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Criminal: How Lockup Quotas and “Low-Crime Taxes” Guarantee Profits for Private Prison Corporations

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Major Findings:

  • 65 percent of the private prison contracts ITPI received and analyzed included occupancy guarantees in the form of quotas or required payments for empty prison cells (a “low-crime tax”). These quotas and low-crime taxes put taxpayers on the hook for guaranteeing profits for private prison corporations.
  • Occupancy guarantee clauses in private prison contracts range between 80% and 100%, with 90% as the most frequent occupancy guarantee requirement.
  • Arizona, Louisiana, Oklahoma and Virginia are locked in contracts with the highest occupancy guarantee requirements, with all quotas requiring between 95% and 100% occupancy.

State-specific Findings:

  • Colorado: Though crime has dropped by a third in the past decade, an occupancy requirement covering three for-profit prisons has forced taxpayers to pay an additional $2 million.
  • Arizona: Three Arizona for-profit prison contracts have a staggering 100% quota, even though a 2012 analysis from Tucson Citizen shows that the company’s per-day charge for each prisoner has increased an average of 13.9% over the life of the contracts.
  • Ohio: A 20-year deal to privately operate the Lake Erie Correctional Institution includes a 90% quota, and has contributed to cutting corners on safety, including overcrowding, areas without secure doors and an increase in crime both inside the prison and the surrounding community.

This report discusses the use of prison bed occupancy guarantee clauses in prison privatization contracts and explore how bed occupancy guarantees undermine criminal justice policy and democratic, accountable government. Section 1 explains the for-profit private prison industry’s reliance on high prison populations, and how these occupancy guarantee provisions directly benefit its bottom line. Section 2 discusses the prevalence of bed guarantee clauses, drawing on a set of contracts that ITPI obtained through state open records requests. Section 3 describes how occupancy guarantees have harmed states, focusing on the experiences of Arizona, Colorado, and Ohio – three states that have agreed to these provisions to detrimental consequences. Lastly, Section 4 will discuss our recommendation that governments can and should reject prison occupancy guarantees.