A Florida company will pay New Mexico $1.1 million in penalties for not adequately staffing a private prison it operates in Hobbs, a state official said.

GEO Group, which manages three of New Mexico's four private prisons, agreed to pay the settlement last week following a meeting between the corrections agency and the company's top management, Corrections Secretary Gregg Marcantel said Monday.

"They've agreed on it," Marcantel said of GEO. "It's a very fair way of doing it. They are not completely happy. It needed to be done."

Officials at GEO could not be reached for comment Monday night.

GEO will pay the $1.1 million over several months, the corrections secretary said. In addition, GEO has agreed to spend $200,000 over the next calendar year to recruit new correctional officers for the Hobbs facility.

By contract, New Mexico can penalize The GEO Group and Corrections Corp. of America, the two firms that operate the private facilities, when staffing vacancies are at 10 percent or more for 30 consecutive days.

The settlement represents the first time in years — possibly ever — that New Mexico has penalized the out-of-state, for-profit companies for not adequately staffing the facilities they operate. The issue has come up in the past, but state officials said New Mexico had never levied penalties for understaffing issues.

The question surfaced in 2010 when state lawmakers were struggling to find ways to close a yawning state budget gap. At the time, the Legislature's budget arm, the Legislative Finance Committee, estimated Gov. Bill Richardson's administration had skipped $18 million in penalties by not assessing penalties against the two firms for inadequate prison staffing levels.

The $1.1 million covers understaffing by GEO at the Hobbs facility for only this year and was reached after the state corrections agency and GEO spent most of the summer disputing each other's methodology for computing how much GEO should be penalized, state documents show.

Marcantel said he could not retroactively penalize the companies for previous years, but could only go back to the first day of Gov. Susana Martinez's tenure, Jan. 1.

According to state records, of the four privately operated prisons, Lea County Correctional Facility in Hobbs has struggled the most to keep correctional officers on the job. The facility's vacancy rate hovered above 20 percent for 12 of the 14 months for which there was data — between January 2010 and March of this year. That includes seven consecutive months — September 2010 through March 2011 — when the vacancy rate was 25.24 percent, records showed.

Going forward, the state will check monthly to ensure the four privately operated prisons are adequately staffed, Marcantel said.

"Our new approach, it's not going to be waiting," Marcantel said. "That doesn't motivate" the companies to keep staffing levels where they need to be, he added.

GEO, headquartered in Boca Raton, Fla., recently reported $1.2 billion in earnings and $58.8 million in profit through the first nine months of this year, according to a Nov. 2 release by the company.

Contact Trip Jennings at 986-3050 or at tjennings@sfnewmexican.com.