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September 20, 2013

New report assails "lockup quotas" in private prison industry

Criminal-Lockup-Quota-InfographicThe organization In the Public Interest (ITPI), which bills itself as "a comprehensive resource center on privatization and responsible contracting," has just released this new report on the private prison industry titled "How Lockup Quotas and 'Low-Crime Taxes' Guarantee Profits Guarantee Profits."   Here is 17-page report's introduction:

In 2012, Corrections Corporation of America (CCA), the largest for-profit private prison company in the country, sent a letter to 48 state governors offering to buy their public prisons. CCA offered to buy and operate a state’s prison in exchange for a 20-year contract, which would include a 90 percent occupancy rate guarantee for the entire term. Essentially, the state would have to guarantee that its prison would be 90 percent filled for the next 20 years (a quota), or pay the company for unused prison beds if the number of inmates dipped below 90 percent capacity at any point during the contract term (a “low-crime tax” that essentially penalizes taxpayers when prison incarceration rates fall). Fortunately, no state took CCA up on its outrageous offer. But many private prison companies have been successful at inserting occupancy guarantee provisions into prison privatization contracts, requiring states to maintain high occupancy levels in their private prisons.

For example, three privately-run prisons in Arizona are governed by contracts that contain 100 percent inmate quotas.  The state of Arizona is contractually obligated to keep these prisons filled to 100 percent capacity, or pay the private company for any unused beds.

These contract clauses incentivize keeping prison beds filled, which runs counter to many states’ public policy goals of reducing the prison population and increasing efforts for inmate rehabilitation.  When policymakers received the 2012 CCA letter, some worried the terms of CCA’s offer would encourage criminal justice officials to seek harsher sentences to maintain the occupancy rates required by a contract.  Policy decisions should be based on creating and maintaining a just criminal justice system that protects the public interest, not ensuring corporate profits.

Bed guarantee provisions are also costly for state and local governments.  As examples in the report show, these clauses can force corrections departments to pay thousands, sometimes millions, for unused beds — a “low-crime tax” that penalizes taxpayers when they achieve what should be a desired goal of lower incarceration rates.  The private prison industry often claims that prison privatization saves states money.  Numerous studies and audits have shown these claims of cost savings to be illusory, and bed occupancy requirements are one way that private prison companies lock in inflated costs after the contract is signed.

This report will discuss the use of prison bed occupancy guarantee clauses in prison privatization contracts and explore how bed occupancy guarantees undermine criminal justice policy and democratic, accountable government. Section 1 explains the for-profit private prison industry’s reliance on high prison populations, and how these occupancy guarantee pr ovisions directly benefit its bottom line. Section 2 discusses the prevalence of bed guarantee clauses, drawing on a set of contracts that ITPI obtained through state open records requests. Section 3 describes how occupancy guarantees have harmed states, focusing on the experiences of Arizona, Colorado, and Ohio — three states that have agreed to these provisions to detrimental consequences. Lastly, Section 4 will discuss our recommendation that governments can and should reject prison occupancy guarantees.

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September 20, 2013 at 08:55 AM | Permalink


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This report is incorrect on a minor point. One state DID take CCA up on its offer (although not in full). Ohio sold the Lake Erie Correctional Institution (down the street from me) to CCA in 2012 for the exact same terms outlined in the letter. To date, LaECI remains the nations only privately-owned and operated prison.

Posted by: Mark Allenbaugh | Sep 20, 2013 1:42:23 PM

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