AT ONE END of Delaware County's rekindled debate over prison privatization, you'll find Wally Nunn, a tough-talking fiscal hawk and former county councilman. At the other, Fay Kallenbach, a bereaved mother.

The George W. Hill Correctional Facility is ground zero.

Nunn led the 1995 effort to privatize the county jail, outsourcing its operation to the GEO Group, a multinational corrections corporation.

He stands by his decision today, saying the move cut government waste and saved taxpayers millions of dollars – including the more than $30 million the county saved by hiring GEO, then called Wackenhut Corrections Corp., to build the current prison in 1998.

"It's a success right there, by definition," Nunn said.

Fay Kallenbach has a different perspective.

She says privatizing the prison has put inmates in the care of a money-hungry "machine" that cuts corners anywhere it can. Her son, comedian Kenneth Keith Kallenbach, died in April of complications from cystic fibrosis while in prison custody. She says he didn't receive the crucial treatment that had kept him alive for 39 years.

"They definitely killed my son," she said of Florida-based GEO.

The deep philosophical divide between Kallenbach and Nunn is typical when it comes to prison privatization, a love-it-or-hate-it concept that pits labor unions against politicians and corporate leaders against inmate-advocacy groups.

Regardless, if Nunn is considered Delaware County's "father of privatization," his first born remains an only child in Pennsylvania – and there have been some growing pains lately.

In the 12 years since the county handed the jailhouse keys to GEO, no other county in the state has followed its lead. Now, the company is terminating its $40-million-a-year contract there, ridden out of town by an onslaught of lawsuits and inadequate profits. A new firm takes over on New Year's Day.

All about the $$$

Prison Superintendent John Reilly Jr. oversees GEO's performance at the 1,883-bed lockup in Thornton, and he doesn't shy away from discussing the good, the bad and the ugly. There has been plenty of each, from huge cost savings and indemnification from civil-rights lawsuits, to filthy showers and dead inmates.

The cost of operating the prison - nearly $45 million when you factor in the superintendent and his staff – is the single largest expenditure of county tax dollars in the budget. It is expected to eat up 15 percent of the $303 million budget next year.

But GEO has run the prison cheaper than the county ever could, Reilly said. And outsourcing still saves the government an estimated $3.2 million a year, according to Delaware County Executive Director Marianne Grace.

By having Reilly and his staff on the premises, the county's version of privatization is ideal because the government is able to keep an eye on GEO and implement hefty fines - more than $700,000 this year - when the jail is understaffed.

"Our security, maintenance and food service is similar to, and in some instances maybe better, than when the county ran it," Reilly said.

Proponents of privatization say profit-driven companies can eliminate patronage jobs, play hardball with the labor unions and find new efficiencies without a substantial drop-off in services.

Government officials "tend to hire people that have worked on their campaigns or political-patronage people," Nunn said. "Corporations tend to hire people that are competent and capable. They can manage more effectively than a public entity can."

Critics say the profit incentive is a double-edged sword, and that the industry makes its money on the backs of inmates and guards by reducing personnel costs and cutting back on inmate care.

"I don't trust them as far as I can throw them," said Ken Kopczynski, executive director of the Private Corrections Institute and a lobbyist for the Florida Police Benevolent Association, a union that represents police and correctional officers.

"All those millions of dollars they are making that are going into corporate executives' pockets should have been put into inmates services," he said.

Avalanche of lawsuits

Delaware County officials say they are generally satisfied with GEO's performance here since 1996, with one large caveat: The medical services in the prison have, at times, fallen woefully short.

Employee turnover in that department has been extremely high in recent years, Reilly said, and the company has gone through eight health-services administrators since 2004.

As a result, the daily "pill call" for inmates, for example, is sometimes run by nurses who are incompetent or overworked, he said, and the backlog of prisoners waiting for medical attention can exceed 400 cases.

"The medical department has underperformed here," Reilly concedes.

GEO has spent an inordinate amount of time and money fending off federal lawsuits, including wrongful-death cases. The frequent litigation is one of the main reasons the company is bailing out on its contract next week.

In 2006, the company agreed to pay $100,000 to the family of Rosalyn Atkinson, a 25-year-old mother of two who died from a toxic dose of a blood-pressure drug while in prison custody. In October, GEO agreed to an undisclosed settlement in the case of Cassandra Morgan, 38, who died in 2006 of complications from an untreated thyroid condition while jailed on a shoplifting charge.

GEO also paid $125,000 in 2005 to the family of a prisoner who hung himself with his bootlaces and agreed to a $300,000 settlement in 2000 involving another suicide.

Fay Kallenbach and her attorney are awaiting more medical information before deciding whether to move forward with a lawsuit on behalf of her son, a longtime member of Howard Stern's "Wack Pack." Prison officials say they are not at fault in his death.

While the Delaware County prison was far from a utopia when it was run by the county - seven guards were convicted of federal charges stemming from inmate beatings in 1994 - GEO's correctional officers have compiled a lengthy rap sheet since the jail was privatized.

This year a K-9 officer pleaded guilty to having sex with an inmate in his pickup truck, and a guard admitted to sending a forged letter to the state parole board so her boyfriend - a convicted murderer - could move in with her.

In 2006 the jail's former work-release supervisor, who is now registered under Megan's Law as a sex offender, pleaded guilty to sexually assaulting an inmate, and a guard pleaded guilty in federal court last year to conspiracy to commit bank robbery.

Two other guards were convicted of participating in a 2002 attack on an inmate who claimed that he was handcuffed and pummeled with a basketball and that his pants were pulled down. That inmate's attorney, Jon Auritt, has said the incident reminded him of "Abu Ghraib, except without the dogs." GEO later paid an undisclosed settlement in that case, though.

Prison staff incorrectly released three inmates between 2002 and 2004, and in 2006, GEO agreed to pay a settlement to an innocent man who sued the company because he was imprisoned for more than 40 days. It was a case of mistaken identity.

GEO officials declined to be interviewed for this story, as did state Rep. John Perzel, R-Phila., a paid member of its board of directors. The company did not admit any wrongdoing in the lawsuits it settled.

Pa. counties unreceptive

In 1998, the state Supreme Court approved the privatization of the Delaware County prison, ruling against the prison guards' union, which had filed suit to block the outsourcing. At the time, labor leaders fretted that the ruling would pave the way for other counties to hire firms to run their own jails.

That never happened.

While privatization has taken off in other states, particularly Texas, the George W. Hill Correctional Facility remains the only privately-run county prison in Pennsylvania, largely due to strong union resistance, according to Richard Culp, a prison privatization expert and professor at the John Jay College of Criminal Justice in New York City.

"It's a matter of labor costs, pure and simple," said Culp, who has worked as a consultant for the Delaware County Board of Prison Inspectors.

Beaver County tried to privatize its prison in 2006, but was bombarded by union opposition. The county lost a ruling by an arbitrator, which was upheld in Common Pleas Court, according to county Commissioner Charles Camp. Beaver County officials decided not to appeal the case because the legal bills were getting so high, he said.

"We had everyone coming at us," Camp said of the unions that fought the privatization proposal.

"It would have saved us a million bucks a year," he said, adding that the county is now facing a $2 million budget deficit and is planning layoffs.

Large corrections companies increasingly are looking to the federal government for their profits, and U.S. Immigrations and Customs Enforcement and other federal agencies have been expanding their use of private companies in recent years, Culp said.

While Culp recommended that counties and other government agencies keep a short leash on those firms – as Delaware County does – he said the industry has become more "professional" since the mid-1990s.

"I think the market has shaken out a lot of the underperformers and poor performers and people that got into it to make a fast buck," Culp said.

The future is CEC

Community Education Centers (CEC), a smaller, privately-held company that specializes in inmate re-entry services, will replace the GEO Group on Jan. 1 at the Delaware County prison.

Based in West Caldwell, N.J., CEC operates county prisons in Texas, Arizona and Ohio, as well as treatment centers within publicly-run prisons. In Philadelphia, it runs Hoffman Hall, a residential re-entry center for city inmates that opened in July, and Coleman Hall, which runs a work-release program for state inmates.

William Palatucci, a CEC senior vice president, said the Delaware County prison will become the largest county jail in the company's network. Most of the existing GEO guards will keep their jobs, and county officials say that guards that once worked for GEO are interested in coming back now that the company is leaving.

CEC made headlines in 2004 when a Coleman Hall resident was shot to death in his room, and the company is being sued by the Pennsylvania Institutional Law Project on behalf of several inmates who said they were denied adequate medical care there.

Palatucci declined to comment on the litigation, but said the company planned to bring to the Delaware County prison a "renewed commitment to quality operations."

"I think competition is good for everybody. It keeps the public sector and private sector on their toes," he said. "At the end of the day, that's good for the taxpayer."

Robert Eskind, spokesman for the Philadelphia Prison System, said the city is "pleased so far" with CEC's performance at Hoffman Hall.

County officials say CEC could be a better fit than GEO at their jail, particularly because the company has experience in reducing recidivism. Overcrowding has long been a problem there.

John Hosier, chairman of the county Board of Prison Inspectors, is optimistic about the changing of the guard, but warned against unrealistic expectations.

"We can hope for the best," Hosier said, "but it is a jail." *