The Pandemic Isolated Incarcerated People. Kentucky And Securus Cashed In
For over 460 days, as the pandemic shut down visitation across the state, incarcerated people and their loved ones relied on the prison system’s costly phone calls and emails.
The Kentucky Department of Corrections and Securus Technologies reaped big rewards.
Records show the Department of Corrections made at least $3.2 million last year off phone calls that cost the loved ones of incarcerated people up to 25 cents per minute.
That’s the state’s share of the revenue brought in by Securus, which is one of the largest prison telecom firms in North America and holds the contract for all 14 of Kentucky’s prisons. A Securus spokesperson refused to provide its total revenue for that state contract, but a KyCIR analysis found they took in anywhere from $2.9 million to $6.4 million on phone calls alone.
And the company’s profits nationwide indicate the pandemic was a windfall: Financial records obtained by KyCIR show Securus’ revenue increased by almost 10% to $767 million in 2020, amid business shutdowns and rampant unemployment accompanying the coronavirus pandemic.
Kentucky took advantage of this windfall last summer while negotiating a new contract with Securus. They already received $3 million a year from the proceeds of prison phone calls. But the new contract raised their guaranteed minimum to $3.5 million, plus a 40 to 50% share of revenue on new tablets and video calls.
Securus’ services were more necessary than ever, yet the company still hasn’t delivered on long-promised video calls, leaving prison staff to set up Zoom calls when the pandemic struck. And users regularly encounter tech issues with phone calls, interviews with 10 family members and incarcerated people show.
The Department of Corrections didn’t respond to a request for an interview. Securus’ manager of communications Jade Trombetta responded to an interview request with a brief emailed statement. “Securus is proud to provide communications services to the Kentucky Department of Corrections. Our products keep incarcerated Kentuckians connected with their loved ones, help reduce recidivism, and promote public safety,” the statement said.
But advocates and family members say the DOC and Securus’ products extracted more money from vulnerable people at a time when they needed it most.
“This is people’s lifeline to their loved ones, and they could just charge anything, because people will pay what they have to pay to communicate with their loved ones,” says Diana Elswick, who has spent $900 since March communicating with a friend at the Kentucky State Reformatory. “It’s like they’ve got an IV into the bank account of anybody who has got someone incarcerated in the state.”
The Cost of Staying In Touch
Gov. Andy Beshear suspended visitation at Kentucky prisons on March 11, 2020 in an effort to prevent COVID-19’s spread in the overcrowded facilities. It would eventually spread in every state prison, leading to over 9,000 cases and 53 deaths of workers or incarcerated people.
Before the pandemic, Mekayla Breland would drive over three hours from Newport to the Green River Correctional Complex to visit her fiancé, who asked not be named to avoid retribution in the prison. She says she didn’t hear from him for the first two weeks of the pandemic.
“There was no notification,” Breland said. “Everything went through my head. I didn’t know if he was alive.”
After that, phone calls became more important — and, without in-person visits to look forward to, more frequent. Data provided by the DOC shows that people spent over 633,000 more minutes on Securus phones in 2020 than in 2019, an increase of almost 2% even as the prison population dropped by 16%.
Some of those calls were free, as Securus and the Department of Corrections quickly announced one free 15-minute call per week.
Even with the free calls, Securus still collected anywhere between $2.9 and $6.2 million from Kentucky users in 2020, according to a KyCIR analysis based on call volume and Securus’ lowest prepaid call rates to most expensive. The analysis assumed widespread use of the free calls, but it’s still likely an understatement, since it’s based on per-minute call rates, and does not include other costs associated with Securus’ products.
Though the pricing is set in Securus’ contract, call prices can be unpredictable. KyCIR reviewed bills from calls to the Lee Adjustment Center that show the price of a 15-minute call to an out-of-state number increased by 48 cents between May 2020 and April 2021.
DOC and Securus representatives both said the price hasn’t changed. But Securus noted tax rates “can fluctuate.”
The company passes regulatory fees and taxes on to consumers. Even though the Federal Communications Commission caps most calls at 21 cents per minute, that doesn’t include these passed-through fees, and Securus calls regularly cost nearly 40% more than that cap.
There are also flat fees: speaking to a live customer service representative, for example, costs $5.95. Adding money to a prepaid account costs $3 per transaction, and users can only load $50 at a time.
Securus acknowledged at the start of the pandemic that staying in touch with incarcerated people was an especially heavy financial burden. Last March, Securus petitioned the FCC to waive its regulatory fees so that they could lower the cost of phone calls for its customers.
“While in-person visitation is limited or prohibited, many inmates and their friends and families — many of whom are low-income and/or may be experiencing increased financial pressures due to lost income caused by COVID-19 — will increasingly rely on [phone calls] as a means of communications,” Securus said in its petition.
When the FCC denied Securus’ request, it argued that Securus could lower its rates any time, and had no obligation to pass regulatory fees onto its customers. They didn’t lower rates in Kentucky.
Breland uses a third-party app and has to change phone numbers often to keep down the cost of staying in touch with her fiancé. She lost her job as a mental health case manager in February. She found a lower-paying job at a factory, and took a second job waiting tables.
Breland says the money from her second job — about $150 to $200 a week — goes right to her Securus account.
“Dating somebody who’s incarcerated is a financial burden, but you love who you love and you have to make sacrifices,” Breland said.
Research by advocacy groups has found that 1 in 3 people with an incarcerated family member go into debt to pay for phone calls or visits.
About 22% of incarcerated people in Kentucky are Black, though they make up less than 9% of the state’s population
“The impact of COVID-19 on the outside community was disproportionate on Black, brown and cash-poor communities,” said Bianca Tylek, the founder and executive director of Worth Rises, an advocacy group that has challenged the prison phone industry. “And so when you think about those who are most dependent on prison telecom, disproportionately cash-poor communities, disproportionately Black and brown communities, also being those that are most negatively financially impacted by the pandemic? You can only imagine that that 1 in 3 number is now much higher.
“The pandemic was the biggest blessing that [Securus] could have asked for,” Tylek said.
A Pandemic Turnaround
Securus entered the pandemic promising reform after years of pressure from advocates and families of incarcerated people to reduce or eliminate prison telecom costs.
The Dallas-based company holds individual contracts in 22 local jails in Kentucky in addition to the state prison system. It’s owned by private equity firm Platinum Equity, placing it under the leadership of chairman Tom Gores, owner of the Detroit Pistons NBA team.
In recent years, investors and correctional facilities had been eschewing business with Securus, citing the exploitative nature of their business model.
The company is privately held, but it issues publicly-held debt that provides some clues to its finances and public perception. Until 2020, the value of that debt was in a downward spiral, bottoming out at $47 per share, about half its 2018 high of $101 per share.
In 2020, after the pandemic started, the value of that debt bounced back up to $62 per share.
Documents obtained from the Alabama Public Service Commission, which regulates utilities such as Securus in that state, show the pandemic benefited nearly every business venture of Securus’ parent company, Aventiv Technology — including electronic monitoring services called Satellite Tracking of People, or STOP, used in Kentucky.
The use of these services also increased during the pandemic, as jurisdictions released more people on parole to reduce the population of crowded correctional facilities, and their electronic monitoring revenue increased company-wide by almost $4 million in 2020.
That overall revenue increased to $767 million in 2020, and net cash flow from its business operations increased five-fold, to $133.4 million. Securus’ spokesperson said revenue increases “reflect new installations, expanded offerings, and improved product performance.”
‘You’d think they would try’ to keep prices low
Other jurisdictions are rethinking the practice of charging for phone calls from prison. The Louisville Metro Council passed a budget last month that weans Metro Corrections off its portion of the revenue from phone calls. Connecticut recently became the first state in the country to ban fees for phone calls from prison.
Legislation has been introduced in Congress several years in a row to curb the costs of phone calls for incarcerated people. Rep. Bobby Rush, a Democrat from Illinois, has sought unsuccessfully to pass a federal law prohibiting correctional facilities from taking a cut of phone call revenue.
The prison phone contract has brought some scrutiny in Kentucky recently. Securus and its competitors testified before an interim committee on jail and criminal justice reform last fall. Sen. Whitney Westerfield, a Republican from Crofton who chaired the committee, said he has a problem with the state profiting off this industry — but the short legislative session and likely pushback from local jailers and county governments prevented him from proposing a new law.
“To charge enough to pay a 50% commission and still be profitable as a vendor and still compete nationally for business, that probably means the margins are higher than it ought to be,” Westerfield said.
But the Kentucky Department of Corrections has not publicly expressed any similar concerns. In fact, the agency committed to a new, six-year contract with Securus last July, even as the company has failed to meet its contract terms in past years.
The new contract includes a promise from Securus to offer video calls. The service would have been popular last year, and lucrative: a 25-minute video call in Kentucky will cost $5, according to the company’s new contract, and the state will keep half.
But a review of previous contracts shows Securus has been promising video calling since 2013. Two years later, the DOC enacted financial penalties if Securus didn’t set up video calls. But they didn’t act on it.
A DOC spokesperson said the agency was “in the process” of enforcing that policy in 2016, but “departmental administration changes” and contract issues delayed the implementation of video calls further.
The prisons did offer some free video calls during the pandemic, but the calls were held over Zoom, usually in a prison staffer’s office, according to multiple people who have participated in such calls over the past year.
“It’s really awkward because there’s one or two people just sitting in there, and you can’t really talk about anything or put your information out there,” said Kyle Thompson, who made two video calls over the course of the pandemic from the Kentucky State Reformatory in Oldham County.
The new contract also brings a big benefit for the Department of Corrections: the new, $4.1 million up-front payment in addition to a larger guaranteed revenue of $3.5 million a year.
The DOC said at a recent legislative hearing that the money goes into a restricted fund for repairs and maintenance at DOC facilities.
That was a surprise to Thompson, who makes phone calls from a crowded hallway, sandwiched between the washing and dryer machines and bathrooms.
“I’m in a building that was built in the 1930s,” said Thompson, who is serving a sentence of life without parole. “You’d think if they were paying for repairs they would try to repair the leaks. They’d try to get rid of the mold, at least.”
Thompson said there’s no air conditioning in that room, and he had to quickly end a call in June when he began to suffer symptoms of heat exhaustion.
The calls end automatically at 30 minutes.
“It’s very dehumanizing when it comes to someone like your mother or your father when you can’t talk about the things that you need to talk about and you’re constantly pressured to have a certain amount of time,” Thompson said. “We don’t always have the money to call back so a lot of times you’ll forget things or they will be delayed because of that.”
His mother, Valerie Prater, says she spends about $1,200 a year staying in contact with him. That includes emails that cost 44 cents a piece, plus another 44 cents to share a family photo.
Prater is unemployed, and her husband is retired.
“At times I’ve charged my credit cards to be able to talk to him,” Prater said. “I’ve not bought something just so I can load money on the phone to be able to communicate with him because I can’t imagine what would happen if Kyle couldn’t talk to me.”
Neither Thompson nor his mother knew that the Kentucky Department of Corrections takes a cut of the money they spend.
“With the Department of Corrections, I mean they already make really massive amounts of money,” Thompson said. “You’d think that they would try and keep everyone peaceful and keep the prison calm, and that they would try to charge as small an amount of money as they can.”