The Country’s First Non-Profit Private Prison Wants to Put Down Roots in Arizona 

By Kendra Ingram. 

It is widely accepted that a lack of competition stifles innovation and that markets can often be overrun by outdated practices that do not operate at maximum efficiency. This can be said about the current corrections infrastructure. Currently, there are only two avenues for prison operations: public and private for-profit prisons. State-run facilities and for-profit prisons are each plagued by their own inefficiencies. State-run facilities are notorious for overcrowding, being on a flat budget, and having staff shortages, while private for-profit prisons, which are controlled by a primary duopoly consisting of CoreCivic and GEO Group, have no incentive to produce better outcomes for inmates because of their lack of public oversight. The status quo has contributed to a recidivism rate of nearly 80% and an annual cost of $81 billion in operating expenses nationwide, with $1.5 billion in Arizona alone. 

According to recent data published by the U.S. Bureau of Justice Statistics, about two-thirds of released prisoners are rearrested within three years, and nearly half are reincarcerated within five years. Studies consistently find that employment is the factor most correlated with a person’s desistance from crime, and former inmates who are unemployed return to prison at five times the rate of those who were employed. Many inmates leave prison without adequate resources or support systems, which hampers their ability to reintegrate successfully into society. As a result, they are more likely to become repeat offenders, perpetuating cycles of crime and harm. Equipping individuals exiting the prison system with the necessary tools, such as education, job training, and mental health support, has the potential to lower recidivism rates, protect communities, and alleviate financial strain on the state’s public resources.

Social Purpose Corrections

A new player has emerged in the private corrections industry, aiming to tackle recidivism and wasteful spending through an innovative approach to managing inmate populations. Social Purpose Corrections (SPC), headquartered in Arizona, is the nation’s first non-profit private prison that offers a revolutionary shift in the traditional corrections system culture. The entity originated because SPC’s leadership team, composed of former for-profit prison operators, began to question the failing practices that contribute to the revolving door of repeat offenders. This reflection and realization led to the formation of their current model. Through their non-profit model, they confront the systemic root causes that traditional private for-profit and public corrections struggle with while fostering a culture rooted in safety and inmate rehabilitation. At the crux of SPC’s guiding principles is a desire to transition from a punitive to a transformative approach for inmates and replace the traditional profit-chasing model with a performance-based funding model that will save the state millions. 

Unlike other prison operators who are paid by the state on a per-bed per-day basis regardless of the prison’s efficacy, SPC employs a performance-based funding model that incentivizes rehabilitation by allocating funding based on key success metrics. Akin to Arizona’s Safe Communities Act of 2008, which incentivized municipalities to secure better outcomes for parolees, SPC would be evaluated and paid based on their job placement rate, return to prison rate, and other metrics that indicate a former incarcerated individual is contributing to society. Since SPC is a non-profit, all gross revenues are reinvested into the facility to sustain transitional programs.

Regulatory Hurdles 

Despite guaranteeing lower recidivism rates and costs to the state, emerging models for corrections are faced with a myriad of regulatory challenges that keep them from entering the market. This past legislative session, Representative Tim Dunn introduced HB 2135: Adult Incarceration Contracts to amend the state’s procurement code for contracting with prison operators. In its current form, Arizona Revised Statute Section 41-1609.01 imposes a significant barrier for new entities seeking to obtain contracts for operating secured facilities. It requires that applicants demonstrate operational and management experience running secured facilities to be considered for a contract. In essence, the law establishes a catch-22 scenario: without prior experience, new entities are ineligible to bid for contracts, yet they cannot obtain that experience without being awarded a contract. HB 2135 would have allowed brand new entities to compete for contracts if their management team had demonstrated experience running facilities as part of a separate entity. Consequently, SPC could have demonstrated the necessary experience for the newly-formed entity to compete for a bid by demonstrating that their Founder and CEO, Brian Koehn, served as warden for five prisons and supervised a total of 65 prisons and jails throughout his career in corrections.

After passing through the House Military Affairs and Public Safety Committee 10-2, HB 2135 received bipartisan votes in the Arizona House of Representatives, passing on the floor 40-17. Once the bill crossed over to the Senate, it was not granted a hearing, and the bill died. Because the bill had such strong support in the House, there is a lot of excitement regarding future efforts to introduce similar legislation that would open the corrections industry to new competition and subsequent change. Arizona legislators should continue taking steps toward changing the status quo in the corrections industry.