Private Prisons Cost Arizona $3.5 Million More Per Year Than State-Run Prisons

Private prisons, touted as a cost-efficient alternative to state-run penitentiaries, are not living up to their promises in at least one state. A new study of Arizona’s private prisons finds that the state is actually losing money — $3.5 million a year — by turning their inmates over to for-profit corporations.

According to the Tucson Citizen’s analysis of Arizona’s three oldest private prison contracts, the rate to hold one prisoner for one night has increased 13.9% since the contracts were awarded. Compared to the cost of state-run prisons, Arizona overpaid for its private prison beds by $10 million between 2008 and 2010.

The cost of these private prison contracts was no surprise to the legislators who awarded them. In an earlier investigation, the Citizen discovered the Legislature was well aware how expensive the private prisons were and simply circumvented a law requiring corporations to show cost savings before receiving a contract. In 2012, the Legislature repealed the requirement entirely — as well as a requirement that the state conduct a review comparing the quality of private and public prisons.

After removing any incentive to maintain facilities, the Legislature made things even easier for these corporations by guaranteeing their prisons will always be 100 percent occupied:

The documents refer to a “dispute” between the Department of Corrections and for-profit operator MTC as to whether or not the 5-year contract renewal was done in a timely manner (ADC says yes, MTC apparently said no). The negotiated settlement of this dispute consolidates 450 rated beds with 50 emergency beds into a total of 500 rated beds. These 500 beds will carry a guaranteed occupancy of 100% at a rate of $49.03 per prisoner, per day.

What’s more, this agreement was applied retroactively to October 6, 2010, effectively erasing all but three months of the reduced emergency bed per diem in the previous amendment (from July 2010). It also guaranteed that Arizona would continue to pay about three times as much for the emergency beds. In essence, ADC is handing over four years’ worth of extra money to keep MTC happy.

How much money? In the July 2010 contract amendment for the facility, the state had bargained the emergency beds down to a $12.60 per diem. Now they will be paying $49.03 per diem for the same beds. Which means that MTC is raking in an extra $36.43 per prisoner, per day. Multiply by 50 such beds, and MTC will make additional profits of $664,847.50 per year– a total of $2,659,390 through the remainder of the contract, which expires in October of 2013.

MTC made headlines in Arizona in 2010 after 2 prisoners escaped from their poorly maintained facility and allegedly killed a vacationing couple. The corporation has a long history of understaffing facilities, punctuated by inmate riots all over the country. Arizona now plans to buy back one of the MTC-managed prisons for $150,000.


In spite of the monetary and human costs, state and federal officials all over the country have embraced private prisons, perhaps because of the millions of dollars these corporations have lavished on politicians.