The Dirty Business ofPrivate Prisons in the US

Crime rates have gone down by one-third in Colorado over the last 10 years, and, as a result, the state has closed five prisons since 2009. Paradoxically, however, Colorado’s private prisons have never been fuller. This is because of the minimum occupancy levels agreed on between private prisons and the state government, which have meant that the state has had to transfer 3,330 inmates from public jails, already with empty cells, to private ones. Colorado is by no means unique. Similar scenarios are happening in various parts of the country, and they reveal the secrets behind the boom in U.S. prison privatization, such as the perverse disparity between acting in the public interest to rehabilitate offenders and reduce the prison population and the inherent aim of private businesses to maximize their profits.

In the Public Interest, a nongovernmental organization based in Washington, analyzed 62 private prison contracts from all over the United States. According to its report, 65 percent of prisons stipulated a guaranteed minimum occupancy level or imposed penalties for empty beds. The logic behind these demands is that the prisons charge $40 to $60 per inmate per day, so private companies need to be sure of a stable minimum income to be able to manage the prisons and cover construction costs. The most common minimum occupancy level was 90 percent, although, in some cases, it was apparently as high as 100 percent; according to the report, three prisons in Arizona stipulated 100 percent as their minimum, although the Arizona Department of Corrections denied this and said it was only 90 percent.

Either way, the state has to guarantee a minimum number of prisoners, whatever the crime rate, which the Arizona Department of Corrections considers to be a logical and beneficial business requirement. “For taxpayers, if there were no quota and occupancy levels were completely variable, the private operators would charge a much higher daily rate so as to be sure of getting a return on their investment,” says ADC spokesman Doug Nick in a telephone conversation. “These guarantees keep the cost relatively stable and predictable.”*

However, what happens when crime rates go down, as happened in Colorado, and prisoner numbers keep falling? “We have never had problems filling beds, and the prison population has not fallen. In fact, it has been increasing for decades,” says Nick, convinced that the situation will not change.* Arizona has had private prisons for two decades. There are currently 14 prisons in the state, of which four are owned and run by private companies. There are another six private prisons that only accommodate prisoners from neighboring states. According to the concession agreement, Arizona state authorities will take over the four prisons after they have been open for 20 years, which the Arizona Department of Corrections also extols as a benefit for taxpayers.

In 2010, according to the most recent data available, 8 percent of prisoners in the U.S. were being held in private prisons, a figure of around 128,000, out of a total prison population of 1.6 million. According to Carl Takei, a lawyer from the American Civil Liberties Union, the current figure is likely to be around 12 percent in federal prisons, slightly lower in state institutions. In detention centers for immigrants, it could be as high as 50 percent.

Prison privatization has been growing since the 1980s, when the first private operator started running jails, but it has only really taken off during the last decade. Between 1999 and 2010, the number of inmates in private prisons grew by 80 percent, much more than the 18 percent registered for the total prison population according to official figures. Takei is clear about the reasons for this phenomenon:

“The U.S. is dealing with an epidemic of mass incarceration. Between 1970 and 2010, prisoner numbers rose by 700 percent, and this has encouraged the private companies,” he argues.*

So, it is not surprising that, as prisoner numbers have risen rapidly since the 1990s, private prisons have grown in parallel. Recently, private operators have also benefited from the economic crisis, offering supposedly lower costs than the public sector to governments ever more in need of making savings.

However, the In the Public Interest report considers it an “illusion” to think that minimum occupancy quotas for prisons ultimately benefit taxpayers. The group claims, for example, that private prisons have ended up costing 33 cents more per prisoner, per day than state institutions, while in Colorado the transfer of 3,330 inmates to comply with the minimum resulted in a bill for $2 million.

The leading company in the sector, Corrections Corporation of America, denies the extremes of the situation. “We provide savings to the taxpayer, secure facilities, reduced re-offending rates, and significant flexibility with regard to government contracts,”* said a spokesperson in an email. The company also stresses that only half of its contracts specify minimum occupancy levels and that, where these do exist, they are not inflexible and are only established to guarantee that the “fixed costs” of prison construction and management are covered.

Predictably, the privatization boom has boosted Corrections Corporation of America’s results, as well as those of another giant in the sector, the GEO Group. In the third trimester of 2013, CCA registered net profits of $51.8 million, compared with $42.3 million in the same period the previous year. Both groups are listed on the stock exchange, and their profitability has attracted investment from major financial companies and banks, says Takei. In their public reports, the companies admit that a growing prison population has a positive impact on their results and that any relaxation of immigrant detention procedures or sentencing law could pose a threat to their business.

According to In the Public Interest, both Corrections Corporation of America and the GEO Group are lobbying vehemently for stricter laws, with the ultimate aim of increasing, or at least maintaining, the prison population. Corrections Corporation of America spent $17.4 million to influence politicians between 2002 and 2012, while the GEO Group spent $2.5 million, according to figures obtained from the Center for Responsive Politics, a nongovernmental group. Both companies also donated generously to the election campaigns of key politicians: CCA donated $1.9 million between 2003 and 2012, while the GEO Group donated $2.9 million.

“[The companies] have very well-developed relationships with the political authorities, meaning they can negotiate to win more contracts,” says Shar Habibi, director of the In the Public Interest research department.* At the same time, both companies seek to minimize “operational costs” in their prisons, allowing them to convert as much of their government subsidies as possible into profit. This means, according to Habibi, that they keep staffing to an absolute minimum and spend as little as possible on maintenance, security and salaries, with staff tending to be poorly qualified as a result. All this adds up to an explosive cocktail that has, in some cases, led to mistreatment of inmates, increased conflict in prisons and even escapes.

Habibi stresses that, in general, state governments monitor the conditions in private prisons strictly, but also says that when this supervision is relaxed or less regular, private operators tend to maintain their prisons at “below-standard” level, so as to further reduce costs. This may ultimately result in a loss of control, as happened recently at a CCA prison in the state of Idaho. At the beginning of January, state authorities announced that they were taking over the facility after multiple complaints about staff violence and negligence. Corrections Corporation of America admitted last year to falsifying reports submitted to the government about the working hours of its employees, saying that positions were filled, when, in fact, they were empty. This was not an isolated case: The In the Public Interest report includes similar examples from other U.S. prisons. In cases like the one in Idaho, the government rescue ends up blowing the prison management budget, and it is taxpayers who foot the bill. This is the dark side of the prison privatization boom in the United States.

*Editor’s note: These quotes, though accurately translated, could not be verified.