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Cells for Sale: Study Finds Lack of Proof for OH Private Prison Savings

April 19, 2011

COLUMBUS, Ohio - Governor John Kasich's proposal to sell five state-owned prisons may not save Ohio the money that some expect. Since the first private prisons were opened here in 2000, Ohio law has required that any private operator produce savings of at least five percent compared to what it would cost the state to run the same facility. But there is little proof of the required cost savings, according to a new study conducted by journalist Bob Paynter.

"These calculations that they've used over the years have never really convincingly proved that these private prisons were saving five percent. As a matter of fact, they didn't even have a new methodology in place at the time they were proposing to privatize more prisons."

Paynter cites errors from the 2008-09 biennium. He says the potential savings figure put forth, of as much as 21 percent a year, shrivels to less than 1 percent when errors are corrected and state-proposed revisions are made, depending on how state overhead is handled.

According to previous calculations done by the state, the savings have exceeded the required threshold by as much as threefold. However, given his research, Paynter says something isn't adding up.

"It raises real questions about the reliability of these state assertions that they are going to save money. So, I don't know that, given past performance, there's a whole lot of reason for confidence in their future predictions."

According to the state, selling the five prisons is expected to bring in about $200 million.

The state Department of Rehabilitation and Corrections has said a new method for comparing costs would be approved, but Paynter says it had not been completed, as of the day before Kasich announced his privatization plan.

The report is available at www.policymattersohio.org


Mary Kuhlman, Public News Service - OH