Grassroots Leadership responds to private prison corporations' statements to investors

August 10, 2016

CCA, GEO Group link family detention, expansion of for-profit treatment services, and upcoming ballot initiative in California to future profits

(AUSTIN, Texas) — Today, Grassroots Leadership responded to investor conference calls held last week by private prison corporations Corrections Corporation of America (CCA) and the GEO Group.   In the calls, company executives reported on earnings from 2016’s second quarter and spoke of the financial outlook moving forward.

“These statements show that policy reforms that are good for immigrants, good for those tied up in the criminal justice system, and good for taxpayers are bad for private prison corporations,” said Bob Libal, executive director of Grassroots Leadership.   “Policy-makers should prioritize reforms that reduce the number of people behind bars and , not policies that line the pockets of private prison corporation executives.”

Family detention

The calls also revealed to shareholders of both companies what many in Texas already knew: the two massive lockups for refugee moms and kids in South Texas have been key to record profitability since 2014. CCA’s Dilley detention camp and GEO Group’s Karnes County lockup have been a driver of revenue for both companies, who have both reported gains in every quarter since the facilities opened.  

But continued record revenue from family detention is not promised. Mass family detention faces two court rulings against a policy that locks up asylum-seeking moms and their kids, another pending lawsuit from detained mothers and Grassroots Leadership over licensing the detention centers as childcare facilities in Texas, and a presidential candidate who has spoken out against family detention.

CCA executives reported a $7.7 million drop in net income in the second quarter, down from $65.3 million a year earlier. The Dilley family detention camp accounts for nearly 16% of CCA’s total revenue by one estimate. If the Dilley camp is closed, as immigrant rights advocates have been demanding for more than two years, it would be a significant blow to CCA.

GEO Group boss George Zoley was happy to say that his company’s Karnes family detention center, which was at the center of a sex abuse scandal before the state of Texas awarded it with a childcare license earlier this year, continues to be profitable for the company. But that didn’t stop shareholders from asking about his outlook given the forces aligning against family detention. He painted a rosy picture and highlighted the childcare license, which may not survive a court challenge next month.

“It’s really appalling that CCA and GEO have tied their corporate bottom lines to the suffering of mothers and children who came to the U.S. for refuge,” said Cristina Parker, immigration programs director at Grassroots Leadership.

California woes for CCA

CCA's Chief Financial Officer, David Garfinkle, announced on the call that a decline in California’s prison population had the most significant negative financial impact on CCA this quarter, which contributed to a $0.06 per share reduction from the prior year quarter.

The state’s reliance on shipping prisoners to out-of-state private prisons as a “solution” to overcrowding has long resulted in a steady revenue stream for CCA. In November 2013, a total of nearly 9,000 California prisoners were locked up in four CCA prisons in Oklahoma, Arizona, and Mississippi. In less than three years, that number has dropped drastically to a little over 4,800 in two out-of-state CCA prisons. The decline may be attributed to the implementation of Prop 47, which passed in 2014 and reduced the classification of many nonviolent crimes from a felony to a misdemeanor.

While the passage of Prop 47 helped to nearly cut in half the state’s use of for-profit prisons across state lines, CCA CEO Damon Hininger hinted on the call that another upcoming ballot initiative, Prop 57, may be cause for concern. If passed, Prop 57 would allow for a number of reforms aimed at reducing the number of people locked up in California, including authorizing parole consideration for people with nonviolent convictions who complete the full sentence for their primary offense.

Hininger warned that, though it is difficult to assess the impact of Prop 57, the CA Legislative Analyst’s Office reported the approximate cost savings of Prop 57 to be in the tens of millions of dollars annually of CDCR's annual budget. CCA may be bracing for another potential blow to their bottom line.

“Shipping prisoners to out-of-state private prisons is harmful and regressive criminal justice policy,” said Holly Kirby, criminal justice programs director at Grassroots Leadership and author of the report Locked Up and Shipped Away, which documents the trend of shipping prisoners to out-of-state for-profit prisons. “It’s clear from these remarks that states across the country should continue to prioritize policy changes that reduce incarceration and chip away at CCA’s bottom line.”

Treatment Industrial Complex

Both companies also sent a clear message to investors that they view the growing call for prisoner treatment and rehabilitation, community supervision, and reentry facilities as lucrative opportunities they will continue to pursue. GEO Group described these as “growth opportunities for our company” while CCA announced, “we are strategically pursuing additional investments to further grow in this area”. As the tide continues to turn against mass incarceration, these companies have capitalized on the growing shift to an array of options touted as alternatives to incarceration, though in reality they are only other forms of confinement and control.

CCA touted their recent acquisition of Correctional Management Incorporated, which owned seven reentry facilities in Colorado. Today, CCA owns or controls 25 residential reentry facilities in 6 states, representing approximately 5,000 beds. GEO Group, on the other hand, also experienced growth in their GEO Care segment comprised of halfway houses, day reporting centers, youth residential facilities, and community supervision. GEO Care President Ann Schlarb proudly announced, “Our BI subsidiary continues to grow its supervision electronic monitoring services at the local state and federal level nationwide.” GEO care is monitoring 142,000 individuals on any given day.

“Prison profiteers continue to hijack efforts to curb mass incarceration by attempting to rebrand themselves as providers capable of rehabilitation and treatment. In reality these companies provide little more than warehousing.” said Cate Graziani, mental health campaigns coordinator at Grassroots Leadership and author of the report InCorrect Care.

CCA loses lucrative BOP contract to incarcerate immigrants

Corrections Corporation of America announced that it has lost a Federal Bureau of Prisons contract for the 1,129-bed Cibola County Correctional Center in New Mexico.  CCA’s contract was a lucrative Criminal Alien Requirement (CAR) contract to incarcerate immigrants in the federal prison system, and is set to expire on September 30.

The contract had been renewed since 2009 despite repeat violations according to an exposé in The Nation that excoriated the BOP for improper oversight of these facilities. Another of CCA’s CAR-contract facilities in Eden, Texas erupted in protests over inadequate conditions earlier this month.

“We applaud the BOP’s decision to cut Cibola’s contract, though it is long overdue. The protest at Eden is yet another in the string of protests at CAR prisons that has called attention to the inhumane conditions in these facilities,” said Bob Libal, director of Grassroots Leadership. “The BOP should cut contracts with these for-profit prisons that have repeatedly had major operational problems and work with policymakers to stop the sources of overcrowding in the federal prison system.”

Many of the immigrants incarcerated in CAR prisons are sentenced for one of two charges: misdemeanor improper entry or felony improper re-entry. The book, Indefensible: A Decade of Mass Incarceration of Migrants Prosecuted for Crossing the Border, released by Grassroots Leadership and Justice Strategies last month, revealed that these two charges account for half of all federal prosecutions although they are merely status offenses for crossing the border without proper documentation, and do not fall under Department Of Justice (DOJ) priorities.

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Grassroots Leadership is an Austin, Texas-based national organization that works to end prison profiteering and reduce reliance on criminalization and detention through direct action, organizing, research, and public education.