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Alaska: Caution urged on for-profits.

Anchorage Daily News (Alaska)
June 9, 2004
Opinion - Alaska should heed cautionary lesson from Louisiana fiasco

Louisiana provides a cautionary tale for Alaska, as certain politicians and special interests continue lobbying the state to authorize a large private prison. Private prisons can work well if standards are rigorously observed, but there are no guarantees.

Louisiana is shutting down its notorious Tallulah juvenile prison, which began in the mid-1990s as a privately run facility for violent offenders and rapidly spun out of control. "The prison was first run by a management company with no experience in juvenile prisons," The Associated Press reported last week. "Within months, riots and allegations of abuse forced the state to take on-and-off control.

"In 1997," AP continued, "the Justice Department found widespread abuse of inmates by guards had left teens with gashes and broken bones. Federal investigators reported a year later that teens were beating and raping fellow inmates."

The state eventually took over and fired hundreds of guards. Even then, the juvenile prison was so bad, one state judge refused to send youths there. The judge ordered other offenders he had sentenced there to be transferred to safer facilities.

According to the AP, "State legislators noted last year that Louisiana's juvenile offenders wind up back in prison at a rate of about 60 percent -- far higher than in other states."

Was it private-sector status that caused these problems? Not necessarily. Public-sector prisons can go bad too. But the case illustrates how private-sector incentives need to be shaped and constrained to higher public purpose. Carefully.

Private prisons have become a popular way for cash-strapped governments to cut the swelling cost of corrections as they lock up more and more offenders. For years, Alaska has used a private prison in Arizona to house roughly 700 inmates. Stashing prisoners in the Arizona facility costs noticeably less -- around $30 to $40 per inmate per day -- than it would to keep them here in public prisons.

But the fundamental question is whether private prisons cost less because they deliver less. In some cases, they may save money by doing away with public employee unions that might otherwise drive up labor costs. In other cases, like Tallulah in Louisiana, private prisons deliver less-trained staff, less rehabilitation and, ultimately, less protection for the public.

The private prison debate will heat up again in Alaska soon. Legislation passed this year authorizes a private prison in Whittier if a cost study shows a state-run prison can't meet or beat the price.

In that comparison, the state has to make sure it understands not just the cost differences but also any differences in the quality of services. The legislation requires comparing the "same level of services required by state law or regulation." The difficulty is that analysis may be more art than science.

Deciding what correctional services are "required by state law" could, and has, kept legions of lawyers busy. For almost two decades, Alaska courts wrestled with that question as they enforced a consent decree eliminating overcrowding and protecting prisoners' rights. Those courtroom disputes routinely and repeatedly arose when bureaucrats were merely trying to limit how much oil money they spent on inmate services. Expect even more disputes about "required" services where the prison operator has a fiduciary duty to its stockholders to control costs, i.e., restrict the level of services.

Government-run prisons are presumed to be less efficient, but any efficiency gains from private operations also come with added costs. Private prisons have to pay taxes and produce profits. The profit motive may lead operators to cut corners in ways that harm the public interest.

Prison management is like any other economic arrangement: In general, you get what you pay for. If it looks like you're getting something for nothing, check the fine print.

The bottom line for Alaskans is not the same as the bottom line for private prison operators. With a private prison, job number one is making money for the owners. For Alaskans, the bottom line with a prison is doing what best protects the public -- and that must always be first priority. That's a key difference the state must keep in mind as it considers privatizing this critically important function of state government.

BOTTOM LINE: Considering Louisiana's experience, Alaska should look carefully at whether a proposed private prison really can deliver the same services at lower cost.