Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 26, 1995 TAG: 9502240026
SECTION: HORIZON PAGE: G1 EDITION: METRO
SOURCE: LAURENCE HAMMACK STAFF WRITER
DATELINE: NASHVILLE LENGTH: Long
The Metro Davidson County Detention Facility is, after all, a business.
The more criminals who come here, and the longer they stay, the more profitable it is for Corrections Corporation of America, the Nashville-based company that runs the 872-bed prison. Under a contract with the Metro Government of Nashville and Davidson County, CCA is paid an average daily rate of $30 per inmate, or more than $9 million annually.
It is the kind of arrangement that mixes criminal justice with marketplace economics to create what some are calling one of the biggest growth industries in the country.
With Congress passing new and more sweeping crime bills every year, and state legislatures brandishing their own tough-on-crime measures, CCA and other companies like it are ready to capitalize on government's surplus of inmates and the shortage of prison space.
Nowhere is that more true than in Virginia, where last year's General Assembly vote to abolish parole and establish truth in sentencing is expected to double the state's 23,000 inmate population over the next 10 years.
So far, the biggest impact has been in Southwest Virginia.
CCA was the first to wade in, proposing a 1,500-bed facility in Wythe County that, if all goes as planned, will be the state's first privately run prison when it opens next year.
Since then, United States Corrections Corp. of Louisville, Ky., has expressed interest in operating a prison in Bland or Tazewell counties, and other companies are busy scouting for business.
"We have had at least six companies, and probably more, who are interested and have been land shopping in Virginia for prisons," Secretary of Public Safety Jerry Kilgore said.
To deal with a projected shortfall of 23,500 prison beds by the year 2005, the state is hoping to contract with private companies to operate 10,000 beds in low- to medium-security facilities, Kilgore said. The General Assembly took the first step at this year's session, passing legislation to allow bidding for 3,500 beds within the next few months.
Because private companies are free from government bureaucracy and procurement requirements, they can build prisons faster and cheaper than the state can, CCA officials say. Supporters of prisons-for-profit say companies can also run prisons cheaper and more efficiently.
At the same time, Kilgore said, the state saves money by not having to employ prison guards - by far the largest cost in operating prisons - and localities where the prisons are built gain a tax-paying, recession-proof corporate citizen.
"We feel like we owe it to the taxpayer to look for cost-saving mechanisms," Kilgore said. "Certainly if the private sector can do something better, we need to look at it."
Critics are not so easily convinced.
Some question whether it is really cheaper to keep criminals locked up in private prisons. A legislative study in Tennessee, where CCA also runs a state penitentiary, found little difference in identical facilities run by the company and the state Department of Corrections.
Skeptics also raise a more fundamental, philosophical question: Does the task of protecting society and administering justice belong in the hands of an industry driven by the profit margin?
"Taking away a person's liberty is about the most extreme thing the state can do to an individual, and to turn that over to a company operating purely on a profit motivation is the wrong thing to do," said Jenni Gainsborough of the American Civil Liberties Union's National Prison Project in Washington, D.C.
Jerome Miller, who runs the National Center on Institutions and Alternatives in Alexandria, shares those concerns.
"The problem is all the incentive in a privately run prison is to keep it full and to get as many people in there for as long as possible," Miller said.
"So all the incentive is in the wrong direction as far as public policy is concerned because it becomes an industry of locking people up."
CCA's president and chief executive officer counters that the government should not dominate the correctional field for the same reason that anti-trust laws prohibit monopolies in the private sector.
"Before CCA came along, what we had for the most part of the century is a correctional monopoly untested by any other organization," said Doctor Crants, who has seen CCA grow into the largest private prison company in the country since he helped start it in 1983.
"I think the people are better off to have the competition that the private sector brings."
Handcuffed by the state
Jimmy Turner speaks slowly, with a deep drawl that seems only natural for the Texas prison warden he once was.
But instead of wearing sunglasses, a uniform and a gun belt to match the voice, Turner's attire for his current prison job is decidedly more yuppie - white shirt, silk tie, charcoal-gray dress slacks and wingtip shoes.
As the warden of CCA's Metro Davidson County Detention Facility, Turner's job is a combination of tough prison boss and shrewd businessman.
Having spent the first part of his career with the Texas Department of Corrections, Turner has no doubts that privately run prisons operate better and cheaper than those under state control.
There are statistics to back him up: In an annual report to stockholders and potential investors, CCA estimated that its annual operating cost per inmate was $14,890. Compared to a $16,860 cost in the public sector as determined by the Criminal Justice Institute, that amounts to a 12 percent saving.
Turner and other CCA officials offer several reasons why.
"In the state, they had numerous levels of bureaucratic quagmire," Turner said. His favorite example was when he was running a prison in Texas for hard-core offenders - "the worst of the worst" - and a federal judge ordered that all inmates be handcuffed while being escorted from different parts of the prison.
The way Turner tells it, he was the one left handcuffed by the state.
Ten weeks after he put a funding request in for extra handcuffs, Turner said, he was told there was no money available and that an appropriation would have to be put in the next year's budget. "It was like running into a brick wall," he said. Turner's guards ended up buying the handcuffs themselves and being reimbursed at a higher cost, he said.
Faced with the same situation at CCA, Turner said, he would have gone to a law enforcement supply store in Nashville that day and written a check for the supplies.
That may seem like a minor point, but Turner and other CCA officials say it's the little things that add up.
"In my experience with the state, no one really cared about expenses so long as you didn't go over your budget," he said. "In fact, you had more incentive to spend every penny in your budget, instead of trying to save it."
Because CCA offers a stock option plan to its employees, it says guards are more likely to develop a sense of ownership in the facility and are generally more receptive to complaints from inmates.
As Clarence Potts, a shift supervisor at the company's prison in Clifton, guides a tour through the 1,300-bed prison, he offers another example of the difference in philosophy between private and state prisons.
If an angry inmate threatens to tear out the sink in his cell unless a guard talks to him, a state guard might ignore him - figuring the government can easily replace a $1,500 stainless steel piece of equipment.
But at a CCA facility, "If they tear something up, it comes out of our pocket," Potts said. "Everybody kind of takes ownership in what we do."
The bottom line, CCA officials say, is that giving inmates a voice, plus keeping them busy with lots of rehabilitation and treatment programs, makes for a more efficiently run prison.
"I'm here to tell you that I don't coddle inmates," Turner said. "But if an inmate stops me to say, 'Warden, I need to talk to you,' you better believe I'm going to listen to what he has to say."
While finding ways to cut expenses on operations is important, Crants says the real savings come in the company's design of its new prisons.
"You start with the advantage of designing facilities with an eye toward making it more cost-effective," Crants said.
Crants said state governments often hire architectural firms to design a prison and pay them a percentage of the total construction cost, thus creating a built-in incentive to make the buildings bigger and more expensive.
"By the time government gets its hands on it, all the design decisions have already been made, and the operating costs are fixed in concrete," Crants said. "By simply erecting a wall where a wall is not needed, and blocking a guard's field of vision, you can raise the cost by the sum of what it takes to employ five additional correctional officers" to man a unneeded command post.
To take advantage of economies of scale, CCA prefers to operate larger prisons with about 1,500 inmates.
And most of the company's prisons are contained in one large building, as opposed to the college dormitory style of most state prisons, to reduce the number of guards needed to supervise inmates.
Behind the bars, there are more subtle differences inside a CCA prison. The floors are waxed to a shine, the walls freshly painted, and the grounds carefully cared for by inmate work crews.
While there are fights, drugs and disturbances as in any prison, guards who have worked for the state before coming to CCA say they see fewer problems on their current job.
And CCA officials are more than willing to show off their product. The Metro Davidson County facility received 1,200 visitors last year alone, many of them government officials, some from as far away as South Africa and Russia.
When a reporter and photographer for the Roanoke Times & World-News showed up unannounced at the Clifton prison recently, they were invited inside for an unscheduled tour. Warden Kevin Myers even came in on a Sunday afternoon for an interview.
"As a private company, I feel like me and my staff are much more responsive to the public," Myers said. "Our business is on the line every day."
Scandals ahead?
Just inside the main entrance of CCA's South Central Correctional Center in Clifton, Tenn., a sign is posted on a bulletin board and replaced every day. It lists the price of CCA's stock at the close of business the previous day.
The sign is intended for stock-holding employees, but it sends a broader message.
When CCA began listing its stock on the New York Stock Exchange last December, Crants called it a natural move "given our company's growth and global expansion."
But companies like CCA have been growing so fast that some critics say the private prison business could someday rival the defense industry - both in sales potential and, possibly, in the kind of scandals that defense contractors were involved in.
"Indeed, you see many of the same defense contractors moving into the corrections and law enforcement area," said Miller of the National Center for Institutions and Alternatives. "It's the same crew from which you got the $6,000 toilet seats, and I think we are going to see some more of that."
With the end of the Cold War, companies are beginning to realize that government's new enemy is no longer overseas, but instead is the criminal lurking in the dark at the nearest street corner.
"We are so angry at prisoners that we lock them up at $23,000 a year, more than we spend on the neediest and the most gifted of our college students, and the taxpayer bears that cost," said Gordon Bonnyman, a Tennessee lawyer who waged a lengthy legal fight that led to a reform of the state's prison system.
Another risk cited by critics is that the questionable relationships between contractors and government in the defense industry might also surface with prison companies and state legislators.
That happened to some degree in 1985, when CCA's failed effort to take over the entire Department of Corrections in Tennessee led to revelations that then-Gov. Lamar Alexander's wife held stock in the company. And one of the company's founders is the former chairman of the state Republican Party.
"There's no way you can put a billion or $2 billion into prisons without all sorts of cozy arrangements," Miller said, referring to estimates of what Virginia may spend on prison construction in the next decade.
"I don't think it's wise to replicate the defense procurement situation," agreed Bonnyman. Private prison operators "understand, just like the defense industry, that their real audience is the elected officials," he said.
But others say the defense analogy is too far-fetched for an industry that's just beginning. In fact, only about 4 percent of the nation's 1-million-plus inmates are held in private prisons.
Still, there is no disputing that the corrections industry is booming, and that CCA has the lead locked up.
The company operates 27 facilities in eight states, as well as Puerto Rico, Australia and the United Kingdom. The total number of prison beds it has under contract topped 15,000 this year - more inmates than are held in about half of the state's correctional populations.
While there is lots of competition - Wackenhut Correctional Corp. operates about 10,000 beds - CCA represents about a third of all the private prison beds under contract.
Since the beginning of last year, CCA's beds under contract have increased by 55 percent, and the company's revenues topped $100 million for the first time in 1993.
Company officials say they are interested in establishing a larger role in Virginia, but plan to withhold any announcements of new prison sites until the Wythe County facility is well under way.
"Most of the time you have to demonstrate your competence with the first project before you have any right to start a second one," Crants said. "It's important for us to do well in Virginia, because it could impact what we do in North Carolina, South Carolina and Maryland."
As the industry leader, CCA gets high marks even from those who acknowledge some concerns about private prisons.
"They're a very good company, and we've had a good working relationship with these people," said Tennessee Sen. James Kyle, who chairs the state's Select Oversight Committee on Corrections.
Kyle's committee recently conducted a study that compared CCA's Clifton prison with two state-run facilities of identical size and scope. As part of CCA's contract, the state would continue to do business with the company only if the study found that CCA offered superior services at the same cost, or equal services at a lower price.
The result: Operations at the different prisons were determined to be on an equal scale, with CCA offering a saving of just 38 cents a day per inmate.
"My shorthand impression is that there is basically a dead heat," Bonnyman said. "If there are savings on one side or another, they are not that significant." CCA, however, counters that operations at the state prisons would never have been so efficient had it not been for stiff competition from the private sector.
"We have found that competition is good for the system," Kyle said.
The study also compared the number of fights, disturbances and escapes at private versus public prisons. The two state prisons had three escapes during a 15-month period; CCA's South Central had none.
The state prisons reported nine cases of serious disturbances; CCA had just two such incidents during the same period. Yet the number of injuries to staff and prisoners was higher at South Central that at the two state-run prisons.
When CCA first started to do business with Tennessee, there was much debate on the philosophical question of whether a private industry should conduct such a public job as corrections. That issue has essentially died, with the focus now on dollars and cents and day-to-day operations of private versus public prisons.
In the Virginia legislature, however, there has been little discussion this year on the privatization issue.
Del. Clifton "Chip" Woodrum, D-Roanoke, wishes that there had been.
"That issue has kind of slipped by," he said, "in the haste of everyone saying that we've got to build more prisons to receive this large number of inmates that will be coming in."
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PROFILE GENERAL ASSEMBLY 1995
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