Corrections Corporation of America Message Board

Following from PDX Oregonian:
AFTER HOT
GROWTH, PRIVATIZATION OF PRISONS SLOWS.

The lack
of big savings promised over government run prisons
and fewer criminals are among the reasons for the
slowdown.

By JOSEPH T. HALLINAN Newhouse News
Service

The nation's largest private prison company, the
Corrections Corporation of America, has begun pulling up
stakes in the country's largest private prison market,
Texas.

It voluntarily quit running, in 1998 at least three
prisons there, a small but telling omen in an industry
grappling with change.

When private prisons first
appeared in 1984, the companies that ran them promised big
savings over government-run prisons.

But now, some
of the savings aren't as big as officials had been
led to believe. In some cases, the savings are less
than 7 cents on the dollar

This, along with
other factors, has cooled one of the hottest trends in
prisons - privatization. After years of breakneck growth,
expansion is slowing and stock prices are flat or
falling.

"You can't be a fledgling start-up forever,� said
Peggy Lawrence, vice president of investor relations
for the company, whose once-hot stock has taken a
beating.

There are several reasons for the slowdown. Chief among
them is fewer criminals. In December, the federal
government announced that violent and property crimes hit
their lowest level since 1973. And fewer crimes
generally means fewer convicts

"I guess the bottom
line is, there's a bit of a slowdown in the number of
inmates we've been receiving," said Larry Todd, a
spokesman for the Texas Department of Criminal
Justice

Effect disproportionate

Texas is the biggest
private prison user in the nation, swamping every other
state. So a slowdown there has a disproportionate effect
on the private prison industry.

Of the 142
private prisons and, jails in operation in 1997, 41 of
them -29 percent - were in Texas.

Fourteen of
those facilities were run by Corrections Corporation of
America until Dec. 31. But the company stopped running at
least three of those facilities, Lawrence said, as
competition drives down the company's profits.

At the
end of 1997, private prisons housed about 71,000
inmates, or' about 4 percent of the nation's prison and
jail population.

These facilities were built on
a singular concept: Private is cheaper. But
figuring out how much cheaper has been difficult. Industry
estimates vary widely. Corrections Corporation of America,
which runs 72 prisons in the United States, cites
savings numbers ranging from 5 percent to 20
percent.

But the federal government, in a 1996 report, said it
could not conclude based on the evidence, whether
private prisons save any money at all.

The report,
by the General Accounting Office, reviewed five
studies that compared costs of public and private
prisons.

In four of the comparisons examined the GAO found
that two showed no significant differences in cost one
showed a 7 percent difference in favor of the private
prison; and another showed that the private prison was
more expensive than one public prison but cheaper than
another.

The fifth study reported that private prisons saved
14 percent to 15 percent But the GAO discounted'
These results because the comparison was based on
hypothetical public prisons, not real ones.