The pending privatization of Indiana's New Castle Correctional Facility will create 90 new jobs immediately and an additional 200 by 2007, the state prisons commissioner said Tuesday.

Commissioner J. David Donahue, who met with prison employees with Gov. Mitch Daniels, did not identify the contractor, with whom the state still is negotiating after selecting it from among five bidders.

The number of employees will grow from its current level of 210 to 300, and more prisoners will arrive in increments of about 25 at a time beginning in January. The facility will continue to grow until it reaches a capacity of 2,000 inmates with 500 employees in mid-2007, Donahue said.

Current prison employees will be offered opportunities to keep jobs, and for those who do not wish to join the contractor, the department will try to move them elsewhere in the prison system, he said.

The $123 million medium-security prison, on the grounds of the former New Castle State Developmental Center about 35 miles east of Indianapolis, was designed to house more than 1,800 inmates and employ about 750 people. Because of state funding shortages, it houses only about 500 inmates.

Donahue said a private contractor not only would save the state money, but offer top employees a chance for higher pay.

Donahue was a federal prison warden and chief operating officer for the U.S. Corrections Corp. in Louisville, Ky., then was the deputy commissioner for the Kentucky Department of Corrections immediately before he joined the Daniels administration in January. Daniels said privatization will save the state $2 million to $3 million.