Private Prisons
Hiding Behind a Veil of Democracy
Bianca Tylek
POPULAR CRIMINALISM ‖ PROFESSOR ANDREW CRESPO
MAY 7, 2015
Contents
Introduction ................................................................................................................................................... 1
Part I. The Emergence of For-Profit Prisons................................................................................................. 4
Part II. Threatening Growth Strategies ......................................................................................................... 7
Maximizing Revenue ................................................................................................................................ 7
Minimizing Expenses.............................................................................................................................. 10
Part III. Undermining Democracy .............................................................................................................. 12
Legislative Lobbying .............................................................................................................................. 13
Campaign Financing ............................................................................................................................... 14
Conclusion .................................................................................................................................................. 16
Introduction
With the highest incarceration rate in the world,1 the United States is facing incarceration levels
that present substantial ethical and fiscal challenges. Many Americans are losing their liberty with limited
benefit to public safety at a cost that constrained government budgets cannot sustain. Consequently,
democrats and republicans are now teaming up to tackle the issue of mass incarceration, forming unlikely
partnerships such as the Coalition for Public Safety, which brings together adversaries like the Koch
Brothers and the American Civil Liberties Union.2 However, there is one interest group enjoying a huge
windfall from the American incarceration crisis and sparing no expense to protect and expand it: the
private prison industry.
Individual features of prison operations have been privatized for quite some time. A host of forprofit companies provide services, such as telecommunications, and products, such as commissary items,
to correctional facilities. However, in the past few decades, the comprehensive management of these
facilities has also emerged as a privatization target. In fact, given the capitalist underpinnings of
American culture, the exponential growth of incarceration stemming from the War on Drugs announced
in 1971 and subsequent “tough on crime” political regimes did everything short of draft an invitation to
for-profit prison owners and operators.
Today, more than 8% of the 1.6 million people serving time in federal or state prisons are held in
private facilities,3 generating considerable income for half a dozen private prison companies. In 2014, the
two leading private prison companies, Corrections Corporation of America (CCA) and The GEO Group
(GEO), reported combined revenues of $2.8 billion.4 These revenues translated to $22 million in
1
International Centre for Prison Studies, Highest to Lowest - Prison Population Rate. The U.S. has the highest incarceration rate
for any country with a population over 100,000. Seychelles is the only country with an incarceration rate higher than that of the
United States, but its population is less than 90,000.
2
Carl Hulse, “Unlikely Cause Unites the Left and the Right: Justice Reform,” The New York Times, February 18, 2015.
3
U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics, Prisoners in 2013, by E. Ann Carson,
(Washington, DC: Government Printing Office, September 2014), 1, 14.
4
Corrections Corporation of America, 2014 Annual Report: Form 10-K, F-4; The GEO Group, Inc., 2014 Annual Report: Form
10-K, 62. Includes only revenue from The GEO Group’s U.S. Corrections & Detention business unit.
1
executive compensation, representing an 18% increase from the previous year.5 But insiders are not the
only beneficiaries. For these publicly held companies, these revenues have also produced millions in
shareholder dividends.6 Yet, many of these shareholders may not even know they have an ownership
stake in a private prison company.7 Vanguard and Fidelity are the nation’s top 401(k) providers and also
the combined owners of 19% of CCA and 11% of GEO.8 One index fund managed by Vanguard alone
owns nearly 8% of both CCA and GEO shares.9
Private prison companies present such an attractive financial investment because they enjoy profit
margins higher than most private industries. In 2014, CCA had a net profit margin nearly double that of
the average private company in the United States.10 Even more impressively, both CCA and GEO
reported operating margins north of 30% for the facilities they owned and managed;11 margins higher than
that reported by Apple in 2014.12 And, indeed, the investments panned out the way investors would have
liked with CCA’s stock price growing 74% and GEO’s growing 82% over the past five years.13
Together CCA and GEO account for approximately 75% of the $7.4 billion private prison
market.14 Other private prison companies include Management & Training Corporation, LaSalle
Southwest Corrections, Community Education Centers, and Emerald Companies. Figure 1 provides more
detail on the scale, clientele, and geographic presence of private prison companies in America.
5
Morningstar, Corrections Corporation of America, Chart; Morningstar, The GEO Group, Chart.
Corrections Corporation of America, 2014 Annual Report: Form 10-K, F-5; The GEO Group, Inc., 2014 Annual Report: Form
10-K, 94.
7
Ray Downs, “Who’s Getting Rich off the Prison-Industrial Complex?,” Vice, May 17, 2013.
8
Morningstar, Corrections Corporation of America, Ownership: Major Owners; Morningstar, The GEO Group, Ownership:
Major Owners.
9
Id.
10
Corrections Corporation of America, 2014 Annual Report: Form 10-K, F-4; Sageworks, The Private Company Report
(Raleigh, NC: Sageworks, March 30, 2015), 1.
11
Corrections Corporation of America, 2014 Annual Report: Form 10-K, 59. Refers only to the operating margin of The GEO
Group’s U.S. Corrections & Detention business unit.
12
Apple, Inc., 2014 Annual Report: Form 10-K, 45.
13
Morningstar, Corrections Corporation of America, Insiders: Executive Compensation; Morningstar, The GEO Group, Insiders:
Executive Compensation.
14
Theirry Godard, “The Economics of the American Prison System,” SmartAsset , January 23 2015.
6
2
Figure 1: Leading Private Prison Owners and Operators
Corrections
Corporation
The GEO
of America
Group15
59
61
Facilities17 (#)
47
37
Leased/Owned & Managed
12
24
Managed Only
85,297
69,697
Beds (#)
Management
& Training
Corporation
22
--26,425
Other Owners/
Operators16
29
--19,129
Contract Agency
Immigration
Federal
State/Local
12
17
34
12
18
34
2
3
17
7
12
21
Region
Northeast
Midwest
West
Southeast
Southwest
2
5
9
19
24
2
3
18
16
22
0
1
3
5
13
1
1
1
11
15
Source: Correctional Corporation of America, Locations; The GEO Group, Inc., 2014 Annual Report: Form 10-K, 13-16; The
GEO Group, Inc., Locations; MTC Management & Training Corporation, Corrections: Locations; LaSalle Corrections, Our
Locations; Community Education Centers, Facilities: CEC Corrections; Emerald Companies, Company Locations.
This paper will discuss the relationship between private prison companies and criminal law and
policy. Part I will offer a brief overview of the modern history of for-profit prisons. Part II will provide
more detail on the profit model of private prison companies and their accompanying growth strategies.
Part III will then discuss the ways in which these strategies undermine democratic processes within the
criminal justice sphere. Throughout the paper, we will also address the leading alternative explanation for
the correlation between high incarceration rates and the presence of for-profit prisons—that private
prisons offer a less expensive solution to incarceration for budget constrained states.
15
Refers only to The GEO Group’s U.S. Corrections & Detention business unit and includes facilities recently acquired from
LSC Corrections Services.
16
Includes LaSalle Corrections, Community Education Centers, and Emerald Companies.
17
Does not include leased out or non-correctional facilities.
3
Part I. The Emergence of For-Profit Prisons
The modern age of prison privatization began in 1983, after the prison population grew more than
10% in consecutive years,18 with the incorporation of CCA.19 The company received its first federal
contract in Texas later that year and its first state contract in Tennessee the following year.20 In 1984,
CCA also opened the very first privately owned prison, the Houston Processing Center in Texas.21 In the
same year, Wackenhut Corrections Corporation (WCC) was formed under the parent company of The
Wackenhut Corporation.22 Just two years later, in 1986, CCA leaped into an initial public offering on the
NASDAQ (WCC would follow suit in 1994).23 The following year, WCC was awarded its first contract
over the Aurora Processing Center in Colorado.24
Over the next five years, these private prison conglomerates continued to expand operations while
a number of smaller private prison companies also emerged, presenting an early opportunity for industry
consolidation. In just 1995, CCA acquired TransCor America, Concept, and Corrections Partners. 25 In
1998, CCA acquired the third largest private prison company at the time, U.S. Corrections Corporation
for $10 million.26 Years later, in 2005, WCC would change its name to The GEO Group and embark on a
similar acquisition strategy.27 Between 2005 and 2010, GEO acquired Correctional Services Corporation,
CentraCore Properties Trust, and Cornell Companies.28 In 2014, GEO also acquired LSC Corrections
Services.29
18
U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics, Prisoners in 1986, (Washington, DC:
Government Printing Office, May 1987), 1.
19
Correctional Corporation of America, About Us: Who We Are: Our History.
20
Correctional Corporation of America, About Us: Who We Are: Our History; The Sentencing Project, Prison Privatization and
the Use of Incarceration (Washington, DC: The Sentencing Project, 2004), 1.
21
Correctional Corporation of America, About Us: Who We Are: Our History.
22
The GEO Group, Inc., About Us: History.
23
Correctional Corporation of America, About Us: Who We Are: Our History; The GEO Group, Inc., About Us: History.
24
The GEO Group, Inc., About Us: History.
25
Correctional Corporation of America, About Us: Who We Are: Our History.
26
Corrections Corporation of America, Corrections Corporation of America and CCA Prison Realty Trust to Merge In $4 Billion
Transaction; Companies Acquire U.S. Corrections Corporation [Press Release], April 20, 1998.
27
The GEO Group, Inc., About Us: History.
28
Id.
29
The GEO Group, The GEO Group Announces Acquisition of Eight Correctional and Detention Facilities Totaling More Than
6,500 Beds [Press Release], January 26, 2015.
4
Throughout the maturation of the private prison industry, the number of people incarcerated grew
260% from 437,248 in 1983 to 1,574,741 in 2013.30 Still, the number of prisoners held in for-profit
prisons grew at a rate that significantly outpaced the already dramatic growth rate of incarceration more
generally.31 By 2013, there were 133,044 prisoners, or 8% of the total prison population, housed in forprofit prisons.32 Though the majority of these prisoners are state prisoners, for-profit prisons account for a
larger segment of the federal prison population than the state prison population.33 In fact, federal agencies
make up more than 40% of CCA’s client base.34 The U.S. Marshals Service (USMS) accounts for 17%
and the Federal Bureau of Prisons (BOP) and Immigration and Customs Enforcement (ICE) each account
for another 13%.35 ICE is also GEO’s largest client.36
Thus, not surprisingly,
Figure 2: Regional State Prison Incarceration Rates
there is a cluster of for-profit
prisons in the states along the
Mexican-American border: Texas,
New
Mexico,
Arizona,
and
California. However, with more
than 40% of for-profit prisons
located in the southwest and
another 30% in the southeast,37
Source: Peter Wagner, “Tracking State Prison Growth in 50 States,” Prison
Policy Initiative, May 28, 2014.
the prevalence of immigration detention cannot be the only factor driving private prison companies to
concentrate their operations in the south. Southern states also offer the highest incarceration rates in the
30
U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics, Prisoners in 1986, (Washington, DC:
Government Printing Office, May 1987), 1; U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics,
Prisoners in 2013, by E. Ann Carson, (Washington, DC: Government Printing Office, September 2014), 2.
31
American Civil Liberties Union, Banking on Bondage: Private Prisons and Mass Incarceration (New York, NY: American
Civil Liberties Union, November 2011), 5.
32
U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics, Prisoners in 2013, by E. Ann Carson,
(Washington, DC: Government Printing Office, September 2014), 14.
33
Id.
34
Corrections Corporation of America, 2014 Annual Report: Form 10-K, 9.
35
Id.
36
Aviva Shen, “Private Prisons Spend $45 Million On Lobbying, Rake In $5.1 Billion For Immigrant Detention Alone,”
ThinkProgress, August 3, 2012.
37
See Figure 1.
5
nation and a conservative political climate that has endorsed the “tough on crime” policies that have
allowed them to persist over the years (see Figure 2). Furthermore, their overwhelming republican
governments favor private sector expansion, thus encouraging private prison companies to directly exploit
these ballooned incarceration rates. Figure 3 provides more detail on the geographic concentration of four
of the leading private prison companies.
Figure 3: Geographic Landscape of Private Prison Beds
Source: U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics, Prisoners in 2013, by E. Ann
Carson, (Washington, DC: Government Printing Office, September 2014), 7; Community Education Centers, Facilities: CEC
Corrections; Correctional Corporation of America, Locations; MTC Management & Training Corporation, Corrections:
Locations; The GEO Group, Inc., 2014 Annual Report: Form 10-K, 13-16.
While it is no coincidence that the geographic expansion of for-profit prisons has directly
correlated with regional incarceration rates, it is difficult to determine whether private prison companies
are simply capitalizing on favorable conditions or driving them. Surely, private prison companies cannot
6
be blamed for creating the current incarceration crisis that began in the 1970s prior to their emergence or
even the conservative ideologies that contributed to their later success in certain regions. However, these
private prison companies have taken proactive steps to reinforce the conditions favorable to their success
and thus have fashioned a vicious feedback loop that encourages incarceration.
Part II. Threatening Growth Strategies
The revenue model of private prison owners and operators depends on a per diem per prisoner
pay structure. With per diem rates limited by existing operational costs at public facilities, the profitability
of for-profit prisons relies on increasing man-days38 to maximize revenue and lowering operational costs
to minimize expenses. The former approach promotes incarceration with no upward boundary while the
latter threatens prison conditions with at least some downward limit. In this section, we will discuss the
benefits and limits of these growth strategies and their implications on incarceration rates.
Maximizing Revenue
With a per diem revenue model, increasing compensated man-days is critically important to the
profit growth of private prison companies. These companies can increase their man-days in number of
ways. First, they can increase their company’s market share of the existing private prison market through
mergers and acquisitions. Second, they can increase the private prison market share of the broader prison
market by increasing the number of privately contracted beds and/or their occupancy rates. Third, they
can increase the overall utilization of prisons by increasing incarceration more generally. In this section,
we will touch on each of these strategies in more detail.
Corporate Expansion: Private prison companies can increase their share of the existing private
prison market by acquiring existing private prisons from competitors. GEO took this approach when they
recently bought out LSC Corrections Services for approximately $312 million.39 The acquisition added
38
Man-days are calculated by multiplying the number of prisoners by the number of days each serves.
The GEO Group, The GEO Group Announces Acquisition of Eight Correctional and Detention Facilities Totaling More Than
6,500 Beds [Press Release], January 26, 2015.
39
7
eight facilities, or 6,500 beds, to the company’s portfolio.40 Though, both CCA and GEO have expanded
their market shares in this way in the past, there are two rather substantial limitations to this growth
strategy: current levels of privatization and the small number of players in the market. In fact, by 2007,
there were only six players left.41 Thus, this is unlikely to be the dominant growth strategy for these
private prison companies going forward.
Prison Privatization: Private prison companies can increase their man-days by increasing the
market share of for-profit prisons in corrections more broadly. This approach is dependent on the
industry’s ability to gain government and public support for the privatization of corrections. While private
prison companies have noted the opposition of certain groups, such as labor unions and criminal justice
reform organizations,42 they have nevertheless seen an expansion in their populations. In fact, the number
of prisoners held in for-profit prisons increased more than 1,600% between 1990 and 2009.43
While contracting for additional beds, private prison companies also make an effort to include
occupancy guarantees in their management contracts. Sixty-five percent of management contracts have
such guarantee clauses.44 These clauses typically promise occupancy rates between 80% and 100% and
offer to pay for unused prison beds below the delineated guarantee.45 For example, in 2012, CCA secured
a management contract from the Arizona Department of Corrections to incarcerate 1,000 prisoners at the
Red Rock Correctional Center.46 The contract included an occupancy guarantee of 90% for the contracted
beds.47 As a result of such contracts, in 2014, CCA and GEO enjoyed occupancy rates as high as 84% and
96%, respectively.48 This growth strategy holds a lot of promise since more than 90% of prisoners are still
40
Id.
Simon Hakim and Erwin A. Blackstone, Prison Break: A New Approach to Public Cost and Safety (Oakland, CA: The
Independent Institute, June 2014), 16.
42
Corrections Corporation of America, 2014 Annual Report: Form 10-K, 26.
43
American Civil Liberties Union, Banking on Bondage: Private Prisons and Mass Incarceration (New York, NY: American
Civil Liberties Union, November 2011), 5.
44
In the Public Interest, Criminal: How Lockup Quotas and “Low-Crime Taxes” Guarantee Profits for Private Prison
Corporations (Washington, DC: In the Public Interest, September 2013), 6.
45
Id. at 3-6.
46
Corrections Corporation of America, 2014 Annual Report: Form 10-K, F-20.
47
Id.
48
Corrections Corporation of America, 2014 Annual Report: Form 10-K, 6; The GEO Group, Inc., 2014 Annual Report: Form
10-K, 54. For Corrections Corporation of American, data includes idle facilities, but excludes facilities marked for
discontinuation. For The GEO Group, data excludes idle facilities.
41
8
held in public prisons.49 However, there is still an absolute ceiling set by the number of people
incarcerated and a lower practical ceiling set by correctional systems and their policies about what types
of populations can be housed in for-profit prisons.
Prison Utilization: Private prisons are relied upon to relieve strains on government budgets and
concerns of overcrowding.50 Accordingly, private prison companies fair best when incarceration is high
enough to create such burdens. Thus, these companies can grow their man-days by increasing the overall
number of people incarcerated. This approach undoubtedly raises the greatest number of ethical issues,
but it also the only uncapped growth strategy. And not only is the strategy recognized by private prison
companies, but efforts made to reduce incarceration are viewed as threats to profitability. In fact, both
CCA and GEO cite leniency in conviction and sentencing, decriminalization of drug and immigration
offenses, and even reductions in crime as business risks. In its 2014 Annual Report, CCA states:
. . . growth depends on a number of factors we cannot control, including crime rates and
sentencing patterns in various jurisdictions . . . The demand for our facilities and services could
be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole
standards and sentencing practices or through the decriminalization of certain activities that are
currently proscribed by criminal laws. For instance, any changes with respect to drugs and
controlled substances or illegal immigration could affect the number of persons arrested,
convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house
them . . . Legislation has also been proposed in numerous jurisdictions that could lower minimum
sentences for some non-violent crimes and 25 make more inmates eligible for early release based
on good behavior. Also, sentencing alternatives under consideration could put some offenders on
probation with electronic monitoring who would otherwise be incarcerated. Similarly, reductions
in crime rates or resources dedicated to prevent and enforce crime could lead to reductions in
arrests, convictions and sentences requiring incarceration at correctional facilities.51
Similarly, in its 2014 Annual Report, GEO states:
The demand for our correctional and detention facilities and services . . . could be adversely
affected by changes in existing criminal or immigration laws, crime rates in jurisdictions in which
we operate, the relaxation of criminal or immigration enforcement efforts, leniency in conviction,
sentencing or deportation practices, and the decriminalization of certain activities that are
currently proscribed by criminal laws or the loosening of immigration laws. For example, any
changes with respect to the decriminalization of drugs and controlled substances could affect the
number of persons arrested, convicted, sentenced and incarcerated, thereby potentially reducing
49
U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics, Prisoners in 2013, by E. Ann Carson,
(Washington, DC: Government Printing Office, September 2014), 14.
50
Simon Hakim and Erwin A. Blackstone, Prison Break: A New Approach to Public Cost and Safety (Oakland, CA: The
Independent Institute, June 2014), 3.
51
Corrections Corporation of America, 2014 Annual Report: Form 10-K, 27-28.
9
demand for correctional facilities to house them. Similarly, reductions in crime rates could lead to
reductions in arrests, convictions and sentences requiring incarceration at correctional facilities.52
In summary, the profitability of private prison companies comes at the expense of public safety and
personal liberty. It may not be surprising then that the recidivism rates of privately held prisons are higher
than those of publicly run prisons.53 After all, it is within the best interest of private prison companies to
have a revolving door at their facilities.
Minimizing Expenses
Another way private prison companies seek to increase profitability is by reducing their
operational expenses—the less they spend, the more they pocket. With approximately 65-70% of prison
expenditures going to staff,54 private prison companies save the most in operational costs by avoiding
unionized labor and the associated personnel services.55 Consequently, the correctional staff at for-profit
prisons tend to be inadequately trained and poorly paid.56 Not surprisingly, private prisons have been
condemned for higher rates of violence and abuse.57 Private prisons also cut costs related to food,
healthcare, and programs.58 While lowering these expenses may not directly influence incarceration rates,
it may have an indirect impact by worsening prison conditions and thus putting prisoners in poorer mental
and physical health for release. Indeed, as already noted, studies have showed that recidivism rates are
higher for private prisons than public prisons.59
Interestingly, financial efficiency is also the primary alternative explanation for the expansion of
for-profit prisons in highly incarcerative states. If true, the interests of the public and private sectors
would in some way be aligned. With lower operational costs, private prison companies can still promise
savings for federal and state systems while charging profit premiums. There is indeed some truth to these
52
The GEO Group, Inc., 2014 Annual Report: Form 10-K, 36.
Theirry Godard, “The Economics of the American Prison System,” SmartAsset , January 23 2015.
54
U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Assistance, Emerging Issues on Privatized Prisons,
by James Austin and Garry Coventry, (Washington, DC: Government Printing Office, February 2001), 16.
55
Simon Hakim and Erwin A. Blackstone, Prison Break: A New Approach to Public Cost and Safety (Oakland, CA: The
Independent Institute, June 2014), 23-24.
56
Brendan Fischer, “Violence, Abuse, and Death at For-Profit Prisons: A GEO Group Rap Sheet,” The Center for Media and
Democracy’s PR Watch, September 26, 2013.
57
U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Assistance, Emerging Issues on Privatized Prisons,
by James Austin and Garry Coventry, (Washington, DC: Government Printing Office, February 2001), 36-37, 48.
58
Theirry Godard, “The Economics of the American Prison System,” SmartAsset , January 23 2015.
59
Id.
53
10
claims with short-run savings averaging about 19% and long-run savings averaging about 29%.60 Some
states even require private prison companies to offer a specified discount to public per-diem costs. For
example, Texas, Kentucky, and Mississippi have contract stipulations that require a 10% savings. 61
Moreover, a recent study found that the cost savings of for-profit prisons is often underestimated because
they fail to account for savings on personnel services, such as pensions and healthcare for retirees, which
may not be attributed directly to state correctional departments.62 Finally, with operating margins as high
as 30% and per diem costs still lower than those in public prisons,63 some might consider for-profit
prisons much more financially efficient. However, comparing private and public operational costs is not
as straight forward as private prison companies might like the public to believe. There are, in fact, hidden
costs that private prison companies either unfairly avoid or perhaps even create for public prisons.
First, for-profit prisons can cherry-pick the most desirable, or profitable, prisoners from the
general prison population. Generally, this means that for-profit prisons house healthy, minimum security
prisoners who are cheaper to incarcerate. States are left to run maximum security prisons that require
“more intensive security systems and procedures.”64 Public prisons also typically house specialized
populations, such as sex offenders, that are more expensive due to higher treatment and administrative
needs.65 Finally, public prisons also tend to be responsible for prisoners with moderate to high mental or
physical healthcare needs. These population differences allow private prison companies to demonstrate
artificial savings for states.
60
Id. Short-run costs are those associated with the day-to-day operation of prison facilities. Long-run costs include short-run
costs plus the capital expenditures associated with maintaining and building prisons.
61
Id.
62
Simon Hakim and Erwin A. Blackstone, Prison Break: A New Approach to Public Cost and Safety (Oakland, CA: The
Independent Institute, June 2014), 3.
63
Association of State Correctional Administrators, Inmate Cost Per Day Follow Up Survey (September 2011).
64
Harris Kenny and Leonard Gilroy, The Challenge of Comparing Public and Private Correctional Costs (Reason Foundation,
December 2013), 4-5.
65
Id.
11
Second, as already mentioned, studies have shown that for-profit prisons have marginally higher
rates of recidivism than their public counterparts.66 Ethical concerns aside, higher recidivism rates burden
states with additional incarceration expenses in the future. Though a differential of 3-4% may seem
Figure 4: Annual Cost of Incarceration per Prisoner
negligible, a difference of even one
percentage
point
can
amount
to
considerable costs, particularly in states
with high incarceration costs. For
example, in New York, where the
annual cost of incarcerating one person
is more than $60,000, recidivism comes
at a very high price. Figure 4 provides
Source Theirry Godard, “The Economics of the American Prison System,”
SmartAsset, January 23, 2015.
further detail on the annual costs of
incarceration by state.
In their efforts to maximize revenues and minimize expenses, private prison companies rely
heavily on growth strategies that promote incarceration. Given the obvious ethical implications, private
prison companies are less than public about their expansion intentions. Consequently, they employ
growth tactics that manipulate political elections and criminal lawmaking, weakening the influence of
popular democracy on criminal law and policy.
Part III. Undermining Democracy
With most private prison contracts executed by federal, state, and local policymakers, the forprofit prison industry relies heavily on political relationships. Accordingly, the industry has a dualpronged political strategy that undermines democratic legitimacy in its dependence on legislative
lobbying and campaign financing.
66
Spivak, Andrew L. and Susan F. Sharp, “Inmate Recidivism As a Measure of Private Prison Performance,” Crime &
Delinquency Vol. 54 (Washington, DC: SAGE Publications, July 2008), 482-508.
12
Legislative Lobbying
Despite denying lobbying involvement, in the past ten years, the three leading private prison
operators have spent over $45 million on lobbying.67 According to the company’s own literature, CCA
has an explicit policy prohibiting it from “engaging in lobbying or advocacy efforts that would influence
enforcement efforts, parole standards, criminal laws, and sentencing policies.”68 Yet, over the past decade,
CCA, like its competitors, has spent more than $900,000 annually on lobbying. 69 In fact, not only do
private prison operators utilize the services of lobbying firms, they also employ their own in-house
lobbyists.
Since 2002 alone, CCA has employed nearly 400 lobbyists across 30 states.70 In 2014, the
company had 36 active lobbyists in 10 states, focusing heavily on Florida, Vermont, Tennessee,
California, Pennsylvania, Kentucky, and Minnesota.71 Over the same time frame, GEO has employed
more than 200 lobbyists across 11 states, focusing heavily on Florida, California, Texas, Pennsylvania,
and Virginia.72 In 2014, the company had 15 active lobbyists across 5 states.73
Attention to these specific states has been a successful strategy play for private prison operators.
Aside from being the home to the headquarters of GEO, Florida also has the second largest private prison
population and the market share of these for-profit prisons is only increasing.74 Between 2012 and 2013,
the private prison population in Florida grew 1% while the private prison population across all states
decreased 5%.75 Lobbying centered on California has also produced strong results. With the second
largest prison population in the country and a judicial order to remedy overcrowding,76 California has
67
Aviva Shen, “Private Prisons Spend $45 Million On Lobbying, Rake In $5.1 Billion For Immigrant Detention Alone,”
ThinkProgress, August 3, 2012.
68
Corrections Corporation of America, 2014 Annual Report: Form 10-K, 28.
69
Justice Policy Institute, Gaming the System: How the Political Strategies of Private Prison Companies Promote Ineffective
Incarceration Policies (Washington, DC: Justice Policy Institute, June 2011), 22.
70
National Institute on Money in State Politics, Corrections Corporation of America, April 29, 2015.
71
Id.
72
National Institute on Money in State Politics, GEO Group, April 29, 2015.
73
Id.
74
U.S. Department of Justice, Officer of Justice Programs, Bureau of Justice Statistics, Prisoners in 2013, by E. Ann Carson,
(Washington, DC: Government Printing Office, September 2014), 14.
75
Id.
76
Id. at 5.
13
largely embraced private prisons. Accordingly, between 2012 and 2013, the private prison population in
California grew 233%.77
Both CCA and GEO are private sector members of American Legislative Exchange Council
(ALEC), a nonpartisan organization aimed at advancing “limited government, free markets and
federalism at the state level.”78 The organization utilizes a public-private partnership structure to bring
together state legislators, members of the private sector, and the general public to draft and introduce
model legislation. ALEC has played a role in the passing of mandatory minimum, three strikes, and truthin-sentencing laws, all of which have contributed to the rapid growth of incarceration since the 1970s.79
Unfortunately, further detail about the
lobbying
efforts
of
private
Figure 5: State and Local Political Contributions of
prison Private Prison Companies by Year
operators is lacking since lobbyists are
$3,000,000
$2,650,346
not required to report the direction in
$2,500,000
which they lobbied on any particular
$2,000,000
piece of legislation.80
$1,500,000
Campaign Financing
$1,000,000
Since 1990, the private prison
$500,000
operators have made nearly $15 million in
$-
political contributions at the state and
local level.81 These contributions have Source: National Institute on Money in State Politics, Correctional
seen a dramatic uptick in recent years
facilities construction & management/for-profit contributions to
candidates and committees, April 29, 2015.
77
Id. at 14.
American Legislative Exchange Council, About Us.
79
Justice Policy Institute, Gaming the System: How the Political Strategies of Private Prison Companies Promote Ineffective
Incarceration Policies (Washington, DC: Justice Policy Institute, June 2011), 29.
80
Id. at 21.
81
National Institute on Money in State Politics, Correctional facilities construction & management/for-profit contributions to
candidates and committees, April 29, 2015.
78
14
with 2014 representing the highest amount yet at $2.7 million.82 CCA and GEO, along with their
acquisitions, have accounted for 72% of these political contributions over the years.83 The two companies
also made combined political contributions of nearly $1 million at the federal level since just 2010.84
Moreover, these company-specific figures under estimate their political influence because they fail to
capture the individual political contributions of the companies’ executive leadership and board of
directors. In fact, the Chief Executive Officer of GEO, George Zoley, and one of the founding partners of
CCA, Doctor Crants, have each made approximately $90,000 in political contributions.85
Approximately half of all state and local political contributions are made to party committees, the
largest beneficiary of which is the Florida Republican Party, which has received more than $4 million.86
Another substantial proportion of
Figure 6: State and Local Political Contributions of
Private Prison Companies by State
these
directly
contributions
to
state
are
made
and
local
candidates.87 Finally, the remaining
3% of these contributions are made
to ballot measure committees.88
Similar
to
lobbying
spending, these contributions have
been relatively clustered in a few
Source: National Institute on Money in State Politics, Correctional facilities
construction & management/for-profit contributions to candidates and
committees, April 29, 2015.
82
Id.
Id.
84
Id.
85
Id.
86
Id.
87
Id.
88
Id.
83
15
states. Florida, California, Texas,
Tennessee, and Virginia have all
scene contributions in excess of $500,000.89 GEO is by far the largest correctional contributor in Florida
at $3.4 million and CCA has an equally substantial lead as the largest correctional contributor in
California at $1.5 million.90
Though republican candidates tend to be the recipients of campaign contributions from private
prison operators, nearly a third of contributions are made to democratic candidates.91 Researchers have
taken this to suggest that private prison operators are less concerned with supporting particular political
beliefs than general access to political power.92 In fact, nearly 80% of campaign contributions support
winning candidates.93 Even the timing of these contributions is strategically nuanced. Private prison
operators tend to give in the early and late stages of political campaigns in order to establish a strong
rapport early and then reinforce a positive relationship with the candidate expected to win.94
Conclusion
Though private prison companies tend to tout financial efficiency as their great contribution to
corrections, their incentives are in many ways diametrically opposed to those of a safe and free society.
Their financial success depends on increasing crime, law enforcement, and liberty infractions.
Accordingly, they succumb to undercutting popular democracy to feed their bottom lines. They rely on
the questionable practices of private sector lobbying and campaign financing to secure political support
for their business ventures. They do so with as much secrecy as possible to stay out of the direct attack of
ethically minded opposition.
Thus, it seems only fitting that the fastest growing client for private prison companies is one that
intends to fly under the radar and enjoys the fewest protections, illegal immigrants targeted by
Immigration and Customs Enforcement. Both, CCA and GEO highlighted the importance of the recent
89
Id.
Id.
91
Justice Policy Institute, Gaming the System: How the Political Strategies of Private Prison Companies Promote Ineffective
Incarceration Policies (Washington, DC: Justice Policy Institute, June 2011), 19.
92
Id. at 18.
93
National Institute on Money in State Politics, Correctional facilities construction & management/for-profit contributions to
candidates and committees, April 29, 2015.
94
Justice Policy Institute, Gaming the System: How the Political Strategies of Private Prison Companies Promote Ineffective
Incarceration Policies (Washington, DC: Justice Policy Institute, June 2011), 18.
90
16
focus on immigration laws at the federal, state, and local level in their annual reports. But they are not idle
players in the space; they are well-prepared to protect and expand their enterprises. For example, 30 of the
36 legislators who co-sponsored Arizona’s immigration bill that would undoubtedly place more
immigrants in detention received campaign contributions from private prison companies.95 If we are not
careful, and perhaps even if we are, federal, state, and local immigration policies will be dictated by a few
parties interested in further immigrant detention.
Unfortunately, business interests run high in politics and consistently undermine the legitimacy of
popular democracy. To rein in the legislative lobbying and campaign financing of private prison
companies, additional limitation would have to be made on such practices. Alternatively, the privatization
of prisons could be outlawed or at least more closely regulated. For example, legislation could be passed
that forbids private prison companies from relying on a revenue model that encourages incarceration or
prohibits states from paying owners and operators on a per diem per person basis. Private prison
companies could instead offer the public sector better recidivism rates in exchange for higher payouts
similar to the social impact bond model. It may not be entirely prudent to dismiss privatization within
corrections or any other public sector. However, as it currently stands, the privatization of prisons
threatens all efforts to reduce mass incarceration.
95
Andre N. Sanchez, “Private Prisons Spend Millions On Lobbying To Put More People In Jail,” Think Progress, June 23, 2011.
17