Supporters of the initiative argued that teaming with the private sector to bring new businesses to prison grounds would benefit the state financially and result in many more inmates contributing a portion of their wages to pay for their own room and board. Initiative supporters also contended that inmates, whose participation in the Joint Venture Program is voluntary, would also benefit by gaining work experience, learning a work ethic, and gaining job skills that would prevent their return to a life of crime upon their release from prison.
To date, no county has established a Joint Venture enterprise. However, the state prison system began hosting Joint Venture enterprises in July 1991. The voter- mandated program is now in its fourth year of operation.
The Joint Venture Program is operating at an annual loss to the General Fund, largely because so few private companies have chosen to establish enterprises. The program has provided some benefits, such as room and board repayments to the General Fund and the withholding of state and federal income taxes from inmate pay. Only a fraction of the prison inmate population is involved in Joint Venture businesses and there is little information available as to whether they are gaining job skills that will make them more employable upon their release or less likely to return to prison.
We found that the Joint Venture Program has generally not been successful at meeting many of the original goals of the program. Although the program provides valuable jobs for inmates and a number of financial benefits to society, the program has been losing money.
Few Inmates, Companies Participating. The program has not been successful at increasing the number of enterprises and jobs offered to inmates. The Joint Venture Program currently has 12 businesses in operation with a combined workforce of 196 inmates. Thus, only one-tenth of 1 percent of the state's 125,000 inmates are employed by a Joint Venture enterprise--far from the thousands of inmates that had been envisioned by proponents of the ballot measure.
The size of the inmate workforce has fluctuated significantly. One year ago, program administrators reported, the program reached a peak of 240 inmates. The payroll total subsequently slipped to about 140. Participation has since rebounded to 196 as of January 1995.
Program Operates at General Fund Loss. The Joint Venture Program continues to operate at a financial loss to the state's General Fund. Financial data provided by the CDC indicates that the program currently has a net annual cost to the General Fund of about $180,000. This is primarily because the number of inmates participating is so small.
The annual administrative cost of the program is about $520,000. The program returns about $200,000 to the General Fund each year in room and board support for inmates and another $20,000 in state taxes withheld from inmate pay. About $120,000 in rent is also paid annually to the General Fund for the use by businesses of correctional facilities.
Since, on average, about 192 inmates are participating in the program, this amounts to a short-term annual loss of about $900 per inmate.
The administrative costs for Joint Venture are higher than were anticipated when the initiative was approved by the voters. At that time, they were estimated to be $1,700 per inmate, comparable to an existing Youth Authority's joint venture program. The CDC Joint Venture Program now has administrative costs averaging about $2,700 per inmate. The CDC's costs are higher due to the limited number of inmates participating in the program. Program Provides Other Benefits. The calculations above of short-term costs and benefits to the General Fund do not take into account other benefits the program generates for other parties, nor possible beneficial long-term effects upon the General Fund. These benefits are more indirect and some accrue to entities other than the state.
Calculations based upon financial data supplied by Joint Venture administrators point up these benefits:
Program Provides Inmate Jobs to Reduce Time Spent in Prison. Inmates who participate in a work or educational program can earn credits to reduce the time they spend in prison by as much as one-half. Inmates who participate in the Joint Venture Program become eligible for these credits. In the long- run, these work credits could result in a General Fund savings of several thousands of dollars annually for each participating inmate. These savings are not realized unless and until an inmate completes his sentence, and it is not known how many inmates have left prison earlier than they would otherwise because of work credits earned in the Joint Venture Program. (These savings will diminish somewhat as a new state law restricting work credits for newly committed violent offenders takes effect.)
Program Has Hidden Costs. Not all costs of the program by the state are reflected in the program's operating budget:
Effect on Inmates Unclear. As described above, one argument in support of the initiative was that the biggest potential savings could come from better enabling inmates to become self-supporting after their release by equipping them with marketable job skills taught by the state's Joint Venture partners from the private sector. However, it is not known whether inmates who have participated in the Joint Venture program have a lower rate of recidivism after they are released from prison.
It is known that few inmate workers have stayed with their Joint Venture employers after their release. This is, in part, because current law requires inmates to be paroled back to the county from which they were sentenced. Employers might not have enterprises in the same county.
Improved Program Performance May Be Forthcoming. Despite the prior difficulties, CDC officials are projecting that the Joint Venture Program will add eight new companies and 221 inmate employees to the program by the end of the 1995-96 fiscal year. Contracts for these new employers are signed or pending.
The CDC estimates that these additional companies and workers would allow the Joint Venture Program to generate more money for the General Fund each year than it expends. That break-even point will be reached when between 225 to 300 inmate employees are working for active Joint Venture enterprises, according to the CDC, because administrative costs are expected to remain level. However, past predictions of growth in the number of Joint Venture jobs and enterprises have not always been realized.
Obstacles to the Program. A series of obstacles have thwarted expansion of the Joint Venture program:
What Can the Legislature and Administration Do to Improve the Program? We found that there are a number of steps that the Legislature and administration can take that could improve the performance of the program. Some of these changes can be enacted in the Budget Bill and some will require legislation (Proposition 139 permits the Legislature to amend the statutory provisions of measure to further the measure's purposes, with a two-thirds vote of each house). In addition, we believe that there are a number of steps that should be considered for the long-term that may be beneficial. The changes include the following:
Study the Effects of Program on Inmate Recidivism. Given that there is so little information about the effect of the program on inmate recidivism, we recommend that the Legislature direct the CDC to compare the rates of recidivism among participants with similar inmates in the prison population.
In the long run, if Joint Venture continues to operate at a loss to the General Fund, the Legislature may want to consider more fundamental changes to the program. For example, we believe that the successful joint venture programs in other states are also worth examination, such as a program in Oregon in which the state created an independent nonprofit agency with greater autonomy to strike agreements with private business partners. Similarly, the Legislature may want to consider consolidating the Joint Venture Program with the existing Prison Industry Authority (PIA).