SF5080

Purpose

• To modify Minnesota’s correctional industries program (MINNCOR) to improve transparency, ensure fair wages for inmate labor under the Prison Industry Enhancement Certification Program (PIECP), prevent subsidies or manipulation of contract profitability, and verify that inmate labor does not displace private sector workers.

Key Provisions

• Definition added

  • Private business: Any entity organized under Minnesota law or foreign law, but not governmental units. This sets who MINNCOR can contract with.

• Reporting and financial statements (MINNCOR Subd.6)

  • MINNCOR must include full costs of inmate wages and the money it receives from the department for inmate confinement in annual financial statements.
  • The annual report must show how confinement-cost funding affects MINNCOR’s profitability and include a calculation of the profitability of each contract MINNCOR has with a private business.
  • MINNCOR must post on the agency’s public website the PIECP wage for each region where it contracts with private businesses.

• Interactions with private businesses (MINNCOR Subd.7)

  • MINNCOR must participate in the PIECP.
  • When implementing PIECP, MINNCOR must:
  • Calculate the PIECP wage (the prevailing wage for the region, based on a DEED wage survey) and set it at the 50th percentile for each region.
  • Separately track wages paid to inmates at the PIECP wage vs. the non-PIECP wage (the non-PIECP wage is exempt from PIECP’s prevailing wage requirements).
  • Not use a blended wage rate when evaluating contract costs, profitability, or partnerships.
  • Classify and document each inmate’s MINNCOR position as PIECP wage or non-PIECP wage.
  • MINNCOR must not subsidize private businesses, including using inmate confinement costs to offset contract costs or to lower a private business’s operating expenses.
  • When setting standard contract rates, MINNCOR must account for all labor, manufacturing, general, and administrative costs.
  • MINNCOR must recapture the fair market value for use of Department of Corrections (DOC) floor space and storage dedicated to a private business.
  • When calculating labor costs for a contract, MINNCOR must use the prevailing wage rate for the inmate-work industry as determined by DEED.
  • MINNCOR must not enter a contract if inmate labor will provide more than 70 percent of the business’s full-time equivalent (FTE) headcount.
  • Contracts with private businesses that use inmate labor must use revenue contracts or purchase orders on forms approved by the Department of Administration.
  • The choice between a revenue contract or a purchase order must follow criteria approved by the Department of Corrections, guided by the legislative auditor’s 2009 recommendations.
  • MINNCOR must develop a uniform method to report sales and expenditure data related to individual labor arrangements with private businesses.
  • MINNCOR must review data annually to assess how these arrangements affect goals of high inmate participation and overall profitability.

• Displacement verification (New Subd.9)

  • The Department of Employment and Economic Development (DEED) must verify that each MINNCOR contract will not displace private sector workers in the geographic region where MINNCOR facilities are located or where the private business is located.

Significant Changes to Existing Law

• Adds a new private-business definition to Minnesota Statutes governing MINNCOR.
• Increases reporting requirements:
  • Full disclosure of inmate-wage costs and confinement funding effects on profitability.
  • Public posting of PIECP wages by region.
  • Uniform reporting for sales and expenditures tied to private-labor arrangements.
• Tightens wage and cost rules:
  • PIECP wages must be set at the regional 50th percentile and tracked separately from non-PIECP wages.
  • Prohibits wage blending for contract cost assessments.
  • Requires use of DEED-determined prevailing wages for inmate labor in each industry.
• Strengthens anti-subsidy and accountability measures:
  • Prohibits using confinement costs to subsidize private-business contracts.
  • Requires recapturing the fair market value of DOC space used by private businesses.
• Sets limits on inmate-labor share:
  • Inmate labor may not constitute more than 70 percent of a private business’s FTE headcount.
• Adds oversight on private-sector displacement:
  • DEED must verify that MINNCOR contracts do not displace private-sector workers in the relevant regions.

Relevant Terms - MINNCOR (Minnesota Correctional Industries) - Minnesota correctional industries program - Private business - Inmate wages - Inmate confinement costs - Prison Industry Enhancement Certification Program (PIECP) - PIECP wage - Prevailing wage - 50th percentile - Department of Employment and Economic Development (DEED) - Department of Corrections (DOC) - Floor space and storage - Subsidy (governmental support) - Full-time equivalent (FTE) - Revenue contract - Purchase order - Department of Administration - Profitability - Displacement of private sector workers - Public-facing website - Annual financial statements - Labor arrangements