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Posted on
12/11/2008 6:07 PM EST
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Private prisons: ‘being consistently funded’
Part 2 of 2
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Tom Barry
In a post-election conference to report third-quarter revenue increases, the Corrections Corporation of America’s -- the country's oldest and largest prison corporation, boasted that it enjoyed a $33.6 million increase in the third quarter over last year, while earnings rose 15% during the same period -- board chairman John Ferguson told Wall Street investors: "One budget that was put in place for the full year was immigration customs enforcement ... and the funding for that is for 33,400 beds—that's an increase from 32,000 in the prior fiscal year, and also that compares to a little over 31,000 detainees in [2007]."
"Just to remind everyone," Ferguson told investors, "detainee beds would be sourced from us from several places that immigration customs boys need: that's border apprehensions, people that overstay their visas, [immigrants] that are identified as criminals, and the jails and prisons [that hold immigrants] who have completed their time and will be deported."
Addressing investor fears that recent decreases in illegal immigration inflows might dampen company returns, Ferguson said, "So even though we have seen the border crossings and apprehensions decline in the last couple of years, we are really talking about dealing with a population well north of 12 million illegal immigrants residing in the United States."
The Corrections Corporation of America (CCA) chief assured investors that the company's dependence on detained immigrants is not a factor of policy but rather of law enforcement. "The Federal Bureau of Prisons, U.S. Marshals Services, Immigration, and Customs Enforcement are carrying out statutory obligations for their responsibility ... We should continue to see their utilization of the private sector to meet their statutory obligations and requirements."
The prison executives even intimate that the economic crisis will fatten their business. When asked by an investment company representative about a possible downturn in detained immigrants as a result of new government policies, James Hyman, president of Cornell Companies, said, "We do not believe we will see a decline in the need for detention beds particularly in an economy with rising unemployment among American workers."
What is more, he told investors that there exists a pool of "10 million plus illegal immigrants" the company draws from and there is an "imbalance" between the number of immigrants and number of available prison beds.
Cornell also waxed enthusiastic about the continued good prospects for its prison business based on immigrant numbers and federal commitment to enforcement and "prison beds." Hyman said, "Today, ICE has about 33,000 detention beds available, which seems small but has increased substantially from only 20,000 beds in 2005. The Federal Bureau of Prisons, which houses criminal aliens and today has about 52,000 beds in their system, including 22,000 inmates housed in the private prisons."
To illustrate the increase in business generated by immigrants, Hyman pointed out that the "Southwest Border Districts for the USMS [U.S. Marshals Service] have about 19,000 detainees today, which is over a 70% increase since the beginning of the decade"—driven by the immigration crackdown including almost doubling of the number of Border Patrol agents.
But won't the economic downturn mean decreased state and local budgets for incarceration? None of the private prison firms seem too worried.
CCA's Chief Financial Officer Todd Mullenger offered investors a rosy forecast. "The other thing that could be on the positive side," he said, "[is that] we could see some new states or existing states come to us with a more aggressive push toward privatization to help them reduce their budget shortfall." Moreover, "they might be willing to shutter some old inefficient facilities ... and outsource those inmates as a cost-cutting mechanism."
"Remember we're in two markets—the state market and the federal market," noted GEO Group's chairman George Zoley. "At the state level you're obviously hearing about states with different deficits all around the country including the Sunbelt states where our customers are primarily located. But from coast to coast we're seeing the continued need for more capacity. Florida itself has a budget deficit I think of $3 billion or $4 billion, and yet in the last month it just issued an award to us for a new 2,000-bed facility."
Full of confidence that the private prison industry is the business to be in these days, Zoley confidently added: "The federal market is being driven for the most part as we've been discussing by the need for criminal alien detention beds. That's being consistently funded."
Tom Barry directs the TransBorder Project of the Americas Policy Program (www.americaspolicy.org) at the Center for International Policy in Washington, DC.
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