Spurred by a tax revolt that spread across the United States in the late 1970s and early 1980s, citizens were voting down bonding proposals, even though they were at the same time demanding that more criminals be imprisoned in the hope of making their communities safer. Public officials saw, the lease-purchase arrangements as a convenient way out of this dilemma - a rent payment can be paid out of government operating budgets (McDonald, 1994). A recurring controversy cited in government and academic studies of privately run correctional facilities is the practice of lease/purchase financing as a method of circumventing the debt ceilings and referenda requirements of general-obligation bonds. Because no voter approval is required, lease/purchase agreements undeniably reduce citizen participation in corrections policy (Johnson, 1985).

In the traditional business arena, the knowledge that when service is poor the paying customers eventually stop coming serves as a safeguard. Privatized correctional services, however, serve "clients" who have been ordered there by the courts, who have little political influence, and who, therefore, have minimal immediate impact on or control over the finances of the business.

Private prison corporations answer criticism by insisting that their prisons run efficiently without scrimping on essentials or impinging on prisoners' rights. The Corrections Corporation of America notes in its 1994 annual report that the stock options it offers to employees foster a sense of ownership and makes them more receptive to complaints from prisoners.

The reemergence of the private sector's involvement with the Texas prison system signaled a new era in Texas corrections, an era distinguished by progressive methods for aiding the thousands of Texas inmates. The most important aspect of this privatization experiment pertains to the type of facility that is operated by the private companies. By using small (five-hundred-man) facilities that offer prerelease programs, lawmakers are taking major steps toward preparing inmates for life outside prison walls.

The operation and management of small, specialized facilities that house low-risk inmates has been championed as a possible role for the private sector in the nation's correctional system (Folz and Scheb, 1989; Johnson and Ross, 1990). Other states might follow the example of Texas. According to Logan (1990), this already may be a trend: Most of the privately operated state prison units in the United States house fewer than five hundred low-risk inmates.

A second feature of the Texas privatization experiment is the financing scheme contrived to pay for the construction and operation of prerelease centers. Lawmakers devised a bonding mechanism that did not need voter approval. By using lease revenue bonds, the state does not technically create a debt. Although the use of such bonds proved successful in Texas, the issuance of bonds that do not need voter approval to pay for prison construction has been criticized because the government can expand prison construction without public input (Leonard, 1990; McDonald, 1989).

A third aspect of the Texas privatization experience pertains to tile contract negotiations between thee state and private companies. On the basis of the original contracts, the contract monitors' reports, and the companies' responses to the reports, it appears that some portions of the contracts were ambiguous (for example, educational programs, vocational programs, and prerelease programs). As a result, the companies and the Texas Department of Corrections spent a great amount of time and money in reaching agreements on how to carry out the contracts properly (Ethridge and Marquart, 1993).

Krulwich (1981:12) refers to the series of costs related to inappropriate or inadequate regulation as "secondary effects that are rarely considered in tile rush and newness of privatization." For example, regulation at times causes delay, which, in turn, imposes its own set of costs. Failing to take into account effects that accumulate over time has been suggested as one cause of some of these problems. More often, costs (and benefits) that economists cannot measure are ignored or merely cited as possibilities the agency also considered without attempting to quantify.

In a profile analysis entitled Privately Managed Prisons - At What Cost? The Prison Reform Trust of the United Kingdom provides an analysis of cost factors. This analysis concludes that privately managed prisons are not the benchmark on which to base publicly managed prison budgets. A detailed account of the consternation of attempts at comparative cost analysis and the concomitant political and bureaucratic foray involved in the public use of private prisons continues to raise concerns. For example:

Comparisons between public and private prisons are complex, as it is difficult to establish true "like with like" conditions. For example, in addition to the stated overall contract price for a private prison, as compared with the annual budget for a publicly run prison (even if they were the same kind of prison, of the same age, with the same design, number, and category of prisoner from the same locality with exactly the same needs and services provided - all of which must be unlikely), there are a myriad of hidden costs to be taken into account. These would include prison service headquarters costs; the resources of outside agencies, such as police, fire department, local authorities, national health services, health and safely agencies, and of other central government departments and voluntary groups that provide services to prisons; the public provision of local infrastructure to prisons; and not least, the cost to taxpayers of the entire privatization itself.

Taxpayers also foot the bill for costs that are exclusive to the private sector and that are included as an element of the contract price, such as the need to make profits, create returns on capital investment and dividends for shareholders or payments to parent companies for technical know-how, expertise, or management/administrative fees. There is also the loss in corporation tax revenue if the company makes a loss. Despite the claim that privately managed prisons are cheaper to run, the Prison Service has been unable to publish meaningful cost comparisons.

It is arguable that this exercise might not even be possible. (Nor has the issue been resolved in the United States or Australia, both of which have had longer experience of privately managed prisons than has the U.K.)

The claim that privately managed prisons automatically provide better value for the money is also, at best, unproven, as the performance of three of the existing privately managed prisons in the U.K. testifies. The fourth, Buckley Hall, has not yet been independently evaluated (Penal Lexicon Home Page: United Kingdom, September 15, 1996).

Privatization advocates discount concerns over the erosion of governmental sovereignty. They argue that sovereignty is retained through the contract and enforced by the government's power to terminate the contract. This view fails to recognize the fact that progressive privatization of correctional production (that is, the creation and delivery of correctional services) gradually transfers public policy making functions to the private sector (Dahl and Glassman, 1991; Gilbert, 1996a; Keating, 1990; Kolderie, 1986; Leonard, 1990; McDonald 1990b; USGAO, 1991).

A vivid test of the sovereignty of governmental oversight occurred in the June 18, 1995, riot at the 350-bed Immigration and Naturalization Service (INS) Detention Center in Elizabeth City, New Jersey, contracted at $54 million to Esmore Correctional Services, Inc., a private correctional management firm (J. Sullivan, 1995).

The INS, a federal agency with little experience (and few options) for operating a custodial detention center for illegal immigrants, had sought private contractors out of the sheer expediency of creating detention facilities quickly. These minimum-security centers, located in unobtrusive locations, provoked little controversy or even notice. The convenience of contracted detention services pre-empted INS concern for contracted detention centers. This matter continues to play out with protracted litigation on behalf of the immigrant detainees. In this tragedy it has become painfully obvious that accountability is not always a clear-cut matter in this mix of private and public prisons.

As Mullen et al. (1985) speculated it would, the correctional privatization movement appears to be shifting from initial declarations of cost savings to more neutral issues of "flexibility and the provision of special services" (7). Essentially, there is little evidence of anything imaginative or exciting coming out of the new private prison facilities. To date, the development, design, operation, and management of private prisons has turned out to be much like those of their traditional counterparts. The administrative ranks of the private prisons continue to grow with managers and supervisors that have been mostly recruited (or are retired) from public sector correctional agencies.

Private welfare management and training companies are lining up for a market that expanded overnight when President Clinton, in September 1996, signed the new law to replace the sixty-year-old guarantee of federal aid to poor children with lump grants to the states. Privatization is now being championed as an enhancement for the new welfare law for the first time, the law allows states to buy not only welfare services but also gatekeepers to deter- eligibility and benefits. The privatization of social-welfare functions has become dominant theme for twenty-first-century human resource functions, including education, health and medical services (HMOs) and a growing range of social infrastructure maintenance services. Because of a mutuality of the clients served linkages with these newly privatized human service agencies will engender collaborative services with and among public and private correctional programs.

The tough job ahead for both public and private penal experts is to continue to create constitutionally protected justice environments geared to both economic and social improvements. The past decade of aggressive privatization in correctional services is clarifying fundamental demarcations of privatization claims. Consider what privatization might and might not do: (a) It cannot ease the credit crunch caused by budget deficits; (b) it cannot relieve government of its social responsibilities; (c) it isn't likely to make monopolies more efficient; and (d) it may even temper political demands for inefficient operations. The real hope for innovative change lies in a middle ground.

The racial demographics of our prison population mirror deeper social problems that prisons are increasingly being asked to solve. The American prison system already functions as a surrogate national public health system, a national job training and literacy program, and, unfortunately, as a second-rate mental hospital. Tapping into the emerging public-private partnerships evolving out of the past decade of privatization may help solve this crisis.

It is time to redefine the purpose of the prison, to peel away all of these social engineering tasks the prisons are assuming. Let the prisons truly become a penal system for long-term and dangerous inmates and turn remaining custodial control into a restructured system of correctional programs leading to positive behavior, such as community service and boot camp programs. Such centers (public and private), concentrating on programs of self-esteem and personal development skills for inmates, can put our correctional system back into balance with other criminal justice and social service agencies. This could well lie the beginning of a correctional version of the popular and successful community policing programs throughout the United States.

In this context, accountability for both public and private prisons can be linked to creativity, in community partnership. How can this process be achieved? While the United States represents a pioneer market in the incarceration-for-profit industry, it can also serve as a laboratory for the development of a new "social contract" with private correctional entrepreneurs. The utility of these partnerships will emerge as government seeks new modes for custodial care of geriatric prisoners, prisoners with alcohol - and drug-related problems, and prisoners with emotional and mental problems (Cullen, 1986; Matthews, 1989). One of the most significant outcomes of the privatization debate is that a fundamental rethinking of every facet of the existing system is widely recognized as not only desirable but very necessary (Matthews, 1989). These partnerships are stimulating new forms of oversight responsibility by both government and private agencies (Crants, 1991; Cullen, 1986; Matthews, 1989, 1990).

The privatization movement has now matured enough to bring some reasoning to the usual reactive stance of both advocates and adversaries. There is an emerging community of interests that recognizes a mutuality of mission in meeting the ever-growing correctional custodial needs of the nation. It can be hoped that this community of interests will lobby for increasing legislation to create privatized minimum-security centers for drug addicts, alcoholics, and special-need offenders.

It is not science fiction to speculate that the prisons (private and public) of the twenty-first century will constitute even more gigantic correctional complexes providing a full range of institutionalized geriatric and public health services. The mix of public and private correctional systems is inevitable. The maintenance of the social accountability and integrity of these partnerships must be inculcated in the institutions of both sectors.

This necessitates a return to the teaching of vocational and economic civics: public and private partnerships.

As a prelude, the current intoxication with the return of private-for-profit incarceration is the most recent indicator of all emergent fourth wave of correctional reform at the cusp of the twenty-first century. The reappearance of prisons-for-profit as a fourth wave reform movement is opening old wounds and creating new dilemmas of social engineering and the possibilities for positive change. The net-widening capabilities of privatized incarceration are ominous. In this context, privatization manifestly represents less eligibility reborn. Sparks (1996) offers a resounding cautionary tone: "The prospect that penal services might be provided by a private sector not 'incentivized' toward relentless improvement but instead constrained by a rhetoric of austerity exposes a range of impending troubles for the legitimacy of the private corrections industry which have until now been largely suppressed" (89).

This is a keenly insightful point shadowing the current reprogramming of private-for-profit incarceration. Prison privatization confronts us with subjective social costs that are not so readily quantifiable. There is a concern for the consequences of commercialization in influencing current criminal justice policy. International human rights experts arc joining in voicing concerns that privatization of prisons is not in accordance with international human rights law (Beyens and Snacken, 1996). The embodiment of new public and private correctional partnerships may be the end product of this aggressive correctional privatization. The mix of public and private correctional systems is inevitable. Reforms that will define and ensure the social accountability and integrity of these new partnerships will constitute the dominant interplay in the institutions of both sectors. The importance of prisoner rights advocacy in both private and public prisons must now shift to all expanded corporate model. The dilemma continues.

1. ISSUE: Identify factors to consider for evaluating costs and quality of services for use in comparing private versus state prisons.

2. BACKGROUND/HISTORY: The increase in privatization of correctional facilities in the late 1980s and first half of the 1990s was part of a philosophical shift toward privatization of many government services. The advantages of privatization are said to be its cost efficiency, similar or better quality services, and its ability to bring facilities on-line quickly. Opponents believe that one of the core functions of government is punishment and that private companies profit motives have no place in the administration of justice, where it may create a conflict of interest between the public safety and private profit.

Private involvement with adult correctional institutions has three major models:

1. private financing and construction of prisons;

2. private industry involvement in prisons through vocational, academic, work and support programs; and,

3. the management and operation of an entire correctional facility by a private contractor.

There is general agreement that privatization is a management tool that, when used, requires government to make a series of decisions. These decisions are policy decisions to determine:

the level of privatization; which services may be considered for privatization; cost/benefit decisions to determine whether the public or private sector could produce those services most effectively and efficiently; evaluation decisions whether output or outcome evaluation should be utilized to determine if privatization decisions made are meeting intended goals.

Many state corrections agencies believe that privatization in corrections has sufficient merit to justify further study. Some advocates of privatization believe that cost savings can be realized from increased flexibility in competitively shopping for prices. Most private companies involved in corrections do not offer traditional pension plans to its employees, but rather offer vested employees opportunities in profit-sharing plans. Advocates state that one feature of private involvement in corrections is the capacity of the private sector to expand criminal sanctions, through new forms of intermediate level control and new surveillance and control technologies.

SECTION 944.105(1) - FLORIDA STATUTES, authorizes the Department of Corrections to enter into contracts with private vendors for the provision of the operation and maintenance of correctional facilities and supervision of inmates. It requires that prior to entering into or renewing a contract for a privatized prison, the DOC must determine that the contract offers substantial savings and that the contract provides for the same quality of services as that offered by the department.

3. CHAPTER 957: The Auditor General is charged with certifying to the Correctional Privatization Commission actual costs associated with the construction and operation of similar facilities or services; and developing and implementing an evaluation of the costs and benefits of each contract entered under this Chapter.

The evaluation must include a comparison of the costs and benefits of constructing and operating prisons by the state versus by private contractors. The Auditor General (again, by agreement, OPPAGA [Office of Program Policy Analysis and Government Accountability] will conduct these reviews) is further charged with evaluating the performance of the private vendor at the end of the term of each management agreement and making recommendations to the Legislature as to continue the contract.

By contract, the private vendor must provide a full-time contract monitor, who is appointed and supervised by the Correctional Privatization Commission.

DESCRIPTION /SCOPE OF WORK: This FCC issue would require the cooperation and Support of the Correctional Privatization Commission, the. Department of Corrections, and individual private correctional contractors (Wackenhut Corporation, U.S. Corrections Corporation, Esmor Correctional Services, and the Corrections Corporation of America). FCC activities would include, but not necessarily be limited to, contacting other states with multiple privatized prisons to determine:

The models(s) of privatization utilized; The profile of offender populations (adult, pre-release, jail, juvenile) at the contracted facilities; The statutory authorization for contracting correctional facilities; The statutory authorized entity for contracting correctional facilities; The cost and quality of services contractually required for the continued operation and renewal of contract; The cost and service quality criteria reviewed to determine contractual compliance; The entity which reviews and evaluates the cost and service quality criteria of private prisons; The availability of evaluations comparing the cost and service quality criteria of private v. public prisons.

Review existing research literature to identify methods and criteria utilized in measuring and evaluating costs and quality of services in private versus public prisons.

Review all Florida contracts for privatized prisons for language pertaining to cost savings and the provision /quality of services - including academic, vocational training, and substance abuse program services.

Identify innovative facility design or program operations of privatization facilities. Develop cost and service quality factors for statutory authorized entities to consider for evaluating and comparing private versus public prison operations in Florida.

4. BENEFIT OF PROJECT: The primary benefit of FCC conducting an analysis to identify cost and service quality factors would be to policy and decision makers involved in privatization of correctional facilities. Sections 944.105 Mid 944.710-719 Florida Statutes, and Chapter 957, Oversight via Florida Statutes, each prescribe varying responsibilities for cost savings, audits and monitoring contract compliance. Although cost comparison will be all essential part of the Auditor General's review, that review will not occur until completion of the second year of operation, in preparation for the decision of renewing the contract. (Florida Corrections Commission, 1996)

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