Selling State Prisons

Private Prisons GEO CCA ALEC

Louisiana’s Angola Prison, know as “The Farm”

Louisiana’s House Appropriations Committee held a hearing this week on HB 850, regarding the sale of Avoyelles Correctional Center, and the authorization to sell every prison built after 1989.  This would follow the direction of Arizona and Florida, and possibly lead to The GEO Group, Inc. having a third prison in the most incarcerated state in the world.  To understand this proposal, it is important to know the players, a bit of history, and a bit of economics.  For an excellently detailed overview of the proposal, see Ryan West’s “Penny Wise, Pound Foolish” at Louisiana Progress.

This week’s hearing was action-packed, to say the least, with nearly 200 people in the room.  Over 50 wore matching t-shirts; but rather than your typical grassroots activists demanding humane treatment for prisoners, the people were prison employees and spouses standing in solidarity.  After all, prisons in America are primarily protected and supported as jobs programs rather than as a societal need.  Avoyelles prison was built because a judge ordered Louisiana to stop overcrowding, and it was unenthusiastically accepted in the parish as a way to employ locals.  Unemployment at that time, according to former Avoyelles Rep. Raymond Laborde, was 12-14%.

I walked in late, due to testifying on behalf of V.O.T.E.’s bill, HB 295, to end licensing discrimination for people with criminal records.  (More on that later.)  But when I did arrive, the grilling of DOC Secretary Jimmy LeBlanc and Governor Jindahl’s Deputy Chief of Staff, Kristy Nichols, was in full swing.  I was wondering if anyone had pointed out that Jindahl received $28,500 from the for-profit prisons over the years.  Rep. James Armes moved that this hearing be presented to the full House, rather than just the Appropriations Committee, as this is the first time the state was authorizing something so serious as selling a multi-million dollar asset.  It was defeated, 11-10 (Voting in favor: Armes, Brossett, Burrell, Geymann, James, Leger, Montoucet, Moreno, Smith, Thierry.)

Nichols claimed that we have the right of first refusal when the 20 years is up, to buy the prison back, and there is a reversionary clause in case the corporation went bankrupt or performance measures were not met.  I was curious what those performance measures were.  As was pointed out later, none of that language is in the statute and we have no contract to look at; furthermore, Avoyelles Parish District Attorney Charles Riddle later countered Nichols, saying that such a statute won’t overrule a federal bankruptcy court.

If It Ain’t Broke, Why Fix It?

Rep. Roy Burrell elicited the statement from Secretary LeBlanc that our prison system was “not broken.”  He wanted to know why we were trying to fix it, and at the cost of driving all the prison employees into poverty level wages?  His inquiry, along with others, made it clear that the Governor and LeBlanc put little, if any, value on Louisianans earning a living wage.  All of the savings were admittedly coming through shifting union jobs into WalMart-level jobs starting at $8 an hour, climbing to $10 after three years.

louisiana prison hearing

Louisiana prison hearing.

Where will the money go?  This was Rep. Brett Geymann’s chief concern, and he moved for an amendment that they be mandated into the Budget Stabilization Fund, rather than the Rainy Day Fund which can be spent in a single day.  After an objection by Appropriations Chairman Jim Fannin (who has received at least $4000 from for-profit prisons, and represents the district where CCA operates Winn prison), the vote went forward and lost via tie, 12-12.  The yeas were nearly the same as those supporting the other amendment.  As this bill came up last year, clearly most legislators already have a position.

A long list of malfeasance and criminality was listed at the Allen and Winn prisons, run by GEO and Corrections Corporation of America, respectively.  It was a rap sheet that easily could have been lifted from Private Corrections Working Group, known for watchdogging GEO, CCA and others.  Somehow, nobody mentioned similar conduct by homegrown for-profit prison corporation, LCS Corrections Service, run by Michael LeBlanc.  LCS changed their name from Premier Enterprise Services after an ethics scandal, and was founded by the late Patrick LeBlanc.  LCS owns four prisons in Louisiana, a consistent donor, and presumably would also be in position to bid on Avoyelles.

Former U.S. Representative Jimmy Hayes had the line of the day, when referring to the need for the best prison possible: “When released they don’t go to Ex-Con Land, they move next to me and you.”  (Considering that I’m headed for a degree from his alma mater, he may be more right than he thinks.)  It sounded like the politicians were starting to get the larger prison picture, a trend happening throughout the country.  Hayes pushed back on another bit of misinformation by Nichols: this bill applies to the sale of all prisons built after 1989, not only Avoyelles.  I managed to scratch off yet another of my long list of notes.

Convict Lease Labor and Bursting the System

Senator Rick Gallot’s scathing indictment of the entire concept had the entire chamber on edge.  Like the financial gurus of Gwinnett County, Georgia, Gallot also pointed out that the parishes are getting free labor from prisoners across the state.  A point amplified by Alexandria Mayor Jacque Roy, that for GEO or CCA to rent out their prisoners to the highest bidder is a return to “a form of peonage; we haven’t done that in many years.”  He made a valid point about this not saving money, in so many ways it doesn’t, but I couldn’t help rolling my eyes in hearing such a thing, in a state with a prison famously known as “The Farm,” where guards on horseback oversee what looks exactly like a plantation.

“If we’re going to be so tough on crime, there is a price to pay for it,” Gallot said.  I went into the room wanting to say one fundamental thing: the private prison corporations create growth by growing, and bursting, the entire system.  Considerable talk throughout the nation has focused on what influence private industry can have on society by owning the prisons, and owning a profit motive for more prisoners.

geo board of directors

GEO Board of Directors

Since 2001, GEO, Corrections Corporation of America (CCA), and Cornell Corrections have spent $22 million on lobbying Congress alone.  With the help of the American Legislative Exchange Council (ALEC), GEO and CCA have employed nearly 300 lobbyists in 17 states over the past decade.  These corporations have also given over $10 million to political campaigns over the past decade, including $1.9 million in 2010 alone.  What do they ask for?

“In particular, the demand for our correctional and detention facilities and services could be adversely affected by changes in existing criminal or immigration laws, crime rates in jurisdictions in which we operate, the relaxation of criminal or immigration enforcement efforts, leniency in conviction, sentencing or deportation practices, and the decriminalization of certain activities that are currently proscribed by criminal laws or the loosening of immigration laws.  For example, any changes with respect to the decriminalization of drugs and controlled substances could affect the number of persons arrested, convicted, sentenced and incarcerated, thereby potentially reducing demand for correctional facilities to house them. Similarly, reductions in crime rates could lead to reductions in arrests, convictions and sentences requiring incarceration at correctional facilities.  Immigration reform laws which are currently a focus for legislators and politicians at the federal, state and local level also could materially adversely impact us.”  GEO Group, 2007 Annual Report, Financials p.20.

Clearly, all those lobbyists are fighting to stop the decriminalization of marijuana, to lengthen sentences, eliminate Good Time credits, curtail parole, incarcerate immigrants, maintain mandatory minimums, and increase Three Strikes laws.  An incisive report about this “Unholy Alliance,” is worth the read.  This goes against the popular sentiment across the nation, whether for humanitarian or financial reasons, as mass incarceration has had no useful effect on our communities.  As suspected, California has responded to the Supreme Court’s order to reduce their cruel and unusual overcrowding by increasing capacity rather than decreasing prisoners.

The number of prisoners has more than doubled since 1990, when private prisons began to ramp up their game; their number of caged humans went up 1664% between 1990 and 2009.  CCA and GEO are both billion dollar companies, with their CEOs Damon Hininger and Jay Zoley earning $3.3 and $3.5 million per year, respectively.  The largest shareholder in CCA, Wellington Management, is also the third-largest shareholder in GEO.  Top holders are the likes of Fidelity, Vanguard, and Wells Fargo.  Each of these owners all have their own interest in advancing their investments.

From my perspective as a prison reformer, I always said, “That’s okay, keep locking folks up.  You’ll see.”  In 2002, the National Institute on Money in State Politics tried raising this already problematic issue, with “Contributing Influence: Private Prison Giving In The South”  (But who reads these things?)  GEO and CCA are confounding the Burst The System strategy, however, as it clouds the People from truly recognizing the basic mathematics of this equation.

As Senator Neil Riser (Chairman of the Finance Committee) said, “We have one of the highest incarceration rates in the world.  This ain’t going away.  Right or wrong, we believe in locking people up in Louisiana.”

This Deal Is A “Stupid” Reverse Mortgage

Senator Eric LaFleur was perhaps the bluntest of the bunch.  As a man with three private prisons in his district, he had to stick up for one of his prime voter constituencies: the Avoyelles prison guards and families.  However, as a public finance attorney, the man checks the fine print.

GEO and CCA may be wishing they had back the $6000 (likely more) they have given him over the years, as he called this deal nothing more than a “Reverse Mortgage.”  He bypassed the jobs argument and focused on the “stupid” concept of us selling a state-owned asset and then paying to use it.  “Why not sell it all?”  Chico State Park, Sycamore Point, Superdome, state police… “Won’t we be better off?”  LaFleur accused them of hiding behind this deal because they aren’t signing the note, and they should all vote “No” because this could happen in their district next for the same wrong reasons.

One thing completely off my radar: securing the mineral rights under Avoyelles’ 1200 acres, in a county where oil leasing has been on the rise.  District Attorney Riddle brought the committee to math class: The proposal does not factor in the cost of financing or overseeing the contract, and the numbers are based on only ONE of the seven Requests For Information (RFI) last year.  The $31.50 per diem that is touted as a savings is only guaranteed for the first three years [there is the fine print I was looking for], and many of the politicians, including Jindahl, will be long gone when the piper comes to collect.

The privatization, unlike health care where patients have a choice, comes with an unheard of guarantee that it is 96% full.  I wanted to shout out one of my other key points: CCA and GEO will screen out the unhealthy prisoners, thereby jacking up costs on the public prisons — just like charter schools do with special education.  But Riddle was rolling, and I didn’t feel like being kicked out on my first day in the legislature.

Riddle exclaimed that the closing of Forcht-Wade drug rehab prison was a “horrible answer” as it reduces recidivism.  Along the same prison growth mantra, former Rep. Laborde sharply criticized the recent moves to increase Avoyelles capacity and to spend $800,000 on new windows, all to impress their potential buyers.

Someone mentioned that the most important part of the attached fiscal note is at the very end: “until the facilities and operations are bid, the potential savings to the state is indeterminable.”

bruce reillyThat pretty much took away the bulk of my testimony… except for the long list of people overtly receiving money from the private prison companies.  Keep in mind that the large party donations can be filtered to whomever they wish, and this does not include the many employees and shareholders of these corporations.

 Bruce Reilly
Unprison 

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