BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1876
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          ASSEMBLY THIRD READING
          AB 1876 (Quirk) 
          As Amended  May 15, 2014
          Majority vote 

           LOCAL GOVERNMENT    7-0                                         
           
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          |Ayes:|Achadjian, Levine,        |     |                          |
          |     |Bradford, Gordon, Wagner, |     |                          |
          |     |Mullin, Waldron           |     |                          |
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          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  








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               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  








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            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." 









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          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.   








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            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  








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            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.









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          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 


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