HD41 - Privatization of Correctional Facilities

  • Published: 1991
  • Author: Joint Subcommittee
  • Enabling Authority: Chapter 972 (Regular Session, 1990)

Executive Summary:
In the 1990 General Assembly, Delegate Franklin P. Hall introduced House Bill 1011, which authorized the Department of Corrections to contract for private sector correctional facilities. House Bill 922, introduced by Delegate John A. Rollison as chief patron, authorized the department and localities to contract for private facilities.

At the same time, Senator William A. Truban introduced a budget amendment calling for a joint subcommittee to examine this issue. A particular focus of the study was the feasibility of a private facility to relieve overcrowding at the Virginia Correctional Center for Women. The study was agreed to and the joint subcommittee was established. No action was taken on the original House bills, but on December 17 the joint subcommittee agreed new legislation should be presented to the 1991 General Assembly.

This report defines privatization as a contractual relationship between the Department of Corrections, the Department of Youth and Family Services, or a locality (or localities), and a qualified private corporation. The contract specifies that the corporation shall finance, design, acquire the site for, construct, maintain, and/or operate a correctional facility, under the supervision of the contracting agency.

Following a competitive bidding process, the contracting agency pays a negotiated price, which may be calculated on a per-inmate, per-day basis. The per diem payment may include either a capital or an operating cost component, or both. The contract may be renegotiable after a period of time, and at some point the facility may revert to public ownership.

Growth of Privatization in the 1980's.

The use of privatization expanded during the 1980's as an alternative method of incarceration for certain types of offenders, including minimum and medium security males and females. By late 1990, 14 private companies operating 48 private adult facilities in twelve states accounted for about 1.5 percent of all correctional beds in the United States. Privatization has long been accepted in the field of juvenile corrections and treatment.

Privatization appears to have been effective in reducing capital and operating costs. The attractiveness of this approach has been evident in states such as Texas, Florida, New Mexico, Tennessee, Kentucky, and California. The federal government has also turned to the private sector to house illegal aliens and minimum security offenders.

Potential Use of Privatization in Virginia

The current projection of state-responsible inmates suggests the Commonwealth will need 4,000 additional prison beds by 1995, beyond the number already funded. This represents a 20 percent increase in the operational capacity of Virginia's adult prisons, beyond the number of beds already funded. The private sector has the potential to provide up to 1,000 of those needed beds, at lower cost. Accordingly, this report proposes a limited initial program be developed.

Privatization should not be viewed as an end in itself, but as one means for the Department of Corrections to meet its statutory responsibility to house securely those offenders who are sentenced to its custody. The potential advantages of privatization may include:

(I) Reduced capital and operating costs, when compared to standard state or local government operations;

(2) Increased flexibility to increase or decrease levels of services rapidly depending on changing conditions and demands;

(3) Increased value of the local property tax base; and,

(4) The ability to locate facilities with less conflict.

There are no constitutional or legal barriers to privatization, except that any such program would have to be authorized in the Code of Virginia. In any private contracting situation the Commonwealth will retain ultimate responsibility for the incarceration of offenders sentenced by the courts.

Privatization may also be of help to financially-strapped localities which must expand their local jails and juvenile detention centers. The private sector has already been used extensively in Virginia for providing residential and non-residential services for juveniles. However, no statutory authority exists for localities to contract with private corporations for either adult jails or juvenile detention facilities.

A Limited Initial Program. In order to assess the potential for cost savings, the 1991 General Assembly should authorize a limited initial program. The Board and Department of Corrections should coordinate this initial program with the master plan for capital projects to meet projected bed space needs for 1995. Specific proposals should be presented to the General Assembly by December 1,1991. This will enable the 1992 General Assembly to compare the costs and benefits of public and private facilities.

Privatization should serve specific, clearly defined needs in such a way as to achieve a cost advantage or service improvement. There are several such targets of opportunity in Virginia, including:

• Female Offenders. The number of state-responsible females is projected to increase 85 percent from 1990 to 1995 (from 915 to 1,700 women). This is far greater than the rate of growth projected for male inmates, during the same five-year period.

However, the current capacity of the Virginia Correctional Center for Women is only 485, and the VCCW is already overcrowded with 585 inmates. Current support services and physical infrastructure are inadequate to accommodate any more inmates at the existing facility.

The remaining state-responsible females are backed up in local jails, a situation which often forces the locality to make less efficient use of its available jail space. For example, an entire floor or wing may have to be reserved for females, even though the capacity of that unit may not be fully utilized. Rapid growth in the number of female offenders presents a unique challenge which can be addressed by the private sector.

• Minimum Security Male Offenders. A number of other states and the federal government have utilized the private sector to build and operate minimum security facilities for male offenders, such as pre-release centers. Many such centers provide work-release opportunities for selected inmates during the day, but provide secure perimeters and armed guards to ensure that inmates remain under supervision at night.

The Virginia Department of Corrections has contracted for pre-release centers and halfway houses since 1986. However, the department is not fully utilizing its existing capacity. The average daily population was only 33 in November, 1990, compared to an operational capacity of 103 beds. One of the reasons for the current low utilization of halfway houses and pre-release beds is the perception that security in these units may not be sufficient for the types of inmates available.

Privatization may offer the potential for more appropriate facilities for offenders who are near the end of their sentences, but who may need a greater degree of supervision than is currently available in halfway houses. Further review by the Board of Corrections is needed in this area.

• Local Jails and Detention Centers. Localities in Virginia are faced with reductions in state aid for education, human services, and law enforcement. At the same time, their needs for jails and detention centers are increasing. The potential state reimbursement for construction of jail projects which are currently approved, planned or under consideration could reach $253 million. Given the present budget crisis, this amount of money may not be available. Privatization may offer the potential for these localities to obtain the required facilities, with payments to be made over the life of the project.

The joint subcommittee finds privatization to be an attractive alternative which may potentially reduce costs for both the Commonwealth and local governments. However, prior to the appropriation of funds for specific contracts, further consideration must be given to a number of regulatory and technical issues (including reimbursement policies) by the appropriate policy boards. With these conditions in mind, the joint subcommittee offers the following recommendations for consideration by the 1991 General Assembly.

Recommendations

The joint subcommittee recommends the following legislation:

1. House Bill 1809, which authorizes the Board of Corrections to initiate a project for the private financing, design, site selection, construction, maintenance, and/or operation of one women's facility and one minimum security, pre-release facility for men, consistent with the department's master plan. (HB 1809 includes a directive to the Department and Board of Corrections to submit actual proposals, through the Secretary of Public Safety, to the General Assembly by December 1, 1991. Of course, no private contract may be awarded until funding is appropriated by the General Assembly.)

2. House Bill 1810, which authorizes the Board of Corrections to approve not more than two private local or regional jails.

3. House Bill 1811, which authorizes the Board of Youth and Family Services to approve not more than two private local or regional juvenile detention facilities.