BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1978|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 1978
Author: Hayden (D), et al
Amended: 6/27/00
Vote: 21
SENATE PUBLIC SAFETY COMMITTEE : 4-0, 4/25/00
AYES: Vasconcellos, Johnston, McPherson, Polanco
NOT VOTING: Burton, Rainey
SENATE APPROPRIATIONS COMMITTEE : 12-0, 5/25/00
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Johnson,
Kelley, Leslie, McPherson, Mountjoy, Perata, Vasconcellos
NOT VOTING: Karnette
SENATE FLOOR : 37-0, 5/31/00
AYES: Alarcon, Alpert, Bowen, Brulte, Burton, Chesbro,
Costa, Dunn, Escutia, Figueroa, Hayden, Haynes, Hughes,
Johannessen, Johnson, Johnston, Kelley, Knight, Leslie,
Lewis, McPherson, Monteith, Morrow, Mountjoy, Murray,
O'Connell, Peace, Perata, Polanco, Poochigian, Rainey,
Schiff, Sher, Soto, Speier, Vasconcellos, Wright
ASSEMBLY FLOOR : 55-19, 8/30/00 - See last page for vote
SUBJECT : Department of Corrections: Department of Youth
Authority:
contracts for inmate/ward telephone services
SOURCE : Author
DIGEST : This bill enacts legislative findings and
CONTINUED
SB 1978
Page
2
declarations pertaining to prison inmate and youth
authority access to telephone services and requires any
state contracts for such access to be negotiated and
awarded in a manner to provide for the lowest cost, as
specified.
Assembly Amendments added legislative clarifying intent
language.
ANALYSIS : Existing law provides that the Department of
General Services may acquire, install, equip, maintain, and
operate new or existing communications systems and
facilities. To accomplish that purpose, it may, in the
name of the state, enter into contracts, obtain licenses,
acquire property, install necessary equipment and
facilities, and do such other acts as will provide adequate
and efficient communications systems. Any system
established shall be available to all public agencies in
the state on such terms as may be agreed upon by the agency
and the department. (Government Code section 14931)
Existing law states that the director of the Department of
Corrections is vested with the supervision, management and
control of the state prisons and is responsible for the
care, custody, treatment, training, discipline, and
employment of a person confined in those prisons. The
director may prescribe rules and regulations for the
administration of the prisons. (Penal Code Sections 5054
and 5058)
Existing law creates the Department of the Youth Authority
under the direction of the Director of the Youth Authority.
(Welfare and Institutions Code sections 1700 et seq.)
Existing law provides that except as otherwise provided by
law, all money belonging to the state received from any
source whatever by any state agency shall be accounted for
to the Controller at the close of each month, or more
frequently if required by the Controller or the Department
of Finance, in such form as he/she prescribes, and on the
order of the Controller be paid into the treasury and
credited to the General Fund, provided that amounts
received as partial or full reimbursement for services
furnished shall be credited to the applicable
SB 1978
Page
3
appropriation. (Government Code section 16301)
This bill would enact legislative findings and declarations
and the following provision in law:
Any contract to provide telephone services to wards of
the Department of the Youth Authority or to inmates in
state prisons shall be negotiated and awarded in a manner
to provide for the lowest possible costs to wards and
inmates, and to pay for any expenses of the Department of
Corrections and the Department of the Youth Authority, as
well as for the reasonable costs of the Department of
General Services for establishing and administering any
necessary telephone contract, and profits to these
departments or the state shall not be a basis for
awarding a contract.
Legislative findings in this bill
The following legislative findings are included in this
bill:
1. The California prison system is comprised of 33
institutions that are often located in remote locations,
making it difficult for family and friends to visit
inmates.
2. Studies, advocates, and incarceration experts have
concluded that inmates who remain in contact with family
and loved ones are less likely to pose a threat to
prison staff or to reoffend once released.
3. Collect phone calls are often the only means by which
the more than 160,000 inmates confined in the California
prison system can directly communicate with family,
friends, and loved ones.
4. The State of California contracts with vendors through a
prescribed bidding process to provide telephone service
to prisons while maximizing its economic return through
telephone concessions agreements.
5. Billing rates for collect telephone calls from prisons
include a 33 to 43 percent commission beyond the
SB 1978
Page
4
provider's costs, which in 1998 generated $16 million
for the General Fund of the state.
6. The excessive rates resulting from the state commission
for collect telephone calls made from prisons makes it
difficult, if not impossible, for inmates to remain in
regular contact with family members and loved ones.
7. Therefore, it is the intent of the Legislature to assure
that affordable telephone services are available for
inmates within the custody of the Department of
Corrections and wards of the California Youth Authority,
and their families and loved ones.
8. In assuring affordable telephone service as specified,
it also is the intent of the Legislature to assure that
any awarded contract allows for full recovery of the
vendor's costs in performing the terms and conditions of
the contract and a reasonable margin of profit.
Brief History of the Inmate Phone Contracts
The history of revenues from inmate phone call contracts in
California began over a decade ago. At the same time that
the state began to collect revenues from such phone
services, counties began to do much the same in jails.
The following paragraph appears in the Senate Judiciary
Committee analysis of SB 1149 (Presley), as amended April
24, for an April 30, 1991, hearing:
In current practice, telephone companies enjoying a
concession to provide services to the inmates of the
Department of Corrections return a commission as a
percentage of revenue to the Department of Corrections
for the receipts they receive as a consequence of
monopolistic service to over 100,000 individuals.
These commissions have traditionally been deposited in
the Inmate Welfare Fund for the provision of
educational and recreational services to prisoners
whose families are the source of the revenue, though
in budget deliberations last year a portion of the
proceeds were diverted to the General Fund.
SB 1978
Page
5
Subsequent budgetary decisions resulted in all of the
revenues from the state inmate phone contract being
deposited in the state General Fund. It also appears that
the Department of General Services was urged to maximize
those revenues. For example, the Department of Corrections
responded in a 97/98 Supplemental Report to the Legislature
on Inmate Pay Telephone Access that increasing the number
of phones would not result in greater revenue. The
Legislative Analyst's Office was the source of the
recommendation that the Department of Corrections respond
to that issue. The Department of General Services has
traditionally dealt with the inmate/ward phone contract as
similar to any other concession contract where the state
attempts to maximize its receipts from vendors who provide
services on state property.
Last year, the LAO informed committee staff that the
Department of General Services indicated that actual
payphone revenues from CDC were $18.1 million in 1997-98.
Projections for 1998-99 and 1999-00 were $19.6 million each
year. An additional increment - but much smaller amount -
is received each from the Youth Authority ward phones and
the same contract also includes public phones at other
state facilities, such as state parks.
The Department of General Services administers the
inmate/ward telephone through the Public Access
Telecommunications System (PATS). The contract which
includes the inmate/ward system also includes pay phones at
other state locations, although at other locations callers
may choose not to make collect calls and they may dial
other phone service providers.
The correctional phone system which has evolved involves a
private company installing and maintaining pay phone
equipment - to specifications which include such items as
tamper-resistant housings - which may be used for inmate
and ward collect calls; each call is preceded by a notice
to the recipient that the call is originating in a
correctional or Youth Authority institution and there is an
ongoing "overlay" recording repeated during the call that
the call is being recorded; all calls are recorded and they
may be reviewed by state employees who also may monitor
calls as they are made. For example, calls may be
SB 1978
Page
6
triangulated so that if one phone number in a given
location is receiving multiple calls from numerous state
facilities, law enforcement may target those calls.
The current Department of General Services Request for
Proposal - RFP MSA-8003 - for the inmate phone system
originally included the following objectives:
1.To ensure the provision of high quality service;
2.To maximize the economic return to the state and
participating agencies from this pay telephone concession
arrangement;
3.To make the benefits of new, but proven, technology from
the public communications industry available to its pay
telephone users, clients, and consumers; and
4.To provide secure and reliable inmate/ward telephone
services throughout the state correctional facilities.
Addendum #16 dated December 21, 1999, revised the
objectives by deleting "2.", above, and revising "1." as
follows:
1.To ensure the provision of high quality service at
competitive prices.
NOTE: This short history does not mention the complicated
and sometimes confusing issues of telephone tariffs; the
role of the PUC and the FCC; deregulation in the delivery
of telephone services; surcharges and usage rates; and
Local, Intralata, Interlata, and Interstate and Intrastate
rate structures. Nor did it discuss in detail the concern
sheriff's and counties may express if the state inmate/ward
system is restructured since local entities do benefit from
a state contract which maximizes revenues since pursuant to
Public Contract Code section 12110 those local entities may
participate in the state's Master Contract (without instead
negotiating their own deal.)
Over the past year, several legislators have written to and
met with representatives of the Administration, including
the Department of General Services and the Department of
SB 1978
Page
7
Corrections.
For example, the Chairman of Senate Public Safety Committee
wrote to the director of the Department of General Services
on March 21, 1999, and asked for background information
about the then-new Request for Proposals for the
inmate/ward telephone system.
On August 23, 1999, the Chairman of the Senate Public
Safety Committee and others wrote again to the director of
the Department of General Services in a letter that
included the following:
We strongly encourage you to step into this issue and
direct DGS to alter its bid criteria so the winning
bidder will be determined not by the level of commission
it provides to the state, but rather on who provides the
lowest overall prices for a collect call. Obviously, it
would be inappropriate for the prison phone rates to be
so low that they fail to cover the state's expenses
associated with the program, but equally obvious is that
it is inappropriate for the rates to be so high that the
state reaps a windfall.
Subsequently, the DGS did revise the objectives of the RFP
as discussed in Comment 3, above. Further discussions
indicated the likelihood that the new RFP might lower
collect call phone rates somewhat, but that the assumption
was that collect calls would still be utilized and that the
commissions on such calls would perforce be far higher than
would be the case using a system primarily based on
something other than solely a collect call option.
On February 2, 2000, a letter was sent to the secretary of
the Youth and Adult Correctional Agency that included the
following:
After studying the issue for some time, we believe the
best way to reduce the cost of these calls would be to
allow inmates to make pre-paid station-to-station calls.
Under this concept, inmates would pre-pay for their calls
either by using calling cards or by charging calls to an
inmate phone account or to their inmate trust account
from which they also draw funds to make purchases at the
SB 1978
Page
8
canteen.
In addition to that alternative to the existing "collect
call only system," it would be possible for the state to
capitalize the security costs (monitoring
equipment/monitoring) and go to a debit system (get rid of
the surcharge). While a collect call option would likely
still be needed for some inmates in any system adopted, a
debit-card system with pre-approved numbers to call would
appear to address some of the concerns expressed about
ensuring that debit cards or numbers do not themselves
become valuable prison commodities.
Another alternative which has been suggested is to modify
the current RFP to eliminate the commission as an element
in the state contract for telephone service for California
Department of Corrections (CDC) prisoners and California
Youth Authority (CYA) wards. (The DGS has indicated that
doing that without changing from a collect call-only system
would not likely result in a "lower price per call" new
contract assuming phone companies concerned about contracts
with other states and within California would not be
willing to make collect calls for inmates cost as little as
direct dial calls in general.)
Regardless, the Administration is currently considering a
response to the latest legislative inquiries and the RFP
process has not been closed.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
Telephone services Unknown loss of revenues, potentially
General
$29,000 annually
SUPPORT : (Verified 5/26/00) (Unable to reverify at time
of writing)
SB 1978
Page
9
Concerned Family and Friends
OPPOSITION : (Verified 5/26/00) (Unable to reverify at
time of writing)
California Correctional Peace Officers Association
ARGUMENTS IN SUPPORT : Background provided by the author
includes the following:
The problem SB 1978 attempts to address is this: A
person making a 15-minute collect phone call from a phone
booth outside San Quentin state prison to Oakland across
the San Francisco Bay would cost about $2.55. An inmate
making the same call from inside the prison would pay
about $5 (Deborah Soloman, SF Chronicle, Aug. 17, 1999).
The cost charged to the inmate goes well beyond what is
necessary to provide a profit for the service provider
and for security measures associated with the phone call.
So why are inmates, or more accurately the inmates'
families or loved ones who are billed for the collect
call, paying such a steep price?
...Why are these calls so expensive? Unlike pay phones
for public use where the caller can choose what
long-distance provider to use and has access to various
rate-reducing options, calls from state prison are
handled exclusively by companies contracting with the
state. In California, those companies are MCI and GTE.
Currently, the long-distance rate for collect calls from
prison is about 50 cents per minute with a $3 surcharge.
Local calls can range from 15 to 30 cents per minute with
a $2.65 surcharge. Rates are the same regardless of the
day and time the call is placed. The rates are inflated,
in large part, because of a commission the state collects
by the phone service providers MCI and GTE. For each
dollar MCI collects from prison calls, it pays the state
44 cents. GTE pays 33 cents. (Deborah Soloman, SF
Chronicle, Aug. 17, 1999).
There are more than 160,000 inmates in California's
prison system with institutions from the Mexican to
Oregon borders. For many prisoners so far removed from
SB 1978
Page
10
their families, the phone is often their only direct
means of personal communication. With the state racking
in commissions up to 43 percent for each call, it doesn't
take a CPA to figure out this is a real moneymaker.
According to the Family Council (Family Members and
Friends of State Prisoners), the state made $16 million
last year from prison calls. The money went into the
General Fund. Prison calls are expected to generate even
more this year.
The current contracts with MCI and GTE have expired.
Extensions have been granted. The RFP for the new
contracts recognizes the state's obligation to assure
fair rates for the consumers. "The State wishes to
strike a balance between the Contractor's right to charge
market rates and the State's public policy responsibility
to ensure that its constituents, consumers and inmate
families and friends are not subject to price abuse?" it
states.
Yet, the RFP offers no hope of relief from the price
abuse currently suffered inmates' families and loved
ones. The RFP clearly states that the major objective
that must be met by the new service provider is "to
maximize the economic return to the State and
participating agencies from this pay telephone concession
arrangement."
Studies have repeatedly shown that inmates who remain in
contact with their families and loved ones are less
likely to reoffend. The state of California has an
interest in encouraging communication between its
prisoners and their families as a matter of public
safety. SB 1978 is an attempt to remove an economic
barrier to this communication.
ARGUMENTS IN OPPOSITION : The California Correctional
Peace Officers Association writes in opposition to this
bill that the existing state funds derived from the inmate
phone system should be maintained but that those funds:
...should be earmarked for use directly within the
Department of Corrections and the Department of the Youth
SB 1978
Page
11
Authority for the inmate welfare fund, victim services
and additional correctional officer training. Just such
a proposal was passed by the Legislature, but was vetoed
by former Governor Pete Wilson in 1991.
ASSEMBLY FLOOR:
AYES: Aanestad, Alquist, Aroner, Ashburn, Baldwin, Bates,
Bock, Calderon, Campbell, Cardoza, Cedillo, Corbett,
Correa, Cox, Cunneen, Davis, Ducheny, Dutra, Firebaugh,
Gallegos, Honda, Jackson, Kaloogian, Keeley, Knox, Kuehl,
Leach, Lempert, Longville, Lowenthal, Machado, Maldonado,
Margett, Mazzoni, McClintock, Migden, Nakano, Papan,
Reyes, Romero, Scott, Shelley, Steinberg, Strom-Martin,
Thomson, Torlakson, Villaraigosa, Vincent, Washington,
Wayne, Wesson, Wiggins, Wildman, Wright, Hertzberg
NOES: Ackerman, Battin, Brewer, Briggs, Dickerson, Florez,
Granlund, Havice, Leonard, Maddox, Olberg, Oller, Robert
Pacheco, Rod Pacheco, Pescetti, Runner, Strickland,
Thompson, Zettel
RJG:jk 8/31/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****