BILL ANALYSIS Ó AB 1876 Page 1 ASSEMBLY THIRD READING AB 1876 (Quirk) As Amended May 15, 2014 Majority vote LOCAL GOVERNMENT 7-0 ----------------------------------------------------------------- |Ayes:|Achadjian, Levine, | | | | |Bradford, Gordon, Wagner, | | | | |Mullin, Waldron | | | ----------------------------------------------------------------- SUMMARY : Prohibits commissions in telephone service contracts for juvenile facilities and for county, municipal or privately-operated jails, and requires such contracts to be negotiated and awarded to the lowest cost provider. Specifically, this bill : 1)Requires any contract to provide telephone services to any person detained or sentenced to a jail or juvenile facility to be negotiated and awarded to an entity that meets the jail or juvenile facility's technical, functional, and security requirements for services, and that provides the lowest cost of service to any person who pays for the telephone service. 2)Allows a county to require a telephone service provider to cover all costs related to the installation and maintenance of the telephone devices and services. 3)Prohibits a contract to provide telephone services to any person detained or sentenced to a jail or juvenile facility from including any commission or other payment to the entity operating the jail or juvenile facility. 4)Provides the following definitions for the purposes of this bill: a) "Jail" means a county jail, a municipal jail, or a privately operated jail; b) "Juvenile facility" means any juvenile hall, camp, ranch, or other facility where a person is detained as a result of a petition pursuant to specified provisions of existing law pertaining to minors who become wards of the AB 1876 Page 2 court; and, c) "Commission or other payment" means any payments made to incentivize procurement of contracts, but does not include grants and other payments that do not increase the cost of telephone calls billed to consumers. EXISTING LAW : 1)Imposes specified procedural and substantive content requirements on contracts entered into by local agencies, including cities and counties. 2)Provides that there shall be deposited in the Inmate Welfare Fund (IWF) any money, refund, rebate, or commission received from a telephone company or pay telephone provider when the money, refund, rebate, or commission is attributable to the use of pay telephones which are primarily used by inmates while incarcerated. 3)Requires the money and property deposited in the IWF to be expended by the sheriff primarily for the benefit, education, and welfare of the inmates confined within the jail. Any funds that are not needed for the welfare of the inmates may be expended for the maintenance of county jail facilities. Maintenance of county jail facilities may include, but is not limited to, the salary and benefits of personnel used in the programs to benefit the inmates, including, but not limited to, education, drug and alcohol treatment, welfare, library, accounting, and other programs deemed appropriate by the sheriff. 4)Prohibits inmate welfare funds from being used to pay required county expenses of confining inmates in a local detention system, such as meals, clothing, housing, or medical services or expenses, except that inmate welfare funds may be used to augment those required county expenses as determined by the sheriff to be in the best interests of inmates. An itemized report of these expenditures shall be submitted annually to the board of supervisors. 5)Allows the sheriff to expend money from the IWF to provide indigent inmates, prior to release from the county jail or any other adult detention facility under the jurisdiction of the sheriff, with essential clothing and transportation expenses AB 1876 Page 3 within the county or, at the discretion of the sheriff, transportation to the inmate's county of residence, if the county is within the state or within 500 miles from the county of incarceration. FISCAL EFFECT : None COMMENTS : 1)Purpose of this bill. This bill prohibits concession fees in contracts for phone services for juvenile facilities and for county, municipal, or privately-operated jails, and requires such contracts to be negotiated and awarded to the lowest cost provider. This bill is sponsored by Community Initiatives for Visiting Immigrants in Confinement (CIVIC), the California Immigrant Policy Center, and Friends Committee on Legislation of California. 2)Author's statement. According to the author, "The ability of Californians who are imprisoned to stay in touch with family members is essential for reintegration into the community and helps to reduce recidivism. Phone calls also provide a crucial way for inmates to communicate with attorneys and bail agents, which are a vital component to the basic right of due process. "For inmates in county jails, there is no alternative way of communicating with family, friends, support groups, attorneys or bail agents. There is little incentive for contracting with phone companies who guarantee great service and low prices. The Federal Communications Commission (FCC) recently announced that 'some correctional facilities may base their selection of a contractor largely on the amount of cash and/or in-kind inducement offered rather than being driven by proposals focused on high quality service at the most affordable rates for consumers.' "There are three main reasons why the cost of making a call from a county jail is extremely expensive: (1) each county enters into an exclusive contract with a phone company; (2) companies are contractually obligated to pay commissions to the county for services rendered; and (3) in order to collect revenue to make up the money lost to commissions, telephone companies add hefty charges and extra fees." AB 1876 Page 4 3)Background. According to a December 2013 article in Prison Legal News, "The billion-dollar prison phone industry is comprised of companies that provide phone services for prisoners and detainees held in state, federal and privately-operated prisons, county and municipal jails, juvenile facilities, immigration detention centers and other correctional facilities. Such services are commonly referred to as Inmate Calling Services (ICS). Five companies, known as ICS providers, dominate the prison phone market: Global Tel*Link (GTL), Securus Technologies, CenturyLink, Telmate and ICSolutions provide phone services for 49 of the 50 state Departments of Corrections. A number of other companies, such as Pay-Tel, NCIC, Legacy and EagleTel, provide ICS services primarily to jails. "When prisoners make phone calls they typically have three payment options - collect, prepaid or debit. Collect calls are paid by the call recipient, prepaid calls are paid from a pre-funded account established by the call recipient and debit calls are funded from a prisoner's institutional debit account. Prisoners can usually call only a small number of people on a specified list, and calls are frequently limited to 15 or 20 minutes per call. "There are three types of phone calls within the telecommunications industry - local, intrastate and interstate. Local calls are made to numbers within a local calling area, such as the same city or county. Intrastate calls are made within the boundaries of a state?Interstate (long distance) calls are made across state lines and are generally the most expensive. Prisoners' family members and friends pay for the vast majority of ICS calls, either by accepting collect calls, establishing prepaid accounts or sending money to their incarcerated loved ones to place on their debit phone accounts. "ICS rates are much higher than non-prison rates, in large part because prison phone companies pay 'commission' kickbacks to the corrections agencies with which they contract. Such commissions are usually based on a percentage of the revenue generated from prisoners' calls and have nothing to do with the actual cost of providing the phone service. Because ICS providers factor commission payments - which currently average 47.79% for state Departments of Corrections (DOCs) - into the phone rates they charge, the rates are artificially inflated. AB 1876 Page 5 Absent commission kickbacks, which are received by 42 state DOCs, the rates could be considerably lower. ICS providers paid at least $123.3 million to state prison systems in 2012." 4)California concessions. According to a 2004 article in USA Today, telephone companies and California counties made hundreds of millions of dollars through high, unregulated phone rates for calls from local jails. The average California county jail inmate's local call home cost more than seven times as much as a $0.50 pay phone call, totaling more than $120 million a year in phone bills for families and friends of county inmates statewide. The inflated rates made service contracts with jails so lucrative that carriers offered counties signing bonuses, nearly $17 million in the case of Los Angeles County. California counties received more than $303 million in revenue from collect calls, calling cards and signing bonuses over five years. In 2007, the Legislature approved SB 81 (Budget and Fiscal Review Committee), Chapter 175, Statutes of 2007. Among its many provisions, SB 81 directed a four-year phase out of concession fees in phone service contracts for state correctional facilities. According to information provided by the author, after the full enactment of SB 81, California prison phone rates decreased drastically. Today, a 15 minute long-distance call from a California state prison costs $1.44. In comparison, according to a sample chart provided by the author, the same 15 minute call from a local correctional facility can cost in the range of $4.39 to $6.75 for a local call, and $9.80 to $12.75 for a long-distance call. Commissions range from 57% to 72% of gross revenue, with some contracts containing minimum annual guarantees and/or bonus payments for contract extensions. 5)Inmate Welfare Fund (IWF). Current law requires any money, refund, rebate, or commission received from a telephone company providing inmate phone services to be deposited into the IWF. The use of those funds is restricted to the benefit, education, and welfare of the inmates confined within the jail. However, funds that are not needed for the welfare of the inmates may be expended to maintain county jail facilities, which can include the salary and benefits of personnel used in the programs to benefit the inmates such as AB 1876 Page 6 education, drug and alcohol treatment, welfare, library, accounting, and other programs deemed appropriate by the sheriff. According to the author, "?there is disagreement over how much actually goes to direct services for inmates and how much is used to subsidize salary or building retrofits which should be paid from a different fund. For example, in 2005, Santa Clara County was sued for how it handled the IWF. When it was settled in 2007, the County agreed to abide by certain conditions and limitations, including the creation of a committee to oversee the IWF. Additionally, not all annual reports contain specific information on what the expenditures were, but rather opt for using broad and general categories." 6)Federal Communications Commission (FCC) rate cap. In August of 2013, the FCC approved a cap on the cost of interstate phone calls at rates that are "just and reasonable." Effective February 11, 2014, the following caps apply: a) $0.25 per minute for collect calls (with a $3.75 cap for a 15-minute call); and, b) $0.21 per minute for debit or pre-paid calls (with a $3.15 cap for a 15-minute call). These rate caps do not apply to intrastate calls. The FCC also put out a request for comments on a proposal to cap rates for calls within states, but has not yet taken further action. 7)Previous legislation. SB 81 among many provisions directed a four-year phase out of concession fees in contracts that provide telephone services to wards and inmates in state correctional facilities. AB 230 (Leno) of 2003 would have required any contracts to provide phone service to state prison inmates and California Youth Authority (CYA) wards to be negotiated to provide the lowest possible costs to wards and inmates, with a proviso that service contracts cover state expenses and provide a reasonable profit margin for the vendor. The bill also specified that state profits must not be a basis for awarding a contract. AB 230 was held in the Assembly Appropriations Committee. AB 1876 Page 7 8)Arguments in support. Supporters state, "The high cost of phone calls prevents incarcerated people from staying in touch with family and friends. This is a disservice to society, as studies show that the ability of incarcerated people to stay in touch with their families aids rehabilitation and reduces recidivism. While the revenue generated from county jail telephone contracts must, by law, be placed in an Inmate Welfare Fund and spent on behalf of inmates, funding education and rehabilitation programs at the expense of family contact undermines this intention. "For many Californians in county jails, phone calls are the only way to stay connected with their families, loved ones, and attorneys. Such communication is integral to the basic right to due process, as it is vital for Californians facing court or immigration proceedings to consult regularly with their legal representatives as the process advances. Moreover, for those with convictions, regular contact with loved ones is vital to successful rehabilitation and reentry." 9)Arguments in opposition. The California State Sheriff's Association, in opposition, states that "precluding a provider from paying a commission or other payment to the facility operator will only hurt inmates, the very people this bill ostensibly seeks to aid. Existing law requires any money, refund, rebate, or commission received from a provider of inmate phone services to be deposited in the inmate welfare fund (IWF). Statute specifies what may be paid for by the IWF, and as a practical matter, IWFs typically pay for inmate education, religious materials, vocational training, recreational equipment, and clothing and hygiene supplies for indigent inmates. Additionally, and separate from commissions, providers often pay for facility upgrades to accommodate phone systems, but this savings to the county would be eliminated by AB 1876?this bill will likely result in a lower level of phone service and will cause a reduction in the meaningful programs and provisions that are funded by the IWF. Elimination of this funding source will ultimately harm inmates and the public safety." Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958 FN: 0003465 AB 1876 Page 8