BILL ANALYSIS                                                                                                                                                                                                    




          Appropriations Committee Fiscal Summary

                                SB 126  (Polanco)

Hearing Date:5/17/99            Amended:4/27/99        
Consultant: Lisa Matocq         Policy Vote:Pub Saf 5-0
____________________________________________________________ 

BILL SUMMARY:  SB 126 (1) states legislative findings and  
intent related to the Prison Industry Authority (PIA), and  
(2) makes changes to existing legislative findings related  
to the purpose of imprisonment.

                         Fiscal Impact (in thousands)
  
Major Provisions                       1999-2000         2000-01        2001-02      
  Fund  

PIA                       Unknown increased costs, potentially            
Special*
                                           multimillions
Procurement               Potential unknown cost savings to                 
General/
                          state agencies                                        
        Various
Audits                    $ 100-140        $ 70-100     $ 70-100             
General
Display                   Minor, absorbable, increased costs               
General                         
 *Prison Industries Revolving Fund                    

STAFF COMMENTS:   This bill meets the criteria to be placed  
on the Suspense File.  Under current law, the PIA operates  
inmate work programs and provides industrial, agricultural  
and service enterprises to state and federal governments.   
According to a 1997 report by the Bureau of State Audits,  
PIA factories manufacture textiles to license plates to  
office furniture and employ 6,600 inmates.  For fiscal year  
1995-96, the PIA had sales of $147 million.
  
State departments and agencies are required to purchase any  
authorized PIA product or service regardless of price or  
availability and to report annually on the purchase of PIA  
products.  PIA may grant a waiver to allow an agency to  
purchase goods or services elsewhere if PIA cannot produce  
the product or can't do so in a timely manner.  Lower price  










is not a valid reason for requesting a waiver.   This bill:  
 

 states the intent of the Legislature that (1) the purpose  
  of PIA is to, among other things, provide productive work  
  and training resources for inmates thereby fostering  
  development of work force skills leading to increased  
  employability upon release, (2) the PIA products or  
  services purchased by state agencies are substantially  
  similar in either quality or cost to those available  
  through the private sector, and (3) state agencies may  
  request a waiver for products that do not constitute the  
  best value acquisition for the state. 
 expands the duties and powers of PIA, 
 requires the Department of Finance, in consultation with  
  the PIA and LAO, to develop a display in the annual  
  Budget Act of projected expenditures and revenues for  
  PIA, 
 requires the Bureau of State Audits to conduct a  
  performance and financial audit of the PIA every two  
  years, as specified,
 amends existing legislative findings related to the  
  purpose of punishment to specify that punishment shall  
  not be construed to preclude vocational and drug  
  treatment programs, and
 makes related changes. 

To the extent that state agencies are granted more waivers  
to purchase products or services elsewhere, there is an  
unknown, potentially significant, loss of revenues to PIA,  
and unknown, potentially significant, cost savings to state  
agencies. Specified inmates working in the PIA and other  
vocational programs are eligible for up to 1 day in  
sentence reduction credit for each day served.  According  
to CDC, there are currently 16,000 inmates on a waiting  
list to participate in work programs.  While on the waiting  
list, those inmates are only eligible for up to a 1/3  
sentence reduction credit.  To the extent that inmates  
participating in PIA work programs are displaced, there may  
be increased incarceration costs for a potential loss of  
sentence reduction credits.  To the extent that PIA retools  
some of its 73 factories in order to be more competitive,  
and provides additional work skills development programs,  
there are unknown increased costs, potentially  
multimillions.   LAO points out that there are unknown,  
potentially significant, incarceration savings to the  










extent that recidivism is reduced by improving the  
employability of inmates. 

The Department of Finance and the LAO estimate minor,  
absorbable increased costs to comply with the provisions of  
the bill.  The Bureau of State Audits estimates increased  
costs of $100,000-140,000 in the first year, and  
$70,000-$100,000 annually in subsequent years to comply  
with the audit provision of the bill. 

SB 1132 (Polanco) of 1998, which failed passage in Senate  
Governmental Organization, was similar to this bill.