Ohio Selling Its Lake Erie Prison to CCA, Hiring Company to Run Two Others

Ohio will sell a prison to Corrections Corp. of America Inc. for $72.7 million and has decided to keep four others for which it sought offers.

The state will sell the Lake Erie Correctional Institution in Ashtabula County to Nashville-based CCA, the Rehabilitation and Correction Department said in a release today. It will hire Management & Training Corp. of Centerville, Utah, to run two facilities in Marion. Ohio also will combine state and privately run prisons to create one government-operated complex in Lorain County, the department said.

The moves, done to help balance a state budget with a deficit this year of as much as $8 billion, will save an estimated $13 million annually and provide 702 additional beds to ease overcrowding statewide, the agency said.

“It is a decision that is balanced,” Gary C. Mohr, director of the department, said at a news conference in Columbus. “It is a decision that is responsive to the bids that we received, and it’s a decision that will move our agency forward in a safe and strong manner.”

Ohio is trying a new approach: selling a prison outright, rather than hiring a contractor to operate it or paying a company to build and run a new one, James Austin, president of the Washington-based JFA Institute, a corrections-consulting company, has said.

Poor Offers

The state budget passed in June authorized the sale of five lockups, and Corrections Corp., Management and Training Corp. and Geo Group Inc. (GEO) of Boca Raton, Florida, submitted bids, the department said.

Bidders didn’t offer enough for the other prisons, Annette Chambers-Smith, the agency’s deputy director, said at the news conference.

Corrections Corp. of America has almost a one-half share of the private-corrections industry, according to an Aug. 29 analysis by Standard & Poor’s. U.S. prisoners in private facilities have increased 82 percent during the past decade to 129,336 at the end of 2009, according to the U.S. Bureau of Justice Statistics.

The Lake Erie prison being sold to CCA to operate currently is run by Management and Training, the agency said. The state is hiring Management and Training to operate North Central Correctional Institution in Marion and the vacant Marion Juvenile Correctional Facility, which will reopen as an adult prison, the department said.

The North Coast Correctional Treatment Facility in Lorain County, now run by Management and Training, will become a state operation and merge with the state-run Grafton Correctional Institution, the department said.

Taking Over

The agency said it expects the companies to assume operation of the prisons at 10 p.m. on Dec. 31.

As part of the sale of the Lake Erie prison, CCA will receive $44.25 per day, per prisoner, as well as a $3.8 million annual fee for wear and tear during the 20-year span of the management contract, the department said.

Management and Training Corp. will receive a per diem of $41.20 to operate the Marion facilities, according to agency documents.

The sale is not a done deal because a lawsuit against the state is proceeding, Brian Rothenberg, ProgressOhio executive director, said in a telephone interview from Columbus.

Selling prisons 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, ProgressOhio said in its lawsuit.

Courtroom Clash

Judge Patrick E. Sheeran of Franklin County Common Pleas Court yesterday declined to block the sale, though he did say the referendum argument “appears to have merit.” He scheduled a hearing Sept. 13 in Columbus.

Carlo LoParo, a spokesman for the Rehabilitation and Correction Department, said the agency’s process is sound and “we’re confident that it’ll ultimately be upheld.”

The Ohio Civil Service Employees Association, which represents 10,000 prison employees, was “very happy” about the decision not to sell all five institutions, President Christopher Mabe told reporters.

“We as a union believe that the incarceration of a human being should be left to government and not up to a private corporation for the sake of profit,” Mabe said.

To contact the reporter on this story: Mark Niquette in Columbus, Ohio at mniquette@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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