PITTSBURGH, PA -- September 14, 2004 - Cornell Companies Inc. (NYSE:CRN) announced today the signing of a three-year agreement to work jointly with the Lebanon School District, Lebanon, Pa., in providing alternative education services to 225 students in grades 3-12. The estimated annualized revenue is approximately $1.5 million.

For more than three decades, Cornell has provided educational services to juveniles through its residential treatment programs. "We possess a level of expertise in meeting the academic, behavioral and social needs of at-risk children. Our expanding customer base for alternative education services speaks to the increasing demand for this specialty area. Our strategic growth plan includes the alternative education service line and this agreement fits perfectly into our plan," explained Thomas R. Jenkins, Jr., president and chief operating officer.

Jack Godlesky, senior vice president of the Eastern Region, noted, "The Lebanon School District superintendent set out five goals for the 2004-2005 school year and improving student performance is one of the top priorities. We are pleased to partner with the District to help them achieve their goals and provide a supportive environment in which students can experience academic and social success.

"The Polaris Program, which is the name that the District selected, will begin Nov. 1 in a self-contained building. Lebanon's program is a modification of the ACTS Program, our successful partnership in Harrisburg, Pa., to meet its specific needs. Students referred to the ACTS Program have experienced significant academic gains, as well as improved attendance rates," Godlesky explained.

One aspect of the program that helps students make academic and behavioral improvements is the class size. No more than 15 students will be in each classroom allowing more individual attention from the teacher.

Cornell will hire the principal and support personnel, along with the intervention specialists. The teachers will be employees of the Lebanon School District, as will the Coordinator of Alternative Education.

Cornell also provides alternative education services to 165 third and fourth graders in the School District of Philadelphia.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current plans and actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, among others, (1) the outcomes of pending putative class action shareholder and derivative lawsuits, and related insurance coverage, (2) the outcome of the pending SEC investigation of Cornell, (3) Cornell's ability to win new contracts and to execute its growth strategy, (4) risks associated with acquisitions and the integration thereof (including the ability to achieve administrative and operating cost savings and anticipated synergies), (5) the timing and costs of the opening of new programs and facilities or the expansions of existing facilities, (6) Cornell's ability to negotiate contracts at those facilities for which it currently does not have an operating contract, (7) significant charges to expense of deferred costs associated with financing and other projects in development if management determines that one or more of such projects is unlikely to be successfully concluded, (8) results from alternative deployment or sale of facilities such as the New Morgan Academy or the inability to do so, (9) Cornell's ability to negotiate a contract amendment with the BOP related to the Moshannon Valley Correctional Center and Cornell's ability to resume construction of that facility, (10) changes in governmental policy and/or funding to discontinue or not renew existing arrangements, to eliminate or discourage the privatization of correctional, detention and pre-release services in the United States, or to eliminate rate increase, (11) the availability of financing on terms that are favorable to Cornell, and (12) fluctuations in operating results because of occupancy, competition (including competition from two competitors that are substantially larger than Cornell), increases in cost of operations, fluctuations in interest rates and risks of operations.

Cornell Companies Inc. is a leading private provider of corrections, treatment and educational services outsourced by federal, state and local governmental agencies. Cornell provides a diversified portfolio of services for adults and juveniles, including incarceration and detention, transition from incarceration, drug and alcohol treatment programs, behavioral rehabilitation and treatment, and grades 3-12 alternative education in an environment of dignity and respect, emphasizing community safety and rehabilitation in support of public policy. Cornell (http://www.cornellcompanies.com) has contracts to operate 72 facilities with a total service capacity of 18,395. Cornell's facilities are located in 17 states and the District of Columbia.