Kasich administration moves to privatize some of Ohio’s prisons
As the recession continues to be a drag on the revenues to state and local governments, governmental officials are looking for cost savings at every opportunity. The state of Ohio was facing an $8 billion shortfall going into the current biennial budget. The Kasich administration has attempted to close that shortfall with some measures that have been, to say the least, controversial. Part of the Kasich strategy is to promote privatizing state entities for cost savings, which would arguably create potential new revenue for the state. The governor has already moved to privatize the department of economic development, prisons and liquor sales. At this time there is discussion about privatizing the Ohio Lottery and the Ohio Turnpike.
In the latest step to reduce the size of state government and to shrink the state’s budget shortfall, two weeks ago Ohio sold the Lake Erie Correctional Institution in Ashtabula County for $72.7 million to a private company. Officials said the state had sold the 11-year-old correctional facility, which currently houses about 1,500 non-violent prisoners, to the Corrections Corporation of America (CCA). The state will now pay the Nashville-based company to run the facility. The privatization of parts of Ohio’s prison system was one of the deficit-closing provisions contained in the budget Governor Kasich signed into law in June. Although Ohio has used private companies to manage state-owned prisons since 2001, this is the first time Ohio or any state has sold a prison facility to a private corrections company.
The original Kasich plan called for the sale of five prisons, which were expected to raise as much as $200 million in the privatization process. However, when the bids on the other four facilities fell short of the state’s target selling price, the state maintained ownership of those four facilities. Currently, Ohio has 31 correctional institutions housing approximately 51,000 inmates. A spokesman for the Ohio Department of Rehabilitation and Corrections stated the privatization package meets the goal of reducing overhead costs with savings of $13 million annually, while at the same time adding 700 beds to house inmates in the overcrowded system. The state will pay CCA $44.25 per inmate per day in addition to $3.8 million for an annual ownership fee to cover wear and tear to the facility.
Critics of the sale argue the reduction of overhead costs comes at a price of lower wages and fewer benefits paid by the private companies to the workers at these facilities. Last week the policy group, ProgressOhio, sued to block the privatizations, claiming the sales were unconstitutional. A hearing in the case is scheduled for later this month. The judge, however, declined to impose a temporary restraining order on the state, which allowed for the sale of the Lake Erie Correctional Institution to go through.
Forum Question of the Week:
Is it sound public policy to privatize parts of the Ohio correctional system, including the recent sale of the Lake Erie Correctional Institution to a private company?