State losing prison operator

Tuesday, Feb. 24, 2004 | 10:44 a.m.

CARSON CITY -- The private company that has operated the women's prison in North Las Vegas since its opening is pulling out because it is losing money, company officials said.

Corrections Corp. of America has notified the state that it will not renew its contract effective Oct. 1. That will end what has been a rocky relationship in recent years.

Steve Owen, director of marketing for Corrections Corp., said there are "irreconcilable differences" between the company and the state. "We couldn't come to an agreement."

The notification gives the state plenty of time to consider its options, Owen said.

Anthony Grande, vice president for customer relations, said the company has "determined that continuing to operate the Southern Nevada Women's Facility under the current contract provisions is not practical."

In a letter to state Corrections Department Director Jackie Crawford dated Feb. 20, Grande said the company will operate the prison until October.

The women's prison is the last privately run penal institution in Nevada. The state took back the privately run medical care program at the Ely prison and reopened Summit View juvenile facility near North Las Vegas with state employees.

The state pays Corrections Corp. $47.79 a day per inmate, but the rate is scheduled to increase by 3 percent to $49.23 on July 1.

There are about 445 women at the 550-bed prison that was built by Corrections Corp. and opened in 1997. The contract with the state runs until June 2015 with an automatic renewal every three years.

Crawford said Corrections Corp. was required to notify the state by July 1 if it wanted to continue operation, but made its decision earlier "to ensure an orderly transition between the state and CCA."

The most recent controversy at the prison involved a female inmate who became pregnant. DNA testing showed the father was a former guard. The inmate has filed a lawsuit against the company, the state and others.

The state will look at previous proposals to run the prison, said Keith Munro, deputy chief of staff and general counsel to Gov. Kenny Guinn.

The state put the prison contract out to bid in 2002, looking for a better price, Munro said, and three companies submitted proposals. No action was ever taken and the prices on the other proposals were never disclosed.

Asked if the state would take it over and run the prison, Munro said the first step is getting the request for proposals ready.

Owen said his company would have an interest in submitting a new bid to operate the prison, but he said it would have to be a "more viable contract." He said his company has lost money under the current arrangement.

Munro said he did not know why the company is ending its contract, but he referred to the state's proposal to take over the medical care of the inmates to provide the company some relief.

"I know they (Corrections Corp.) thought it was a good opportunity for them. We thought it was a good opportunity for the state," Munro said.

Corrections Corp. would have paid the state $14.71 per inmate this fiscal year and $15.15 next fiscal year to cover the health care. That would have reduced the state's payment per inmate to $33 this fiscal year and $34.08 next fiscal year.

But the Legislative Interim Finance Committee, at the urging of Sen. Bill Raggio, R-Reno, blocked the deal. Raggio said further study was needed to make sure the state was not taking on more liability than it thought.

A subcommittee was appointed headed by Raggio to study the matter. Raggio said the budget staff of the Legislature believed it would cost the state more than the money it was receiving for the medical care.

Corrections Corp. has periodically sought to raise the contract price, complaining to state officials that it was losing money.

Grande told the legislative committee in January it would be "exceedingly hard to continue" if the contract was not changed. He said, "This remedy (of the state taking the medical care) gives us hope of operating in a cost efficient manner."

Corrections Corp. of American, which operates 64 prisons in 20 states and the District of Columbia, built the prison and the state was leasing it for 20 years, after which the state would own the facility. But the state issued bonds in 2001 for $24.1 million to buy the prison and its equipment, saving money in the long run because of the low interest rates.