BRETT BARROUQUEREAfter a sex scandal at a privately run prison in rural Kentucky, the state cut off the institution's funding and now it's shutting down â¿¿ and that worries town officials in an impoverished Appalachian community where incarceration meant jobs and economic survival. With Otter Creek Correctional Center set to close in the coming months, Mike Goeing, who runs Family Drugs of Wheelwright, sees pain ahead for his store and the other few remaining businesses in the town of about 1,200. "It's definitely going to hurt," he said. The prison, run by Nashville, Tenn.-based Corrections Corporation of America, is set to close by this summer as Kentucky pulls its inmates out of the facility that 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 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. Kentucky paid CCA $21 million in fiscal 2010 to operate Otter Creek, along with the Marion Adjustment Center, which has roughly 800 Kentucky inmates and Lee Adjustment Center, which no longer houses Kentucky inmates. Kentucky opted not to renew its contract with CCA as part of an ambitious plan to cut costs, reduce the number of small-time, non-violent drug offenders in prison and refocus efforts on rehabilitation. The men currently held at Otter Creek are being moved to Northpoint Training Center in Burgin. People in Wheelwright are hoping for word 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 told The Associated Press. Initially, the local jobs came from coal. Elk Horn Coal Company founded the city in 1916 about 150 miles southeast of Lexington near the Kentucky-Virginia border, and named it for the company's then-president, Jere H. Wheelwright.