What Private Prisons Companies Have Done to Diversify in the Face of Sentencing Reform

Corrections Corporation and GEO Group have both invested into offender rehabilitation services

A prisoner in Tracy, California.

A prisoner in Tracy, California.

Photographer: Noah Berger/Bloomberg

Last month, Hillary Clinton added her name to the long list of politicians calling for a reduction in the number of Americans in prisons. “Keeping [prisoners] behind bars does little to reduce crime,” she said in a speech at Columbia University on April 29.

Her comments followed bipartisan legislative proposals to reform sentencing guidelines as conservative pundits lamented the “overcriminalization of American life.” Earlier this month, Rick Santorum told Bloomberg that his era had responded to crime with policies that hollowed out urban communities. “We have to take a step back and see if there’s a better approach with a lot of these nonviolent drug crimes,” he said.

America’s overall prison population has increased by 500 percent over the last 40 years, and the U.S. incarcerates more people than any other country, by far. State and federal authorities began turning to private prison companies in the 1980s to handle overflowing facilities, and today about 8 percent (PDF) of prisoners in the U.S. are housed in privately run prisons. Almost all are run by the two largest providers: Corrections Corporation of America and GEO Group.

In September 2014, then-Attorney General Eric Holder announced that the federal prison population had declined for the first time since 1980. There were nearly 5,000 fewer prisoners in federal prisons in the 2014 fiscal year, compared to the year before, he said. The latest figures for state prisons are only from 2013, which showed an increase of 6,300 prisoners from the previous year.

Both GEO Group and CCA—which last year pulled in a combined $3.3 billion in annual revenue—have taken moves in recent years to diversify into services that don't involve keeping people behind bars. 

GEO Group in 2011 acquired Behavioral Interventions, the world’s largest producer of monitoring equipment for people awaiting trial or serving out probation or parole sentences. It followed GEO’s purchase in 2009 of Just Care, a medical and mental health service provider which bolstered its GEO Care business that provides services to government agencies.  “Our commitment is to be the world’s leader in the delivery of offender rehabilitation and community reentry programs, which is in line with the increased emphasis on rehabilitation around the world,” said GEO chairman and founder George Zoley during a recent earnings call.

For $36 million in 2013, CCA acquired Correctional Alternatives, a company that provides housing and rehabilitation services that include work furloughs, residential reentry programs, and home confinement. “We believe we’re going to continue to see governments seeking these types of services, and we’re well positioned to offer them,” says Steve Owen, CCA’s ‎senior director of public affairs.

Brian W. Ruttenbur, a managing director at CRT Capital Group’s research division, says that neither GEO or CCA will be significantly hurt by sentencing reform in the near future.

“The big growth in recent years has been with [U.S. Immigration and Customs Enforcement, or ICE] and both of these companies have historically made heavy investments there,” Ruttenbur says. Immigration detainees are commonly held in the same private facilities that contain state and federal prisoners, and a Government Accountability Office analysis of ICE data showed (PDF) that immigration detentions more than doubled between 2005 and 2012.  

Alex Friedmann, associate director of the Human Rights Defense Center and managing editor of Prison Legal News, says sentencing reform will probably not affect immigration detainees. “Immigration reform might, but even under proposed reform legislation, detention will likely increase,” he says.

In 2015, more than $2 billion in federal contracts are up for bid to run five or more prisons that meet the “Criminal Alien Requirements” and house non-U.S. citizens.

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