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Page 1 of 2 2008 Factiva, Inc. All rights reserved.

U.S. News: Larger Inmate Population Is Boon to Private PrisonsBy Stephanie Chen938 words19 November 2008The Wall Street JournalA4English(Copyright (c) 2008, Dow Jones & Company, Inc.)

Prison companies are preparing for a wave of new business as the economic downturn makes it increasinglydifficult for federal and state government officials to build and operate their own jails.The Federal Bureau of Prisons and several state governments have sent thousands of inmates in recentmonths to prisons and detention centers run by Corrections Corp. of America, Geo Group Inc. and otherprivate operators, as a crackdown on illegal immigration, a lengthening of mandatory sentences for certaincrimes and other factors have overcrowded many government facilities.Prison-policy experts expect inmate populations in 10 states to have increased by 25% or more between2006 and 2011, according to a report by the nonprofit Pew Charitable Trusts.Private prisons housed 7.4% of the country's 1.59 million incarcerated adults in federal and state prisons asof the middle of 2007, up from 1.57 million in 2006, according to the Bureau of Justice Statistics, acrime-data-gathering arm of the U.S. Department of Justice.Corrections Corp., the largest private-prison operator in the U.S., with 64 facilities, has built two prisons thisyear and expanded nine facilities, and it plans to finish two more in 2009. The Nashville, Tenn., company put1,680 new prison beds into service in its third quarter, helping boost net income 14% to $37.9 million. "Thereis going to be a larger opportunity for us in the future," said Damon Hininger, Corrections Corp.'s presidentand chief operations officer, in a recent interview.California has shipped more than 5,100 inmates to private prisons run by Corrections Corp. in Arizona,

Mississippi and other states since late 2006, when Gov. Arnold Schwarzenegger ordered emergencymeasures to control a ballooning state-prison population. Prisons were so overcrowded that hundreds ofinmates were sleeping in gyms, according to one report. An additional 2,900 prisoners are scheduled to betransferred to private prisons outside the state by the end of next year, according to the CaliforniaDepartment of Corrections and Rehabilitation."Private prisons are a short-term solution while we work on long-term solutions, rehabilitation programs andrecidivism strategies," said Terry Thornton, spokeswoman for the state's corrections department.Geo Group, of Boca Raton, Fla., the second-largest prison company, has built or expanded eight facilitiesthis year in Georgia, Texas, Mississippi and other states, and it plans seven more expansions or newprisons by 2010. Last month, Geo Group was awarded a contract by Florida's Department of ManagementServices to design and build a 2,000-bed special-needs prison in that state. Cornell Cos., the nation'sthird-largest prison company, recently broke ground on a 1,250-bed private prison for men in Hudson, Colo.The Federal Bureau of Prisons, the government agency that operates all federal prisons and manages the

handling of inmates convicted of federal crimes, has awarded 13 contracts since 1997 to prison companiesto build prisons and detention centers that house low-security inmates, primarily "low security criminalaliens," says Felicia Ponce, a spokeswoman for the agency. The contracts give the bureau "flexibility tomanage a rapidly growing inmate population and to help control overcrowding," Ms. Ponce says.Outsourcing incarceration to prison companies can reduce a government's cost of housing those prisonersby as much as 15%, according to a study by the Reason Foundation, a research organization in LosAngeles. Private operators say they can build prisons more quickly and operate them less expensively thangovernments because their payroll costs are lower and they can consolidate prisoners from many far-flungjurisdictions into facilities located in areas where land and building costs are very low.Some groups accuse the private prisons of neglecting inmates or of putting them in bad conditions. "Profit is

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