BILL ANALYSIS
SB 1130
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1130 (Aanestad) - As Amended: August 2, 2010
Policy Committee: Public
SafetyVote:6-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows the Department of Corrections and
Rehabilitation (CDCR), notwithstanding the current requirement
for state agencies to make maximum use of Prison Industry
Authority (PIA) products, to enter into contracts with private
entities or public agencies for "locally produced perishable
goods" provided at a lower price than the price available from
the Prison Industry Authority (PIA).
This exception applies only to CDCR facilities located in
counties with a population of 50,000 or less, which means
Pelican Bay State Prison in Crescent City, Mule Creek State
Prison in Ione, and High Desert Sate Prison, and the CA
Correctional Center near Susanville.
FISCAL EFFECT
Because PIA has resolved - for now - the issues between Pelican
Bay State Prison and a local dairy producer and distributor that
prompted this bill, there are no direct state costs for 2010-11.
When and if these agreements terminate - or if similar issues
develop in the other areas - the state could experience
potentially significant annual GF costs, as follows:
1)Costs in the low millions of dollars for a diminution of PIA
food and agricultural sales and production. According to PIA,
the cost would be about $3 million, representing about 6% of
PIA's food and agricultural services.
2)An unknown increase in inmate recidivism to the extent about
100 inmate assignments are eliminated. According to PIA data,
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the recidivism rate for PIA-employed inmates is about 25% less
than non PIA-employed inmates, which would translate into
recidivism costs in the range of $1 million. Replacing these
positions with alternative vocational education positions
would cost several hundred thousand dollars, and the
recidivism rate may or may not be affected.
COMMENTS
1)Rationale . This bill is designed to address a specific dairy
situation at Pelican Bay in which a local dairy producer and
distributor was notified that Pelican Bay would not renew the
contract to supply dairy products to the prison since the PIA
would supply the prison's dairy needs. PIA recently agreed,
however, to continue a waiver for CDCR to use local vendors to
meet Pelican Bay's dairy needs.
The author wishes to codify this agreement to prevent future
disagreements.
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."
The Dairy Institute contends "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 1130 would permit."
2)Current law specifies PIA products shall be purchased by the
state, and may be purchased by any local government, at the
prices fixed by PIA. State agencies shall make maximum
utilization of these products, and shall consult with the PIA
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to develop new products and adapt existing products to meet
their needs.
3)Opposition .
a) PIA contends the situation prompting this bill has been
addressed by a waiver and that codifying piecemeal
exemptions will lead to costly and disjointed policies.
According to PIA, "Bills of this nature are a form of
disjointed incrementalism and should be opposed? This bill
is a reaction to what is a perceived short-term
imperfection in an existing policy rather than establishing
long-term future goals. And in this instance is wholly
unnecessary as CALPIA is able to issue waivers - and has
done so - to meet local need for decisive action on local
economic policy, specifically in Del Norte County. This
form of disjointed incrementalism, should it be codified,
would allow policy making to be divided into stages, in
such a way that by separately considering each institution
the conclusive policy would be less justifiable than if the
whole of the waiver process was to be considered."
b) The National Correctional Industries Association states,
"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."
4)What are "locally produced perishable goods"? This provision,
the crux of the bill, should be clarified. All goods are
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locally produced. Presumably the intent is to address
geographical proximity, so perhaps the locally should refer to
the county in question or to a specific mileage.
5)PIA Background . Created in 1982, PIA is designed to be a
self-sustaining operation to reduce the cost of incarceration
by increasing the safety of prisons and reducing the
recidivism rate of inmates who are released to their
communities after learning basic work skills. The PIA's
2010-11 Annual Plan projects a gross profit of $44 million
with revenues of $180 million and $136 million in expenses.
PIA operates more than 60 business enterprises in 23 prisons,
employing some 6,800 inmates, providing goods and services for
state, local, and federal agencies. PIA products include
food, furniture, metal, clothing, modular building products,
printing, optical, and laundry services.
According to the PIA's 2010 Strategic Business Plan, PIA
inmate workers have contributed more than $7 million - via a
compulsory contribution of 40% of their wages - in restitution
to crime victims since 1992-93.
Overall, the recidivism rate of CALPIA inmate workers is 25%
less than the recidivism rate of the California prison general
population.
6)Related Legislation . AB 1771 (Mendoza) specifies that the
requirements imposed on state agencies to purchase PIA
products 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 this committee's Suspense File.
Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081