It is very concerning when a private corporation makes an offer to buy 90% of the state based jail systems in the U.S. for “as low as” $250 million.  Two caveats:

#1 – States must maintain a 90% occupancy rate.
#2 – “As low as” means $250 million is the floor…not the ceiling on the cost to taxpayers.

Anytime you set up a cost structure where a company is incentivized by having MORE convicts….it is a recipe for destruction.   For private-public partnerships to function properly…it requires setting up the proper incentives that reward corporations for doing what is in the best interest of society….not the opposite.  If states intend to have successful private prison systems – they’re going to have to evaluate how they pay for these services.

There are already plenty of scenarios and empirical evidence that shows private prison systems actually cost the taxpayer much more than if it were run by the state.  One interesting idea that has yet to be tried and has proven to be successful in the energy industry is “revenue decoupling”.

Revenue decoupling (RD) is generally defined as a ratemaking mechanism designed to eliminate or reduce the dependence of a utility’s revenues on sales….In a significant departure from traditional cost-of-service principles, which historically provides utilities with only the opportunity to earn a fair return, RD guarantees actual earnings at the level of authorized earnings. Under RD, a utility is indifferent to the impact of sales levels or when the sales occur because of changing economic conditions, weather, or new technologies.

Source: http://www.elcon.org/Documents/Publications/3-1RevenueDecoupling.PDF

Of course – private companies do not love “revenue decoupling” because while they are guaranteed a profit in most cases…their profits are regulated.  Corporations dislike this because:

Florida’s investor-owned electric utilities (IOUs) contend that revenue decoupling represents an obstacle to revenue growth. This effect on growth may have the effect of limiting the utility’s ability to earn a fair rate of return for its stockholders. 

Source: http://www.psc.state.fl.us/publications/pdf/electricgas/DecouplingReport_To_Legislature.pdf

There are already so many examples of shady and underhanded deals between politicians and private prison companies.  It is completely irresponsible and frankly…I think it can only be honestly described as corruption when a private prison corporation funds a local group of politicians via PAC’s, donations, special interest groups, etc and in return these private prison corporations receive lucrative deals to manage prison systems where the taxpayer pays an even larger share of their tax $ to keeping it’s citizens under lock and key…only this time with a profit motive to guide the process.

It’s called quid pro quo and it doesn’t just happen in sexual harassment cases….although – most assuredly…you are getting fucked on this.

In exchange for keeping at least a 90 percent occupancy rate, the private prison company Corrections Corporation of America (CCA) has sent a letter to 48 states offering to manage their prisons for the low price of $250 million per year, according to a letter obtained by the Huffington Post.

But reports indicate that private prisons do not actually save states money, since the average inmate costing more than in public prisons. Worse yet, for-profit prisons have been accused of heightened levels of violence toward prisoners and have limited incentives to reduce future crimes by current inmates, through education and training programs, counseling or drug and alcohol rehabilitation, according to a report from the American Civil Liberties Union.

via Private prison company offers to buy 48 states’ prisons | The Raw Story.

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