Privatization of Prisons

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Privatization of Prisons


I am writing this memo in response to a request to analyze the benefits and disadvantages of privatized prison systems. With the present economic environment, it is important to explore all options that could reduce the state’s deficit. This research project will explore the cost benefits to the privatization of California’s prison system, in comparison to other cost saving options. It will use statistics from other states that use private prison systems, as well as federal detention facilities that are privately managed. The purpose of this analysis is to reduce spending as a whole, and to not place a financial burden on local governments. It is also important to note that prison sentences
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In the evaluation of cost efficiency, Allen Correctional Facility and Winn Correctional Facility, the two privately operated prisons, showed a unit cost per day to be $22.93 and $23.49, respectively. This is compared to Avoyelles Correctional Facility (government operated) at a $26.60 unit cost per day. Over a five fiscal year period, the cost savings for privatization was between 11 percent and 13 percent (doc.state.ok).

The state of California has a staggering unit cost per day of $162.00. The state also utilizes out-of-state privately operated prisons to help reduce its overcrowded prison population. The most expensive contract shows a unit cost per day at approximately $72.00 (Reason). It becomes clear that California needs to explore cost saving options when its unit cost per day drastically exceeds states like Texas, with a unit cost per day of $42.47, and Louisiana with a unit cost per day of $26.60.


The evidence reported in this analysis weighs towards privatization. Although the cost benefits suggested by the studies are promising, the ratio of California’s prison expense to other states remains distorted. Even at a 14 percent reduction in cost, such as Texas, the unit cost per day would still exceed the national average. In order to reach the same unit cost per day as Texas, California would
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