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Treatment Industrial Complex: Brief on Privatization of Correctional Medical & Mental Health Treatment AFSC of AZ 2014

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TREATMENT INDUSTRIAL COMPLEX:

How For-Profit Prison Corporations are
Undermining Efforts to Treat and Rehabilitate
Prisoners for Corporate Gain

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NOVEMBER 2014

TREATMENT INDUSTRIAL COMPLEX:

How For-Profit Prison Corporations are Undermining Efforts to Treat and Rehabilitate Prisoners
for Corporate Gain
Written by: Caroline Isaacs
AFSC of Arizona, Grassroots Leadership, and the Southern Center for Human Rights would like to
thank the following people for their contributions to and review of this report: Paula Arnquist, Cate
Graziani, Rebecca Larson, Jason Ziedenberg of Justice Policy Institute, Nicole Porter of The Sentencing Project, Tory Brown of In the Public Interest, Kara Dansky of the ACLU, Joshua Miller of AFSCME,
Carmen Berkley of the AFL-CIO, Judy Schwald, Gyl Switzer of TX Mental Health of America, and Holly
Kirby of Grassroots Leadership.
Design by: Catherine Cunningham

EXECUTIVE SUMMARY
Over the last 30 years, for-profit prison corporations, such
as Corrections Corporation of America (CCA) and GEO
Group (formerly Wackenhut Corrections Corporation),
have benefited from the dramatic rise in incarceration and
detention in the United States. Since the advent of prison
privatization in the early 1980’s, the number of people behind
bars in the US has risen by more than 500 percent to more
than 2.2 million people.1 Meanwhile, the number of people
held in immigration detention centers has exploded from an
average daily population of 131 people to over 32,000 people
on any given day.2
Private prison corporations have profited from, and at times
contributed to, the expansion of tough-on-crime and antiimmigrant policies that have driven prison expansion. This
confluence of special interests and profit-driven policy
making has been referred to as the “prison industrial
complex.”
This brief describes the expansion of the incarceration
industry away from warehousing and into areas that
traditionally were focused on treatment and care of
individuals involved in the criminal justice system--prison
medical care, forensic mental hospitals, civil commitment
centers, and ‘community corrections’ programs such as
halfway houses and home arrest.
While the prison industrial complex was dependent on
incarceration or detention in prisons, jails, and other
correctional institutions, this emerging “treatment industrial
complex” allows the same corporations (and many new
ones) to profit from providing treatment-oriented programs
and services. This includes moving to capitalize on efforts
at the state and federal levels to look at alternatives to
prison, a softening of criminal sentencing laws, and a new

interest in evidence-based practices in parole, probation, and
sentencing.
As a result, this emerging Treatment Industrial Complex has
the potential to ensnare more individuals, under increased
levels of supervision and surveillance, for increasing lengths
of time—in some cases, for the rest of a person’s life.

COMPONENTS OF THE TREATMENT INDUSTRIAL
COMPLEX
For the purposes of this brief, we have divided the Treatment
Industrial Complex into three segments:
Segment 1: Civil Commitment and Psychiatric Care Facilities.
Unlike prisons, from which over 90% of those incarcerated
are eventually released, mental health hospitals and civil
commitment centers represent the potential for lifetime
confinement, which spells long-term, guaranteed profits for
private corporations.
Segment 2: Subcontracted Prisoner Mental Health and
Medical Care
This is the largest and fastest-growing sector in the treatment
industrial complex. Total state spending on correctional
healthcare rose from $4.2 billion in 2001 to $6.5 billion in
2008 (the last year available for comprehensive review).3
Private companies have contracts for close to 1/3 of all
correctional healthcare spending, or $3 billion per year.4
Segment 3: Community Corrections
Community corrections is a vast segment of the criminal
justice system. It includes a variety of treatment services
historically delegated to probation and/or parole, halfway
houses, day reporting centers, home arrest, surveillance,
and electronic monitoring. Overall, two-thirds of individuals
involved in the criminal justice system are in the community,

not behind bars. One in 45 adults is on probation or parole
and 1 in 100 is in prison or jail.5

FINDINGS
1.	 Most for-profit prison corporations have dismal records
in terms of safety, cost, and quality of the prisons
that they manage.6 Across the country, evidence has
surfaced that these companies cut corners on staff pay
and training and services to prisoners in order to make
a profit.7 Application of the same business model to
treatment, services, and alternatives to incarceration has
demonstrated the same sorts of problems
2.	 The profit motive is inherently at odds with the stated
purpose of ‘corrections,’ including community corrections,
which is to reduce offenses that land people in prison
thereby reducing the number of incarcerated individuals.
Private prison corporations are financially dependent
on the growth of supervised populations, providing a
perverse incentive not to rehabilitate.
3.	 While many sentencing reform efforts are geared toward
keeping people out of the system and/or returning them
to their communities as quickly as possible, the financial
incentive for private prison corporations is to keep
people in custody or under some form of supervision
for as long as possible at the highest per diem rate
possible in order to maximize profits. This creates the
potential for a dangerous trend of “net widening”—
placing more people on stricter forms of supervision than
is necessary, for longer than is warranted.
4.	 The problems inherent in the Treatment Industrial
Complex cannot be simplified into a for-profit vs.
non-profit dichotomy. There are many examples of forprofit healthcare, mental health, and reentry programs
that are effective and plenty of publicly-run or non-profit
organizations with dismal track records. However, the fact
that certain for-profit prison corporations are publicly
traded does raise the question of where such companies’
primary loyalties lie. In most corporations, the first priority
is to generate profits for shareholders. This creates
pressure on the business to constantly grow, which
encourages compromising the quality of care.

References
1.	

The Sentencing Project. Available at http://www.sentencingproject.org/template/page.cfm?id=107

2.	

Jacob Fenton, Catherine Rentz, Stokely Baksh and Lisa Hill, “Map: The US Immigration Detention Boom,”
PBS/Frontline, October 20, 2011. http://www.pbs.org/wgbh/pages/frontline/race-multicultural/lost-indetention/map-the-u-s-immigration-detention-boom/

3.	

Pew Charitable Trusts, “Managing Prison Healthcare Spending,” October 2013.

4.	

Paula Arnquist, “Halting the Treatment Industrial Complex” May, 2014.

Despite the serious implications for sentencing policy, public
safety, state budgets, and the lives of thousands of individuals
in the criminal justice system and their families nationwide,
the treatment industrial complex has not yet received
the critical analysis or public attention that it deserves.
Stakeholders (sentencing reform advocates, treatment
providers, criminal justice professionals, elected officials)
are largely unaware of this trend or its implications for their
agencies, programs, or public policy options.
This is a critical moment. There is a nationwide movement
to rethink our criminal justice priorities, favoring evidencebased practices that favor treatment and prevention over
prison warehousing. At the same time, the Affordable Care
Act provides the greatest potential for providing needed
substance abuse, medical, behavioral and mental health care
at the community level in decades. This could divert a huge
number of people from prisons and jails.8 Unfortunately, it
also provides a potential new funding source to for-profit
prison corporations moving into the “alternatives market.”
This brief represents an initial effort to name and describe this
phenomenon, as well as to provide some basic framework for
decision-makers and other stakeholders to examine, evaluate,
and make contracting decisions.
Within the national dialogue(s) around mental health and
criminal justice there must be more scrutiny and examination
of these trends. Further study is needed on each of these
segments (and the many others—juvenile detention, inprison services, etc.) to determine the cost, effectiveness, and
impacts of the treatment industrial complex.

5.	

Pew Center on the States, “One in 31: The Long Reach of American Corrections,” May 2009

6.	

Hartney, Christopher and Caroline Glesmann, “Prison Bed Profiteers: How Corporations are Reshaping
Criminal Justice in the US,” National Council on Crime and Delinquency, May 2012.

7.	

Isaacs, Caroline. “Private Prisons: The Public’s Problem,” American Friends Service Committee, Arizona.
February 2012. https://afsc.org/resource/arizona-prison-report

8.	

Bainbridge, Andrea. White paper, “The Affordable Care Act and Criminal Justice: Intersections and
Implications.” Bureau of Justice Statistics, July 2012.

TABLE OF CONTENTS
BACKGROUND/HISTORY..................................................................................................... 5
INDUSTRY THREATS EMERGE............................................................................................. 6
THE TREATMENT INDUSTRIAL COMPLEX......................................................................... 7
COMPONENTS OF THE TREATMENT INDUSTRIAL COMPLEX...................................... 9
PROFITIZING TREATMENT................................................................................................. 13
DISCUSSION........................................................................................................................ 13
CONCLUSIONS................................................................................................................... 15
RECOMMENDATIONS	....................................................................................................... 16
GUIDELINES........................................................................................................................ 17
REFERENCES....................................................................................................................... 19

BACKGROUND/HISTORY
Over the last 30 years, for-profit prison corporations, such as Corrections Corporation of America (CCA)
and GEO Group (formerly Wackenhut Corrections Corporation), have benefited from the dramatic rise in
incarceration and detention in the United States. Since the advent of prison privatization in the early 1980s the
number of people behind bars in the US has risen by more than 500 percent to more than 2.2 million people.1
Meanwhile, the number of people held in immigration detention centers has exploded from an average daily
population of 131 people to over 32,000 people on any given day.2 Private prison corporations have profited
from, and at times contributed to, the expansion of tough-on-crime and anti-immigrant policies that have
driven prison expansion.
CCA has spent over $19 million3 and GEO $3 million, on lobbying activities through 2013.4 Both corporations
have stated publicly that they do not lobby on “sentencing or detention enforcement legislation” and “do not
take a position on or advocate for or against any specific immigration reform legislation.”5 Yet, evidence shows
that both corporations have indeed lobbied aggressively to increase their share of federal detention and other
prison contracts:
•	

Senate lobby expense disclosures reveal that in 2012 CCA hired a lobbying firm to follow federal
immigration policy issues.6

•	

In April 2013 as the Senate undertook immigration reform; GEO’s quarterly lobbying disclosures show it
hired a firm to lobby Congress on “issues related to comprehensive immigration reform.”7

•	

GEO’s in-house lobbyists spent $1.2 million while the company also paid $880,000 to an external firm to
engage Members of Congress on “policies of interest” in 2013.8

As a result, CCA and GEO Group both wield significant political and economic influence in many states as well
as nationally. They further solidify their influence through a ‘revolving door’ between the public and private
sectors, hiring former legislators and corrections officials once they retire from public service in order to take
advantage of their political connections. They also help their lobbyists (or former lobbyists) obtain positions of
influence in government, serving as political advisors and garnering appointments to various committees and
boards.9
These investments have clearly paid off. CCA and GEO Group have turned incarceration into a multi-billion
dollar industry. Combined, these two corporations operate more than 158 correctional and detention facilities
with a capacity of more than 163,500 beds in the US
and three other countries.10 Together, the companies’
revenues exceed three billion dollars annually.11 Behind
state and federal facilities, privately operated facilities
represent the third largest prison system in the US.
While these companies have generated billions of
dollars for their shareholders, there are also welldocumented records of prisoner abuse, poor pay
and benefits to employees, scandals, escapes, riots,
lawsuits, and wrongful deaths. At the same time, states
and the federal government have begun to rethink
their sentencing and detention policies, citing cost,
effectiveness, and public safety outcomes.

Treatment Industrial Complex | November 2014 | 5

INDUSTRY THREATS EMERGE
Over the past five years, a majority of US states have begun to reform their criminal sentencing laws to
reduce prison populations. Spurred by budget cuts and overcrowding, states have discovered that evidencebased practices in diversion, treatment, and earned release are far more effective at reducing recidivism
and preserving public safety than incarceration. The Bureau of Justice Statistics reported that in 2012 the US
prison population dropped for the third consecutive year. During 2013, legislators in at least 31 states adopted
47 criminal justice policies that may help to further reduce the prison population, improve juvenile justice
outcomes, and eliminate the barriers that marginalize persons with prior convictions.12
Due to expanding prison populations in the majority of states, the total U.S. prison population grew in
2013, according to a new report from the Bureau of Justice Statistics. The 1,574,700 inmates in state and
federal prisons at yearend 2013 represent an increase of 4,300 prisoners since the previous year. (The rate of
incarceration declined from 480 prisoners per 100,000 population to 478 per 100,000 during the year due to
increases in the overall U.S. population.) The new figures come after three years of modest decline from a high
of 1,615,500 prisoners in 2009.
In some states, reforms have had such dramatic impact on prison populations that they have spurred the
closure of prison facilities. The Sentencing Project reports:
“During 2013, at least six states closed 20 correctional facilities or contemplated doing so, potentially
reducing prison capacity by 11,370 beds and resulting in estimated five-year cost savings of over
$229 million. Since 2011, at least 17 states have reduced prison capacity totaling over 35,000 beds.”13
More recently, US Attorney General Eric Holder announced a new “Smart on Crime” initiative aimed at reducing
federal prison populations. Among his proposals are reduced sentences for low-level drug offences, a review
of racial disparities in sentencing, compassionate release for elderly prisoners, and drug treatment alternatives
to prison.14 The federal prison population decreased in size for the first time since 1980, with 1,900 fewer
prisoners in 2013 than in 2012.15
Likewise, administrative or legislative immigration reforms at the national level could decrease the number
of people held in Immigration and Customs Enforcement (ICE) detention, nearly 60% of whom are housed
in privately operated facilities. State and federal contracts represent roughly equal portions of the contracts
held by both CCA and GEO Group. The private prison industry depends on expansion and acquisition of new
contracts for its profits. Immigration reform that offers a ‘path to citizenship,’ combined with sentencing reform
in multiple states poses a significant threat to prison corporations’ bottom lines.
In its 2012 report to shareholders, Corrections Corporation of America (CCA), noted:
“The demand for our facilities and services could be adversely affected by the relaxation of
enforcement efforts, leniency in conviction or parole standards and sentencing practices or
through the decriminalization of certain activities that are currently proscribed by criminal laws.
For instance, any changes with respect to drugs and controlled substances or illegal immigration
could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing
demand for correctional facilities to house them. Immigration reform laws are currently a focus for
legislators and politicians at the federal, state, and local level. Legislation has also been proposed
in numerous jurisdictions that could lower minimum sentences for some non-violent crimes and
make more inmates eligible for early release based on good behavior. Also, sentencing alternatives
under consideration could put some offenders on probation with electronic monitoring who would
otherwise be incarcerated. Similarly, reductions in crime rates or resources dedicated to prevent and
enforce crime could lead to reductions in arrests, convictions and sentences requiring incarceration
at correctional facilities.”16
Treatment Industrial Complex | November 2014 | 6

An additional threat is the negative publicity garnered by multiple scandals in for-profit facilities nationwide.
Allegations of prisoner abuse, financial mismanagement, medical neglect, riots, escapes, and deaths have
made headlines, contributing to growing popular opposition to for-profit incarceration and costly litigation
for states. Negative publicity is viewed as a significant risk factor for investors in prison corporations, as it could
impact current and future contracts. The CCA Annual Report addresses this issue as well:
“Escapes, inmate disturbances, and public resistance to privatization of correctional and detention
facilities could result in our inability to obtain new contracts or the loss of existing contracts. The
operation of correctional and detention facilities by private entities has not achieved complete
acceptance by either governments or the public. The movement toward privatization of correctional
and detention facilities has also encountered resistance from certain groups, such as labor unions
and others that believe that correctional and detention facilities should only be operated by
governmental agencies.”17

THE TREATMENT INDUSTRIAL COMPLEX
For-profit prison corporations such as CCA and GEO Group are keenly aware of industry trends and are
constantly seeking new and different markets to preserve and increase their profits. As states have pursued
sentencing reform efforts to reduce prison populations, the private prison industry has adapted by expanding
its services to include more treatment services and “alternative” programs.
The result is an emerging “Treatment Industrial Complex” (TIC)
— the movement of the for-profit prison industry into correctional
medical care, mental health treatment, and ‘community
corrections.’ Community corrections include corrections programs
outside of jail or prison walls: probation and parole services
including halfway houses; day reporting centers; drug and alcohol
treatment programs; home confinement; electronic monitoring;
and an array of supportive services such as educational classes and
job training. Community corrections is a huge business, with three
times as many people under “community corrections” programs as
currently incarcerated in prison facilities.18
To take advantage of these emerging markets, for-profit prison corporations have begun acquiring smaller
companies that specialize in health care, mental health and substance abuse treatment; “alternatives to
incarceration” such as electronic monitoring; reentry services; and community corrections.
GEO Group, the country’s second-largest private prison corporation, spun off a wholly-owned subsidiary called
GEO Care in 2012, which provides “correctional mental healthcare services and operat[es] state psychiatric
hospitals treating forensic and civil populations.19 More recently, GEO Care was acquired by Correct Care
Solutions, which provides health care to incarcerated populations in 30 states.20
GEO Group is also angling for a piece of the “alternatives to prison” market. In 2010, the company acquired
Behavioral Interventions Inc. (BI), which makes GPS ankle bracelet monitors and other “compliance
technologies.” George C. Zoley, Chairman and Chief Executive Officer of GEO, stated:
“This important transaction represents a compelling strategic fit for our company as it further
positions GEO to meet the demand for increasingly diversified correctional, detention and residential
treatment facilities and services in every state and federal detention and corrections agency.”21
Corrections Corporation of America, meanwhile, announced a “watershed moment” in September 2014 that
Treatment Industrial Complex | November 2014 | 7

While the Prison Industrial Complex

was dependent on incarceration or
detention in prisons, jails, and other
correctional institutions, the Treatment
Industrial Complex now allows the same
corporations to profit from housing of
people with mental illnesses in facilities
that had originally been intended as a
therapeutic environment, such as state
hospitals or civil commitment centers. In
addition, the companies stand to profit
from expanding their purview beyond
physical prisons and jails to supervision
and surveillance of people on parole or
probation and formerly incarcerated
people, potentially infiltrating all
segments of the criminal justice system.

would result in the company focusing more of its resources on prisoner reentry, drug counseling, and rehabilitation programs.22 The move is simply a
response to consumer demand. CEO Damon Hininger said in an interview,
“government clients are increasingly concerned about the long-term costs
of housing inmates and are pushing CCA and other private operators to
save them money by reducing recidivism, the number of inmates who are
released only to do a repeat turn in prison.”23
Other companies have sprung up to take advantage of these opportunities.
In 2013, Connecticut contracted with a private company to run a nursing
home specifically for aging and disabled state prisoners24 and more states
are expected to follow suit.25 One private prison corporation cheerfully
refers to this potential cradle-to-grave supervision and control as the
“corrections lifestyle.”26
The term, “treatment industrial complex” has its roots in a 1961 address by
President Dwight D. Eisenhower, who expressed his concern at the time
about defense contractors, politicians, and the press capitalizing on public
fears during the cold war with the Soviet Union in order to secure more
military spending. “In the councils of government,” Eisenhower said, “we
must guard against the acquisition of unwarranted influence, whether
sought or unsought, by the military-industrial complex.”27

In 1997, educator, author, and activist Angela Davis delivered a speech
entitled, “The Prison Industrial Complex,” which later served as the title of a book on the subject. Writing in
ColorLines, Davis explained,
“[Incarceration and the maintenance of penal infrastructure], which used to be the primary province
of government, is now also performed by private corporations, whose links to government in the
field of what is euphemistically called “corrections” resonate dangerously with the military industrial
complex. The dividends that accrue from investment in the punishment industry, like those that
accrue from investment in weapons production, only amount to social destruction. Taking into
account the structural similarities and profitability of business-government linkages in the realms of
military production and public punishment, the expanding penal system can now be characterized
as a ‘prison industrial complex.’”28
In 1998, Eric Schlosser, writing in the Atlantic, further described the phenomenon:
“Three decades after the war on crime began, the United States has developed a prison-industrial
complex—a set of bureaucratic, political, and economic interests that encourage increased
spending on imprisonment, regardless of the actual need…It is a confluence of special interests
that has given prison construction in the United States a seemingly unstoppable momentum. It is
composed of politicians, both liberal and conservative, who have used the fear of crime to gain votes;
impoverished rural areas where prisons have become a cornerstone of economic development;
private companies that regard the roughly $35 billion spent each year on corrections not as a burden
on American taxpayers but as a lucrative market; and government officials whose fiefdoms have
expanded along with the inmate population.”29
In this industry, the raw material is people. While the Prison Industrial Complex was dependent on
incarceration or detention in prisons, jails, and other correctional institutions, the Treatment Industrial
Complex now allows the same corporations to profit from housing of people with mental illnesses in facilities
that had originally been intended as a therapeutic environment, such as state hospitals or civil commitment
centers. In addition, the companies stand to profit from expanding their purview beyond physical prisons
Treatment Industrial Complex | November 2014 | 8

and jails to supervision and surveillance of people on parole or probation and formerly incarcerated people,
potentially infiltrating all segments of the criminal justice system.
Many for-profit prison corporations generate revenue by charging “per diem”—meaning a dollar amount
for every incarcerated individual, for every day. It is a static system to a large degree, dependent upon fixed
contracts based on established sentencing practices and population rates. The Treatment Industrial Complex,
on the other hand, is a dynamic system, with many people constantly moving through. This high volume
represents the potential for much higher profit.
Under the Treatment Industrial Complex, individuals may no longer be held in prisons, but instead are housed
in other types of facilities (mental health institutions, residential drug treatment centers, halfway houses).
While corporations typically charge a lower per diem for this type of facility, the pool of individuals is larger
than the incarcerated population, potentially generating increasing levels of profit for the company.
Those who are not physically held in any sort of institution, yet remain under state supervision through home
arrest, probation, parole, or other community corrections programs become potential profit-making engines
when corporations can charge for monitoring equipment, supervision fees, drug testing, counseling, and
the like. Although the profit generated from this type of supervision is typically low, the length of time under
supervision can be much longer. As a result, this emerging Treatment Industrial Complex has the potential
to ensnare more individuals, under increased levels of supervision and surveillance, for increasing lengths of
time—in some cases, for the rest of a person’s life.
At the same time that it is responding to industry threats, the Treatment Industrial Complex is also poised
to take advantage of a new potential revenue stream—The Patient Protection and Affordable Care Act
(sometimes referred to as “Obamacare”). The law will provide tens of millions of people with healthcare,
including, for the first time, mental health and substance abuse treatment.
This presents an unprecedented opportunity to expand treatment alternatives to incarceration for those with
mental health issues or addiction disorders.
“By increasing federal dollars for expanding community mental health and substance use treatment
options, including case management services that can coordinate care needs, the ACA enables
jurisdictions to reduce their misplaced reliance on jails and prisons for treatment. Under the ACA,
community-based options become the cost-effective solution for jurisdictions, with the added benefit
of reducing unnecessary criminal justice system involvement in addressing health conditions.”29
Ideally, these programs would be developed and administered through established local agencies and
organizations that have a track record of providing such services in the community. However, given the
tremendous political and economic influence wielded by for-profit prison corporations, there is concern that
companies like GEO Care will be able to out-compete these smaller non-profits to win contracts.

COMPONENTS OF THE TREATMENT INDUSTRIAL COMPLEX
For the purposes of this brief, we have divided the Treatment Industrial Complex into three segments:
Segment 1: Civil Commitment and Psychiatric Care Facilities.
Segment 2: Subcontracted Prisoner Mental Health and Medical Care
Segment 3: Community Corrections, which includes a variety of treatment services historically
delegated to probation and/or parole.
It is important to note that these are not the only additional markets that have grown out of the privatization
of prisons (the growth of immigrant detention is an example). Practically every service and component of
Treatment Industrial Complex | November 2014 | 9

correctional operations has been privatized in some settings, including prisoner transportation, prison food
service and commissary, and prisoner telephone calls and visitation services. However, in this brief we will
focus on those programs and services that are both the clearest examples of the Treatment Industrial Complex,
and which are the most troubling in terms of their potential for expanding the number of people under control
of the criminal justice system and lengthening the amount of time spent under some form of supervision.

Segment 1: Civil Commitment for People Convicted of Sex Offenses and Psychiatric Care
Facilities.
This segment encompasses two different forms of residential/custodial supervision. They are grouped
together because they represent the highest level of custody/supervision in the
Treatment Industrial Complex (second only to incarceration in prisons, jails, and
detention centers). In both types of institutions, individuals are still held against
their will for substantial periods of time in secure facilities.
Unlike prisons, from which over 90% of those incarcerated are eventually released,
mental health hospitals and civil commitment centers represent the potential
for lifetime confinement, which spells long-term, guaranteed profits for private
corporations.
Increasingly, aging buildings and shrinking state budgets are conspiring to force states into the position of
privatizing their mental health hospitals and other facilities. In FY 2008, over 50,000 people were housed in 187
state psychiatric or forensic facilities in the US.30
Every year states spend some $8.6 billion—or 20 percent of their mental health spending—on state psychiatric
hospitals.31 One third of the people in state psychiatric hospitals are forensically committed, meaning they
were committed to a mental health facility through their interaction with the criminal justice system.32 Most
often, individuals forensically committed are found incompetent to stand trial or not guilty by reason of
insanity. This scenario offers a stepping-stone for for-profit prison company expansion into the delivery of
mental health services.
Civil commitment is a process by which certain people convicted of sex offenses may be involuntarily
committed to a residential facility after they have served their full prison sentence, if they are deemed to pose
a risk of recidivism. The term of this commitment is generally indefinite, meaning that many such individuals
will be confined for the remainder of their lives. Twenty states and the District of Columbia have enacted laws
permitting the civil commitment of individuals convicted of sexual offences. In addition, the Adam Walsh Child
Protection and Safety Act of 2006 authorized the federal government to institute a civil commitment program
for people convicted of federal sex offenses.33
GEO Care, the subsidiary spun off by GEO Group in 2013 and (acquired by Correct Care Solutions in
April, 2014) is the only private prison corporation involved in this segment. They operate five residential
psychiatric treatment hospitals in Florida, South Carolina and Texas. They also operate the only privatized
civil commitment facility in the country (in Florida). In recent years, GEO Care attempted to take over a
civil commitment center in Virginia and a forensic psychiatric state-run hospital in Kerrville, Texas but was
unsuccessful due to popular opposition and government concerns about staffing levels and quality of care.
GEO Care currently is a bidder on a request for proposals for another state hospital in Terrell, Texas.34
Although public mental health systems continue to be chronically underfunded, new funding for mental
health is expected to flow from the federal government and from private insurance companies in coming
years. The Bureau of Labor Statistics projects that employment in the mental health and substance abuse
treatment sector will expand by 22.8 percent by 2022, compared with only moderate growth for correctional
officers and jailers (4.9 percent).35
While this is a very positive development in terms of access to care, there is growing concern that for-profit
prison corporations, by virtue of their deep pockets and political connections, will be well-positioned to exploit
these new funding streams, which could lead to the demise of community-based organizations and programs.
Treatment Industrial Complex | November 2014 | 10

While local organizations are likely more qualified, they may lack the clout
and relationships to obtain large-scale competitive contracts.

Segment 2: Subcontracted Prisoner Mental Health and Medical
Care
While prisons began privatizing in the 1980s in the United States,
the privatization of correctional healthcare began as early as the late
1970s. The medical care segment is the fastest growing segment in the
Treatment Industrial Complex, with 26 states contracting some or all of
their correctional health care and/or mental health treatment to private
corporations as well as county jails.

While this is a very positive development
in terms of access to care, there is
growing concern that for-profit prison
corporations, by virtue of their deep
pockets and political connections, will
be well-positioned to exploit these
new funding streams, which could lead
to the demise of community-based
organizations and programs. While local
organizations are likely more qualified,
they may lack the clout and relationships
to obtain large-scale competitive
contracts.

This segment represents subcontracted medical and mental health
care provided to prisoners in jails, prisons, and detention centers. These
correctional facilities may themselves be either publicly (state, federal,
county) run or managed by a prison corporation. For-profit prison
healthcare corporations like Corizon and Wexford compete for contracts to
provide some or all of the medical services inside existing facilities. Some states contract for management of all
medical and mental health services, while others adopt a “partial privatization” model, where certain services
are contracted out while others are still provided by the state. For example, the doctors in a given prison
system may be employed by the Department of Corrections, while the nurses are provided by a subcontractor.
Over the past 10 years, shrinking state budgets and rising correctional healthcare costs (due to higher
populations and older prisoners with more expensive health conditions) have resulted in correctional
healthcare becoming a more and more significant chunk of state budgets. State spending for corrections
reached $52.4 billion in fiscal 2012 and has been higher than 7.0 percent of overall general fund expenditures
every year since fiscal 2008. State correctional healthcare costs can be as high as 20% of a state’s correctional
budget.
Total state spending on correctional healthcare rose from $4.2 billion in 2001 to $6.5 billion in 2008 (the
last year available for comprehensive review).
1.	 A comprehensive report recently published by the State Health Care Spending Project, an initiative of
The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation, documented a total of
$6.5 billion in state spending on inmate health care in 2008, up from $4.2 billion in 2001 (amounts in 2008
dollars).36
Private companies have contracts for
close to 1/3 of all correctional healthcare
spending, or $3 billion per year.37
•	

Industry sources estimate total 2012
Correctional Health Care spending
at $10 billion, including state,
municipal and federal spending.
Industry estimates put the private
correctional healthcare industry at
around $3 Billion/year, or one third of
total correctional spending.38

Privatized
Partially-Privatized
Not Privatized/Run
by University Health
Services

As seen above, as of January 1, 2014, 22
states have privatized correctional healthcare and 7 are partially privatized.

Treatment Industrial Complex | November 2014 | 11

Segment 3: Community Corrections
Community corrections includes corrections programs outside of jail or prison walls: Probation and parole
services, including halfway houses; day reporting centers; drug and alcohol treatment programs; home
confinement; electronic monitoring; and an array of supportive services such as educational classes and job
training.
Community corrections is a huge segment of the criminal justice system. Overall, two-thirds of individuals
involved in the criminal justice systems are in the community, not behind bars. One in 45 adults is on probation
or parole and 1 in 100 is in prison or jail.39
Many states are looking into options for shifting corrections spending to community corrections services,
which cost less than incarceration and offer better public safety outcomes for many individuals.
A June 2014 report from the Pew Charitable Trusts warns that more than 1 in 5 state inmates maxed out
their prison terms and were released to their communities without any supervision in 2012.40 The report
suggests that for many people, shorter prison terms followed by supervision have the potential to reduce both
recidivism and overall corrections costs.41
For-profit prison corporations are maneuvering to take advantage of this potential avenue of expansion. In
2010, GEO Group acquired BI Incorporated, which makes electronic monitoring products, including GPS ankle
bracelet monitors, voice verification technology, and alcohol monitors for individuals on home confinement.
The company boasts of its newly reorganized “Community Services” unit, which operates halfway houses, day
reporting centers, and juvenile detention facilities. This segment represented 20% of GEO Group’s operations
in 2012.42
CCA has more recently begun to follow suit. In August of 2013, the company acquired Correctional
Alternatives, Inc (CAI). In doing so, CCA absorbed CAI’s existing contracts providing work furloughs, residential
reentry programs and home confinement for San Diego County, the Federal Bureau of Prisons (BOP) and
United States Pretrial Services and Probation.43
A particularly disturbing offshoot of the Community corrections sector is the trend toward for-profit probation.
In at least 10 states (mostly in the Southeastern US), municipal courts contract with private, for-profit probation
companies. Unlike state probation programs, in which probation provides an alternative to incarceration for
certain crimes, in these states, individuals charged with misdemeanors like minor traffic violations, shoplifting,
or public intoxication who cannot afford to pay their court ordered fines are placed on probation.
Once on probation, they are expected to pay the private company monthly fees for the privilege of being
supervised, in addition to paying their original fine. Human Rights Watch investigated these schemes and
found that “[m]any of these offenses carry no real threat of jail time in and of themselves, yet each month,
courts issue thousands of arrest warrants for offenders who fail to make adequate payments towards fines and
probation company fees.”44 The result has been likened to the creation of modern day debtor’s prisons. Not
only does this represent an unequal system of justice (one for those who can pay, one for those who can’t), it
also puts taxpayers on the hook, paying for jail time that is completely unnecessary and counterproductive.

Incarcerated
Community Supervision

Treatment Industrial Complex | November 2014 | 12

PROFITIZING TREATMENT
Most for-profit prison corporations have dismal records in terms of safety, cost, and
quality of the prisons that they manage.45 Across the country, evidence has surfaced
that these companies cut corners on staff pay and training and services to prisoners in
order to make a profit.46 Application of the same business model to treatment, services,
and alternatives to incarceration is already demonstrating the same sorts of problems:
•	

In July of 2012, the Associated Press reported three gruesome deaths,
including a patient who died in a scalding bathtub, at the South Florida State
Hospital operated by a division of private prison corporation GEO Group.47

•	

For-profit prison health care company Corizon was sued 600 times in 5 years
for neglect and malpractice issues. 48 The second largest such company, Wexford, “was hit with 1,092
malpractice claims — suits, notices of intent to sue and letters from aggrieved inmates from Jan. 1,
2008, through 2012. Records say Wexford settled 34 of 610 closed matters for a total of $5.4 million, as
well as another case that ended in a $270,000 jury verdict against the company.”49

•	

The New York Times ran an investigative series on the problems in for-profit halfway houses in New
Jersey run by Community Education Centers, a company with close ties to Governor Chris Christie.50
The facilities were rife with violence, drugs, and sexual abuse, and plagued by a high rate of escapes.

These and many other similar incidents raise important questions about the potential drawbacks of handing
over control of such important therapeutic and public safety responsibilities to a corporation whose principal
business is punishment and whose primary loyalty is to its shareholders.
The primary argument in favor of most privatization scenarios is cost savings. However, medical care, mental
health treatment, and rehabilitation programs are inherently expensive. The only way to save money on these
services is to provide less care, or substandard care. For-profit prison corporations not only need to promise
cost savings to acquire contracts, those contracts also need to be profitable. The result, more often than
not, is a corporation cutting corners, running staff vacancies, providing inadequate or ineffective treatment
programming, and denying needed procedures, hospitalizations, and medications.
This is the fundamental fallacy of correctional privatization: Politicians want to believe that they can have
“cheap” medical and mental health care and quality community corrections programs without making a
significant investment. This has repeatedly been proven false, in numerous contexts and in a variety of states. It
is flatly impossible to provide adequate treatment and rehabilitation programs without sufficient funding.
The situation may be summed up with this truism: “Pay now or pay later.” ‘Paying later’ in this case refers to the
expenses associated with treating advanced and chronic conditions, higher recidivism rates, and the cost of
defending the state against wrongful death lawsuits and class-action suits.

DISCUSSION
Widening the Net
The profit motive is inherently at odds with the stated purpose of ‘corrections,’ including community
corrections, which is to reduce offenses that land people in prison thereby reducing the number of
incarcerated individuals. Private prison corporations are financially dependent on the growth of prisoner
populations, providing a perverse incentive not to rehabilitate.
While many sentencing reform efforts are geared toward keeping people out of the system and/or returning
Treatment Industrial Complex | November 2014 | 13

them to their communities as quickly as possible, the financial incentive for
private prison corporations is to keep people in custody or under some form
of supervision for as long as possible at the highest per diem rate possible in
order to maximize profits. This creates the potential for a dangerous trend of
“net widening”—placing more people on stricter forms of supervision than is
necessary, for longer than is warranted.
Several private prison corporations are now advocating re-purposing prisons
into “alternative” facilities, including specialized mental health centers,
halfway houses, and “intermediate sanctions” facilities. This amounts to little
more than prisons by another name. While the conditions may be less restrictive, this scenario still allows the
companies to charge for a residential program, which is far more expensive than allowing individuals to remain
in the community while they complete treatment or other programs.
In Oklahoma, a plan for significant sentencing reforms was scuttled after for-profit prison operators unduly
influenced the process. Records revealed that operators of private facilities actively lobbied “to have their
halfway houses serve as the “intermediate sanctions facilities” spelled out in the new law to handle individuals
with low-level offences who violated terms of their release. Leaders from Avalon Correctional Services and GEO
both sought meetings with the governor’s office and Corrections Department officials regarding the Justice
Reinvestment reforms, records show.51
The New York Times recently reported that GPS ankle bracelets are being placed on immigrant mothers
seeking asylum who have no criminal records.52 These individuals are arguably the lowest flight risk, given that
they are eager to attend immigration proceedings in order to ensure they are able to remain in the country.
The bracelets are monitored by BI Inc., which was acquired by GEO Group. In July of 2014, the Times reports
that some 7,440 immigrants are wearing the bracelets.53 But a move by Immigration and Customs Enforcement
(ICE) to increase use of alternatives to detention ensures that there will be many more in the years to come. A
review of the program by the Rutgers-Newark School of Law Immigrant Rights Clinic and the American Friends
Service Committee in 2012 concluded that:
“Despite their designation as ‘alternatives to detention,’ many ATD programs are used on individuals
who have been released from detention or who were never detained in the first place, rather than
individuals who would otherwise be detained in a detention facility and for whom the government’s
goals of ensuring compliance with removal orders and court appearances could be accomplished
with alternative measures.”54
Another disturbing example of this trend is the rise of “for-profit probation” companies. As mentioned
above, these programs are designed for people accused of misdemeanor offenses or who simply could
not pay a ticket. Yet, they are saddled with the same level of surveillance as some individuals on criminal
probation or parole. Worse yet, they are often jailed for nothing more than failure to pay the required fines
and fees. Individuals who pose no threat to the public are being penalized for being poor. Both the probation
companies and private jail operators stand to make significant profits through this misapplication of justice.

Moral, Ethical and Democratic Implications
It is also important to evaluate the Treatment Industrial Complex in terms of its ethical and moral implications.
Increasingly, the public is questioning the morality of profiting from incarceration. Faith organizations –
including the American Friends Service Committee, the United Methodist Church, Presbyterian Church USA,
and the Southern Catholic Bishops – have all called into question the practice of prison profiteering. This
concern may be extended to other fundamental rights and freedoms, such as the right to adequate medical
and mental health care, drug treatment, and rehabilitation.
The trend of for-profit prison corporations moving into these arenas also has implications for our democratic
Treatment Industrial Complex | November 2014 | 14

principles. Many consider it an abdication of a fundamental government responsibility to care
for its citizens, even those who may have broken the law or need supports in order to function
in society. To delegate this literal life and death power to a for-profit corporation is a decision
that should not be taken lightly, or pursued solely for the purpose of cost savings.

Business Models
The problems inherent in the Treatment Industrial Complex cannot be simplified into a
for-profit versus non-profit dichotomy. There are many examples of for-profit healthcare,
mental health, and reentry programs that are effective and plenty of publicly-run or nonprofit organizations with dismal track records. However, the fact that certain for-profit prison
corporations are publicly traded does raise the question of where such companies’ primary loyalties lie. In most
corporations, the first priority is to generate profits for shareholders. This creates pressure on the business to
constantly grow, which encourages compromising the quality of care.
From a business perspective, the varying stages in the life cycle of a large behavioral health or mental health
corporation have varying implications for quality of care. The business world has a term for this phenomenon:
the “S-Curve.” Companies start small, often picking up local contracts and growing at a moderate pace. At
this point, the local government is driving the need and the company is fulfilling the needs of a community.
The next phase happens when companies go public in order to acquire capital for expansion. The infusion
of capital causes rapid growth, as the company attempts to gain a dominant position in the market. This
phase is good for shareholders and companies will attempt to prolong this phase as long as possible (using
net widening strategies). The third phase of the “S-Curve” creates problems for quality of care. At this point,
without as many options for expansion and growth, the companies must begin cutting corners in order to
maintain the same levels of profitability to which shareholders are accustomed.
The United States has four decades of experience with the combination of public funding and private health
care management and delivery through HMO’s, and the results are less than encouraging. One study found
that “The commercialization of care in the United States has driven up costs by diverting money to profits and
by fueling a vast increase in management and financial bureaucracy, which now consumes 31 percent of total
health spending.” The author concludes, “The poor performance of US health care is directly attributable to
reliance on market mechanisms and for-profit firms, and should warn other nations from this path.” 55
Fortunately, there are also many examples and emerging programs that provide an alternative to this model.
Non-profit entities other than the traditional social service agencies that are sometimes involved include
churches and state universities. There are some emerging hybrid models that have potential for providing
excellent services while remaining cost effective.
In March of 2014, the State of Michigan’s Department of Corrections (MDOC) Bureau of Health Care Services
announced an innovative new collaboration with Michigan State University College of Human Medicine.
The project’s goals include creation of a corrections/community public health care model; development of
a population and disease management approach to correctional health care; and creation of a prison health
education and prevention model.56

CONCLUSIONS
Despite the serious implications for sentencing policy, public safety, state budgets, and the lives of thousands
of individuals in the criminal justice system and their families nationwide, the Treatment Industrial Complex
has not yet received the critical analysis or public attention that it deserves. Stakeholders (sentencing reform
advocates, treatment providers, criminal justice professionals, elected officials) are largely unaware of this
trend or its implications for their agencies, programs, or public policy options.
Treatment Industrial Complex | November 2014 | 15

This is a critical moment. There is a nationwide movement to rethink our criminal justice priorities, favoring
evidence-based practices that favor treatment and prevention over prison warehousing. The debate over
immigration reform rages, with the potential ‘path to citizenship’ posing a serious threat to essentially half of
CCA and GEO Group’s profits. The role of for-profit prison corporations in these important policy discussions
could mean the difference between reforms that truly address human needs and a destructive “widening of
the net” that only serves to increase the level of control and surveillance at the expense of public safety.
At the same time, the Affordable Care Act provides the greatest potential for providing needed substance
abuse, medical, behavioral and mental health care at the community level in decades. This could divert a huge
number of people from prisons and jails.57 Unfortunately, it also provides a potential new funding source to forprofit prison corporations moving into the “alternatives market.”
There is no question that treatment services are desperately needed in many states. The constitution requires
that incarcerated people be provided with quality medical and mental health care. Patients in state psychiatric
hospitals and civil commitment centers deserve safe and effective treatment and safety. Alternatives to prison
and reentry services are critical to reducing prison populations and lowering recidivism rates.
Yet, for-profit prison corporations are too often not qualified or appropriate to manage such programs.
Applying a corporate culture of incarceration to treatment and alternatives to prison has consistently delivered
poor to disastrous results. These critical programs should be in the hands of community-based non-profit
organizations and/or companies that bring experience in the relevant field, are transparent and accountable to
taxpayers, and are grounded in evidence-based practice and high standards of care.

RECOMMENDATIONS
The emergence of the Treatment Industrial Complex raises important and timely
questions about the driving force behind, the real decision-makers involved, and other
influences at work in the national movement toward sentencing reform and efforts to
privatize prison medical care and forensic mental health care.
This is a new phenomenon that is only just being discovered and examined. Criminal
justice advocates, systems actors, good government proponents, treatment and
service providers, mental health advocates, and government agencies must be aware
of the TIC and critically evaluate any proposed movement in this direction. Within the
national dialogue(s) around mental health and criminal justice there must be more
scrutiny and examination of these trends. Finally, further study is needed on each of
these segments (and the many others—juvenile detention, prison services, etc.) to
determine the cost, effectiveness, and impacts of these emerging trends.
The fact that the Treatment Industrial Complex is an emerging and evolving phenomenon provides both
dangers and opportunities for states and local governments. In the best case scenarios, government and
systems actors have the opportunity to be proactive rather than reactionary. Because state and municipal
agencies award contracts, they are key influencers in crafting how individual contracts are structured.
This also means that, collectively, they have the power to determine what the landscape will look like ten and
twenty years from now. Although many of the privatization scenarios that we see today have been motivated
by reactionary fiscal measures rather than real reform, a new approach emphasizing outcomes, evaluation, and
accountability could promote creative local solutions to local problems.
When a state contracts with an organization or company to provide medical or mental health care, treatment
or rehabilitation services, it is handing over control of an essential public function to a company that may
have different goals and priorities than the government and public. Privatization contracts represent a long
Treatment Industrial Complex | November 2014 | 16

term investment (typically 20 years) in a business relationship with a corporation. Once the state enters into a
contract, it can be extremely difficult to nullify or amend the contract, even when the contractor is shown to be
grossly negligent or abusive.
For these reasons, as well as those enumerated above, the following guidelines are important in guiding
decisions regarding prisoner or detainee medical care, inpatient and forensic mental health care and civil
commitment, and a variety of treatment, rehabilitation, and supervisory services. They are grouped by the
various stages of the decision-making process: Assessment, contracting, and evaluation.

GUIDELINES
Assessment
This analysis brings forward three primary questions that decision-makers can use in determining whether and
when privatization is appropriate:
1.	 What is the public health, safety or justice-related goal of the proposed program (treatment,
prevention, reduced recidivism, etc.)? Does the contractor have the same or different goals?
•	 Corporate Philosophy: Corporations such as CCA and GEO Group are historically grounded in
a “prison-mindset” that emphasizes custody, control, and punishment. The difference between
viewing individuals in a facility as “inmates” versus “patients” or “consumers” is vast. Even when
rebranded as healthcare companies, their original purpose of incarcerating “inmates” remains.
•	

Priorities: Large publicly held corporations should be viewed with scrutiny because they must
continually produce increasing profit for their shareholders, often prioritizing their shareholder
profits over quality, effectiveness and ethical and moral concerns.

2.	 Is the contractor/program effective and how are outcomes measured?
•	 Due Diligence: A critical component of potential outsourcing is conducting the “due diligence”
on the background and performance of potential contractors. In the case of corporations such
as CCA and GEO Group, decision-makers have the benefit of 30 years of state private prison
contracts. Corizon and Wexford, too, have long histories, and a basic scan is enough to generate
an overwhelming body of criticism including negative press, audits, investigation reports, lawsuits
and the like. There are additional resources that will be listed in Appendix A that can provide more
detailed evidence and analysis.
One critical aspect of researching these corporations’ track records is monitoring their mergers
or acquisitions with other companies. Corporations such as GEO Group and Corizon should be
evaluated as the sum of their parts, meaning that the histories of the companies they have acquired
and spun off should not be overlooked.
3.	 Is the level of custody or supervision appropriate to the individual’s level of risk or is it “widening
the net”?
•	 Level of Need: The latest research on evidence based practices in treatment and rehabilitation
stresses using scientific risk assessment tools to place individuals on the least restrictive form
of supervision appropriate. This allows states to focus resources on those who require the most
supervision and need the most help. However, for-profit prison corporations work on a contract
basis, which tends toward a “one-size-fits-all” approach.
•	 Profit increases with volume: Corporations moving from the prison and detention market into
treatment and alternatives bring a corporate perspective that is too focused on profit through
Treatment Industrial Complex | November 2014 | 17

volume. Fees are usually structured based on a per-diem amount set out in the contract. Non-profits
and medical care companies, by contrast, charge a set “fee for service.”

Contract Requirements
1.	 Limit contract length: The contract term should be limited to a reasonable amount of time, to ensure
the contract can be re-bid at regular intervals if necessary.
2.	 Avoid occupancy guarantees, for those facilities that are in-patient or house defendants, patients,
or parolees/probationers. These requirements are effectively bed quotas that leave the contracting
governmental entity on the hook for unfilled units. These types of contracts can result in decreased
flexibility in responding to demand, population changes, or serious problems in the facility.
3.	 Accountability: Is the contractor/program responsive and accountable to the needs/requirements of
the agency and the public? How is that accountability structured and enforced?
a.	 Require regular monitoring, financial and record-keeping audits, and complete transparency
in all areas of operation. Contractors should be held to the same public records laws and other
transparency requirements as government agencies.
b.	 Clearly delineate between contractor and state/county/municipal responsibilities and costs.
c.	 Explicitly require compliance with state law, departmental policies, and standard medical or
professional practices. This includes use of force standards, incident reporting, operating standards,
minimum staffing ratios, staff educational and training requirements, medical standards of care, and
emergency protocols.
d.	 Clear and adequate consequences for non-compliance
4.	 Contracts should incentivize positive outcomes. Payment should be tied to disease/relapse
prevention, effective treatment, improved patient functioning, reduced recidivism and other positive
results.
5.	 Contract Local: Priority should be given to local or state-based non-profits and for-profit providers.

Evaluation
1.	 Regular Audits: Audits should be conducted on a regular basis, by an impartial third party. The results
should be made publicly available.
Payment and contract status (including amendments and renewals) should be contingent upon positive audit
results and achievement of key outcomes.

Treatment Industrial Complex | November 2014 | 18

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The Sentencing Project. Available at http://www.sentencingproject.org/template/page.cfm?id=107

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Implications.” Bureau of Justice Statistics, July 2012.

27.	

Eric Schlosser, “The Prison Industrial Complex,” The Atlantic Monthly, December 1, 1998.

28.	

Angela Davis, “Masked Racism: Reflections on the Prison Industrial Complex.” Colorlines, 9/10/98

Treatment Industrial Complex | November 2014 | 19

TREATMENT INDUSTRIAL COMPLEX:

How For-Profit Prison Corporations are Undermining Efforts to Treat and
Rehabilitate Prisoners for Corporate Gain

For more information, please contact
American Friends Service Committee
cIsaacs@afsc.org or (520) 623- 9141
Twitter: @afsc_org
www.afsc.org

Grassroots Leadership

info@grassrootsleadership.org or (512) 499-8111
Twitter: @Grassroots_News

www.grassrootsleadership.org
Southern Center for Human Rights

khamoudah@schr.org or (404) 688-1202
Twitter: @southerncenter
www. schr.org

 

 

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