Arizona Pulling Away From CCA

CNN Money
CCA (Corrections Corporation of America) (NYSE: CXW), the nation's largest partnership corrections provider to government agencies, announced today that the proposed budgets by the Arizona Governor and Legislature, released on January 15, 2010, would phase out the utilization of private out-of-state beds. CCA currently has management contracts with Arizona at its 752-bed Huerfano County Correctional Center in Walsenburg, Colorado and at its 2,160-bed Diamondback Correctional Facility in Watonga, Oklahoma.
The proposed phase-out of utilizing out-of-state beds is based on Arizona's budget crisis and its desire to utilize additional in-state capacity that will come on-line in 2010.
As a result of the budget proposals, there is a significant risk that CCA will lose the opportunity to house offenders from Arizona at its Huerfano and Diamondback facilities during 2010. Our contract with Arizona at Huerfano expires on March 8, 2010, and our contract at Diamondback expires on May 1, 2010. In the event that Arizona should not renew one or both of these contracts, CCA will work with Arizona officials related to the timing of any phase-out of Arizona inmate populations. We would anticipate that such populations would be transferred out within 30 to 60 days following expiration of each management contract. If Arizona removes its offender populations housed at these facilities, CCA will likely close both facilities. During 2009, CCA generated approximately $56.5 million in revenues from both of these contracts.
"Although we are disappointed with the proposed budgets' initiative to eliminate utilization of out-of-state prison capacity, we understand our partner's fiscal concerns in a very difficult budgetary environment," said Damon Hininger, president and CEO. "We are hopeful that Arizona will move forward with a Request for Proposal for the construction and management of 5,000 partnership prison beds in the state of Arizona and remain committed to continuing our partnership with the state of Arizona. Although we do not currently manage any inmate populations from the state of Arizona at any of the six facilities we own in the state of Arizona, we are one of the state's top 50 employers and pay millions of dollars in taxes every year, making us a compelling partner for Arizona as it considers the addition of in-state partnership capacity."