CSI to Merge with Cornell Cos.

SAN DIEGO -- Correctional Systems Inc. (Pink Sheets:CRXS) has entered into a definitive merger agreement with Cornell Cos. Inc. The merger agreement provides for the merger of CSI and a wholly owned subsidiary of Cornell, with the stockholders of CSI receiving cash for their shares and CSI continuing as a wholly owned subsidiary of Cornell.

CSI estimates that its common stockholders will receive initial merger consideration approximating $.66 per share, based on approximately 7,010,000 issued and outstanding shares of common and preferred stock and after payment of a preferential return to the holders of CSI's preferred stock. This per share price accounts for amounts that are payable to the holders of "in-the-money" options for approximately 1,100,000 shares of CSI common stock not included in the 7,010,000 issued and outstanding shares of common and preferred stock. The initial merger consideration may increase or decrease depending on the performance of CSI between Nov. 30, 2004, and the merger closing. CSI stockholders also may share in a $1,250,000 escrow to be established from the merger proceeds to secure indemnification and other obligations of CSI and may receive additional "earn-out" consideration if CSI is awarded one or more of specified contracts within six months after the closing. CSI projects that the merger consideration may increase by approximately $.02 per share based on the performance of CSI between Nov. 30, 2004, and the merger closing, but cannot offer any assurance of this. CSI can offer no assurance that the escrow will increase materially the consideration payable to its stockholders and does not anticipate a substantial increase in the consideration payable to its stockholders from the "earn-out." Any increase in merger consideration will also be shared with the holders of "in-the-money" options. Additional options in the approximate amount of 360,000 that are "out-of-the-money" based on a $.66 per share purchase price may become "in-the-money" through increases in the merger consideration and share in any increased merger consideration as a result.

The closing of the merger is subject to a number of conditions, including approvals from CSI's stockholders. The merger agreement provides that the relevant stockholder approvals must be obtained by March 24 and the merger must close by April 8. CSI intends to hold a meeting of its stockholders during March and distribute a Proxy Statement pertaining to the meeting in February.

About Correctional Systems Inc.

Correctional Systems Inc. is a San Diego-based provider of privatized jail, community corrections, and alternative sentencing services.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 -- This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include information relating to possible or assumed future results of operations of CSI, including those preceded by, followed by or that include the words "believes," "projects," "expects," "anticipates" or similar expressions. These statements reflect the current views of CSI with respect to future events. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors that could cause CSI's actual results, performance, or achievements to differ from predicted future results. Important factors that could cause actual results to differ include, among others: (i) the closing of the merger may not occur or may be delayed; (ii) the requisite number of CSI's stockholders may not provide the relevant approvals; (iii) the failure to satisfy various other closing conditions contained in the merger agreement; (iv) CSI's business could suffer due to market uncertainty relating to the transaction; and (v) other economic, business, or competitive factors affecting CSI's business generally. These forward-looking statements are made as of the date of this press release, and CSI undertakes no obligation to update or revise them, whether as a result of new information, future events or any other reason.

Questions should be addressed to John Forren, CEO of CSI, at 858-566-9816 or [e-mail].

Disclaimer:

This press release contains forward-looking statements regarding future events. Actual results could differ from those contained in these forward-looking statements due to certain factors, including the company obtaining additional management contracts, obtaining contracts for which proposals have been submitted, business and economic conditions and availability of financing.