- Created on 19 September 2013
After three violent inmates escaped from an Arizona private prison in July 2010, prompting a two-week, multi-state manhunt, state corrections officials demanded improvements and stopped sending new inmates to what they called a "dysfunctional" 3,300-bed facility.
Less than a year later, the company that runs the prison, Management & Training Corp., threatened to sue the state. A line in their contract guaranteed that the prison would remain 97 percent full. They argued they had lost nearly $10 million from the reduced inmate population.
State officials renegotiated the contract, but ended up paying $3 million for empty beds as the company continued to address problems, according to state documents and local news accounts.
Far from the exception, Arizona's contractually obligated promise to fill prison beds is a common provision in a majority of America's private prison contracts, according to a public records analysis released today by the advocacy group In the Public Interest. The group reviewed more than 60 contracts between private prison companies and state and local governments across the country, and found language mentioning quotas for prisoners in nearly two-thirds of those analyzed.
The prison bed guarantees range between minimums of 70 percent occupancy in a California prison to 100 percent occupancy requirements at some Arizona prisons. Most of the contracts had language mandating that at least 90 percent of prison beds be filled.
Experts argue that such requirements create an incentive for policymakers to focus on filling empty prison beds, as opposed to pursuing long-term policy changes, such as sentencing reform, that could significantly reduce prison populations. In short, many states are effectively obligated to continue to incarcerate people regardless of crime rates and public safety needs, or otherwise hand over taxpayer dollars in order to satisfy private profit-making companies.
"It's really shortsighted public policy to do anything that ties the hands of the state," said Michele Deitch, a senior lecturer and criminal justice expert at the University of Texas School of Public Affairs, who has researched the rise of private prisons. "If there are these incentives to keep the private prisons full, then it is reducing the likelihood that states will adopt strategies to reduce prison costs by keeping more people out. When the beds are there, you don't want to leave them empty."
Private prison corporations emerged in the 1980s and 1990s, at a time when crime rates were soaring and states were scrambling to keep up with surging prison populations. Lawmakers needed quick alternatives, and looked to private prisons as an overflow valve to house inmates who were overcrowding the existing state systems.
But as state prison populations have started to decline in recent years, advocates point to occupancy guarantees as long-term obligations that raise core questions about who benefits from the service: the state, or the prison contractor?
"You can't project years into the future what your prison population is going to look like," said Shahrzad Habibi, research director with In the Public Interest, who authored the study on prison bed guarantees, which the group calls "lockup quotas." "If there is a reduction in the prison population, instead of closing these private prisons first, there is an incentive to keep funneling inmates there, to keep giving them business."
Private prison operators point out that many contracts offer termination language in contracts that give government agencies the option to back out if necessary.
Company spokesmen also argue that occupancy quotas in contracts allow contractors to offer better rates to government agencies. Most prison contracts are structured on a per-day, per-inmate basis, where states pay contractors a designated fee based on a daily count.
Issa Arnita, a spokesman for Management & Training Corp., said the bed guarantees lead to better rates because of the "stability it provides to operators," who don't have to factor in the risk of fluctuating inmate populations and "empty beds."
A spokesman for Corrections Corporation of America, the nation's largest private prison chain, said government agencies sometimes request the bed guarantees to ensure the company won't sell the beds to another agency.
"This helps them ensure that they have the space they need to safely and effectively house inmates," said company spokesman Steve Owen.
But industry critics argue that the contracts are structured such that states have difficulties holding prison companies responsible for mismanagement. In the case of the prison escape in Kingman, Ariz., follow-up audits by the state found an institution in disarray.
Prison officials didn't alert the local sheriff's office until nearly two hours after the escape. It took more than two weeks for authorities to apprehend two of the escapees, both of whom were subsequently charged in connection with the carjacking and murder of an Oklahoma couple who were driving through New Mexico.
Malfunctioning alarms repeatedly blared throughout the prison, and the state concluded that most guards had become "conditioned" to the false warnings and simply ignored them. The company hadn't performed maintenance on the system in nearly a year, audits found.
Five months after the escapes, the director of the Arizona Department of Corrections wrote that he still had "serious concerns about myriad chronic operational deficiencies." Yet MTC still argued that the state was bound by the 97 percent occupancy clause.
According to documents cited in the Arizona Republic, the state agreed to start paying the private contractor the 97 percent rate three months before the prison population reached that level.
"There are so many barriers to actual accountability in these cases," said Caroline Isaacs, a program director for the American Friends Service Committee, a Quaker organization that advocates for prison reform.
Arnita, the MTC spokesman, wrote in an email that the company renegotiated the contract with the state after the disagreement "to ensure no future losses." He said the company has "a very strong partnership" with Arizona.
A spokesman for the state's Department of Corrections declined to comment.
In the Public Interest, the group that did the analysis of bed guarantees, argued that the most prudent contracting scheme would involve payments based only on the number of inmates in a facility for any given day. States such as Texas do not have specific bed guarantee clauses in private prison contracts, pegging payments to the number of prisoners counted every night at midnight.
"When entering a contract to operate a prison, a private company should be required to take on some risk," the report concluded. "Private prison beds were intended to be a safety valve to address demand that exceeded public capacity. It was never intended that taxpayers would be the safety valve to ensure private prison companies' profits."
- Created on 18 September 2013
Will your kids be clamoring for an Elmo that gives hugs, a loom that lets you make rubber bracelets or a kid-size go-cart this holiday?
Those and others have made Toys R Us' annual list of "hot" toys that the company is betting kids will want around holiday time.
It's a crucial calculation because retailers can make up to 40 percent of annual holiday sales during the holiday season, so Wayne, N.J.-based Toys R Us needs to make sure it has the right mix of toys at the right prices.
Overall holiday spending is expected to be cautious. Retail revenue in November and December is expected to rise 2.4 percent during the biggest shopping period of the year, Chicago-based research firm ShopperTrak said Tuesday. That compares with a 3 percent increase in 2012 from 2011.
Meanwhile, Toys R Us, the largest specialty toy retailer in the U.S., has its own challenges. It's facing tough competition from discount stores and online retailers, and is in the midst of a CEO search since Jerry Storch left in February.
But executives at the privately held company say they expect a bustling season.
"Christmas always comes and parents want to give their kids items on their wish list," said Chief Merchandising Officer Richard Berry. "We're pretty bullish on what holiday looks like."
Toys R Us' list of the top 15 toys for the season is split nearly evenly between toys that are available everywhere and toys that are exclusive to Toys R Us. Exclusives help retailers compete since shoppers can't buy the toys elsewhere for cheaper.
Among non-exclusive offerings: Hasbro's Playskool Big Hugs Elmo, a $59.99 22-inch Muppet doll with flexible arms that plays songs, knows phrases and gives out hugs; LeapFrog's LeapPad Ultra, the educational toy company's latest $149.99 tablet for kids; and a $119.99 Lego set Legends of Chima The Lion CHI Temple construction set.
Exclusives on the list include a $14.99 Shimmer 'N Sparkle Cra-Z-Loom by Cra-Z-Art, which creates rubber band bracelets; a $399.99 Razor Crazy Cart go-cart for kids a Toys R Us' own $149.99 tablet for kids called the tabeo e2.
- Created on 18 September 2013
It looks like many people will see out their days in the office.
A new global study finds nearly one in eight workers expect they will never be able to afford to retire fully. In the U.S. and U.K, the figures are even worse.
The report by HSBC paints a gloomy picture of sustained financial hardship and new working habits despite the world economy returning to health.
"Generating an adequate income in retirement remains a major challenge for most people, given the financial conditions created by the global economic downturn," HSBC head of wealth management Simon Williams said.
High levels of unemployment, low wage growth and depressed savings rates have pushed retirement out of reach for many in the global workforce. Ageing populations have compounded the problem as retirement funds have to cover a longer period.
Throughout the Western world people still hope to retire around the same age their parents did, despite indications they may live much longer.
The report surveyed 16,000 people in 15 countries around the world, assessing their retirement and savings outlook.
On average, people expect to retire for 18 years but have only saved enough for 10 years.
Workers in the U.K. and the U.S. face the bleakest future. In both countries about one in five say they will never be able to give up work completely. The prospects are brighter in Asia, with less than half that number in China indicating they're likely to work forever.
For those who do make it to retirement, their twilight years might not be as comfortable as they had hoped. Almost half of current retirees surveyed said they haven't been able to realize their plans - perhaps a European holiday or finally buying that boat - because they have less money to live on than they had expected.
And it's not just grim news for wannabe retirees. Children hoping to inherit could also be disappointed, with over one third of people reporting they won't leave a legacy.
Increasing costs of higher education and housing has driven many parents to provide financial assistance to children during their lifetime -- proving yet another drain on retirement coffers.
- Created on 16 September 2013