Texas Prison Bid'ness

Last month, the Christian Broadcasting Network published an article that covered serious concerns with the for-profit prison industry.  While the issues CBN raises are nothing new to regular Texas Prison Bid’ness readers, we are excited to see that the diversity of groups raising these concerns continues to grow.  Here’s an excerpt:

Critics complain that private prisons cut corners on salaries, guard training, inmate medical care, and facility maintenance to add to their bottom lines. "The model as a whole has not had a happy history," Dr. Fran Buntman, a criminologist at George Washington University, said.

In her opinion, for-profit companies should not be in the business of locking up criminals. 

"Ethically we need to deal with the fact that when we have chosen to put people in prison, we've taken away from their liberty rights to control their own lives," Buntman said. "We as a society and the government as the institution looking after them have a responsibility to their welfare," she continued. "We cannot subcontract out that responsibility to a private agency."

For critics of the industry, their fears materialized a few months ago when CCA proposed a $250 million deal to 48 states. The company would buy state prisons and manage them if the states would guarantee a 90 percent occupancy rate.  [For TPB’s coverage of this offer click here.]

"What's more important? People or money?" John Whitehead, founder of the Rutherford Institute, asked.  "I'm not saying corporations are evil, but corporations exist for one reason, to make money, maximum profit," he continued. "That's okay if you're making widgets or toothpaste, but when you're dealing with people and you're making money off of people -- you're starting to treat people like they're toothpaste and you're making money off of them and I think that's way we're headed.

"We're de-personalizing people in this country and I think that we're heading to a country where people are going to be treated like they're products," he said.

To make matters worse for the for-profit prison industry, this is not the first time this year that CBN affiliated individuals raised issues that could negatively impact the industry’s profits.  In March, CBN founder Pat Robertson came out in favor of legalizing marijuana.  How could this harm the for-profit prison industry?  Well, approximately 46% of drug prosecutions (858,408 in 2009) are for marijuana – and that adds up to a lot of prison beds!  And, the for-profit prison industry has lobbied for draconian drug laws that rely on incarceration rather than evidence-based solutions such as treatment programs.

How can the for-profit prison industry both maximize shareholder profit and ensure public safety, human rights, and fiscal responsibility?  As the industry’s actions indicate, the answer is – they can’t!  We hope that CBN continues to highlight this clear conflict of interest.

Corrections Corporation of America’s (CCA) letter offering to purchase state and local prisons/jails in return for a 20-year deal and 90% guaranteed occupancy rate (probably making the hotel lobby very jealous) continues to gather press.  Last week, an AP story (Corrections firm offers states cash for prisons, Greg Bluestein, Associated Press) about the facility was picked up by a number of newspapers around the country. 

 In defense of the deal, CCA continues to point to its “successful” purchase of the Lake Erie Correctional Institution in Ohio.  Did CCA think no one would check to verify this claim? Unfortunately for CCA, the ACLU of Ohio did.  Quoting Mark Twain, they wrote "’[t]here are three kinds of lies: lies, damned lies and statistics.’ A recent letter sent out by Corrections Corporation of America (CCA) to 48 governors offering to buy state prisons included a little of each.”

 Here are some highlights from the ACLU of Ohio’s blog:

 · “While CCA claims it will save Ohioans $3 million per year, a recent report analyzing the state's contract shows that taxpayers will actually lose money over the next 20 years.  Of course, this is not earth-shattering news, as other fiscal analyses in Ohio and Arizona have produced similar results.”

· “CCA also leads readers to believe there was no drama behind the transition to private ownership, but the people of Conneaut may disagree.  As CCA took the reins of the Lake Erie facility, Conneaut city officials were informed that it would be the duty of local police officers to investigate crimes at the private prison.  Typically, the Ohio State Highway Patrol (OSHP) handles all investigations at state prisons, but private properties are under the jurisdiction of local police forces.  This could cost the city of Conneaut taxpayer dollars it just doesn't have.”

· “CCA also points out that 93 percent of the previous staff from the Lake Erie facility was retained in the ownership transfer — the implication being that governors shouldn't worry about privatization because most state corrections officers will be hired back.  What it does not explain is that Lake Erie has been a privately operated facility for over a decade.  … Certainly, if the facility had employed state corrections officers, many of those workers could not afford to continue working there.  It's no secret that private prisons pay employees far less than state workers and provide few benefits, leaving doubt that privatization of a state facility would be as ‘seamless’ as CCA describes in its letter.”

On the bright side, I imagine CCA’s management and shareholders made out quite well.  Stay tuned to Texas Prison Bid’ness for more on this story. 

Over the next several days, Texas Prison Bid'ness will be highlighting the top five private prison stories of 2011, and looking forward to the new year.   Our #3 story is the increased exposure of the American Legislative Exchange Council and the role of private prison lobbyists in influencing legislation.

Earlier this year, The Nation and The Center for Media and Democracy released ALEC Exposed.  ALEC Exposed brought to light the actions of the American Legislative Exchange Council (ALEC), an organization that unites corporations with state legislators to “discuss” public policy and draft model legislation.  One of the most concerning areas of this public/private partnership is in the realm of criminal justice and prisons.  In fact, criminal injustice may be a more appropriate phrase.  Thanks to ALEC, the for-profit prison industry has a lot to be thankful for during this holiday season.

As The Nation reported, “ALEC helped pioneer some of the toughest sentencing laws on the books today, like mandatory minimums for non-violent drug offenders, ‘three strikes’ laws, and ‘truth in sentencing’ laws.”  According to the proponents, these laws are designed to reduce crime.  In reality, as California saw first hand, instead of reducing recidivism these laws lead to severe overcrowding.  In the end, public safety is undermined (at the expense of taxpayers) while the for-profit prison industry makes out like a bandit.  Corrections Corporation of America (CCA), the largest private prison company, played a lead role on the ALEC task force developing some of this legislation.  NPR reported last year that through its membership in ALEC, CCA was actually able to help draft model anti-immigrant legislation like Arizona's noxious SB 1070.   

Unfortunately, the negative influence of the for-profit prison industry is not limited to ALEC.  As the ACLU reported, CCA and The Geo Group, Inc. have engaged in a multi-state lobbying effort to fight smart on crime reforms.  These two corporations hired 271 lobbyists in over 32 states between 2003-2011.  Between 1999 and 2009, CCA alone spent over $18 million on lobbying, just at the federal level.  To understand their need for this army of lobbyists you do not need to read any further than Geo’s Securities and Exchange Commission filings (CCA’s is similar):

“Our growth depends on our ability to secure contracts to develop and manage new correctional, detention and mental health facilities, the demand for which is outside our control …. [A]ny changes with respect to the decriminalization of drugs and controlled substances could affect the number of persons arrested, convicted, sentenced and incarcerated, thereby potentially reducing demand for correctional facilities to house them. Similarly, reductions in crime rates could lead to reductions in arrests, convictions and sentences requiring incarceration at correctional facilities. Immigration reform laws which are currently a focus for legislators and politicians at the federal, state and local level also could materially adversely impact us.”

 The U.S. has the highest rate of imprisonment in the world, and the private prison industry clearly wants to make sure it stays that way. While taxpayer and civil rights advocates have been working to reform archaic and ineffective criminal justice laws, working to ensure that our laws reflect current research on effective ways to reduce crime and protect human rights, for-profit prison corporations are headed in the opposite direction.  To these corporations, societal impact and public safety don’t matter.  The only thing that is relevant is maximizing the bottom line.

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.