At first glance, visitors to the South Central Correctional Center could be forgiven for mistaking the medium-security prison for a college campus. The main driveway rolls through wooded hills on the outskirts of Clifton Tennessee, past picnic benches, a fitness track and a horse barn. But just inside the front door, a prominent bulletin board makes clear that the prison means business. At the top are the words "C.C.A. Excellence in Corrections." At the bottom is "Yesterday's Stock Closing," followed by a price.
In addition to employing fewer guards, C.C.A. saves money on labor by replacing the guaranteed pensions earned by workers at state-run prisons with a cheaper - and riskier - stock-ownership plan Employees get a chance to invest in the company, and the company gets employees devoted to the bottom line. "Being a stockholder yourself, you monitor things closer," says Mark Staggs, standing in the segregation unit, where he oversees prisoners confined for breaking the rules. "You make sure you don't waste money on things like cleaning products. Because it's your money you're spending."
Warden Kevin Myers (not related to C.C.A. president David Myers) also looks for little places to cut costs. "I can save money on purchasing because there's no bureaucracy," he says. "If I see a truckload of white potatoes at a bargain, I can buy them. I'm always negotiating for a lower price."
But what is thriftiness to the warden is just plain miserly to those forced to eat what he dishes out. "Ooowhee! It's pitiful in that kitchen," says Antonio McCraw, who was released from South Central last March after serving three years for armed robbery. "I just thank God I'm out of there. You might get a good meal once a month. The rest was instant potatoes, vegetables out of a can and processed pizzas. C.C.A. don't care whether you eat or not. Sure they may cut corners and do it for less money, but is it healthy?"
The State of Tennessee hoped to answer that question when it turned South Central over to C.C.A. in 1992. The prison was built at roughly the same time as two state-run facilities with similar designs and inmate populations, giving officials a rare opportunity to compare daily operating costs—and quality— under privatization.
The latest state report on violence at the three prisons indicates that South Central is a much more dangerous place than its public counterparts. During the past fiscal year, the C.C.A. prison experienced violent incidents at a rate more than 50 percent higher than state facilities. The company also posted significantly worse rates for contraband drugs and assaults on staff and prisoners. "If that doesn't raise some eyebrows and give you some kind of indication of what the future holds, I guess those of us who are concerned just need to be quiet," says John Mark Windle, a state representative who opposes privatization.
Corrections officials note that understaffing can certainly fuel violence, which winds up costing taxpayers more money. The state legislature has heard testimony that employee turnover at South Central is more than twice the level at state prisons, and prisoners report seeing classes of new recruits every month, many of them
young and inexperienced. "The turnover rate is important because it shows whether you have experienced guards who stick around and know the prisoners," says inmate Alex Friedmann, seated at a bare table in a visitation room. "If you have a high turnover rate you have less stability. New employees come in; they really don't know what's going on. That leads to conflicts with inmates.
Internal company documents tell a similar storty. According to the minutes of an August 1995 meeting of shift supervisors at South Central, chief of security Danny Scott "said we all know that we have lots of new staff and are constantly in the training mode."
He "added that so many employees were totally lost and had never worked in corrections."
A few months later, a company survey of staff members at the prison asked "What is the reason for the number of people quit tiny C.C.A.?" Nearly 20 percent of employees cited "treatment by supervisors," and 17 percent listed "money." Out of earshot of their supervisors, some guards also say the company contributes to violence by skimping on activities for inmates. "We don't give them anything to do," says one officer. "We give them the bare minimum we have to."
Ron Lyons agrees. "There's no meaningful programs here,"says Lyons, who served time at state-run prisons before coming to South Central. "I can't get over how many people are just laying around in the pod every day. I would have thought C.C.A. would have known that inmate idleness is one of the biggest problems in prisons—too much time sitting around doing nothing. You definitely realize it's commercialized. It's a business. Their business is to feed you and count YOU, and that's it."
Given all the penny pinching, it would seem that C.C.A. should easily be able to demonstrate significant savings at South Central. Instead a study of costs conducted by the state in 1995 found that the company provided almost no savings compared with its two public rivals. The study - cited by the General Accounting Office as "the most sound and detailed comparison of operational costs" actually showed that the C.C.A. prison costs more to run on a daily basis even after the state factored in its long term expenses, C.C.A. still spent 35.38 a day per prisoner-- only 38 cents less than the state average.
The study contradicted what is supposed to be the most compelling rationale for prison privatization: the promise of big savings. But the industry champion dismissed its defeat by insisting, much to the amazement of its challengers, that it hadn't tried very hard to save tax dollars. "When you're in a race and you can win by a few steps, that's what you do," said Doctor R. Crants, who co-founded C.C.A. and now serves as chairman and chief executive officer. "We weren't trying to win by a great deal. '
The comment by Crants, as remarkable as it seems, exposes the true nature of privatization. When it comes to savings, the prison industry will beat state spending by as narrow a margin as the state will permit. To a prison company like C.C.A., "savings" are nothing but the share of profits it is required to hand over to the government - another expense that cuts into the bottom line and must therefore be kept to a minimum, like wages or the price of potatoes. At its heart, privatizing prisons is really about privatizing tax dollars, about transforming public money into private profits.
That means companies are actually looking for ways to keep public spending as high as possible, including charging taxpayers for questionable expenses. The New Mexico Corrections Department, for example, has accused C.C.A. of overcharging the state nearly $2 million over the past eight years for operating the women's prison in Grants. The company fee of $95 a day for each inmate, it turns out, includes $22 for debt service on the prison.
Last summer. a legislative committee in Tennessee calculated that state prisons contribute nearly $17.8 million each year to state agencies that provide central services like printing, payroll administration and insurance. Since company prisons usually go elsewhere for such services, states that privatize unwittingly lose money they once counted on to help pay fixed expenses.
The chargebacks." as they are known, came to light lastspring when C.C.A. once again proposed taking over the entire Tennessee prison system. This time the company offered to save $100 million a year - a staggering sum, considering that the annual budget for the system is only $270 million.
Like many claims of savings, the C.C.A. offer turned out to be based on false assumptions. Crants, the company chairman and C.E.O., said he derived the estimate from comparing the $32 daily rate the company charges for medium-security prisons at South Central with the systemwide average of $54. But the state system includes maximum- security prisons that cost much more to operate than South Central. "It's almost like going into a rug store," says State Senator James Kyle. who chaired legislative hearings on privatization. "'They're always 20 percent off. But 20 percent off what?"
Yet the sales pitch, however absurd, had the intended effect of getting Kyle and other lawmakers into the store to look around. Once there, the prison companies kept offering them bigger and better deals. Given an opportunity to submit cost estimates anonymously, firms offered fantastic savings ranging from 30 percent to 50 percent. Threatened by the competition, even the state Department of Corrections went bargain basement, offering to slash its own already low cost by $70 million a year. Despite opposition from state employees, legislators indicated after the hearings that they support a move to turn most prisoners over to private companies - a decision that delighted C.C.A. "I was pretty pleased," Crants said afterward. The governor and legislators are wrangling over the details, but both sides have agreed informally to privatize roughly two-thirds of the Tennessee system. A few prisons mill be left in the hands of the state, just in case something goes wrong.
Lawmakers didn't have to look far to see how wrong things can go. South Carolina decided last February not to renew a one-year contract with C.C.A. for a juvenile detention center in the state capitol. Child advocates reported hearing about horrific abuses at the facility, where some boys say they were hogtied and shackled together. ''The bottom line is the staff there were inexperienced ," said Robyn Zimmerman of the South Carolina Department of Juvenile Justice. They were not trained properly."
Once again, though, such stark realities proved less influential than the political connections enjoyed by C.C.A. The chief lobbyist for the company in the Tennessee legislature is married to the Speaker of the House. Top C.C.A. executives, board members and their spouses have contributed at least $110,000 to state candidates since 1993, including $1,350 to Senator Kyle. And five State officials - including the governor, the House Speaker and the sponsor of the privatization bill - are partners with C.C.A co-founder Thomas Beasley in several Red Hot & Blue barbecue restaurants in Tennessee.
The political clout extends to the national level as well. On the Republican side, Corrections Corporation employs the services of J. Michael Quinlan, director of the federal Bureau of Prisons under George Bush. On the Democratic side, C.C.A. reserves-a seat on its seven-member board for Joseph Johnson, former executive director of the Rainbow Coalition. The Nashville Tennessean points to Johnson as evidence that the company "looks like America Johnson is African-American," the paper observes, are 60 % of C.C.A.'s prisoners."
Johnson played a pivotal behind-the-scenes role earlier this year, using his political connections to help C.C.A. swing a deal to buy a prison from the District of Columbia for $52 mil. It was the first time a government sold a prison to a private company, and C.C.A. hopes it won't be the last. Earlier this year, with backing from financial heavyweights like Lehman Brothers and Paine Webber, the company formed C.C.A. Prison Realty Trust to focus solely on buying prisons. The initial stock offering raised $388.5 million from investors to enable C.C.A. to speculate on prisons as real estate.
Why would cities or states sell their prisons to the C.C.A. trust? Paine Webber cites the lure of what it calls 'free money." Unlike many public bond initiatives earmarked for specific projects like schools or sewage systems, the broker explains, "the sale of an existing prison would generate proceeds that a politician could then use for initiatives that fit his or her agenda, possibly improving the chances of re-election." Companies building their own prisons certainly receive friendly treatment from officials. Russell Boraas invited companies bidding on a private prison to a meeting and asked what he could do to help. "I said, 'Guys, I know quite a bit about running construction projects, but I don't know much about private prisons. What are you looking for? What can I do to make this user-friendly for you'?' They said it would be nice if they could use tax-exempt bond issues for construction, just like the state." So Boraas allowed companies to finance construction with help from taxpayers, and a local Industrial Development Authority eventually aided C.C.A. in getting $58 million in financing to build the prison.
Such deals raise concerns that private prisons may wind up costing taxpayers more in the long run. Although governments remain legally responsible for inmates guarded by public companies, firms have little trouble finding ways to skirt public oversight while pocketing public money. Instead of streamlining the system, hiring corporations to run prisons actually adds a layer of bureaucracy that can increase costs and reduce accountability. Prison companies have been known to jack up prices when their contracts come up for renewal, and some defer maintenance on prisons since they aren't responsible for them once their contract expires.
Even more disturbing, private prisons have the financial incentive - and financial influence - to lobby lawmakers for harsher "get tough" measures. In the prison industry, after all, locking people up is good for business. "If you really want to save money you can lock prisoners in a box and feed them a slice of bread each day," says Alex Friedmann, the prisoner at South Central. "The real question is, Can you run
programs in such a way that people don't commit more crime are encouraged to write up prisoners for minor infractions and in prisons - not whether you keep them locked up but whether you keep them out." C.C.A. officials dismiss such concerns, confident the current boom will continue of its own accord. "I don't think we have to worry about running out of product," says Kevin Myers, the warden at South Central. "It's unfortunate but true. We don't have to drum up business.""
Perhaps - but Corrections Corporation and other company prisons already have enormous power to keep their current prisoners behind bars for longer stretches. Inmates generally lose accumulated credit for "good time" when they are disciplined by guards, giving the C.C.A. stockholders who serve as officers an incentive to crack the whip. A 1992 study by the New Mexico Corrections Department showed that inmates at the women's prison run by C.C.A. lost good time at a rate nearly eight times higher than their male counterparts at a state-run lockup. And every day a prisoner loses is a day of extra income for the company - and an extra expense for taxpayers.
Some C.C.A. guards in Tennessee also say privately that they are encouraged to write up prisoners for minor infractions and place them in segregation. Inmates in "seg" not only lose their good time, they also have thirty days added to their sentence - a bonus of nearly $1,000 for the company at some prisons. 'We will put 'em in sea in a hurry," says a guard who works at the Davidson County Juvenile Detention Facility in Nashville. The prison holds 100 youths - children, really," says the Guard - most of them teenage boys. They may be young, but they understand what's going on," he adds. One day, as a 14 year-old boy was being released after serving his sentence, the guard offered him some friendly advice. "Stay out of trouble," he said. "I don't want to see you back here."
Why not'?" the kid responded. "That's how you make your money."
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