Policy Matters Ohio: Privatized Prisons Don't Always Save Money




As part of his budget rethink, new Governor John Kasich has proposed a number of initiatives that have come under fire from opposition. Privatizing the state’s liquor agency, creating a non-profit public/private job creation outfit, selling off the state’s prisons to private operators — all theses have been proposed with the guiding spirit of cost reduction hanging in the background. And of course, considering the current climate, where political affiliations have crystallized into battle lines, each of these have been hot button.

But now one left-leaning think tank has issued a report full of legitimate and well-researched concerns; the paper is full of data points sharp enough to possibly deflate the idea that auctioning off Ohio’s prisons will save us money. According to Policy Matters Ohio, private prisons haven’t always saved the state money, even though they’re required by law to do so.

Policy Matters’ research was conducted by ex-Plain Dealer reporter Bob Paynter, a longtime investigation journalist who took the buyout bus in 2008. His mission was to examine whether or not the private prisons the state opened in 2000 really saved Ohioans at least 5 percent of what it would have cost the government to handle the work themselves, as the statute requires. Right now the government likes to say privatization has saved the state $45 million. But Paynter found out that the state’s work with a measuring stick has been spotty.

Their methods for calculating the seemingly robust savings have changed substantially and, in some case, inexplicably over the last several biennia. A detailed examination of those calculations shows them not only to be riddled with errors, oversights and omissions of significant data, but also potentially tainted by controversial accounting assumptions that many experts consider deeply flawed.

According to the research, when these errors and miscalculations were recalibrated, sometimes it revealed private prisons missed the mark.

In fact, revised calculations suggest that it may actually have cost taxpayers MORE to contract with a private vendor for operations at the Lake Erie Correctional Facility in Conneaut for fiscal years 2006 and 2007 than to have allowed the state to run it. And for both the 2008-09 and 2010-11 biennia, revised calculations for Lake Erie project savings that appear to fall below — and in some years, well below — the 5 percent minimum required by state law.

This kind of reporting is great —exhaustive, heavy on math, fine-print savvy. You should probably read it for yourself. Follow the link trail to Paynter’s full report. Also, the Ohio Department of Rehabilitation and Correction has issued a statement challenging Policy Matter’s findings. You can find that response and a response to the response on the think tank’s web site.

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