Wall Street Journal NOVEMBER 18, 2008, 11:26 P.M. ET http://online.wsj.com/article/SB122705334657739263.html Larger Inmate Population Is Boon to Private Prisons By STEPHANIE CHEN Prison companies are preparing for a wave of new business as the economic downturn makes it increasingly difficult for federal and state government officials to build and operate their own jails.
The Federal Bureau of Prisons and several state governments have sent thousands of inmates in recent months to prisons and detention centers run by Corrections Corp. of America, Geo Group Inc. and other private operators, as a crackdown on illegal immigration, a lengthening of mandatory sentences for certain crimes and other factors have overcrowded many government facilities. Prison-policy experts expect inmate populations in 10 states to have increased by 25% or more between 2006 and 2011, according to a report by the nonprofit Pew Charitable Trusts. Private prisons housed 7.4% of the country's 1.59 million incarcerated adults in federal and state prisons as of the middle of 2007, up from 1.57 million in 2006, according to the Bureau of Justice Statistics, a crime-data-gathering arm of the U.S. Department of Justice. Corrections Corp., the largest private-prison operator in the U.S., with 64 facilities, has built two prisons this year and expanded nine facilities, and it plans to finish two more in 2009. The Nashville, Tenn., company put 1,680 new prison beds into service in its third quarter, helping boost net income 14% to $37.9 million. "There is going to be a larger opportunity for us in the future," said Damon Hininger, Corrections Corp.'s president and chief operations officer, in a recent interview. California has shipped more than 5,100 inmates to private prisons run by Corrections Corp. in Arizona, Mississippi and other states since late 2006, when Gov. Arnold Schwarzenegger ordered emergency measures to control a ballooning state-prison population. Prisons were so overcrowded that hundreds of inmates were sleeping in gyms, according to one report. An additional 2,900 prisoners are scheduled to be transferred to private prisons outside the state by the end of next year, according to the California Department of Corrections and Rehabilitation. "Private prisons are a short-term solution while we work on long-term solutions, rehabilitation programs and recidivism strategies," said Terry Thornton, spokeswoman for the state's corrections department. View Full Image Getty Images Prison overcrowding, partially due to a crackdown on illegal immigration and longer mandatory sentences for certain crimes, could spur state and federal officials to increase the use of private prisons like this one in Otay Mesa, Calif. Geo Group, of Boca Raton, Fla., the second-largest prison company, has built or expanded eight facilities this year in Georgia, Texas, Mississippi and other states, and it plans seven more expansions or new prisons by 2010. Last month, Geo Group was awarded a contract by Florida's Department of Management Services to design and build a 2,000-bed special-needs prison in that state. Cornell Cos., the nation's third-largest prison company, recently broke ground on a 1,250-bed private prison for men in Hudson, Colo. The Federal Bureau of Prisons, the government agency that operates all federal prisons and manages the handling of inmates convicted of federal crimes, has awarded 13 contracts since 1997 to prison companies to build prisons and detention centers that house low-security inmates, primarily "low security criminal aliens," says Felicia Ponce, a spokeswoman for the agency. The contracts give the bureau "flexibility to manage a rapidly growing inmate population and to help control overcrowding," Ms. Ponce says. Outsourcing incarceration to prison companies can reduce a government's cost of housing those prisoners by as much as 15%, according to a study by the Reason Foundation, a research organization in Los Angeles. Private operators say they can build prisons more quickly and operate them less expensively than governments because their payroll costs are lower and they can consolidate prisoners from many far-flung jurisdictions into facilities located in areas where land and building costs are very low. Some groups accuse the private prisons of neglecting inmates or of putting them in bad conditions. "Profit is still a motive and it's structured into the way these prisons are operated," says Judy Greene, a justice-policy analyst for Justice Strategies, a nonprofit studying prison-sentencing issues and problems. "Just because the system has expanded doesn't mean there is evidence that conditions have improved." The American Civil Liberties Union has filed lawsuits involving several prison companies over the past decade alleging poor treatment of inmates. Last year, the organization and other parties filed a lawsuit against Corrections Corp. and the Department of Homeland Security's Immigration and Customs Enforcement arm in federal court in San Diego, alleging that the company was operating an overcrowded, unsafe immigrant-detention center in that city. Detainees were routinely assigned in groups of three to sleep in two-room cells -- meaning one had to sleep on the floor near the toilet -- or to temporary beds in recreation rooms and other common spaces, according to the complaint. The suit also alleged that detainees had little access to mental-health care. "We have serious concerns about for-profit prison companies because they are notorious for cutting essential costs that need to be provided to maintain a safe and constitutional environment for prisoners," says Jody Kent, a public-policy coordinator for the ACLU's National Prison Project. The lawsuit was settled in June, with Corrections Corp. and Homeland Security agreeing to limit immigrant detainees to the number of inmates the facility was designed for. Louise Grant, a Corrections Corp. spokeswoman, says the company's prison practices complied with federal standards and that it regularly discloses capacity levels and other information in federal filings. "Our government partners monitor us daily," Ms. Grant says. "There is no cutting corners." 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