BILL ANALYSIS
SB 1130
Page 1
Date of Hearing: June 29, 2010
Counsel: Kimberly A. Horiuchi
ASSEMBLY COMMITTEE ON PUBLIC SAFETY
Tom Ammiano, Chair
SB 1130 (Aanestad) - As Amended: May 26, 2010
As Proposed to be Amended in Committee
SUMMARY : Provides that the requirements imposed on the
Department of Corrections and Rehabilitation (CDCR) to purchase
Prison Industry Authority (PIA) products, make maximum
utilization of these products, and consult with the staff of the
PIA to develop new products and adapt existing products to meet
its needs shall not restrict CDCR from entering 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. This exception shall only apply
to CDCR facilities in counties with a population of 50,000 or
less.
EXISTING LAW :
1)Provides that the PIA is hereby authorized and empowered 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 CDCR 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 Section
2807(a).]
2)All things authorized to be produced, as specified, 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 PIA. State agencies
shall make maximum utilization of these products, and shall
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consult with the staff of the authority to develop new
products and adapt existing products to meet their needs.
[Penal Code Section 2807(b).]
3)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 PIA. (Penal Code Section 2814.)
4)Lists the purposes of the PIA as:
a) To develop and operate industrial, agricultural, and
service enterprises employing prisoners in institutions
under CDCR's jurisdiction, which enterprises may be located
either within those institutions or elsewhere, all as may
be determined by the authority.
b) To 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.
c) To 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 CDCR, thereby
reducing the cost of its operation. (Penal Code Section
2801.)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement : According to the author, "I have
introduced SB 1130 which will help promote fairness in state
purchasing, provide assistance to small businesses and save
the state money by allowing more flexibility in awarding
contracts. SB 1130 would provide that CDCR may enter into
contracts with private businesses or other public agencies for
locally produced perishable products provided it is at a lower
price than the price available from the PIA. It has been
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determined that this bill will not impact 'good-time' credits
for inmates.
2)The PIA : According to the PIA's Web site, "The PIA is a
state-operated organization that was created by Chapter 1549,
Statutes of 1982 (California Penal Code Section 2800), to
provide productive work assignments for inmates in
California's adult correctional institutions. The PIA
provides work assignments for approximately 5,900 inmates and
operates over 60 service, manufacturing, and agricultural
industries at 22 prisons throughout California. The PIA is
self-supporting and does not receive an annual appropriation
from the Legislature. PIA's revenue comes from the sale of
its products and services to governmental organizations.
"The PIA'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. PIA products and
services are available to government entities, including
federal, state, and local governmental agencies. The
California Penal Code prohibits PIA from selling its products
and services to the general public.
"Up to 40% of an inmate's wages is deducted for court-ordered
restitution/fines and is transferred to the Crime Victims'
Restitution Fund. In Fiscal Year 2005-06, over $700,000 of
PIA inmates' earnings was deposited. Since Fiscal Year
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, PIA 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 PIA's
enterprises.
"The PIA'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 PIA work assignments can help inmates learn
work skills and habits to become productive members of
society.
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"The PIA factories operate within Federal and State health,
safety, and occupational regulations.
"The PIA inmate work assignments provide productive activity,
thereby reducing idleness and prison violence. In 1998, the
CDCR completed a study which found that inmates assigned to
PIA had a lower rate of reported serious incidents than
inmates assigned to other CDCR assignments (academic,
education, vocational education, and support services).
"The Prison Industry Board (PIB) was established to oversee the
operations of PIA, 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."
3)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. [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
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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.
[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:
"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." [Danneskjold v. Hausrath (2d Cir. 1996) 82
F.3d 37, 43.]
Inexpensive labor can give an unfair advantage to an enterprise
that competes in the marketplace. Low-wage prison labor
surely raises the specter of such unfair competition. Thus,
prison industries can pose an unfair competitive advantage
which inmate employers' gain by paying wages below the
statutory minimum. However, Congress has addressed the
problem of unfair competition by regulating prison-made goods.
The Ashurst-Sumners Act, 18 United Stats Code Sections
1761-62, penalizes the knowing transportation of prison-made
goods in 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.]
For the government, competition in the marketplace is not a
dominant mode and profits are not the ultimate goal. A
governmental advantage from the use of prisoner labor is not
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the same as a similar low-wage advantage on the part of a
private entity: while the latter amounts to an unfair
windfall, the former may be seen as simply paying the costs of
public goods, including the costs of incarceration.
According to an article in the Sacramento Bee summarizing the
efficacy of PIA goods and the needs of small businesses:
"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
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.
"The issue pits lawmakers' desire to prepare prisoners for
gainful employment against recession-related pressure to
bolster private businesses struggling to survive. Nationally,
the Federal Prison Industries program, responding to similar
pressure, loosened a mandate on federal agencies in 2004 to
allow purchases from private vendors offering lower prices."
[Sanders, Prison Industries Maintain Monopoly even in Tough
Times, Sacramento Bee (April 13, 2010) found at
http://www.sacbee.com/2010/04/13/2674085/prison-industries-main
tain-monopoly.html.]
4)Arguments in Support :
a) Regional Council of Rural Counties , "The PIA was
developed to assist inmates in providing goods and services
to prison facilities while at the same time allowing
inmates to gain job skills that can be used upon release
from incarceration. Current California law requires state
agencies to purchase products that are available from the
PIA; however, a waiver can be issued to a state agency,
thus allowing the products and/or services to be acquired
in another manner. Without a waiver, PIA's products and
services take precedent over other vendors regardless of
PIA's price, quality or logistical arrangement. During the
1980's, California realized the need to construct
additional prisons.
"With this in mind, a number of rural communities needing
economic development opportunities were encouraged by state
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officials to site prison facilities in order to have good
paying jobs for their residents and opportunities for local
businesses. One such example was the construction of
Pelican Bay State Prison in Del Norte County. For years,
North Coast businesses have had opportunity to supply the
prison with a variety of local dairy products. Earlier
this year, a dairy producer and dairy distribution firm was
notified that Pelican Bay would not be renewing their
contract to supply products to the prison and instead the
PIA would supply their dairy needs. Thankfully, the PIA
recently agreed to continue the waiver for CDCR to use
local vendors to meet Pelican Bay's dairy needs."
b) Dairy Institute : "SB 1130 provides partial fulfillment
of the pledge made by various state officials in exchange
for locating state prisons in rural communities. That
pledge provided that whenever possible, local vendors would
be utilized to provide the perishable product needs of the
prisons. The system by which local vendors are utilized
over more distant, and often more costly Prison Industry
Authority goods makes more sense than ever. The lower
cost, lower carbon footprint, increased local tax revenue
and higher quality and freshness of local products all
point toward the wisdom of the 'buy local' policy, which SB
11330 would permit."
5)Arguments in Opposition :
a) California Prison Industry Board (CALPIA), "Adoption of
SB 1130 in its current form would result in a reduction of
annual revenues to CALPIA of up to $62 million and
elimination of over 1,100 inmate rehabilitation positions.
Approximately 780 of those positions would be within out
industries that produce perishable goods. As CALPIA
reinvests our profits into the provision of Career
Technical Education (CTE), including Carpentry, Iron
Working, and Labor, as well as Commercial Diving, the loss
of these revenues would result in the elimination of an
additional 300 CTE inmate rehabilitative positions in the
most successful programs within CDCR-programs with a
documented recidivism of 10 percent. The loss of both the
perishable goods portion of CALPIA business and the CTE
program would result in the elimination of 95 staff
positions within the CALPIA, a majority of which reside in
the Central Valley. Lastly, CALPIA purchases substantial
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raw materials, goods and services to support these
perishable food enterprises and out CTE programs. Because
of SB 1130, there would be a significant reduction in the
purchase of raw materials from California companies-at
least $25 million annually.
"Overall, CALPIA inmates have a documented recidivism rate
that is 25 percent less than that of the general inmate
population. SB 1130 would create the need for CDCR to
reprogram approximately 1,100, and this would result in
General Fund costs over $5 million. Alternatively, the
recidivism savings lost from diminished CALPIA programs
would result in increased annual costs for incarceration of
up to $9 million. CALPIA has a proven record of
accomplishment, is self-supporting, and does not receive an
annual appropriation from the Legislature. SB 1130
destabilize the entire CALPIA program-including our
revenues and mission-and this will ultimately result in the
decimation of the most effective rehabilitation program
within CDCR."
b) National Correctional Industries Association : "The
National Correctional Industries Association (NCIA) is the
national association devoted exclusively to the field of
correctional industries. NCIA's mission is to promote
excellence and credibility in correctional industries
through professional development and innovative business
solutions that improve public safety and successful
offender reentry. Our members represent all 50 state
correctional industry agencies, Federal Prison Industries,
foreign correctional industry agencies, city/county jail
industry programs, as well as private sector companies that
work in partnership with correctional industries both as
suppliers/vendors and as partners in apprenticeship and
work programs. California Prison Industry Authority has
been an NCIA member since for more than 10 years.
"Some of the benefits of Correctional Industries programs
include enhancing public safety by reducing crime and
recidivism; saving taxpayers money by collecting items such
as room and board, family support and taxes; strengthening
local and state economies with purchases of raw materials,
supplies and services; facilitating successful reentry by
providing offenders with transferable skills and a strong
work ethic while incarcerated; and embracing restorative
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justice principles.
"SB1130 would allow private producers of perishable goods to
sell their goods to CDCR, eliminating the mandate that CDCR
purchase from CALPIA, thereby allowing any food 'producer'
who is 'local' to a prison to sell to CDCR if their 'price'
is lower than CALPIA. This is dangerous public policy as
both "producer" and "local" are not defined clearly in the
context of the bill. As written, SB1130 would allow any
producer to undercut CALPIA prices with 'loss leaders.' The
effect of this would be to decrease CALPIA market share to
a point where they could not compete; this would decimate
the CALPIA perishable product lines. Additionally, 'price'
is not the only factor that needs to be taken into
consideration when we are looking at this issue. The
economic impacts to the State for the increased
incarceration costs of re-offending parolees must be taken
into account as well.
"SB 1130, as currently written, will reduce revenues to the
Prison Industry Revolving Fund by approximately $62 million
dollars, and this reduction in revenues will eliminate
approximately 1100 CALPIA inmate training assignments
across numerous business lines. Approximately 780 of those
training assignments would be within CALPIA industries that
produce perishable goods. CALPIA programs are
interdependent, and if enacted, this bill would negatively
affect CALPIA's ability to sustain other successful
rehabilitation and training programs and prompt the closure
of additional programs adding more budgetary pressure on
CDCR for alternative programming. The first impacted
programs would be the elimination of CALPIA's Career
Technical Education (CTE) Programs - 300 training
assignments in Carpentry, Iron Working, and Labor, as well
as Commercial Diving.
"CDCR will incur General Fund costs of approximately $5
million if alternative vocational training is provided for
the 1100 displaced inmate workers. The $5 million estimate
is based on 2006 CDCR costs which indicated for every 27
inmates the cost for vocational education was $135,000.
CDCR would also incur significant additional General Fund
costs for incarceration as on average, inmates employed in
CALPIA programs have a 25 percent less chance of going back
to prison; thus eliminated CALPIA programs would increase
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recidivism for a portion of the 1100 inmates no longer
employed by CALPIA, which could amount to as much as a $9
million cost to the General Fund.
"The impact on California's economy would be significant. A
2008 commissioned study of the economic impact of
production by CALPIA on California's economy found the
following: If CALPIA activities did not exist, economic
activity in the State would decline by $238 million,
household income would decline by $75.7 million and 1,138
jobs would be lost statewide. And, California suppliers of
raw materials for CALPIA production would also be impacted
as purchases for the manufacturing of CALPIA goods and
services would be reduced by up to $30 million.
6)Related Legislation : AB 1771 (Mendoza) provides that the
requirements imposed on state agencies to purchase PIA
products make maximum utilization of these products, and
consult with PIA staff to develop new products and adapt
existing products to meet their needs shall not restrict state
agencies from entering into purchase orders or contracts of
$25,000 or less with California certified small businesses,
micro-businesses, or disabled veteran business enterprises, as
defined. AB 1771 was held on the Assembly Appropriations
Committee's Suspense File.
7)Prior Legislation :
a) 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
would have prohibited dairy products from being sold
directly to private persons. AB 664 was held on the
Assembly Appropriation Committee's Suspense File.
b) 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 :
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Support
County of Del Norte
Regional Council of Rural Counties
Taxpayers for Improving Public Safety
Dairy Institute
Opposition
California Prison Industry Board
National Correctional Industries Association
Analysis Prepared by : Kimberly Horiuchi / PUB. S. / (916)
319-3744