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

NCJ Number
Date Published
September 2013
15 pages

This report examines the use of prison bed occupancy guarantee clauses used in prison privatization contracts.


This report, produced by In the Public Interest, examines how lock-up quotas and prison bed occupancy guarantee clauses are used in prison privatization contracts. Major findings from this report include the following: 65 percent of the private prison contracts analyzed for this report included occupancy guarantees in the form of quotas or required payments for empty prison cells; occupancy guarantee clauses in the contracts ranged between 80 percent and 100 percent, with 90 percent as the most frequent occupancy guarantee requirement; and the States of Arizona, Louisiana, Oklahoma, and Virginia are locked in contracts with the highest occupancy guarantee requirements requiring between 95 percent and 100 percent occupancy. Regarding specific States, the evaluation found that in Colorado, despite a significant drop in crime, that State has been forced to pay an additional $2 million to three for-profit prisons due to an occupancy requirement; three for-profit prison contracts in Arizona have a 100 percent quota; and in Illinois, a 20-year private contract to operate the Lake Erie Correctional Institution has resulted in reduced spending on safety, increased overcrowding, and an increase in crime both inside the prison and in the surrounding community. The information in this report is presented in four sections. The first section explains the for-profit private prison industry's use of occupancy guarantee clauses and its reliance on these clauses to maintain its bottom line. Section 2 discusses the prevalence of occupancy guarantee clauses, while the third section describes how these clauses have harmed States. The fourth section discusses the report's recommendation for rejecting the use of occupancy guarantee clauses. Figures and appendix