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Corrections Corp., Geo retreat after California unveils cost cutting plan

Two prison operators - Corrections Corp of America (CXW) and The Geo Group (GEO) - are retreating after California's prison department announced that it would cut billions of dollars in spending. Under the plan announced yesterday, the Department of Corrections and Rehabilitation will reduce its annual budget by $1.5B when the blueprint is fully implemented. Included in that projection is $160M in savings from closing the California Rehabilitation Center; Corrections Corp. operates two prisons in California, the California City Correctional Center and the San Diego Correctional Facility. The GEO Group manages California's Golden State Correctional Facility, which had been expected to close in June. Earlier this month, the company said that the state would honor its contract with the company until it expires. The contract expires on December 14, 2012. In early trading, Corrections Corp. slumped 9.14% to $27.54, while GEO lost 1.17% to $20.35.