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Corrections Corporation of America Message Board

  • flipper_58 flipper_58 Jan 6, 1999 10:03 AM Flag

    PZN was indicated $24.50-$26, now $23-$2

    Any news????

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    • 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.

      • 2 Replies to CRISISwithouteyes
      • completely accurate with regard to the three
        facilities CCA
        "stopped running" in Texas. TDCJ (Texas
        Department of Criminal
        Justice) will sign a management
        contract for one year, with
        three to five extensions.
        However, they have (and do) exercise
        their right to
        re-bid the contract at any time. CCA "lost" the

        contract for a big county jail near Dallas and a state
        jail
        (maybe two) simply because TDCJ exercised
        their right
        to re-solicit.

        Incarceration
        costs as much as $75 per day per inmate.
        Up until
        now, most private firms have been able to beat state

        operating costs by $10-20 per inmate per day. It is an

        incredibly cut-throat business, and I would not be surprised

        if TDCJ received back channel pressure from other
        companies
        claiming to be able to meet or beat CCA's
        price. So, that part
        of the article I take with a
        grain of salt.

        I work for a medical services
        provider which contracts with CCA.
        It is a
        well-organized company, professionally and efficiently
        run.
        It is a pleasure to work with them. We also contract
        with
        other correctional companies, so I have a
        basis of comparison.
        Currently, CCA deserves its
        place at the top of the heap. I
        bought some CCA
        stock because of my experience with the
        company.

        I've been reading the CCA message board for quite a
        while and
        enjoy the comments. I've learned much
        from this erudite group.

      • Growth forecasts trimmed

        Florida also has
        studied the issue and has reached roughly the same
        conclusions as the GAO.

        Charles Thomas, a professor at
        the University of Florida and a leading expert on
        private prisons, has scaled back his growth forecasts for
        the industry, from 35 percent to 40 percent a year to
        a still healthy 21 percent to 23 percent. Thomas is
        a member of the board of trustees of Corrections
        Corporation of America Prison Realty Trust, a prison owning
        company closely affiliated with the
        company.

        Between the end of 1997 and June 1999, Thomas predicts 36
        new prisons capable of holding nearly 30,000 inmates
        will have opened. This is a 13 percent drop from the
        1996 pace.

        The occupancy rate of private
        prisons also is slipping. According to numbers compiled
        by Thomas, private prisons filled 4 percent fewer
        beds in 1997 than in 1996.

        Stock prices, too,
        are leveling off. The stock of Corrections
        Corporation of America, which traded early in 1998 for as
        much as $41.50, now 2 languishes near $18.

        The
        stock of its archrival, Wackenhut Corrections Corp., is
        doing better but still trades for about what it did a
        year ago. And shares of Cornell Corrections Inc., a
        leading company based in Houston, are down more than 25
        percent from their peak.

        But even amid this gloom,
        Thomas sees light. A baby boom, he said, is expected to
        push more young people into the crime-prone years, and
        this will be good for the prison business.

        In
        addition, he said, repeat-offender laws such as "three
        strikes and you're out," which imposes a life sentence
        upon a third criminal conviction, will ensure
        criminals stay behind bars longer.

 
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