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USA: Prison Building Spree Creates Glut of Lockups

by Bryan GruleyWall Street Journal
September 6th, 2001

With a lobbyist at his side, Wayne Calabrese sat down to a friendly dinner here with two Mississippi state senators in late March. The restaurant's player piano plinked nearby while Mr. Calabrese, president and chief operating officer of Wackenhut Corrections Corp., described his company's extraordinary problem.

Two hundred miles north, at a Wackenhut-run prison in Holly Springs, Miss., 130 steel bunks stood bare and unused in two cavernous cell blocks. Wackenhut had closed the units because it no longer had inmates to fill them. Every day, the empty space was costing the company money it had expected to be paid by the state. Mr. Calabrese recalls telling the senators Wackenhut couldn't afford so many empty beds, and he hoped they could help.

Even after Mississippi built 15 prisons in seven years, nobody thought the day would come when there weren't enough felons to fill every cell. But that day came this year, when the state found itself with 2,000 more prison beds than prisoners.

The companies and counties that provide those beds responded with a bold request: Pay us for cells Mississippi doesn't need. So persuasive were prison operators that state lawmakers at one point wrote legislation that, according to corrections commissioner Robert Johnson, set aside millions of dollars for empty prison beds -- or "ghost inmates."

The prisons won this favor even as lawmakers were cutting state budgets for classroom supplies, community colleges, mental-health services and other programs. "We've got this all wrong," Mississippi Attorney General Mike Moore says. "We're the poorest state in the union, and we're investing money in failures."

After two decades of stuffing ever more prisons with ever more prisoners, many states are looking to reverse that grim trend. What unfolded in Mississippi after Mr. Calabrese's evening with the senators shows how hard that could be.

Prison expansion here -- as in many states -- spawned a new set of vested interests with stakes in keeping prisons full and in building more. In Mississippi, those interests include private prison companies and their lobbyists, legislators with prisons in their districts, counties that operate their own prisons and sheriffs who covet convicts for local jails. The result has been a financial and political bazaar, with convicts in stripes as the prize.

The number of people behind bars in the U.S. has nearly quadrupled in the past 20 years -- to about two million -- and prison overcrowding persists in many states. But as crime has declined, some states are easing the tough sentencing laws that fueled the inmate bulge. The nation's prison population appears to be leveling off, and in some places, pockets of prison space are opening up.

More than 1,000 beds are empty in South Carolina, even after the state recently closed a prison to save money. Michigan has postponed opening a new prison for a year because the state lacks the inmates to fill it. Minnesota has more than 600 empty beds at a new prison and 130 elsewhere in its system.

Empty cells could proliferate. Last year, the nation's prison population grew by just 1.3%, its slowest pace since 1972, and state-prison populations dropped in 13 states. During the second half of 2000, the nationwide state-prison population shrank by 0.5%, its first such decline in nearly three decades.

Mississippi ranks behind only Texas and Louisiana in per-capita incarceration. But the growth of Mississippi's inmate population has slowed while its prison system has expanded. This has put Mr. Johnson, the blunt 53-year-old former police chief who runs the state corrections department, in a peculiar spot. "Everybody wants inmates," he says. "I can't help them."

Empty prison cells used to be scarcer in Mississippi than cool summer afternoons. In 1994, a federal judge threatened the state with big fines because too many state convicts were crowding local jails. Crime-conscious lawmakers rallied to then-Gov. Kirk Fordice, who vowed in his State of the State address that year to put yet more criminals behind bars. "If that means we have to build a bigger jailhouse," Mr. Fordice said, "hand me a shovel, stand back and we'll get a bigger jailhouse built."

Fifteen new prisons later, Mississippi has four main types of institutions competing for state inmates. Private companies -- Wackenhut Corrections Corp. of Palm Beach Gardens, Fla., CCA of Nashville, Tenn., and Tuscolameta Inc. of Walnut Grove, Miss. -- run a total of five facilities designed to house 4,000 prisoners in exchange for payments from the state. Cash-poor counties eager for economic development operate 10 "regional" prisons where the state can rent as many as 2,500 additional beds. Some local sheriffs get paid to keep state inmates in their jails. And the state runs three of its own penitentiaries.

All told, Mississippi has bunks for about 20,700 inmates. Until last year, it was easy to keep them filled because the state in 1995 had enacted a "truth-in-sentencing" law that, like similar statutes in many other states, required all felons to serve 85% of their sentences.

Then, in June 2000, several related events expanded the supply of cells available for state inmates. First, another federal judge fined the state $1.8 million, again for packing local jails with too many state prisoners. That prompted Mr. Johnson, who had been on the job just two months, to pressure substandard jails to improve conditions, so they could legally house another 700 state inmates.

He also tinkered with prison policies to allow some well-behaved inmates to get out slightly earlier, within the bounds of the truth-in-sentencing law. The rate of inmates being released started rising just as counties opened three new regional prisons that created 750 additional spots for state inmates. By the end of last year, more than 2,000 medium-security beds stood empty.

This wasn't welcome news at the private and regional prisons, which depend on inmates for revenue. Since 1996, when Wackenhut opened a 1,000-bed prison in Holly Springs and CCA launched a similarly sized facility in Greenwood, the companies had enjoyed a constant supply of more than 990 inmates each. The state, which owns the prison buildings, paid about $28 a day per prisoner to the private operators. As the year ended, the head counts in each facility had slipped to about 900 and were still falling.

Prisons Are Like Airlines

Prisons that charge fees crave prisoners like airlines crave passengers. Just as an airline's costs for fuel and crew stay nearly the same no matter how full a flight, prisons carry security, staff, utility and other fixed costs that can't easily be reduced in step with a declining inmate count. So those two moth-balled 65-man units at Wackenhut's Holly Springs prison represented about $109,000 a month in lost revenue. The move cut into profit because Wackenhut didn't reduce payroll, its biggest expense there.

Likewise, each regional prison had been accustomed to having nearly all of its 250 beds filled, at daily rates of $25 to $27 per inmate. By January, the inmate counts at these facilities were hovering near 200 each. While the regionals aren't supposed to turn a profit, the counties that own and operate them rely on the revenue to pay off debt from building the prisons and to pay staff salaries.

Most regionals were built in rural areas that needed an economic boost. Bolivar County's facility, in the Mississippi River delta in the northwest part of the state, employs about 40 local people. On a recent tour of the prison, a group of cinder-block buildings surrounded by razor wire and soybean fields, state Rep. Linda Coleman pointed to a guard and said, "If we don't get [more inmates], she might get laid off."

In January, Ms. Coleman, the Democratic vice-chairwoman of the House penitentiary committee, lobbied Mr. Johnson on behalf of the Bolivar prison. She says she told him the prison needed more inmates so the county wouldn't default on $7.8 million in debt it took on to build the facility.

Sorry, he recalls telling her. In the past, the state had steered most fresh convicts to the private and regional prisons, making sure they were close to full. But Mr. Johnson says he cared more about saving money than keeping the for-pay prisons happy. Now, as space opened up in the three state-run facilities, he was directing new inmates to those prisons.

The state had agreed by contract to provide each regional facility with at least 200 inmates, which it was doing. Beyond that, he remembers telling Rep. Coleman, "I can't create any inmates."

He says he was merely following the legislature's desire to corral corrections spending, which has more than doubled since 1994, to nearly $260 million a year. In contrast to the $25 to $28 daily per-prisoner fee the state paid to keep inmates in private or regional facilities, he says the cost of adding a prisoner -- the marginal cost -- to one of the three state-run penitentiaries is only about $8 a day. "It's like owning a hotel," Mr. Johnson says. "Why would you put somebody up in another hotel when you have an empty bed in your own?"

The numbers are actually a bit more complicated. The average -- as opposed to marginal -- cost of housing a prisoner in a state-run facility comes to about $50 a day, but much of that reflects fixed costs, such as staff and building maintenance. The state average is also higher in part because it includes amounts not reflected in the private and regional per-diems. These amounts include expenses for parole supervision and the higher cost of handling Mississippi's maximum-security inmates, most of whom are directly housed by the state.

Throughout January and February, legislators, wardens and county supervisors deluged the corrections department with pleas for prisoners. Mr. Johnson had no qualms about putting criminals behind bars. He had done it for most of his career as a cop. But it disturbed him to hear burglars, drug dealers and car thieves being portrayed as valuable assets.

"The sole focus for many people is economic development: 'We can make money off of inmates,' " he says. "That's just gotten a little too skewed for my liking."

One frequent caller to the corrections department was Charles Weissinger Jr., a lawyer, lobbyist and former state legislator who had helped plan the first two regional prisons in the 1990s. He now has contracts with six regional prisons to provide legal and other advice. A report released in July by the state legislature's auditing agency says these clients will pay him at least $332,000 this year.

As spring neared, Mr. Weissinger implored Mr. Johnson and his aides to restore the regional prisons to their full, 250-inmate capacity. The lobbyist recalls saying that if extra prisoners had to come out of the private prisons, so be it, because the regionals are "the littlest and the poorest." Mr. Johnson didn't budge.

Wackenhut's local lobbyist, Al Sage, made his own appeals. The folksy, silver-haired Mr. Sage, 53, is known for his dogged style. "If the capitol doors are open, I'm over there," he says. Sage Advice, his one-man firm in Jackson, had been hired by Wackenhut in 1994, when the prison-building push began. The prison company was his best client in 2000, accounting for $30,000 of his $124,100 in total revenue.

Begging for inmates had become a big part of Mr. Sage's job. By mid-March, the inmate count at the Wackenhut-run Holly Springs prison had fallen below 800. Mr. Calabrese, the company's president, recalls telling Mr. Sage the prison needed at least 900 inmates to cover costs and generate a "reasonable" profit, which the company declines to specify. The lobbyist repeated the 900 minimum to any lawmaker who would listen.

Wackenhut's Lobbying

On March 22, Mr. Calabrese paid a visit to Mr. Johnson for a conversation both men describe the same way. They sat in the commissioner's conference room, facing a color-coded map of Mississippi prisons. Mr. Calabrese asked if he could expect more inmates anytime soon. The answer was no.

Wackenhut's state contract at Holly Springs was up for renewal. Mr. Calabrese said he couldn't renew if it meant Wackenhut would keep losing money. Mr. Johnson said he didn't have the budget to pay for the company to house more inmates, and only the legislature could change that. Mr. Calabrese perked up. What was the legislature's view? he asked. "They're meeting now," Mr. Johnson said, and the executive could go to the statehouse and find out.

"I better get over there," Mr. Calabrese said. He hadn't planned to stay in Mississippi overnight, so he bought a fresh shirt for the next morning.

Two blocks away at the statehouse, the part-time legislature was completing its three-month session. State tax revenues had come in short of projections because of the faltering economy, and Gov. Ronnie Musgrove was battling lawmakers for more money for the state's public schools. The legislature had made a one-year reduction of $30 million for classroom supplies and textbooks and ended a program that funneled 25% of any state budget surplus to the public schools.

Messrs. Calabrese and Sage went door-to-door in the statehouse, a domed granite edifice that stands on the former site of Mississippi's first prison. In a corridor, they buttonholed Carl "Jack" Gordon, Democratic chairman of the Senate appropriations committee and one of Mississippi's most powerful legislators. They also chatted with Republican Sen. Robert "Bunky" Huggins, another political heavyweight whose district is home to a regional prison and CCA's Greenwood facility.

In Sen. Huggins's office, Mr. Calabrese emphasized that Wackenhut was not an interloper. "We didn't build a prison on spec and start looking for prisoners," he recalls saying. "You invited us."

He continued the discussion over dinner with Sens. Huggins and Gordon at the Parker House, a local restaurant. Mr. Calabrese, 50, made his case with the crispness and deference of the former courtroom attorney that he is. He told the senators it was "fair" and "commercially reasonable" that Wackenhut be restored to 90% capacity at Holly Springs -- 900 inmates -- because overall the state's prisons were 90% full. "We're willing to share the pain," he recalls saying, "but give us 90%." And he picked up the check for dinner.

Unlike the regional prisons, Wackenhut and CCA had no inmate guarantees in their contracts. The contracts obliged Mississippi only to make its "best efforts" to keep the facilities filled. Weeks before, CCA's local lobbyist, Spencer "Buddy" Medlin, told Sen. Huggins that CCA's prison in his district needed 930 inmates to break even, the senator recalls.

Sens. Huggins and Gordon worried that the companies might pull out of the prisons, and neither man thought the state could run them more efficiently than the companies. In the future, Mississippi might need the extra beds.

By March 24, a Saturday, Mr. Calabrese had left, but Mr. Sage was planted on the second floor of the statehouse. A conference committee of three representatives and three senators had convened to set the corrections budget and deal with the empty beds, which now numbered 2,600. Four of the six lawmakers had prisons in their districts.

The conferees sat around a U-shaped group of tables in a high-ceilinged room hung with portraits of former appropriations chairmen, participants say. Cigar and cigarette smoke floated in the air. Mr. Johnson shuttled in and out to answer questions, while Mr. Weissinger, the regional prisons' attorney, waited with Mr. Sage outside.

The conferees spent most of the weekend debating whether to solve the empty-bed problem by closing part of the state's massive century-old penitentiary at Parchman in northwest Mississippi. Rep. Coleman of Bolivar argued against the idea. Some of her constituents work at Parchman, which is near her district. She opposes companies being in the incarceration business in the first place, dealing with "human bodies as commodities," as she puts it.

Sen. Huggins endorsed closing part of Parchman. "Jack [Gordon] and I went out to dinner with the private prisons, and they're hurting," he recalls telling the lawmakers. Wackenhut and CCA had bailed the state out of a tough spot in 1994 by helping get two new prisons up and running quickly, and they deserved help, he said.

"I haven't had the privilege of going to dinner," Rep. Coleman remembers firing back, "but I don't think we should close the [Parchman] units." The debate got loud at times, but finally, the conferees agreed to leave Parchman intact for now.

They turned to the county-owned regional prisons. The legislators were inclined to boost these prisons' guaranteed minimum to 230 inmates -- an idea Mr. Johnson says he didn't like, because it meant moving $8-a-day prisoners from state facilities to $25-a-day regional prisons. The conferees accused him of wanting to keep state prisons full, so their budget would look justified, participants recall. Guilty, he said.

The committee emerged with a bill around noon on Monday, March 26, but its language was ambiguous. The measure seemed to set a 230-inmate minimum for the regional prisons, as well as what looked like a 900-inmate minimum for the Wackenhut and CCA prisons. The bill didn't, however, explicitly require Mr. Johnson to move any inmates. Rather, it directed his department merely to "make payments for housing" prisoners according to the stipulated minimums -- to pay the prisons whether they housed more inmates or not.

Mr. Johnson was outraged. By his arithmetic, his department would have to pay the private operators and the regionals for the equivalent of 600 inmates they weren't currently holding. The annual bill would come to about $6 million.

Later that afternoon, he huddled with aides before facing local reporters. "How do we get them to understand we'd be paying for something we don't have?" he recalls asking his staff. His communications director, Jennifer Griffin, suggested asking a friendly lawmaker to address reporters, using a phrase that had just popped into her head: "ghost inmates." Mr. Johnson thought for a moment. "No," he said, "I'll do that myself."

The full House and Senate approved the prison bill that afternoon. But Mr. Johnson stole the show. Newspaper headlines and newscasts endlessly repeated the line about ghost inmates.

On the defensive now, the legislative conferees told other lawmakers that they had intended for Mr. Johnson to move inmates to the private and regional prisons, not pay for ghosts. The actual language hadn't stirred any significant opposition in the end, the conferees said.

Sen. Huggins says he inserted the private-prison minimum into the bill, with Sen. Gordon's approval. "We don't guarantee them a profit, but I think we're obligated to get them enough prisoners to where they have a chance," Sen. Huggins now says. Both he and Sen. Gordon say they never intended to allocate money for empty beds.

Rep. Coleman says she didn't like guaranteeing inmates to the private prisons but had been too tired to fight anymore. The outcome was a compromise, she says.

Both Wackenhut and CCA say they never asked for and didn't want to be paid for empty beds. But Mr. Sage, the Wackenhut lobbyist, says that is exactly what he interpreted the bill as requiring.

Two days after the legislation passed, Gov. Musgrove vetoed it. In a press conference, the usually cool-headed governor trembled with anger as he, too, railed against ghost inmates. He accused lawmakers of helping prisons while "taking money away from children and teachers."

Just after the governor spoke, Attorney General Moore took the podium. Flanked by Sens. Huggins and Gordon, Mr. Moore said the only sensible and proper way to interpret the legislative guarantees was to require the corrections department to move inmates. There would be no payments for ghosts. Thus assured, the House and Senate overrode the governor's prison-bill veto.

Not Over Yet

The prison free-for-all wasn't over yet, however. On June 4, Mr. Johnson sent a letter to 61 sheriffs around the state. To comply with the prison bill, he wrote, the corrections department might need to transfer hundreds of state inmates currently housed by local jails to regional and private facilities.

Many sheriffs were furious. The state paid local jails $20 a day to keep an inmate. Sheriffs used the state prisoners, many of whom were low security risks, to do jailhouse chores, local road maintenance and construction. Sheriffs, who are influential political figures in Mississippi counties, angrily complained to the corrections department and attorney general's office.

Just as the controversy reached another boiling point, the legislature's audit agency released a study finding that the regional prisons, to break even, need fewer inmates than had been provided for in the notorious prison bill. Similarly, the private operators required fewer inmates to cover their costs, the study concluded.

Sens. Gordon and Huggins said they had always intended to defer to the audit agency's analysis. The numbers in the prison bill weren't binding, they added. Mr. Johnson would have to move only a total of 250 inmates, and the sheriffs could keep most of the state prisoners residing in their jails.

In its report, the audit agency cited a total of nearly $700,000 in "excessive costs" at the regional prisons, including $272,000 of the $332,000 in payments to Mr. Weissinger. He says he is paid reasonably and that his fees cover his work and that of another part-time lawyer, three legal assistants and a receptionist, as well as related overhead.

During the last week of June, white corrections department buses gathered inmates from two state prisons and headed north, toward the privately operated facilities. The buses deposited 154 inmates at the Wackenhut-run Holly Springs facility, boosting its total population to 869, and dropped another 83 at the CCA-operated prison in Greenwood, raising its tally to 843. A smattering of additional inmates went to regional prisons.

Wackenhut recently signed a two-year contract renewal for Holly Springs, with a guarantee for only the first year of at least 871 inmates. Mr. Calabrese says the company will get by with that amount for now but is likely to appeal to Mr. Johnson and legislators next year for more inmates. Steven Owen, a spokesman for CCA, says his company is focused on providing good service to Mississippi, and "the rest of it will take care of itself."

As of yesterday, 2,145 prison beds remained empty across the state, a number Mr. Johnson says isn't likely to fall anytime soon. Net admissions of 554 inmates through Aug. 31 are trailing last year's comparable figure by 694 inmates. In March, the legislature adjusted the state's sentencing law to make first-time nonviolent convicts eligible for parole.

And in an aftershock of the 1990s prison-building explosion, an 11th county-operated regional prison is scheduled to open next spring, with space for 250 state prisoners. According to a contract he signed before so many beds became empty, Mr. Johnson must find 200 inmates for that prison too.

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Mississippi built 15 prisons in seven years, creating too many cells and fierce competition for inmates among prison operators. In the hunt for more convicts were private prison companies Wackenhut Corrections Corp. and Corrections Corp. of America, as well as "regional" prisons, such as the one in Bolivar County.

Wackenhut Corrections Corp.
Headquarters:
Palm Beach Gardens, Fla.
CEO and Vice-Chairman:
George C. Zoley
40,000 beds in 57 facilities
2000 revenue: $535.6 million
2000 net income: $17.0 million

Corrections Corp. of America
Headquarters:
Nashville, Tenn.
CEO and President:
John D. Ferguson
61,300 beds in 64 facilities
2000 revenue: $310.3 million
2000 net loss: $730.8 million

The explosion of prison construction during the past decade has left 27 states with at least 1% excess capacity in their prison systems according to the Justice Department. Some states, though, are still overcrowded. Figures are as of end of 2000.

The introduction of tougher sentencing laws in the 1980s and 1990s drove the national prison population up, even as the rate of violent and property crime was falling.





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