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Privatized prisons are failing the public interest
A major private prison corporation was in the news last week, and not for the right reasons.

The Corrections Corporation of America, headquartered in Nashville, Tennessee, is one of America's largest private prison contractors. As of the end of 2012, CCA owned and operated 47 different private prisons across the country, and has management contracts at 20 others. The company is very successful: its 2011 financial statements showed it with revenues approaching $1.75 billion. But as so often happens when public services are contracted out to private companies, the quest for profit stands at odds the public good. In many cases, privatization leads to the provision of shoddy services as contractors seek to cut corners to maximize profits. But the pervasive influence of the private prison industry goes far beyond inadequate correctional facilities and the waste of taxpayer dollars; it has extensive ramifications on public policy, as you'll see below the fold.

In these cases, sheer incompetence should be enough to cause governments to take a step back from contracting out correctional services to private companies. Earlier this week, a federal judge held Corrections Corporation of America in contempt of court for failing to correct issues at its Idaho Correctional Center, despite promising to do so as part of a 2011 settlement. The conditions at the facility were so bad that it came to be known as "gladiator school":

As part of a 2011 settlement in which it admitted no wrongdoing, CCA agreed to make some improvements, including more carefully monitoring staffing to ensure that records were not falsified. Corrections Corporation of America later admitted that it had reported staffing for at least 4,800 hours during which mandatory security posts were actually vacant.

In his ruling Monday, U.S. District Judge David O. Carter found that CCA was continuing to leave key security posts unmanned, endangering public safety, and that “it is clear that non-compliance was far worse than the report of about 4,800 hours would lead one to believe.” Carter ordered an extension of the settlement, an independent monitor and a steep fine for any misreported hours in excess of 12 per month.

Another lawsuit focused on the same facility alleges that CCA partnered with gangs and used the threat of gang violence as an “inexpensive device to gain control over the inmate population.”

In fact, a comprehensive report by In the Public Interest, an organization focused on privatization and responsible contracting, has documented multiple safety violations at private prisons throughout the country. By themselves, these numerous safety issues should be enough to make states reconsider the desire to have private correctional contractors own and manage prisons. But this startling report highlights an even worse problem: the pernicious influence of private prison contracts on criminal justice policy.

When thinking about how a contract to privatize a prison would work, the average person might think that the government entity would simply pay the corporation to house and manage however many inmates are in the prison at any particular time. But that's not how the large majority of contracts are structured. From the report:

To understand the prevalence of prison occupancy guarantee provisions in prison privatization contracts, In the Public Interest (ITPI) analyzed numerous contracts between states and local jurisdictions and private prison companies. ITPI identified 77 county and state-level private facilities nationwide and collected and analyzed 62 contracts from these facilities. These contracts each relate to the operation of an individual facility within the state or locality. The contracts that we collected were either given to us by state-level organizations that already had the contracts in their possession, or we utilized the open records request process with state and local governments. ITPI is currently following up with states to collect additional information.

Of the contracts that we reviewed, 41 (65 percent) contained quotas. These occupancy requirements were between 80 percent and 100 percent, with many around 90 percent. The highest bed guarantee requirements were from Arizona, Louisiana, Oklahoma, and Virginia. As mentioned above, Arizona has three contracts that contain 100 percent occupancy guarantee clauses. Oklahoma has three contracts with a 98 percent occupancy guarantee provision, while a couple of Louisiana’s contracts contain occupancy requirements at 96 percent, and Virginia has one at 95 percent.

The occupancy requirements in prison privatization contracts guarantee a consistent revenue stream for the private entity, but the public policy consequences are a disaster. To begin with, occupancy guarantees prevent governments from taking advantage of the savings dividend one might otherwise assume would spring from a lower prison population. The case of an Arizona prison managed by a different private contractor, the euphemistically named Management and Training Corporation, makes this point clear:
After three violent inmates escaped from an Arizona private prison in July 2010, prompting a two-week, multi-state manhunt, state corrections officials demanded improvements and stopped sending new inmates to what they called a "dysfunctional" 3,300-bed facility.

Less than a year later, the company that runs the prison, Management & Training Corp., threatened to sue the state. A line in their contract guaranteed that the prison would remain 97 percent full. They argued they had lost nearly $10 million from the reduced inmate population.

State officials renegotiated the contract, but ended up paying $3 million for empty beds as the company continued to address problems, according to state documents and local news accounts.

This is not an isolated phenomenon: according to the aforementioned report by In the Public Interest, Colorado taxpayers have wasted over $2 million to pay CCA to house inmates while state prisons sit with empty beds, all because of the occupancy guarantees in the contract. But even worse, occupancy guarantees reduce the incentive for governments to take measures in criminal justice policy, such as sentencing reform, immigration reform, or decriminalization of drugs, that would result in fewer prison inmates: after all, the state will just end up having to pay for empty beds. And while spokespeople for CCA promise that none of the millions of dollars they spend on lobbying goes to efforts to influence policies that determine basis or duration of sentencing, internal reports from CCA and from GEO group, another major private prison contractor, make clear that the industry is very concerned about the impact of drug decriminalization and sentencing reform on their bottom line.

But whether or not the private prison industry is explicitly lobbying for harsher sentences for more crimes or not, one thing is certain: private prisons should be a safety valve that allows governments to ensure they have capacity for their prison population. Right now, however, we have a system where governments serve as a dedicated, guaranteed revenue stream for private corporations. If governments are going to resort to outsourcing at all, they should ensure that they eliminate minimum occupancy guarantees from all privatization contracts. This will ensure that legislators and policy-makers can do their jobs and produce outcomes that serve the public good, rather than a private company's bottom line.

Originally posted to Daily Kos on Sun Sep 22, 2013 at 03:30 PM PDT.

Also republished by American Legislative Transparency Project.

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