SB 214-ESTABLISH CORRECTIONAL INDUSTRIES PROGRAM  2:22:46 PM CHAIR COGHILL reconvened the meeting and announced the consideration of SB 214. This is the first hearing. 2:23:13 PM CLARE SULLIVAN, Deputy Commissioner, Department of Corrections (DOC), Anchorage, Alaska, said she would provide an overview of SB 214 and the benefits of establishing a correctional industries program and Juliana Melin would provide a sectional analysis. She reviewed her background with the Department of Corrections, most of which was in the institutions. She explained that correctional industries programs are designed to help prisoners leave prison with meaningful skills that are necessary for a successful transition into the community. This means getting a job, reporting to the job, getting paid and paying bills, including restitution and child support. The idea is to develop a program within the correctional facilities that is not detrimental to outside work groups or labor. The correctional industries board that the bill establishes will provide direction on the industries that each correctional facility should focus on. The industries program is also a potential feeder program for unions. She said research from other states shows that correctional industries programs help reduce recidivism. Inmates who have been in the program for any length of time have a far better chance of a successful transition. They are far less likely to think in a criminal fashion because they have established a fairly normal process within the institution. Research also shows that the institutions that provide some form of economic diversity help businesses and communities on the outside by providing products or services that are not otherwise readily available. Another benefit of these programs is that they reduce collateral department costs. When people in prison are engaged in productive and pro-social activities, assaults go down and medical costs are reduced. Those people also do better after they are released. MS. SULLIVAN said DOC is looking at four possible industry venues that have unmet needs. These are flash freezing of Alaskan-grown vegetables, continuing and possibly expanding the Alaska Marine Highways laundry service, restarting the custom furniture and specialty item business that Spring Creek used to have, and making and selling Alaska-unique items to wholesalers in the state. 2:29:20 PM CHAIR COGHILL asked if they'd thought about steering certain industries to certain prisons or if that would be left to the discretion of the board. For example, growing would be much easier in Palmer than in Southeast. MS. SULLIVAN said she believes the board would provide that guidance and DOC would provide the staffing. CHAIR COGHILL asked if DOC would implement security and safety measures to ensure that tools aren't misused or stolen. He noted that mishandling tools was part of the reason the earlier programs folded. MS. SULLIVAN said the institutions reworked and enhanced their tool safety procedures and accountability after a 2014 audit highlighted deficiencies. CHAIR COGHILL asked if the Point MacKenzie Correctional Farm was still vibrant. MS. SULLIVAN said the farm is still producing enough that they donate their excess to local charities. SENATOR WIELECHOWSKI said this is a commendable effort, but he's concerned about diminishing jobs and wages. He asked what industries they expect to target, the expected impact on the labor force, and the expected wage for inmates. MS. SULLIVAN said the objective is to establish a program in the prison so inmates can develop skills and be productive when they are released. The jobs wouldn't be high paying and there is no intention to compete with businesses on the outside. She noted that DOC has a program where inmates on ankle monitors go outside during the day to be trained as ironworkers with the idea that they will feed into that industry once they're released. 2:35:32 PM SENATOR COSTELLO asked if the legislation contemplates that the inmates would leave with an agreement for future work like the ironworker example or if it contemplates a correctional industry program like those in the past which included the laundry service and furniture building. MS. SULLIVAN said it's different than the example she cited. The idea is to have most of the programs within the facilities. SENATOR COSTELLO noted the proposed board makeup and asked if they would be opposed to adding a business seat. MS. SULLIVAN said that's a good idea because labor and business view some things differently. SENATOR COSTELLO noted the bill going through the process to exempt DOC from the procurement process and asked how this legislation would be impacted if that bill were to pass. MS. SULLIVAN said she would follow up with an answer. SENATOR KELLY said he was initially concerned about unemployment but was encouraged when he realized that a lot of things are imported now. He cited the hypothetical example of a prison industry that makes patio furniture. Today most of that is imported from China or Pakistan. 2:39:27 PM SENATOR SHOWER said he had the same concern that Senator Costello voiced. He referenced the language in Section 7 and opined that there could be a conflict with the typical competitive bidding process. 2:40:58 PM JULIANA MELIN, Legislative Liaison, Department of Corrections (DOC), Juneau, Alaska, clarified that Section 7 does not change the existing procurement rules for the proposed correctional industries program. It replaces the old program with the new correctional industries program. She added that it's not related to the procurement legislation going through the process. SENATOR SHOWER asked her to clarify the meaning of the language on page 2, lines 9-10. MS. MELIN said the idea is that when the department enters a contract with a private organization, that employer would be required to provide workers' compensation. CHAIR COGHILL deferred further discussion until after Ms. Melin presented the sectional analysis. 2:42:24 PM SENATOR WIELECHOWSKI said he was curious about the workers' compensation implications and whether someone who is injured would receive temporary total disability or permanent total disability. He also asked about the potential impacts on Davis- Bacon wages and the prevailing wage standards. CHAIR COGHILL deferred the question until after the sectional analysis. 2:43:19 PM MS. MELIN paraphrased and supplemented the following sectional analysis for SB 214. Section 1: Amends 33.30.191(e) to clarify that Worker's Comp (AS 23) does not apply to the employment of prisoners under this particular section. She explained that later in the bill a large portion of the section is deleted. An example of what remains is the commissioner's ability to direct a prisoner to participate in productive employment while incarcerated, including routine facility maintenance, academic or vocational education, and public conservation projects. The exemption from workers' compensation from these types of activities is consistent with current statute. MS. MELIN noted the drafting error in Section 2 on page 1, lines 10-11. The phrase, "In addition to entering contracts or cooperative agreements under AS 33.30.191," should have been deleted. Section 2: Amends 33.30 by adding a new section, 33.30.195, that establishes the correctional industries program, detailing that in addition to cooperative agreements listed under 33.30.191, the commissioner may establish & administer correctional industries programs upon approval of the Correctional Industries Board created later in the bill under 33.30.196. Under (b)-(f), operational details of the newly established correctional industries program is laid out. She noted that on page 2, subsection (f) on lines 17-19 clarifies that prisoners employed under this section are not entitled to unionize and they do not have the rights of state employees, including the right to participate in collective bargaining. Under the new section, 33.30.196, the Correctional Industries Board is established. The board consists of four members: the commissioner of labor (or designee), the commissioner of corrections (or designee), and two representatives of organized labor that the governor shall appoint from a list submitted by a labor organization. These members serve staggered three-year terms. The duties of the board include meeting quarterly or at regularly scheduled times determined by a majority of members, approve, monitor, and make recommendations for proposals for prison industry programs, and hold public hearing to provide opportunity for persons or organizations to submit written comments or oral testimony on proposals that may affect them. The board will also keep public record of all meetings and hearing and make this information public. Section 3: Amends 33.30.201(a) by distinguishing prisoners employed under the new prison industries program (33.30.195) and removes them from this particular statute detailing compensation of prisoners who fall under current statute. It also removes 33.30.191(g)(5) from applying to this section as "other work performed inside or outside a facility" now falls within the newly established prison industries program. She noted that the outdated language, "if the money is available from legislative appropriations" is also deleted. The Department of Law determined that language should be deleted from the section when it was drafted in 1986. Section 4: Amends 33.30.201(c) by requiring compensation of employed prisoners established under the new section, (g), to follow the priority order of compensation dispersion as laid out in this section. It also reorders the priority list, making restitution payments a higher priority. Section 5: Amends 33.30.201(d) to include the newly established prisoner employee's compensation section (g), detailing that any remaining compensation after any deduction under (b) or (c) of this section will be credited to the prisoner. Section 6: Adds a new section (g) under 33.30.201 describing the compensation of prisoners employed under the newly established prison industries program (33.30.195). [It clarifies that compensation for work performed under contract or agreement with an individual or private entity may not be less than the minimum wage required by AS 23.10.065.] Section 7: Amends 36.30.313 by including the newly established prison industries program, 33.30.195, in this statute that precludes the procurement of products or services provided through the employment of prisoners from competitive sealed bidding or competitive sealed proposals. Section 8: Amends 37.05.146(c) by adding a new section allowing the Department of Correction to collect receipts from contracts or agreements under the new prison industries program (33.30.195) Section 9: Amends 41.21.026(f) by deleting the old employment of prisoners language (33.30.191(b)) and replaces it with the new prison industries program established under 33.30.195, allowing the department to charge fees as listed under this section. Section 10: Repeals AS 33.30.191(b) which is the current (and limiting) prison industries language as well as 33.30.191(g)(5) that describes other work performed inside or outside of a correctional facility which is now incorporated under the newly established prison industries program 33.30.195. Section 11: Effective date July 1, 2018. 2:51:53 PM SENATOR WIELECHOWSKI said he'd like a discussion on Section 1 that says the provisions of AS 23 do not apply because Title 23 contains the entire work standards. 2:52:31 PM SENATOR COSTELLO noted that the language on page 1, lines 11-13, gives the commissioner the ability to establish and administer a correctional industries program and the language on page 2, line 22, talks about the board providing general policy direction to the commissioner. She asked the commissioner if he reads that the way she does, which is that the board would provide general direction and the program would be run by the commissioner. 2:53:46 PM DEAN WILLIAMS, Commissioner, Department of Corrections (DOC), Juneau, Alaska, said the intent is for the board to vet any permissible business opportunities and give them a red or green light. He said he'd take another look at the language because the board is not intended to be a figurehead. He agreed with the earlier suggestion to include a business member on the board. SENATOR COSTELLO asked what assurance the legislature would have that the department would promulgate regulations should this bill pass. COMMISSIONER WILLIAMS said this is a good example of a statute that would require the department to promulgate regulations. They are necessary to articulate things like board and meeting processes, the procedure for approving business opportunities, and how inmates would get paid. SENATOR COSTELLO asked if he heard the question about how this legislation would be affected if the legislation about changing the procurement code were to pass. 2:57:13 PM COMMISSIONER WILLIAMS clarified that the procurement exception in HB 325 is specifically about reentry transition housing services. That bill was not designed or intended to impact anything regarding procurement in this legislation. 2:58:15 PM CHAIR COGHILL held HB 214 in committee for further consideration.