Posts Tagged ‘GEO Group’

ICE paid out $500 million for empty beds in FY 2020

Currently the number of people being held by Immigration and Customs Enforcement is just over 20,000. This number has fallen off dramatically from the all time high of over 55,000 registered last August (2019). At the beginning of the current fiscal year (Oct 1, 2019) there were still over 53,000 people being held. Which means that over the last 12 months there has been a 62% fall off in the number of people in ICE detention. ICE contracts with 175 different facilities around the country to hold people. Many of these facilities are run by county sheriffs or state departments of corrections. However, the larger facilities, which in total hold close to 75% of the people in detention, are run by private companies, the largest are CoreCivic and the GEO Group, followed by LaSalle Corrections.  With a collapse of nearly 62% of the number of people being held, you’d expect these companies to really be hurting. But they are not. The reason they are not on the verge of collapse is because the contracts for managing most of these facilities guarantee payment for a minimum number of beds, whether those beds are occupied or not. Indeed, across the 44 private facilities that have a guaranteed daily minimum, the total number of people they are guaranteed to get paid for is 30,242.  (See full ICE stats YTD here) In those same facilities, the average daily population for the whole year was just 22,006 – or 8,236 a day below the guaranteed minimum. So, over the course of this year, which ends on September 30, the federal government has paid for an equivalent of 3,014,376 days of detention for empty beds (remember it was a leap year!). The actual amount that companies get paid for beds per day in individual contracts is not public. However, the funding enacted for ICE detention in FY2020 was $3.1 billion, based on an anticipated daily average of 50,126 beds, or an average cost of $168.97 per bed per day. This means that, based on the average daily bed costs in the budget enacted this year, ICE may have paid as much as $509,339,113 for empty beds in FY2020.    Daily averages for the year aside, it is worth pointing out that at this moment there are 20,000 people in detention in the entirety of ICE’s network. And the companies housing three fourths of them are still getting paid for 30,242 people a day. (To be clear, we are not advocating ICE fill those beds.) With all of the extra money, you’d think services would have improved. But no. Health services remain abysmal – and even in the midst of a global pandemic, ICE contractors cannot be bothered to provide adequate services for people in detention – or for their own staff. Indeed, the companies are cutting staffing levels and services given the lower overall numbers, not providing better services.  For CoreCivic’s part, revenue in the second quarter of 2020, the peak time of the COVID-19 crisis, and the lowest detention rates in 20 years, was still $471 million. This, they note, was down just 3.6% from the first quarter (which puts revenue for the first half of 2020 near $1 billion). On an investor call in August, company leadership made clear that the guaranteed minimums have insulated the company somewhat from the overall decline in ICE detention. Asked if ICE or the US Marshal service was trying to renegotiate the minimums at this time, Damon Hininger, CoreCivic’s President and CEO, responded, “No. So it is the contrary.” He then noted the recent 10-year extension for their contract at the T Don Hutto detention facility in Texas, and the expectation of a 10-year extension for their contract at the Houston Processing Center – the oldest private detention facility in the country – as evidence of ICE’s commitment to maintain “detention capacity.”  The GEO Group had revenue of $588 million during the second quarter of this year. On a recent investor call, company directors also discussed the decline in ICE detention but noted that “most of our GEO Secure Services contracts contain fixed price or minimum guaranteed payment provisions.” For both GEO and CoreCivic, the guaranteed minimums are crucially important for cash flow and “investor confidence.” The GEO Group was also able to celebrate another 10-year deal for an ICE facility in southern Texas. ICE seems hell bent on protecting both of these companies from lost revenue. As I’ve written before, the reason detention numbers are so low is that the Trump administration has effectively closed the border – summarily expelling 175,000 people since March 19, 2020, many of whom would have otherwise been transferred to Immigration and Customs Enforcement’s detention network. Stephen Miller wants to keep the border closed indefinitely. The GEO Group and CoreCivic do not. So, while the first three years of Trump’s presidency were sort of a bonanza for these companies, the last year has been a struggle (in the way that a 3.6% decline in revenue for companies that make billions off incarcerating people is a “struggle”). Oddly enough, what this means is that a Biden victory is probably better for them in the short term, as Biden has indicated he will overturn the order that closed the border. Of course, prior to Trump taking office, Biden was part of the administration that set the previous record for detention rates, with a daily average of over 38,000 people in 2016. That administration also signed many of the sweetheart contracts with daily minimums that are keeping these companies afloat today. Capitalism surely makes for strange bedfellows, even when most of the beds are empty. 
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