Vanderbilt University Study Unveils Significant Cost Benefits by Introducing Private Corrections Management

Today corrections represents approximately seven percent of states’ total budgets – a figure that continues to climb as many systems face a growing inmate population and increased economic pressures in education, health care, infrastructure and other public needs.

Under these conditions, states – especially those over capacity – are revisiting their correctional strategies. And new research by Vanderbilt University professors shows that privatization provides the cost savings to the public system that many states may seek.

In the six years of data examined in “Do Government Agencies Respond to Market Pressures? Evidence from Private Prisons,” the researchers concluded that states integrating private prisons into their existing public system experience lower rates of growth in the cost of housing their public prisoners when compared with states that do not contract with private correctional facilities at all.

The study focused on the use of public and privatized prisons from 1999 to 2004 – a period when the use of privatization increased nationally, from 13 states to 34 states (with about 7.5 percent of prisoners in the United States under private management).

“The fundamental conclusion is that, over that six-year period, states that had some of their prisoners in privately owned or operated prisons experienced lower rates of growth in the cost of housing their public prisoners – savings in addition to direct cost savings from using the private sector,” said report author James Blumstein.

This new research also shows that this cost savings for public corrections systems is in addition to the direct cost savings achieved from privatization itself. The report indicates that states could save $13-15 million annually by introducing public-private partnership in corrections.

The study also suggests that privatization spurs healthy competition and the transfer of industry knowledge to the public sector, thus curbing the public sector's own operational costs (aside from the direct cost savings of privatization).

CCA does business with about 20 states today in more than 60 correctional facilities. A two-page abstract of the official 40-page report, the news release issued by Vanderbilt University and the official study are available on CCA’s online Resource Center at: at http://www.correctionscorp.com/cca-resource-center/research-findings/independent-studies-prison-privatization/.