Push To Privatize US Prisons Lurks in Corporate Investment Scheme

Push To Privatize US Prisons Lurks in Corporate Investment Scheme

Firm will purchase facilities from states in exchange for guaranteed 90% occupancy rate

The privatization of US prisons is in the news today after a close vote in the Florida state senate on Tuesday defeated an attempt to privatize a huge swath of correctional facilities in the southern state. Also, a report in the Huffington Post on Tuesday highlighted how Corrections Corporation of America (CCA), the nation's largest operator of private prisons, has a plan in place to purchase public prisons from 48 states.

Huffington Post's Chris Kirkham reports:

As state governments wrestle with massive budget shortfalls, a Wall Street giant is offering a solution: cash in exchange for state property. Prisons, to be exact.

Corrections Corporation of America, the nation's largest operator of for-profit prisons, has sent letters recently to 48 states offering to buy up their prisons as a remedy for "challenging corrections budgets." In exchange, the company is asking for a 20-year management contract, plus an assurance that the prison would remain at least 90 percent full, according to a copy of the letter obtained by The Huffington Post.

The CCA letter cites a new program called the "Corrections Investment Initiative" that has earmarked $250 million for purchasing state facilities. The requirements, according to the letter, include (emphasis added):

  • A minimum rated occupancy of 1,000 beds;
  • A structure age of no more than 25 years
  • A designation that the structure is suitable for immediate occupation or is already occupied by an inmate population; and
  • An assurance by the agency partner that the agency has sufficient inmate population to maintain a minimum 90 percent occupancy rate over the term of the contract.

Most troubling about the 'occupancy' clause in state contracts is what it implies for law enforcement and incarceration policy at the state level.

... critics point to inherent problems in such long-term contracts, particularly provisions that require a prison to be 90 percent full throughout the life of an agreement. In Ohio, for example, contractors are guaranteed payment at the 90 percent rate "regardless of the actual number of inmates at the institution at that time."

The mandate to keep prisons full raises questions about cost efficiency -- what if there aren't enough inmates? -- but it also presents a moral question about maintaining a constant supply of new prisoners.

"It becomes a self-fulfilling prophecy," said Shakyra Diaz, policy director of the American Civil Liberties Union of Ohio. "In order to have it at 90 percent, you need to be able to make criminals to fill it at 90 percent."

In response to the Kirham's report, Ameriblog's honed the takeaway on state privatization to its "core dynamic," calling it the "the one-two punch of low taxes and looting":

Starve states of money, then offer to buy everything they own. What do you call it when you're the only one in the world with cash? Mission accomplished, baby.

This captures the reality of the dynamic, because as states have struggled to make ends meet in a merciless recession compounded by calls for deep public austerity, cash-flush corporations are making easy prey of state governments looking to fill short-term gaps in their revenue streams. Kirkham writes:

Corrections Corporation has been a swiftly growing business, with revenues expanding more than fivefold since the mid-1990s. The company capitalized on the expansion of state prison systems in the '80s and '90s at the height of the so-called 'war on drugs,' contracting with state governments to build or manage new prisons to house an influx of drug offenders. During the past 10 years, it has found new opportunity in the business of locking up undocumented immigrants, as the federal government has contracted with private companies in an aggressive immigrant-detention campaign.

And Corrections Corporation's offer of $250 million toward purchasing existing state prisons is yet another avenue for potential growth. The company has billed the "corrections investment initiative" as a convenient option for states in need of fresh revenue streams: The state benefits from a one-time infusion of cash, while the prison corporation wins a new long-term contract. In addition, supporters of prison privatization have argued that states can achieve cost savings through outsourcing, as prison corporations give fewer benefits to employees.

"Starve states of money, then offer to buy everything they own. What do you call it when you're the only one in the world with cash? Mission accomplished, baby."

But, Kirkham, writes, numerous studies have "cast doubt on the private prison industry's main selling point: efficiency."

Research across numerous states has shown that the promised savings from private prisons can be illusory at best. Cost comparisons often fail to account for extra administrative expenses borne by the state, or differences in health care costs for sickly inmates who normally remain in state supervision.

What's more, many civil liberties advocates question why a profit motive should be tied to incarceration policies, raising concerns that cutting costs could have an adverse effect on public safety. In 1998, six prisoners, including five convicted murderers, escaped from a Corrections Corporation prison in Youngstown, Ohio, putting the company in the national spotlight amid findings of inept supervision by guards and poor training by prison officials.

"It's a real gamble for states to say, 'Gee, we're going to save a lot of money this way,'" said Zach Schiller, research director at Policy Matters Ohio, which did several studies analyzing Ohio's sale of a state prison to Corrections Corporation of America. "The idea that we should do this because we need money on a one-time basis seems like awfully short-term thinking. If we want to talk about what our needs are for the budget, and what our needs are for housing prisoners, let's look at those on a long-term basis and see what the best decisions are."


Private Prison Push Goes Down to Defeat in Florida

Good news for those opposed to the privatization push was available in Florida on Tuesday as the state senate narrowly defeated legislation that would have amounted to the 'single largest prison privatization plan' in US history.

The Miami Heraldreports:

A massive expansion of private prisons in Florida collapsed in the Senate Tuesday as nine Republicans joined a dozen Democrats in handing a setback to Senate leaders and a victory to state workers.

As a result, the state will not undertake what would have been the single greatest expansion of prison privatization in U.S. history, affecting 27 prisons and work camps in 18 counties and displacing more than 3,500 correctional officers. [...]

Tuesday's vote was a triumph for a rebellious group of Republicans who rejected supporters' arguments that for-profit prisons would save tax dollars and increase efficiency. All 12 Democrats also voted no, putting the minority party in the unaccustomed role of being on the winning side. [...]

Dead for now, but not necessarily for good

A lobbyist for private prison operator GEO Group, Jim Eaton, conceded that the issue is dead in the Legislature for now, but he said Scott can implement privatization on his own because the budget of 2010-11 included money to outsource some South Florida prisons. "He has the authority to do it if he wants to," Eaton said.

Scott declined to say whether he would expand prison privatization on his own. [...]

The state is separately privatizing all medical, dental, mental health and pharmaceutical services for all 100,000 inmates statewide.


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