Jindal’s Prison Privatization Proposal Must be Properly Structured, But Can Generate Savings, Spokesman Says

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Corrections System the Second-Fastest Growing Part of State Budgets

By Kevin Mooney

While some high profile state officials have expressed skepticism toward the idea of selling off state correctional facilities, a spokesman for Gov. Bobby Jindal says the proposal can be structured to alleviate costs and “right size” state government.

As part of a larger effort to address Louisiana’s $1.6 billion budgetary shortfall without raising taxes, Gov. Jindal has suggested privatizing government services and selling off key assets including the Allen Correctional Center and the Winn Correctional Center. Corrections Secretary Jimmy LeBlanc estimates the state could receive $64 million for both prisons.

However, State Treasurer John Kennedy has been critical of the governor’s plan and views it as a “one-time” quick fix that will not translate into long-term budgetary solutions. Meanwhile, elected officials in both parties have cautioned against the possibility that private companies could actually raise prices over time and coerce the state into paying for maintenance costs.

“A junkie can go sell his television and sell the radio and pay for a fix…[b]ut sooner or later…he’s got to face his addiction,” Kennedy has said. “I would prefer to have us face our addiction.”

State Sens. John Alario (R-Westwego) and Karen Carter Peterson (D-New Orleans) anticipate that Louisiana taxpayers will ultimately lose out as a result of rising prison costs that are sure to impact private companies. In response, Gov. Jindal has said the prisons will not be sold unless savings could be realized “up front.” Moreover, the successful prison privatization efforts in other states shows that meaningful savings can be realized, so long as certain provisos are in place, according to Gov. Jindal’s policy director Michael Dailey.

The contracts drawn up between government officials and private owners would be crafted to safeguard Louisiana taxpayers and prevent costs from rising over time, he explained.

“Just as other states have done, we can structure the transaction to ensure that this is not the case,” Dailey said. “Such a contract will establish a per offender per diem rate schedule for a guaranteed number of prisoners for the length of the contract, and will establish qualitative restrictions for the new owner.”

A new study released through The Reason Foundation substantiates Dailey’s argument. The study shows that private prisons yield significant savings for taxpayers.

“Private prisons save money,” the study concludes. “10 to 15 percent average savings on operations costs, based on fourteen independent cost comparison studies. Other evidence of cost savings is examined as well. Cost savings are achieved through innovation and efficient management practices.”

Dailey also said “targeted one-time funds” could be used to bridge any budgetary gaps until future savings are realized from ongoing reform efforts. The state’s Department of Corrections is assessing the potential sale of both prisons to ensure that the transaction measures up to the governor’s fiscal and public safety goals, he added.

Jindal’s prison sale proposal has attracted the attention of free market organizations that joined with the Texas Public Policy Foundation to advance “Right on Crime” a nationwide effort aimed against inefficient incarceration practices and excessive criminalization that heighten taxpayer costs.

Government corrections programs have expanded to the point where they are now the second-fastest growing category in state budgets behind only Medicaid, according to Right on Crime. In California, for example, incarceration can cost up to $50,000 a year per prisoner, government figures show.

“As with any government program, the criminal justice system must be transparent and include performance measures that hold it accountable for its results in protecting the public, lowering crime rates, reducing re-offending, collecting victim restitution and conserving taxpayers’ money,” Right on Crime, declares in its ‘Statement of Principles.’ “Crime victims, along with the public and taxpayers, are among the key ‘consumers’ of the criminal justice system; the victim’s conception of justice, public safety, and the offender’s risk for future criminal conduct should be prioritized when determining an appropriate punishment.”

Leading conservative figures such as former House Speaker Newt Gingrich who have long emphasized a “tough on crime” approach to public policy ardently support the cost savings initiatives “Right on Crime” has advanced at the state level.

Even as Jindal’s in-state critics insist his proposal could backfire and further inflate government, his proposals continue to generate interest among policy specialists who see room for cost savings in the criminal justice system.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.

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