The biggest privatization move in Florida history began when a nationally known government cost-cutter told the (state) senate's budget committee chief that, for the right kind of inmates, turning prisons over to for-profit corporations could save a lot of money.
Now, the state's plan to privatize 29 prison facilities in 18 counties is the hottest political, management and legal issue of Gov. Rick Scott's young administration. And he didn't even ask for it.
The state Department of Corrections was scheduled to open bids this week to operate prisons in its vast Region IV — everything south of Hillsborough, Polk, Osceola and Brevard counties — but a circuit court judge last week stopped the move. The state has not decided whether to appeal Circuit Judge Jackie Fulford's findings that the Legislature illegally slipped the privatization mandate into proviso language of the budget.
The Florida Police Benevolent Association sued to stop the privatization. The union, which vigorously fought the business-minded Scott in last year's campaign, frankly
admits it's looking out for the jobs of nearly 4,000 prison officers in the region — as well as jobs statewide, if privatizing ultimately succeeds in saving the legally required 7 percent of operating costs.
“It's not going to happen if it doesn't save money,” Scott said of the prison initiative. “You pick any area of state government and think about it this way: The
taxpayers, the things they expect government to do, they expect government to do efficiently. If the state can do it, that's great; if somebody else can do it better, at a better price, that's great.”
This project is besieged on several sides.
Legally, Fulford slammed the brakes on the whole thing on Sept 30, ruling that legislative budget negotiators illegally changed substantive law with proviso language in a one-year budget. Her ruling will probably be appealed.
Politically, it's the subject of a (Florida) Ethics Commission complaint against Scott by the Teamsters, which claims private prison companies bought themselves a golden business opportunity with cash donations to the political parties and Scott's inauguration gala.
Legislatively, Florida Sen. Mike Fasano, R-New Port Richey, wants to hold hearings on how such a massive undertaking got slipped into the budget via 30 pages of proviso language late in the 2011 legislative session. Fasano is such a foe of privatization that the PBA named one of its trophies for him, and he's irked that legislative leaders didn't run the project through his subcommittee with the rest of the criminal-justice budget items.
Administratively, the privatization could cost the DOC $25 million in leave payouts to laid-off workers, an expense that one high-ranking department executive warned
could “cripple the agency” in the coming fiscal year. Chief Deputy Secretary Dan Ronay wrote in an email to the governor's budget office, after the Legislature had adjourned, that legislators were told of those costs but didn't budget for them.
Senate budget chairman JD Alexander, R-Lake Wales, said the department could squeeze that much out of reduced overtime and savings in other areas of its $2-billion budget.
Unlike other state employees who get laid off, the prison officers have “bumping” rights to replace less-senior employees in other parts of the state if they want to stay with the department after the South Florida prisons are privatized.
'$22 million in Savings'
Privatizing Region IV is projected to save $22 million a year, a figure hotly disputed by PBA.
“Donna Arduin suggested, not just Region IV, but said there was significant savings between privatized corrections on a per-day basis in, say, Texas and some other places, over what Florida was spending,” said Alexander.
Arduin is a nationally recognized expert on governmental cost-cutting, having worked as a budget adviser to governors in Michigan, New York and California. She was ex-Gov. Jeb Bush's budget chief a dozen years ago and was a budget adviser to Scott's campaign last year.
Arduin said her consulting firm was retained by the Senate budget committee to look at all facets of the budget about two years ago. She said she presented “unit cost
comparisons” for various programs, including prisons, which were also analyzed by the DOC, and her firm also gathered data from Texas and other states that have dealt with rising prison costs.
She said some “special” types of inmates — such as women, juveniles and elderly — are naturally more expensive to maintain, educate and rehabilitate. But adult male prisoners, particularly in the lower-security range, can be locked up at competitive rates by private contractors.
“It hasn't been a total solution for any state,” she said.
Florida's Seven Private Prisons
Florida has seven privately operated prisons. Two are operated by GEO Group, four by Corrections Corp. of America and one by MTC, a new competitor that runs the Gadsden Correctional Facility.
GEO Group, based in Boca Raton, declined to comment on its plans for expansion. CCA spokesman Steve Owen in Nashville said his company's pay scales are comparable to what the state pays correctional officers and that inmate training in the private prisons is also on par with what the state can offer.
“Here in Florida, we have been safely managing prisons for more than 15 years,” said Owen. “By law, our employees are required to meet the same state certification
requirements as their public counterparts.”
PBA, which opposes all privatization, maintains a nationwide watch on GEO, CCA and other companies that run city and county jails or state correctional facilities.
When Scott signed the budget into law, with the proviso language he didn't seek, the PBA immediately filed suit in Leon County Circuit Court on behalf of some prison
employees whose careers would be disrupted by the privatization. The union's complaint — upheld by Fulford in a brief order Friday — was that the Legislature permanently changed substantive law in a one-year budget, which the Florida Constitution prohibits.
Fulford said the state clearly can privatize as much as it wants, in any department, but must do so in separate legislation with public hearings and legislative debate. If that ruling stands on appeal, the PBA knows it will find its lobbyists fighting just such privatization statutes in the legislative session next January.
The Teamsters' Ethics Commission complaint against Scott says the privatization move is unduly influenced by campaign cash. The Teamsters said GEO contributed $829,665 to political parties in the past election cycle, while CCA gave $138,494 to politicians in Florida.
Scott's office brushed aside the complaint, saying the governor has nothing to do with deciding which company, if any, gets the state's business, because the contract will be awarded on competitive bids.
One spinoff of the PBA lawsuit was a deposition of former DOC Secretary Ed Buss, a nationally known corrections expert Scott recruited last year from Indiana. The state resisted having Buss give his deposition and, when the PBA won a court order for it, Buss said he wasn't consulted on privatization of a vast swath of his department.
State law requires a business case for any privatization or outsourcing for more than $10 million, and one was done after the fact. A four-page plan was submitted July 27, nearly two weeks after the PBA filed suit.
The department prepared a more detailed 30-page business case subsequently.
In court last week, Assistant Attorney General Jon Glogau unsuccessfully tried to persuade Fulford that it doesn't matter how the Legislature arrived at its privatization
Michael Hallett, chairman of the Criminology Department at the University of North Florida, raised serious questions about the request for proposals for bids on prison
operation, including the DOC decision to have one company take over all 29 institutions in South Florida.
“In what will be the largest correctional privatization contract in U.S. history, a more deliberative process would be prudent,” said Hallett. “Assuming you accept the logic of market forces controlling costs, then why would you bias the process in favor of an already monopolized industry, which itself lowers cost efficiency and accountability?
“Why not get the bids first and then decide?”
Hallet said using one company “renders the state subject to captivity by giving only one corporation so much control over a significant portion of the state budget.”
Alexander, the Senate budget chief, said he decided to put the proviso in the budget because “I believed the competition would be helpful and that there was real savings
The original version of this story appeared Oct 4 2011 in The Tallahassee Democrat. Bill Cotterell, the Democrat's state capital reporter and
columnist, was a 2011 John Jay/H.F. Guggenheim Reporting Fellow, and this story was a product of his fellowship. He welcomes comments from readers.