Are private prisons Mich.'s cost savior?

Michigan has shrunk its prison population by more than 7,000 inmates since 2006. Nevertheless, the state's prison system continues to consume more than 20 percent of the state's general fund budget.

Now, some legislators are considering whether shipping some of the state's 43,000 inmates to a private prison would, finally, make a dent in Michigan's $2 billion prison budget.

Bills in the House (Bills 5174 and 5177) and Senate (Bills 877-878) would allow the Department of Corrections to send hundreds of adult inmates to a currently shuttered private prison in Baldwin. The Baldwin facility is owned by Florida-based GEO Group, formerly known as Wackenhut Corrections Corp.

The stated goal of the bills is to operate the private Baldwin prison for at least 10 percent less than it costs to others in the state prison system.

“For me, it’s the same motivation we had when we started charter schools,” said state Rep. Joe Haveman, R-Holland. “It’s going to create competition in how Michigan runs prisons. Competition is just good for everybody. I hope this will save money. I know we will learn something that will make us better. Let’s just try it in one facility and see if it works better. I want to hold the Corrections Department’s feet to the fire.”

Supporters like Haveman say the privatization experiment is one of their most hopeful remaining strategies for saving money in the state’s $2 billion prison system, which accounts for 21.5 percent of the state general fund budget. Despite a 17 percent reduction in the prison population, operations efficiencies, and employee concessions on health-care costs, the prison budget continues to grow due to large labor costs and pension obligations. (The Michigan Corrections Reform Coalition of business, nonprofit and public sector groups has repeatedly raised questions about Michigan prison labor costs, which are higher than those in other states. Bridge Magazine's parent, the Center for Michigan, is a member of the Corrections Reform Coalition.

Should Michigan avail itself of private prison beds, it would be part of a recent national trend.

While the number of states sending inmates to private prisons declined slightly between 1999 and 2010, the number of inmates in privately managed prisons increased significantly, according to a new report by The Sentencing Project.

In 1999, 31 states had contracts with private prison companies. By 2004, that had grown to 33 states, but then declined to 30 in 2010. In 1999, 67,380 state prisoners were in privately managed facilities. By 2010, it had increased to 94,365 inmates.

During that same period, the number of federal prisoners -- mostly undocumented immigrants -- in private prisons increased 10 times from 3,828 in 1999 to 33,830 in 2010.

New Mexico has nearly half of its prison population (44 percent) in private prisons, The Sentencing Project says. Five other states have at least a quarter of their inmate counts in private facilities, as of 2010: Montana (40 percent), Alaska (33.5 percent), Hawaii (32.7 percent), Idaho (30.1 percent) and Vermont (27 percent).

Texas has the single largest state contingent in private prisons -- more than 19,000 -- but that represents only 11 percent of the state's entire prisoner count.

In his proposed 2013 fiscal year budget, Gov. Rick Snyder estimated the state could save $11.1 million by soliciting bids for medical and mental health services for prisoners. He stopped short of calling for outright privatization of prisons.

In Florida, though, Republican Gov. Rick Scott, elected with Snyder in the election of 2010, tried to convince the legislature to turn all 29 of Florida's prisons over to the GEO Group. What would have been the largest single expansion of private prison ranks in U.S. history was turned back by a bipartisan majority in the Florida Senate last month.

Ohio sold one of its prisons to the Corrections Corporation of America last year, and Gov. John Kasich is urging legislators to turn more over to a private operator. GEO Group and CCA hold the majority of private prison projects around the country.

Some prisoner rights groups worry the move will increase the number of inmates, and they say it raises a deeper moral question.

Private prisons reduce costs by providing less training, lower salaries and fewer benefits, according to a study, "Too Good to be True: Private Prisons in America," released in January by The Sentencing Project, a nonprofit supported by the Ford Foundation among others.

But the Sentencing Project report claims private prisons can have high employee turnover, which “may contribute to safety problems within prisons.” The report noted that GEO’s Walnut Grove Youth Correctional Facility in Mississippi is the subject of a federal investigation into brutality complaints. A lawsuit against it alleges inmates “live in unconstitutional and inhumane conditions and endure great risks to their safety and security.”

The Department of Corrections in Arizona, which has increased its private prison population by nearly 150 percent since 1999, did a comparison and found that private prisons were offering roughly comparable services to the state's public ones, at comparable costs.

The Michigan Corrections Organization, representing the state’s prison guards, issued its own report in February, warning that private prisons seldom deliver promised savings, frequently are understaffed and are not as safe as government-run facilities. When the Baldwin prison was open, it had three times as many violent incidents as the state’s other maximum security facilities, the report said.

Haveman counters that the House bills specifically prohibit discrimination against collective bargaining -- meaning guards may unionize if they choose to in the private facility.

From 'punk' to private

In 1999, Michigan braced for a predicted increase in “super predators,” teenage criminals so dangerous, they’d need to be locked in their own high-security prison.

To save taxpayer money, Gov. John Engler signed a contract with GEO to build and operate what he called the "punk prison” in Baldwin. It was “time to stop pampering punks who rape, murder and assault law-abiding citizens,” Engler said at the ground-breaking.

But the large numbers of super-predators did not materialize, and the expected savings were elusive. In 2005, the state Auditor General found the daily cost of housing each prisoner in the Baldwin facility was higher than in 33 of the state’s 37 other prisons. That was even though less than a third of the inmates required the highest security levels. Two-thirds required the lowest security, which is supposed to cost less.

Six years after Engler hailed the opening of the Michigan Youth Correctional Facility, Gov. Jennifer Granholm in 2005 canceled the contract.

Provisions of the new privatization bills are meant to assure that cost savings are achieved. The bills require competitive bidding for the right to operate the facility (even though GEO owns it) and any public or private prison vendor can bid. State fiscal analysts say the 10 percent savings requirements in the bills would amount to several million dollars in a 1,000-prisoner facility. The contract period would be two years with renewable terms.

Pablo Paez, the GEO Group’s vice president for corporate relations, did not respond to messages from Bridge seeking the company’s comment.

The Corrections Department has not taken a position on the bills, said department spokesman Russ Marlan.

Private companies step up efforts

Observers have noted that GEO has pushed legislators to reopen the Baldwin facility.

“I know there’s a lot of pressure on legislators,” said Barbara Levine, executive director of the Citizens Alliance on Prisons & Public Spending, a nonprofit group that advocates reducing prison spending through alternatives to incarceration.

GEO’s work comes as its major competitor, CCA, is offering to buy state-owned prisons in several states. The company recently sent letters to 48 states, including Michigan, saying it had earmarked $250 million to buy state prisons, the ACLU and others have reported.

In return, CCA proposed a 20-year management contract and a guarantee from the states that each facility would maintain 90 percent occupancy.

MDOC did receive a copy of CCA’s offer, Marlan said, noting that the department saw it as "a very interesting concept."

Sen. John Proos, R-St. Joseph, sponsor of the Senate bill that would allow privatization, said he was unaware of CCA’s offer.

“I just don’t have enough information to know if this is appropriate,” he said. “One of my concerns is we’d be accepting a one-time fix. The taxpayers of Michigan have a balanced budget without one-time gimmicks or fixes.”

Critics contend that private prison companies have a financial stake in keeping incarceration rates high – which could work against wider, business-supported efforts to significantly reduce overall prison costs in Michigan.

The GEO Group and CCA, were once members of the American Legislative Exchange Council, a group that promotes privatization. That group has drafted, and urged states to pass, legislation imposing mandatory sentences and other measures to increase incarceration.

"We already have a state economic development strategy based on prisons – “that’s why we have them in the U.P.,” said Haveman. But, he said he has seen no evidence of private prison operators trying to push an expensive get-tougher-on-crime agenda in Michigan.

“They have no business lobbying us on that,” Haveman said. “If they ever did that, I’d say, ‘Butt out, you have a conflict of interest.’”

Pat Shellenbarger is a freelance writer based in West Michigan. He previously was a reporter and editor at the Detroit News, the St. Petersburg Times and the Grand Rapids Press.

Bridge Magazine's John Bebow contributed to this report.


Facts matter. Trust matters. Journalism matters.

If you learned something from the story you're reading please consider supporting our work. Your donation allows us to keep our Michigan-focused reporting and analysis free and accessible to all. All donations are voluntary, but for as little as $1 you can become a member of Bridge Club and support freedom of the press in Michigan during a crucial election year.

Pay with VISA Pay with MasterCard Pay with American Express Donate now

Comment Form

Add new comment

Dear Reader: We value your thoughts and criticism on the articles, but insist on civility. Criticizing comments or ideas is welcome, but Bridge won’t tolerate comments that are false or defamatory or that demean, personally attack, spread hate or harmful stereotypes. Violating these standards could result in a ban.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.


Thu, 03/01/2012 - 10:16am
I have watched the privatization of mental health services and schools over the past 30 years, and am sure the same would happen with the prisons. I am opposed to privatization of these services because: 1 - savings are seldom achieved 2 - these types of services require properly trained staff who stick around - in the group homes that replaced inpatient mental health and in charter schools, the turnover rate is extremely high because they maintain inadequate staffing levels, wages are low, and benefits are poor, this is how these private companies make money, by cheating the worker. 3 - I resent my tax dollars going to pad the pockets of out of state companies.
Sam Hagar
Thu, 03/01/2012 - 11:41am
Privatizing prisons is a bad idea for one simple reason: The companies that run them are in it to make a profit. Setting aside any possible concerns about prisoner treatment, these companies have a vested interest in increasing prison population - and that is fundamentally wrong.
Thu, 03/01/2012 - 12:12pm
Could it not be conversely argued that publicly owned and operated prisons have no concern as it relates to cost and efficiency? What about an open book type of accounting system (similar to cost plus) where all costs are accounted for and marked up an agreed to percentage? As it currently stands, owning, operating and maintaining the prisons with public employees does not seem to be able to corral out of control cost structures.
Thu, 03/01/2012 - 2:05pm
Private companies do have a vested interest in increasing the prison population, but so does the Michigan Department of Corrections. Criminal justice is an industry. If all criminals stopped being criminals, we'd have to invent new crimes because of all the people we'd put out of work. Much of Michigan's county correction processes are out-sourced to private companies, often non-profit private companies (e.g. drug counselors). Privatization by itself isn't necessarily the problem or the solution. When you privatize prisons, basically all you are doing is rearranging the deck chairs on a sinking ship. The big problem is over reliance on jails and prison for correction. We use this correction option more than any country on the planet: e.g. 7 times the rate in Canada, most of Europe and Australia. We don't just imprison people we fear, we also imprison those we're just mad at. Our sentences are much longer than they need to be in many instances. And worst, we're really bad at actually correcting criminals: our very high recidivism rates are a testament to the ineffectiveness of long (and incredibly expensive) incarcerations. We need to develop alternatives for criminals we're just mad at.
Mon, 03/05/2012 - 9:49am
Thu, 03/01/2012 - 11:50am
Perhaps the gov and his partners can fund a study and consider privitizing the legislature as well as the prisons and schools and so on. The gov and his partners need to establish just what gov role is to be. If all it is for is to be a conduent for my tax $s going to the business community tell us. There really are some things that gov should do and not the private sector. But in the current climate privatize at all costs is the answer to all problems.
Thu, 03/01/2012 - 12:14pm
There are two types of criminals: those we fear and those we're just mad at. The ones we fear need to be locked up. The ones we're just mad at should be dealt with differently and not by the state. When we shifted criminal correction responsibility to the state, we created several very expensive problems, the worst of which is that they soon get shipped back to the counties, uncorrected, but much better educated criminals; their fellow inmates taught them well. Correcting the criminals we're just mad at should be a county responsibility, not a state responsibility. Since counties have to live with them when they get out, counties are much more motivate to actually accomplishing correction than is the state and much more motivated to use correction methods that actually work. Sentencing guidelines probably make sense, but these guidelines need to be created by experts, not via political whim. For those we're just mad at, these sentences should be guidelines, not mandates. Local judges know more about these criminals than anyone and will make the best decisions regarding correction. Some Michigan counties, the ones that can't afford ever bigger jails, have gotten pretty creative when dealing with their criminals. Incarceration isn't always the most effective answer for these criminals and long incarceration often does more harm than good, not necessarily to the criminal, but to the rest of us who often have to take care of their families, deal with them after they're released and pay 1/5th of our state tax dollars to support them while they're in state prison.
Thomas W. Donnelly
Thu, 03/01/2012 - 12:59pm
At the risk of being seen as a bleeding heart liberal, I would suggest that part of the solution to our high volume of prisoners was the closing of just about all of the mental hospitals in the state. Delusional people commit crimes and are sent to prison, with no opportunity for treatment. I am concerned that making money for the private contractors is the motivation by the legislature to move prisoners to privately run facilities. I am not against businesses making money; that is what they do and they also employ people who pay taxes. I am against the gradual deconstruction of the state's services by turning everything over to private enterprise. As Norm above mentioned, I really like the idea of an out-sourced legislature. Make it unicameral and part-time as well. There's some real savings there.
Thu, 03/01/2012 - 9:57pm
For-profit, private, corporation prisons increase their bottom line profits, not when they do their job of reforming prisoners, but when they fail and released prisoners commit new crime with new victims and are returned to prison. The for-profit, corporation prisons are not safe for employees or prisoners. They cut corners and use security guards rather than trained prison guards. Overhauling the criminal justice and incarceration systems and becoming smart on crime and providing training and rehab programs for prisoners is far wiser than paying corporations for assuming our responsibility of incarceration and actually saves us tax dollars. FOLLOW THE MONEY to the prison profiteers whether they are corporations, politicians, unions, or others. Why would we want to fund these soulless corporations that waste salvageable people and our tax dollars?
gary pline
Fri, 03/02/2012 - 8:40am
It looks like to me that gov snyder is running the MDOC into the ground like he did his million dollar business !! Whats he going to do to the MDOC next sell it to the Chinese??
Fri, 03/02/2012 - 9:42am
So Rep Haveman is comparing private prisons to charter schools? How about a "home-prison" choice. It's time for "out-patient treatment" for people who are not a danger to themselves or society. If families could choose a prison for their loved one - like "some" can choose a school - from a buffet of choices that include private, parochial, charter, public, or home-school - then you can talk competition. In the meantime, unless competition in other public services - fire departments, police forces, road commissions - is seen as viable, it certainly should not be touted as a good idea in the corrections arena. How about improving the public system with more ombudsmen, transparency and community oversight councils instead of sinking millions into an experiment that has already proved ineffective and unsuccessful?
Sun, 03/04/2012 - 7:04am
It is a social problem and the breakdown or should the continued breakdown of our value system. A former coworker favorite saying was why be nasty when it is so easy to be nice. We all need to get better at following his advise.
Wed, 04/04/2012 - 10:39pm
How about we legalize marijuana in the state, and release all the NON VIOLENT pot users being used as slave labor in the great state of Michigan? Between the LOWER budgets for law enforcement, and the lower prison populations, its got to save at least HALF a billion.