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Bailing Out Private Jails

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Bailing Out Private Jails
JUDITH GREENE | September 9, 2001

The private-prison industry is in trouble. For close to a decade, its business boomed and its stock prices
soared because state legislators across the country thought they could look both tough on crime and
fiscally conservative if they contracted with private companies to handle the growing multitudes being
sent to prison under the new, more severe sentencing laws. But then reality set in: accumulating press
reports about gross deficiencies and abuses at private prisons; lawsuits; million-dollar fines. By last year,
not a single state was soliciting new private-prison contracts. Many existing contracts were rolled back or
even rescinded. The companies' stock prices went through the floor.
Here was one experiment in the privatization of public services that might have limped to a well-deserved
close. But instead, the federal government seems to be rushing to the industry's rescue.
Consider just the last 12 months, and just the Corrections Corporation of America (CCA), the country's
largest private-prison company.
Last August two prisoners escaped from a CCA prison in Bartlett, Texas. State investigators found that doors
had been left unlocked at the facility. No one was watching the closed-circuit-TV surveillance monitors. When
the prisoners cut their way through the prison's perimeter fence, a security alarm sounded, but staff in the prison's
control center turned it off and did nothing.
In October two guards at a CCA prison in Walsenburg, Colorado, who had repeatedly beat a prisoner while he
was handcuffed, shackled, and unable to resist pleaded guilty in federal court.
In November the Bartlett facility erupted in a disturbance that left five prisoners injured. Two days later, five
guards were stabbed and three others were injured when prisoners at a CCA prison in Estancia, New Mexico, took
them hostage.
In December jurors in Columbia, South Carolina, found that guards at a CCA juvenile prison had abused a
youth confined there and that their use of force was so malicious it was "repugnant to the conscience of
mankind." The jury awarded $3 million in punitive damages.
In April prison guards at CCA's Cibola County Correctional Center in New Mexico teargassed nearly 700
prisoners who had staged a daylong nonviolent protest of conditions at the facility. The same day, in Oklahoma,
the addiction-treatment manager at CCA's Tulsa Jail resigned. The warden, she said, had directed her to make a
"sales pitch" to local judges, urging them to sentence offenders to a treatment program in the jail even though the
program had been eviscerated in order to cut operating expenses.
In May three prisoners were mistakenly
from the same Oklahoma jail, and nine guards at CCA's
District of Columbia Correctional Treatment Facility were indicted. Federal prosecutors alleged that they had
accepted money from an undercover FBI agent in exchange for smuggling two-way pagers and cash into the
prison.
In June, back at the Tulsa Jail, a CCA guard resigned his post after 10 Valium tablets were reportedly found
hidden in his sock during an employee shakedown.

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In July, 400 prisoners exported from Indiana to a CCA prison in Wheelwright, Kentucky, started a riot in the
prison recreation area that spread to four housing units before it was over, with inmates setting mattresses on fire
and tossing TVs and toilets through the windows. Two weeks later, CCA fired the warden and his top assistant,
citing "policy violations."
CCA is not the only private-prison company with a record of continuing abuses. Prisons run by the
Wackenhut Corporation in New Mexico have repeatedly erupted in violence and disturbances. (Together,
CCA and Wackenhut control 75 percent of the U.S. private-prison market.) Between December 1998 and
August 1999, four inmate-on-inmate homicides were committed in Wackenhut's New Mexico facilities;
and then, in August, a guard was murdered as well. Most people think that kind of violence is the norm in
America's prisons. But the best available data on prison homicides--compiled by the Criminal Justice
Institute, publishers of The Corrections Yearbook--show otherwise: In 1998, when American prisons held
1.3 million prisoners, there were only 59 inmate-on-inmate homicides. That's a rate of one murder for
every 22,000 prisoners. The homicide rate in Wackenhut's New Mexico facilities in those nine months was
about one for every 400 prisoners--and that's not counting the death of Ralph Garcia, Wackenhut's guard.
But if the company changed its ways after that explosion of violence, it's hard to tell. Just last year, its Jena
Juvenile Justice Facility in Jena, Louisiana, was shut down. A juvenile-court judge in New Orleans found
that the youngsters held there had been treated no better than animals.
The Great Escape

Industry executives will tell you that these prison-management disasters were isolated events, confined to
a handful of "underperforming" facilities. But the available evidence suggests that the problems are
structural and widespread.
A research project I directed in 1999 compared the quality of correctional services in a medium-security
private prison run by CCA in Minnesota with the three medium-security prisons run by the state. We
found many more operational problems in the CCA prison--from program deficiencies and unreliable
methods of classifying prisoners for security purposes to high rates of staff turnover that resulted in
inadequate numbers of experienced, well-trained personnel. And this was in a private prison that was not
notoriously troubled--a facility that the company, in fact, considered to be exemplary.
There have been few other studies of the quality (as opposed to the cost) of private-prison services; but
evidence is mounting that serious operational problems are not confined to just a few institutions.
An industry-wide survey conducted in 1997 by James Austin, a professor at George Washington University,
found 49 percent more inmate-on-staff assaults and 65 percent more inmate-on-inmate assaults in medium- and
minimum-security private facilities than in medium- and minimum-security prisons run by government.
National data reported in The Corrections Yearbook indicate that correctional-officer turnover was 41 percent
for the private-prison industry in 1998, compared with 15 percent in publicly run prisons.
A tally of news reports in 1999 showed at least 37 escapes of adult prisoners from secure private prisons that
year. (This did not count escapes from juvenile facilities, from transportation vans, or during escorted hospital
visits.) For comparison, one can look at New York's state prisons, which hold roughly the same number of
inmates as the entire system of private prisons in the United States. Between 1995 and 1999, there were only
eight escapes from secure institutions in New York--a rate of less than two per year.
The problems seem to be endemic to the enterprise--a result, in great part, of the private companies'
mission to hold down costs. Most important, wages and benefits substantially lower than those in
government-run prisons have resulted in significantly higher employee turnover, with dramatic ill effects.
But other kinds of corner cutting have also taken a toll. Spending on inmate health care and on staff
training also tends to be inadequate at the private prisons--another reason why the industry has fallen

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behind the public-prison system both in maintaining prisoners' basic human right to a safe and humane
environment and in protecting the safety of the prison staff and the public.
Yet for all that, it's unlikely that the states will save much, if any, money by contracting with the private
companies. Private-prison cost cutting primarily serves to boost company profits. As early as 1996, a
report of the U.S. General Accounting Office thoroughly reviewed a series of academic and state studies
and concluded that there was no clear evidence about cost savings. The most optimistic academic advocate
of privatizing prisons, Charles Thomas, had claimed that savings of 10 percent to 20 percent could be
expected. But then it came to light that he'd been paid $3 million in consulting fees by private-prison
corporations. He was penalized by the Florida Ethics Commission, which enforces the state's conflict-ofinterest laws, and had to shut down his research institute at the University of Florida.
Moreover, the financial advantage that may have been most attractive to state legislators--the private
companies' ability to construct prisons unhindered by public debt limits or by the need to get voter
approval for bonds--has turned out to be the industry's downfall. From 1991 to 1998, according to Charles
Thomas's data (unfortunately, the only data available), the growth in private adult-prison beds averaged
36 percent per year. But with the states pulling back from the trouble-plagued facilities and Wall Street
reacting even more strongly to the deaths and scandals, the companies have found themselves
overleveraged and undercapitalized--CCA, in particular. It built new prisons "on spec," assuming that
contracts to fill them would follow, and by my estimate the company now has more than 8,500 prison beds
standing empty. The firm last year came close to a financial meltdown: Its stock lost 93 percent of its value
in 2000, and its accountants reported a fourth-quarter loss of more than a third of a billion dollars.
Human rights advocates, public employee unions, prisoners' rights activists, and student groups have not
let any of this pass unnoticed. Thus, it should be no surprise that so many states are now backing away
from for-profit companies.
But while most state correctional managers are taking a hard look at the private-prison industry, the
federal government has stepped up to fill the breach. Says Steven Logan, the ceo of Cornell Corrections:
"On the federal side, there's an unprecedented [new market]--to the tune of approximately 20,000 beds
that are expected to be set out for people to bid on over the next 24 months." If Logan is right, the feds are
poised to take up a lot of the slack--and, in fact, to spur new construction--by showering the industry with
contracts that will be worth $4.6 billion over the next 10 years.
Until recently, the Federal Bureau of Prisons (FBOP) had moved relatively slowly down the road to
privatization. It awarded its first private-prison contract only in 1997--to Wackenhut, to operate a 2,048bed prison complex for low- and minimum-security federal prisoners at Taft, California. A second contract
was awarded to CCA in 1998 for a 1,500-bed facility at Eloy, Arizona. But as the industry's troubles
escalated, Congress required the FBOP to contract for more private beds, insisting on private prisons for
at least half the prisoners at the District of Columbia's prison complex at Lorton, Virginia, which was
scheduled to shut down. And then the FBOP launched a massive privatization initiative of its own
throughout the country.
In part this was a response to the rapid growth of the federal inmate population. Between 1995 and 1999,
while the incarceration rate nationwide grew by 16 percent, in the federal prison system it rose by 31
percent. By June of this year, the FBOP was responsible for some 127,000 sentenced criminals and
perhaps 25,000 other detainees; its prisons were operating at 33 percent over their capacity. And like the
state legislators before them, members of Congress were madly building new prisons (26 are currently
under construction or in the development pipeline), searching for cheap new private-prison beds, and
refusing to consider changes in the draconian sentencing laws that were causing most of the increase in
prisoners.

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In fact, the new laws have conveniently created a special population of prisoners--immigrant prisoners-whom the feds seem comfortable segregating from the rest of the prison population and turning over to
the private companies.
Find and Deport

It's common knowledge that the harsh drug-sentencing laws that Congress enacted in 1986 have greatly
increased the federal prison population. (In 1984 just 30 percent of federal inmates were drug offenders;
today 57 percent are.) Less known is the impact of federal immigration policies. Since at least 1994,
Congress has put enormous pressure on federal officials to find and deport troublesome immigrants (both
legal residents and undocumented immigrants). In the 1996 Immigration Reform Act, Congress widely
expanded the list of crimes for which a noncitizen must be deported after serving his or her sentence.
These crimes, called "aggravated felonies," are now defined to include many offenses that are neither
aggravated nor even, in many other jurisdictions, felonies. But together, the statute and the political
pressure have fueled an all-out law-enforcement campaign to find crime-committing immigrants--even
relatively small-time offenders and those whose only "crime" is attempting to re-enter the country--and
with that has come an explosion in the number of non-U.S. citizens in federal prison, the so-called
"criminal alien" population.
There were 35,629 noncitizens serving criminal sentences in federal prisons on June 7 of this year, up
from 18,929 only seven years ago. About half of them were Mexican citizens, 10 percent Colombians, 7
percent Cubans, and the rest an assortment of other nationalities. In addition, several thousand other
noncitizens are being held in federal prisons, not as convicts serving criminal sentences but as pretrial or
predeportation detainees. These include many "lifers"--people who have completed their criminal
sentences in state or federal prison and are now supposed to be deported but who remain incarcerated
because no country will take them. A U.S. Supreme Court ruling in June prohibited the indefinite
detention of certain lifers, but according to Judy Rabinovitz, senior staff counsel at the American Civil
Liberties Union's Immigrants' Rights Project, the decision is unlikely to affect most of those in FBOP
facilities.
Information about the immigrant population in federal prison is difficult to come by, but telling evidence
of the federal-law-enforcement campaign that is targeting immigrants comes from Peter H. Schuck, a
professor at Yale Law School. In 1998 Schuck found that while immigrants (legal as well as
undocumented) made up 9.3 percent of the American population and a roughly comparable 7.6 percent of
the prison population of the states, they made up a vastly disproportionate 29 percent of those in federal
prisons.
The "criminal aliens" in federal prison are apparently a relatively unthreatening group of prisoners.
According to the federal Bureau of Justice Statistics (BJS), about a third of them were sentenced for
immigration violations, and just 1.5 percent of them were sentenced for violent offenses (compared with 15
percent of the U.S. citizens in federal prison). A BJS research project found that even those convicted of
drug sales are likely to have played a lesser role in the transaction than did U.S. citizens convicted on
drug-sale charges.
This may also help to explain why these prisoners have been singled out for incarceration in privately run
prisons. Criminal aliens typically require only low-security prisons, federal officials say. And as Mike
Janus, privatization administrator at the FBOP, points out, they face deportation at the end of their
sentences and therefore do not require the kinds of education and counseling programs available in
regular federal prisons. Moreover, they have little if any political clout.
Off the record, the FBOP officials say that they're confident they can oversee the private companies better
than the states have. On the record, they say they are simply seeking "management flexibility" to deal with
this burgeoning segment of the prison population in a less program-rich environment than their other

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prisoners require. But that's not far from acknowledging that they think they can get away with providing
second-class prisons for these second-class prisoners.
The FBOP's first request for proposals to provide up to 7,500 low-security beds for this population was
issued in September 1999. As phase one of the plan for private contractors to meet the prison system's
"criminal alien requirements," it was called CAR-I for short. The beds were to serve California, Arizona,
New Mexico, Texas, and Oklahoma.
A CAR-I proposal by Cornell Corrections to house almost 2,000 prisoners at a facility near Santa Fe that
the company hoped to lease from the state of New Mexico was eliminated from the competition as a result
of vigorous opposition from a local coalition of immigrant-rights advocates, civil rights and church
leaders, and prison reformers. But in June of last year, two other CAR-I contracts were signed with CCA-one for 2,304 beds at the company's long-empty "spec" prison at California City, California, and the other
for 1,012 beds at its Cibola facility in Milan, New Mexico. (This is the facility where, some months later,
guards teargassed hundreds of prisoners who were protesting conditions.) These contracts are for an
initial three-year term, followed by seven one-year renewal options. They will be worth about $760 million
over 10 years.
For CCA, which carried more than $1 billion in outstanding indebtedness last year and was in violation of
its credit agreements, the two contracts are providing a virtual bailout. The company's many creditors
were willing to extend it waivers last year. But without the federal contracts, John D. Ferguson, the
company's new CEO, frankly admits, CCA would likely have been forced into bankruptcy.
A second request for proposals--CAR-II--was issued last year for up to 1,500 beds to be located in the
Alabama, Florida, Mississippi, and Georgia region. Five private companies and one Mississippi county
proposed 14 possible CAR-II sites. The field has now been narrowed to three, and draft environmentalimpact statements have been issued for public comment. The winners of this sweepstakes will be
announced in October, but CCA appears to have the inside track: It has proposed a "spec" prison already
built by the company in McRae, Georgia--while Cornell Corrections has two sites in the running that
would require new prison construction from the ground up.
A CAR-III solicitation was also issued late last year--for three 1,500-bed facilities in California and
Arizona. By the January 2001 deadline, six companies, one town, and a sheriff's department had
submitted 20 prospective sites. Less than a week later, the FBOP filed public notice that it anticipates a
CAR-IV as well, for the Delaware, Kentucky, Ohio, Virginia, and West Virginia region.
This momentum is unlikely to let up any time soon. The private-prison industry has excellent connections
with the federal government. Michael J. Quinlan, the chief operating officer of CCA, served as the FBOP
director under the first President George Bush. Norman Carlson, a director of the FBOP under President
Ronald Reagan, sits on Wackenhut's board of directors. Meanwhile, generous campaign contributions and
the best lobbyists that money can buy have spread the influence of private-prison companies beyond the
personal networks of their executives and board members to the halls of Congress. There are grass-roots
pressures, as well, coming from desperate pockets of rural America where prisons are seen as a source of
new jobs. And there is every reason to expect that the current administration will go along. With 42
private prisons located within its borders, President Bush's home state of Texas is the world capital of the
private-prison industry.
To be sure, political opposition is swelling. The private-prison industry's record of human rights
violations, violence, and inmate escapes has fueled an unusual alliance between prison-reform advocates
and correctional officers (union members in government-run institutions), who are now standing together
with student groups and community organizations to fight any further expansion of prisons for profit. In
most states, where prison-population growth is finally slowing or halting, the coalition appears to have
turned the tide.

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The same groups are now supporting the Public Safety Act, introduced in Congress this year by
Democratic Senator Russell Feingold of Wisconsin, Democratic Congressman Ted Strickland of Ohio,
Republican Congressman John E. Sweeney of New York, and 56 other House sponsors. This measure
would bar the FBOP from contracting with private prisons and would deny federal funding for prisons to
states that contract with private facilities. But prison privatization is unlikely to be halted in the federal
system until the growth of the federal prison population is curtailed. And that means that the effort to
reform federal sentencing and immigration laws must continue.
It's a good cause. The anti-immigrant laws adopted by Congress in 1996, especially as they interact with
federal drug laws, create particularly unfair punishments for noncitizens, most of whom are subject to
harsh and rigid sentences for drug offenses, with no consideration of mitigating circumstances or the
offender's actual role in the crime. And then they are further punished with deportation. The federal plan
to create and expand a huge second tier of segregated immigrant prisons--whether public or private--is an
irrational and expensive way to avoid coming to terms with those fundamental injustices.

Mississippi Churning
At the end of march, despite the fact that more than 2,600 beds stood empty in Mississippi's state
prisons, the Mississippi legislature committed $6 million in scarce public funds to increasing the
number of state prisoners sent to private prisons and county correctional facilities. They did this while
cutting the budget of every other state agency.
Why? Perhaps because prisons are increasingly seen as engines of economic development in rural
America--and especially in Mississippi, which has a long and egregious history of using prisoners to
bolster the local economy.
Shortly after the Civil War, the Mississippi "Black Codes" were enacted to keep newly freed slaves in
their place. At a time when many blacks had no homes or jobs, the Black Codes made common
conditions like vagrancy a criminal offense. In this way, huge numbers were forced into prison and the
neoslavery of the state's convict-leasing system. And after the practice of leasing prisoner-laborers to
private businesses was finally ended at the turn of the century, Mississippi prisoners, in their notorious
striped uniforms, continued for decades to provide unpaid plantation-like labor for the state. Until the
1970s, Mississippi's infamous Parchman Prison Farm, with its armed inmate-overseers ("trusty
shooters"), stood as a national symbol of brutal and corrupt prison rule.
But just when prison litigation seemed finally to be ending these abuses, the Mississippi legislature in
1994 enacted a package of new laws to crack down on crime and youth violence--and to provide capacity
for more than 4,000 additional prisoners, half in new state prison beds and half by contracting with
two private prisons. They also put prisoners back into the hated striped uniforms; and the next year
they took up the fad of "truth in sentencing," eliminating parole for all offenders sent to prison--violent
and nonviolent alike--and requiring that they serve 85 percent of their sentence before gaining release.
It was a "get tough" juggernaut, and it sent the state's prison population--nearly three-quarters of it
African Americans--skyrocketing. Year after year, legislators pumped money into the prison budget for
more and more new prison beds--and prison builders and prison employees. In 1997 they heeded
demands to spread this bounty and authorized the state Department of Corrections also to contract for
beds in "regional correctional facilities"--a new type of county-level lockup run by powerful local
sheriffs.
Between June 1994 and June 2001, Mississippi's prison population grew from 10,631 to 18,255 and its
prison budget more than doubled. But by last year, the prison-expansion effort had caught up with and
passed the growth in prisoners. The state was keeping the private and regional contract facilities nearly

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full regardless. But that left the state's own prisons with room to spare, and the Department of
Corrections with a shortage of funds.
So when Robert L. Johnson became corrections commissioner last fall, he changed things. The state's
contracts guaranteed each regional correctional facility a minimum occupancy of 200 (which
amounted to 80 percent of the beds available for state prisoners). Johnson's strategy was simply to
hold down the state prisoner count at all contract facilities--private as well as regional--to about that
level.
The contract-facility managers went crying directly to the legislature.
Until that point, Mississippi legislators had been consumed with apparently more burning issues--like
requiring that the motto of the United States, "In God We Trust," be displayed on an 11-by-14-inch
placard in every classroom, school cafeteria, and school auditorium in the state. But the lawmakers
responded quickly to the complaints of local sheriffs and the private-prison companies, Wackenhut and
the Corrections Corporation of America. Citing a critical need to retain local prison jobs, they voted to
increase the minimum-occupancy guarantees for contract facilities. Nine hundred state prisoners
would be guaranteed for each of the two largest private prisons (an increase of about 100 for each
company) and 30 more prisoners for each of the 10 regional facilities. The first year's price tag for this
increase: $6 million.
Mississippi legislators also voted a $16.4-million appropriation from the state's "rainy day fund" to
cover a deficit in the current budget for private and regional contract facilities. At the same time, they
slashed the public-schools budget for textbooks and classroom supplies.
Governor Ronnie Musgrove pointed out that lawmakers were creating a multiyear obligation with
escalating costs, since the per diem amount that the state pays for contract beds will increase over
time. He said that the legislature was investing in private-prison corporations instead of in teachers and
students, and he vetoed the bill. Within two days, the legislature voted to override his veto.
But there will no doubt be another round of lobbying next year. The legislation mandated a cost review
and stipulated that the new daily census guarantees would be adjusted to meet only those costs that
were necessary for the contractors to "break even." After the smoke cleared, the staff of the Joint
Legislative Committee on Performance Evaluation and Expenditure Review (PEER) found that the
break-even levels for all contract facilities were well below the legislated guarantees.
The PEER analysts uncovered almost $700,000 in "unnecessary costs" at the regional facilities.
Hundreds of thousands of dollars 198 been paid to a former legislator for legal services by five of the
county-run facilities, while three other counties got by spending less than $12,000 in legal fees. More
than $200,000 in excess fees had gone to a private firm that provides consulting and program services
at seven regional facilities; the firm is headed by an ex-warden from Parchman Prison. And in nine of
the 10 counties that operate regional facilities, the sheriffs, with no significant increase in duties, were
collecting a salary increase of about $15,000 each.
A profitable local business, indeed.

Judith Greene, a criminal-justice-policy analyst, has researched prison privatization under fellowships
from the Open Society Institute of the Soros Foundation and the Institute on Criminal Justice of the
University of Minnesota Law School.

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