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Do private prisons save money as promised? Maybe not, but Legislature keeps approving

St. Rep. David Richardson, D- Miami Beach. [SCOTT KEELER    |    Times]

St. Rep. David Richardson, D- Miami Beach. [SCOTT KEELER | Times]

TALLAHASSEE When he was first elected, Florida Gov. Rick Scott was so determined to meet his campaign promise of saving $1 billion on prisons that he pushed through a series of contracts with private operators that on paper claimed to produce millions in annual savings.

But the promised savings have never materialized, according to audits done by Rep. David Richardson, a Miami Beach Democrat who has been a one-man investigation unit into Florida's troubled prison system. Many of the contracts, which were required to save at least 7 percent a year, actually cost the state more money than taxpayers would have spent if the programs had never been privatized. In some cases, he also found, medical care and access to programming in the private facilities was often worse.

"This is not saving the state money because they are more efficient, they are saving money as a contractor because they are denying goods and services to the inmates," Richardson said.

His most recent prison audit, a review of Gadsden Correctional Facility in North Florida, found that the prison run by Management Training Corp. of Centerville, Utah, saved money by withholding heat, hot water, educational supplies and medical care for inmates for months. (The warden has resigned and the company says it is addressing concerns.)

The governor's goal to privatize dozens of prisons was thwarted by the state Senate in 2012, but he succeeded in advancing contracts with two health care companies to turn over prison medical care to private contractors. Legislators made sure that the contracts with the private vendors were not managed at the Department of Corrections, where career bureaucrats might be threatened by the private competitors, and moved them to the Department of Management Services, which has expertise in contracts, but not prisons.

Richardson discovered that in their zeal to hand over prison operations to private vendors, neither the governor's office, the Department of Corrections, the Department of Management Services, nor the legislature's auditors ever went back to check if the savings were valid.

On Thursday, Florida lawmakers are poised to adopt draft House and Senate budgets that Richardson says embed the same phantom savings into the budget for another year.

Richardson, a retired forensic auditor, has uncovered a pattern: The state signs contracts with private prison vendors that rely on false and excessive cost estimates to establish the baseline, require a cost savings below those costs, and then approve escalator clauses for multi-year contracts.

In the last few years, the state has renewed the contracts to run the seven private prisons and updated the rates to be more favorable to the state, Richardson said, but he is convinced there is little, if any, savings and there is also no way to know.

"There has never been a financial audit of any of these contracts," he said. "In recent years, contracts have been updated and rates have been reduced, which reinforces the fact that we are overpaying in the early years and we are probably overpaying today."

His latest discovery: In 2011, the governor's office promised savings of $550,000 a year by signing contracts with private vendors to handle six prison work-release programs but, after extensive reviews of the contracts, Richardson found the contracts actually cost the state double that each year and have resulted in a loss of at least $3.3 million in the last three years.

"There was a representation this would save money, and it's not," Richardson said. He also says his estimates about the amount lost from work release are low because they don't take into consideration medical and other costs.

The non-profit vendors who hold the contracts, Bridges of America and Transition House, counter however that they save the state money because they are more effective at reducing inmate recidivism by providing training and educational services that keep them from returning to a life of crime.

In January, Richardson reported that after reviewing seven years of state payments to Corrections Corporations of America (CCA), now known as CoreCivic of Tennessee, the pricing plan approved by the Department of Corrections resulted in at least $16 million in overcharges over the past seven years.

Richardson delivered a copy of his two-inch briefing book and a summary of his report to Chief Inspector General Melinda Miguel and asked her to conduct an investigation into potential criminal violations surrounding the Lake City Correctional Facility contract, as well as the six other Florida prisons operated by other vendors.

"It appears to me that certain individuals were grossly incompetent," Richardson wrote in a January letter to Miguel. "If their actions were intentional, then they have participated in a scheme to defraud the state government."

The reaction from the governor's office? "Silence," Richardson said.

He has presented his findings to the governor's staff, the House's budget staff, the former secretary of the Department of Management Services which manages the private prison contracts, and secretary of the Department of Corrections Julie Jones.

Jones told the Times/Herald this week that she agrees that more must be done to make sure the state reaps the promised savings in the private prison system but, she adds: "I have no control over those contracts, it's a DMS thing," she said.

"There is an expectation from the Legislature that these are done at a savings," she said. She acknowledged that last year DMS renewed several contracts without giving FDC any role over it, and she met with former DMS secretary Chad Poppell seeking more coordination because the inmates often get transferred from private prisons into the state system.

New rates have been negotiated to produce better savings, she said, and more changes are coming.

"I've been talking with the governor's office. The governor's office challenged me early on to figure out with DMS what's the best things so we have been working very closely on these contracts and I'm sure there will be a recommendation this summer between the two of us," she said.

DMS spokesperson Maggie Mickler could not provide any data that indicated how much each of the private prison contracts have saved the state, if anything.

"While DMS continues to monitor our contracts annually and aggregately for savings, the statutorily required 7 percent savings is required to be achieved over the life of the contract," she said. "We look forward to continuing our partnership with the Department of Corrections in the contract renewal and procurement processes to enhance the quality and savings of the private prison contracts."

Richardson has filed a bill to transfer management of private prison contracts from DMS to FDC but it has been heard in only one committee where it received narrow approval.

Corizon, which until last year held the private health care contract with FDC, and the department have conditionally agreed to settle a class action lawsuit for $1.7 million, brought on behalf of 1,800 current and former Florida prison inmates who were denied medical care for hernias.

At Gadsden Correctional Facility, Richardson found there is one doctor for 1,544 inmates, and inmates are required to have three visits to the doctor before they are allowed access to any medical care. With each visit, inmates would be charged $5 from their personal accounts and he has asked the prison to address specific cases in which he has found evidence that dental and medical care is being withheld from inmates.

Meanwhile, Richardson says the state appears to be operating on a false premise — steering more money into private facilities than it is sending to state prisons under the cover of providing cost savings.

"Their lack of spending is not because of efficiency," he said. "Their lack of spending is to enhance their profitability."

Contact Mary Ellen Klas at [email protected] or 850-222-3095. Follow @MaryEllenKlas

Do private prisons save money as promised? Maybe not, but Legislature keeps approving 04/13/17 [Last modified: Thursday, April 13, 2017 5:33pm]
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