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Friday, 11 October 2013 07:05

States Guarantee High Prison Populations for Private Prison Industry’s Profits

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PrisonWalls"The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by our criminal laws."

– Corrections Corp. of America Annual Report, 2010

Anyone who even tangentially follows the travesty that is America's criminal justice system knows that privately owned prison corporations are gaining a deeper foothold in our nation's prisons. The private prison industry lobbies politicians, donates to campaigns of pro-privatization candidates, supports the ongoing War on Drugs, and has helped to shape criminal justice policies like California's three-strikes law. High incarceration rates insure greater profits for the private prison industry.

A new report from In the Public Interest reveals that private prison companies, including two of the largest, the Corrections Corp. of America and Geo Group Inc., are forging deals with state and local governments that provide huge profits based on guaranteed high occupancy rates.

The report, titled "Criminal: How Lockup Quotas and 'Low-Crime Taxes' Guarantee Profits for Private Prison Corporations," "documents the contracts exchanged between private prison companies and state and local governments that either guarantee prison occupancy rates (essentially creating inmate lockup quotas) or force taxpayers to pay for empty beds if the prison population decreases due to lower crime rates or other factors (essentially creating low-crime taxes)," AlterNet's April M. Short recently reported.

According to the report, last year CCA "sent a letter to 48 state governors offering to buy their public prisons. ... in exchange for a 20-year contract, which would include a 90 percent occupancy rate guarantee for the entire term. Essentially, the state would have to guarantee that its prison would be 90 percent filled for the next 20 years (a quota), or pay the company for unused prison beds if the number of inmates dipped below 90 percent capacity at any point during the contract term (a 'low-crime tax' that essentially penalizes taxpayers when prison incarceration rates fall). Fortunately, no state took CCA up on its outrageous offer. But many private prison companies have been successful at inserting occupancy guarantee provisions into prison privatization contracts, requiring states to maintain high occupancy levels in their private prisons."

The In the Public Interest report's findings included:

• "65 percent of the private prison contracts ITPI received and analyzed included occupancy guarantees in the form of quotas or required payments for empty prison cells (a "low-crime tax"). These quotas and low-crime taxes put taxpayers on the hook for guaranteeing profits for private prison corporations."

• "Occupancy guarantee clauses in private prison contracts range between 80% and 100%, with 90% as the most frequent occupancy guarantee requirement."

• "Arizona, Louisiana, Oklahoma and Virginia are locked in contracts with the highest occupancy guarantee requirements, with all quotas requiring between 95% and 100% occupancy."

The report pointed out that "These contract clauses incentivize keeping prison beds filled, which runs counter to many states' public policy goals of reducing the prison population and increasing efforts for inmate rehabilitation."

Not only do many of these contracts prove to be financially unsound, they often "force corrections departments
to pay thousands, sometimes millions, for unused beds — a 'low-crime tax' that penalizes taxpayers when they achieve what should be a desired goal of lower incarceration rates."

Corrections Corp. worms its way into America's prisons

According to the In the Public Interest report, a statement in The Nashville, Tennessee-based Corrections Corp. of America's 2010 annual report read: "The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by our criminal laws."

CCA "owns and runs 49 prisons, manages another 18 and leases two, as of June 30," Bloomberg.com reported. "The federal government provided almost 43 percent of the company's $1.76 billion of revenue in 2012, according to its annual report."

As in many businesses, there are ups and downs. Over the past month CCA has experienced both. After a decade of operations, CCA is leaving Idaho. According to the Associated Press, "The decision comes after the company wrestled with scandal and lawsuits surrounding its operation of the state's largest prison." (For more on the Idaho fiasco, see this.)

Meanwhile, both CCA and Geo Group Inc. stand to benefit royally from California Governor Jerry Brown's proposal to reduce prison overcrowding mandated by a decades long law suit and federal consent decree.

Bloomberg.com's Michael B. Marois reported in early September that, "Brown seeks to spend $315 million in the year that ends June 30 and an estimated $415 million annually for two more years to remove 12,500 inmates from state penitentiaries. The plan calls for leasing a ... [CCA] prison in the Mojave Desert, shipping more inmates to private lockups out of state, and renting beds at public and private jails in California."

Bloomberg.com also pointed out that California is CCA's "biggest state customer and accounted for 12 percent of revenue, or $214.8 million, in 2012, according to corporate filings."

Geo, America's second biggest private prison company, contracts with California "to confine parole violators at a 625-bed dormitory-style lockup in McFarland, 135 miles ... north of Los Angeles," Bloomberg noted. And while there was talk about California terminating that contract, "Under the governor's plan, the state would lease as many as 1,225 beds in two of Geo's facilities in California that were shuttered when the state canceled earlier contracts."

The private prison industry is counting on cash-strapped state and local governments bowing to their bed guarantee demands. Even in states where criminal activity and the prison population have been markedly reduced, private prison corporations continue to demand bed guarantee provisions in their contracts.

"Elimination of bed guarantee clauses will allow lawmakers to enact policies that are in the public interest, not in a private prison corporation's financial interest," In the Public Interest's report maintained. "Corrections agencies should not be forced to direct prisoners to certain private facilities because of bed guarantee clauses. Criminal justice policy and programs should be guided by our public goals, such as reducing the number of people in prison. Rejecting bed guarantee clauses allows public officials to make the best decisions in the public's interest."

(Photo: Ori)