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Eye On Boise

AP: Private prisons may be costing Idaho more; state hasn’t checked

Private prisons may actually be costing the state of Idaho more than running its own, according to a new report from the Associated Press. State leaders have refused to examine the issue, reports AP reporter Rebecca Boone; about four years ago, Idaho Department of Correction Director Brent Reinke asked the Board of Correction and Gov. Butch Otter's office if his department could bid for the contract to run the Idaho Correctional Center, a move that would have given Idaho a firm idea of how much it would cost to make the facility public. The board responded with a firm "no," and the governor's office simply deflected the matter back to the board.

"We just decided we'd stay with what we're doing," said board member Jay L. Nielsen, who was the board secretary when Reinke made the request in October 2007. "As you know, Idaho likes to have private industry do whatever they can, and I think that's the reasoning behind it all." Click below for Boone's full report.

Does private prison save Idaho money? No one knows
By REBECCA BOONE, Associated Press

BOISE, Idaho (AP) — For more than a decade, Idaho leaders have promoted private prisons by telling taxpayers it's cheaper for the state to outsource prison management. But an examination of comparative costs by The Associated Press shows that the state has never actually done the math, and there may be no cost savings at all.

In fact, privatization could be costing the state more money than if the Idaho Department of Correction ran the lockups.

Idaho officials will tell you that the state's largest private prison, the Idaho Correctional Center, saves $12 per inmate, per day compared to a similar state prison. But adjusting for known system-wide expenses and the cost of overseeing the contract for the private lockup bring the per diems to just $5 apart.

The comparable state prison also houses all of the sick and geriatric inmates, is the oldest facility in the state and spans multiple buildings on a 65-acre campus, requiring a high guard-to-inmate ratio to patrol. The private prison, meanwhile, is relatively new and compact and only accepts inmates without chronic medical or mental health needs, factors that allow it to operate with a lower staff-to-inmate ratio. Those factors make it likely that the state could operate the facility for no more than it pays the private company.

State leaders have refused to examine the issue. About four years ago, Idaho Department of Correction Director Brent Reinke asked the Board of Correction and Gov. C.L. "Butch" Otter's office if his department could bid for the contract to run the Idaho Correctional Center — a move that would have given Idaho a firm idea of how much it would cost to make the facility public. The board responded with a firm "no," and the governor's office simply deflected the matter back to the board.

"We just decided we'd stay with what we're doing," said board member Jay L. Nielsen, who was the board secretary when Reinke made the request in October 2007. "As you know, Idaho likes to have private industry do whatever they can, and I think that's the reasoning behind it all."

Otter's spokesman Jon Hanian said the governor's office was carrying out a policy created by former Gov. Phil Batt in the mid-1990s. But Otter has continued to be a cheerleader for private prisons, looking into the possibility of privatizing another state facility in northern Idaho and opening a smaller private prison south of Boise in 2009.

The nation's largest private prison provider, Corrections Corporation of America, contracted with Idaho in 1997 to build and run the Idaho Correctional Center south of Boise. At the time, Batt said the move would save the state $16 million in operating costs alone.

The state generally compares the money it pays to CCA to the cost the state incurs running a similar facility: The Idaho State Correctional Institution. At first glance, those numbers show the private prison to be a striking savings — $42.12 per inmate, per day, compared to $54.14.

But the numbers are stacked against the state.

The private prison's per diem doesn't include the $4.51 per inmate, per day the state spends to monitor operations and contract compliance at the prison. They also don't reflect the fact that Idaho's contract with Corrections Corporation of America bars the state from transferring any inmate with a chronic medical or mental health condition to the private prison.

The state's per diem doesn't reflect that every inmate in Idaho is funneled through ISCI before they're transferred anywhere, including the private prison. That's because the state-run lockup handles all receiving, diagnostic and placement services for the correctional system. It also houses the Idaho's only mental health unit — a service not offered at the private prison — as well as all geriatric and chronically ill inmates, including those who can't be sent to ICC.

Adjusting for contract oversight brings the private ICC's per diem cost up to $46.63. Eliminating the system-wide costs attributed to the state-run lockup — but leaving in the $12.09 per inmate, per day that goes to medical costs — brings the state's ISCI's per diem down to $51.64.

Adjusting for the medical expenses is trickier. Because CCA is a private company, it doesn't have to disclose how much it spends on medical and mental health care for inmates. And because the state has a contract with health care company Corizon to handle the medical needs of all the state-managed inmates, the department can't get a breakdown of just how much its own healthy inmates cost compared to the sick and elderly.

"It's an algebraic problem, and as it sits today, you have too many unknown variables," said Tony Meatte, the Idaho Department of Correction's business services division chief.

Even with all those unknown variables, this much is clear: If the average medical cost of a healthy inmate runs less than $5 a day, it would likely be cheaper for the state to run the Idaho Correctional Center.

The per diem analysis "was our best bet at looking at how we can allocate all the costs in the department," said Meatte. "If someone wanted to come in and shoot holes in it, they could just like anything they look at. In the end we have to use it as a tool, to let us see if something goes up significantly in an area."

It's surprising that the state has never done a comparison, said Board of Correction member J.R. Van Tassel.

Tassell wasn't on the board when Reinke made his request to study the costs back in 2007. He said if asked today, he would likely support a different decision.

"If the question came up at a board meeting, I would be willing to support allocating the resources to do that," Van Tassel said. "Because at some point in time, the contract's going to be up for renewal again and that information would be crucial to making that kind of decision."

Having the department bid on the service is "the only way you get an apples-to-apples comparison," Van Tassel said.

"I'm on the verge of calling it a failed experiment," said Van Tassel of prison privatization, noting that the state has had to fine CCA thousands of dollars after the company repeatedly failed to meet contract requirements.

Idaho Board of Correction chairman Robin Sandy, however, said that there's value outside of cost savings in privatizing prisons. She was part of the board that made the decision not to let Reinke bid on the contract.

"I personally agree with the governor in that the more we limit government and the more we let private people do the work, that is a good thing," Sandy said. "I believe that most Idahoans share that philosophy."

Steve Owen, the spokesman for Correctional Corporation of America, says the company is highly motivated to comply with its contracts, meet its own standards of excellence and always "do better than the competition."

"As a business, we are able to provide taxpayers an essential government service at equally high standards of quality and efficiency," Owen said in an email to the AP. "Competitive private-sector entities are motivated to move swiftly, evaluate and refine success each day, and maintain the highest operating standards at least cost."

Without a state analysis, taxpayers and the Idaho Department of Correction have to take CCA's word for it.

"Any company that's saying, 'I can save you this,' has never done anything to prove that they can — that's the hard part," said Meatte. "They don't have to prove it."


Sixteen years ago, all of Idaho's prisons were owned by the state, and they were nearly chock-full. The prison population was also growing at a rapid rate, thanks to years of tough-on-crime legislation.

It was clear the state needed a new prison. What wasn't clear was how it would be paid for, and who would run it.

In a 1997 paper that then-Gov. Phil Batt dubbed the "Committee of One Sentencing Study," he noted that in 1995 there were 3200 state inmates. Just two years later, that number had grown by 28 percent to 4100.

By April 1997, the Idaho Board of Correction was told by correction department officials that the prison population was increasing at a rate of about 38 inmates per month, and the state's entire prison system only had 112 available beds, most at a northern Idaho prison designed for short-term "bootcamp" inmates. More prisoners would need to be shipped out of state soon.

Batt had spent the past several months talking to lawmakers, judges and Idaho Department of Correction officials and pushing for sentencing alternatives that would get inmates for non-violent offenses out of prison quicker, making more room for the worst criminals. He also looked at ways to build the new prison, and quickly hit on privatization as his preferred solution.

The Idaho Board of Correction had been preparing for the same eventuality, calling in outside consultants and workers with the state's Division of Financial Management to research privatization possibilities.

Consultant Richard Crane told the board they should have another expert come in and research how much it would cost the Idaho Department of Correction to run the facility. A review of Batt's papers at the Idaho State Historical Archives, the board minutes from 1996 and 1997 and a search of the state's legislative library uncovered no hint that any such expert was ever brought in. IDOC financial manager Dave Sorensen, who was part of the department's financial division at the time, said he doesn't remember any cost comparison study being done.

Instead, former IDOC director Jim Spaulding and officials with the state's Division of Financial Management agreed to use the cost per day figure for the Idaho State Correctional Institution.

At the time, ISCI had roughly the same number inmates that the new prison was to have. The inmates were also classified as either minimum- or medium-security, the same classification levels expected for the new prison.

But the similarities stopped there. ISCI is the state's oldest lockup, and it sprawls across a 65-acre campus. Inmates must frequently be moved from one building to another for meals, recreation time, therapy and education sessions. Multiple corners and nooks inside and in between buildings mean there are "line-of-sight" issues: More guards are required to make sure inmates aren't hiding and getting into trouble. It's also where all of the inmates who are elderly or who have chronic medical needs are housed.

The new prison was to be built on a much smaller campus, and it would be designed with security and technology in mind. That would make it more efficient to run.

The 1997 Legislature granted the Board of Correction the authority to enter into contracts with private prison providers. The state ultimately awarded the contract to build and operate a 1,250-bed prison to Corrections Corporation of America. In a letter to lawmakers in December 1997, Batt said CCA's proposal was set to save 14 percent over Idaho's operating costs and 33 percent over the state's construction costs. Idaho's estimated construction cost was $65 million, and the cost per day figure was $46.00. CCA's bid came in $7 lower on the cost-per-day, and $15 million less for construction.

The state named the new lockup the Idaho Correctional Center, or ICC. It opened in July 2000.

ICC appeared to be operating uneventfully for several years, until inmates began filing so many lawsuits alleging similar civil rights abuses that a federal judge began consolidating them. Some of the cases were ultimately dismissed, some were settled and some are still winding through the courts. Amid the lawsuits, the U.S. Attorney's Office for Idaho acknowledged that the FBI was also investigating the lockup for alleged abuses against prisoners. That investigation is ongoing.

CCA has repeatedly denied any wrongdoing, although in response to one lawsuit brought by about two dozen prisoners it agreed to make widespread changes in how it operated the prison.

Meanwhile, the state fined CCA for failing to meet several terms of the contract, including having enough substance abuse treatment providers on staff.

Nevertheless, the state decided to move forward with building a second private prison. The Correctional Alternative Placement Program, built and operated by private company Management Training Corporation, opened in the summer of 2010.

The state may have to considering opening yet another prison soon. Idaho now has roughly 7,800 inmates, and a follow-up report on prison facilities by the Office of Performance Evaluations released last week noted that Idaho prisons are operating again at or near capacity. The Idaho Department of Corrections estimates that another 588 beds will be needed this year and 1,200 additional beds needed by the year 2015.

Copyright 2012 The Associated Press.

Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

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