California will begin shipping thousands of inmates to prisons in four other states next month at a cost of more than $51 million a year, corrections officials said Friday.

Gov. Arnold Schwarzenegger declared an emergency this month to speed up the no-bid contracts with two private companies. He said the transfers are needed to ease crowding in the nation's largest prison system, where more than 172,000 inmates are crowded into space designed for about 100,000, forcing some inmates to sleep in gymnasiums and auditoriums.

The GEO Group Inc. of Florida will be paid an estimated $28.7 million a year to house as many as 1,260 inmates at its New Castle Correctional Facility in Indiana.

Tennessee-based Correctional Corporation of America will be paid a projected $22.9 million annually to house as many as 1,000 inmates at four prisons in Arizona, Oklahoma and Tennessee.

All 2,260 medium-security inmates are to be moved by March under the contracts, signed late Thursday. California prisons had been projected to run out of even makeshift beds by next August, but the transfers will free space until June 2008, the corrections department said.

The companies will be paid $63 a day for each inmate, cheaper than they can be housed in California prisons or jails. But that's still an added cost for taxpayers who are already paying to operate state prisons.

"It's not a cost savings; it's cost effective. It's a good price," said Oscar Hidalgo, a spokesman for the California Department of Corrections and Rehabilitation.

Public employee unions said it is cheaper to send inmates out of state because the contracts let private companies reject inmates who have caused trouble or have mental or physical problems.

The three-year contracts allow two-year extensions, which Corrections Secretary James Tilton said will give state lawmakers enough time to consider whether to add more prison cells in California or add programs to trim the inmate population.

This summer, Schwarzenegger proposed building two new prisons, adding cells at existing prisons and shifting thousands of inmates to community programs. The Legislature has not acted on the $6 billion plan.