And the message just continues to be the same really challenging infrastructure issues within their system, facilities are becoming more and more overcrowded as populations are starting to come out of the jails that have been backed up because, of course, being closed and then also seeing significant population increases over the next three to five years. So that message continues to be conveyed to us from our partners. The other thing I’ll just say that maybe is a little bit surprise for folks is that some of our customers, they closed either units or maybe entire facilities during COVID and what facilities they targeted for closure are usually the ones again that are maybe older, maybe more difficult to operate, but maybe really challenging the staff.
And so some of this, I think kind of more immediate opportunity for us are coming from customers to say, we close XYZ facility in certain part of our jurisdiction, and it just doesn’t make operational sense for us to reactivate it. So basically, what I’m saying is you may have a system or systems that their operational capacity has declined a little bit because they’ve got units or facilities that just didn’t make sense to reactivate and so that’s created a little more demand from them to use capacity in our system there. But I don’t know, I guess you’d add to that, Dave?
David Garfinkle: Yes. Just to reemphasize, the underlying drivers of the new contracts that we signed in the second half of 2023 are still there. And as Damon just mentioned, getting more urgent. So we feel really good about prospects moving into 2024 and have good momentum, having signed three new contracts in the fourth quarter and another contract in the third quarter that’s both with state and county governments, so good momentum as we’re going into ’24.
Damon Hininger: Yes. I really appreciate. And one other thing I’d just say, Joe, and we mentioned in our script, but want to reinforce it, and that is as you know, we leaned a little forward on staffing around the enterprise about a year ago and also impacted a little bit margins, and I know we had some good conversations about that along the way. But we think some of those investments are really now — we’re getting the benefits of that now with some of these new contracts. Again, obviously, we’re watching closely what happens with ICE with this supplemental. There was some discussion about funding there for 50,000 beds nationwide, again, who knows how likelihood that is with the supplemental. But as long as we saying, we continue to be very thoughtful on the staffing front, not just on what the needs are today, but trying to probably anticipate a little bit what customer need is either with existing customers or new customers.
Joe Gomes: Great, thanks again for taking my questions and congrats on the quarter.
Damon Hininger: Thank you sir.
Operator: Thank you. One moment for our next question. And our next question comes from the line of M. Marin from Zacks. Your question please.
Marla Marin: Thank you. So given COVID, the courts were obviously in advance and now that they’re back up and running, it seems that we’re still seeing a backlog, and it seems like rather than getting smaller, it’s appearing treatment to grow. So if that’s the case, how do you think that might impact some of your utilization rates and some of your post COVID facilities.
Damon Hininger: Yes. It’s a good question. And yes, it’s a little bit of a couple of different catalysts. You alluded to it with you, of course, going to get back to where they were operationally pre-COVID in this backlog that is we’ve seen in numbers and jail populations nationwide. So we — again, we’re seeing that now. I think again, with contracts like with Montana, increased utilization in Idaho, Wyoming as we talked about, I mean, I think that’s part of the reason. I think again, I think another part of the reason is, again, some of these systems took some capacity off-line and just that, okay, it just makes sense for us to reactivate it to more cost effective, you’re probably going to give a lot better outcomes too by using capacity within CoreCivic.
And I guess the third thing I’d just say is that looking at another lead indicator, which is kind of crime rates around the country and some of the actions that are happening at the state and local level, I think that’s also going to have some material impact on populations on top of what we’re seeing today because of the backlog with COVID. But is there anything you’d add to that, Dave?
David Garfinkle: No, I don’t have anything to add, Damon. You covered it.
Marla Marin: Okay. So you also talked about in your prepared remarks, you mentioned alternatives to retention. And I’m guessing that, that would include your electronic monitoring services, maybe the community service corporations, do you see and you talked before about how you had some good quarters on community services operations. Do you see that as potentially benefiting from some of the changes we’re seeing in the courts and in prison, views about prison detention?
Damon Hininger: Yes. I mean — and keep me answer, Dave. I say on the community, again, the big driver there has been just increased utilization from a population perspective into our facilities and also some favorable renegotiation of contract terms, again, we’ve had some improvements on the per diem and the compensated day rates. But we also are seeing, again, good use and good attraction to our monitoring, our case management services and other support services we can do within the community segment. But I’ll also say, and I think maybe a part of your question, too, we remain really bullish on that for the community business. And so we continue to make investments in both people and technology to meet the needs either with the existing partners or potentially new partners.
Again, going back to the lease proposed supplemental from Congress on Sunday night of this week. Again, who knows how much of this will carry on either through a supplemental being passed or moved on to a full funded year, but there was almost over $1 billion. I think that was earmarked for additional expansion of alternative detention under ICE. So again, I think the continued investment, not only just for that opportunity, but also what we’re seeing in with cities and counties and even the bureau prisons, I think, are good investments. And again, we continue to be really bullish on the business. But anything to add to that, Dave?
David Garfinkle: Yes, I think there’s some inertia from the Federal Bureau of Prisons as well to expand the utilization of residential reentry centers whether that’s due to infrastructure, trying to get more people out of prison into the communities and helping them assimilate. So I think there could be some more funding there that kind of began during the last administration. And it seems to be getting some legs now. So I wouldn’t be surprised if we saw the BOP expand its utilization of our RCs by early release programs, alternatives to detention and things like that. So I agree that there’s a lot of upside there. And we have a lot of capacity within our community portfolio to accommodate that need.
Marla Marin: Okay, thank you.
David Garfinkle: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Kirk Ludtke from Imperial Capital. Your question please.
Kirk Ludtke: Hi, Damon, and David, Brian, Mike, thanks for the call.
David Garfinkle: Good morning.
Damon Hininger: Good morning, Kirk.
Kirk Ludtke: Congratulations on the quarter. Just a couple of follow-ups. On the ICE population, did I hear that the immigration bill included funding for 50,000 beds, did I hear that correctly?
Damon Hininger: That’s correct. Yes. The bill that came out Sunday night, and as you know, this was out of the Senate and you heard this a couple of times during the course of the week where the negotiators that Bill noted that they were looking at funding for taking up the population of 50,000 beds. So that’s been part of the talking points with the unveiling of this bill on Sunday. So again, you probably know as well as I, there’s obviously some strong views about that bill on the House. So again, not here to handicap the bill, but at least just want to indicate, that’s at least what the Senate was making relative to that supplemental.
Kirk Ludtke: Got it. Well, that’s helpful. Thank you. And where did your ICE population peak pre-pandemic?
Damon Hininger: Pre-pandemic, keep me honest with you, Dave. I think in the summer of ’19, we got near 15,000.
Kirk Ludtke: From 11,300 today?
Damon Hininger: Yes.
