Excerpt from Vox, 13 Jan 2017
Private prison contracts in other parts of the world can serve as a model. Two new private prison contracts in Australia incentivize a reduction in recidivism rates through bonuses paid to the companies. The GEO Group will operate Victoria’s Ravenhall Prison (due to open this year), and the firm will be compensated on the basis of the rate of re-offending among its released prisoners. Specifically, the company has been promised a $2 million bonus payment annually if the rate of reoffending among inmates released from the facility is 12 percent lower than at other governmentally run prisons. And Sodexo, an international prison industry titan, recently signed a contract with Western Australia’s Department of Corrective Services to run a 256-bed women’s prison; it will receive a bonus of $11,000 for every inmate who remains out of prison two years after release.
Pennsylvania is experimenting with a similar idea. In 2013, Republican Gov. Tom Corbett’s administration announced it would cancel all Department of Corrections contracts with private community corrections companies (also known as halfway houses) and rebid them, with incentives for good performance built into the contracts. At the time, individuals who transitioned from prison to the community through the state’s community corrections centers were more likely to return to prison than those who were “paroled directly to the streets.” Under the new contracts, providers are evaluated and paid according to their success at reducing the recidivism of those who have just been released from prison. The new contracts provide that if the overall recidivism rate of individuals in their facilities falls below a certain level, the state will reward the providers by paying one percent more per prisoner. The state can cancel a contract if the recidivism rate increases over two consecutive years.
Pennsylvania’s approach worked. The recidivism rate for individuals released from private community corrections centers in the state fell 11.3 percent in just the first year after these new contracts. Private contractors were able to reduce recidivism by providing programs that are proven to work such as cognitive behavioral therapy, substance abuse counseling, educational classes, and job training.
Other innovative practices exist that use private funding to try to reduce recidivism rates for inmates exiting mostly governmentally run jails and prisons. Recently, New York and Massachusetts explored performance based contracts aimed at improving outcomes of those who cycle in and out of the justice system. Under a pay-for-success or social impact bond program, private firms fund what is usually a brand new social justice or public interest program and only get paid back if the project meets certain benchmarks.
In August 2012, New York City announced the first U.S. social impact bond aimed at reducing the rate of reincarceration among juvenile inmates released from Rikers. Goldman Sachs backed the program in New York through a $9.6 million loan to MDRC, a leading social policy organization. Bloomberg Philanthropies then provided a $7.2 million grant to MDRC to guarantee a portion of the loan, reducing the lender’s risk. The financial structure of these bonds was complex, but the lower the program’s recidivism rate, the greater the interest paid. If the program cut participant recidivism by more than 10 percent, Goldman would earn up to $2.1 million.
Even failed experiments can lead to improvement
In August 2015, the Vera Institute of Justice evaluated the program and determined it “did not lead to reductions in recidivism and therefore did not meet the program’s pre-defined threshold of success.” That was disappointing, but many considered the experiment a success, given that it cost taxpayers nothing and had allowed government officials to try something new.
A similar experiment is underway in Massachusetts. In 2014, then-Gov. Deval Patrick’s administration signed a pay-for-success contract with Roca, a nonprofit located outside of Boston, Massachusetts. Roca received an investment of $27 million from private foundations and the Goldman Sachs Social Impact Fund. The money pays for support services, skills training, and job placement, and the program will cost the state nothing unless it succeeds; significant recidivism reductions will produce bonuses for investors.
In my book, I pose the following question: Is it fair to ask the private sector to meet very high levels of performance in an area where the state has so badly failed? After all, recidivism rates in the US are high — more than half of prisoners released are reincarcerated within three years — and most of these individuals are housed in public correctional facilities. My answer, based on research, is: yes, it is fair to hold private prisons to a higher standard. Private prison firms are making billions of dollars off the corrections industry, providing them with the resources to innovate and experiment in a way that government correctional agencies simply don’t.
Restructuring contracts around the nation’s public policy goals would ensure that private operators provide more educational programming and job training — and that they prepare their inmates for successful reentry to the community.
Like it or not, all signs indicate the private prison industry is here to stay under Trump. Asked about his views on prison reform by Chris Matthews on the campaign trail, Trump replied, “I do think we can do a lot of privatizations, and private prisons it seems do work a lot better.”
His administration would do well to adopt some of the innovative ways state officials have reined in the worst excesses of privatization.
Building the proper incentives into contracts has the power to move the for-profit prison industry away from focusing on cost-cutting and filling beds toward a world where public and private incentives align.
With more than three decades of experience under their belt, it is time for private prisons to up their game — and aim to produce better outcomes than their public counterparts.
Lauren-Brooke Eisen is a senior counsel at the Brennan Center for Justice and is working on a book, forthcoming from the Columbia University Press, entitled Inside Private Prisons