Friday, May 14, 2010

Despite critics, prison operator CCA says times are good

Erik Townsend says he prefers the Arizona prison where he's serving 15 years for robbery to a California facility where he was until August. For one thing, he was getting just two hot meals a day at the other prison.
"We get three hots here," said the 40-year-old Townsend, while taking a quick break from sweeping the yard at La Palma Correctional Center in Eloy, Ariz., a desert town halfway between Phoenix and Tucson. "It's all right. It's decent."

La Palma, which houses 2,900 convicts from California, is one of 65 facilities operated by Corrections Corporation of America, the Nashville-based private company that gets government contracts to build and run prisons for state and federal authorities.

CCA, which held its annual shareholders' meeting in Nashville on Thursday, has become the largest private-prison operator in the U.S. as states from California to Florida turn to corporate America to punish felons and hold lesser offenders, amid iffy tax revenues and tight budgets.

Despite such financial pressures, company officials are optimistic about their business's long-term prospects.

CCA reported $155 million in earnings last year. Net income has risen in each of the past four years. For 2010, the company forecasts per-share earnings of $1.16 to $1.26, down from $1.32 last year.

Recent contracts have been tied more to federal prison clients than individual states, although CEO Damon Hininger, who began his career as a prison guard, thinks the fact that states have less money to build jails puts CCA in a sweet spot as more construction gets outsourced to private companies.

"We think that is very favorable for the company and for the industry," he said.

Critics, who see a conflict between making profits and providing adequate care to prisoners, aren't so sure.

"Lobbyists for CCA want to make sure they keep their prisons full. It's a question of how you delegate the really ferocious powers of the state to a private enterprise," said Mark A.R. Kleiman, a University of California, Los Angeles professor and author of When Brute Force Fails: How to Have Less Crime and Less Punishment .

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