After years of opposition from California’s prison guards’ union, a breakthrough contract this fall to house up to 1,000 inmates by next spring is a shift in fortunes for Nashville-based Corrections Corporation of America, reports the Tennessean. Two years ago, the company’s problem was filling 8,000 empty beds. Now the challenge is staying ahead of the curve to meet the growing need for prison beds. “All the stars have kind of aligned at this point in terms of demand for beds is high and supply is low,” said Jim Macdonald, a stock analyst at Chiago’s First Analysis Securities. CCA will add 3,931 beds next year in its biggest expansion since overbuilding of prisons and problems with a real estate investment trust left the company on the brink of collapse in 1999.
It also plans to begin construction of an additional 4,000 to 6,000 beds to meet future demand as more states shun building their own prisons, turning instead to private operators to keep corrections department costs under control. “It’s just politically not palatable to spend money on prisons when it could be spent on schools,” said analyst Anton Hie at Jefferies & Co. in Nashville. The California opportunity materialized as overcrowding and other problems have worsened for that state’s prison system. Gov. Arnold Schwarzenegger issued an emergency order last month that, allows the immediate transfer of inmates out of state without competitive bidding. Most of CCA’s roughly 4,100 empty beds are under contract with existing customers.