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PHOENIX — With one state needing more prison beds and the other having room to spare, Arizona will send up to 1,260 medium-security male prisoners to an Indiana state prison, the Arizona Department of Corrections announced Monday.

The prisoners will be sent to the New Castle Correctional Facility about 40 miles east of Indianapolis, the Arizona Department of Corrections said.

Operating with thousands more inmates than its system is designed to hold, the Arizona department said it lost 1,500 temporary beds earlier this year when a private prison provider canceled two contracts in Texas.

"We had no other option," said Arizona corrections spokeswoman Katie Decker. "We had to fly those people back and we're already overcrowded."

The agreement between Arizona and Indiana, a one-year pact that can be extended for three successive years by mutual agreement, requires Arizona to pay Indiana $64 per inmate per day, Decker said.

Citing security needs, Decker would not provide specifics on where the inmates would come from or discuss the timing of the transfers, which will take place over several weeks.

However, Indiana Gov. Mitch Daniels told reporters Monday that the first prisoners will be transferred to the facility this week.

"That white elephant prison will now reach capacity, and we'll be able to hire a total of over 300 citizens in a community that could use the jobs," Daniels said in Indianapolis.

The deal comes nearly three months after a plan fell through under which California would have sent 1,260 of its inmates to the New Castle facility.

That plan was thwarted because of a lawsuit against California over the possible transfer, and a lack of inmates willing to volunteer to make the cross-country move.

Arizona now has 36,000 prisoners in its system, which has permanent funding for 31,000 beds. Of the excess, 1,431 inmates are housed in "provisional" beds at the Diamondback Correctional Facility, a private prison in Watonga, Okla.

Decker said a time crunch to deal with the bed shortage prompted the department to pursue an intergovernmental agreement with Indiana rather than start a competitive bidding process for a contract with a private prison provider.

"That process takes an extensive amount of time," she said.

The Arizona department has said it plans to add 1,386 temporary beds, including 900 in tents, at nine existing state prisons to help reduce the shortfall.

But lawmakers and Gov. Janet Napolitano's administration still face decisions on whether the state should permanently expand its own prison system or increase its use of private facilities.

The state agency and three private companies are competing to build 3,000 permanent new beds.

New Castle, Ind., is located approximately 1,800 driving miles from Phoenix, compared with nearly 1,000 miles from Phoenix to Watonga, Okla.

Decker said placing the prisoners in Indiana is necessary but regrettable because the department recognizes that putting prisoners far from family and friends makes it harder to keep up personal bonds. That's significant because those ties help inmates when they are eventually released from prison, she said.