By Jim Small - jim.small@azcapitoltimes.com

Published: December 14, 2009 at 7:45 am

When lawmakers chose April Fool’s Day as the deadline to submit a plan to privatize the state’s prison system, they unwittingly telegraphed just how dubious the plan was.

First, the whole idea of putting state prisons under private control was a difficult sell to the public. Then there was a question about how many of the state’s 10 prisons to auction off. After that, several of the largest private prison operators made it clear that they weren’t interested in buying the prisons.

But now it’s clear that the $100 million asking price for the prisons was the most specious aspect. The plan from the beginning was part of the Legislature’s scramble to fill a gap in the state’s budget and thus avoid Gov. Jan Brewer’s proposed sales-tax increase.

Last month, the Joint Legislative Budget Committee announced the $100 million was not feasible.

“I think it was a number that (lawmakers) felt comfortable with and what they wanted to be able to get up front,” said Grant Nulle, the director of fiscal policy for the House of Representatives. “I think it’s speculative at this point.”

Rep. John Kavanagh, a Fountain Hills Republican, said the number was developed after he spoke with representatives from several private prison firms and could be achieved by privatizing three prisons. Kavanagh is the driving force behind the privatization proposal.

The plan was pitched as an upfront payment the private companies would make to take over existing prisons. But that doesn’t tell the whole story. The $100 million also includes a loan of sorts from the prison companies, which would be asked to advance the state a portion of the money that they expect to save during the contract period.

The most frequently cited reason for privatization is that a business can run a prison more efficiently than the state. According to the law that allows privatization, the state would split any savings equally with the prison company. But to achieve an upfront payment of $100 million, the company would have to calculate how much money would be saved during life of the contract, then pay a portion to the state when the contract is signed.

“That’s how you get so much upfront,” Kavanagh said.

The idea to sell off the prisons is also drawing criticism from outside the state, partly because it includes transferring ownership of several maximum security units and the state’s death row.

Andrew Strong, who runs the Texas-based private-prison watchdog Web site Private Prison Watch, said ceding operation of the state’s most dangerous inmates to private companies is bad public policy.

“States owe it to their general public to follow through with the punishment that is administered instead of avoiding the responsibility altogether and placing it in the hands of less-qualified personnel
because of a faulty budget plan,” he said. “The blanket selling off of one of the state’s highest responsibilities is not only cowardly but a slap in the face to anyone who pays taxes in Arizona.”

Kavanagh, though, defends the proposal as both good policy and necessary, considering the state’s gaping budget holes. Detractors are interested merely in protecting the status quo, he said.

“Everybody’s protecting their turf, and a lot of statements are being made more for protection, as opposed to evidence-based opinion,” he said.

He also pointed out that the privatization authorized by the state budget won’t result in the entire system’s being turned into private prisons — at least not now.

Instead, Kavanagh said the plan is to privatize two or three of the prisons. While an earlier version of the privatization language named specific prisons, the final version gives authority to consider nine
of the 10 state prisons for privatization, but it doesn’t mandate they all be offered up.

Still, Kavanagh said lawmakers should consider selling more if selling the first batch is successful.

But the privatization presents political challenges, as well.

Opponents are lining up for a fight, including the head of the state Department of Corrections.

Charles Ryan, the interim director of the department, said the agency isn’t opposed to using private prisons for Arizona inmates, but it doesn’t like the idea of turning over its facilities to for-profit prison companies.

“I don’t think that is a viable public policy to pursue and implement,” he said. There is, he added, “no history in the United States of privatizing maximum-security prisons.” Ryan said the only private holding of maximum-security prisoners is in detention centers, to which all prisoners go before they are sent to what he calls “full, functioning prisons.” All prisoners are initially considered maximum-security when they enter the system until corrections staff can determine how to classify them.

Kavanagh said Ryan is wrong. A search on the Internet, Kavanagh said, showed 15 or 20 private prisons that house maximum-security inmates.

According to the Association of Private Correctional and Treatment Organizations, there are 20 private prisons that house high-risk inmates; 15 of them are detention centers or intake facilities. The
rest house multiple security levels of inmates.

Even lawmakers who otherwise support privatizing government functions are wary about turning over control of the prisons.

“There are functions that are just the government’s responsibility,” said Sen. Russell Pearce, a Mesa Republican.

Pearce said Arizonans will resist turning over control of state prisons to a private entity.

“One of the cornerstones to success is public confidence. I think it’s difficult (for privatization) to pass the headline test,” he said.

Privatizing the complex that includes death row would be unprecedented, said Dr. Travis Pratt, a professor at Arizona State University’s School of Criminology and Criminal Justice.

“This is huge,” he said. “This outpaces anything we’ve ever seen.”

The magnitude of the privatization also presents problems for prison companies, said Strong, who runs a Web site that monitors private prisons. And it will be difficult to make money from the facilities because it costs a lot of money to incarcerate high-risk and maximum-security inmates.

“Private prison corporations, much like any other corporation, have an unyielding desire to make money,” Strong said.

He said private prisons tend to hire inexperienced guards because they are less expensive, which makes the firms better suited to manage facilities with lower-risk inmates. Many private prisons nationwide house such low-security inmates as drug offenders and drunk drivers.

“I am confident that there are no existing private prison companies that could provide sufficient security measures to house death row inmates,” Strong said.

Kavanagh doesn’t buy the critics’ arguments. “Nobody has yet to tell my why somebody whose paycheck is cut by a private company versus the government can’t do as good a job supervising a prisoner,” he said. “I think most of the people who claim that the private employee can’t do as good a job are the same people who, when they’re really ill, shun the public hospitals and go to private ones. I guess it doesn’t apply to medicine, but it does to corrections? No one’s been able to explain that to me.”

Private prison companies also refused to explain it to the Arizona Capitol Times.

A spokeswoman for Corrections Corp. of America, the nation’s largest private prison company, said it was “very questionable” whether the company would seek to take over a state prison.

Representatives for Corrections Corp. of America refused to comment further because a legislative panel is still considering what kind of information to request from private prison companies.

Similarly, spokespeople for Management & Training Corporation and The GEO Group, two other prominent private prison firms, would not answer questions about Arizona’s decision to explore privatizing its facilities.

Ensuring the continued employment of state corrections officers presents another roadblock.

Tixoc Muñoz, president of the corrections officers’ union, said officers wouldn’t be guaranteed jobs. Those who do find work with a private company wouldn’t be covered by state personnel rules or
benefit from its retirement system.

“We believe public safety should not be done by profiteers,” Muñoz said. “If privatization were the solution to the problem, we should privatize the House and the Senate.”

Of course, the debate over whether the state’s prisons should be privatized assumes private prison businesses will be interested in taking over Arizona’s large prison complexes. Last month, the AP reported there was little interest among the firms.

Kavanagh, though, said he thinks private companies will step forward and bid on some of the state’s prisons.

Even if parts of the system are privatized, there may not be any resolution to the debate over whether private firms should oversee high-risk inmates. In a Nov. 19 executive session meeting, the Joint Committee on Capital Review explored parceling out to private companies low-security units within larger complexes.

That presents a problem for the Corrections Department, Ryan said, because it would disrupt the day-to-day operations of the facilities and may, in fact, gobble up any efficiencies and cost-savings.

Each prison complex contains multiple units, but many of the services provided to each unit — administration, supplies and vehicle maintenance, to name a few — are centralized.

Breaking up a facility like the Eyman complex, which has two maximum-security units, a close-custody unit and two medium-security units, would require finding a way to provide those services to the private portion of the prison.

“My concern is it will require us to duplicate efforts and services,” Ryan said. “Does that sound efficient?”

It would also nullify existing service contracts with private companies, including food service, which could cost the state more.

Kavanagh said lawmakers are obligated to find ways out of the budget crisis without raising taxes. And that means selling prisons, if necessary.

“It’s our responsibility to get the best service for the best price. It’s about quality and cost, and not about parochialism and protectionism,” he said.

By April 1, the departments of Administration and Corrections must submit a request for proposals to seek private vendors to take over operations of at least one prison complex. The Joint Committee on Capital Review will review the proposal, but the statute doesn’t allow modifications or rejection.