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March 2010

Grayson County to send inmates to Fannin County's CEC jail

After the Grayson County commissioners decided earlier this month to not construct a private jail in Sherman, they are staying true to this commitment. However, in Monday's commissioner meeting it was decided that some of their inmates might be housed in a private facility after all -- just not in Grayson County. The commissioners signed a deal with their neighbor to the East, Fannin County, to house some of their overflow inmates in order to give the commissioners more time to make a decision on how best to solve their jail problems in Sherman. The inmates would be sent to CEC's 432-bed Fannin County Detention Center in Bonham, TX.  

"We have always maintained a good working relationship with Fannin county and this has been in the works for a few months" said Judge Drue Bynum.

Bynum says [Monday's] agreement allows the county to house prisoners closer to home, instead of in McClellan or Limestone county jails and that it could also save Grayson County money.

"The contract was signed for 48 dollars a day, that includes transportation so depending on who you talk to around here that is cheaper than we can do it,” said Bynum.

Fannin County Sheriff Kenneth Moore says his jail has the space, but doesn't need the extra income to operate.

"It was in the back of our minds, but we didn't build this facility to depend on another county," said Moore.

The Jail in Fannin County is operated by a private company, Community education centers, or CEC. Sheriff Moore says he is glad to offer any help he can to Grayson County.

"They have helped us on many occasions, they have never failed to offer assistance in any situation," said Sheriff Moore.

While the future of the Grayson County jail is still not set in stone, housing some prisoners in Fannin County will give Grayson County more options and that means more breathing room to make a final decision ("Grayson and Fannin Counties enter jail agreement," KXII, 29 March 2010).

While Judge Bynum says the contract is for "48 dollars a day," I am assuming he means "48 dollars per day, per inmate." Any further details of the plan have not been released, such as the duration of these inmates stay in Fannin County. Judge Bynum did mention, however, that Grayson County sends 5 to 10 inmates to other counties already. Check back here regularly as this development pans out. In the meantime, below are some links to the background of the Grayson County debate and CEC

Tuesday: Protest of MTC in Georgetown planned

I'll be headed out tomorrow to this protest against Management and Training Corporation in Georgetown, Texas.  Activists will be calling for the closure of MTC's notorious Willacy County "Tent City" detention center in Raymondville.  "Tent City" is the largest immigrant detention center in the country, incarcerating up to 3,000 immigrants awaiting hearings, and is built out of a series of kevlar pods which has earned it the "Tent City" distinction.  Here's the announcement circulating:

Immigrant rights organizers will gather for a protest and letter-delivery calling for the closure of the "Tent City" detention center at the offices of private prison corporation Management and Training Corporation in Georgetown, Texas.  MTC operates the "Tent City" detention center in Raymondville, Texas.  The prison, largely built out of kevlar pods, is the largest immigrant detention center in the country and has been racked by a series of allegations of horrendous conditions and abuse, reports of detainees being fed rotten and inadequate food, and poor access to medical and mental health care.  Activists have called on ICE to close both "Tent City" and the Port Isabel Detention Center - two large immigrant detention centers in the Rio Grande Valley and to implement community-based alternatives to detention policies that are more humane and less costly. 

The protest will be held on Tuesday, March 30th, from 12-1pm at MTC offices (2995 Dawn Drive, Georgetown, TX).  For information on a carpool to Georgetown, contact blibal (at) or (512) 499-8111.

I'll post some pictures of the protest later in the week.  For now, read some of our previous coverage of MTC's "Tent City" detention center:

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Family sues CEC over son's death in Texarkana jail

The family of a man who died of cancer in a Community Education Centers jail has sued the company, jail officials, and the county that contracted for the jail space, according to an article in the Texarkana Gazette ("Woman says son died of cancer after being denied medical treatment," March 21):

The mother of a Texarkana man accuses Bowie County officials of causing her son’s death from cancer in 2006 by denying him medical treatment in jail.
A federal lawsuit filed by Miller County resident Carolyn Beal names Bowie County Sheriff James Prince, County Judge James Carlow and Civigenics, the private company that manages the Bowie County jail, as defendants.
“We just want our day in court,” said Beal’s attorney, Thomas Johnson of Texarkana. “Imagine if your family member was being held in jail with a life-threatening medical condition and denied treatment.

We'll keep you posted on developments in this case.

The GEO Group's 2009 Q4 Conference Tells of Speculative Building, Stock Buybacks

On February 22nd The GEO Group announced their Q4 earnings in an investor conference call. CEO George Zoley said, "our financial performance in 2009 was the most successful in our company's history, achieving new highs in revenue and earnings results." The company reported a 2009 yearly revenue of $1.41 billion and $1.46 in earnings per share.

However, what struck me the most was the large amount of speculative building  - construction of additional beds without a contract to fill these expansions - the company has embarked on. Zoley explained:

"In Michigan, our 530-bed North Lake facility is being expanded by 1,225 beds. As you may be aware we have submitted this expanded facility in response to the Bureau of Prisons'  CAR-9 Procurement. CAR-9 was expected to result in an award of approximately 1,700 to 2,000 beds in late 2009 and early 2010... While the BOP continues to have a need for these beds, the decision on CAR-9 has been delayed primarily due to funding concerns related to the agency's future year budgets. As a result of this delay, we have decided not to assume any revenue contribution from our Michigan facility in our guidance at this time, and we continue to market this facility to other potential clients as well, and we hope to be able to activate this facility later in the year."

What Zoley did not explicitly state is that the North Lake facility is currently idle, and that the expansion project will cost $60 million. Spending this large amount of money on a facility that is not even listed on the company's website as an "existing facility" without a contract to justify the expansion is either very foolish or very insightful. This wasn't the only example of speculative building, though. Next, he stated:

"In Colorado, our 432-bed Aurora immigration detention facility is being expanded by more than 1,000 beds. We believe that our Federal clients, primarily ICE and the U.S. Marshals, will continue to need beds as they consolidate existing populations into larger facilities such as our expanded Aurora facility. However, we currently don't have a contract for the use of the expanded beds and therefore have decided not to include and revenue contributions from these beds in our initial guidance for the year."

Again, this is either very foolish or very insightful. However, evidence for the former appears everywhere as Colorado seeks state-level reform in their immigration detention because of inmate maltreatment. Additionally, ICE has recently come under fire for the deaths of 100 immigrant detainees in their facilities. The President has also suggested reforming immigration detention because of these alleged abuses. Business opportunities in immigrant detention could dry up based on these immigration reform movements, and for GEO to continue to invest their money in immigrant detention could be misguided. Zoley also spoke of a third facility that has yet to finalize a contract:

"As I discussed previously, we are also scheduled to complete construction of the new 2,000 bed managed-only Blackwater River facility in Florida by July 1 of this year. Again, we have decided not to include any revenue contribution from this facility in our 2010 guidance until the state of Florida notifies us regarding the facility's opening date."

The Blackwater River facility, if/when it is opened, will primarily fall under the jurisdiction of GEO Care, a mental-health subsidiary of The GEO Group. 

However, these speculative prisons were not the center of the conference call. The big news (for investors) came when Zoley announced their stock buyback program:

"...our board has authorized a stock buyback program up to $80 million effective through March 31st, 2011 as announced in our press release this morning. We expect to implement this program with an opportunistic strategy that maximizes the executory returns for our shareholders and does not impede our company's continued growth process."

The purpose of the program, as implied by Zoley, is to increase the price of their stock shares by buying back outstanding shares and leaving fewer shares on the market for sale. Decreasing the amount of available shares would increase the price per share, potentially giving a rise to their stock price.

What exactly caused the drop in share price is all speculative--whether the immigration reform movements or the allegations of rampant abuse in private facilities caused the drop is totally opinion-based. With Zoley claiming it was the company's best year in terms of revenue and earnings, it seems odd that the stock price would need a boost by way of a stock buyback program. Regardless, the day the buyback program was announced, The GEO Group stock (NYSE: GEO) saw a trade volume of 1,084,200 shares -- the largest amount of shares for GEO traded in a day since November 2008. That is, until ten days later when the CAR-9 solicitation was cancelled and just over 2 million shares were traded following the subsequent plummet of the GEO stock price by about $2 per share, the opposite of the intentions of the stock buyback program. However, since then the stock price has risen by about $1.50 per share despite the loss of the important CAR-9 solicitation, perhaps the buyback has achieved some of its intended effect. 

The remainder of the conference call was mostly the usual comments about how they are ready for future opportunities and that opportunities for growth exist. In general, the call was fairly standard procedure with the executives attempting to convince the shareholders that everything is well and good within the company. What will come of these speculative moves is something that will be of great interest. Only time will tell whether these often-hazardous speculative projects are beneficial or not to the company.

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New Report Covers History of GEO's Involvement in Texas

Earlier this month, Fort Worth Weekly published an article outlining the history of The GEO Group's involvement within Texas, specifically at the Reeves County Detention Center. Our own Bob Libal was referenced multiple times in the piece for his general knowledge and participation in the protest last December in front of the company's New Braunfels headquarters. The work, by Peter Gorman, is one of the more comprehensive overviews of the relationship between Texas and The GEO Group in recent time. Below are some of the more noteworthy excerpts

...GEO also has one of the world’s worst track records in inmate care: The horror stories range from rapes to suicides to murders to deaths due to inadequate medical care. The company, which declined to respond to questions for this story, once hired a convicted sex offender as a guard in a facility for juvenile females. It’s not as if something goes wrong occasionally at GEO-run prisons — something goes terribly wrong on a regular basis at one or another of their facilities. Texas alone has twice removed all its inmates from a GEO-run facility because of deplorable conditions. And yet the company is still supported by the state and federal governments, a testimony to GEO’s deep connections and deeper pockets when it comes to lobbying expenditures.

GEO’s work in Texas, according to many observers, has been some of the company’s worst. “They have simply been horrendous,” said Bob Libal, coordinator of the Texas division of Grassroots Leadership, an organization bent on eliminating private prisons.

Reeves County complex is touted as the largest private prison in the world. A little over a year ago it was the site of two major riots, the second of which burned large areas of the complex. The inmates who did it were not killers or hardened criminals. Most were immigrants whose only crime was illegally re-entering the United States after having been deported. And they and their families said they were rioting because of medical care so poor that some of them were dying from it...

...GEO annually spends more on lobbying than any other private prison company in Texas. In 2007, at the height of the Coke County Juvenile Justice Center scandal, GEO increased its lobbying expenditures in the state tenfold, leading State Sen. John Whitmire of Houston, chair of the Senate Criminal Justice Committee, to tell The Dallas Morning News that the company and its lobbyists should back off from defending “a very poor facility that probably violates the youths’ civil rights.”

Among GEO’s lobbyists are Ray Allen, a former Grand Prairie legislator and longtime proponent of prison privatization, who had chaired the House Committee on Corrections, and his former chief of staff. When Reeves County threatened to default on $39 million in bonds used to build its third housing unit, the county hired DeLay’s brother Randy to go to Washington to lobby for federal prisoners to fill the new beds. Shortly thereafter, the feds came through with a contract to fill the new unit.

GEO’s lobbying efforts have aimed at keeping its prisons full — which means pushing for major immigration raids periodically if beds start to empty. But it also has worked to keep its Texas prisons from being monitored and held to the rules of the Texas Commission on Jail Standards, according to Libal.

“Prior to 2003, Jail Standards would go into facilities like the one at Reeves — which is county-owned but filled with federal Bureau of Prison inmates — and inspect it. But after heavy lobbying, a bill was passed that took away that purview,” he said. So GEO’s federal prisons now are inspected only by monitors hired by the counties, which have a direct financial interest in keeping them full and profitable. “What that means is that if that monitor says things are fine, that’s what they are, even if conditions are atrocious,” Libal said. “At Reeves, they’ve always been understaffed, which has led to a number of problems. But since no one from Jail Standards can inspect the complex, that is just ignored." ("Private Prisons, Public Pain," Peter Gorman, Fort Worth Weekly, 10 March 2010)

This article is a wealth of information and you are encouraged to read the article in its entirety in order to get the full effect of the depth that this article goes in to. We would like to thank Peter Gorman and the Fort Worth Weekly for their efforts in publishing this wonderful article.

Will McLennan County Sheriff continue to receive pass-through payments from CEC?

We missed this story when it came out.  Despite an Attorney General ruling that seemingly says that Sheriffs cannot accept salary enhancements from private prison corporations, McLennan County officials don't think the ruling applies to their relationship with CEC/CiviGenics.

According to a Waco Tribune ("McLennan County officials say attorney general opinion on sheriff's salary supplement won't affect Lynch," February 19) article from last month,

McLennan County Judge Jim Lewis and McLennan County District Attorney John Segrest said the opinion will not affect operations here because the salary supplement Lynch is paid comes from the county, not CEC.

Segrest said “this opinion has no bearing whatsoever on the situation in McLennan County,” based on his knowledge of the CEC contract and from his discussions with county officials, including county auditor Steve Moore and county attorney Mike Dixon. “The private contractor does not pay the county anything,” Segrest said. “The county pays them. So clearly, there is no administrative fee paid by the private contractor who runs the jail.

The Combined Law Enforcement Association of Texas (CLEAT), the union who has battled the McLennan County Sheriff over a new private jail operated by Community Education Centers, was having none of it.

Charley Wilkison, political and legislative director for CLEAT, challenged Lynch, based on the AG’s opinion, to write a check today and give the money back to the private contractor....

“This opinion is a great victory for the regular people of Texas, and the reason is that this goes to the cornerstone, to the fish bait, that private jail companies use to get into a community and get their hooks into the taxpayers and get their hands into their pockets,” Wilkison said.

There doesn't seem to be any resolution to this story, but we'll keep you posted when we hear something new. 

Grits on House Appropriations Examining Private Prison Contracts

State lawmakers continue to review the budget and ways to cut costs and private prison contracts are on the table.  Scott Henson at Grits for Breakfast covered a recent House Appropriations hearing where Corrections Chairman Jim McReynolds asked about private prison contract renewals.  According to Grits:

At a House Appropriations Committee meeting today, House Corrections Chairman Jim McReynolds asked TDCJ chief Brad Livingston if private prison-contracts up for renewal might increase their rates and increase costs for the state.

Livingston said that was possible, since contracts covering the 12,000 or so private beds for which TDCJ contracts are 5-7 years old. Most of these are up within the coming year and all new contracts should be negotiated by mid-2011. Livingston said that in general, for every dollar increase in per-inmate costs represented a $4.5 million cost increase to TDCJ.

How the state will deal with it's budget in 2011 may certainly impact these contracts.  We will continue to monitor the situation and post developments.

Previous coverage:

CCA Investor Call; Reports 12,000 Empty Beds

The Corrections Corporation of America held an investor conference call last month.  During the call, CCA officials discussed current capacity issues and how they were profiteering from incarcerating thousands of men, women, and children in private prison beds.  

According to CCA reports, the private prison company continues to be the largest private prison profiteer by controlling 45% of all private prison beds in the nation.  CCA reported that they have 12,000 empty beds.  Additionally, the nation’s largest private prison company stated they have lost or terminated contracts totaling more than 7,500-beds in the past 16 months and expect to lose over 3,600-beds in 2010. 

During the investor call, CCA reps mentioned they have lobbyists working in six states trying to identify new contracts.  CCA reps stated that those states are about 14,000 persons over current capacity and are not planning to build any new prisons.  While they didn’t mention Texas specifically, CCA was reported to have spent $2 million lobbying elected officials – presumably to identify the profiteering activities they outlined on the call. 

A majority of the company’s revenue is from state clients at 60%; with Texas contracts representing 5.39% of CCA business.  Federal contracts comprise about 40% of CCA’s business; specifically consisting of contracts from United States Marshall Service (USMS), Immigration Custom and Enforcement (ICE), and the Bureau of Prisons (BOP). 

CCA still reports that their average per diem rates have declined because of the change in population at the T. Don Hutto prison in Taylor, Texas.  Folks will remember that ICE ended family detention at Hutto last year, and currently detains women in that correctional facility.  That change in population impacts CCA’s ability to charge a higher per diem and affects the company’s bottom line.

"Downscaling Prisons: Lessons from Four States," a new report from Justice Strategies and the Sentencing Project anaylzes the trend in down-sizing prisons.  The report

finds that four states - Kansas, Michigan, New Jersey, and New York - have reduced their prison populations by 5-20% since 1999 without any increases in crime. This came about at a time when the national prison population increased by 12%; and in six states it increased by more than 40%.  The reductions were achieved through a mix of legislative reforms and changes in practice by corrections and parole agencies.

On the call, CCA profiteers mentioned they are monitoring current state reforms.  What continues to be disconcerting is that they talked about those policy reforms in terms of risk to their business.  We will continue to monitor CCA as they watch these reforms.  Stay tuned. 

Grits Explores which Private Prison Contracts could be Terminated

Our pal Scott at Grits for Breakfast, posted a list of private prison contract term obligations earlier this month.  Grits post was further exploration of a story we posted a few weeks ago regarding the Texas Department of Criminal Justice (TDC) looking to terminate private prison contracts.  Scott adds this analysis:

A couple of notable contracts stand out as potential candidates for cuts. For starters, the Mineral Wells facility was the one unit state Senate Criminal Justice Committee Chairman John Whitmire is interested in closing, and for security reasons, not because of the budget. The contract for that troubled facility ends conveniently around a month after the next legislative session starts, meaning there's a lot of time for budget pressures to build between now and then. What's more, the Board of Pardons and Parole hasn't really been using the Mineral Wells facility the way it was intended, so there's no special reason to keep it opened compared to, say, Intermediate Sanctions Facilities on the list.

Equally interesting to me is the fact that the Dawson State Jail's contract with Corrections Corporation of America is up for renewal next January. This ill-placed facility is located in downtown Dallas on the banks of the Trinity River in prime real estate the city hopes to redevelop. So the fact that Dawson's contract ends on January 15, 2011 is a significant date for the city of Dallas: If the state renews the contract, the proposed riverfront redevelopment could be put on hold indefinitely. It's possible, then, we may see members of the Dallas delegation and related development interests pushing for non-renewal, though certainly CCA will have its own lobbyists on the other side.

Hopefully, lawmakers will continue to consider the possibility of terminating contracts as they figure out what to do with unused prison beds.

Grayson County Debate Finds an Answer

After a lawsuit, a review and estimate, a cancelled bond vote, two potential locations, and many other small battles, the Grayson County debate over whether or not to privatize their downtown jail or build another, separate private facility was given an answer by County Judge Drue Bynum on February 24th. In September, Bynum was one of the four who voted affirmatively to hold a bond vote to the public, a bond vote that was very ambiguous and eventually thrown out.

Last week, a press conference held by Bynum yielded this information ("Grayson County Jail bond election cancelled," KXII, 24 February, 2010):

Judge Drue Bynum says enough is enough, and at a press conference today he said a bond issue to build a public jail is now also off the table. The future of the Grayson County jail is a seemingly never ending debate.

"This has become a volatile issue," said Judge Drue Bynum... "...I have heard from the people, they are tired of wrestling this bear, we have been dealing with this issue since 2001," said Judge Bynum.

The jail does need major renovations, but according to Commissioner Gene Short, The County is scheduled to pay off several debts in the coming months, freeing up money that can go toward remodeling the existing facility, without raising taxes...

..."We need to get past this and get a jail that is downtown, close to the courts, and is run by the Sheriff," said Magers. While getting a new jail built was the goal of many county leaders, Judge Bynum says the cost has become too high to continue. "We have got to figure out how to make lemonade out of lemons, and I am not going to go forward with an idea or an agenda at the sake of splitting this county open," said Bynum. 

Because the county has yet to say definitively that they won't build a private prison, the debate is technically still alive.  Still, the Commissioners have made a choice to not build a new jail (public or private) until they renovate their existing jail and pay off some outstanding debt. After that task is accomplished, it is still possible that they could build a new private facility. What is known is that there will not be a new jail at all until the aforementioned goals are reached. However, I imagine that if a new jail is built in the coming years, that it will be a public prison "run by the Sheriff" rather than run by a company.

This was a good choice by the Judge and Commissioners. Paying off their existing debt is the responsible action to take, rather than forcing through a private jail project. It was a rocky road to come to this decision, and I would bet that the privatization topic will arise again within the next few years once tempers have fallen. However, a congratulations is due to the people and officials of Grayson County for finding a responsible plan to jail renovation rather than constructing a new, privately-operated facility with the thinking that it will bring in jobs and money at no cost to the county. 

We will keep our eyes open for any new developments in the months and years to come.