BILL ANALYSIS Ó
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair S
2011-2012 Regular Session B
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SB 608 (DeSaulnier)
As Introduced February 17, 2011
Hearing date: April 12, 2011
Penal Code
SM:mc
PRISON INDUSTRIES AUTHORITY: SALES TO NONPROFITS
HISTORY
Source: K to College
Prior Legislation:SB 1130 (Aanestad) - held on suspense in
Assembly Appropriations
2009-10
SB 467 (Dutton) - held on suspense in Senate
Appropriations,
2009-10
AB 1771 (Mendoza) - held on suspense in Assembly
Appropriations,
2009-10
SB 1397 (Negrete McLeod) - died in Senate Public
Safety, 2007-08
Support: California Correctional Peace Officers Association;
Crime Victims Action Alliance; Prison Industry Board
Opposition:None known
KEY ISSUE
SHOULD THE PRISON INDUSTRY AUTHORITY BE AUTHORIZED TO OFFER THEIR
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GOODS AND SERVICES FOR SALE TO NONPROFIT ORGANIZATIONS?
PURPOSE
The purpose of this bill is to authorize the Prison Industry
Authority to offer their goods and services for sale to
nonprofit organizations.
Existing law establishes the Prison Industry Authority (PIA) and
states that the purposes of the authority are to:
develop and operate industrial, agricultural, and
service enterprises employing prisoners in institutions
under the jurisdiction of the Department of Corrections,
which enterprises may be located either within those
institutions or elsewhere, all as may be determined by the
authority;
create and maintain working conditions within the
enterprises as much like those which prevail in private
industry as possible, to assure prisoners employed therein
the opportunity to work productively, to earn funds, and to
acquire or improve effective work habits and occupational
skills; and
operate a work program for prisoners which will
ultimately be self-supporting by generating sufficient
funds from the sale of products and services to pay all the
expenses of the program, and one which will provide goods
and services which are or will be used by the Department of
Corrections, thereby reducing the cost of its operation.
(Penal Code § 2801.)
Existing law authorizes the Authority to operate industrial,
agricultural, and service enterprises which will provide
products and services needed by the state, or any political
subdivision thereof, or by the federal government, or any
department, agency, or corporation thereof, or for any other
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public use. Products may be purchased by state agencies to be
offered for sale to inmates of the department and to any other
person under the care of the state who resides in state-operated
institutional facilities. Fresh meat may be purchased by food
service operations in state-owned facilities and sold for onsite
consumption. (Penal Code § 2807(a).)
Existing law further states that all things authorized to be
produced by the Authority shall be purchased by the state, or
any agency thereof, and may be purchased by any county, city,
district, or political subdivision, or any agency thereof, or by
any state agency to offer for sale to persons residing in
state-operated institutions, at the prices fixed by the Prison
Industry Authority. State agencies shall make maximum
utilization of these products, and shall consult with the staff
of the authority to develop new products and adapt existing
products to meet their needs. (Penal Code § 2807(b).)
Existing law provides that notwithstanding Section 2807 of the
Penal Code, the director of the Department of General Services
or his or her designee may procure goods from the private sector
even though the goods may be available from the Prison Industry
Authority, when in his or her discretion, it is cost beneficial
to do so, and if the director or his or her designee continues
to include the authority in soliciting quotations for goods.
(Government Code § 14612.)
This bill would provide that all goods and services provided by
PIA could be offered for sale to a nonprofit organization.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation.
As these cases have progressed, prison conditions have
continued to be assailed, and the scrutiny of the federal courts
over California's prisons has intensified.
On June 30, 2005, in a class action lawsuit filed four years
earlier, the United States District Court for the Northern
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District of California established a Receivership to take
control of the delivery of medical services to all California
state prisoners confined by the California Department of
Corrections and Rehabilitation ("CDCR"). In December of 2006,
plaintiffs in two federal lawsuits against CDCR sought a
court-ordered limit on the prison population pursuant to the
federal Prison Litigation Reform Act. On January 12, 2010, a
three-judge federal panel issued an order requiring California
to reduce its inmate population to 137.5 percent of design
capacity -- a reduction at that time of roughly 40,000 inmates
-- within two years. The court stayed implementation of its
ruling pending the state's appeal to the U.S. Supreme Court.
On Monday, June 14, 2010, the U.S. Supreme Court agreed to hear
the state's appeal of this order and, on Tuesday, November 30,
2010, the Court heard oral arguments. A decision is expected as
early as this spring.
In response to the unresolved prison capacity crisis, in early
2007 the Senate Committee on Public Safety began holding
legislative proposals which could further exacerbate prison
overcrowding through new or expanded felony prosecutions.
This bill does not appear to aggravate the prison overcrowding
crisis described above.
COMMENTS
1. Need for This Bill
According to the author:
Under current law, only government organizations may
purchase goods or services from PIA. This bill allows
non-profit entities to purchase goods or services
purveyed by the Prison Industry Authority. This change
will support the philanthropic endeavors of California
non-profits, who in many cases cannot afford to pay
market prices. It also supports the rehabilitative and
vocational-training efforts of PIA, which ultimately
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saves the State money by allowing more prisoners to
earn sentence-reducing work credits. The sponsor of
this bill, K to College, a non-profit based in the East
Bay, provides free school supplies to students from
disadvantaged backgrounds. Historically, K to College
has used volunteers to assemble these school supply
packets. However over time, volunteers were no longer
able to meet the increasing demand for the school
supply packets. In response, in 2009, K to College
worked with Senator DeSaulnier's office to coordinate a
program with PIA workers at Folsom State Prison. The
Folsom State inmates were able to assemble 150,000
school supply packets, a project too large in scale to
be accomplished by volunteers. In order to make this
program and others like it sustainable, California
statute must be amended in order to explicitly allow
non-profits to work with PIA.
2. What is the Prison Industry Authority?
CALPIA is a State-operated organization that was created in
1982, to provide productive work assignments for inmates in
California's adult correctional institutions. (Chapter 1549,
Statutes of 1982, California Penal Code §§ 2800, et seq.)
According to a 2006 Audit by the Inspector General:
The Prison Industry Authority is a semi-autonomous,
fiscally self-supporting entity within the California
Department of Corrections and Rehabilitation, whose
mission is to use inmate labor to operate California's
prison industries in a manner similar to that of
private industry. The Prison Industry Authority was
established to develop and operate manufacturing,
agricultural, and service enterprises that provide
work opportunities for inmates under the jurisdiction
of the California Department of Corrections and
Rehabilitation. Prison Industry Authority work
assignments support prison safety, help reduce
violence, reimburse victims, provide career training,
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and offer productive activity for inmates. The Prison
Industry Authority operates over 60 programs at 22
correctional facilities statewide and employs
approximately 6,000 inmates in various industries such
as license plate production, eyewear production,
office furniture manufacturing, and food and printing
services. (2006 Accountability Audit PIA Optical
Program at the Richard J. Donovan Correctional
Facility, Office of the Inspector General, pp.
349-350.)
The Inspector General's 2006 Audit describes one of the many
programs operated by PIA:
Through an interagency agreement, the Department of
Health Services has contracted with the Prison
Industry Authority since 1988 to furnish and fabricate
optical eyewear for the California Medical Assistance
Program (Medi-Cal). The term of the current
interagency agreement is July 1, 2003, through June
30, 2006, with expenditures not to exceed $61,200,000.
Statewide, the Prison Industry Authority optical
program has invested over $10 million in buildings and
state-of-the-art optical equipment in its four optical
laboratory facilities at the Richard J. Donovan
Correctional Facility, Pelican Bay State Prison,
Valley State Prison for Women, and the California
State Prison, Solano. In total, the Prison Industry
Authority optical program employs 391 inmates,
including 110 inmates at the Richard J. Donovan
Correctional Facility. The laboratories fill
approximately 860,000 prescriptions annually and ship
them to about 2,400 providers. Finally, the Prison
Industry Authority services about 754,602 Medi-Cal
beneficiaries in all of California's 58 counties
through such providers as optometrists and opticians.
(Id. at 350.)
3. Report on the Economic Impact of Prison Industry Authority
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In December 2010, researchers from the University of California,
Berkeley and the University of Nevada, Reno, issued a report
entitled, The Economic Impact of the California Prison Industry
Authority on the California Economy for FY 2008/09.<1> The
report concluded:
The CALPIA is a selfsupporting government agency and
has the largest sales of any prison industry in the
nation. In fiscal year 2008/09, CALPIA had sales of
$234.2 million. In addition, CALPIA had instate
selling and administrative expenditures of $40.8
million and capital expenditures totaling $7.7 million
during 2008/2009. From these direct expenditures,
CALPIA total economic, household income, and
employment impacts on the state of California economy
are estimated to be $497.1 million, $132.7 million,
and 2,394 jobs, respectively. Conversely, if CALPIA
activities did not exist in the state of California,
total output, household income, and employment would
decline by $295.5 million, $75.6 million, and 1,170.5
jobs, respectively. Not only are there economic,
household income, and employment impacts from
activities of CALPIA, there are potential cost savings
to the state of California from reduced recidivism of
CALPIA parolees. The recidivism rate of CALPIA
parolees in one year is approximately 31 percent
compared to CDCRwide rate of approximately 42 percent.
Estimates of potential cost savings to the state of
California from reduced recidivism range from $8.4
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<1> The report was prepared for PIA by Thomas R. Harris,
Professor in the Department of Resource Economics and Director
of the University Center for Economic Development at the
University of Nevada, Reno, George Goldman, Emeritus
Agricultural Economist for the University of California,
Berkeley. He has been with the University of California,
Berkeley for 51 years, and Shannon Price, a Former Research
Associate in the University Center for Economic Development and
Department of Resource Economics at the University of Nevada,
Reno.
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million to $9.2 million (California Prison Industry
Authority, 2008b). Not only are there realized costs
savings from reduced recidivism, California parolees
who participated in CALPIA have a higher propensity to
become contributing members to society once
reintroduced to the state of California.
4. Inmate Vocational Training Issues
Recently the New York Times reported on the nationwide trend to
increase the use of inmate job training programs as a means to
control government spending as well as reduce inmate recidivism,
and some of the issues that raises:
Using inmate labor has created unusual alliances: liberal
humanitarian groups that advocate more education and
exercise in prisons find themselves supporting proposals
from conservative budget hawks to get inmates jobs, often
outdoors, where they can learn new skills. Having a job in
prison has been linked in studies to decreased violence,
improved morale and lowered recidivism - but most
effectively, experts say, when the task is purposeful.
"The days of just breaking rocks with sledgehammers" are
over, said Michael P. Jacobson, director of the Vera
Institute of Justice , a research group in New York. "At the
grossest financial level, it's just savings. You can cut
the government worker, save the salary and still maintain
the service, and you're providing a skill for when they
leave."
There are, of course, concerns about public safety and
competition with government or private workers. Professor
Horn estimates that only 20 percent of inmates present a
low enough security threat to work in public. And in some
places, even financially struggling governments are not
willing to take the risk of employing prisoners.
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In Ocala, Fla., after a long debate, the City Council last
summer decided to have a private company mow grass, even
though using inmates would have saved $1.1 million. "Our
area has been really hard hit by unemployment," said Suzy
Heinbockel, a Council member. "There was a belief that the
private company would bring local jobs, rather than giving
those jobs to prisoners. (Enlisting Prison Labor to Close
Budget Gaps, New York Times Feb. 24, 2011,
http://www.nytimes.com/2011/02/25/us/25inmates.html?pagewant
ed=2&_r=3&Hpw)
5. Federal Law on Selling Inmate-Produced Goods and Services to
Nonprofits
The Thirteenth Amendment, guarantees "Neither slavery nor
involuntary servitude, except as a punishment for crime whereof
the party shall have been duly convicted , shall exist within the
United States, or any place subject to their jurisdiction."
(United States Constitution, Amendment XIII, 1, emphasis added.)
Once convicted, prisoners can be required to work, even pending
appeal. (See Tourscher v. McCullough (3d Cir. 1999) 184 F.3d
236, 240; Plaisance v. Phelps (5th Cir. 1988) 845 F.2d 107, 108;
Omasta v. Wainwright (11th Cir. 1983)696 F.2d 1304, 1305;
Stiltner v. Rhay (9th Cir. 1963) 322 F.2d 314, 315.)
The Fair Labor Standards Act (FLSA) generally requires that
workers be paid a minimum wage, but is silent as to coverage of
state prison labor. (See 29 USCS 201-219.) Prisoners have no
constitutional right to be paid at all for the work they are
forced to perform. (See generally Murray v. Miss. Dep't of
Corrs. (5th Cir. 1990) 911 F.2d 1167 (per curiam): "Compelling
an inmate to work without pay is not unconstitutional. The
thirteenth amendment specifically allows involuntary servitude
as punishment after conviction of a crime, see United States
Constitution, Amendment XIII, 1, and this Court has held that
'compensating prisoners for work is not a constitutional
requirement but, rather, is by the grace of the state'.")
Thus, prisoners producing goods and services used by state
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prisons have not been considered employees under the FLSA. (See
Tourscher 184 F.3d at p. 243; Hale v. Arizona (9th Cir. 1993)
993 F.2d 1387, 1392-98 (en banc).) One court decision
illustrates why prisoners are not paid minimum wages:
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Forced prison labor for the prison is not subject to
the FLSA. The relationship is not one of employment;
prisoners are taken out of the national economy; prison
work is often designed to train and rehabilitate;
prisoners' living standards are determined by what the
prison provides; and most such labor does not compete
with private employers . . . . As a result, no Court
of Appeals has ever questioned the power of a
correctional institution to compel inmates to perform
services for the institution without paying the minimum
wage. Prisoners may thus be ordered to cook, staff the
library, perform janitorial services, work in the
laundry, or carry out numerous other tasks that serve
various institutional missions of the prison, such as
recreation, care and maintenance of the facility, or
rehabilitation. Such work occupies prisoners' time
that might otherwise be filled by mischief; it trains
prisoners in the discipline and skills of work; and it
is a method of seeing that prisoners bear a cost of
their incarceration. ÝDanneskjold v. Hausrath (2d Cir.
1996) 82 F.3d 37, 43.]
Congress has made a clear distinction between goods and services
provided by inmate labor for the use of government agencies, and
those that enter into interstate commerce. Cheap labor can give
an unfair advantage to an enterprise that competes in the
marketplace. Thus, use of inmate labor can pose an unfair
competitive advantage in which inmate employers' gain by paying
wages below the statutory minimum. Congress has addressed the
problem of unfair competition by regulating goods and services
provided by inmate labor. The Ashurst-Sumners Act, 18 United
States Code Sections 1761-62, prohibits, except as specified,
the knowing transportation of prison-made goods in interstate
commerce and was specifically intended to combat unfair
competition. (Kentucky Whip & Collar Co. v. Illinois Central
R.R. Co. (1937) 299 U.S. 334, 351.)
In addition to exempting from this prohibition goods and
services provided to government agencies, the Ashurst-Sumners
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Act also specifically exempts goods and services to be provided
to nonprofit organizations. (18 USCS § 1761(b).)<2> Thus, this
bill does not appear to violate the federal ban on use of
inmate-produced goods in interstate commerce.
DOES FEDERAL LAW PERMIT SALE OF INMATE-PRODUCED GOODS TO
NONPROFIT ORGANIZATIONS?
IF NOT, WOULD ALLOWING SALES TO NONPROFITS BENEFIT PIA AND HELP
PROMOTE ITS MISSION?
WOULD THIS HAVE A NEGATIVE IMPACT ON EMPLOYMENT IN THE
COMMUNITY?
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<2> 18 USCS § 1761(b) states, "This chapter shall not apply to
agricultural commodities or parts for the repair of farm
machinery, nor to commodities manufactured in a Federal,
District of Columbia, or State institution for use by the
Federal Government, or by the District of Columbia, or by any
State or Political subdivision of a State or not-for-profit
organizations."