SB27: relative to the department of corrections industries inventory account.

SB 27-FN - AS INTRODUCED

2015 SESSION

15-0719

04/05

SENATE BILL 27-FN

AN ACT relative to the department of corrections industries inventory account.

SPONSORS: Sen. D'Allesandro, Dist 20

COMMITTEE: Finance

ANALYSIS

This bill makes changes to the department of corrections industries inventory account.

This bill is a request of the department of corrections.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

15-0719

04/05

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Fifteen

AN ACT relative to the department of corrections industries inventory account.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Statement of Intent. As defined in the consent decree in Laaman v. Helgemoe, 437 F. Supp. 269, 275 (D.N.H. 1977), the department of corrections’ industries program offers offenders an opportunity to develop marketable work skills and a positive work ethic through a structured workplace training program. It is designed to have an operational education component, teach marketable work skills, and provide competency-based training and instruction. The department of corrections industries program shall, to the extent practicable, sell its goods, including license plates, within a competitive business model.

2 Prison Labor and Its Products; Industries Inventory Account. Amend RSA 622:28-a to read as follows:

622:28-a Industries Inventory Account.

I. An industries inventory account shall be maintained to enable the state prisons to implement RSA 622:26-28. [Except for permanent personnel,] All operating expenses, materials, supplies, overtime and purchase and repair of equipment determined to be necessary for the growing or manufacture of products for resale shall be a proper charge against this account. [Charges for the sale of goods and services produced by the industries program shall be sufficient to defray the expenditures charged against this account and any sums obtained therefrom shall be a credit to the account.]

II. The state treasurer, upon presentation of manifests prepared by the commissioner of corrections and certified by the commissioner of administrative services, is authorized to pay for materials, supplies and equipment from any money in the treasury not otherwise appropriated.

III. The commissioner of corrections shall prepare a monthly profit and loss statement and at the end of each fiscal year shall file a report with the commissioner of administrative services in such format and containing such information as the commissioner of administrative services shall require. The commissioner of administrative services at the end of each fiscal year shall [cause any profit which accrued during that year to lapse to the general fund] determine, on an accrual basis, the amount of profit which has accrued during the fiscal year, and such amount shall be nonlapsing and continually appropriated to this account for the purpose of supporting the operation of the industries program.

IV. [Omitted.]

V. All purchases of materials, supplies, and equipment into the inventory account shall be made in accordance with the provisions of RSA 21-I:11 and any equipment purchase in excess of [$5,000] $15,000 made under the provisions of this section shall require the prior approval of both the fiscal committee of the general court and the governor and council.

3 Effective Date. This act shall take effect 60 days after its passage.

LBAO

15-0719

02/02/15

SB 27-FN - FISCAL NOTE

AN ACT relative to the department of corrections industries inventory account.

FISCAL IMPACT:

The Department of Corrections and Department of Administrative Services state this bill, as introduced, will have an indeterminable fiscal impact on state revenue and expenditures in FY 2015. There is no fiscal impact on county and local revenue and expenditures.

METHODOLOGY:

The Department of Corrections states this bill makes changes to the correctional industries inventory account to use an accrual basis of accounting versus the modified cash basis of accounting, directs any profit remain in the industries inventory account and not lapse to the general fund and increases the threshold for equipment purchases made from the account requiring fiscal and governor and council approval from $5,000 or more to $15,000 or more. The Department states correctional industries was 70 percent supported by the general fund prior to FY 2004. The Department states by FY 2010 it had taken all general fund positions supporting correctional industries and budgeted them using revolving funds from the correctional industries inventory account. The Department views correctional industries as a program to provided inmates with knowledge and skills in learning a trade not a business. The request to change the accounting method would more fairly reflect the real financial results of the program. The Department states the use of the modified cash basis of accounting does not consider inventory levels or depreciation, which has an impact on the losses being reported. The Department indicates the losses have varied from year to year, with a low of $147,271 in FY 2013 and a high of $673,842 in FY 2012. The Department estimates the loss for FY 2015 to be around $300,000. Any shortfall in the correctional industries inventory account is covered with the general fund. The Department states this bill will have an indeterminable impact on state revenue and expenditures.

The Department of Administrative Services this bill will have an indeterminable fiscal impact on state revenue and expenditures. The Department states it is not able to determine the impact of this bill on the general fund. The Department reports the correctional industries inventory account has an aggregate deficit of $3,073,387 through FY 2014. The Department states the losses associated with the correctional industries inventory account are being supported with general funds.