THE MISSISSIPPI LEGISLATURE

The Joint Committee on

Performance Evaluation and Expenditure Review

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.

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 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).

Recommendations

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

a  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.”

b  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 Home Page         Full Text PDF (2,522K)