Across the United States, states are re-assuming control over prisons previously managed by private companies. Recently, Oklahoma State completed the acquisition of the Lawton facility for $312 million, effectively ending its last private prison contract. Meanwhile, New Mexico is in the process of phasing out its final private prison after 27 years. In Texas, plans are in place to transfer seven private state prisons to public control once contracts lapse and legislative funding is approved.
That seems like a significant change, but, well, I’m not sure it’s the right kind of change. The core issue doesn’t really lie in who operates the facilities. It’s more about the payments and demands set by government entities. Private operators, regardless of their logo, still have to meet state standards and work within payment structures that incentivize occupancy. They provide whatever results those incentives drive. So, if the conditions remain the same, why would we expect different outcomes?
For many years, prison contracts focused on filling beds. Certain facilities even guarantee a minimum occupancy rate. This approach prioritizes filling spaces over rehabilitation efforts. The Cicero Institute has highlighted this issue, showing how certain clauses in contracts reward merely the presence of inmates instead of their rehabilitation progress. The essence of the matter? Contracts and organizational culture influence behavior, not the identity of the management.
Interestingly, the role of private prisons is smaller than many might think. In 2022, around 90,000 individuals, which is about 8% of all state and federal prisoners, were held in these facilities. Immigration detention, however, tells a different story; nearly 90% of immigrant detainees were in centers operated by ICE, indicating a shift rather than a retreat in the industry.
Public systems are grappling with similar challenges. A national survey has revealed high vacancy and turnover rates in county jails. Furthermore, the Federal Bureau of Prisons is noted for ongoing management and staffing issues. While Congress has suggested laws for increased monitoring and the establishment of an oversight office, simply observing will not alter entrenched cultures.
In many sectors, it’s assumed that private involvement enhances efficiency and innovation. But often, the way contracts are crafted diminishes these potential benefits. Bidders usually focus on the lowest cost per bed rather than on measurable outcomes. If payment is tied to occupancy rates, providers will aim for full beds rather than ensuring safety or effectiveness, whether public or private. Thus, funding linked to occupancy can lead to a misguided focus.
If we genuinely want better outcomes, we need to measure, fund, and make these results public.
There are successful models out there. Back in 2013, Pennsylvania restructured its community corrections contracts to incentivize businesses to reduce recidivism rates. Penalties were also imposed if repeat offenses increased. The early results indicated an 11% drop in recidivism in those contracted settings, which became part of the state’s broader justice strategy.
This approach changed behaviors within the system. Legal frameworks didn’t.
The implications are significant. Most people in prison—about 95%—will eventually return to society. A federal study of individuals released in 2012 found that 71% were rearrested within five years. Paying for compliance checks or staffing doesn’t change these statistics. It’s possible we might just be investing in ineffective outcomes.
There’s an alternative approach that doesn’t shift from public to private but establishes a nonprofit, results-oriented charter for a medium-security facility evaluated independently in relation to state units.
In this model, we would provide a set daily fee covering safe operations and essential programs. Performance could be incentivized with capped bonuses based on public savings connected to successful community reintegration. Utilize the existing budget to transform daily allowances into performance payouts. If there are no savings, no bonuses are awarded. Key metrics like staff retention, safety incidents, and successful transition programs would be monitored and reported transparently every 90 days. If success eludes us, we would terminate the contract. If it’s effective, we can implement the model elsewhere.
This concept could also extend to prisons, allowing sheriffs to contract for safety improvements, managed outcomes, and program completions, all while being reviewed by county commissions.
Meaningful reform isn’t about merely swapping facility operators. It’s about redesigning the incentives themselves. When contracts prioritize safety, stability, and successful reintegration, that’s when true cultural shifts can happen. Changing compensation structures can transform prisons.
It might even be necessary to close some facilities. However, if we maintain the same incentive structures, merely changing uniforms will likely yield the same results. So, shifting from occupancy fees to payments aligned with results could be a viable path forward.
