The state began soliciting bids to operate the prison a few days after a September riot at one of three private prisons in the state housing Kentucky inmates.
That disturbance took place at the Lee Adjustment Center in Beattyville. It is owned and operated by Corrections Corporation of America, based in Nashville, Tenn., and houses inmates from Kentucky and Vermont under contract to those states.
Kentucky also contracts with the company to house inmates in the Marion Adjustment Center in St. Mary. A third private prison in Kentucky run by the company, the Otter Creek Correctional Center in Wheelwright, houses Indiana inmates but none from Kentucky.
Whites said he had not reviewed whether the two private prisons housing Kentucky inmates met that criteria. But he said the Corrections Department should make sure they do.
The opinion said state law prohibits the government from contracting with a company to run a prison if taxpayers paid for the facility.
By law, the state can contract with companies to "establish, operate, and manage adult correctional facilities," the opinion says.
Under the law, the state can contract with a private prison company only if the company has built the prison that would house Kentucky inmates, according to the opinion.
The opinion also said the law limits private companies to building and operating prisons in counties only where a Kentucky State Police post is located, where two state police officers reside, or where there is a full-time police department.
It was unclear how many companies submitted bids to operate the Elliott prison, but a spokesman for Corrections Corporation of America acknowledged that his company did so.
Adkins said that he was told that two companies made submissions.
Jill Midkiff, a spokeswoman for the Finance Cabinet, said she could not disclose that information.
Corrections Corporation of America had no comment on Stumbo's opinion, spokesman Steve Owen said.
"We simply responded to (a proposal) the state issued," Owen said.
"What happens next and where that process goes lies with the state."
Corrections Commissioner John D. Rees, a former executive at Corrections Corporation of America, did not return a call seeking comment.