As California prepares to greatly expand its use of halfway houses for people leaving its overcrowded prisons, state officials have turned for help to a private halfway house operator that has been cited in other states for inadequate care, unchecked violence and repeated escapes at its facilities.
The private company, Community Education Centers, or CEC, recently began work on a $30-million contract to arrange housing, substance-abuse treatment and mental health services for thousands of former convicts returning home to Los Angeles County.
Part of that contract will be channeled to the one halfway house CEC has already run in California, a facility in Long Beach that lost an earlier state-funded contract after repeated complaints of poor treatment programs, drug use by residents and other problems, people familiar with the operation said.
CEC won its new contract on the eve of what senior officials said will be a major expansion of the state’s network of halfway houses, or residential re-entry centers, which provide secure housing, job placement and other social services for parolees as they prepare to move back into society. California’s corrections secretary, Jeffrey A. Beard, said private companies like CEC will be central to that effort.
“By and large it will be done by the privates,” Beard said in an interview with The Marshall Project. “Those are the people that will be bidding on the various things that we put out when we’re asking for these residential centers.”
Beard said he was unaware of CEC’s troubled history in other states, which has been widely reported. He also said he knew nothing of the company’s problems in Long Beach, where its state-funded contract was not renewed just three years ago. “I really haven’t been out there researching the various companies and what they do,” he said.
Yet in his previous public-sector job, Beard headed the Pennsylvania corrections system during a decade in which CEC amassed a substantial part of the state’s extensive halfway house network. After Beard left that position, a study commissioned by his successor showed that former prisoners who spent time in the state’s halfway houses—many of them operated by CEC—had higher rates of recidivism than people who were released directly from prison.
A spokesman for CEC, Christopher Greeder, denied that the Long Beach facility had lost its earlier contract because of poor performance. He added that the company had won its new California contract in a fair and open process and “intends to participate in future bid processes” as part of the planned expansion of halfway house operations in the state.
Many of the country’s largest corrections corporations have begun to invest heavily in the re-entry business as a way to offset projected losses from efforts to reduce the prison population. Such companies have long been limited in their ability to expand in California by opposition from the state’s powerful prison guards’ union. But major efforts to reduce the state prison population, driven in part by a federal court order in 2009, have led thousands of inmates to be shipped to private prisons outside California, and the expansion of re-entry services has created a new, in-state opportunity for some of the firms.
A subsidiary of the GEO Group, Inc. has been snapping up million-dollar state and county contracts in California to run “day reporting centers” that provide counseling, education, and job placement services for people released from prisons and jails. Another industry giant, the Corrections Corporation of America, recently acquired a San Diego-based firm that operates publicly funded halfway houses around Southern California.
At a national level, however, CEC was ahead of the game. The company operates several prisons, but it has long focused on re-entry centers, offering states an alternative to incarceration that promises to reduce costs and improve the odds that ex-convicts will stay out of prison. CEC now operates halfway houses in ten states, with a total of about 9,000 beds.
The company has also run into a slew of troubles1, however, most notably in New Jersey, where it makes its headquarters. CEC’s halfway houses there have been cited for rampant violence, drug abuse and failing to prevent escapes. Some inmates who escaped from CEC halfway houses went on to commit violent crimes; others were victimized by violence while in CEC’s care.
Still, the company has managed to thrive with help from some influential supporters. The New Jersey governor, Chris Christie, once served as a registered lobbyist for CEC, and he held up the company as a model even after state auditors raised questions about its contracts. When state legislators sought to regulate the company’s operations more closely, Christie largely beat back their efforts.
During Beard’s tenure as corrections chief in Pennsylvania, that state became one of CEC’s largest markets, accounting for as much as 30 percent of the company’s operations nationwide. But Beard said he played no role in awarding the $30-million contract for Los Angeles County that CEC won last year. Other officials said the company was chosen because it underbid its only competitor, HealthRight 360, a San Francisco-based nonprofit group.
HealthRight – which was created in 2011 by the merger of two nonprofit groups born in the 1960’s, the Haight Ashbury Free Clinics and Walden House, a provider of addiction and mental health treatment services – filed an official protest at the outcome. HealthRight asserted that CEC’s proposed budget and staffing levels were so inadequate that each of its case managers would have to work more than 300 hours a week, serving 67 clients at a time, to meet the contract’s requirements.
But that complaint was dismissed by an administrative law judge, who determined the state corrections agency “had a reasonable basis to conclude that CEC could capably perform the work of this contract based on the evidence of similar work experience.”
Millicent Tidwell, Beard’s director of rehabilitative services, said the agency is bound by government contracting rules to accept the lowest bidder. “Do I think that’s the best way to get human services contracted?” she asked. “No. But that’s the rule.”
Tidwell acknowledged that the low-bid requirement “does erode the services over time,” but added that any serious failures would result in the termination of the contracts. “Whether they can or cannot do it for the money – that’s their problem,” she said. “If they can’t, then we will find someone else.”
CEC and HealthRight have a history: HealthRight was previously the state corrections agency’s primary contractor for re-entry services in the Los Angeles area, and it directly oversaw CEC’s halfway house in Long Beach. According to several people familiar with that facility, the nonprofit group refused to renew CEC’s contract there three years ago because it repeatedly failed to address problems of inadequate clinical programs, violence and drug and alcohol abuse by residents.
“It was a mess,” said Richard Ortega, who served as director of the Long Beach facility until he was fired by CEC a few days after inspectors from the state corrections agency found a series of problems during an unannounced audit in December, 2010.
“The drug use was rampant, especially at night,” Ortega said in an interview. “People were jumping the fences, going out to liquor stores, scoring drugs.” Ortega said that even when residents failed drug tests, CEC officials discouraged him from evicting them. “They had a hard time keeping the beds full.”
Ortega said he could not adequately address the auditors’ concerns because his clinical staff was so poorly trained. The facility’s clinical director did not have a college degree and earned only about $13 or $14 an hour for overseeing the treatment of as many as 112 residents, he said.
HealthRight auditors filed periodic reports to the state corrections agency, Ortega and others said, laying out a series of deficiencies: unreported violence among residents, drug and alcohol use, inadequate treatment for mental health and addiction problems and poor record-keeping. When the auditors asked for records of therapy programs and training classes, the halfway house staff routinely answered that they were unavailable, these people said.
Ortega, who had previously managed treatment programs for CEC in prisons in California and Oregon, sued the company after his firing, but eventually settled the case out of court.
A former director of CEC’s operations in California, Paul Brown, described Ortega as a valued employee, adding that even he found it difficult to monitor the Long Beach halfway house.
“When I was there, I’d want to see certain documents, and I would hear ‘Oh they’re locked inside somebody’s office, and they’re out sick.’ People were always conveniently out sick when I was there.”
More senior CEC officials did not share his concerns about the services at Long Beach, said Brown, who left the company in 2008. “I felt the pressure was more to populate it and make a profit.”
Greeder, the CEC spokesman, said the company would not comment on the allegations made by Ortega and Brown, or on the specific complaints reportedly made by the Health Right auditors.
Another current CEC employee, who insisted on anonymity because he spoke without the company’s authorization, confirmed that HealthRight stopped sending residents to Long Beach at one point because the problems there were so intractable. But he argued that the facility was not an extreme case. “These are problems that exist with all residential programs,” he said.
After filing dozens of incident reports and program audits to the state corrections agency, HealthRight eventually notified state officials of its decision not to renew the group’s contract. But in response to a broad request for such records under the California Public Records Act, the state corrections agency produced virtually none of those documents. The agency did provide a single memo, which confirms that auditors did raise a number of concerns with CEC about the Long Beach facility in 2010. Greeder said the contract there was not renewed because of “the reduction in the number of residential beds needed statewide,” and not because of “any performance or other issue.”
HealthRight officials would not comment on their group’s relationship with CEC or its experience with the Long Beach facility. But the assertions about the Long Beach operation echo some of the problems that have been found at CEC’s halfway houses elsewhere in the country.
The company came under fire in New Jersey following a 2011 audit that found the state’s halfway houses, most of them run by CEC, were largely unregulated. State officials had failed to penalize the facilities for frequent escapes, or to monitor their effectiveness in keeping former convicts from returning to prison, the auditors said. They also raised questions about the state government’s relationship with CEC, which had set up a nonprofit entity in order to bypass state law preventing the corrections department from contracting with for-profit companies.
A subsequent series of articles by The New York Times revealed that 5,100 people had escaped from New Jersey’s publicly-funded, privately-run halfway houses since 2005, including some inmates who went on to commit violent crimes. One inmate doing time for assaulting a former girlfriend escaped unnoticed from a sprawling CEC facility and killed another woman; he was one of ten escapees from his halfway house that month. At another CEC halfway intended for nonviolent offenders, three inmates murdered a man who was serving a short sentence for failing to pay parking tickets.
In Colorado, criticism of CEC has focused on the company’s largest halfway house in the state, a 750-bed facility where inmates described unchecked drug use and gang violence. State corrections inspectors reported in 2008 that administrators staged phony classes during their inspections, offering candy bars to residents if they would pretend to participate in counseling and job placement sessions.
In Texas, where CEC runs a network of jails, almost every one of those facilities has been sued for alleged staff misconduct. The warden and head of security at one CEC-run jail were fired in 2012 after a former inmate sued the company, saying she was sexually assaulted repeatedly by the security officer and then forced by the warden to lie to investigators about the attacks. Sexual assault allegations led to two more lawsuits against CEC in 2014, one by inmates at another CEC jail, the second by a former inmate at a CEC immigration detention center. At yet another CEC facility, thirteen guards pleaded guilty in 2013 to accepting bribes and smuggling contraband; at least eight were sentenced to federal prison.
CEC began operating in Pennsylvania in 2000, just one year before Jeffrey Beard took over the state’s corrections department. Beard, who began his career as a prison counselor, was seen by many as a reformer who would help reduce the state’s ballooning prison population.
“He said to me ‘I plan on leaving my position with less people than I came in,’” said Angus Love, director of the Pennsylvania Institutional Law Project, which sued CEC in 2008 for failing to provide medical care at one of its largest halfway houses in the state.
Beard pushed for reforms that would ease parole restrictions for nonviolent prisoners and divert new offenders with short sentences to halfway houses. But these efforts largely stymied by mandatory sentencing policies and other factors. Over Beard’s tenure, the prison population increased by more than 40 percent, from around 36,000 people to nearly 52,000.
Many of Beard’s critics in Pennsylvania also blame him for the state’s increased reliance on solitary confinement. A U.S. Justice department investigation of one Pennsylvania prison revealed widespread use of long-term and extreme forms of solitary confinement on prisoners with severe mental illness. The justice department has since expanded that investigation, and is looking into use of solitary confinement in every prison in the state.
A study commissioned by Beard’s successor revealed two-thirds of the inmates coming out of the state’s halfway houses, including those operated by CEC, were rearrested or sent back to prison within three years, while inmates released directly from prison into the community fared better. The study’s author, Bret Bucklen, said in an interview that he was stunned to learn that the goal of lowering recidivism “wasn’t even on the radar” of the private halfway house operators.
Beard said he was not aware of the New York Times series on CEC’s operations in New Jersey or even of the details of CEC’s performance in the Pennsylvania study of halfway house recidivism.
“I know that my successor had some concerns about some of the halfway houses there and changed the way they did their bidding to more of a performance-based bidding,” he said. “When I left Pennsylvania, I did not really stay in contact specifically with what they were doing and what companies were doing what.”
Like New Jersey and Pennsylvania, the new California system will move prison inmates into halfway houses as they approach the end of their terms and will require a higher level of security than most existing halfway houses in the state. Beard said he expects the new centers to reduce recidivism, despite the recent findings in Pennsylvania.
“We’re going to be much more specific in what we require, and we’re going to be monitoring what we’re getting from the companies much closer,” he said. “While cost becomes a primary consideration, it is not the sole consideration. You’re also looking at past performance.”
A spokeswoman for the rehabilitative services division of the state corrections department declined to comment on how the department assessed CEC’s track record elsewhere before assigning the company to manage its re-entry network in the Los Angeles area.
But Tidwell, the rehabilitative services director, emphasized CEC’s experience. “The provider that won it, they’re new to California, but they’re not new to services,” she said in an interview. “They do this in other states and they’ve been around for quite some time. But we’re going to be watching them.”
