How to reduce California's prison costs

Reason:

The Legislative Analyst's Office found that correctional officers – prison guards – account for one in seven state employees and eat up a disproportionately large 40 percent of state personnel spending. The overcrowded state prisons house 167,000 inmates in a system designed for 84,000. As a result, federal judges have ordered California to release 40,000 inmates. And a federal receiver has taken control of California's prison health care services, the result of class-action lawsuit alleging poor medical care behind bars.

California is spending more than $8 billion on corrections this year, more than 10 percent of the massive state budget. State taxpayers spend about $133 per inmate – every day. Texas, which has the second-largest inmate population after California, spends about $42.50 per inmate per day.

One reason Texas spends so much less than California on prisons is its extensive use of public-private partnerships. Since 1989, Texas' annual data shows its cost savings from private prisons have averaged 15 percent a year. During that time, there was not a single year in which government-run prisons matched or were below the costs for private prisons.

A new Reason Foundation-Howard Jarvis Taxpayers Foundation study finds that modest expansion of California's current use of public-private partnerships in corrections would save taxpayers nearly $2 billion over five years. Additionally, more aggressive use of private prisons and contracting out some operations of existing prison facilities would save another $400 million to $1.2 billion each year.

The first pivotal step for California is to build upon its successful experience transferring inmates to lower-cost privately operated facilities in other states. Expanding this strategy by sending an additional 25,000 low- to medium-security inmates to such facilities – 5,000 per year for five years – would save $120 million the first year and up to $1.8 billion by the end of the fifth year.

Not only are costs lower in private prisons, but the competition they provide helps drive down costs in state-run prisons as well. A study of New Mexico – which contracts out 45 percent of its correctional system – found the state spent $10,000 less per prisoner per year than peer states that had no privately operated correctional facilities. A March 2009 Avondale Partners survey of 30 state correctional agencies, many of which use privately operated correctional facilities, found that contracted prisons cost 28 percent less than state-run facilities.