Lockup Quotas and “Low-Crime Taxes” Helping to Make Money for the Private Prison Industry

PrisonCellSubmitted by Elaine Magliaro, Guest Blogger

In the Public Interest (ITPI), which describes itself as “a comprehensive resource center on privatization and responsible contracting,” released a report this month titled CRIMINAL: How Lockup Quotas and “Low-Crime Taxes” Guarantee Profits for Private Prison Corporations. The report provides information about “the prevalence of prison occupancy guarantee provisions in prison privatization contracts.” ITPI said that it had “identified 77 county and state-level private facilities nationwide and collected and analyzed 62 contracts from these facilities.” Of the contracts that ITPI reviewed, 65% contained occupancy requirements that ranged between 80% and 100%–with 90% being the most frequent quota guarantee.

ITPI found that the states of Arizona, Louisiana, Oklahoma and Virginia were locked into contracts with the highest occupancy guarantee requirements. All four states had quotas requiring an occupancy rate between 95% and 100%.

Here are some state-specific findings from the report:

Colorado: Though crime has dropped by a third in the past decade, an occupancy requirement covering three for-profit prisons has forced taxpayers to pay an additional $2 million.

Arizona: Three Arizona for-profit prison contracts have a staggering 100% quota, even though a 2012 analysis from Tucson Citizen shows that the company’s per-day charge for each prisoner has increased an average of 13.9% over the life of the contracts.

Ohio: A 20-year deal to privately operate the Lake Erie Correctional Institution includes a 90% quota, and has contributed to cutting corners on safety, including overcrowding, areas without secure doors and an increase in crime both inside the prison and the surrounding community.

What do the occupancy quotas mean for the people who live in the counties and states that enter into these contracts with for-profit prison corporations? The quotas can put tax payers “on the hook” for required payments due the corporations when occupancy levels fall below those agreed upon in the contracts. ITPI refers to these payments as a “low-crime tax.” In other words, taxpayers are—in effect—made responsible for guaranteeing profits for private prison corporations if there are too many empty prison cells.

Let’s look at an example from the state of Arizona:

In July of 2010, three violent inmates escaped from a privately run prison. Their escape led to a multi-state manhunt. “It took more than two weeks for authorities to apprehend two of the escapees, both of whom were subsequently charged in connection with the carjacking and murder of an Oklahoma couple who were driving through New Mexico.”

After that experience, corrections officials in Arizona stopped sending any new inmates to the 3,300-bed facility—which they described as “dysfunctional.” But, less than a year after the escape, Management & Training Corp., which is responsible for running the prison, threatened to sue the state of Arizona. You see, a “line in their contract guaranteed that the prison would remain 97 percent full.” The private prison company claimed that it had lost close to $10 million because of the reduced inmate population in its prison. What did the state do then? Why, officials renegotiated the contract—and ended up paying Management & Training Corp. “$3 million for empty beds as the company continued to address problems” at its prison facility.

Some experts have argued that the contracted quotas “create an incentive for policymakers to focus on filling empty prison beds, as opposed to pursuing long-term policy changes, such as sentencing reform, that could significantly reduce prison populations. In short, many states are effectively obligated to continue to incarcerate people regardless of crime rates and public safety needs, or otherwise hand over taxpayer dollars in order to satisfy private profit-making companies.”

Michele Deitch, a senior lecturer and criminal justice expert at the University of Texas School of Public Affairs and someone who has researched the rise of private prisons, said, “It’s really shortsighted public policy to do anything that ties the hands of the state. If there are these incentives to keep the private prisons full, then it is reducing the likelihood that states will adopt strategies to reduce prison costs by keeping more people out. When the beds are there, you don’t want to leave them empty.”

Is it any wonder that Corrections Corporation of America (CCA) and GEO Group, the two largest private prison companies in this country, have been involved in pushing for a number of criminal justice policies—including mandatory minimum sentences, California’s three-strikes law, and continuing the War on Drugs—“that increase the number of inmates who enter and stay in prison.” ITPI reported that CCA and GEO Group have also contributed to legislation—“like Arizona Senate Bill 1070, requiring law enforcement to arrest anyone who cannot prove they entered the country legally when asked.” Legislation such as Arizona’s 1070 will most likely help to increase the number of detainees in privately-run federal immigration detention centers.

It appears that the private prison industry is aware that a harsh criminal justice system is beneficial to its business. Following is a statement from CCA’s 2010 annual report:

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. For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them. Legislation has been proposed in numerous jurisdictions that could lower minimum sentences for some non-violent crimes and make more inmates eligible for early release based on good behavior. Also, sentencing alternatives under consideration could put some offenders on probation with electronic monitoring who would otherwise be incarcerated. Similarly, reductions in crime rates or resources dedicated to prevent and enforce crime could lead to reductions in arrests, convictions and sentences requiring incarceration at correctional facilities.

In 2006, The Institute for Money in State Politics published a report titled Policy Lockdown: Prison Interests Court Political Players. The report speaks of the American Legislative Exchange Council (ALEC) as a “long-time proponent of privatization and stricter sentences…”–and says the organization “was instrumental in pushing get-tough-on-crime laws.” Model legislation that ALEC provided to legislators included three-strikes bills—as well as “truth-in-sentencing” bills that required convicted criminals to serve a set length of time before being eligible for parole. ITPI said that CCA helped “craft” that legislation “when it was a member of ALEC’s Criminal Justice Task Force.”

US Private prisons want you

We have been told that privatizing prisons is supposed to save counties and states money. It seems that’s a hard thing to do when elected officials sign contracts with private prison companies that require the counties and states to maintain extremely high inmate occupancy rates.

Who should be responsible for determining what our criminal justice policies should be? For-profit private prison companies. ALEC? What do you think?


This Is How Private Prison Companies Make Millions Even When Crime Rates Fall (Mother Jones)

CRIMINAL: How Lockup Quotas and “Low-Crime Taxes”Guarantee Profits for Private Prison Corporations (In the Public Interest)

Report says private prison contracts with states guarantee high inmate occupancy (Arizona Daily Star)

Private purchasing of prisons locks in occupancy rates (USA Today)

Prison Quotas Push Lawmakers To Fill Beds, Derail Reform (Huffington Post)

Policy Lockdown: Prison Interests Court Political Players (The Institute on Money in State Politics)

GAMING THE SYSTEM: How the Political Strategies of Private Prison Companies Promote Ineffective Incarceration Policies (Justice Policy Institute, 2001)

Cell-Out Arizona Exclusive: Documents Show Arizona Officials Knew Private Prisons Weren’t Saving Money (TusconCitizen.com)

Private Prisons Cost Arizona $3.5 Million More Per Year Than State-Run Prisons (ThinkProgress)

Private Prison Contracts Are Forcing States To Pay For Empty Beds (Business Insider)

Privatization Nightmare: 5 Public Services That Should Never Be Handed Over to Greedy Corporations. Why we all pay more when essential services are privatized. (AlterNet)

Private Prisons Found to Offer Little in Savings (New York Times)

The Hidden History of ALEC and Prison Labor: Years after ALEC’s Truth In Sentencing bills became the law of the land, its Prison Industries Act has quietly expanded prison labor across the country. (The Nation)

School-to-Prison Pipeline (ACLU)

Pennsylvania rocked by ‘jailing kids for cash’ scandal (CNN)

Why is the Private Prison Industry in Our Schools? (Occupy.com)

Corrections Corporation of America Used in Drug Sweeps of Public School Students (The Center for Media and Democracy’s PRWatch)

Florida To Completely Privatize Juvenile Correctional Facilities (Huffington Post)

48 thoughts on “Lockup Quotas and “Low-Crime Taxes” Helping to Make Money for the Private Prison Industry”

  1. This is comparable to Chinese turning convicts into exhibits supposedly representative of human anatomy…

  2. Presumed guilty: How prisons profit off the ‘war on drugs’
    By Ari Melber,

    Cutting more than costs

    Whatever the savings, the public does not necessarily benefit when private prisons are run on the cheap.

    In May, the Southern Poverty Law Center and the ACLU filed a suit alleging that a Mississippi private prison is systematically mistreating mentally ill patients, (including denying them adequate food and medical care).

    Florida, which recently rejected a plan to transfer over 20 state prisons to private companies, has found that some private prisons cut health care services by as much as 50%, raising concerns about safety and mistreatment.

    After surveying those kind of tradeoffs, The Week magazine concluded last month that “as bad as state-run prisons can be, private prisons ultimately pose a greater threat,” since “they exist solely to make a profit off of incarcerated individuals.”

    That profit motive could also impact the renewed national debate about sentencing reform.

    Selling punishment

    In many states, private prisons have grown into a powerful employer and business lobby. Between 2003 and 2010, Corrections Corporation of America spent over $14 million on lobbying in over 30 states. For years, the company has also worked with ALEC, the conservative advocacy group, which backed legislation for harsh sentencing and mandatory minimums at the state level. As the Washington Monthly recently noted, ALEC has “probably contributed more to the spread of mandatory minimum legislation in the states than just about any other single source.” (And CCA is not alone; the top three prison companies have spent $45 million on campaign donations and lobbying over the past decade.) ALEC has recently softened its support on mandatory minimums somewhat.

    Despite the lobbying activity, CCA argues that it does not actually have a stance on the wisdom of more or less prison as a policy matter.

    “We do not take a position on or in any way promote policies that determine the basis for an individual’s incarceration,” says Steve Owen, a CCA spokesman. “Because our customer is government, lobbying is the way we educate them about the services we provide,” he told MSNBC, adding, “We never lobby on policies.”

    Yet in documents the company is required to file under securities law, Corrections Corporation of America has told investors that its business may be hurt if new policies advance “leniency in conviction or parole standards and sentencing practices.” And in a 2010 report, CCA declared that “any changes” to harsh drug sentences could stem the flow of new prisoners in the U.S., reducing “demand for correctional facilities to house them.”

    Many criminal justice experts say that a business built on incarceration can’t help but support incarceration.

  3. rafflaw,

    Dogged by complaints, prison operator GEO Group keeps growing
    By Jeff Ostrowski
    Palm Beach Post Staff Writer


    For Nicaraguan immigrant Serafin Solorzano, being jailed for overstaying his visa was bad enough. Even worse: Solorzano said he was denied access to his asthma inhaler for part of a two-week stay at an immigration detention center in Deerfield Beach.

    Without access to his medicine, he felt as though he was suffocating. Solorzano, now 54, recovered from the asthma attack. But the experience two years ago led him to join the growing list of critics of GEO Group, the Boca Raton-based prison operator that owns the 700-bed Broward Transition Center where Solorzano was held.

    “This is something that has violated my human rights,” Solorzano told reporters in May as he and other critics protested outside the GEO Group’s annual meeting at The Breakers in Palm Beach.

    Solorzano’s gripes have been echoed by inmates, by civil libertarians and by state and federal regulators who have scrutinized GEO Group’s operations. They argue that GEO Group pads its profits by cutting worker wages, skimping on inmate health care and ignoring safety and sanitation.

    Despite the complaints, which GEO Group (NYSE: GEO) dismisses as unfounded, the company continues to grow, thanks to rising prison populations and the federal government’s move to privatize detention of immigrants. GEO Group is on track to book $1.7 billion in revenues in 2012, its biggest year on record and a hundredfold increase from 1994, the prison operator’s first year as a publicly traded company.

    GEO Group launched as Wackenhut Corrections and was based in Coral Gables. After a move to Palm Beach Gardens in the 1990s, GEO Group landed in Boca Raton.

    Governments pay GEO Group to run nearly 80,000 beds in prisons and hospitals worldwide. Among the institutions operated by GEO Group are South Bay Correctional Facility, a 1,862-bed state prison in western Palm Beach County; the 700-bed Broward Transition Center, a U.S. Immigration and Customs Enforcement facility; and the Treasure Coast Forensic Treatment Center, a 223-bed state hospital in Stuart.

    GEO Group’s revenue — which has risen every year for nearly 20 years — and steady profits make it a financial success story. It’s the second-largest operator of private prisons, trailing only Corrections Corp. of America (NYSE: CXW) of Nashville.

    But investors clearly prefer CCA. While GEO Group’s revenue is similar to CCA’s, CCA is twice as profitable, and CCA’s market capitalization is twice GEO Group’s. A $10,000 investment five years ago in GEO Group would have dwindled to $8,667, while the same amount invested in CCA would have grown to $13,237.

    Meanwhile, GEO Group has been dogged for years by reports of sloppy — and sometimes gruesome — practices.

    One recent black eye: In June, the federal Occupational Safety and Health Administration proposed fines totaling $104,100 for violations at a GEO Group prison in Meridian, Miss.

    Federal inspectors visited the prison in December and found too few guards on duty and broken cell locks. OSHA said GEO Group guards were stabbed, bitten, punched and kicked by inmates, and that the company did little to protect them.

    In one of the prison’s housing units, only three guards were on duty. GEO Group’s staffing plan called for eight officers to be on guard. Understaffing meant guards were more likely to be attacked by prisoners, OSHA said.

    What’s more, inmates tampered with cell doors so that they could be opened by prisoners from the inside but not by guards from the outside.

    “This employer knowingly put workers at risk of injury or death by failing to implement well recognized measures that would protect employees from physical assaults by inmates,” Clyde Payne, OSHA’s director in Jackson, Miss., said in a statement.

    GEO Group has contested OSHA’s findings.

    GEO Group has been on the receiving end of a laundry list of regulatory actions and lawsuits. Among them:

    • In 2011, an Oklahoma jury ordered GEO to pay $6.5 million to the family of Ronald Sites, an inmate who was strangled to death by his cellmate in 2005.

    • In 2011, Florida Department of Corrections investigators visited GEO Group’s prison in South Bay for a drug sweep and couldn’t get in. No one was stationed at the front gate, and no one responded when state employees pushed the alert button and shined flashlights at the prison surveillance cameras.

    • Also last year, the Florida Department of Children and Families said GEO Group’s neglect contributed to the death of a South Florida State Hospital patient. The man was being escorted by GEO Group employees to an appointment at Jackson Memorial Hospital when he hurled himself from the eighth story of a parking garage, the Miami Herald reported. A GEO Group employee should have stayed with the man at the first-story hospital entrance while the driver retrieved the van, DCF said.

    • In 2010, the U.S. Equal Employment Opportunity Commission sued GEO Group for allowing sexual harassment of female employees at two prisons in Florence, Ariz. In one incident, a male GEO Group manager “grabbed and pinched the breasts and crotch of a female correctional officer,” the EEOC said. In another instance, a “female employee was forced onto a desk, where a male GEO employee shoved apart her legs and kissed her,” the agency claimed.

    • In 2009, a Texas appeals court upheld a $42.5 million verdict after a prisoner at a GEO Group facility was beaten to death four days before his release.

  4. CCA Letters Reveal Private Prison Industry’s Tactics
    By Katy Hall
    Posted: 04/11/2013

    The U.S. has the world’s highest incarceration rate, with 2.2 million people, or nearly 1 in 100 behind bars. Rising immigration detentions and the disastrous “war on drugs” have helped push inmate numbers to record highs in recent decades. While this growing, largely nonviolent population has stretched federal and state prisons and budgets past their limits, the prison industrial complex has eagerly expanded to accomodate — and anticipate — new masses of inmates.

    Corrections Corporation of America (CCA), now the nation’s largest private prison company, was founded just over 30 years ago in Nashville. Since then, it has become a multi-billion-dollar-a-year business with more than 60 facilities across the country. Meanwhile, the U.S. prison population has grown 500 percent.

    A look at the CCA’s annual shareholder reports over the past few years shows an aggressive business strategy based on building prison beds, or buying them off the government, and contracting them to government authorities — sometimes with decades-long contacts mandating minimum occupancy rates as high as 90 percent. Profits, after lining the pockets of shareholders, are used to create more beds and to lobby state and federal agencies to deliver inmates to fill them. The resulting facilities can be violent and disgusting.

  5. AP: Days Are Numbered for Idaho Private-Prison Operator CCA
    Posted by George Prentice on Wed, Jun 19, 2013

    Following years of controversy, including understaffing, accusations of gladiator-like inmate-on-inmate violence, and falsification of nearly 4,800 hours in staffing records, the State of Idaho is set to kick private prison operator Corrections Corporation of America to the curb and find a new manager for the state’s largest prison, the Idaho Correctional Center.

    The Associated Press’ Rebecca Boone reports that a three-member Board of Correction met the night of June 18 and decided not to renew its options with CCA when its current contract expires Sunday, June 30, 2014. While the State of Idaho will not submit its own bid to take over the facility, which is part of a large prison complex south of Boise, it will accept proposals from other operators.

    In November 2012, eight inmates launched a lawsuit against CCA, alleging that the private prison operator was working with prison gangs to control the Boise facility. According to an October 2011 AP report, it ran the most violent lockup in the Gem State. AP obtained records that showed between September 2007 and September 2008, ICC had 132 inmate-on-inmate assaults, compared to just 42 at the state-run Idaho State Correctional Institution. Additionally, in 2008, ICC had more assaults than all other Idaho prisons combined, according to the AP. The complaint alleged that CCA “fosters and develops criminal gangs” at its Boise lockup. Additionally, it alleges that prison housing supervisors “ask permission from gang leaders” before moving anyone new into an empty cell.

    In April, CCA admitted that it it had falsified staffing records at the privately-run prison, thus violating CCA’s contract with the State of Idaho. The admission came after an investigation by the Idaho State Police and an internal review found that correctional officers claimed that they had staffed security positions at ICC, when in fact the posts had been left vacant. Nearly 4,800 hours during a seven month-period were falsified.

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