Report to Mississippi Legislature Re Doc Management of Commissary and Inmate Welfare Fund 2011

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#551

Joint Legislative Committee on Performance
Evaluation and Expenditure Review (PEER)
Report to
the Mississippi Legislature

The Department of Corrections’
Management of Commissary Services
and the Inmate Welfare Fund
The Mississippi Department of Corrections (MDOC) contracts with a third party to provide
commissary services for state prisons and the private correctional facilities that house state inmates.
In response to a citizen’s request, PEER reviewed MDOC’s management of commissary services and
the Inmate Welfare Fund, a statutory fund established to receive revenues (including net profits from
the operation of commissary services) that are to be used for the “benefit and welfare of inmates.”
Regarding MDOC’s management of commissary services:
•

MDOC negotiated its contract with a company from which it had previously purchased
canteen goods. Because MDOC did not procure the contract competitively, it cannot assure
that it receives goods of acceptable quality at the highest commission percentage possible
and, ultimately, that the largest possible amount of revenue flows into the Inmate Welfare
Fund.

•

MDOC’s contract does not ensure that the contractor sets commissary prices using a sound
methodology. Thus MDOC cannot assure that the contractor charges reasonable prices.

•

MDOC’s contract does not contain specific quality control provisions for commissary
products or a requirement for a formal inmate complaint process.

Regarding MDOC’s management of the Inmate Welfare Fund (IWF),
•

MDOC has improperly reduced the amount of money available to the IWF;

•

MDOC’s policies on IWF Committee composition do not reflect the requirements of state law
and the actual working membership of the IWF Committee does not comply with either
MDOC’s policy or with state law;

•

state law does not include requirements for IWF Committee attendance, a quorum for voting,
or stakeholder representation and neither MDOC nor the IWF Committee has established
formal, written policies or rules regarding these issues;

•

the IWF Committee has no formal, written criteria for making expenditures from the fund;
and,

•

MDOC has only recently complied with statutory requirements for reporting IWF financial
information.

Also, conflicting statutory requirements for deposits of the Inmate Welfare Fund make it
impossible for MDOC to comply with the law’s requirements, thus compromising oversight of the
fund.

June 14, 2011

PEER: The Mississippi Legislature’s Oversight Agency
The Mississippi Legislature created the Joint Legislative Committee on Performance
Evaluation and Expenditure Review (PEER Committee) by statute in 1973. A joint
committee, the PEER Committee is composed of seven members of the House of
Representatives appointed by the Speaker and seven members of the Senate appointed by
the Lieutenant Governor. Appointments are made for four-year terms, with one Senator
and one Representative appointed from each of the U. S. Congressional Districts and three
at-large members appointed from each house. Committee officers are elected by the
membership, with officers alternating annually between the two houses. All Committee
actions by statute require a majority vote of four Representatives and four Senators voting
in the affirmative.
Mississippi’s constitution gives the Legislature broad power to conduct examinations and
investigations. PEER is authorized by law to review any public entity, including contractors
supported in whole or in part by public funds, and to address any issues that may require
legislative action. PEER has statutory access to all state and local records and has
subpoena power to compel testimony or the production of documents.
PEER provides a variety of services to the Legislature, including program evaluations,
economy and efficiency reviews, financial audits, limited scope evaluations, fiscal notes,
special investigations, briefings to individual legislators, testimony, and other
governmental research and assistance.
The Committee identifies inefficiency or
ineffectiveness or a failure to accomplish legislative objectives, and makes
recommendations for redefinition, redirection, redistribution and/or restructuring of
Mississippi government. As directed by and subject to the prior approval of the PEER
Committee, the Committee’s professional staff executes audit and evaluation projects
obtaining information and developing options for consideration by the Committee. The
PEER Committee releases reports to the Legislature, Governor, Lieutenant Governor, and
the agency examined.
The Committee assigns top priority to written requests from individual legislators and
legislative committees. The Committee also considers PEER staff proposals and written
requests from state officials and others.

PEER Committee
Post Office Box 1204
Jackson, MS 39215-1204
(Tel.) 601-359-1226
(Fax) 601-359-1420
(Website) http://www.peer.state.ms.us

The Mississippi Legislature

Joint Committee on Performance Evaluation and Expenditure Review
PEER Committee

SENATORS

SAMPSON JACKSON
Vice Chair
TERRY BROWN
Secretary
SIDNEY ALBRITTON
MERLE FLOWERS
CINDY HYDE-SMITH
GARY JACKSON
NOLAN METTETAL
TELEPHONE:
(601) 359-1226
FAX:
(601) 359-1420

REPRESENTATIVES
HARVEY MOSS
Chair
WILLIE BAILEY
ALYCE CLARKE
DIRK DEDEAUX
WALTER ROBINSON
RAY ROGERS
GREG WARD

Post Office Box 1204
Jackson, Mississippi 39215-1204

OFFICES:
Woolfolk Building, Suite 301-A
501 North West Street
Jackson, Mississippi 39201

Max K. Arinder, Ph. D.
Executive Director
www.peer.state.ms.us

June 14, 2011
Honorable Haley Barbour, Governor
Honorable Phil Bryant, Lieutenant Governor
Honorable Billy McCoy, Speaker of the House
Members of the Mississippi State Legislature
On June 14, 2011, the PEER Committee authorized release of the report entitled The
Department of Corrections’ Management of Commissary Services and the Inmate
Welfare Fund.

Representative Harvey Moss, Chair

This report does not recommend increased funding or additional staff.

PEER Report #551

Table of Contents

Letter of Transmittal

...................................................................................................................................... i

List of Exhibits

..................................................................................................................................... v

Executive Summary

...................................................................................................................................vii

Introduction

.....................................................................................................................................1

Authority
.....................................................................................................................................1
Problem Statement....................................................................................................................................1
Purpose and Scope ....................................................................................................................................1
Method
.....................................................................................................................................2
MDOC’s Management of Commissary Services ..............................................................................................3
The Provision of Commissary Services at Correctional Facilities ................................................... 3
Pricing of Commissary Items..................................................................................................................8
Quality of Commissary Items .................................................................................................................9
MDOC’s Management of the Inmate Welfare Fund......................................................................................11
Statutory Provisions and Sources of Revenues .................................................................................11
Management of the Inmate Welfare Fund ..........................................................................................14
Recommendations

...................................................................................................................................29

Agency Response

...................................................................................................................................35

PEER Report #551

iii

PEER Report #551

List of Exhibits
1.

Major Provisions of MDOC’s Contract with Keefe Commissary .................................... 7

Flow of Revenue: Canteen Fund and Inmate Welfare Fund,
November 2007 through November 2010 ....................................................................... 13

Distribution of Total Commissary Sales to Canteen Fund and
Inmate Welfare Fund, November 2007 through November 2010................................ 14

Major Categories of Expenditures from the Inmate Welfare Fund,
November 2007 through November 2010 ........................................................................ 28

PEER Report #551

The Department of Corrections’
Management of Commissary Services
and the Inmate Welfare Fund
Executive Summary
Introduction
The Mississippi Department of Corrections (MDOC)
contracts with a third party for commissary servicesa for
the benefit of inmates, their families, and visitors.
Currently, the Department of Corrections has a contract
with Keefe Commissary, LLC, to provide commissary
services for Mississippi’s state prisons and those private
correctional facilities that house state inmates.
PEER received a citizen’s request for a review of “canteen
costs and operations” (i. e., commissary services),
including pricing, product quality, and use of funds. In
response to the citizen’s request, PEER sought to answer
several specific questions about MDOC’s management of
commissary services and the Inmate Welfare Fund (IWF).b

MDOC’s Management of Commissary Services
How does MDOC provide commissary services to inmates?
In 2007, MDOC negotiated a contract for commissary
services with a company from which it had previously
purchased canteen goods. State law does not require
MDOC to bid its contract with the commissary vendor.
However, because MDOC did not procure the contract
competitively, the department cannot assure that it is
receiving goods of acceptable quality at the highest
commission percentage possible and, ultimately, that the
largest possible amount of revenue flows into the Inmate
Welfare Fund.

In this report, commissary services refers to the manufacturing, storage, and delivery of goods,
by way of a third-party vendor, to inmates of the Mississippi Department of Corrections. In the
past, the state’s correctional facilities operated their own facilities or services, called “canteens,”
to serve this function. Applicable CODE sections refer to this function as “the canteen” or
“canteen services,” but for purposes of this report, PEER uses the term “commissary services.”

The Inmate Welfare Fund is a statutory fund established to receive revenues (including net
profits from the operation of commissary services) that are to be used for the “benefit and welfare
of inmates.”

PEER Report #551

vii

With regard to pricing of commissary items, how does MDOC ensure that prices are
reasonable?
Because inmates are under the care, custody, and control
of the state, the state should assure that inmates receive
an acceptable level of quality and service when they or
their families or visitors pay for commissary items.
MDOC’s contract with Keefe does not ensure that the
contractor determines commissary prices through a sound
methodology. Thus MDOC cannot assure that Keefe
charges inmates and their families reasonable prices for
commissary items.
With regard to quality of commissary items, how does MDOC ensure that inmates
receive items of acceptable quality?
According to canteen managers’ descriptions of the
process for delivery and distribution of commissary items,
inmates are allowed to make complaints regarding
commissary services.
However, MDOC’s contract with Keefe does not contain
specific quality control provisions for commissary
products or a requirement for a formal inmate complaint
process. Thus MDOC has no assurance that the vendor
will continue to follow this process throughout the
duration of the contract.

MDOC’s Management of the Inmate Welfare Fund
What is the Inmate Welfare Fund?
MISS. CODE ANN. Section 47-5-109 (1972) requires that
funds derived from canteen operations (i. e., commissary
sales) be deposited into a Canteen Fund. The Canteen
Fund serves as an operating account; certain costs
attributable to commissary services are charged as
operating costs (e. g., rent, utilities, and employee wages)
against profits earned. Any net profits and interest go to
the Inmate Welfare Fund, established by MISS. CODE ANN.
Section 47-5-158 (1972).
MISS. CODE ANN. Section 47-5-158 (1) (1972) requires that
the Inmate Welfare Fund be used “for the benefit and
welfare of inmates in custody of the department.” Section
47-5-158 (7) creates an Inmate Welfare Fund Committee
“to administer and supervise the operations and
expenditures” from the fund. The CODE specifies that the
committee is to be composed of seven members: the
Deputy Commissioner for Community Corrections, the
Deputy Commissioner of Institutions, the Superintendent
of the Parchman facility, the Superintendent of the Rankin
viii

PEER Report #551

County facility, the Superintendent of the Greene County
facility, and two members to be appointed by the
Commissioner of Corrections.
What money goes into the Inmate Welfare Fund?
The Inmate Welfare Fund receives net profits from
commissary sales, forty percent of MDOC’s telephone
commissions, interest income, and other revenues as
designated by the Commissioner of Corrections. From
November 2007 through November 2010, approximately
$12.7 million was made available from these sources to
the Inmate Welfare Fund Committee to be used for the
benefit and welfare of inmates.
Does MDOC comply with state laws regarding the Inmate Welfare Fund and does
the department use the fund to provide for the “benefit and welfare of inmates?”
Generally, MDOC’s actions regarding the Inmate Welfare
Fund cannot be described as violating the law. However,
PEER determined that:
•

MDOC has improperly reduced the amount of money
available to the Inmate Welfare Fund (see pages 15-16);

•

MDOC’s policies on IWF Committee composition do not
reflect the requirements of state law and the actual
working membership of the IWF Committee does not
comply with either MDOC’s policy or with state law
(see page 17);

•

state law does not include requirements for Inmate
Welfare Fund Committee attendance, a quorum for
voting, or stakeholder representation and neither
MDOC nor the Inmate Welfare Fund Committee has
established formal, written policies or rules regarding
these issues (see page 18);

•

the IWF Committee has no formal, written criteria for
making expenditures from the Inmate Welfare Fund
(see pages 19-24); and,

•

MDOC has only recently complied with statutory
requirements for reporting IWF financial information
(see pages 25-26).

Also, PEER found that conflicting statutory requirements
for deposits of the Inmate Welfare Fund make it
impossible for MDOC to comply with the law’s
requirements, thus compromising oversight of the Inmate
Welfare Fund (see pages 26-28).

PEER Report #551

Recommendations
1.

Prior to the expiration of the department’s current
contract with Keefe Commissary, LLC, the
department should utilize a competitive process to
procure a commissary contractor for a new contract
period.
As part of the process, the department should
develop and issue a formal request for proposals
(RFP) in order to locate companies interested in
providing commissary services to the department.
The RFP should clearly articulate the types of
services needed by the department and factors by
which the department will evaluate and score each
offeror’s proposal. In addition, the RFP should
require offerors to describe their qualifications to
provide commissary services to correctional facilities
in widely dispersed geographical regions. Offerors
should also be required to provide contact
information of references that could attest to such
qualifications.
The RFP should describe the department’s
expectations with regard to commissions, pricing,
and quality assurance, as described below.
Commissions—The RFP should require offerors to
describe fully the proposed commissions to be paid
to the department for the opportunity to provide
commissary services. Such description should
include the basis for computing commissary
commissions and the timeframe for remitting
commissions to the department.
Pricing—The RFP should require offerors to describe
fully their proposed sampling methods for setting
prices at the prison canteens to ensure that prices
charged by the canteens are reasonable and fair to
those purchasing through the canteen system.
Should MDOC continue to allow a comparison of
convenience store prices to be the basis for setting
canteen prices, the RFP should require offerors to
specify in their proposals the proposed locations,
types, and number of stores and products to be
sampled in order to ensure that sufficient data is
collected to determine the variation and central
tendency of product prices. In establishing
individual product prices, the commissary contractor
should be required to select the measure of central
tendency that best fits the distribution of the sample
price data. Should a commissary contractor

PEER Report #551

determine that prices should be adjusted, the RFP
should require an offeror to keep all records
pertaining to requested price adjustments, including
supporting sample data and calculations of central
tendency, and corresponding documentation of the
Commissioner’s action on the request (approval or
disapproval).
Quality Assurance—The RFP should require offerors
to describe fully their proposed processes for
ensuring the freshness and quality of goods sold
through commissary services. Such processes should
also include proposed performance indicators with
which MDOC could audit or gauge the quality of
service provided by the contractor. The RFP should
require an offeror to keep all records pertaining to
the company’s monitoring of its quality assurance
processes. In addition, the RFP should require an
offeror’s quality assurance proposal to include a
description of the recourse through which inmates
could express their dissatisfaction with quality or
delivery of goods purchased from prison canteens.
2.

The Legislature should amend MISS. CODE ANN.
Section 47-5-158 (1972) to clarify the department’s
fiscal management responsibilities over the Inmate
Welfare Fund. The Legislature should choose one of
the following three options:
•

Option One: Delete the requirement that IWF
funds be deposited into the State Treasury. By
deleting this requirement, no question could
arise as to whether the Department of
Corrections can operate the fund through a bank
account without the controls customarily applied
to the expenditures of public funds.
If this option is selected, the Legislature should
further amend MISS. CODE ANN. Section 47-5-158
(1972) to require that the Inmate Welfare Fund
Committee adopt rules that set out standards for
appropriate use of the fund. Such standards
should define what types of items will constitute
allowable purchases for inmate welfare.
Additionally, the Legislature should further
amend the same section to:

PEER Report #551

establish a quorum requirement for the IWF
Committee (e. g., four members);

require the appointment of a person to
represent the interests of inmates’ families;

•

set minimum attendance requirements for
committee members;

require the committee to adopt a mission
statement to guide the development of any
policies and procedures the committee
adopts regarding the use of the Inmate
Welfare Fund; and,

require the committee to conduct needs
assessments to determine what types of
purchases should be made for the benefit of
inmates. Such assessments should seek
information not only from MDOC personnel,
but also from families of inmates, as well as
inmates.

Option Two: Delete the provision regarding
MDOC’s authority to keep the IWF funds in a
bank account and require that they be deposited
to a special fund from which the Inmate Welfare
Fund Committee may make disbursements in
accordance with appropriations authority. Under
this option, the money would be deposited to a
Treasury fund and be withdrawn only on
Treasury warrants. The Department of
Corrections would have to obtain appropriations
authority to make any withdrawals from the
fund.
If this option is selected, the Legislature should
further amend MISS. CODE ANN. Section 47-5-158
(1972) to require that the Inmate Welfare Fund
Committee adopt rules that set out standards for
appropriate use of the fund. Such standards
should define what types of items will constitute
allowable purchases for inmate welfare.
Additionally, the Legislature should further
amend the same section to:

xii

establish a quorum requirement for the IWF
Committee (e. g., four members);

require the appointment of a person to
represent the interests of inmates’ families;

set minimum attendance requirements for
committee members;

require the committee to adopt a mission
statement to guide the development of any
policies and procedures the committee
adopts regarding the use of the Inmate
Welfare Fund; and,
PEER Report #551

•

Option Three: Abolish the Inmate Welfare Fund
and deposit all funds derived from commissary
operations and other IWF revenue sources into
the state’s general fund. This would entail
repealing CODE Section 47-5-158 and amending
Section 47-5-109 to provide that canteen profits
be deposited to the General Fund.

To aid in oversight and public policy decisionmaking
regarding MDOC, the Legislature should amend MISS.
CODE ANN. Section 47-5-109 (1972) to require MDOC
to submit annual financial statements of the Canteen
Fund to the Chairs of the House and Senate
Corrections committees, Legislative Budget Office,
and the Corrections Auditor.

In the event that the Legislature adopts Option One
set out above, in compliance with MISS. CODE ANN.
Section 47-5-158 (5) (1972), MDOC officials should
continue to prepare an annual report for the Inmate
Welfare Fund that includes a summary of
expenditures from the fund by major categories and
by individual facility and should submit the annual
report to the chairs of the House and Senate
Corrections committees, the Legislative Budget
Office, and the Corrections Auditor. Additionally, in
compliance with MISS. CODE ANN. Section 47-5-158
(5) (1972), MDOC should continue to prepare
quarterly consolidated and individual financial
statements and submit them to the Corrections
Auditor.

The MDOC should refine its standard operating
procedures to include defining permissible costs of
operation for the Canteen Fund to ensure that only
necessary, canteen-related expenditures are being
subtracted from total profit prior to the funds being
placed in the Inmate Welfare Fund, as required by
MISS. CODE ANN. §47-5-109 (1972).
These expenditure guidelines should address, but
not be limited to:
•

PEER Report #551

which canteen employees’ salaries and wages
may be paid from the fund and the job
descriptions for those positions; and,

xiii

•

specific criteria that would qualify an
expenditure as one for a “canteen-related
service,” including those related to the canteen
warehouse, services that are offered by the
MDOC as part of its agreement with a third-party
vendor, and items/services necessary to
accomplish those duties.

For More Information or Clarification, Contact:
PEER Committee
P.O. Box 1204
Jackson, MS 39215-1204
(601) 359-1226
http://www.peer.state.ms.us
Representative Harvey Moss, Chair
Corinth, MS 662-287-4689
Senator Sampson Jackson, Vice Chair
Preston, MS (601) 677-2305
Senator Terry Brown, Secretary
Columbus, MS (662) 329-3399

xiv

PEER Report #551

The Department of Corrections’
Management of Commissary Services
and the Inmate Welfare Fund
Introduction
Authority
The PEER Committee reviewed the Mississippi Department
of Corrections’ (MDOC’s) commissary services contract and
operations. PEER also reviewed MDOC’s management of
the Inmate Welfare Fund, a statutory fund established to
receive revenues (including net profits from commissary
services) that are to be used for the “benefit and welfare of
inmates.” The Committee acted in accordance with MISS.
CODE ANN. Section 5-3-51 et seq. (1972).

Problem Statement
The Department of Corrections contracts with a third
party for commissary services1 for the benefit of inmates,
their families, and visitors. Currently, the department has
a contract with Keefe Commissary, LLC, to provide
commissary services for Mississippi’s state prisons and
those private correctional facilities housing state inmates.
PEER received a citizen’s request for a review of “canteen
costs and operations” (i. e., commissary services),
including pricing, product quality, and use of funds.

Purpose and Scope
In response to the citizen’s request, PEER sought to answer
several specific questions.
Regarding MDOC’s management of commissary services:
•

How does MDOC provide commissary services to
inmates?

PEER Report #551

•

With regard to pricing of commissary items, how does
MDOC ensure that prices are reasonable?

•

With regard to quality of commissary items, how does
MDOC ensure that inmates receive items of acceptable
quality?

Regarding MDOC’s management of the Inmate Welfare
Fund (i. e., a statutory fund established to receive revenues
[including net profits from the operation of commissary
services] that are to be used for the “benefit and welfare of
inmates”):
•

What is the Inmate Welfare Fund?

•

What money goes into the Inmate Welfare Fund?

•

Does MDOC comply with state laws regarding the
Inmate Welfare Fund and does the department use the
fund to provide for the “benefit and welfare of
inmates”?

PEER did not evaluate the performance of MDOC’s
commissary contractor (Keefe Commissary, LLC).

Method
In conducting this review, PEER:
•

reviewed the provisions of MISS. CODE ANN. §47-5-158
(1972) regarding the Inmate Welfare Fund and
provisions of MISS. CODE ANN. §47-5-109 (1972)
regarding the Canteen Fund;

•

interviewed personnel of the Department of Finance
and Administration (DFA), the Department of
Corrections, and Keefe Commissary, LLC;2

•

analyzed the Department of Corrections’ rules,
regulations, and practices related to Canteen Fund and
Inmate Welfare Fund expenditures and operations;

•

reviewed Canteen Fund and Inmate Welfare Fund
financial records for the period of November 2007
through November 2010;

•

reviewed minutes of the Inmate Welfare Fund
Committee meetings from November 2007 through
November 2010; and,

•

interviewed members of the Inmate Welfare Fund
Committee.

On November 2, 2007, MDOC contracted with G. T. Enterprises for commissary services for its
facilities. In 2008, G.T. Enterprises sold business operations to Centric Group and the company
took over the contract, resulting in a proprietary company, Keefe Commissary, LLC, taking
responsibility for providing services for Mississippi.

PEER Report #551

MDOC’s Management of Commissary Services
In this chapter, PEER addresses the following questions:
•

How does MDOC provide commissary services to
inmates?

•

With regard to pricing of commissary items, how does
MDOC ensure that prices are reasonable?

•

With regard to quality of commissary items, how does
MDOC ensure that inmates receive items of acceptable
quality?

The Provision of Commissary Services at Correctional Facilities
How does MDOC provide commissary services to inmates?
MDOC negotiated a contract for commissary services with a company from which it
had previously purchased canteen goods. Because MDOC did not procure the
contract competitively, the department cannot assure that it is receiving goods of
acceptable quality at the highest commission percentage possible and, ultimately,
that the largest possible amount of revenue flows into the Inmate Welfare Fund.

MDOC’s Contract for Commissary Services
In November 2007, MDOC chose to outsource its commissary services
rather than provide such services in-house.
Prior to entering into a contract for commissary services,
MDOC purchased bulk quantities of canteen goods (e. g.,
cigarettes, crackers, noodles, and cookies), stored them in
warehouses at each correctional facility, then bagged and
delivered them to inmates. Because MDOC had purchased
the majority of its canteen goods from G. T. Enterprises,
the department made the decision to allow that company
to provide commissary bagging and delivery services to
the Central Mississippi Correctional Facility (CMCF) in
Rankin County on a pilot basis. (MDOC chose CMCF for
the pilot test because G. T. Enterprises had a warehouse
located in Rankin County.) Later, MDOC chose to enter
into a contract with G.T. Enterprises on November 2, 2007,
to supply commissary services to state prisons and those
private correctional facilities housing state inmates (see
Exhibit 1, page 7).
On March 25, 2008, G. T. Enterprises assigned its
commissary services contract to Centric Group (doing
business as Keefe Commissary, LLC), resulting in Keefe
becoming responsible for commissary services. MDOC’s
current contract for commissary services covers the period

PEER Report #551

January 1, 2008, through December 31, 2011. Exhibit 1,
page 7, contains the major provisions of MDOC’s contract
with Keefe for commissary services.

No Competitive Procurement of Commissary Contract
State law does not require MDOC to bid its contract with the commissary
vendor. However, because the department did not use a competitive
procurement process, MDOC cannot assure that it is receiving the highest
commission percentage possible and, ultimately, the largest possible
amount of revenue flowing into the Inmate Welfare Fund.
The state has provisions of law addressing the competitive
procurement of goods and personal services. MISS. CODE
ANN. Section 31-7-1 et seq. (1972) addresses the
procurement of commodities for use by state agencies.
Additionally, MISS. CODE ANN. Section 26-9-120 (1972)
establishes a competitive process for state agencies’
procurement of personal services. In the case of
commissary services, it appears to PEER that neither the
commodities provisions nor the personal service
contracting provisions are applicable, since the
commissary service provider is not providing commodities
or services to the Department of Corrections. The
department’s General Counsel also concluded that no
statute or regulation would require MDOC to conduct a
formal RFP process for this contract.
MDOC’s Procurement of the Commissary Contract
Rather than utilizing a competitive process to locate a commissary
contractor, MDOC negotiated a contract with G.T. Enterprises, a
company from which it had previously purchased canteen goods.
According to MDOC managers, the department had
contemplated outsourcing commissary services at its
correctional facilities for several years. The department
considered the primary benefits of outsourcing to be the
elimination of:
•

risks of storing large perishable inventories on prison
grounds;

•

problems associated with managing canteen staff in
various correctional facilities; and,

•

challenges associated with ordering from suppliers and
ensuring that canteen items were in stock.

Because G. T. Enterprises had functioned as the
department’s largest supplier of canteen goods and
because, according to MDOC officials, the department had
had a positive experience with the company on a pilot
basis at CMCF, MDOC selected the company to provide
commissary services to state prisons and those private

PEER Report #551

correctional facilities housing state inmates, entering into
a contract on November 2, 2007.
The department did not utilize a formal request for
proposals to determine whether there were other
commissary service companies interested in providing
such services to the department. Rather, the department
entered into negotiations with G. T. Enterprises and
eventually signed a contract with the company for the
provision of commissary services on a statewide basis.
As stated on page 4, MDOC was not subject to any specific
statutory requirements with regard to the procurement of
commissary services. However, because public entities are
bound by responsibility to expend resources efficiently,
effectively, and fairly, they should adhere to effective
contracting processes or a “best practices” model. One
such model for procurement is the American Bar
Associations’ Model Procurement Code for State and Local
Governments. The primary purpose of the Code was to
help create transparent, competitive, and reliable
processes by which public funds could be expended
through contracts with private sector businesses.
With regard to competitive procurement, the ABA Model
Procurement Code recommends the following components
in the procurement process and that they be followed in
this general order:
•

developing a request for proposals detailing the
services to be provided;

•

providing public notice;

•

receiving proposals;

•

developing evaluation factors;

•

holding discussions with responsible offerors and
allowing revisions to proposals;

•

selecting a vendor for award; and,

•

holding debriefings with proposers that were not
selected.

Because it should have been the department’s intent to
select a commissary services provider to make goods of
acceptable quality available for purchase while maximizing
commissary revenues at the least cost (see page 9 for a
discussion of the quality of commissary items), it was
imperative that the department adhere to accepted
competitive procurement principles such as those
promulgated by the American Bar Association. In
correspondence to department managers regarding this
subject on January 14, 2011, MDOC’s General Counsel,
while noting that no state law required the department to
use a request for proposals process, noted that “a
comparison of services, products, prices as well as any

PEER Report #551

other factors that MDOC deems important that are offered
by different vendors would be advisable.”
Commissary Commissions Affect the Amount of Revenue Flowing Into
the Inmate Welfare Fund
MDOC’s contract with the commissary vendor sets the percentage
that the department receives from commissary sales. The money
earned from this commission is used to pay for commissary
operations and the remainder goes to the Inmate Welfare Fund.
Thus the commission percentage that MDOC agrees to in the
commissary contract ultimately affects the amount of money
flowing into the Inmate Welfare Fund.
Although state law does not require MDOC to use a
competitive procurement process for the commissary
contract, the department receives a commission from the
services provided and uses the revenue for canteen
operations. A portion of this money ultimately flows into
the Inmate Welfare Fund (see pages 11-12).
As noted in Exhibit 1, page 7, under the current contract
MDOC receives a 29.4% commission on total commissary
sales3 per month from the public facilities and 24%
commission on commissary sales at the private facilities.
During the period November 2007 through November
2010, these commissions amounted to $7,661,741 (see
page 12).
Because the department did not procure the commissary
contract competitively, neither the department nor PEER
has any basis to determine whether the department could
have received higher commissions from another
commissary services contractor. However, it is quite
possible that the use of a competitive market mechanism,
such as a bid, could have yielded higher commissions
because firms interested in obtaining state business would
have known that offering the state more advantageous
terms would have placed them in a more competitive
position in comparison to other firms. Higher commission
percentages could have generated additional revenues for
the Inmate Welfare Fund.

Excludes sales tax amounts, stamped postcard sales, and postage stamp sales.

PEER Report #551

Exhibit 1: Major Provisions of MDOC’s Contract with Keefe
Commissary
Type of Service Provided:
Keefe stocks commissary items in a centralized warehouse and
provides a menu from which inmates may order. Keefe fills
orders weekly and handles the packaging and delivery of items to
the facilities.

Facilities Served:
Public Facilities--Central Mississippi Correctional Facility,
Mississippi State Penitentiary, and South Mississippi Correctional
Institution.
Private Facilities--Delta, East Mississippi, Marshall County, Walnut
Grove Youth, and Wilkinson County.
The county and county/regional facilities still operate individual
canteens and are not covered by the contract with Keefe.

Payment Provisions:
MDOC receives a 29.4% commission on total commissary sales
per month at public facilities and 24% commission on
commissary sales at the private facilities. From its commissions,
Keefe pays for the cost of commissary goods sold and operating
expenses associated with the contract.
<

Keefe receives a 70.6% commission on total commissary sales
per month at public facilities and 76% commission on
commissary sales at the private facilities.
MDOC receives a 10% commission on visitation bags (i.e., prepackaged bags available for purchase by families during
visitation) sold by Keefe, with Keefe receiving a 90% commission
on such sales.
Keefe remits sales taxes collected on sales monthly to the
Mississippi Department of Revenue.

Pricing of Products:
Keefe sets prices based on “the average of convenience store
prices” determined through a biannual survey of convenience
store pricing (with the price increase to be approved by the
Commissioner of Corrections).

SOURCE: PEER analysis of MDOC’s contract with Keefe.

Excludes sales tax amounts, stamped postcard sales, and postage stamp sales.

PEER Report #551

Pricing of Commissary Items
With regard to pricing of commissary items, how does MDOC ensure that prices are
reasonable?
MDOC’s contract with Keefe does not ensure that the contractor determines
commissary prices through a sound methodology. Thus MDOC cannot assure that
Keefe charges inmates and their families reasonable prices for commissary items.
Because inmates are under the care, custody, and control
of the state, the state should assure that inmates receive
an acceptable level of quality and service when they or
their families or visitors pay for commissary items.
As noted in Exhibit 1, page 7, MDOC’s contract with Keefe
requires that Keefe set the prices of items based on “the
average of convenience store prices” and that to determine
this average, Keefe is to survey convenience store prices
two times per year and request price adjustments for
commissary items from the Commissioner of Corrections.
In 2009 and 2010, Keefe surveyed two and four stores,
respectively, to determine what price adjustments to
suggest to MDOC for the Commissioner’s approval. MDOC
has no documentation of the location of the stores
surveyed or how the determination was made to survey
these particular stores. According to the Keefe
representative assigned to MDOC, commissary prices have
had two price increases since Keefe took over the contract.
MDOC could not provide any documentation showing that
Keefe had formally requested any price increases or the
Commissioner’s approval of any price increases.
According to the Deputy Commissioner of Administration
and Finance, the Commissioner will only allow one price
adjustment per year; therefore, Keefe only conducts one
price survey annually.
PEER found that MDOC’s contract with Keefe does not
specify where or how price surveys will be conducted. The
contract does not specify a selection method for the
convenience store price survey (e. g., number of stores to
be surveyed, location of stores, or a range of miles within
which stores should be surveyed) or a sampling procedure
to be used. Thus the contract does not ensure that the
contractor’s survey contains an adequate representation of
convenience stores, including products and prices.
Although PEER is not suggesting that any previous
commissary price increases were unreasonable, because
MDOC has not specified a pricing methodology in its
contract with Keefe, the department cannot protect
inmates and families from unreasonable price increases
for commissary items.

PEER Report #551

Quality of Commissary Items
With regard to quality of commissary items, how does MDOC ensure that inmates
receive items of acceptable quality?
According to canteen managers’ descriptions of the process for delivery and
distribution of commissary items, inmates are allowed to make complaints
regarding commissary services. However, MDOC’s contract with Keefe does not
contain specific quality control provisions for commissary products or a
requirement for a formal inmate complaint process.

Facilities’ Delivery and Distribution of Commissary Items
MDOC’s policies regarding delivery and distribution of commissary items
applied to the old canteen system and the department has not updated
them since implementing the agreement with the commissary vendor.
However, according to canteen managers, in practice, the correctional
facilities have a basic, functioning quality assurance and complaint
process for commissary services.
Although the Keefe contract covers state prisons and
those private correctional facilities housing state inmates,
commissary management differs by facility. At Central
Mississippi Correctional Facility and South Mississippi
Correctional Institution, Keefe staff serve as commissary
managers. At Parchman Penitentiary, MDOC staff serve as
commissary managers. At each of the private facilities
covered by the Keefe contract, the private facility’s staff
serve as commissary managers.
MDOC’s policies regarding delivery and distribution of
commissary items applied to the old canteen system and
the department has not updated them since implementing
the agreement with the commissary vendor. However,
according to commissary managers,4 the following is the
practice used at both public and private facilities to assure
that inmates receive goods of acceptable quality in their
commissary orders.

•

Once commissary goods arrive at the facility
warehouse via a Keefe representative, the commissary
staff sorts them by inmate unit and custody level and
then distributes them. Sometimes at larger facilities,
sorting and distribution take more than one day.

•

The inmate may individually inspect the items, in the
presence of commissary staff, for quality of the goods
or correctness of the order and at the end of the
process signs the invoice as a statement that he or she
has verified that all items are present and of an
acceptable level of quality. The inmates also have the
option to simply sign the invoice and take the bag

PEER did not perform on-site inspections of actual quality assurance practices at each facility.

PEER Report #551

(should they not want to go through the items for
privacy reasons).
•

Should the inmate determine that an item is damaged
or missing, the commissary staff person notes it on the
invoice, which is then turned over to the commissary
manager, who is responsible for reviewing the error
and reconciling the problem with Keefe. This generally
results in Keefe shipping the correct or missing item
during the next shipping period. In some cases, Keefe
uses surplus items gained from incorrect shipments
from other inmates to fill existing needs before the
entire shipment is sent back to Keefe; however, this is
contingent upon the needed goods being in the surplus
for that week.

Thus, according to commissary managers, inmates have
the opportunity to determine whether they received the
proper items in their commissary order and whether the
items are in acceptable condition.

The Commissary Contract Does Not Ensure that Inmates Will
Receive Acceptable Quality Products
Despite a basic, functioning practice for handling complaints by inmates
regarding item quality or invoice/item discrepancies, MDOC has no
assurance that the vendor will continue to follow this process throughout
the duration of the contract because neither the request for proposals
nor the contract with Keefe contained requirements for a quality
assurance process.
Based on PEER’s interviews with commissary staff, inmates
are afforded a reasonable opportunity to obtain
replacements for items missing from their commissary
bags. However, even if MDOC updates its policies
regarding quality assurance and complaints (see page 9),
the contractor is not bound by departmental policy, but by
whatever requirements are specified in the contract. The
commissary services contract does not contain specific
requirements for a formal complaint process nor does it
contain specific quality assurance requirements for
commissary goods inspection prior to distribution (e. g.,
checking for expiration dates). Thus the department
cannot assure that the contractor will continue to provide
products of acceptable quality and follow a complaint
process for inmates.

PEER Report #551

MDOC’s Management of the Inmate Welfare Fund
In this chapter, PEER addresses the following questions:
•

What is the Inmate Welfare Fund?

•

What money goes into the Inmate Welfare Fund?

•

Does MDOC comply with state laws regarding the
Inmate Welfare Fund and does the department use the
fund to provide for the “benefit and welfare of
inmates”?

Statutory Provisions and Sources of Revenues
What is the Inmate Welfare Fund?
MISS. CODE ANN. Section 47-5-128 (1972) established the Inmate Welfare Fund to
receive revenues (including net profits from the operation of commissary services)
to be used for the “benefit and welfare of inmates.”
MISS. CODE ANN. Section 47-5-109 (1972) requires that
funds derived from canteen operations (i. e., commissary
sales) be deposited into a Canteen Fund. The Canteen
Fund serves as an operating account; certain costs
attributable to commissary services are charged as
operating costs (e. g., rent, utilities, and employee wages)
against profits earned. Any net profits and interest go to
the Inmate Welfare Fund, established by MISS. CODE ANN.
Section 47-5-158 (1972).
CODE Section 47-5-158 (1) (1972) requires that the Inmate
Welfare Fund be used “for the benefit and welfare of
inmates in custody of the department.” Section 47-5-158
(7) creates an Inmate Welfare Fund Committee “to
administer and supervise the operations and
expenditures” from the fund. The CODE specifies that the
committee is to be composed of seven members: the
Deputy Commissioner for Community Corrections, the
Deputy Commissioner of Institutions, the Superintendent
of the Parchman facility, the Superintendent of the Rankin
County facility, the Superintendent of the Greene County
facility, and two members to be appointed by the
Commissioner of Corrections.

PEER Report #551

What money goes into the Inmate Welfare Fund?
The Inmate Welfare Fund receives net profits from commissary sales, forty percent
of MDOC’s telephone commissions, interest income, and other revenues as
designated by the Commissioner of Corrections. From November 2007 through
November 2010, approximately $12.7 million was made available from these
sources to the Inmate Welfare Fund Committee to be used for the benefit and
welfare of inmates.
Exhibit 2, page 13, depicts the flow of revenues from
commissary sales through the Canteen Fund to the Inmate
Welfare Fund. In addition to revenue from commissary
sales that flows through the Canteen Fund, the Inmate
Welfare Fund receives other revenues, including
commissions from deposits into inmate banking via
Western Union and CyberSuite (Keefe Commissary, LLC),
telephone commissions, interest earned on the IWF,
donations, income from vending, and other revenues as
may be designated by the Commissioner of Corrections.
Exhibit 3, page 14, shows the distribution of total sales
revenues from commissary operations from November
2007 through November 2010. For this period,
commissary sales and other income totaled approximately
$24.1 million. Of this amount, MDOC paid approximately
$16.4 million to Keefe for the cost of commissary goods
sold and Keefe’s share of profits. The remaining
approximately $7.6 million represents MDOC’s share of
profits from commissary operations. Of this amount,
MDOC used approximately $4.7 million (60%) for canteen
operating expenses. This amount includes approximately
$956,630 MDOC expended from the Inmate Welfare Fund
for the reimbursement of canteen employee salaries.
Finally, the remaining 40% of commissary sales
(approximately $3 million) was made available for the
benefit and welfare of inmates.
From November 2007 through November 2010, the total
amount from all sources that was made available to the
Inmate Welfare Fund Committee for the benefit and
welfare of inmates was approximately $12.7 million.

PEER Report #551

Exhibit 2: Flow of Revenue: Canteen Fund and Inmate Welfare Fund, November
2007-November 2010

Commissary
Sales

Keefe
Contract

Canteen Fund

R
e
v
e
n
u
e
s

Other Income
(Interest
Income, etc.)

Canteen
Operations

Phone
Commissions

Welfare and
Benefit of
Inmates

Inmate Welfare
Fund
Other Revenue
Sources
(Donations,
Interest,
Vending, etc.)

E
x
p
e
n
d
i
t
u
r
e
s

Telecommunications and
Farming

Sales revenue from commissary purchases flows into the Canteen Fund. Other income also comes
into the Canteen Fund (e. g., interest income). Money from the Canteen Fund then goes to pay
Keefe its share of revenues. The Canteen Fund then pays expenses required to operate
commissary services, such as salaries, rent, and utilities. Remaining Canteen Fund money flows
to the Inmate Welfare Fund.
Once in the Inmate Welfare Fund, canteen profits are mixed with revenue from other sources,
including telephone commissions. One hundred percent of phone commissions is sent to the IWF,
but only 40% may be used for IWF purposes, per MISS. CODE ANN. Section 47-5-158 (1972). The
remaining 60% is sent to MDOC telecommunications and MDOC farming operations. Salaries for
some commissary workers are reimbursed from the IWF (see pages 12 and 22 for discussion of
this issue). All remaining funds in the Inmate Welfare Fund are available to be approved by the
Inmate Welfare Fund Committee for items for the “benefit and welfare of inmates.”
NOTE: Solid arrows indicate the flow of revenue that is within the scope of this review.
SOURCE: PEER analysis of Mississippi Department of Corrections data.

PEER Report #551

Exhibit 3: Distribution of Total Commissary Sales to Canteen Fund
and Inmate Welfare Fund, November 2007 through November 2010
Transferred to Inmate Welfare Fund ($3,033,911)

13%

Paid to Keefe for cost of
goods sold and profits
($16,425,508)
19%

68%

Total: $24,087,248
Canteen operating expenses ($4,627,829)
NOTE: “Total commissary sales” does not include all revenues of the Canteen Fund; other revenue
sources such as interest income were outside the scope of PEER’s review.
SOURCE: PEER analysis of amounts received from sale of goods in MDOC’s commissary services for
November 2007 through 2010.

Management of the Inmate Welfare Fund
Does MDOC comply with state laws regarding the Inmate Welfare Fund and does
the department use the fund to provide for the “benefit and welfare of inmates?”
Generally, MDOC’s actions regarding the Inmate Welfare Fund cannot be described
as violating the law. However, PEER determined that:
•

MDOC has improperly reduced the amount of money available to the Inmate
Welfare Fund;

•

MDOC’s policies on IWF Committee composition do not reflect the requirements
of state law and the actual working membership of the IWF Committee does not
comply with either MDOC’s policy or with state law;

PEER Report #551

•

state law does not include requirements for Inmate Welfare Fund Committee
attendance, a quorum for voting, or stakeholder representation and neither
MDOC nor the Inmate Welfare Fund Committee has established formal, written
policies or rules regarding these issues;

•

the IWF Committee has no formal, written criteria for making expenditures
from the Inmate Welfare Fund; and,

•

MDOC has only recently complied with statutory requirements for reporting IWF
financial information.

Also, PEER found that conflicting statutory requirements for deposits of the Inmate
Welfare Fund make it impossible for MDOC to comply with the law’s requirements,
thus compromising oversight of the Inmate Welfare Fund.

MDOC Has Improperly Reduced the Amount of Money Available
to the Inmate Welfare Fund
Because state law dictates that commissary sales revenues flow through
the Canteen Fund to the Inmate Welfare Fund, PEER reviewed Canteen
Fund expenditures from November 2007 through November 2010.
During that period, MDOC spent approximately $855,661 from the
Canteen Fund for OffenderTrak software maintenance. PEER considers a
significant portion of OffenderTrak costs to be an administrative expense
of the entire Department of Corrections rather than just commissary
services.
As noted on page 11, because the Canteen Fund serves as
an operating account for MDOC’s commissary services,
revenues from commissary sales are deposited to the
Canteen Fund, certain costs attributable to commissary
services are charged as operating costs (e. g., rent, utilities,
and employee wages) against profits earned, and revenues
including any net profits and interest then go to the
Inmate Welfare Fund as required by CODE Section 47-5158 (see Exhibit 2, page 13). MISS. CODE ANN. Section 475-158 (2) (1972) states:
There shall be deposited into the Inmate
Welfare Fund interest previously earned on
inmate deposits, all net profits from the
operation of inmate canteens, the annual
prison
rodeo,
performances
of
the
Penitentiary band, interest earned on the
Inmate Welfare Fund and other revenues
designated by the commissioner. All money
shall be deposited into the Inmate Welfare
Fund as provided in Section 7-9-21,
Mississippi Code of 1972.
(PEER emphasis in bold)
In establishing a relationship in state law between the
Canteen and Inmate Welfare funds, the Legislature created
a stable funding stream from which the department could
make expenditures for the “benefit and welfare” of the
inmates. Knowing that this relationship existed, PEER

PEER Report #551

reviewed Canteen Fund operations for November 2007
through November 2010 to determine how the department
expended money in the Canteen Fund. While Canteen
Fund expenditures for this period generally appeared to
relate to the department’s commissary services operations,
PEER identified approximately $855,661 in expenditures
from the Canteen Fund for software maintenance of the
department’s OffenderTrak system.
When MDOC issued the request for proposals (RFP) for a
“comprehensive Offender Tracking System,” the RFP
specified that the system would be required to “support
the major functional areas of the MDOC.” The RFP then
listed thirty-one functional areas that the system would be
required to support, including functions such as visitation
management, ID/intake processing, and escape tracking.
PEER believes that components of OffenderTrak such as
these do not relate to commissary services; these are
administrative functions of the entire correctional system
and represent administrative costs of the department,
rather than commissary services.
Although certain components of the OffenderTrak system
are related to commissary services, such as inmate
banking, MDOC has not determined what portion of costs
should be allocated to the functions of OffenderTrak that
relate directly to commissary services, but instead
attributes 100% of the costs of OffenderTrak software
maintenance to the Canteen Fund as an operational
expense.
While initial funding for the OffenderTrak system was
from inmate telephone commissions (authorized by Senate
Bill 2938, 2002 Regular Session), no provision of law
allows for continued funding of OffenderTrak by the
Canteen Fund. By paying 100% of the cost for software
maintenance for OffenderTrak from the Canteen Fund,
MDOC has removed approximately $855,661 over a threeyear period from potentially being available for deposit
into the Inmate Welfare Fund. PEER considers a significant
portion of OffenderTrak costs to be an administrative
expense of the entire Department of Corrections, rather
than just commissary services.

PEER Report #551

Problems with the IWF Committee’s Membership and
Governance
MDOC’s policies on IWF Committee composition do not reflect the
requirements of state law and the actual working membership of the IWF
Committee does not comply with either MDOC’s policy or with state law.
As noted on page 11, MISS. CODE ANN. Section 47-5-158
(7) (1972) sets forth the following as the membership of
the Inmate Welfare Fund Committee:
•

the Deputy Commissioner for Community Corrections;

•

the Deputy Commissioner of Institutions;

•

the superintendents of the three state public prisons;
and,

•

two members to be appointed by the Commissioner of
Corrections.

Thus state law requires that the committee be composed
of seven members for the purpose of authorizing and
approving expenditures of the Inmate Welfare Fund.
However, MDOC’s Standard Operating Procedures Policy
02-11 states that the IWF Committee is to be composed of
five members:
•

the Commissioner of Corrections, or his designee;

•

the Deputy Commissioner for Community Corrections;
and,

•

the superintendents of the three state public prisons.

The policy does not reflect accurately the composition
required by law for the IWF Committee because it does not
require that the Deputy Commissioner of Institutions be
part of the committee. Also, the policy does not provide
for “two members to be appointed by the Commissioner of
Corrections” as members of the IWF Committee, only for
“the Commissioner of Corrections, or his designee.”
PEER believes that the reason for this contradiction
between the requirements for the IWF Committee in
MDOC’s policy and those stated in CODE Section 47-5-158
(7) is that the CODE was amended in 2002 to increase the
IWF Committee’s membership from five to seven members,
but MDOC did not revise its policy to reflect such.
The actual working membership of the IWF Committee
does not comply with either MDOC’s policy or with state
law. In practice, membership of the IWF Committee has
consisted of the Deputy Commissioner of Institutions (who
serves as chairman) and the superintendents of the three
state public prisons.

PEER Report #551

State law does not include requirements for Inmate Welfare Fund
Committee attendance, a quorum for voting, or stakeholder
representation and neither MDOC nor the Inmate Welfare Fund
Committee has established formal, written policies or rules regarding
these issues.
As noted on page 17, MISS. CODE ANN. Section 47-5-158
(7) (1972) requires that the Inmate Welfare Fund
Committee be composed of seven members for the
purpose of authorizing and approving expenditures of the
Inmate Welfare Fund. The CODE does not address
attendance or quorum requirements for voting.
PEER reviewed meeting minutes of the Inmate Welfare
Fund Committee for the period of January 2007 through
December 2010 and interviewed committee members (i. e.,
the chairman and three superintendents) to determine the
extent of committee members’ participation in the voting
process. According to interviews with MDOC officials,
neither MDOC nor the IWF Committee has established
regulations or policies to structure what criteria the board
should use for approving items from the IWF (see page 19),
holding meetings, the quorum required for voting,
attendance, or other similar attributes of an effective
organization. PEER’s review of IWF Committee minutes for
January 2007 through December 2010 shows that the
majority of the forty-seven meetings over four years had
only three members present (excluding the presence of the
non-voting committee secretary).
Furthermore, as noted previously, participation for the
majority of the meetings was limited to the
superintendents of the facilities and Deputy Commissioner
of Institutions, who serves as chairman. PEER found no
evidence in the four years of IWF Fund Committee minutes
that the committee had included input from inmates or
families of inmates in the process of approving
expenditures from the IWF for the benefit and welfare of
inmates. Compounding this condition is MDOC’s history
of noncompliance with MISS. CODE ANN. §47-5-158 (5)
(requiring the reporting of Inmate Welfare Fund financial
data to the Senate and House Corrections Committees, the
Legislative Budget Office, and the PEER Corrections
Auditor; see page 25). Thus stakeholders outside of the
Department of Corrections have had no input into IWF
decisions and the Legislature has had little information
with which to exercise oversight of Inmate Welfare Fund
expenditures.
Availability or participation of a prescribed majority of
voting members in the voting process is needed for
fostering discussion and for proper stewardship of funds.

PEER Report #551

The IWF Committee has No Formal, Written Criteria for
Expenditures
Although MISS. CODE ANN. Section 47-5-158 (1972) authorizes the
Inmate Welfare Fund Committee to promulgate rules and regulations for
use of the fund, neither MDOC nor the committee has developed a formal,
written definition of “benefit and welfare of inmates” or established
formal, written criteria for expenditures from the fund. As a result, the
IWF Committee has approved expenditures for some items that might
have been questionable in terms of “benefit and welfare of inmates” and
expenditures that could have been considered part of the state’s
responsibility.
As noted on page 11, MISS. CODE ANN. §47-5-158 (1972)
states that the Inmate Welfare Fund “shall be used for the
benefit and welfare of inmates in custody of the
department.” The section is silent regarding what
constitutes “benefit and welfare” of inmates and does not
set out what types of items may be purchased with money
from the fund. Subsection 7 states that the Inmate
Welfare Fund Committee “may promulgate regulations
governing the use and expenditures of the fund.”
No MDOC or IWF Regulations or Policies for Expenditure of Inmate
Welfare Funds
Neither MDOC nor the Inmate Welfare Committee has established
formal, written guidelines for expenditures from the Inmate
Welfare Fund.
According to members of the IWF Committee, the
committee has not developed formal, written guidelines or
policies to define “benefit and welfare,” nor has it
established formal, written criteria for what types of items
may be purchased with money from the fund. PEER
reviewed the IWF Committee’s process for making
expenditures from the Inmate Welfare Fund and found
that decisions regarding expenditures from the fund are
made at three levels without applying any formal, written
criteria:

PEER Report #551

•

According to MDOC officials, the correctional facility
staffs themselves consider only the broad terms
“benefit and welfare” when submitting purchase
requests, rather than applying any formal criteria. The
MDOC Director of Purchasing stated that facility
directors “know the criteria” for what will and will not
be funded.

•

In compiling purchase requests from the staffs of
individual correctional facilities, the MDOC Director of
Purchasing uses her own judgment in removing items
that she believes would not qualify as enhancing the
“benefit and welfare” of inmates. According to the

Chairman of the IWF Committee, she determines which
items would “automatically not qualify for funding.”
•

IWF Committee members use no additional
information (e. g., invoices, quotes) to make purchase
decisions other than short descriptions provided on
the purchase request forms. They stated that the
committee members discuss the merits of the requests
at the IWF Committee meetings.

Obviously, the individuals at these three levels who have
input into the decision-making process for expenditure of
IWF funds do not share the same understanding of the
practice regarding appropriate expenditure of the funds.
Guidelines for expenditure and oversight are the most
basic of internal controls that are needed for managing
public funds. Without expenditure guidelines or criteria to
apply when making decisions regarding expenditures, no
assurance exists that funds will be spent consistently for
the benefit and welfare of inmates.
Attorney General’s Opinion Regarding IWF Expenditures
Based on the conclusions of a 2003 opinion, the Mississippi
Attorney General believes that rules and regulations are necessary
to a legal expenditure from the Inmate Welfare Fund.
While the text of MISS. CODE ANN. Section 47-5-158 (7)
(1972) makes the adoption of rules and regulations for the
Inmate Welfare Fund permissive, a 2003 Attorney
General’s opinion regarding the use of funds for the
construction of a roof over a prison facility noted that
expenditures made from the Inmate Welfare Fund are to
be made “in conformity with the rules and regulations
governing such expenditures.” Thus it would appear that
the Attorney General believes that such rules and
regulations are necessary to a legal expenditure from the
Inmate Welfare Fund (see Opinion to Lindsey, May 30,
2003).
Some IWF Expenditures Might be Questioned in Terms of “Benefit and
Welfare of Inmates”
The IWF Committee has approved expenditures from the Inmate
Welfare Fund for some items that might be questioned in terms of
“benefit and welfare of inmates” or items that could be considered
part of the state’s responsibility to provide for inmates.
PEER reviewed the Inmate Welfare Fund Committee’s
expenditures for the period of November 2007 through
November 2010 and noted that some expenditures were
made during that period that might be questioned in
terms of “benefit and welfare of inmates” or that should
have been provided as part of the state’s responsibility for

PEER Report #551

the care, custody, and control of incarcerated individuals.
For example:
•

The IWF Committee spent approximately $5.5 million,
or 55% of total Inmate Welfare Fund expenditures from
November 2007 through November 2010, for salaries,
wages, and contracts of MDOC employees and/or
contractors.

•

The IWF Committee has been inconsistent in approving
and denying purchases from the Inmate Welfare Fund,
approving certain types of expenditures at some times
and denying the same types of expenditures at other
times.

Also, in January 2011, the IWF Committee submitted a
purchase request to the Bureau of Fleet Management to
purchase two vehicles at a cost of $28,062. The vehicle
justifications noted administrative functions for the
vehicles (see page 24 for details), but the money for the
purchase of the vehicles was to be paid from the Inmate
Welfare Fund.
IWF Expenditures for Salaries, Wages, and Contracts
The IWF Committee spent approximately $5.5 million, or 55% of
total Inmate Welfare Fund expenditures from November 2007
through November 2010, for salaries, wages, and contracts of
MDOC employees and/or contractors.
For purposes of this analysis, PEER categorized the IWF
Committee’s expenditures from the Inmate Welfare Fund
for the period of November 2007 through November 2010
into six major categories,5 shown in Exhibit 4, page 28. As
shown in Exhibit 4, expenditures for salaries, wages, and
contracts comprised approximately 55% of all
expenditures from the Inmate Welfare Fund for this
period. This “salaries, wages, and contracts” category
includes some administrative overhead costs for workers
that provide support for commissary services and who
manage and deliver commissary goods to the inmates,
such as commissary clerks and managers.
The category also includes payments for various MDOC
employees and/or contractors who provided general
support to inmates, including educational instructors,
therapeutic specialists, psychologists, a recreational
specialist, and librarians. (PEER also notes that on one
occasion, reimbursement for the salary of a recreation
specialist was denied; see the report section entitled
“Inconsistency in Approval of Expenditures,” page 22.)

PEER created these categories as a method of summarizing the expenditures from November
2007 through November 2010.

PEER Report #551

By using the Inmate Welfare Fund to cover the salaries and wages
of department employees and/or contractors, MDOC appears to
be relying on the Inmate Welfare Fund to cover general operating
costs of the department that PEER believes should be paid from
appropriated funds.
While PEER does not dispute whether these employees or
contractors are needed or that they benefit inmates, one
could take the position that the salaries and wages of
these individuals should be paid by MDOC from its
appropriated funds rather than from the Inmate Welfare
Fund. MISS. CODE ANN. Section 47-5-10 (1972)
enumerates the general powers and duties of the
Department of Corrections, with the primary responsibility
being to provide for the “care, custody, treatment and
rehabilitation” of adult offenders. The Legislature
appropriates general and special funds annually to the
department to carry out its statutory duties. The annual
appropriations also include an authorized number of fulltime, part-time, and time-limited positions through which
the department is to operate.
Additionally, MDOC reimburses wages for facilities’
workers who support commissary services from the
Inmate Welfare Fund, totaling $956,630.42 from November
2007 through November 2010 (see page 12). By using the
Inmate Welfare Fund to cover the salaries and wages of
employees and/or contractors, MDOC appears to be
relying on the Inmate Welfare Fund to cover general
operating costs of the department that PEER believes
should be paid from appropriated funds.
Without formal, written criteria defining “benefit and
welfare of inmates” and specifying what types of
expenditures may be made from the Inmate Welfare Fund,
MDOC and the IWF Committee could continue to make
expenditures from the fund that could be questioned as to
whether they are an appropriate use of the fund.
Inconsistency in Approval of Expenditures
For the period of review, the IWF Committee was inconsistent in
its approvals and denials of purchases from the Inmate Welfare
Fund, approving certain types of expenditures at some times and
denying the same types of expenditures at other times.
The IWF Committee approved a wide variety of
expenditures from the Inmate Welfare Fund for November
2007 through November 2010. However, the committee
was not consistent in the types of expenditures that it
approved or denied.
PEER found examples in which a specific type of
expenditure was approved in one or more instances, but
the same type (or a closely related type) of expenditure
was denied in one or more instances, including:
22

PEER Report #551

•

expenditures for “fans and air conditioning costs” were
approved, but expenditures for “heating and cooling
costs” were denied on more than one occasion;

•

expenditures for “washers,” “dryers,” and
“microwaves” were approved, but expenditures for
“refrigerators for inmate meds” were denied;

•

expenditures for “adult education,” “classroom
supplies,” “teacher contracts,” and
“classroom/building material” were approved, but
expenditures for “supplies for horticulture vo-tech”
were denied on more than one occasion.

Although the IWF Committee denied at least forty-one
expenditure requests during the review period (i. e., these
were recorded in the minutes) in the amount of $137,296,
it is unclear from the limited information presented in the
minutes as to why the requests were denied.
Without formal, written criteria defining “benefit and
welfare of inmates” and specifying what types of
expenditures may be made from the Inmate Welfare Fund,
the IWF Committee may continue to be inconsistent in
approving or denying expenditures from the fund.
Requests to Purchase Vehicles from the Inmate Welfare Fund
In discussing purchasing practices with agencies’
personnel, PEER discovered the vehicle procurement
actions detailed below. While these actions occurred
outside of the period of review for other IWF purchases,
these actions are discussed in this report because of the
considerable interest vehicle purchases garner in policy
debates about the use of public resources.
In January 2011, the IWF Committee requested approval from the
Bureau of Fleet Management to purchase two vehicles (at a total
cost of $28,062) with money from the Inmate Welfare Fund. The
justification was for MDOC administrators to use in traveling
statewide on agency business.
According to records of the Department of Finance and
Administration’s Bureau of Fleet Management, the bureau
received requests in January 2011 for the purchase of two
vehicles using money from the Inmate Welfare Fund. The
bureau’s records show the following justifications for the
vehicles that were to be purchased from the Inmate
Welfare Fund:
•

PEER Report #551

Vehicle One: “To be used by Director of Religious
Programs for statewide travel in conducting agency
business.”

•

Vehicle Two: “To be used by the Director of Treatment
and Programs for attending meetings statewide on
agency business.”

PEER considers vehicles to be a means of accomplishing
the daily duties required of one’s position, considering
that the justification for each is to attend statewide
meetings as any other state government official would be
required to do. PEER is not commenting on whether a
state-owned vehicle would be warranted to travel in these
situations (e. g., to attend meetings statewide or in
management of facility treatment programs); however, the
individuals that would use these vehicles are in program
positions that the state would fund in order to facilitate
centralized management of the state’s correctional
facilities, regardless of the existence of the Inmate Welfare
Fund. Based on this reasoning, PEER considers the use of
these vehicles to be an MDOC administrative cost that
should be funded by the state rather than an expenditure
that should be made from the Inmate Welfare Fund.
As of April 21, 2011, the Bureau of Fleet Management had
not approved funds to be released from the Inmate
Welfare Fund for purchase of these vehicles.
In January 2011, the IWF Committee also requested approval to
purchase a vehicle with money from the Canteen Fund. The
vehicle was to be used for administrative purposes of the
department (not an appropriate use of the Canteen Fund) and its
purchase would ultimately deprive the Inmate Welfare Fund of
some of the revenues it should receive.
Similarly, PEER notes that another request was submitted
in January 2011 for purchase of a vehicle with $14,031
from the Canteen Fund. The justification description
shows that the vehicle was “to be used by the Director of
Fiscal Affairs to provide assistance to the Deputy
Commissioner of Administration and Finance and attend
statewide budget meetings.”
Because the Canteen Fund is to be used only for operating
costs attributable to operation of commissary services,
purchasing this vehicle would not be an appropriate use of
the Canteen Fund and would ultimately deprive the Inmate
Welfare Fund of some of the revenues it should receive
(see Exhibit 2, page 13, and discussion on page 15). As of
April 21, 2011, the Bureau of Fleet Management had not
approved funds to be released from the Canteen Fund for
purchase of this vehicle.

PEER Report #551

MDOC Has Only Recently Complied with Statutory
Requirements for Reporting IWF Financial Information
Prior to PEER’s review, MDOC did not periodically submit Inmate Welfare
Fund financial information to the parties specified by law.
As noted on page 18, MISS. CODE ANN. Section 47-5-158
(5) (1972) requires that MDOC’s Deputy Commissioner for
Administration and Finance submit to the chairs of the
Corrections committees of the Senate and the House of
Representatives, the Legislative Budget Office, and the
PEER Committee’s Corrections Auditor an annual report
for the Inmate Welfare Fund. This report is to include a
summary of expenditures from the fund by major
categories and by individual facility. The law also requires
that quarterly consolidated and individual financial
statements be submitted to PEER’s Corrections Auditor.
During the course of PEER’s field work for this review,
MDOC officials stated that they had submitted the
required information to the parties named in CODE
Section 47-5-158 (5). However, prior to that time, MDOC
officials had not submitted these reports to the specified
parties. According to MDOC officials, previous
noncompliance with the requirements of CODE Section 475-158 (5) was an oversight.
Although the Department of Corrections has complied
with requirements of MISS. CODE ANN. Section 47-5-158
(8) (1972) for annual audits of the Inmate Welfare Fund,
the department’s lack of compliance with provisions of
CODE Section 47-5-158 (5) requiring submission of specific
financial information diminishes the oversight capabilities
of the Legislature that could be important to public policy
decisionmaking regarding the Department of Corrections.
State law does not require that MDOC routinely submit financial
information on the Canteen Fund to any third party for oversight. Any
inappropriate use of money from the Canteen Fund could ultimately
affect the amount of money that flows into the Inmate Welfare Fund.
In a related matter, PEER notes that although state law
requires that MDOC provide financial information for the
Inmate Welfare Fund to specified third parties for
oversight purposes, it does not require that MDOC
routinely submit financial information on the Canteen
Fund to any third party.
Currently, MDOC contracts with a certified public
accounting firm to prepare financial statements for the
Canteen Fund. These financial statements are available on
request but are not routinely submitted to any of the
parties to whom the Inmate Welfare Fund financial

PEER Report #551

statements are submitted. PEER notes that these financial
statements represent a compilation of financial
information and do not constitute an audit, which would
include a review of MDOC’s internal controls for the
Canteen Fund.
Thus MDOC spends approximately $8 million annually for
operation of the Canteen Fund with no routine oversight.
Any inappropriate use of money from the Canteen Fund
could ultimately affect the amount of money that flows
into the Inmate Welfare Fund.

Statutory Requirements for Deposits of the Inmate Welfare
Fund Contradict Each Other
State law’s provisions regarding the deposits of the Inmate Welfare Fund
are contradictory, with one subsection requiring that MDOC manage the
fund through a bank account and another subsection requiring that these
moneys be deposited into the State Treasury. Thus, regardless of the
method it uses to manage the fund, the department cannot comply with
the law’s requirements for IWF deposits and the oversight of the Inmate
Welfare Fund is compromised.
As noted on page 11, MISS. CODE ANN. Section 47-5-158
(1972) creates the Inmate Welfare Fund. This section not
only creates the fund and gives general guidance as to how
the fund is to be used, but also establishes guidance for
fiscal management of the fund. Unfortunately, the
language of this section is contradictory. Section 47-5-158
states:
(1) The department is authorized to
maintain a bank account which shall be
designated as the Inmate Welfare Fund. All
monies now held in a similar fund for the
benefit and welfare of inmates shall be
deposited into the Inmate Welfare Fund. This
fund shall be used for the benefit and
welfare of inmates in the custody of the
department.
(2) There shall be deposited into the Inmate
Welfare Fund interest previously earned on
inmate deposits, all net profits from the
operation of inmate canteens, the annual
prison
rodeo,
performances
of
the
Penitentiary band, interest earned on the
Inmate Welfare Fund and other revenues
designated by the commissioner. All money
shall be deposited into the Inmate Welfare
Fund as provided in Section 7-9-21,
Mississippi Code of 1972.
(PEER emphasis added in bold)
Whereas Subsection 1 requires the Department of
Corrections to manage the Inmate Welfare Fund through a
26

PEER Report #551

bank account, Subsection 2 requires that this money be
deposited as provided for in CODE Section 7-9-21, which
states:
All state officials shall make a detailed
report to the State Fiscal Officer and pay
into the State Treasury all public funds, as
defined in Section 7-7-1, which are
required to be paid into the Treasury. Such
funds shall be deposited in the State
Treasury by the end of the next business day
following the day that such funds are
collected, except as provided elsewhere in
this section. The State Fiscal Officer and the
State Treasurer are authorized to establish
clearing accounts in the State Treasury as
may be necessary to facilitate the transfer of
monies to municipalities, counties and other
special fund accounts, as provided by law.
The detailed report hereinabove required
shall be fully satisfied when any revenuecollecting agency on its applications for
received warrants has stated the amount of
money which it has collected from any
source whatsoever without having to supply
the names of the taxpayers who had
remitted such money. At the request of any
state agency, the State Fiscal Officer, with
the advice and consent of the State
Treasurer, may by regulation provide for
other than daily deposits of accounts by that
state agency. The State Fiscal Officer, with
the advice and consent of the State
Treasurer, shall determine the frequency
and method of deposit for the agency.
(PEER emphasis added in bold)
In order to comply with CODE Section 47-5-158 (1), MDOC
would establish a bank account or accounts for the Inmate
Welfare Fund, which it has done; in order to comply with
CODE Section 47-5-158 (2) and the mandate of CODE
Section 7-9-21, the department could establish a clearing
account, but ultimately would have to deposit moneys of
the Inmate Welfare Fund into the State Treasury. Thus
following the requirements of CODE Section 47-5-158 (1)
results in noncompliance with CODE Section 47-5-158 (2).
In view of the apparent conflict between these provisions,
PEER does not take exception to MDOC’s actions to
manage the Inmate Welfare Fund through bank accounts,
since the CODE contains specific authority for placing this
money in a bank account.
While MDOC’s use of bank accounts to manage the Inmate
Welfare Fund is not in dispute, PEER notes that the
Legislature has not given the Department of Corrections a

PEER Report #551

clear mandate in law for management of the fund. The
lack of a clear mandate for choosing one fiscal depository
over another has consequences for the degree of
management oversight of the money expended for the
benefit and welfare of inmates. Funds deposited to the
State Treasury may only be disbursed by warrant and
warrants may only be drawn in accordance with
procedures set by law and the Department of Finance and
Administration’s rules and procedures. However, funds
kept in bank accounts are disbursed by check and have
only such oversight as the disbursing agency deems
appropriate.
Additionally, funds deposited to Treasury accounts are
generally accessible to the agency only through
appropriations approved through the legislative process.
Funds in bank accounts do not have the same oversight
that the appropriations process ensures.

Exhibit 4: Major Categories of Expenditures from the Inmate Welfare
Fund, November 2007 through November 2010

NOTE: Miscellaneous expenditures are those single event expenditures (e. g., one bulk order of
birth certificates in 2009) that could not be classified into any other category. Multiple categories
expenditures are those expenditures that included items from different categories and were not
broken out separately.
SOURCE: PEER analysis of IWF Committee minutes, November 2007 through November 2010.

PEER Report #551

Recommendations
1.

PEER Report #551

establish a quorum requirement for the IWF
Committee (e. g., four members);

require the appointment of a person to
represent the interests of inmates’ families;

PEER Report #551

•

set minimum attendance requirements for
committee members;

require the committee to adopt a mission
statement to guide the development of any
policies and procedures the committee
adopts regarding the use of the Inmate
Welfare Fund; and,

PEER Report #551

establish a quorum requirement for the IWF
Committee (e. g., four members);

require the appointment of a person to
represent the interests of inmates’ families;

set minimum attendance requirements for
committee members;

require the committee to adopt a mission
statement to guide the development of any
policies and procedures the committee
adopts regarding the use of the Inmate
Welfare Fund; and,

•

which canteen employees’ salaries and wages
may be paid from the fund and the job
descriptions for those positions; and,
PEER Report #551

•

PEER Report #551

PEER Committee Staff

Max Arinder, Executive Director
James Barber, Deputy Director
Ted Booth, General Counsel
Evaluation
David Pray, Division Manager
Linda Triplett, Division Manager
Kim Cummins
Brian Dickerson
Lonnie Edgar
Barbara Hamilton
Matthew Holmes
Kevin Mayes
Angela Norwood
Jennifer Sebren

Editing and Records
Ava Welborn, Chief Editor/Archivist and Executive Assistant
Tracy Bobo
Administration
Rosana Slawson
Gale Taylor
Information Technology
Larry Landrum, Systems Analyst
Corrections Audit
Louwill Davis, Corrections Auditor

PEER Report #551