Business

Eastern Ky. town braces for loss of prison

After a sex scandal at a privately run prison in rural Kentucky, the state cut off the institution's funding and now the prison is shutting down — and that worries town officials in an impoverished Appalachian community where the prison meant jobs and economic survival.

With Otter Creek Correctional Center closing in the coming months, Mike Goeing, who runs Family Drugs of Wheelwright, sees pain ahead for his store and the few other businesses that remain in the town of about 1,200.

"It's definitely going to hurt," he said.

The prison, run by Nashville-based Corrections Corporation of America, is set to close by the end of June as Kentucky pulls its inmates from the facility, which was at the center of a sex scandal. It broke in 2009 when inmates accused prison staff of forcing them to trade sexual favors for privileges.

The Floyd County prison became a casualty of budget cuts and a renewed effort by the state to push more non-violent drug offenders into rehabilitation instead of incarceration.

The men now at Otter Creek are being moved to Northpoint Training Center in Burgin.

People in Wheelwright are hoping that another state will step in with a new batch of inmates, reopen the facility and rehire the employees.

"There aren't a large number of businesses here anyway," Goeing said.

Initially, local jobs came from coal. In 1916, Elk Horn Coal Co. founded the city about 150 miles southeast of Lexington near the Kentucky-Virginia line, and named it for the company's then-president, Jere H. Wheelwright.

As coal production slowed, the area's economy went with it. Businesses closed or struggled to stay open.

The prison brought nearly 200 jobs to one of the poorest regions in the South when it opened in 1981. CCA paid employees $8.25 an hour — low pay by prison standards but welcome cash for the area.

"It helped the few businesses that remain here," said Goeing, who used to deliver medications to the prison.

Without the prison jobs, Wheelwright Mayor Andy Akers says, people will lose their steady incomes and stop spending money in the area.

"It's going to hurt the grocery stores, the restaurants — just everything where the guards are used to spending their money," Akers said.

State Sen. Johnnie Ray Turner, D-Prestonsburg, said Kentucky and CCA must find an alternative use for the prison, either leasing it to another state or converting it to a rehabilitation facility. Until something happens, Turner said he expects lots of phone calls from people looking for help finding work.

"Jobs are few in the mountains," he said. "We're going to have to try to do something."

CCA spokesman Steve Owen said employees were given an opportunity to stay with the company, either at the Lee Adjustment Center in Beattyville, where Vermont houses roughly 800 inmates, or at the Marion Adjustment Center in St. Mary's, where Kentucky houses about 800. Owen said employees also were given a crack at openings at one of CCA's 60 other facilities across the country.

"CCA will continue to market Otter Creek to potential government partners with the hope of reopening the facility," Owen said.

Akers, the mayor for the past 18 months, said that's a positive sign.

"I don't think they're going to be shut down that long," he said.

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