BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 608 (DeSaulnier)
Hearing Date: 5/2/2011 Amended: As Introduced
Consultant: Jolie Onodera Policy Vote: Public Safety 7-0
_________________________________________________________________
____
BILL SUMMARY: SB 608 would authorize the Prison Industry
Authority (PIA) to offer their goods and services for sale to
nonprofit organizations.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Increased sales to No new state costs; potential
significantGeneral
nonprofits future cost savings due to reduced
incarceration, potential personal
income/sales tax revenue loss
_________________________________________________________________
____
STAFF COMMENTS:
Existing law establishes the PIA and states that all things
authorized to be produced by the PIA shall be purchased by a
state agency, county, city, district, or political subdivision,
or by any state agency to offer for sale to persons residing in
state-operated institutions. This bill would allow non-profit
entities to purchase goods and services purveyed by the PIA.
The PIA is a semi-autonomous entity within the Department of
Corrections and Rehabilitation (CDCR) that operates work
programs for inmates through the generation of self-supporting
funds from the sale of products and services to pay all its
expenses, thereby avoiding the cost of alternative inmate
programming by CDCR. The PIA receives no appropriation from the
Legislature. The PIA spends its revenue dollars to cover the
cost of raw materials, inmate supervision, inmate payroll,
transportation and distribution, capital acquisition, debt
reduction, expansion, and central office administration.
Data across a three-year period beginning in Fiscal Year 2005-06
indicate that PIA participants recidivate on average 25 percent
less often than CDCR general population inmates, resulting in
cost savings to the State. Inmates participating in PIA
vocational training programs also earn sentence-reducing work
credits, reducing CDCR programming and incarceration costs.
SB 608 (DeSaulnier)
Page 3
In Fiscal Year 2009-10, PIA employed more than 5,500 inmates in
various manufacturing, service, and agriculture industries
across 23 institutions. However, due to reduced purchasing by
State and local agencies, PIA's revenues declined 22 percent
from the previous year to $182 million, requiring PIA to scale
back operations and provide work assignments to approximately
1,200 fewer inmates.
This bill would allow nonprofit entities to purchase PIA goods
and services. To the extent additional sales are generated
through agreements with these entities, PIA may be able to
provide additional work programming and vocational training to a
greater number of inmates, with potential cost savings to the
State due to increased work credits and reduced recidivism in
the future. Assuming a five percent increase in the PIA
workforce (275 inmates) due to this bill, if 10 percent of those
inmates avoided re-incarceration at an average prison term of
one year would result in General Fund cost savings of
approximately $1.2 million.
However, to the extent that PIA's competition with private
sector businesses in the production of goods for sale to
nonprofits results in the loss of private sector jobs, this bill
could result in reduced revenues from sales and/or personal
income. According to the Franchise Tax Board and Board of
Equalization, the average private sector job in California
contributes taxes of about $3,600 each year to the General Fund
(personal income tax and state sales tax). If PIA were to expand
its inmate workforce by five percent (275 inmates), and if every
two PIA work assignments were to displace one private sector
worker, the impact from lost personal income tax and sales tax
revenues would be approximately $495,000.
Staff notes it is unknown at this time how the Governor's public
safety realignment proposal will fully impact PIA operations.
The shift of prospective low-level offenders to local
supervision may reduce the availability of potential candidates
for existing PIA work assignments. Operations outside of prison
grounds (i.e., agriculture) will most likely be impacted, as
supervision costs for high-level offenders may make those
activities cost-prohibitive. Realignment may impact the level at
which PIA will be able to offer goods and services, and could
lead to increased prices in order to sustain operations. This
would impact the degree to which PIA could compete with private
SB 608 (DeSaulnier)
Page 4
sector businesses and would reduce the potential impact on
private sector jobs.