THE MISSISSIPPI LEGISLATURE

PEER performed this audit independent from the State Auditor.

In addition, PEER is directed by MISS. CODE ANN. Section 47-5-35 to audit all accounts of the state correctional system for the purpose of reporting to the Legislative Budget Office; Chairman, Senate Corrections Committee; and Chairman, House Penitentiary Committee.

Background

The employment of inmates in business and agricultural industries is not a new concept in Mississippi. However, the creation of an independent corporation to operate the industries, while cooperating with Department of Corrections (DOC) toward inmate rehabilitation and post-release job placement is new with the creation of the Mississippi Prison Industries Act of 1990. MISS. CODE ANN. Section 47-5-531 et. al. emphasizes the state's need for a logical sequence of inmate rehabilitation and describes the program's highest charge to "...provide inmates with useful activities that can lead to meaningful employment after release in order to assist in reducing the return of inmates to the system."

Magnolia State Enterprises, Inc. (MSE) was incorporated in May 1990 to provide the prison industries activities to meet the act's mission. In February 1991, MSE assumed responsibility from DOC for business operations. Under the act, DOC remains responsible for the program's mission toward inmate rehabilitation and post-release job placement.

Overview

The Mississippi Prison Industries Act of 1990 contains specific requirements for both DOC and MSE to assure that the legislative mission is accomplished. These legislative requirements are recognizable within distinct performance categories and the law assigns the specific responsibilities for satisfactory performance. The law sets requirements of MSE to operate the prison industries in an economic and efficient manner. The law also distributes requirements to both DOC and MSE for program outcome and effectiveness.

PEER found that MSE operates primarily with inmate labor and reduces inmate idleness of those inmates worked; however, the prison industries program has not yet reached the potential intended under the law. In addition, neither DOC nor MSE have sufficient short- or long-term plans to assure the program's success.

The underlying reason that the prison industries program has not been effective in rehabilitating inmates is because of DOC's lack of guidance and its failure to comply with legal requirements. The primary reason for MSE's reduced operational efficiency and effectiveness is a lack of strong direction from its board of directors.

MSE's Economy and Efficiency

Cost Controls and Efficiency

MSE has not satisfactorily fulfilled its legislative mission to manage its operations as a profit-making enterprise, primarily due to the MSE board's lack of strong written goals, objectives, plans, or comprehensive policies. This lack of board guidance, compounded by reliance on supplemental state revenues, negatively affected MSE's ability to control, allocate, monitor, and account for costs efficiently.

Inadequate Sales Revenues

MSE did not price products and services to provide adequate sales revenues to recover all expenses. MSE total expenses during the audit period exceeded sales revenues by 45%. MSE does not maintain a suitable method of establishing unit sales prices for products and services. MSE does not maintain a satisfactory cost accounting system which could allow the allocation of all costs to operating divisions and which could be used toward more appropriate sales prices.

Measuring Cost Savings

MSE is unable to measure the true financial impact or cost savings from sales to state agencies, which is one method that the program might use to reduce costs of state government. Also, MSE has no long-range plans that would significantly reduce costs to state government. The corporation purchased buildings and property totaling $262,234 during the audit period.

Inefficient Purchasing Methods

MSE efficiency has been hindered by inefficient purchasing practices of raw materials. The Office of Purchasing and Travel verbally advised MSE to adhere to state bid requirements in the purchase of materials, even though MISS. CODE ANN. Section 31-7-1 (e) excludes commodities purchased for resale from the bid law requirements. MSE's ability to comply with its mandate to operate as a profit-making enterprise is negatively affected by this requirement.

MSE's Operational Effectiveness

Marketing

MSE has not complied with MISS. CODE ANN. Section 47-5-545 outlining requirements in marketing and pursuing industries, which has negatively impacted its effectiveness toward stability, fairness, and protection of operations.

DOC's and MSE's Program Effectiveness

MSE employed approximately five percent of the inmate population at the three main correctional facilities. However, DOC has not met its obligations of the prison industries act, which has prevented MSE from effectively achieving the statutory mission to reduce inmate idleness and rehabilitate inmates toward post-release employment.

DOC's Lack of Master Plan

DOC has not complied with the law because it has not provided a master plan for correctional work programs and guidelines for a logical sequence of training, employment, and post-release job placement. Because DOC has not established this required plan, it does not consider training when inmates enter the correctional system and are classified.

DOC's Insufficient Post-Release Job Placement

DOC also has no significant inmate job placement program, and has neither tracked inmates' post-release job placement nor the return of those inmates to the correctional system. The only inmate post-release job placement program is through the Job Training Partnership Act pre-release job assistance, which is able to place only 7% of total inmates departing from the correctional system.

DOC's Weak Inmate Classification Criteria

MSE operations have been negatively affected by DOC's lack of clearly defined classification criteria for inmates qualified for rehabilitation/work and no regulations for expedient classification and movement of inmates for MSE work.

Inadequate Inmate Security

DOC and MSE have not met statutory requirements to assure adequate security within prison industry work areas because of conflicts evident in statutory terms and the lease agreement.

MSE's Inmate Training

MSE has limited inmate rehabilitation to on-the-job-training by not offering classroom training or auxiliary programs with Mississippi Delta Community College and other community colleges, as statutorily authorized.

Lack of Inmate Work Incentives

The prison industries program's only viable behavioral incentive is inmate wages. Inmates do not receive additional earned time under current law, which hinders incentives for inmate work.

Recommendations

As mandated by MISS. CODE ANN. Section 47-5-577, the Mississippi Prison Industries Act of 1990 stands repealed from and after July 1, 1994. Regardless of the Legislature's decision concerning the repealer or the future governing structure of a prison industries program, substantial improvements in program and operational management should be made for the prison industries program to be successful.

Exhibit A, page x, summarizes PEER's recommended actions. This summary categorizes recommendations by subject and delineates which entity is responsible for each recommended action. References to MSE represent that organization or any other entity that the Legislature delegates to assume the responsibilities of the prison industries program. The recommendations assume that the legislative intent and mission of the industries will be unchanged.

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