August 2011

CCA Holds 2011 Second Quarter Earnings Call, Company Pursuing 40,000 new beds

Earlier this month, the Corrections Corporation of America held it's second quarter earnings call.  These calls often give information about where the company expects new opportunities given the current climate on corrections.  They also remind us of the scope of the for-profit private prison industry.  Company officials reported they are actively pursuing nearly 40,000 new beds and new incremental opportunities that could be decided in the next year --estimating a possible $700 million in revenues.  

Given the current economic crisis and fiscal constraints that most state are facing, CCA reps reminded it's audience that not one of the states is appropriating money for new prisons.  In fact due to financial problems a few states -- including Texas -- have cut corrections costs and are planning to close prisons this year1.  

The 40,000 new beds that CCA is looking to obtain don't necessarily have to come from private prison construction -- although a possibility.  However, the current debate on the ability of the public sector to provide services is being addressed specifically in state prison systems.  CCA and other prison profiteers are players in several states, inclduing Florida and Ohio, where governors are working to privatize existing state prisons systems.  

These events are incredibly important and will no doubt shape similar conversations around the nation including right here in Texas.  In fact, officials were excited that Harris County (Houston) issued a request for proposals in June seeking proposals for the management of the entire jail system of approximately 10,000 beds.

In addition to updating investors, CCA also reported last week that it is renewing contracts with the Texas Department of Criminal Justice for the Bridgeport and Mineral Wells Pre Parole Transfer Facilities through September 2013 with an option for extension through 2017. 

Listening to CCA officials discuss all the new opportunities on the horizon is a reminder of the forces behind working to expand prison capacity despite efforts to the contrary.  We will keep ya'll posted on all of the company's developments.

1.  Disclosure: Link to a report I authored for my employer.

TCJS head Adan Muñoz criticizes speculative private jails in Texas Tribune interview

The Texas Tribune's Brandi Grissom sat down Texas Commission on Jails Standards chief Adan Muñoz for an interview covering jail overcrowding, privatization, and other aspects of Texas' enormous county jail system (Brandi Grissom, "Adan Muñoz: The TT Interview," August 3).  It's no wonder that Muñoz is one of our favorite Texas officials.  Here's his reponse to a question about privately operated jails:

"They’ll build the facility above and beyond what is projected for the county's needs... so that they can house either federal inmates or out-of-state inmates in order to generate a profit. What we have been seeing lately, over probably the last year and a half to two years, is a diminishing of those select inmates that are out there for profit. So you've got these facilities that are built and financed by local governments... to bring in extra money for their communities at a time where those inmates were out there and available for these facilities. That's not the case anymore. A certain facility just went up for auction last week in this state, where that facility just basically got abandoned by the private vendor who says, "We’re not making any money, we’re moving." They can notify them and give them 60, 90 days, 30 days notification — whatever it is — and they’re gone. So the facility basically has to fall out of compliance or shut down. It’s a risky situation."

Munoz was also skeptical about proposals floated to privatize Harris County's massive jail system:

"If you run a small jail — when I say small jail, that's anywhere from 7 to 25 prisoners — your daily incarceration may be 7 or 8. So, are you better off shipping them off to the county next door rather than carrying the liability? Certainly. But when you have 11,000 prisoners like Harris County, it's real tough to get out of the jail business. For example, I know that Harris County has spoken of privatization. You really don’t have, in my opinion, you don’t have very many privates trying to do business with Harris, because where is their profit margin going to come from? I mean, if you have a $30 million debt of overtime you encumber or you accept as part of the privatization, where is your profit margin going to come from?"

Read the entire interview and watch the video here.