Ohio Shifts Prison Ownership, Operation Structure
(11/30/2011)

CONNEAUT, Ohio — The Ohio Department of Rehabilitation and Correction (DRC) made changes in the ownership and operation of five prisons, saving the state an estimated $13 million annually and adding an additional 702 beds throughout Ohio’s prison system.

DRC originally estimated it could get $200 million in cash payments from the sale of five facilities, an amount that reflected the replacement value for five prisons. The agency’s budget obligation, however, was for only $50 million in up-front cash, and the request for proposals was written to provide flexibility and allow for a number of outcomes. Vendors could bid on purchase, operation, and management or just operation and management. DRC met the obligation with the sale of only one prison: Lake Erie Correctional Institution.

DRC will sell the Lake Erie Correctional Institution in Ashtabula County to the Corrections Corporation of America (CCA) for $72.7 million. CCA’s operating costs will be 8 percent less than estimated state operational costs and save Ohio a projected $3 million annually. The 20-year management contract awarded CCA stipulates CCA will receive $44.25 per day for each prisoner and a $3.8 million annual fee for wear and tear. The company takes over the 1,798-bed facility effective Jan. 1, 2012, and will add 304 prison beds. Since the operator now owns the land, any construction add-ons to the property would require certifications and agreements from the community, said Carlo LoParo, communications director for the DRC.

In a management shift, Centerville, Utah-based Management and Training Corp. (MTC) will take over operation from the state of both Marion County’s North Central Correctional Institution (NCCI) and the vacant Marion Juvenile Correctional Facility.

The private company will operate the properties for 6 percent less than estimated state operational costs, generating a projected annual savings of $3 million. The vacant Marion juvenile facility will be converted to an adult prison and reopen as part of NCCI, adding 398 new beds. MTC will receive a per diem of $41.20 to operate the facilities.

In Lorain County, the North Coast Correctional Treatment Facility, currently operated by MTC, will revert to a state-run operation and merge with Grafton Correctional Institution. The merger will provide an estimated savings of more than $7 million.

Grafton counts a total population of 1,547, and North Coast has 701, according to LoParo.

Ohio counts 32 correctional facilities, and the state’s recently passed state budget authorized the administration to sell six prisons to private operators for a projected $75 million in revenue, including $50 million for five DRC facilities and $25 million for a Department of Youth Services facility. However, officials decided against selling additional prisons based on the received proposals. Bids were received from Corrections Corporation of America (CCA), Management and Training Corp. (MTC), and Boca Raton, Fla.-based The GEO Group Inc.

The contracts for the prison sale and management changes have been executed despite a legal challenge from ProgressOhio. The lawsuit against the state claims that selling the prison violates the state constitution because the authorization was included in the budget, and the right for citizens to seek a referendum on the matter was denied as a result.

“The claimants had sought an injunction to prevent the entering into contracts with the state. The judge did not allow the injunction but agreed to hear aspects of the case, and the case is pending,” LoParo said.

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