States Guarantee Prison Populations for Profit

Anyone who 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.

Private prison companies—including the Corrections Corp. of America (CCA) and Geo Group Inc.—are forging deals with state and local governments that provide huge profits based on guaranteed high occupancy rates, report from In the Public Interest has disclosed. A report on Alternet, 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.” 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 successfully inserted occupancy guarantee provisions into prison privatization contracts

The report noted 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.”

A statement in CCA’s 2010 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…proscribed by our criminal laws.” reported that CCA “owns and runs 49 prisons, manages another 18 and leases 2, as of June 30. The federal government provided almost 43 percent of the company’s $1.76 billion of revenue in 2012, according to its annual report.”

However, over the past month, CCA has experienced ups and downs and is leaving Idaho. According to the Associated Press, “The decision comes after the company wrestled with scandal and lawsuits.” Meanwhile, both CCA and Geo Group Inc. stand to benefit from California Governor Jerry Brown’s proposal to reduce prison overcrowding mandated by a decades-long lawsuit 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 2 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 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. 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 2 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.”


Bill Berkowitz  is a freelance writer covering conservative movements.