BILL ANALYSIS �
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair S
2011-2012 Regular Session B
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SB 700 (La Malfa)
As Introduced February 18, 2011
Hearing date: April 12, 2011
Penal Code
SM:dl
DEPARTMENT OF CORRECTIONS AND REHABILITATION:
PROCUREMENT FROM ENTITIES OTHER THAN PRISON INDUSTRIES
AUTHORITY
HISTORY
Source: Author
Prior Legislation: SB 1130 (Aanestad) - (2010) held on suspense
in Senate Appropriations
AB 664 (Parra) - (2008) held on suspense in
Assembly Appropriations
SB 1734 (Cox) - (2006) held on suspense in Senate
Appropriations
Support: Regional Council of Rural Counties; California State
Sheriff's Association
Opposition:Service Employees International Union, Local 1000;
Prison Industry Board
KEY ISSUE
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SHOULD AN EXCEPTION BE CREATED TO THE REQUIREMENTS IMPOSED ON
STATE AGENCIES TO PURCHASE PRISON INDUSTRIES AUTHORITY (PIA)
PRODUCTS TO PERMIT THE DEPARTMENT OF CORRECTIONS AND
REHABILITATION TO ENTER INTO CONTRACTS WITH PRIVATE ENTITIES OR
OTHER PUBLIC AGENCIES FOR LOCALLY PRODUCED PERISHABLE GOODS
PROVIDED AT A LOWER PRICE THAN THE PRICE AVAILABLE FROM PIA,
PROVIDED THAT THE CONTRACT IS TO PROVIDE THESE GOODS TO A
FACILITY THAT IS LOCATED IN A COUNTY WITH A POPULATION OF 50,000
OR LESS?
PURPOSE
The purpose of this bill is to create an exception to the
requirements imposed on state agencies to purchase Prison
Industries Authority (PIA) products to allow the CDCR to enter
into contracts with private entities or other public agencies
for locally produced perishable goods provided at a lower price
than the price available from PIA, provided that the contract is
to provide these goods to a facility that is located in a county
with a population of 50,000 or less.
Existing law establishes the Prison Industry Authority (PIA) and
states that the purposes of the authority are:
to develop and operate industrial, agricultural, and
service enterprises employing prisoners in institutions
under the jurisdiction of the Department of Corrections and
Rehabilitation (CDCR), which enterprises may be located
either within those institutions or elsewhere, all as may
be determined by the authority;
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; and
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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 the CDCR, thereby
reducing the cost of its operation. (Penal Code � 2801.)
Existing law authorizes PIA 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 the department 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 � 2807(a).)
Existing law further states that all things authorized to be
produced by PIA 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 the PIA. State agencies
shall make maximum utilization of these products, and shall
consult with the staff of the authority to develop new products
and adapt existing products to meet their needs. (Penal Code �
2807(b).)
Existing law provides that notwithstanding Section 2807 of the
Penal Code, the director of the Department of General Services
or his or her designee may procure goods from the private sector
even though the goods may be available from the PIA, when in his
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or her discretion, it is cost beneficial to do so and if the
director or his or her designee continues to include the
authority in soliciting quotations for goods. (Government Code
� 14612.)
This bill would create an exception to the requirements imposed
on state agencies to purchase PIA products, make maximum
utilization of these products, and consult with the staff of
authority to develop new products and adapt existing products to
meet its needs to allow CDCR to enter 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 authority, provided that the contract is to
provide these goods to a facility that is located in a county
with a population of 50,000 or less.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation.
As these cases have progressed, prison conditions have
continued to be assailed, and the scrutiny of the federal courts
over California's prisons has intensified.
On June 30, 2005, in a class action lawsuit filed four years
earlier, the United States District Court for the Northern
District of California established a Receivership to take
control of the delivery of medical services to all California
state prisoners confined by the California Department of
Corrections and Rehabilitation ("CDCR"). In December of 2006,
plaintiffs in two federal lawsuits against CDCR sought a
court-ordered limit on the prison population pursuant to the
federal Prison Litigation Reform Act. On January 12, 2010, a
three-judge federal panel issued an order requiring California
to reduce its inmate population to 137.5 percent of design
capacity -- a reduction at that time of roughly 40,000 inmates
-- within two years. The court stayed implementation of its
ruling pending the state's appeal to the U.S. Supreme Court.
On Monday, June 14, 2010, the U.S. Supreme Court agreed to hear
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the state's appeal of this order and, on Tuesday, November 30,
2010, the Court heard oral arguments. A decision is expected as
early as this spring.
In response to the unresolved prison capacity crisis, in early
2007 the Senate Committee on Public Safety began holding
legislative proposals which could further exacerbate prison
overcrowding through new or expanded felony prosecutions.
This bill does not appear to aggravate the prison overcrowding
crisis described above.
COMMENTS
1. Need for This Bill
According to the author:
SB 700 has been introduced to promote fairness in
state purchasing, provide assistance to small business
and save the state money by allowing more flexibility
in awarding contracts. This bill would allow CDCR to
enter into contracts with private businesses or other
public agencies for locally produced perishable
products provided it is at a lower price that the
price available from the PIA. This would pertain only
to counties with a population less than 50,000 people
or less.
2. What is the Prison Industry Authority (PIA)?
PIA is a state-operated organization that was created in 1982 to
provide productive work assignments for inmates in California's
adult correctional institutions. (Chapter 1549, Statutes of
1982, California Penal Code �� 2800, et seq..)
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According to a 2006 Audit by the Inspector General:
The Prison Industry Authority is a semi-autonomous,
fiscally self-supporting entity within the CDCR, whose
mission is to use inmate labor to operate California's
prison industries in a manner similar to that of
private industry. The Prison Industry Authority was
established to develop and operate manufacturing,
agricultural, and service enterprises that provide
work opportunities for inmates under the jurisdiction
of the CDCR. Prison Industry Authority work
assignments support prison safety, help reduce
violence, reimburse victims, provide career training,
and offer productive activity for inmates. The Prison
Industry Authority operates over 60 programs at 22
correctional facilities statewide and employs
approximately 6,000 inmates in various industries such
as license plate production, eyewear production,
office furniture manufacturing, and food and printing
services. (2006 Accountability Audit PIA Optical
Program at the Richard J. Donovan Correctional
Facility, Office of the Inspector General, pp.
349-350.)
The Inspector General's 2006 Audit describes one of the many
programs operated by PIA:
Through an interagency agreement, the Department of
Health Services has contracted with the Prison
Industry Authority since 1988 to furnish and fabricate
optical eyewear for the California Medical Assistance
Program (Medi-Cal). The term of the current
interagency agreement is July 1, 2003, through June
30, 2006, with expenditures not to exceed $61,200,000.
Statewide, the Prison Industry Authority optical
program has invested over $10 million in buildings and
state-of-the-art optical equipment in its four optical
laboratory facilities at the Richard J. Donovan
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Correctional Facility, Pelican Bay State Prison,
Valley State Prison for Women, and the California
State Prison, Solano. In total, the Prison Industry
Authority optical program employs 391 inmates,
including 110 inmates at the Richard J. Donovan
Correctional Facility. The laboratories fill
approximately 860,000 prescriptions annually and ship
them to about 2,400 providers. Finally, the Prison
Industry Authority services about 754,602 Medi-Cal
beneficiaries in all of California's 58 counties
through such providers as optometrists and opticians.
(Id. at 350.)
3. Report on the Economic Impact of PIA
In December 2010, researchers from the University of California,
Berkeley and the University of Nevada, Reno, issued a report
entitled, The Economic Impact of the California Prison Industry
Authority on the California Economy for FY 2008/09.<1> The
report concluded:
The CALPIA is a selfsupporting government agency and
has the largest sales of any prison industry in the
nation. In fiscal year 2008/09, CALPIA had sales of
$234.2 million. In addition, CALPIA had instate
selling and administrative expenditures of $40.8
million and capital expenditures totaling $7.7 million
during 2008/2009. From these direct expenditures,
CALPIA total economic, household income, and
employment impacts on the state of California economy
----------------------
<1> The report was prepared for PIA by Thomas R. Harris,
Professor in the Department of Resource Economics and Director
of the University Center for Economic Development at the
University of Nevada, Reno, George Goldman, Emeritus
Agricultural Economist for the University of California,
Berkeley. He has been with the University of California,
Berkeley for 51 years, and Shannon Price, a Former Research
Associate in the University Center for Economic Development and
Department of Resource Economics at the University of Nevada,
Reno.
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are estimated to be $497.1 million, $132.7 million,
and 2,394 jobs, respectively. Conversely, if CALPIA
activities did not exist in the state of California,
total output, household income, and employment would
decline by $295.5 million, $75.6 million, and 1,170.5
jobs, respectively. Not only are there economic,
household income, and employment impacts from
activities of CALPIA, there are potential cost savings
to the state of California from reduced recidivism of
CALPIA parolees. The recidivism rate of CALPIA
parolees in one year is approximately 31 percent
compared to CDCRwide rate of approximately 42 percent.
Estimates of potential cost savings to the state of
California from reduced recidivism range from $8.4
million to $9.2 million (California Prison Industry
Authority, 2008b). Not only are there realized costs
savings from reduced recidivism, California parolees
who participated in CALPIA have a higher propensity to
become contributing members to society once
reintroduced to the state of California.
4. Inmate Vocational Training Issues
Recently the New York Times reported on the nationwide trend to
increase the use of inmate job training programs as a means to
control government spending as well as reduce inmate recidivism,
and some of the issues that raises:
"Using inmate labor has created unusual alliances: liberal
humanitarian groups that advocate more education and
exercise in prisons find themselves supporting proposals
from conservative budget hawks to get inmates jobs, often
outdoors, where they can learn new skills. Having a job in
prison has been linked in studies to decreased violence,
improved morale and lowered recidivism - but most
effectively, experts say, when the task is purposeful.
"The days of just breaking rocks with sledgehammers" are
over, said Michael P. Jacobson, director of the Vera
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Institute of Justice , a research group in New York. "At the
grossest financial level, it's just savings. You can cut
the government worker, save the salary and still maintain
the service, and you're providing a skill for when they
leave."
There are, of course, concerns about public safety and
competition with government or private workers. Professor
Horn estimates that only 20 percent of inmates present a
low enough security threat to work in public. And in some
places, even financially struggling governments are not
willing to take the risk of employing prisoners.
In Ocala, Fla., after a long debate, the City Council last
summer decided to have a private company mow grass, even
though using inmates would have saved $1.1 million. "Our
area has been really hard hit by unemployment," said Suzy
Heinbockel, a Council member. "There was a belief that the
private company would bring local jobs, rather than giving
those jobs to prisoners."
(Enlisting Prison Labor to Close Budget Gaps, New York Times
Feb. 24, 2011,
http://www.nytimes.com/2011/02/25/us/25inmates.html?pagewanted=2&
_r=3&Hpw)
5. State Agencies' Ability To Purchase Non-PIA Goods - Current
Law
Under current law, state agencies are ordinarily required to
purchase items produced by the PIA at the prices fixed by the
PIA. (Penal Code � 2807(b).) However, current law permits the
director of the Department of General Services or his or her
designee to procure goods from the private sector even though
the goods may be available from the PIA, when in his or her
discretion, it is cost beneficial to do so and if the director
or his or her designee continues to include the authority in
soliciting quotations for goods. (Government Code � 14612.)
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Therefore, one question raised by this bill is whether that
discretionary authority is sufficient and, if so, whether a
specific statutory exemption from the mandate to state agencies
would be appropriate. Members may wish to consider whether this
measure could set a precedent resulting in other groups seeking
a similar statutory exemption regarding their goods or services
and what impact that might have on the viability of the PIA.
PIA states that the statutory exemption proposed by SB 700 is
both unnecessary and inappropriate.
SB 700 is unnecessary because CALPIA already offers an
administrative remedy. In circumstances when
deviation from the statutory mandate may be justified,
customers may request an exemption from the mandate.
Such exemptions have been granted to businesses that
provide perishable goods in the author's district.
SB 700's proposed alteration to the existing mandate
is an example of "incrementalist" legislation. If it
is deemed appropriate to exempt from the statutory
mandate counties with less than 50,000 residents, why
not counties with more than 50,000 residents? Thus,
SB 700 is an assault on the mandate that allows CALPIA
to exist.
Moreover, SB 700 runs counter to the State's policy
under Penal Code 2801: 1) To assure prisoners have
the opportunity to work productively and acquire or
improve effective work habits and occupational skills;
and, 2) 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.
While CALPIA perishable goods are competitively
priced, SB 700 would allow manufacturers to undercut
CALPIA prices with "loss leaders" thereby reducing
CALPIA's market share to a point where CALPIA could
not compete. In short, SB 700 enhances the ability of
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private sector entities to supplant and eliminate
CALPIA, the state's most successful rehabilitative
program.
In terms of the impact this exemption would have, PIA states:
Under SB 700, revenues to the Prison Industry
Revolving Fund could be reduced by over $4 million
dollars. Because inmates employed in CALPIA programs
are 26 to 30 percent less likely to recidivate than
the general population, the CDCR would incur
significant additional General Fund costs for
incarceration. Specifically, for the up to 60 inmates
no longer employed by CALPIA, SB 700 would reasonably
result in increased General Fund incarceration costs
of $784,000 per year.
The lost inmate work assignments would increase
General Fund costs to the CDCR by $300,000 if CDCR
seeks to replace the 60 lost CALPIA assignments with
vocational programming. The estimate is based on 2006
CDCR costs, which indicated for every 27 inmates the
cost for vocational education was $135,000, or $5,000
per inmate.
As the State's current fiscal crisis has eliminated
most vocational education at CDCR, it is highly
unlikely that the 60 inmates would receive any
vocational training prior to release, and this
exponentially increases their chances of returning to
prison.
Additionally, CALPIA programs are interdependent. SB
700 would negatively affect CALPIA's ability to
sustain the Career Technical Education (CTE) program
at Folsom State Prison for approximately 50 inmates.
The recidivism rate difference between the CTE program
(less than 15% recidivism) and CDCR's programming (60%
recidivism) is tremendous. CALPIA's CTE programs save
the State $1,102,500 in incarceration costs for every
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50 CTE positions.
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IS THERE EVIDENCE THAT THE CURRENT SYSTEM OF ALLOWING DGS TO
GRANT EXEMPTIONS WHERE APPROPRIATE IS NOT WORKING?
WOULD ESTABLISHING THIS EXEMPTION SET A PRECEDENT INVITING
REQUESTS FOR ADDITIONAL EXEMPTIONS?
6. Argument in Support
The Regional Council of Rural Counties states:
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 precedence over other vendors regardless of PIA's
price, quality, and 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
officials to site prison facilities to have good
paying jobs for their residents and opportunities for
local businesses. A key aspect of that undertaking
was that local businesses would be able to supply
various goods and services to the prison facilities.
Despite the current mandate to acquire PIA products,
RCRC believes that when one balances the costs, tax
revenues gained (both to the state and localities),
environmental quality impacts, the logistics of
supplying the products, and the quality of the
foodstuffs, certain products should be retained by
local suppliers, especially in rural communities where
a state prison is located.
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On a final note, we recognize the need to provide
inmates with life-skills that can be used to earn an
income (on the inside and out) and make restitution to
the victims. PIA performs this mission well.
However, when there is a clear advantage for CDCR to
acquire perishable products by a local vendor at a
cheaper price, the option should be made available.
7. Argument in Opposition
Service Employees International Union, Local 1000 states:
Compelling evidence shows that rehabilitation programs
can impact recidivism. Recent reductions to
vocational programs, due to loss of funding, have
meant a fifty to seventy percent cut in vocational
education programs in the prisons. Some of the
prisoners who were enrolled in vocational education
programs were subsequently enrolled in the Prison
Industry Authority programs when their programs
closed.
This legislation, if enacted, would mean that existing
vocational programs would face reductions if no
elimination. We oppose this legislation for several
reasons. The government should provide programs for
inmates so they have the skills when leaving prison to
become gainfully employed. The reason for the
Authority is to help inmates gain these skills. We
know that recidivism and thus the cost of
incarceration decreases when inmates leave prison with
a skill. Second, shuttering these programs will only
lead to more idleness for inmates. We have already
seen with the closure of the educational programs
reports of more violence in prisons. Finally, we
question if the few existing resources available for
vocational training in our prisons should be reduced
when they are serving less than ten percent of
incarcerated inmates.
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