The Pew Charitable Trusts

Despite financial problems plaguing the giants of the private prison industry, and occasional high-profile foul-ups at for-profit correctional facilities, prison privatization continues to merrily roll along.

Nearly half the states, 22, have contracts allowing minimum- to medium-security private prisons to operate within their borders, according to the National Conference of State Legislatures (NCSL) .

Those states are Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Montana, Nevada, New Mexico, North Carolina, Oklahoma, Tennessee, Texas, Utah and Virginia.

At least five more states, -- Alaska, Hawaii, Indiana, Oregon and Wisconsin -- allow their inmates to be shipped to privately run facilities in other states.

Advocates of private prisons say they cost less than government-operated corrections facilities because they tend to be newer and are designed to require less manpower. Cost is a paramount concern in states trying to handle a flood of prisoners spawned by policies such as truth-in-sentencing laws.

Detractors say that cost savings are marginal to nonexistent and that private facilities tend to use underpaid, poorly trained personnel and pose undue security risks. They also say state oversight is poor when corporations step in to run jails, prisons and detention centers.

Now opponents can point to the financial straits of Prison Realty Trust , a Tennessee-based real estate investment trust (REIT) that currently owns, or is developing, 50 detention and correctional facilities in 17 states, Washington, D.C., and the United Kingdom.

Prison Realty and its sister company, Corrections Corporation of America -- the country's leading management firm for private prisons -- reported 1999 losses totaling $265 million.

Prison Realty currently owns 39 operational correctional facilities in the United States, according to company.

The lion's share are located in Texas, which has nine, including the Houston Processing Center and the Webb County Detention Center, in Laredo, Texas. Kentucky and Oklahoma are the next largest customers with four Prison Realty facilities apiece, followed by Colorado, New Mexico and Tennessee which each have three.

Prison Realty often operates in tandem with Corrections Corporation of America (CCA), which has more than 73,000 prison beds under contract, or under development, in the United States, Puerto Rico, Australia and the United Kingdom.

A few weeks ago, Prison Realty entered into a restructuring agreement with Pacific Life Insurance Co. that pours $200 million into financially troubled Prison Realty. Shares of the corrections realty firm, which had a 52-week high of $22.37 have dipped as low as $2.12 and closed at $2.50 Friday.

That development relieved federal and state authorities worried that a default on the companies' debt might leave them unable to pay guards' salaries and other expenses at 80 prisons.

On top of the financial problems confronting Prison Realty and CCA, the private-prison industry has suffered another significant hit to its image.

Dr. Charles Thomas, a widely quoted private-prisons expert, recently paid a $20,000 settlement to the Florida Commission on Ethics in connection with conflict-of-interest violations. Thomas was revealed to have a personal financial interest in the private-prison industry at the same time he was working as a consultant for the state of Florida.

Thomas, who had been a professor of criminology with the University of Florida, was relieved of his Private Corrections Project Directorship by the school and subsequently resigned.

Thomas's ethical problems and the financial ills of Prison Realty and CCA notwithstanding, the prison privatization push continues. In 1988, prisons and jails operated by private companies were home to 3,000 prisoners, a number that swelled to 85,000 by 1998, according to NCSL.

In February, Ohio opened a 550-bed private prison in Grafton to house inmates with histories of alcohol or drug abuse. The North Coast Correctional Treatment Facility is being operated by a Massachusetts-based firm named CiviGenics.

And in Conneaut, Ohio, a 1,380-bed medium-security private prison opened two weeks ago. The Lake Erie Correctional Institution is managed by Management & Training Corp., a Utah firm.

In Florida, lawmakers are looking into the possibility of Sunshine State private correctional facilities importing out-of-state inmates.

In Hawaii, a skittish House panel last month removed key wording from a bill that would have allowed Gov. Ben Cayetano to talk to private companies about running a new 1,700-bed prison in the Aloha State.

Private prisons lost some of their sheen in New Mexico when Corrections Secretary Rob Perry informed lawmakers in March that he'd authorized a five percent payment increase to Florida-based Wackenhut Corrections Corp. for jailing New Mexico inmates.

And Oklahoma provided more fodder to privatization foes when the state's Department of Corrections levied its largest fine ever, $168,750, against the Great Plains Correctional Facility in Hinton for failing to provide inmate medical services as contractually stipulated.

For more information, visit the Justice Information Center, a Web site maintained by the federal Department of Justice.