Shakeup in Lockdown

Robert Shaw has been around the world, but he’s never found a friendlier place than Grafton. The sixtyish foundry worker is spouting his rural Lorain County gospel from his perch at the Deluxe Bar on Main Street. </p.

“It’s kind of like Petticoat Junction, except we don’t have a water tower,” says the bearded, salt-and-pepper-haired chain smoker, a reference to the 1960s sitcom about life in the mythical town of Hooterville.

Shaw and others are fuming over what’s happening to their hometown — and the fact they have no power to stop it.

Hooterville, they believe, is getting sucker-punched. In early April, the Ohio Department of Rehabilitation and Correction put five Ohio prisons up for sale, including two of the three found in Grafton. Governor John Kasich hopes the sale will raise $200 million to help soothe the state’s multi-billion-dollar deficit. The buyer of those prisons is also expected to run them, and the ODRC expects results: savings of at least 5 percent compared to the costs of state-run institutions.

Quick cash. Long-term savings. The job of managing prisoners gets done. What’s not to like? Plenty, according to many residents, prison employees, village officials, and elected leaders in Grafton.

“Everybody’s mad,” says Ethan Danico, who has lived down the street from Grafton Correctional Institution for 20 years. He works at a local plastics molding company and hangs out at the Trading Post, a crossroads tavern just a mile or so away from the prison.

“Right now the prisons are fine,” he says. Besides, Grafton has housed the prison industry for decades without the slightest of problems. Why change a good thing? Why wrestle good-paying jobs away from locals?

“I work too hard — 60 hours a week and pay my taxes,” says Danico, “to make some politicians and their friends rich.”

Yes, privatization has hit a nerve in Ohio.

Contracting of public services and selling public assets tends to force a divide along ideological lines: those who believe government should shed as many functions as it can and those who believe it should maintain its role in managing public safety and assets. But the issue is more than ideological; when the sales dust settles in Grafton, there will be real-world winners and losers in the village of 2,600.

Obvious gains could await the local school district, with somewhat cloudier losses for prison employees and residents. Locals fear everything from dried-up tax revenue to unemployment to breakdowns in safety — and they cite previous stabs at privatization as evidence. As the state rolls on in its quest to fix the budget, it just might break Grafton.

Prison Capital of the World

Driving south on Avon Belden Road toward town, travelers are likely to be greeted by bunched-up herds of cows happily grazing and nuzzling each other in their pen. Nearby, Grafton Correctional began its life decades ago as an “honor” farm for minor offenders paying their debt to society.

The lush, rolling hills continue further south, where on some days men can be seen through a barbed-wire fence, playing basketball and taking walks around a track. The bucolic scene is a taste of Grafton itself: a tiny village of old and new, where biker bars, Victorian homes, run-down farms, and sprawling suburban-style developments coexist peacefully.

Village administrator Rick Kowalski calls Grafton “The Prison Capital of the World,” and there seems no reason to argue the claim: More than twice as many people live inside its prison walls than in the rest of the town combined.

Grafton’s three prisons sit on more than a thousand acres of land. Grafton Correctional is now a medium-security facility for a general male population. Lorain Correctional Institution processes short-term offenders, from low to maximum security, with sentences of 90 days or less. The smaller North Coast Correctional Treatment Facility, already privately operated since opening in 2000, is designed primarily for felony DUI offenders.

Grafton and North Coast will be sold to the highest bidders; Lorain will remain in state hands.

Grafton was built in 1988 and Lorain Correctional in 1990, at a time when rural towns across the country began to welcome prisons as a way to boost sagging agricultural and manufacturing economies. States, overwhelmed by exploding inmate populations as a result of tougher sentencing laws, looked to build where more land was available, away from urban centers. Some began to seek private developers and operators for the new institutions, while Ohio mostly built its own. For Grafton, prisons brought good wages to an otherwise declining revenue base.

But the relationship between the state and its small prison towns is about to change. Much of that change has to do with who will work for the new owners and how much they will be paid. Private prison owners will be required to offer the same types of services as their state-run counterparts, from educational programs to medical and dental services. So when it comes to slashing costs, observers say, there are few other ways but cutting staff.

Grafton Correctional has a total of 361 employees, some of whom live in town and all of whom pay taxes to it. Wages start at around $33,000 per year (about $16 an hour) and top out at $43,000, according to Bobbie Peters, president of the Grafton chapter of the Civil Service Employees Association and a records department employee at the prison.

At North Coast, which is privately operated by Management and Training Center Co. of Utah, wages start at $13 an hour, according to Carlo LoParo, a spokesman for the ODRC. Nationwide, private prisons pay about one-third less than state-run facilities.

Further savings at North Coast result from slashed employee benefits — fewer vacation and sick days — LoParo says.

But at least the bosses aren’t suffering: Executives and managers at North Coast make about 20 percent more than their state-run counterparts, thanks to bonus pay and incentives.

The bid application issued by the ODRC to potential buyers states that the winning bidder should give preference to — but is not required to hire — workers already employed at Grafton. Private operators rarely are unionized, a fact that has Grafton’s union force fearful of being let go or forced to take steep pay cuts if they want to continue.

“It’s heartbreaking,” says Peters.

A 20-year guard at Grafton figures he faces a choice of staying at Grafton under a new owner, finding a new job, or seeking a transfer to another union prison. If he does that, however, he’ll have to bump out a worker there with less seniority — a prospect he does not relish.

“People don’t realize what goes on inside a prison,” says the guard, who spoke for this story on the condition that his name not be used. He’s referring to the danger inherent in the jobs and the need to pay decent wages. Conditions are generally peaceful at Grafton, he says, but there is occasional violence; he cites an incident a few months ago when a fellow corrections officer was hit with a belt by an inmate. He’s likely to lose one eye because of it.

Many workers at Grafton have stockpiled seniority and formed close relationships with each other, the guard says. Now they fear the loss of their jobs and their way of life.

As Peters puts it: “Morale is horrible.”

Redistributed Wealth

Outside the prison walls, the village is also bracing for the changes that privatization will bring.

Grafton Correctional includes 15 buildings and a wastewater treatment facility that serves the village. According to the Lorain County Auditor, the property has a market value of $75 million, not counting some of the surrounding vacant land parcels. North Coast sits on 175 acres; its buildings have a market value of a little more than $10 million.

Private prisons argue that their presence is a boon to small towns because, unlike state-owned facilities, they will be forking over property tax revenue.Every $100 million in property value would reap $1.3 to $1.7 million, according to the ODRC’s LoParo.

Local schools will receive most of that windfall, says village administrator Kowalski. (John Kuhn, superintendent of the Midview School District, which serves the area, did not respond to interview requests for this story.)

Ohio Representative Matt Lundy (D-Elyria) wants to make absolutely sure that happens, but to no avail so far.

He attempted unsuccessfully to include a provision in the current state budget bill that would prevent private owners from hiding their properties in investment trusts or other tax shelters, which has been a problem with privately run prisons elsewhere.

“I think that’s the least we could have done for these communities,” Lundy says. The budget bill has passed the Ohio House and is pending in the Senate.

If the village itself collects anything, it won’t be enough to offset the projected losses in income tax from the sale. And with those losses, other village services and personnel could suffer.

That — along with the prospect of friends and neighbors losing their jobs — doesn’t sit well on the streets of Grafton.

“Revenue from that prison helps fund this town,” says resident Robert Shaw, who worries that someday the village may need to raise taxes to help cover the losses and additional expenses that privatization might bring.

Keeping the Peace

Safety — inside the prisons and outside too — is a new concern to many, given the likelihood that lower-paid, less experienced workers will soon be patrolling the grounds.

“Our number-one concern is safety,” says Kowalski, noting that the village has never had problems with such issues under state ownership.

The ODRC’s LoParo has said that employees under private management must receive the same level of training as those at state prisons, at the private operator’s expense. His claim does not address the relative value of current employees’ experience, however.

Nationally, privatization has been the subject of much scrutiny over the past 30 years, with hundreds of studies published by the industry, academia, and the U.S. Department of Justice trying to answer the question of whether it’s worth it.

Opponents of privatization cite the fall 2010 incident in which prisoners escaped from a privately run prison in Kingman, Arizona, and murdered two people. Subsequent investigations found that lack of experience and training due to high turnover rates contributed to the fiasco.

A review of private versus public prison studies published in April by the Ohio chapter of the American Civil Liberties Union reveals a higher turnover rate among personnel at privatized prisons and a higher rate of both inmate-on-inmate assaults and inmate-on-staff assaults.

A 2009 report by the Ohio Corrections Inspections Committee review board said the level of violence at Grafton was relatively low compared to other facilities in the state. The major problem at Grafton, as at nearly all state and federal institutions, is overcrowding. Grafton Correctional was built for a prisoner capacity of around 1,100, though it now houses 1,531. With not enough cells to go around, some inmates are required to sleep on the floor or on cots in open areas. Long wait times for services and programs, such as GED classes, are also common.

But the burden doesn’t end there: Under state management, the Ohio Highway Patrol is responsible for investigating crime inside prison walls. With the impending sale, responsibility for such probes at Grafton and North Coast will shift to the Lorain County Sheriff’s Department, with backup from the minuscule Grafton police force.

In 2010, the Ohio Highway Patrol investigated 47 cases at Grafton Correctional — roughly one every week.

The Incarceration Business

Many residents and politicians have supported the union’s protests of the prison sale; they’ve honked in support of picket lines and written letters to Kasich. While there are no doubt supporters of the sale because of the boost in property tax revenue, others wonder why the village is being put through the wringer when nobody knows whether privatization will reap the financial rewards promised by the governor.

Policy Matters Ohio, a Cleveland-based economic research group, examined the methods used by the state in the past — and its revisions to those methods — to calculate the supposed cost savings from prison sales. Its “Cells for Sale” study, published in April, was written by Bob Paynter, a former investigative reporter for The Akron Beacon Journal and The Plain Dealer.

According to the report, there is no clear and understandable way to compare costs between public and private institutions. Paynter called cost comparisons “an exercise in make believe.”

In order to claim cost savings, the bidder, for the sake of comparison, would have to create a hypothetical prison “identical in every respect to that run by a private company, except that it’s fully staffed and operated by the state.” Another difficulty in demonstrating cost savings is in figuring out how to divvy up central office, overhead, and administrative functions; even in private prisons, the state must have staff present to monitor compliance with state laws and to coordinate with other parts of the judicial and penal system.

The Policy Matters study used the ODRC’s own methodology to calculate cost savings; it used Conneaut’s Lake Erie Correctional Institution, run by the same group that operates North Coast, to test the state’s theory that privatization will save taxpayers money. The study compared costs at Lake Erie to what they would be if the state were managing the prison. According to the report and others like it, privatization is actually costing taxpayers more. A May 19 article in The New York Times cited data collected by the Arizona Department of Corrections that indicated inmates in private prisons can cost as much as $1,600 more per inmate per year.

Taking only monetary calculations into account — without measuring quality of rehabilitation — the best one can say is there is no definitive proof that privatizing saves money.

But many of the studies also note that private prisons do not care for the most violent inmates or those who have serious physical or mental health needs; those prisoners are more costly to care for and are transferred to or kept in state-run facilities.

Although the ODRC projects that private owners will operate prisons more cheaply, the difficulty in creating cost comparisons can already be seen at two of the facilities in Grafton, casting doubt on the state’s own goals.

The ODRC website for Grafton Correctional says the state-run facility’s operating cost is $57.55 per day for each prisoner; down the road at privately managed North Coast Correctional, costs run $59.60 per inmate per day. While North Coast may be providing more treatment services that would increase costs, the situation illustrates the complexity of comparing the wide variety of institutions in the state and trying to claim cost savings at one or the other.

What’s more, critics of selling prisons say there’s a fundamental conflict in mission between privately owned and operated prisons and the goals of the state. Private corporations want to maximize profits to shareholders and thus may want to see the prison population increase. States, meanwhile, want crime to go down to ensure the safety of its citizens and to reduce the costs of incarceration. The current push for sentencing reform by Kasich is indicative of this desire to cut the prison population.

But if the decline does happen, how will private prisons make money? One way is through guaranteed per-diem payments: The proposal for Ohio prison bidders states that operators will be paid for a minimum of 90 percent of the capacity of the facility, regardless of whether the beds are filled.

In addition to his doubts that privatizing will result in lower operating costs, state Representative Lundy questions the wisdom of selling valuable brick-and-mortar assets in a still-depressed real estate market. He believes the asking price of $200 million for five and possibly six prisons — a drop in the bucket of an estimated $8 billion state deficit — may be too low. Grafton and North Coast and the surrounding properties alone are worth almost $90 million, according to Lorain County Auditor’s records.

“We’re giving away the store,” Lundy says. “And once [the buildings and land] are gone, they’re gone.” According to Lundy, the budget bill passed by the Ohio House last month also removed deed restrictions on the Grafton properties. That means the new owners are free to use the land for other purposes.

Meanwhile, back in Grafton Correctional, employees await final bids for their workplace and the likely awarding of a contract to new owners who will determine their fates.

Bobbie Peters knows that, as a union official, the odds of her being hired by a non-union company are not good. Like her peers, she’s not happy about her prospects.

“I’ve given everything I can give to this place,” she says, “and now I’ve been kicked in the butt.”

This article appears in Jun 1-7, 2011.