Idaho’s prison population is growing by 400 inmates a year, and hundreds are being shipped out of state for lack of room.
But for two years running, the Legislature hasn’t come up with money for its prison department’s top priority: a new $45 million, 1,000-bed prison.
Now Idaho is considering allowing a private company to build and run a prison on state land south of Boise. The state would be charged only a daily fee for each inmate.
With some nightmarish exceptions, private prisons have successfully replaced state and federal lockups across the country.
Gov. Phil Batt sees two advantages to going private: The state could save money, and a private firm could build a prison quickly, possibly in as little as 18 months. “I don’t think we’re going to have much choice, unless we want to send a whole lot of folks out of state,” Batt said.
On Feb. 10, the Legislature’s budget committee will receive a report on privatization from the Corrections Department.
Eileen Tremblay, a legislative budget analyst for 14 years before joining the Corrections Department three months ago, expects state policy-makers to choose the private prison route. “I think this is going to happen, and it’s going to happen soon,” she said.
Some try to cut corners
In 1984, there was one private prison in the United States, an immigration detention center in Houston. Now there are more than 100.the end of 1996, Nashville consultant Richard Crane expects the number to rise to 135, supervising close to 80,000 inmates.
“It’s growing because it’s cheaper and it’s faster,” said Crane, an attorney who worked for one of the largest private prison firms in the 1980s, then became a consultant helping government agencies privatize their prisons.
Crane admits there are companies with poor records. Some have tried to cut too many corners to come in with the lowest bid. Some weren’t prepared to handle the jobs they won.
“There are people who’ve been convicted of bribery to get contracts,” Crane said. “All of those things you’ve got to ferret out during the request-for-proposals process.”
Crane said a state can protect itself by carefully spelling out its requirements up front, then making sure the contractor can and does follow through.
In the 1980s, two New York City businessmen who had run one of the city’s most notorious welfare hotels decided to go into the private prison business. Within six years, Esmor Correctional Services Corp. had contracts across the country to run everything from halfway houses to boot camps to immigration detention centers.
In 1995, riots broke out at one of the company’s prisons, a center for illegal immigrants in Elizabeth, N.J. The Immigration and Naturalization Service canceled Esmor’s contract after discovering that detainees there had been abused by ill-trained, overworked guards.
The company had bid $20 million less than its competitor to win the contract. Esmor also was criticized for one of its New York halfway houses, which in 1992 was found to have had such problems as vermin, fire hazards and too little food.
But Esmor has operated other facilities with few problems. The company, which recently changed its name to Correctional Services Corp., is among those that could bid on Idaho’s new prison.
“You have to really understand what went on in New Jersey,” Crane said. “The problem was…a request for proposals that was not accurate. The Immigration and Naturalization Service put out a one-page scope of work. A typical request for proposals that I do is probably 150 pages long.”
“So there was a lot of discrepancy between what they thought in their minds they wanted, and what the contractor thought.”
In addition to carefully writing their requests, states need to check references and avoid making price the overriding factor, Crane said.
Idaho can expect plenty of lobbying and political pressure from firms that want the job.
“It’s a very lucrative contract. A thousand beds at $45 a day is $16 million a year,” Crane said.
Companies are ready
Idaho already has started receiving inquiries from firms that would like a chance at building and running the state’s first private prison.
They range from Idaho business, political and law-enforcement players interested in possibly starting up their own companies, to big players in the business.
Mike Duff, a former campaign manager for U.S. Rep. Helen Chenoweth, is among those who want a shot. His five-person Western Partners consulting firm has been looking into private prisons and he thinks he could pull together a group of investors.
Duff said his research has shown “there’s a savings for the states, and that a fella can turn a buck while he’s doing it without increasing the hardships a prisoner might face. They’re not in dungeons with alligators.”
If the state requests proposals, “We would expect to get out there and try and put together a homegrown group, if you will, to do this.”
At least one new correctional services company, Rocky Mountain Corrections of Ketchum, has incorporated recently in Idaho.
Tremblay, who is overseeing the privatization project, jokes that she may have to change her phone number to avoid overtures from private prison firms or their lobbyists.
“I am so paranoid about keeping this squeaky clean,” she said. “I don’t want there to be even a hint of anyone having an inside track.”
Tremblay expects proposals to come in from national companies, local firms, and possibly partnerships that include both. Among those in Idaho with some experience are construction giant Morrison-
Knudsen Corp., which built Idaho’s maximum security institution.
When the state of Virginia recently went looking for proposals for a new 1,500-bed prison, it got nine. A new prison there is under construction.
According to Virginia’s contract with Corrections Corp. of America, the state’s cost per inmate per day, by the second year of the contract, will be $37, including a separate charge for construction.
That’s what Virginia officials estimate the state would have spent just to operate a new prison, if it already were built.
A company for every need
A private prison in Idaho certainly is feasible, Tremblay said.
“For whatever need you have, there is a company out there that will come in and submit a bid and say they will do it for you.”
One private prison Tremblay visited, an Esmor operation in Phoenix, was designed to house drunken driving offenders. Others, like a Minnesota facility that’s now housing overflow Idaho prisoners, are similar to Idaho’s medium- and maximum-security prisons.
“You wouldn’t be able to tell the difference unless you looked at the patches on the correctional officers’ arms,” Tremblay said.
Idaho already has contracted with private firms to provide inmates’ food and medical services.
If the state decides to look for a private firm to build and run a new 1,000-bed prison, it can require that the prison provide certain programs, that it meet national accreditation standards, that it train its staff to certain levels, and that it operate at a cost that’s a certain percentage below the state’s operation costs.
“You put that into the contract, and then you just monitor the heck out of it,” Tremblay said.
In some ways, a private prison could be held to higher standards than the state’s own facilities. Only two of Idaho’s seven institutions meet national standards.
“Can they run them better? I doubt it,” said James Spalding, Corrections Department director. “But they can probably come up with some economies of scale.”
Much of private firms’ savings come because their costs for employee benefits are so much lower than the state’s.
Corrections Corp. of America, for example, has a stock ownership program instead of a pension plan. That “doesn’t cost them anything,” Crane said, while the state has significant costs for employee pensions.
“Wages are going to be pretty close to the same. They have to compete for the same employees, but the benefits are different.”
Said Gov. Batt, “Generally speaking, these private prisons have been able to save the public entities some money. I wouldn’t want to exaggerate that, because I don’t think it’s a lot…But that’s only one of the considerations.”
The speed with which a private prison can be built may be even more important, Batt said.
Crane said it could take three to five years for the state to finance and develop a new 1,000-bed prison. With a private firm, “That facility can probably be designed and built and the doors opened within 18 months of the contract being signed.”
Depending on the contract, ownership could revert to the state after the construction debt is paid off.
“It’s quite attractive to me,” said Batt.
Pam Ahrens, director of the state Department of Administration, cautioned, “There is a great deal of money to be made.”
“I think it is a great idea,” she said, “but you have to go in with your eyes open and know exactly what your costs are.”
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