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Latest CCA Investor Update

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The Corrections Corporation of America (CCA) held its latest investor call earlier this month.  There were no big surprises on the call except that the company reported on how changes at the T. Don Hutto facility were impacting CCA’s bottom line.

We have covered previous CCA investor calls this year.  Given the nation’s current outlook, the private prison profiteers are not planning on building any new speculative prisons right now.  During the call they mentioned over 8,000 beds that are going unused.  This is a significant portion of the more than 86,800 beds that comprise the company’s inventory in its 44-owned prisons or 21-managed only facilities. 

During the call, company officials discussed the recession and the impact of state budgets on their ability to find new customers.  State prisons continue to be overcrowded – according to reports 29 states are operating at 100% capacity or more.  CCA has an interesting take on the state prison crisis.  Rather than building new prisons or even obtaining new contracts, many states – like Texas – have responded with policy changes.  In some instances those changes involve parole reforms and identifying changes to early release practices.  But CCA officials believe that states are having a harder time implementing these changes than officials thought they would.  So they are watching state policy changes pretty closely to determine changes in demand and potential new customers. 

As a result of the state outlook, CCA officials are focusing on federal customers.  Their primary customer targets are Immigration Customs and Enforcement (ICE), United States Marshall Service (USMS), and the Bureau of Prisons (BOP).  The BOP continues to operate at 137% capacity.  CCA thinks there may be an opportunity to consolidate detention beds in centralized facilities – currently about 12,000 detainees are imprisoned in over 150 jails that do not meet new detention standards.  As a result, the company believes there is an opportunity to obtain new contracts with ICE. 

The most relevant issue for Texas may be changes in family detention at Hutto. Now that the medium security prison is detaining immigrant women it seems that CCA can’t charge the same per diem rate to ICE as when it locked up families including small children.  The CCA profiteers seemed most concerned.

The economic outlook continues to delay speculative prison construction.  But it hasn’t changed the world view of the profit minded folks at CCA.  Let’s hope that stakeholders who don’t stand to profit will continue to challenge how we respond to crime and not listen to the folks at CCA or other companies. 

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