Private Prison Contracts Are Forcing States To Pay For Empty Beds

California prison overcrowding readingReuters/Lucy NicholsonAn inmate reads a book in a gymnasium where they are housed due to overcrowding at the California Institution for Men state prison in Chino, California, June 3, 2011.

new reportsuggests that having private companies run prisons might not be the best idea.

The advocacy group In The Public Interest analysed 62 contracts between counties and states and private prison contractors. The analysis found 65% of the contracts had clauses that promised to pay for empty beds if they did not lock up a certain number of people.

States typically pay private prison contractors per inmate. The government has little incentive to cut prison populations if it’s going to have to pay for the empty beds, anyway.

These “lockup quotas” are pretty much a win-win for private contractors. From the In The Public Interest report:

These companies rely on occupancy guarantee clauses in government contracts to guarantee profits and reduce their financial risk, since the ability of private prison companies to ensure prison beds are filled generates steady revenues. These contract requirements are an important tool in private prison corporations’ efforts to maximise profits. …

Private prison companies make no secret that high occupancy rates are critical to the success of their business. During a 013 first quarter conference call, GEO Group boasted that the company continues to have “solid occupancy rates in mid to high 90s.”

Both states and the federal government have turned more to private prison contractors in recent years, ostensibly because they could save money in the long run. The evidence that private prisons actually do save money, however, is mixed, according to the ACLU.

As of 2001, the cost benefits of prison privatization had not “materialised,” according to a Bureau of Justice Statistics report.

Arizona’s corrections department revealed in 2011 that privately run prisons cost the same per inmate as those run by the state, The New York Times reported. And the privately run often facilities often turned away sick, more expensive inmtates, the state found.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.