BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 608
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          Date of Hearing:  June 14, 2011
          Counsel:       Stella Choe


                         ASSEMBLY COMMITTEE ON PUBLIC SAFETY
                                 Tom Ammiano, Chair

                   SB 608 (DeSaulnier) - As Amended:  June 9, 2011


           SUMMARY  :  Authorizes the Prison Industry Authority (PIA) to 
          offer their goods and services for sale to nonprofit 
          organizations.  Specifically,  this bill  provides that the 
          nonprofit organizations must meet all of the following 
          conditions:

          1)The nonprofit organization is located in California and is 
            exempt from taxation under specified federal tax laws.

          2)The nonprofit organization has entered into a memorandum of 
            understanding with a local education agency, which is defined 
            as a school district, county office of education, state 
            special school, or charter school.

          3)The products and services are provided to public school 
            students at no cost to students or their families.

           EXISTING LAW  :

          1)Authorizes PIA 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 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.  ÝPenal Code Section 2807(a).]

          2)States that all things authorized to be produced by PIA 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 








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            offer for sale to persons residing in state-operated 
            institutions, at the prices fixed by PIA.  State agencies 
            shall make maximum utilization of these products, and shall 
            consult with the staff of PIA to develop new products and 
            adapt existing products to meet their needs.  ÝPenal Code 
            Section 2807(b).]

          3)States that the purposes of PIA are to:

             a)   Develop and operate industrial, agricultural, and 
               service enterprises employing prisoners in institutions 
               under the jurisdiction of the California Department of 
               Corrections (CDC), which enterprises may be located either 
               within those institutions or elsewhere, all as may be 
               determined by PIA;

             b)   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,

             c)   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 CDC, thereby 
               reducing the cost of its operation.  (Penal Code Section 
               2801.)

          4)States that notwithstanding any other provision of existing 
            law, products and byproducts of agricultural and animal 
            husbandry enterprises, except nursery stock, may be sold to 
            private persons, at public or private sale, under rules 
            prescribed by the Prison Industry Board.  (Penal Code Section 
            2814.)

          5)Provides that notwithstanding provisions of existing law, 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 PIA, 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 PIA in 
            soliciting quotations for goods.  ÝGovernment Code Section 








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            14612(e).]

           FISCAL EFFECT  :   Unknown

           COMMENTS  :

           1)Author's Statement  :  According to the author, "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 their 
            services.  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.  This bill not only supports the 
            philanthropic endeavors of California non-profits, but also 
            supports the rehabilitative and vocational efforts of PIA.

          "By 2012, K to College hopes to distribute as many as 500,000 
            school packets across the state.  Working with PIA is the only 
            viable way for these packets to be assembled and reach the 
            students who so desperately need them."

           2)Background  :  According to the background provided by the 
            author, "Nonprofits are heavily reliant on grant money, 
            government subsidies, and the generosity of individuals and 
            corporations to fund their philanthropic endeavors.  In many 
            cases, the scarcity of funding sources significantly limits 
            both the scope and effectiveness of their activities.  Under 
            current law, only government organizations may purchase goods 
            or services from PIA.  SB 608 will allow non-profits who meet 
            specified criteria to purchase goods or services purveyed by 
            the PIA.  This bill not only supports the philanthropic 
            endeavors of California non-profits, but also supports the 
            rehabilitative and vocational efforts of PIA.

           3)The PIA, also Referred to as CALPIA  :  According to the PIA's 
            Web site, "The California Prison Industry Authority (CALPIA) 
            is a state-operated organization that was created by Chapter 
            1549, Statutes of 1982 (California Penal Code Section 2800), 








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            to provide productive work assignments for inmates in 
            California's adult correctional institutions.  CALPIA provides 
            work assignments for approximately 5,900 inmates and operates 
            over 60 service, manufacturing, and agricultural industries at 
            22 prisons throughout California.  CALPIA is self-supporting 
            and does not receive an annual appropriation from the 
            Legislature.  CALPIA's revenue comes from the sale of its 
            products and services to governmental organizations. 

          "CALPIA's industries produce over 1,400 goods and services 
            including:  office furniture, clothing, food products, shoes, 
            printing services, signs, binders, eye wear, gloves, license 
            plates, cell equipment, and much more.  CALPIA products and 
            services are available to government entities, including 
            federal, state, and local governmental agencies.  The 
            California Penal Code prohibits CALPIA from selling its 
            products and services to the general public. 

          "Up to 50 percent of an inmate's wages is deducted for 
            court-ordered restitution/fines and is transferred to the 
            Crime Victims' Restitution Fund.  In FY 2005-06, over $700,000 
            of CALPIA inmates' earnings was deposited.  Since FY 1992-93, 
            $6.5 million has been deposited to the Fund.  Inmates receive 
            wages of $0.30 to $0.95 per hour before deductions. 

          "In 2000, CALPIA began the development of the Inmate 
            Employability Program to enhance the ability of inmates to 
            obtain private sector jobs upon their release from prison.  
            The program documents and certifies an inmate's skills, work 
            experience, and positive work habits acquired while assigned 
            to CALPIA's enterprises. 

          "CALPIA's job assignments are voluntary - inmates are not 
            required to work; however, inmates are generally eager to 
            participate, as waiting lists are common for many PIA 
            assignments.  The CALPIA work assignments can help inmates 
            learn work skills and habits to become productive members of 
            society. 

          "The CALPIA factories operate within Federal and State health, 
            safety, and occupational regulations.

          "CALPIA programs assist inmates in learning the value of work. 
            Many CALPIA inmate workers have never held a job or learned 
            the value of work. CALPIA staff expect inmates to learn 








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            appropriate behavior on the job, do quality work, report to 
            work on time, and follow occupational health and safety rules.

          "The Prison Industry Board (PIB) was established to oversee the 
            operations of CALPIA, much like a corporate board of 
            directors.  The 11-member PIB sets general policy for PIA, 
            oversees the performance of existing PIA industries, 
            determines which new industries shall be established, approves 
            its annual plan, and appoints and monitors the performance of 
            the General Manager.  The PIB also serves as a public hearing 
            body charged with ensuring that PIA enterprises do not create 
            a substantial adverse impact on California industry."  ÝFast 
            Facts, < http://www.pia.ca.gov/About_PIA/FastFacts.html> (as 
            of June 6, 2011).]

           4)The Use of Prison Labor  :  The law of prison work and wages 
            starts with the Thirteenth Amendment, which allows slavery and 
            involuntary servitude as punishment for crimes:  "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.)  However, once convicted, prisoners can be required to 
            work, even pending appeal.  ÝSee 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.  ÝSee 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 
            prisons have not been considered employees under the FLSA.  








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            ÝSee 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:

          "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.] 

           5)Efficacy of the PIA  :  According to a recent report by the 
            Bureau of State Audits, although the PIA could improve its 
            mechanisms for tracking parolees' post-release employment and 
            the accuracy of its price analyses, the report found that the 
            PIA provides savings to state agencies and has a positive 
            impact on recidivism levels.  Specifically, the report found 
            that the parolee recidivism rates presented by the PIA are 
            lower than that of the California Department of Corrections 
            and Rehabilitation's general-population parolees, the PIA is 
            overall self-sustaining, and state agencies saved an estimated 
            $3.1 million during the fiscal year 2009-10 by purchasing 
            products and services from the PIA.  ÝCalifornia State 
            Auditor, California Prison Industry Authority, Report 2010-118 
            (May 2011).]   
          According to an article in the Sacramento Bee summarizing the 
            efficacy of the PIA: 

          "PIA officials say their prices are competitive and that savings 
            also should be measured by success in reducing prison violence 
            and keeping paroled felons from re-offending and being 
            re-incarcerated at a cost of about $50,000 per year.  'There 








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            are lots of benefits beyond just, 'Can we go out and buy this 
            stuff more cheaply?', said Barry Krisberg former president of 
            the National Council on Crime and Delinquency.  ÝSanders, 
            Prison Industries Maintain Monopoly even in Tough Times (April 
            13, 2010) Sacramento Bee found at 
            .]

           6)Arguments in Support  :  According to  Crime Victims Action 
            Alliance  , "Authorizing non-profit organizations to utilize the 
            services of the CALPIA will result in a win-win situation for 
            all those involved.  As you are well aware as our economy has 
            weakened over the past several years there has been a 
            significant reduction in donations to non-profit 
            organizations.  Due to this decrease in revenue many programs 
            that provide much needed services to some of the most 
            vulnerable residents of our state have been significantly 
            reduced and in some cases eliminated due to lack of funding.  
            Having the ability to utilize the services of the CALPIA will 
            help non-profits maximize their limited resources, while also 
            providing job training and experience for the CALPIA 
            participants.  The more job training and experience a CALPIA 
            participant can obtain while in custody will increase their 
            ability to find lawful employment upon release."

           7)Prior Legislation  :

             a)   SB 1130 (Aanestad), of the 2009-10 Legislative Session, 
               would have allowed state agencies to enter into contracts 
               with private entities or other public agencies for locally 
               produced perishable goods provided at a lower price than 
               the price available from the PIA, provided that the 
               contract is to provide these goods to a facility that is 
               located in a county with a population of 50,000 or less.  
               SB 1130 was held on the Appropriation Committee's Suspense 
               File.

             b)   SB 467 (Dutton), of the 2009-10 Legislative Session, 
               would have authorized state agencies and departments to 
               award contracts of $25,000 or less for goods or services by 
               California certified small businesses, microbusinesses, or 
               disabled veteran business enterprises for products provided 
               at a lower price than the price available from the PIA.  SB 
               467 was held on the Senate Appropriations Committee's 
               Suspense File.








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             c)   AB 1771 (Mendoza), of the 2009-10 Legislative Session, 
               would have authorized state agencies to enter into 
               contracts or purchase orders of $25,000 or less with 
               California certified small businesses, microbusinesses, or 
               disabled veteran business enterprises for products provided 
               at a lower price than the price available from the PIA.  AB 
               1771 was held on the Appropriation Committee's Suspense 
               File.

             d)   SB 1397 (Negrete McLeod), of the 2007-08 Legislative 
               Session, would have required the Prison Industry Board, in 
               procuring raw materials, component parts, and goods and 
               services, to comply with specified provisions of law that 
               give preference to small businesses and disabled veteran 
               business enterprises in awarding contracts.  SB 1397 failed 
               passage in the Senate Public Safety Committee.

             e)   AB 664 (Parra), of the 2007-08 Legislative Session, 
               would have provided that dairy products produced under the 
               hospices of PIA may only be sold, purchased and used by 
               food service operations in state-owned facilities, and 
               prohibits dairy products from being sold directly to 
               private persons.  AB 664 was held on the Appropriation 
               Committee's Suspense File.

             f)   SB 1734 (Cox), of the 2005-06 Legislative Session, would 
               have provided that dairy products produced by the PIA 
               within California prisons can only be sold, purchased, and 
               used by food service operations within state-owned 
               facilities, as specified.  SB 1734 was held on the Senate 
               Appropriations Committee's Suspense File.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          K to College (Sponsor) 
          California Correctional Peace Officers Association
          California Prison Industry Authority
          Crime Victims Action Alliance

           Opposition 
           
          None








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          Analysis Prepared by  :    Stella Choe / PUB. S. / (916) 319-3744