The Truth About Private Prisons

Corrections Corporation of America (CCA), the nation's largest operator of prisons for profit, is celebrating its 20th anniversary throughout this year "at both the company's corporate Nashville office and at all of the more than 60 prisons, jails and detention centers under CCA ownership and/or management."

No word on whether the prisoners will be celebrating with them. However, a new report from Grassroots Leadership sticks a pin in their birthday balloon with a very critical look at the company's management of both its financial affairs and its contract prisons.

It is no secret that CCA has had its financial problems over the years. It came close to insolvency in the late 1990s after it accumulated heavy debt building expensive speculative prisons and restructuring itself as a real estate investment trust. After restructuring again, shaking up its upper management and spending $120 million to settle investor lawsuits, the company now claims to be in better financial shape. The report concedes that there has been some improvement but remains unconvinced about the company's long-term viability especially as many states are trying to reduce the size of their prison populations.

For those who are more concerned about the public policy implications of the CCA story than the ups and downs of its investors, the company's failures as a prison operator and its successes in influencing penal policy at the state and federal level are the most worrying areas of the report.

For-profit prison companies like CCA have always presented themselves as both cheaper and better than the traditional publicly owned prisons, staffed by state employees. However, from the mayhem and murders at the prison in Youngstown, Ohio, which eventually led to the company paying $1.6 million to prisoners to settle a lawsuit, to a series of wrongful death civil suits, and numerous disturbances and escapes, the authors document in detail a staggering range of failures of prison management.

• failure to provide adequate medical care to prisoners;
• failure to control violence in its prisons;
• substandard conditions that have resulted in prisoner protests and uprisings;
• criminal activity on the part of some CCA employees, including the sale of illegal drugs to prisoners; and
• escapes, which in the case of at least two facilities include inadvertent releases of prisoners who were supposed to remain in custody.

Many of the company's problems are blamed on its labor policies. Because prisons are very labor intensive institutions, the only way a company like CCA can sell itself to government as a cheaper option than public prisons while still making a profit, is by using as few staff as possible, paying them as little as possible, and not spending much on training.

From the beginning, CCA has sought to depress its labor costs by keeping wages low and by denying its employees traditional (defined-benefit) pension plans. One predictable result of these policies had been understaffing and high rates of turnover at some of its facilities. For example, annual turnover rates at several CCA facilities in Tennessee have been more than 60 percent. Another, equally predictable, has been the opposition of public service unions to the spread of prison privatization. Criminal justice reformers, trying to reduce the use of incarceration in the U.S., don't normally find themselves allying with prison guard unions but in this fight they are all on the same side.

Despite this opposition, CCA has been quite successful in recent years in influencing the public debate and winning the support of legislators. Of course, it is not hard to win legislators when you back up your arguments with hard cash. The company spends hundreds of thousands of dollars during each state election cycle to try to gain access and build support for its projects. At the federal level, CCA has given more than $100,000 in soft money to the Republican Party since 1997 as well as political action committee contributions to individual members of key Congressional committees.