligations of the contract are not met with satisfaction. Thus the contract itself—specially one between public and private sector—is highly visible to competitors, investors, shareholders, and insurers. A misstep in any of the variables incorporated into a contract places the private firm under intense scrutiny that can affect that firm’s profitability, insurability, and so on, not to mention its integrity (Bowman et al., 1992, p. 223).
Finally, privatization proponents suggest that, because of their for-profit status, they will be held to a higher standard of accountability than their government counterparts. Not only are private operators monitored by the courts and government agencies but also prison reform activists, civil rights groups such as the A.C.L.U., and more important, the media (Bowman et al., 1992, p. 224).
Prisoners’ Rights
The crux of this concern is that the profit motive could encourage an unprincipled private firm to disregard the rights of prisoners to proper food, medical services, and so on. Their rationale is that public prison administrators are state agents, responsible to elected or appointed public officials and judges and, as such, are somehow more sensitive to an inmate’s rights and needs than their private sector counterparts who are driven by profit maximization (Ammons et al., 1992, p. 14).
Privatization supporters argue two points that, in fact, make them more sensitive to prisoners’ rights, rather than less. First, they submit, “a contractor’s desire for profit places a premium on contract renewal and a long-term business relationship with clients” and any abridgment of prisoners’ rights is generally ground for contract termination. Second, legal remedies for inmates whose rights have been violated are much greater than those of inmates similarly situated in state-run facilities (Ammons et al., 1992, p. 14).
For example, when prisoners in traditional state-run correctional institutions bring civil rights action pursuant 42 U.S.C. [section] 1983 in federal courts, “judicial interpretations of the Eleventh Amendment prevent them from seeking compensatory or punitive damages from the state agencies … responsible for their deprivations” (Bowman et al., 1992, p. 225). For the most part, they are limited to avenues of injunctive relief. However, private corrections firms do not have the benefit of Eleventh Amendment immunity from causes of action brought under [section] 1983.
A practical example of this denial of constitutional protection can be found in the case of Manis v. Corrections Corporation of America (CCA) (1994). In Manis, an inmate brought a [section] 1983 civil rights action against a private corporation (CCA) that operated a Florida prison under contract from the state. Judge Higgins held that
[u]nlike public officials, corporate officers and employees are hired to serve the interests of the corporation, and more specifically its stockholders, whose principal interest is earning a financial return on their investment … without any direct consideration for the best interest of the public … Affording the shield of qualified immunity to a private corporation … would directly contradict the policy behind qualified immunity. (Manis, 1994, p. 306) The court further added, “[T]he threat of incurring money damages might provide the only incentive for a private corporation to respect the constitution. Therefore, the best policy is not to afford them any immunity from suit” (Manis, 1994, p. 306).
Legal Liability Exposure
The focus of privatization of correctional facilities on the government’s legal liability exposure has generally been on the defense of [section] 1983 suits from inmates. Much of the constitutional argument on legal liability has been resolved because the risk has been judicially expanded to include private contractors as defendants in [section] 1983 suits and qualified immunity has not been extended to private contractors. Government’s exposure is further reduced through indemnification, insurance, and a solid grasp on the importance detailed contracting.
In most, if not all, privatization contracts, the private contractor is required to carry insurance to cover all types of violations, constitutional or otherwise, and indemnify the government for all litigation costs, attorneys’ fees, and damage awards (Ammons et al., 1992, p. 23). In some states, private companies are required by law to carry insurance and sign indemnification clauses; others simply do it because it is fiscally responsible in light of their handicap regarding qualified immunity from punitive damage awards. As an example, a contract provision requires CCA, the largest and most successful private corrections firm in the United States, to carry $15 million in liability insurance for one facility in Florida (Bowman et al., 1992, p. 69). In 1988, the American Bar Association released a report whose author, in proposing language for model legislation and a model contract for privately operated corrections facilities, suggested a minimum of $25 million in indemnification insurance for each occurrence (Ammons et al., 1992, p. 23). Most privatization advocates attacked the suggestions immediately as ridiculously excessive. One corrections consultant noted that 33 states plus the Federal Bureau of Prisons paid a total of less than $5 million in damages from inmate suits in a 2-year period. Charles Logan, from the NIJ, cited an example of statutory liability in the state of Virginia of $25,000 in damages. Needless to say, the “Model Legislation” was not taken very seriously by legislators, either.
In addition, as the contract is the one document that solidifies the intentions of both parties, considerable caution is invested in the structuring of the relationship between the state and private contractor. If, through the language of the contract, or by its actions outside the contract, the government is too involved in the direction or performance of the day-to-day operations of the facility, then an agency relationship is created and liability will attach to the government (Bowman et al., 1992, p. 70). One can see then that the contract governs the relationship and both parties have vested interests to see that duties and services to be performed are carefully outlined and strictly followed.
Constitutional Issues
In privatization debates, two dominant issues seem to be of particular concern: (a) whether the actions of a private correctional firm operating under contract from the state constitute “state actions” for which liability would attach under 42 U.S.C. [section] 1983 and (b) whether the delegation of the corrections function to a private firm is even constitutional.
Because [section] 1983 actions must allege that a constitutional right has been deprived and that deprivation was caused by a one acting under color of state law, opponents of privatization were concerned that prisoners in a privately operated facility might not have any legal recourse upon that deprivation (Bowman et al., 1992, p. 234).
The U.S. Supreme Court, in West v. Atkins (1988), held that “to constitute state action, the deprivation must be caused by the exercise of some right or privilege created by the state … or by a person for whom the state is responsible” (citing Parrat v. Taylor, 1981). The court further stated that the traditional definition of “acting under color of state law” requires that the defendant have exercised a power “possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law” (West v. Atkins, 1988 citing U.S. v. Classic, 1941). Furthermore, the court reasoned, “the fact that the defendant’s relationship with the state was a contractual arrangement that did not generate the same benefits or obligations applicable to other state employees, [did] not alter the analysis” (West v. Atkins, 1988 citing U.S. v. Classic, 1941). Private correctional facilities that contract with the government to provide constitutionally mandated services, therefore, can be named as defendants in [section] 1983 actions.
The second issue is whether it is even constitutional for the government to delegate the incarceration function to private corporations. The constitution provides that “[all] legislative powers herein granted shall be vested in a Congress of the United States” (U.S. Const., art. I, [section] 1). Privatization opponents, strictly interpreting the clause, declare that contracting the incarceration function is violative of the clause and therefore unconstitutional. However, privatization advocates suggest that “a strict adherence to the doctrine of non-delegation is not possible” and that practicality and flexibility to a changing society necessitate a more lenient interpretation (Dipiano, 1995, p. 175). Presumably, the U.S. Supreme Court would have agreed with this statement as early as 1935, when Justice Hughes stated in Panama Refining Co. v. Ryan that
[t]he Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the legislature is to apply. Without capacity to give authorizations of that sort we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility. (Dipiano, 1995 citing Panama Refining v. Ryan, 1935, p. 175)
Authority for that flexibility, proponents argue, rests under the “necessary and proper” clause and thus Congress can “delegate authority … sufficient to effect its purposes” (Dipiano, 1995 citing U.S. Const. art. I, [section] 8.)
Accordingly, it can be argued that “inherently governmental functions such as enactment of criminal law, the adjudication of guilt or innocence, … impositions of criminal sanctions, and final decisions regarding release from confinement” are nondelegable (Thomas, 1995). However, the administration of a correctional facility is not a matter of legislative authority and, therefore, the application of the nondelegation doctrine is of no avail (Dipiano, 1995, p. 175).
In 1988, CCA President Thomas Beasly challenged the argument of delegation to a private entity saying,
We’re not policymakers; we implement. Ours is a care and custody function. We provide better facilities, better inmate care, better working conditions, and higher pay for employees—all at less cost to the taxpayer. Now give me a moral impropriety in that! (Ammons et al., 1992, p. 15 citing Fitzgerald, 1988).
Part 3: Statistically, Privatization is In
Currently, 32 states, Puerto Rico, and the district of Columbia have statutory authority contract with private firms at the local or state level. Moreover, each of the three federal agencies that have prisoner custody responsibilities—Immigration and Naturalization Service, Federal Bureau of Prisons, and U.S. Marshal’s Service—has legal contracting authority (Thomas, 1995). In the first quarter of 1995, there were 19 private corrections companies operating or constructing a total of 88 private adult correctional facilities, 67 of which were operational and 21 under construction. Of those facilities that are operational, the rated capacity of 30,821 prisoners is populated by 28,678 prisoners. Completion of the additional 21 facilities will increase the rated capacity to 49,154 inmates—a little more than 3% of the total U.S. inmate population (Thomas, 1995).
In Texas, by March 1995, there were 26 private corrections facilities in operation, with a rated capacity of 12,715 beds and a population of 12,350 inmates. Another 8 facilities, with a rated capacity of 7,053 beds, are currently under construction (Thomas, 1994). The combined total of public and private correctional facilities in Texas has created a rated capacity of approximately 119,000 beds in 1995, with a projection of 144,000 by mid-1996 (“Jail Backlog,” 1995). Fortunately, through a massive prison construction program begun in 1993, the inmate backlog will be reduced to 0 for the first time in Texas in over 100 years. Estimates are that the backlog will be only about 200 by August 1996, but will surge to 13,000 by August 1997, and 20,000 by the same time in 1998 (“Jail Backlog,” 1995). The per diem cost to house Texas prisoners, and part of the reason the private sector has increased its share of the total Texas prison capacity to about 10%, is approximately $44.40 per inmate per day in public facilities and $35.25 in privately operated facilities (Thomas, 1995).
Conclusion
Punishment for Profit. Dungeons for Dollars. Factories with Fences. These and many other appellations, many of them derogatory, have been appended to the concept of privately operated prisons. Similar, ostensibly scholarly, attacks on the privatization concept argue that it will not work because providers of data indicating that it does work are being disingenuous. Those who argue that it did not work in the past, so it will not work now, are simply not reading the data. After a decade of reprivatizing in Texas, questions concerning cost and quality have been definitively answered. Private corrections companies save Texas taxpayers between 10% and 15% annually and maintain a higher level of quality in doing so. Admittedly, the first 10% is statutorily mandated—but the better quality is not. When all the measurable criteria have been put on the firing line, and the bullets miss, die-hard opponents gather up all the constitutional issues within and throw them all against the wall to see which ones stick. None do. The liability exposure of the government is shared by private entities “acting for the state.” Qualified immunity has not been extended to private entities, so the threat of punitive damages keeps them mindful of the rights of their charges. The nondelegation doctrine is a nonissue, simply because administration of a nondelegable function is constitutional under the necessary and proper clause. Perhaps it all boils down to an ethical issue—that X has no right to make a buck off of Y’s misery. It has merit, but only a little. That a “buck will be made” is a moot point. However, quantitative analysis empirically demonstrates the efficiency of private prison operation compared with that of government-run facilities.
Privatization simply provides an efficient, effective method for reducing overcrowding and early release—the source of many more problems both inside and outside the prison walls. It is a win-win situation for the inmates, the taxpayers, and the state. Criminology researcher and prison expert Charles W. Thomas probably summarized the controversy most articulately during his recent address to the House Subcommittee on Crime when he said,
I am persuaded that it is the obligation of the government to provide for the delivery of the best possible public services at the lowest possible cost and to do so with the public or private identity of the service provider being defined as fundamentally irrelevant absent compelling constitutional reasons that government alone must provide the service under consideration. (Thomas, 1995; see also N. 13)