Ohio becomes first state to sell state prison to private company

Four others not sold in privatization efforts

9/1/2011

COLUMBUS— A lockup along the shores of Lake Erie has become the first state prison in the nation to be sold to a private company.

Lake Erie Correctional Institution in northeastern Ohio’s Ashtabula County is the only one of five state prisons up for sale that will be sold, state officials said Thursday. Corrections Corporation of America will buy it for $72.7 million, more than the $50 million needed from the privatization effort to balance the state’s prison budget.

The four other prisons for sale didn’t generate offers advantageous to taxpayers, state officials said.

CCA, the nation’s largest prison operator, takes control of the Lake Erie facility in Conneaut on Dec. 31, pending the outcome of a lawsuit challenging the constitutionality of the move.

Offering the prisons for sale was an idea spearheaded by Republican Gov. John Kasich as he grappled with an $8 billion budget hole earlier this year. He wasn’t the only governor to propose it: Republican Gov. Bobby Jindal of Louisiana introduced a similar plan that was shot down by state lawmakers in June.

Management Training Corp. of Centerville, Utah, successfully landed rights to operate North Central Correctional Institution and the vacant Marion Juvenile Correctional Facility as a single prison camp, saving 6 percent on state costs, the prisons department said.

North Coast Correctional Treatment Facility in Lorain County, currently operated along with Lake Erie by MTC, will be returned to state control and merged with Grafton Correctional Institution.

“I was taken aback,” said Ohio Civil Service Employees Association president Chris Mabe about the news. His union, representing prison guards and other corrections employees, had staged protests in Ashtabula, Marion and Lorain counties, where prisons were up for sale, over fears of lost jobs and jeopardized safety.

“As it stands right now today, it gives us hope,” he said, noting OCSEA has worked with state prisons officials for a decade to see a merger of the two Grafton buildings that would save state jobs. The state said it doesn’t anticipate job losses on the newly configured Marion campus, and state jobs may be added at the Grafton complex.

The American Civil Liberties Union of Ohio said the prison sale doesn’t fix the main problem that too many people are being incarcerated.

“These changes are nothing more than a Band-Aid for the deep-seated problems that continue to plague our state,” Policy Director Shakyra Diaz said in a statement. “Privatization does nothing to address it, and may actually make it worse by allowing companies to make a profit off imprisoning people.”

The prisons department is requiring private facilities to meet all state safety mandates, and it’s stepping up its oversight function, said Annette Chambers-Smith, deputy director of administration at the prisons department.

The combination of operational changes — part of Kasich’s privatization push — is estimated to save the state a combined $13 million annually, about twice as much as what was anticipated.

Nashville, Tenn.-based CCA will operate the Lake Erie prison, which cost $41 million to build, at 8 percent less than the state did, generating $3 million in savings. The facility plans to add 304 beds.

While not buying the facility, MTC plans to operate the Marion campus at $3 million less than state estimated costs. The existing prison and shuttered juvenile facility, which will be reopened for adults, will include 398 new beds.

A third bidder, GEO Group Inc., of Boca Raton, Fla., wasn’t selected. The company has come under scrutiny in its home state, where federal investigators are reviewing the circumstances surrounding development of the state’s largest private prison, Blackwater River.

Ohio’s prisons are over capacity, housing some 51,000 inmates in 31 prisons built to hold about 38,000. Estimates suggest the inmate population could rise to 54,000 in four years if nothing changes.

Private prisons are expected to be as crowded as public ones under the new plan, said Linda Janes, chief of staff for the Ohio Department of Rehabilitation and Correction.

The state is in the process of trying to reduce its prison population by putting fewer nonviolent offenders behind bars and giving judges more sentencing options. Those changes are estimated to trim the state’s inmate population by 47,000 by 2015. About 12,000 inmates are serving sentences of under a year.

Those changes follow a recent review by the Council of State Governments Justice Center. The center’s report in July said the state cycles too many low-risk offenders serving short sentences through the prison system, costing Ohio $189 million in 2008 alone on inmates with an average sentence of just nine months.

CCA houses 75,000 offenders and detainees in more than 60 facilities with more than 80,000 beds — more than half those under private operation in the country, according to its website. Forty-four of the facilities are owned by the company. Its partnerships include federal corrections agencies, nearly half the states and more than a dozen local governments. It employs 17,000 people.

Its Ohio lobbyist, Don Thibaut, served as Kasich’s chief of staff when he was in Congress. The company retained Thibaut’s new lobbying firm in mid-December. State prisons director Gary Mohr spent five years as a consultant to the firm.

Mohr recused himself from the selection process. He said Thursday he learned of the committee’s decision after the deal had been signed late Wednesday afternoon.

CCA already operates one federal prison in Ohio, the Northeast Ohio Correctional Center in Youngstown, but no state facilities.