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The Bottom Line: California's Prison Industry Authority
Imagine a half-billion dollar manufacturing company that uses slave labor, has little overhead, ignores state and federal laws regulating workplace safety, includes hazardous materials in the construction of its products, forces customers to buy those products under penalty of law, yet loses money. Now, imagine that this company is protected from bankruptcy and government interference. Protected because the government owns and operates the company. It's California's Prison Industry Authority. Why is this company still in business?
Some 41 other prison industry programs across the nation turned a profit in 1992-93. California's PIA lost $1.4 million on sales of $128.6 million. Florida, Texas, and North Carolina have the largest prison industries outside of California and compete with private businesses in the marketplace. Florida's PRIDE (Prison Rehabilitative Industries & Diversified Enterprises) program is a private, nonprofit corporation created by the Legislature in 1981. Unlike PIA, PRIDE doesn't employ civil servants.
PRIDE netted $4 million on gross sales of $77.6 million in 1994, and spent $635,000 assisting paroled prisoners. Just 18% of PRIDE alumni return to custody. PIA spends virtually nothing to help parolees, and the recidivism rate in California is over 75%.
Although the Texas Industries Division is prohibited from making money on 30% of its output, the program has turned a profit every year since its inception in 1963. TID employs 7,500 prisoners from a prison population of 94,000. California's PIA uses only 6,800 prisoners out of a 130,000 total. North Carolina's prison industry made $5.4 million on sales of $51.2 million in 1994. But, PIA has lost money five out of the twelve years it's existed. And, of these four states, only California requires government agencies, schools, libraries, and hospitals to buy prison made goods.
From furniture to eyeglasses, PIA manufactured wares are poorly made, overpriced, and often delivered months late. Don Green, purchasing agent for California State Polytechnic University, Pomona, needed chairs for the new computer lab. He could have bought them from a local retailer for about $58 each. However, California law forced him to order the furniture from the prison manufacturing empire. He waited a year for delivery, and paid twice the retail price. In 1994, state entities chose from 110 product lines and 2,000 items in the slickly printed PIA catalog, spending $135 million on prison made goods. The only ones who seem happy with the status quo are the civil service shop foremen, supervisors, salespeople, and administrators who make an average of $44,000 a year, much more than they could earn for similar jobs in the real world.
"It's a joke, absolutely, positively a joke. And everybody covers everybody's ass," said Leonard Greenstone, the lone dissident on the Prison Authority Board, in a recent Orange County Register interview. A black vocational instructor who didn't want to be identified for fear of retaliation described gross program mismanagement. "When I worked for PIA, my shop turned a profit. Pretty soon, I was warned to cut back on production. They told me it made the other supervisors look bad." Private business people think the law forbidding state agencies and other divisions from purchasing commodities on the open market should be abolished.
"It's like the factory system under communist rule. The workers and supervisors got paid whether their products sold or not. There was no reason for them to build quality merchandise because they had no competition," said Joe Harrington, retired Longshoreman, from Costa Mesa, California. The California Constitution forbids prisons from competing with private enterprise. Yet, that's exactly what they're doing. "The complaints we hear are that (PIA) is in direct competition with California business. You can't deny that," Lynn Wright, Governor Pete Wilson's government purchasing expert conceded. The competition isn't quite fair because PIA has a protected market.
PIA administrators claim the law giving them a protected market is necessary because prisons aren't permitted to sell goods to the general public. They also claim their products are more expensive because prisoners are unskilled, illiterate, and require constant supervision. While it's true PIA is barred from selling directly to the public in California, they are aggressively developing markets in foreign countries. They sell blue jeans and prison denim jackets with "California Department of Corrections"' stenciled on them in Dayglo orange to the Japanese. The PIA's excuses were considered by the Little Hoover Commission, a state watchdog agency, in a 1993 report.
In that report, prison industry managers also say outdated equipment, delays in processing orders for raw materials, the high turnover of prisoners, and random lockdowns by prison administrators further drive costs up and production down. The Commission was skeptical. "Despite these burdens, the inability of the PIA to routinely break even or post a profit is perplexing in light of the ability to set prices without fear of losing customers," their report concluded. One state lawmaker has proposed a change.
California Senator Richard Polanco authored Senate Bill 617. If passed into law, the bill would free state entities from the requirement to buy only from PIA. They would be at liberty to find better deals in the private sector. On May 11, 1995, the measure easily won approval in the state Senate. Joined by Senator Dan Boatwright, Polanco demanded a probe of PIA's finances and operations by the state Bureau of Audits. That investigation is expected to begin soon. At the most, insiders anticipate the ouster of Dave King, General Manager of the Prison Industry Board, and executive staff loyal to him. But, mismanagement isn't the only problem with PIA.
Materials used in the manufacturing of furniture the prison industry sells to state schools and hospitals are dangerous, flammable, and destructive to the environment. For example, urethane foam is purchased by the PIA Furniture Factory at Tehachapi prison's maximum security IV-B Facility. The large sheets of foam must be cut to size for use in chairs and couches. Cutting urethane foam in the unventilated shop poses a serious, potentially lethal, health threat to prisoners and civilian employees alike.
When the foam is cut with power saws, tiny particles are dispersed into the air. Trapped inside human lungs, these particles can be deadly. "Urethane foam particles are carcinogenic. And, after accumulating in the lungs, they can cause a condition similar to asbestositis." says John Diffenbaugh, a Captain with the Kern County Fire Department. The foam also bears a warning to consumers that it was manufactured with 1,1,1-trichloroethane, a substance known to destroy ozone in the upper atmosphere.
Urethane foam is also extremely flammable, and once ignited produces a toxic gas which can quickly overcome and kill anyone nearby. The California Furniture Association does not approve of the use of this foam in furniture. PIA ignores the danger, causing some employees to seek other jobs. "I'm transferring out of here," said a former PIA supervisor. "My father died of emphysema, and I've seen too many people with suspicious coughs in the shop. That damn dust will kill you." Foam dust fills the air at Tehachapi's Furniture Factory, and many prisoners working there develop a chronic cough. After Captain Diffenbaugh warned that the dust could cause serious illness, prisoners demanded exhaust fans to remove the particles from the shop air. Instead, they were given disposable paper face masks with labels that read. "This is not a filter. Prolonged use may be dangerous to your health." Meanwhile, it's politics and deliberate indifference as usual.
Governor Wilson is officially neutral on Polanco's bill, but strongly committed to PIA. "Prison Industry needs to expand, not contract, these positive efforts toward providing job skills and lessening the financial burden of state prison costs," he said in a 1992 video message. But, because PIA uses obsolete equipment and outmoded techniques, prisoners don't learn practical skills needed in the workplace outside. PIA executives claim they save taxpayers millions of dollars by allowing prisoners to earn time off their sentences for working. According to the legislative analysis of SB 617, however, that's just not true.
The conclusion that prison industry saves tax dollars by allowing prisoners to earn time off is based on the false assumption those prisoners wouldn't find other jobs and earn time off anyway. The savings guesstimate also supposes the Department of Corrections would have to create other activities for prisoners. The Little Hoover Commission found that PIA really didn't save taxpayers any money at all. "Through the mechanism of forcing these departments to purchase from the PIA, the costs of dealing with inmates are shifted throughout the state government but are still paid by the same public-provided dollar that would cover costs if they were contained in the Department of Corrections budget." So, what's the bottom line?
The bottom line is, the PIA, like the Department of Corrections itself, has become a welfare system for its employees. The sole purpose of PIA, it seems, is to furnish employees with big salaries for little work. It's not concerned with helping insure prisoners stand a chance of success on parole. It's not concerned with producing well made goods or turning a profit, either. One lifer at Tehachapi said, "Give me a year and I'd have this place making millions. Take that furniture factory out, and manufacture computer memory chips. Prisoners would gain job skills that are actually needed outside, and customers would get memory chips at prices comparable to Japanese chips." What a great idea!
But, PIA doesn't appreciate great ideas. And, Governor Wilson, counting on his base of faithful civil servants at election time will likely veto Polanco's bill just as he did other bills in 1991-92 aimed at reforming PIA. So, schools, already strapped for cash thanks to budget cuts, must continue to pay $3.56 for plastic binders they could buy at a stationery store for $1.55, and $695 for conference tables that run $279 at a furniture outlet. State hospitals will have chairs and couches in their waiting rooms made with highly flammable, toxic materials.
In a way, California's Prison Industry Authority is like the goose that laid the golden egg. As long as no one kills the goose, PIA employees, and the myriad vendors who make a living supplying the prison industry, continue getting the gold. The trouble is though, the goose is crapping all over everyone else.
Some 41 other prison industry programs across the nation turned a profit in 1992-93. California's PIA lost $1.4 million on sales of $128.6 million. Florida, Texas, and North Carolina have the largest prison industries outside of California and compete with private businesses in the marketplace. Florida's PRIDE (Prison Rehabilitative Industries & Diversified Enterprises) program is a private, nonprofit corporation created by the Legislature in 1981. Unlike PIA, PRIDE doesn't employ civil servants.
PRIDE netted $4 million on gross sales of $77.6 million in 1994, and spent $635,000 assisting paroled prisoners. Just 18% of PRIDE alumni return to custody. PIA spends virtually nothing to help parolees, and the recidivism rate in California is over 75%.
Although the Texas Industries Division is prohibited from making money on 30% of its output, the program has turned a profit every year since its inception in 1963. TID employs 7,500 prisoners from a prison population of 94,000. California's PIA uses only 6,800 prisoners out of a 130,000 total. North Carolina's prison industry made $5.4 million on sales of $51.2 million in 1994. But, PIA has lost money five out of the twelve years it's existed. And, of these four states, only California requires government agencies, schools, libraries, and hospitals to buy prison made goods.
From furniture to eyeglasses, PIA manufactured wares are poorly made, overpriced, and often delivered months late. Don Green, purchasing agent for California State Polytechnic University, Pomona, needed chairs for the new computer lab. He could have bought them from a local retailer for about $58 each. However, California law forced him to order the furniture from the prison manufacturing empire. He waited a year for delivery, and paid twice the retail price. In 1994, state entities chose from 110 product lines and 2,000 items in the slickly printed PIA catalog, spending $135 million on prison made goods. The only ones who seem happy with the status quo are the civil service shop foremen, supervisors, salespeople, and administrators who make an average of $44,000 a year, much more than they could earn for similar jobs in the real world.
"It's a joke, absolutely, positively a joke. And everybody covers everybody's ass," said Leonard Greenstone, the lone dissident on the Prison Authority Board, in a recent Orange County Register interview. A black vocational instructor who didn't want to be identified for fear of retaliation described gross program mismanagement. "When I worked for PIA, my shop turned a profit. Pretty soon, I was warned to cut back on production. They told me it made the other supervisors look bad." Private business people think the law forbidding state agencies and other divisions from purchasing commodities on the open market should be abolished.
"It's like the factory system under communist rule. The workers and supervisors got paid whether their products sold or not. There was no reason for them to build quality merchandise because they had no competition," said Joe Harrington, retired Longshoreman, from Costa Mesa, California. The California Constitution forbids prisons from competing with private enterprise. Yet, that's exactly what they're doing. "The complaints we hear are that (PIA) is in direct competition with California business. You can't deny that," Lynn Wright, Governor Pete Wilson's government purchasing expert conceded. The competition isn't quite fair because PIA has a protected market.
PIA administrators claim the law giving them a protected market is necessary because prisons aren't permitted to sell goods to the general public. They also claim their products are more expensive because prisoners are unskilled, illiterate, and require constant supervision. While it's true PIA is barred from selling directly to the public in California, they are aggressively developing markets in foreign countries. They sell blue jeans and prison denim jackets with "California Department of Corrections"' stenciled on them in Dayglo orange to the Japanese. The PIA's excuses were considered by the Little Hoover Commission, a state watchdog agency, in a 1993 report.
In that report, prison industry managers also say outdated equipment, delays in processing orders for raw materials, the high turnover of prisoners, and random lockdowns by prison administrators further drive costs up and production down. The Commission was skeptical. "Despite these burdens, the inability of the PIA to routinely break even or post a profit is perplexing in light of the ability to set prices without fear of losing customers," their report concluded. One state lawmaker has proposed a change.
California Senator Richard Polanco authored Senate Bill 617. If passed into law, the bill would free state entities from the requirement to buy only from PIA. They would be at liberty to find better deals in the private sector. On May 11, 1995, the measure easily won approval in the state Senate. Joined by Senator Dan Boatwright, Polanco demanded a probe of PIA's finances and operations by the state Bureau of Audits. That investigation is expected to begin soon. At the most, insiders anticipate the ouster of Dave King, General Manager of the Prison Industry Board, and executive staff loyal to him. But, mismanagement isn't the only problem with PIA.
Materials used in the manufacturing of furniture the prison industry sells to state schools and hospitals are dangerous, flammable, and destructive to the environment. For example, urethane foam is purchased by the PIA Furniture Factory at Tehachapi prison's maximum security IV-B Facility. The large sheets of foam must be cut to size for use in chairs and couches. Cutting urethane foam in the unventilated shop poses a serious, potentially lethal, health threat to prisoners and civilian employees alike.
When the foam is cut with power saws, tiny particles are dispersed into the air. Trapped inside human lungs, these particles can be deadly. "Urethane foam particles are carcinogenic. And, after accumulating in the lungs, they can cause a condition similar to asbestositis." says John Diffenbaugh, a Captain with the Kern County Fire Department. The foam also bears a warning to consumers that it was manufactured with 1,1,1-trichloroethane, a substance known to destroy ozone in the upper atmosphere.
Urethane foam is also extremely flammable, and once ignited produces a toxic gas which can quickly overcome and kill anyone nearby. The California Furniture Association does not approve of the use of this foam in furniture. PIA ignores the danger, causing some employees to seek other jobs. "I'm transferring out of here," said a former PIA supervisor. "My father died of emphysema, and I've seen too many people with suspicious coughs in the shop. That damn dust will kill you." Foam dust fills the air at Tehachapi's Furniture Factory, and many prisoners working there develop a chronic cough. After Captain Diffenbaugh warned that the dust could cause serious illness, prisoners demanded exhaust fans to remove the particles from the shop air. Instead, they were given disposable paper face masks with labels that read. "This is not a filter. Prolonged use may be dangerous to your health." Meanwhile, it's politics and deliberate indifference as usual.
Governor Wilson is officially neutral on Polanco's bill, but strongly committed to PIA. "Prison Industry needs to expand, not contract, these positive efforts toward providing job skills and lessening the financial burden of state prison costs," he said in a 1992 video message. But, because PIA uses obsolete equipment and outmoded techniques, prisoners don't learn practical skills needed in the workplace outside. PIA executives claim they save taxpayers millions of dollars by allowing prisoners to earn time off their sentences for working. According to the legislative analysis of SB 617, however, that's just not true.
The conclusion that prison industry saves tax dollars by allowing prisoners to earn time off is based on the false assumption those prisoners wouldn't find other jobs and earn time off anyway. The savings guesstimate also supposes the Department of Corrections would have to create other activities for prisoners. The Little Hoover Commission found that PIA really didn't save taxpayers any money at all. "Through the mechanism of forcing these departments to purchase from the PIA, the costs of dealing with inmates are shifted throughout the state government but are still paid by the same public-provided dollar that would cover costs if they were contained in the Department of Corrections budget." So, what's the bottom line?
The bottom line is, the PIA, like the Department of Corrections itself, has become a welfare system for its employees. The sole purpose of PIA, it seems, is to furnish employees with big salaries for little work. It's not concerned with helping insure prisoners stand a chance of success on parole. It's not concerned with producing well made goods or turning a profit, either. One lifer at Tehachapi said, "Give me a year and I'd have this place making millions. Take that furniture factory out, and manufacture computer memory chips. Prisoners would gain job skills that are actually needed outside, and customers would get memory chips at prices comparable to Japanese chips." What a great idea!
But, PIA doesn't appreciate great ideas. And, Governor Wilson, counting on his base of faithful civil servants at election time will likely veto Polanco's bill just as he did other bills in 1991-92 aimed at reforming PIA. So, schools, already strapped for cash thanks to budget cuts, must continue to pay $3.56 for plastic binders they could buy at a stationery store for $1.55, and $695 for conference tables that run $279 at a furniture outlet. State hospitals will have chairs and couches in their waiting rooms made with highly flammable, toxic materials.
In a way, California's Prison Industry Authority is like the goose that laid the golden egg. As long as no one kills the goose, PIA employees, and the myriad vendors who make a living supplying the prison industry, continue getting the gold. The trouble is though, the goose is crapping all over everyone else.
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