What happens when state loses its lock on prisons.

• Author: Gray, Tim
• Position: Transfer of prison control to private corporations

The Lawrenceville Correctional Center in Virginia looks like any other medium-security prison. Double chain-link fences garlanded by razor wire glistening like tinsel. Squat, two-story concrete buildings set among scrubby pines. White trucks, driven by guards with shotguns, creeping along gravel roads.

But the similarities hide a big difference. The prison is run by Nashville-based Correctional Corporation of America, the nation's largest private prison operator, and it offers a peek at what's to come in North Carolina. In August, CCA finished the first privately run Tar Heel prison, in rural Pamlico County, near the coast. Its second, on the Mitchell-Avery county line, in the mountains, opens in November.

Prisons are the latest public service to get swept up in privatization. "The private sector can provide services and facilities at much less cost to the taxpayer and provide the same level of service," says state Rep. Gregg Thompson, a Spruce Pine Republican. He thinks competition will force the N.C. Department of Correction to operate more efficiently. He cites the state prison being built beside CCA's in his district. For the first time, the state is bringing in cheaper, pre-cast concrete and steel cells, something CCA has been doing.

But the fact is, the state-run system has done just fine without competition. Unlike other states that have embraced private prisons, North Carolina doesn't have run-down hellholes, and its wages aren't inflated by a burly public-employee union. The Department of Correction runs one of those rare state programs that pays for itself - it even kicks $1 million a year into the general fund and $500,000 into a restitution fund for crime victims.

That's because of its enterprise program - 33 prison-based plants that make everything from road signs to soap. Though it ranks 10th in inmates, North Carolina's prisons generated $77 million in fiscal '98 - fourth in revenues.

Still, by the numbers, CCA seems to be a more-efficient operator. It will receive about $50 a day - the figure was still being negotiated in late August - for the 1,056 medium-security inmates it will house. The state's average cost per medium-security inmate is $67.85.

But the state's average is skewed because it includes the mentally and physically ill, which CCA doesn't have to deal with. And North Carolina has favored small prisons, which lack economies of scale. It has 86, more than any other state. Also, the state's cost includes...