Private Prisons Aren’t Going Anywhere Despite Department of Justice Decision
The companies have other federal, state, local and international clients.
— -- The announcement this week that the Department of Justice was working to reduce the use of privately-operated prisons was a significant policy change, but will almost certainly not end the practice.
In the hours after yesterday’s announcement, share prices for Corrections Corporation of America (CCA) -- which claims to be the “nation’s largest owner of privatized correctional and detention facilities and one of the largest prison operators in the United States” -- on the New York Stock Exchange dropped to $13.04, down from a 52-week high of $35.05 in late June (a decline of almost 63 percent).
Similarly, another major private prison operator, GEO Group, saw its share prices on the NYSE fall about 53 percent -- from a 52-week high of $35.14 in mid-July to $16.26. Their prices have since rebounded a bit. A third company that the federal Bureau of Prisons contracts with, Management & Training Corporation, is not publicly traded.
But, the Federal Bureau of Prisons only accounted for 11 percent of CCA’s revenue in 2015, according to a recent filing with the Securities and Exchange Commission (SEC). And it accounted for 15 percent of GEO Group’s revenue that same year, according to the company’s most recent annual report.
In a transcript provided to ABC News, Damon Hininger, CCA's President and CEO, told investors on Friday afternoon: "I also wanted to note that while nearly half of our revenue comes from our federal partners and the other half from our state partners, the BOP only makes up about $131 million of our revenues."
This week's decision applied only to the federal prison bureau and not the U.S. Marshals Service -- although both operate under the Department of Justice.
Meanwhile, officials tell ABC News that Immigration and Customs Enforcement (ICE), another major federal client, is not affected by the decision.
According to the aforementioned SEC filing, the Marshals Service and ICE combined accounted for 40 percent of CCA’s revenue in 2015. And, the two agencies account for 30 percent of GEO Group’s total revenue in 2015, according to their annual report.
Meanwhile, the companies maintain contracts at the state level, which are also unaffected by the Justice Department decision.
“We currently have correctional operations in approximately 33 states,” GEO Group said in a recent SEC filing. While this figure will include the prisons, for which federal agencies are the primary client, the filing details work for international, state and local governmental clients.
CCA said in its filing that business from state customers accounted for 42 percent of total revenue in 2015.
MTC, the privately traded company, says that it has “26 state and federal correctional facilities in Arizona, California, Florida, Idaho, Ohio, New Mexico, Mississippi, and Texas.”
ABC News’ Mike Levine and Rebecca Jarvis contributed to this report.
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