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Prison profits: Taxpayers pay for vacant beds despite drop in crime

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Most of us hear reports of dropping crime rates and think, “Great, I feel a little safer now.” Sophisticated alarms and video surveillance systems create security bubbles in our neighborhoods.

While it may be true that there are less criminals near our homes, fewer hardcore drug dealers peddling in the streets, fewer domestic disputes, and less nefarious behavior on the whole in the underworld, there’s definitely still a dark side to crime: correctional facilities.

The facilities where sentences are carried out have shrinking populations. Thank goodness, right? Sort of. Taxpayers are still on the hook despite more empty beds in prisons.

Prison Profits

It’s no secret that many prisons are for-profit enterprises. Many Americans are aware of this. But what many more are not aware of is that the companies that own and operate prisons and other corrections facilities have a profit to turn, and have contracts that guarantee them a profit on such penitentiaries.

So while judges, courts, and other government bodies lower sentencing for specific crimes, and while law enforcement does all it can to manage their communities in a way that helps civilians understand that crime doesn’t pay, the companies who own and operate prisons are made a strange promise.

A for-profit prison makes more money if it’s packed to capacity, not unlike a restaurant makes more money when every table in the house is packed. But what happens when the restaurant isn’t seating people?

Vacant Beds Cost Taxpayers

One thing is for sure: taxpayers aren’t subsidizing their losses. And that’s exactly what taxpayers are doing with prisons for profit. One for-profit prison real estate firm, the GEO Group, got edgy as it began to notice its profit margins diminishing, especially when the system started offering up more probation and less time (or no time) in the big house for small time marijuana related charges and the like.

The GEO Group struck a deal to stay on top of their financial game, and to their credit, it’s pretty brilliant. The deal goes a little something like this: As a GEO Group prison population begins to shrink, U.S. taxpayers pay for the empty beds within the facility.

It’s a good news/bad news scenario, and if it doesn’t make you angry, it at least makes you turn your head to the side like a confused golden retriever. How can this make sense?

Lockup Quotas

Various local and state governments where GEO Group facilities are located entered into contracts that allow for something ominously called “lockup quotas”. Such quota agreement contracts contain clauses across several states that actually require the states to keep the prisons full—and if they're not able to do that, they must make up the difference by passing the buck (or rather taking the buck from) the taxpayer.

In an effort to keep to quotas, those who manage penitentiaries find themselves in another serious conundrum. Take some Arizona prisons, for example, which have a lockup quota agreement of 100 percent.

For-profit facilities that are at maximum capacity face far more violence, infighting among inmates, overpopulation and hygiene issues, more infections and illness, which mean more bills for taxpayers. But the vicious cycle of profit slammers strikes again: if a prison is at max capacity, another prison must be built… and filled, so that lockup quotas can be met.

Privately-held Quarters

According to author Michael Lewis, the GEO Group estimates its 2013 fourth quarter earnings at around $380 million. While the GEO Group is considered a real estate investment trust, it also has a very large hand in running and supervising its detention centers, prisons, and other pokeys.

In their most recent online earnings conference report, GEO Group noted that it stood to profit from prison property they own in Florida with approximately 6,000 cold beds.

So the financially ethical question becomes: Is it more criminal to commit a petty crime that lands you in prison, or to profit from ensuring that such individuals stay there longer—or penalize taxpayers when they don’t?

The verdict won’t be in until fewer Americans stay willfully unaware of how the for-profit prison industry works. Chalk it up to time served.

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