Bailing Out Private Jails

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were rolled back or even rescinded.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 released 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.

  • 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 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-of-interest 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 2,048-bed 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.

    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 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
    environmental-impact 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.

    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 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 had 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.

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