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FL Audit on PRIDE

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Special Report
December 2003

Report No. 03-68

PRIDE Benefits the State But Needs to
Improve Transparency in Operations
at a glance
PRIDE programs enhance prison security and
increase opportunities for inmates to find
gainful employment upon release. However,
PRIDE sales have fallen over the past five
years, as has the number of inmates it
employs. A number of factors contributed to
this decline in sales, including reduced state
spending, privatization, and private sector
concerns about using products manufactured
by inmate labor.
PRIDE’s new structure provides cost savings,
flexibility, and liability protection. However,
PRIDE has done a poor job of explaining its
corporate restructuring. As a result, concerns
have arisen that have hurt PRIDE’s business
development.
PRIDE should incorporate greater detail in its
contract to clarify its relationship with,
Industries Training Corporation, an affiliate, and
develop a repayment schedule for the $8.7
million it has loaned the company. To protect
its resources, PRIDE should also increase
internal risk assessment.
The Legislature should revise s. 946.504,
Florida Statutes, to specify the state’s interest
in property transferred to, acquired by, and
transferred by PRIDE and its associated
corporations.

Scope ____________________
Pursuant to s. 11.511, Florida Statutes, the Director of
OPPAGA initiated this project in response to a
legislative request to conduct a review of Prison
Rehabilitative Industries and Diversified Enterprises.

Background ______________

The Legislature created Prison Rehabilitative
Industries and Diversified Enterprises (PRIDE) in 1981
as a private, non-profit corporation to lease and
manage the state prison industries program.
Previously, the Department of Corrections operated
the state’s prison industries.
PRIDE’s mission, as defined in s. 946.501, Florida
Statutes, is to
ƒ

ƒ

ƒ

ƒ

provide education, training, and post-release job
placement to inmates to help reduce
recommitment;
enhance security by reducing inmate idleness and
providing an incentive for good behavior in
prison;
reduce the cost of state government by operating
enterprises primarily with inmate labor while not
unreasonably competing with private enterprise;
and
rehabilitate inmates by duplicating, as nearly as
possible, the activities of a profit-making
enterprise.

Office of Program Policy Analysis and Government Accountability
an office of the Florida Legislature

Special Report
To help PRIDE meet its mission, the Legislature
granted it certain privileges.
PRIDE has
sovereign immunity, which shields it from
liability in the same manner as the state, and
it is not required to pay unemployment
compensation for inmate workers. 1 In addition,
PRIDE is not subject to the authority of any state
agency, except the auditing and investigatory
powers of the Legislature and the Governor.
Legislation also granted purchasing preference
for PRIDE, meaning that state agencies must buy
its products when they are of similar quality and
price to those offered by outside vendors.

1

In Fiscal Year 2002-03, PRIDE provided 1,995
inmate work positions at 21 prisons throughout
Florida and generated $60.9 million in sales.
PRIDE operated 38 industries, including raising
dairy calves, building office furniture, and
providing printing, binding, data entry, and
document imaging services. 2 As shown in
Exhibit 1, several correctional institutions have
multiple industries located on their grounds.
For example, Apalachee Correctional Institution
has a mattress factory and a records warehouse,
and inmates also raise dairy calves and beef
cattle. Appendix A provides a complete listing
and brief explanation of all PRIDE industries.
2

In most cases prisoners also are ineligible for workers’
compensation.

The required skill and educational levels vary across industries as
well as by position, though most PRIDE jobs require at least a
sixth-grade education.
All industries provide job-specific
training.

Exhibit 1
PRIDE Operates Diverse Prison Industries Throughout Florida
Liberty
Digital Information Services


 
Apalachee
Warehouse
Calf
Cattle
Calhoun
Mattress
Printing

Baker
Paint
Madison
Shoe & Textiles



Lawtey
Garment

New River East
Forestry
Warehouse
New River West
Garment



 


Union
Cross City
Cattle
Graphics
Dental Lab
Food Processing Marion
Garments
Metal Furniture
Corrugated Box
Tag
Cutting Room
Warehouse
Sumter
Furniture
Print







Lowell
Garments
Tomoka

Heavy Vehicle Renovations
Polk
Seating
Office Systems
Refurbishing
Recycling
Avon Park
Tire Re-Manufacturing

Sanitary Maintenance & Supplies
Okeechobee
Citrus Processing
Glades
Sugarcane



St. Petersburg
Operations
Safety
Worker Training




South Bay
Torque Converter Refurbishing



Hendry
Cattle
Citrus

Source: PRIDE.

2

Broward
Optical

Special Report

Findings _______________

In Fiscal Year 2002-03, PRIDE provided 1,955
inmate work positions at 21 prisons throughout
Florida.

PRIDE benefits the state by providing vocational
training for prison inmates.
Its programs
enhance security in correctional institutions and
increase opportunities for inmates to find gainful
employment upon release.

Providing incentives for good behavior. PRIDE
work positions also help the department manage
inmates by providing incentives for good
behavior. PRIDE industry managers and prison
officials assert that PRIDE jobs are highly
coveted by inmates because they offer
interesting work, paid compensation, and a
work environment that is similar to outside
employment. Prison officials indicated that
because these positions are highly valued, the
inmates assigned to prison industries tend to
behave better while in prison in order to keep
their jobs. The program also has a positive
influence on the behavior of inmates who hope
to acquire a PRIDE job in the future. Prisoners
are not typically placed in program jobs unless
they are free of disciplinary reports for six
months prior to placement, and they are
removed from the program if they receive
disciplinary reports for any offense at any time
on the facility grounds.

PRIDE faces challenges in seeking to increase the
number of inmates it employs, as its sales have
declined over the past five years. Federal
limitations on the interstate sale of prison
manufactured goods, lower state spending, and
private sector concerns about using products
manufactured by inmate labor present obstacles
to PRIDE’s growth. PRIDE is attempting to add
and expand industries, but its efforts have had
limited success.
PRIDE’s new structure provides cost savings,
flexibility, and liability protection. However,
PRIDE needs to improve the transparency of
its operations.
PRIDE has not adequately
maintained the distinction between itself and
its related businesses. And, PRIDE has not
provided sufficient information to the
Legislature regarding its activities and
restructuring, which has led to concerns about
its operations. PRIDE needs to take steps to
improve its accountability and transparency and
to adopt standard operating procedures to limit
legal risks. In addition, to protect state assets,
the Legislature needs to clarify the state’s
interest in PRIDE property.

Facilitating

inmate

payment

of

restitution.

PRIDE generally pays inmates between 20 cents
and 55 cents per hour, depending on their skill
level and length of service. 3 In addition, for
every $1 an inmate earns, PRIDE pays 15 cents
on behalf of inmates for victim restitution and
transfers these payments to the department for
distribution. In calendar year 2002, PRIDE paid
$231,162 in restitution to crime victims.
Providing vocational training. PRIDE enables
inmates to gain vocational skills that can help
their transition to the outside world and may
help reduce recidivism.
PRIDE industries
provide two types of skills. First, it teaches basic
work skills to inmates who may lack workplace
experience. These skills include reporting for
work, working as a team member, taking
directions, and having their work reviewed.
Second, it allows inmate workers to develop
specific work skills such as operating and
repairing complex machinery in various
industries such as optical, dental and food

PRIDE benefits the state in
several ways
PRIDE supports the state correctional system
in several ways by reducing inmate idleness,
providing incentives for good behavior,
facilitating payment of restitution, and
providing useful vocational skills to inmates that
may help to reduce recidivism.
Reducing inmate idleness.

One of the most
effective tools for providing prison security
is reducing inmate idleness. Occupying inmates
in group activities focuses their attention on
productive activities and makes it easier for
correctional officers to supervise inmates.

3

3

Some PRIDE operations are certified under the federal Prison
Industry Enhancement (PIE) Certification Program, which
requires that inmates be paid the prevailing wage for their work.

Special Report
quality laboratories. These skills may increase
the likelihood of inmates obtaining meaningful
employment after release.
This vocational
training is not affected by state budget
shortfalls, as PRIDE does not receive general
revenue to support its programs. In contrast,
the department reduced its education and
vocational
program
budget
by
29.6%
($8.3 million) for Fiscal Year 2003-04, which
included cutting 42 of its 137 vocational
education staff positions.

Inmates Learn Marketable Computer Skills At Liberty Digital

Exhibit 2 gives examples of the type of
vocational training provided in PRIDE
industries.

Global Digital Services has contracted with PRIDE for inmate labor
on several projects. Inmates at Liberty Digital are trained in
computer-aided drafting, digital image scanning, and data entry.
The projects the inmates work on vary from contract to contract. At
the time of the review team’s visit, the biggest project was scanning
and indexing crash reports for the Department of Highway Safety
and Motor Vehicles. Many government agencies have an excess of
records in need of storage and retrieval services, and scanning
records for electronic storage helps to alleviate this problem.
According to the industry managers, the majority of the competition
for these services is outside of the United States. Because all
information and materials going in and out of a correctional
institution are subject to many controls, Global Digital claims that
data handled by inmates is safer than data that goes outside of the
U.S. Also, because Global Digital is a private business, it can use
non-inmates to be more flexible to a customer’s needs. For
example, Global Digital has a contract with the Department of
Corrections to scan and index medical records of released inmates.
Current inmates are not permitted to see or handle these records,
so that part of the work is done outside of the prison by non-inmate
workers. The inmates do quality control on the files, to make sure
that indexing numbers match up.

Exhibit 2
PRIDE Industries Provide a Variety of Vocational Skills
Inmates Receive Automotive Training and Certifications at
Tomoka Correctional Institution

At the Tomoka Heavy Vehicle Renovation shop, inmates rebuild,
refurbish and customize a variety of vehicles. These include
emergency vehicles, trucks, and buses for public entities like
transportation authorities and school districts. Inmates perform
engine repair and body work, finish and detail exteriors, and
upholster interiors. In addition, some inmates are trained to install
electronics systems needed by emergency vehicles. Inmates who
complete the training process can receive Automotive Service
Excellence certification. Some inmates obtain higher levels of
training and certifications. They assist in training new and lessskilled inmates.
The shop can provide a high level of
customization. For example, it can convert a truck without a bed
into a modern emergency response vehicle. This level of
customization generates return customers.

Source: OPPAGA, photo from PRIDE.

PRIDE’s effect on
confirmed. Reducing

recidivism

cannot

be

the likelihood that inmates
will be recommitted to prison after release is one
of PRIDE’s statutory missions, and it reports that
the recidivism rate among inmates who worked
for its industries is lower than the average
recidivism rate for all inmates. PRIDE reported a
recidivism rate of 18.1% for inmate workers
released during Fiscal Year 2000, which
compares favorably to the Department of
Corrections reported recidivism rate of 33.8% for

4

Special Report
all inmates released since 1993. 4 PRIDE officials
also cite anecdotal evidence of the program’s
effects by providing examples of inmates who
had achieved success after imprisonment and
who gave credit for that success to their PRIDE
experiences.

has declined 33% since 1994. In contrast, the
Florida’s prison population has increased
substantially due to several factors, including
state population growth, new mandatory
sentencing, and the implementation of the
Florida’s Truth-in-Sentencing law. 5 As a result
of a reduction in some business operations and
the increase in prison population, the percentage
of inmates working for PRIDE has fallen
substantially, from 6% in 1985 to 2.7% in 2002.
See Exhibit 3. 6

However, PRIDE’s analysis does not take into
account the fact that it uses inmates who are
typically less likely to return to prison even
before they begin work for the program. PRIDE
workers tend to be older, to have been
incarcerated longer, to be more likely to be
white, and to be more educated; all of these
factors are associated with lower recidivism rates
according to department and other research.
Our statistical analysis of PRIDE’s impact on
recidivism found no net impact once these
factors were held constant.
(Appendix C
provides a more detailed explanation of our
methodology.) However, we were unable to
analyze the impact of other factors, such as postrelease placement support, family ties and work
experience, which may also affect recidivism;
PRIDE’s statistical data also does not account for
these factors. In order to provide the Legislature
with accurate information, PRIDE should collect
additional data and conduct an in-depth
analysis of the effect of the work program on
recidivism including those inmates that would
most benefit from PRIDE work experience.

Exhibit 3
PRIDE Workstations Have Decreased Although the
Inmate Population Has Increased
Year
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002

To serve more inmates, PRIDE
must increase sales

Number of
PRIDE
Workstations2

28,310
29,712
32,764
33,681
38,059
42,733
46,233
47,012
50,603
56,052
61,992
64,333
64,713
66,280
68,599
71,233
72,007
73,553

1,701
1,931
2,194
2,516
2,661
2,887
2,437
2,397
2,663
2,934
2,844
2,605
2,487
2,534
2,659
2,478
1,953
1,955

Proportion of
Workstations
to Inmates
6.0%
6.5%
6.7%
7.5%
7.0%
6.8%
5.3%
5.1%
5.3%
5.2%
4.6%
4.0%
3.8%
3.8%
3.9%
3.5%
2.7%
2.7%

1

Not every inmate is eligible to work in PRIDE industries. Mental
or physical illness, lack of skills, and disciplinary problems exclude
some inmates from eligibility.
2
The number of prisoners who actually work in a year is greater
than the number of work stations; because of turnover, more than
one inmate may use a workstation during the course of a year.

The percentage of Florida inmates working for
PRIDE has decreased over time.
Although

PRIDE produces benefits to the state, the
number of inmates that it employs has decreased
in recent years, even though the prison
population in Florida has substantially
increased. The number of PRIDE workstations

Source: Florida Corrections Commission; Bureau of Research and
Data Analysis, Department of Corrections; PRIDE.

5

4

Total Inmate
Population1

The Florida Department of Corrections defines the standard
recidivism rate as the percentage of inmates who, within two
years of release from prison, commit any crime that leads to
another term of incarceration or community supervision with the
department. Technical violations are not included. PRIDE uses
the same definition.

6

5

Truth-In-Sentencing legislation (s. 944.275, F.S.) requires that
every person sentenced to prison in Florida who committed his
or her crime on or after October 1, 1995, serve a minimum of 85%
of his or her sentence.
Fiscal Year 1985 (July 1, 1984-June 30, 1985) was the first full year
of operation for PRIDE.

Special Report

A number of factors impede PRIDE’s ability
to increase sales

Nonetheless, the federal law substantially
restricts PRIDE’s potential markets.
Loss of sales to state agencies. State agency
purchases, which used to comprise the majority
of PRIDE sales, have been falling. State agency
purchases provided 83% of PRIDE sales in 1995,
but were down to 55% in 2002. One reason for
this reduction has been the general downturn in
the economy. For example, due to reduced
budgets, agencies are holding off on purchases
such as office furniture. Privatization also has
had an effect.
When the Department of
Corrections privatized its food services
operations, the new vendor did not continue the
department’s previous contract with PRIDE
because the program lacked the capacity to
produce, warehouse, and deliver the quantity of
goods that the private contractor desired. The
loss of this contract resulted in a loss of
$5.6 million in revenues to PRIDE.

The number of inmates PRIDE can put to work
depends on the revenues generated by sales.
PRIDE officials estimated that it takes sales of
$30,000 to support each workstation. Over the
last five years, PRIDE sales have fallen by 25%,
as shown in Exhibit 4.

Exhibit 4
PRIDE Sales Have Declined Over the Last Five Years
Year

Net Sales

1998
1999
2000
2001
2002

$81,220,930
78,280,577
63,966,206
62,093,958
60,930,006

Source: PRIDE.

Several factors have contributed to this decline
in sales, including federal limitations on the
interstate sale of goods manufactured by
prisoners, general economic conditions and
reduced state spending, state agency resistance
to using PRIDE products and services, and
private sector concerns about using products
manufactured by inmate labor. While PRIDE
has taken several steps in recent years to
increase sales, its efforts have had limited
success.

In addition, some agencies have shifted
purchases from PRIDE to other sources.
Department of Management Services officials
who monitor state purchasing cited several
reasons for this shift, including agency
complaints about delivery times and quality of
PRIDE goods and a belief by agencies that they
could obtain lower prices or higher quality
products from other sources. Although agencies
are required by law to purchase items from
PRIDE when they are of similar quality and
price to those offered by outside vendors,
Department of Management Services officials
report that this statutory preference has
generated resentment and that some agencies
do not comply with this requirement.

Since 1940,
federal law has prohibited the interstate
transportation of prison-manufactured goods. 7
Despite this limitation, PRIDE has been able to
expand its out-of-state markets through a limited
number of foreign contracts to which federal
limitations do not apply, such as producing
eyeglasses for a client in Puerto Rico. PRIDE
also has developed some service industries, such
as data entry, vehicle renovation, and calfraising, which are exempt from the law.
Federal law limits PRIDE sales.

7

PRIDE has taken some steps to address state
agency concerns by contacting agency
purchasing units and refocusing on product
quality and customer service to win back state
agency business. 8 Pride also is developing new
services, such as digital imaging of documents,

In 1940, Congress enacted the Sumners-Ashurst Act banning the
interstate transportation of prison manufactured goods. The
provisions of the law can be found in 18 U.S. C. 1761. The law
applies to manufactured goods only. Services are not banned by
the act. For example, data entry and repairing transmission parts
are considered services not manufacturing and can be sold
interstate. However, bills extending the ban to include services
have been introduced in Congress.

8

6

In 2002, PRIDE changed its structure to create strategic business
units combining similar businesses in to sales groups. Previously,
PRIDE’s industries were grouped by regions, which placed
disparate industries together. The realignment of these business
units appears to be beneficial for PRIDE. Now each group has a
sales force attached to its business. This increases accountability
by tying sales and production.

Special Report
to increase its appeal to state agencies. 9 To
increase its state business, it will be important for
PRIDE to work with agency purchasing officers
to identify goods and services that it can provide
that will produce real value and cost savings to
the agencies. For example, PRIDE has extensive
printing operations that may allow agencies to
outsource printing functions.

Second, PRIDE’s efforts to expand operations
into new industries are sometimes resisted by
private companies that assert that PRIDE has an
unfair competitive advantage due to the low
wages it pays inmates. However, PRIDE does
not have the capacity to corner the market in its
businesses and PRIDE’s statutory mission
prohibits unreasonable competition with private
enterprise.

Section 946.515(2), Florida Statutes, provides a
preference within state purchasing processes for
PRIDE products and services that meet quality and
price standards. Agencies may buy from a vendor
other than PRIDE based on determinations of
need, price and quality. The Department of
Management Services no longer requires agencies
to submit these determinations to DMS, but to
keep them on file. Therefore, the application of
the statutory provision for a preference for PRIDE
products and services is essentially within the
discretion of individual agencies. While it would
not be cost-effective to re-establish a statewide
review of these decisions, we do believe that
PRIDE should provide state-level decision-makers
with information on variations in the level of sales
to each state agency.

One state, South Carolina, has enlisted its
economic development office to promote its
prison industries with some success. The South
Carolina Department of Commerce has toured
the state’s prison industries to gain an
understanding of its capabilities. The commerce
department seeks to identify opportunities by
which the prison industries can aid a business.
For example, the commerce department may
help broker an arrangement in which a business
that might otherwise move to Mexico to reduce
packaging costs may instead use the prison
industry. Such an arrangement would benefit
the state, as the business would remain in South
Carolina and its workers would retain their jobs,
as well as the prison industry which would have
more work for the inmates.

Selling to the private sector has been difficult.

PRIDE’s efforts to develop private sector markets
to supplement the declining state agency market
have been hindered by two factors. First, private
companies and industries are often reluctant to
accept goods produced by inmates. These
companies appear to fear a negative public
reaction to the perception that a company uses
goods produced by prison labor, which may be
presumed to be forced labor. For example,
corporations such as Coca-Cola and Wal-Mart
have policies against using goods produced by
forced or prison labor. 10

PRIDE would benefit by working to establish
similar working agreements with Enterprise
Florida, the public/private partnership that
provides business recruitment services in
Florida. PRIDE offers a reasonably stable and
cost-effective workforce for industries that
require labor intensive work. PRIDE officials
have attempted to interest Enterprise Florida in
PRIDE operations in the past, but without
success. PRIDE and Enterprise Florida need to
work together to reach out to the private sector,
establish referrals for business, and contract or
subcontract for work in order to expand sales
and inmate work opportunities. Thus, if PRIDE
had orders it could not fill, the work could be
referred out to the private sector. Similarly, if
private sector companies had excess orders,
PRIDE could subcontract to do the work. In
either instance, PRIDE would establish a
working relationship that could result in
opportunities for PRIDE inmate workers after
their release.

9

We also note that PRIDE has focused on broadening its customer
base to include local governments, school districts and
universities. It introduced new lines of dormitory furniture to sell
to universities. In addition, the majority of vehicles refurbished
at the Tomoka plant in Exhibit 2 come from local governments,
transit systems, and school districts.
10
Prison labor in the United States is “forced labor” in the sense
that inmates are required to work during their incarceration. The
term “forced labor” has many connotations that do not apply
within the modern context of corrections in Florida, and
specifically to Florida’s prison industries program, which is
operated on a free enterprise model in which the work
environment largely simulates the work environment of a private
company outside of prison.

7

Special Report

Structural changes benefit PRIDE

Corporation (ITC), a non-profit corporation, to
manage its prison work programs and provide
administrative and managerial support services.
ITC in turn created Labor Line Services; Labor
Line, Inc.; and Global Outsourcing, and formed
private partnerships to create Florida Citrus
Partners and Diversified Supply Management.
Exhibit 5 illustrates the corporate structure of
PRIDE and related parties. See Appendix B for a
detailed description of these related entities.

In 1999, PRIDE began revising its corporate
structure to create new related for-profit and
non-profit corporations.
This corporate
structure has produced several benefits for
PRIDE.
PRIDE has created new related for-profit and
non-profit corporations.
In its early years,

PRIDE provided a number of inmate services
including prison work, training, and assistance
in
finding
post-release
housing
and
employment. 11 In 1999, with the assistance of a
business consultant, PRIDE developed a new
structure that spun off some of these services to
new entities. PRIDE created Industries Training

11

PRIDE’s new structure provides cost savings,
flexibility, and liability protection. PRIDE’s new

corporate structure has produced cost savings.
PRIDE and each of the other related
corporations
contract
with
ITC
for
administrative services and each is assessed a
pro rata share of these costs. This centralization
of personnel, accounting, data entry, and IT
functions allows PRIDE and the new
corporations to distribute the costs of these
services.

PRIDE created Renewed for Industries, Services, and
Employment, Inc. (RISE), a corporation to help with inmate
placement, in 1996. RISE subsequently became Labor Line
Services.

Exhibit 5
PRIDE’s Corporate Structure Is Complex
PRIDE
•Non-profit
•Trains

and works inmates to
aid rehabilitative goals,
enhance security, and reduce
inmate idleness and recidivism

Industries Training
Corporation
•Non-profit
•Provides

administrative and
managerial support for PRIDE

Florida Citrus Partners

Labor Line Services

•Limited

•Non-profit
•Provides

transition support
and job training services for
former PRIDE inmates

Global Outsourcing
Labor Line, Inc.
•For-profit

temp-to-hire
staffing agency
•Works with underemployed
individuals, including
former inmates

liability
between ITC and
private sector associate (50%
owned by each)
•Produces fresh citrus juice
and sectioned fruit
•Partnership

•For-profit
•Develops

partnerships with private
businesses
•Acts as private sector partner for
PRIDE when necessary
•d/b/a Global Digital and Global Reman

Diversified Supply
Management
•For-profit
•40%

owned by ITC
owned business

•Minority

Northern Outfitters
•For-profit
•Manufacturers

extreme weather
apparel using inmate labor in Utah

Source: Developed by OPPAGA analysts based on information provided by PRIDE.

8

Special Review
The creation of Global Outsourcing also gives
PRIDE additional options. One of the intentions
behind the formation of Global was to provide
an insulating layer for businesses which may be
interested in working with a prison industry, but
have concerns about public reaction as discussed
above.
Allowing potential partners and
customers to interact with Global, which in turn
subcontracts with PRIDE, insulates the partners
and customers from consumer concerns about
using prison labor. 12
Because Global is a
relatively new corporation, there is no current
data to confirm whether this approach has
worked.

the grant of sovereign immunity to PRIDE help
protect PRIDE’s assets. 14
The new structure also protects PRIDE’s nonprofit status. The Internal Revenue Code limits
the amount of income PRIDE can produce from
business activities that are not directly related to
its main charitable purposes because PRIDE is a
non-profit corporation. This type of income is
called unrelated business income. If PRIDE
generates too much unrelated business income,
it could lose its non-profit status, or incur
increased taxes. PRIDE has used a generally
accepted business practice by creating a related
company that will allow it to generate unrelated
business income, maintain its non-profit status,
and avoid tax problems. 15 For example, one of
the for-profit entities created when PRIDE
moved to the new structure is Labor Line, Inc.,
which generates income by providing temporary
employment to hard-to-place individuals, such
as low income or under-employed persons.
While the company on occasion places former
inmates, it is not integrated into PRIDE’s other
placement efforts, and is, therefore, not part of
PRIDE’s charitable mission. 16
The income
generated by Labor Line, Inc., could be classified
as unrelated business income by the IRS. By
creating Labor Line, Inc., as a for-profit entity,
PRIDE officials have created a corporate
structure that enhances the services that PRIDE
previously sought to provide and produces
income while preserving its non-profit status.

Global also has the ability to act as a PRIDE
partner in Federal Prison Industries Enhancement
(PIE) program. Previously, many of the business
ideas and ventures considered by PRIDE were
not feasible due to the lack of a for-profit partner
that could establish or sustain a PIE. Federal
regulations, enacted in 1979, require PIE
industries to have a for-profit partner and to pay
prevailing wages. The formation of Global may
benefit PRIDE in one of PRIDE’s industries from
which the private partner withdrew. Global
Outsourcing may be able to replace the
withdrawing partner and serve as the for-profit
partner in that venture. If Global was not
available to do so, the business which provides
work opportunities for more than 100 inmates
would be forced to severely cut back or close.
PRIDE reports 10 active PIE programs which
employ 249 inmates. 13

PRIDE needs to improve the
transparency of its operations

The new corporate structure limits PRIDE
liability. For example, ITC may enter a lease for
equipment or property. If a dispute arises over
the lease, ITC will litigate the claim and pay any
judgment; PRIDE will not. Global also contracts
for production of certain goods. If a dispute
arises, it is Global which may be held liable, not
PRIDE. The existence of these corporations and

While the new corporate structure produces
benefits, it also has created accountability
concerns. Many of PRIDE’s board members also
sit on the boards of the new corporations, and
PRIDE has made millions of dollars of loans to
14

Although ITC was created by PRIDE neither it nor its related
corporations enjoy the protection of sovereign immunity.
15
See Guidebook for Directors of Nonprofit Corporations, 2nd
edition, American Bar Association (2002)
16
PRIDE recognizes that inmates are difficult to place. The hope is
that Labor Line can establish a working relationship with
employers though referrals of other hard to place individuals in
order to build goodwill and trust. Once a relationship is
established Labor Line, Inc., would be able to approach the
employer about employing former inmates.

12

Some companies have express policies against using goods
produced by prison labor, which is typically equated with “forced
labor.” Even though modern prison industries are unlike
historical images of forced labor, some companies want to avoid
public relations concerns that may arise in response to reports
that the company is using prison labor.
13
The 249 inmates include full-time, part-time, and one-time
workers. Nationwide, PIE programs account for approximately
3,800 prison industry workers out of 65,000 total state prison
workers.

9

Special Report
these corporations.
PRIDE has failed to
adequately explain these actions and its
structural changes to the Legislature in its
annual reports or to answer questions posed by
the Corrections Commission about its new
structure.

Confusion over the relationship of PRIDE and
ITC created adverse consequences in a recent
business dealing. In 2000, ITC entered into a
contractual relationship with a private business
involving property in the Jacksonville area, but
included PRIDE’s name in the legal documents.
When a dispute arose over that contract, there
was confusion over whether the dispute was
with the privately held Industries Training
Corporation, or with PRIDE, a company which
enjoys sovereign immunity from certain legal
actions. PRIDE and ITC have received favorable
rulings in the case, but only after extended and
expensive litigation.

PRIDE has failed to adequately maintain the
distinction between itself and its related
businesses. The relationship between PRIDE,

ITC and the other corporations is intertwined
and difficult to separate. For example, PRIDE
and ITC have some common managers,
common board members, and use the same
offices. 17
The phones are answered,
“ITC/PRIDE.” PRIDE paid ITC $6 million in 2002
and $9 million in 2001 for administrative
services. These services have not been placed
out for bid on a regular basis to determine if
another contractor could provide PRIDE with
the same services at a lower cost.

PRIDE has not provided sufficient information to
the Legislature, the Governor, and the public.

Given the complex nature of PRIDE’s new
corporate structure, it is important that it clearly
communicate with key stakeholders to address
potential accountability concerns. However,
PRIDE has not taken these steps and has instead
provided only incomplete information about its
operations; this lack of transparency has been
aggravated by its refusal to respond to questions
by the Corrections Commission.

PRIDE also made substantial financial
contributions, both in direct contributions and
loans, to the startup of ITC and the other new
corporations. As of December 31, 2002, the
corporations owed PRIDE approximately
$9.7 million. According to PRIDE officials the
debt has been reduced to $8.7 million as of
December 1, 2003. PRIDE has not established
the terms for repayment of these loans.

PRIDE’s required annual report on its operations
has been incomplete. Section 946.516, Florida
Statutes, directs PRIDE to report annually to the
Governor and Legislature on the status of
corrections work programs, including

The relationship between PRIDE and the new
entities needs to be defined in more detail in
their contract. The bylaws of ITC provide that
PRIDE would in essence inherit ITC’s assets in
the event of ITC’s closure. However, a future
ITC board could change its bylaws, sever its
relationship with PRIDE, and sell or otherwise
dispose of the assets it received from PRIDE. For
example, PRIDE gave a cold storage facility in
Jacksonville to ITC that was valued at
$2.5 million.
If ITC decided to change its
operations, PRIDE would have no recourse to
regain the value of that asset. Further, PRIDE
has not established a contract governing the
terms of repayment for loans it has made to ITC,
as discussed above.

17

ƒ
ƒ
ƒ
ƒ
ƒ
ƒ

proposed use of profits from such programs;
amount of non-inmate labor;
work subcontracted to other vendors;
use of consultants;
finished goods purchased for resale; and
number of inmates working in the
correctional work program at the time of the
report.

The PRIDE annual reports have not met these
requirements. The reports provide only cursory
information about the evolving structure of
PRIDE, often referring to ITC and the other
corporations as “related parties” without further
identification or explanation. The reports offer
only limited information concerning the other
statutory requirements. For example, PRIDE’s
annual reports do not provide information about
the proposed use of profits from the individual

All of the current ITC board members are either current or
former board members of PRIDE.

10

Special Review
programs, the amount of work subcontracted to
ITC and Labor Line Services, Inc., and the
amount of finished goods purchased for resale.
The reports also fail to communicate the
financial and performance information needed
to effectively evaluate the program.
For
example, where statistics are provided in the
reports, they are often provided without needed
context.
The 2002 annual report provides
eight charts on various sales, training, and
expenditures but provides no explanatory text
relating to the charts.

PRIDE should revise its annual report format to
be clear about its corporate structure and
financial operations, and include all statutorily
required information. In addition, as ITC and its
related companies are intertwined with and
indebted to PRIDE, the reports should include
information on those companies as well,
including the amount and status of loans and
the nature and rationale for gifts.
The annual report also should describe the costs
the state incurs to support PRIDE. For example,
PRIDE has incurred liability when prisoners or
others were injured and filed claims and
lawsuits against the state. (Sovereign immunity
laws allow claims under limited circumstances.)
In some instances the state has paid those
settlements; fortunately, most of these suits were
settled for modest amounts. In 2001-02, the
Division of Risk Management reported that the
state paid 12 liability claims related to PRIDE for
a total of $128,888. Similarly, the state pays the
medical bills of inmates injured on the job.
While it does not appear that PRIDE has any
endemic inmate safety problems, there have
been a few major accidents, including an inmate
who lost a portion of a leg and several who have
lost fingers. According to company officials,
PRIDE pays the state approximately $110,000 a
year for this coverage. The Legislature cannot
adequately assess the financial costs of PRIDE to
the state without this information.
PRIDE
should work with state agencies to determine
the cost to the state of claims and injuries filed
against PRIDE and paid by the state, and these
costs should be included in any report provided
to the Legislature and the Governor. 18

Finally, the language of the annual reports often
does not provide needed supporting details. As
illustrated in Exhibit 6, the 2002 annual report
noted that PRIDE had advanced funds to
“certain related parties,” but did not disclose
who the recipients were, why they would not
benefit from the funding, why PRIDE assumed
the cost of the initiatives, and why over
$5 million was forgiven from the related parties.
The annual reports also did not disclose the
waiver of a conflict of interest signed by its CEO.
The CEO of PRIDE, who also serves as the
president of ITC, is a private shareholder of
Diversified Supply Management, a minority
owned business that is partly owned by ITC.
While PRIDE waived conflict of interest rules for
this situation, it should have disclosed the
situation in its annual report.

Exhibit 6
PRIDE Annual Reports Fail to Clearly Communicate
Information
Excerpt from 2002 PRIDE Annual Report
In prior years and during the year ended December 31, 2002,
PRIDE advanced funds to certain related parties, including ITC, for
the funding of certain specific initiatives. During 2002, the parties
concluded that the recipients of this initial funding would not
benefit from these initiatives as PRIDE had assumed responsibility
for administering them. As a result, it was agreed among the
parties that PRIDE would assume the initial and certain operational
costs of these initiatives. Management identified these initiatives,
isolated such costs and adjusted the amount due from the
appropriate related party. Accordingly, the amount due from these
related parties has been reduced by $5,279,190.

Refusal to respond to certain Corrections
Commission inquiries led to criticism of PRIDE.

In 2002, the Florida Corrections Commission
requested information on PRIDE for its annual
review of matters pertaining to corrections.
After providing initial information disclosing the
existence of ITC and its related corporations,
PRIDE refused to provide additional financial
information that was requested, challenging the
authority of the commission to review

Source: 2002 PRIDE annual report.

18

11

The annual report has a section on pending suits, but it is
insufficient to provide the information needed to the state. Even
if the annual report provided greater detail, it would be limited to
cost borne by PRIDE not by the state.

Special Report
PRIDE. 19, 20 As a result, the commission’s 2002
annual report described PRIDE’s unwillingness
to explain the interrelationship between the
corporations, questioned whether conflicts of
interest exist, and recommended a review by the
Auditor General and/or OPPAGA. PRIDE needs
to recognize that as a state-created entity it
has a fundamental responsibility to provide
accountability information on its operations,
including those conducted by closely related
corporations.

PRIDE’s relationship with Department
Corrections management is strained. At

of

the
institutional and operational level, PRIDE
employees and prison officials work well
together. Problems which arise are usually
resolved amicably, and the two work
cooperatively to resolve security and other
issues.
However, the working relationship
between PRIDE and the department’s upper
management is strained at best.
PRIDE
managers express resentment that while the
Secretary of the Department of Corrections is a
member of its board, the current and prior
secretaries have infrequently attended PRIDE’s
board meetings. This resentment has impeded
the development of a working relationship
between PRIDE and department management.
PRIDE’s expectation that the Secretary of the
department will attend all of its quarterly board
meetings is unreasonable.
The Secretary’s
responsibilities include oversight of 121
institutions and facilities serving nearly 80,000
inmates.
While PRIDE provides valuable
services, it serves less than 2,000 of these
inmates.
Consistent participation of a
Secretary’s designee should appropriately
address this issue.

PRIDE needs to address
management issues
PRIDE
needs
to
increase
internal
risk
assessment. PRIDE lacks adequate standard

operating review procedures to limit legal risks.
Several cases have arisen as a result of a lack of
standard operating procedures or because
employees had excess authority. For example, a
former PRIDE manager changed the terms of a
lease agreement without the knowledge of
PRIDE’s general counsel and removed terms in
the agreement that protected PRIDE in the case
of a default on the lease. This embroiled PRIDE
and ITC in extended litigation. In another case,
a former employee overstated PRIDE’s ability to
meet supply demands on a food service
agreement, causing the loss of a multi-million
dollar contract. In a third instance, a former
employee signed an indemnity agreement in a
contract and failed to inform PRIDE that it
lacked insurance on rental vehicles. PRIDE
terminated these employees after these
problems arose. However, to avoid further
costly mistakes which may lead to litigation,
PRIDE should develop a process for reviewing
internal
operating
procedures,
potential
ventures, and outside partnerships. A more
systematic approach to evaluating these
opportunities will make PRIDE financially
stronger and preserve its resources.

State property interests in PRIDE
assets need to be clarified
The law determining the interest of Florida in
PRIDE assets is not clear. Florida law provides

the state with an interest in property that was
transferred to PRIDE at the time of its creation,
as well as some property acquired by PRIDE
after that time. However, the law is unclear as to
whether, if PRIDE sells or disposes of that
property, the state’s interest follows the
proceeds of the sale into other property.
Although PRIDE’s corporate documents require
PRIDE properties to be returned to the state at
the corporation’s closure, the law does not
require this transfer. It may be in the state’s best
interest to codify this requirement. Should
PRIDE fail, the state would have access to the
equipment and assets that would allow it to
continue the work program. In addition, some
property which was donated to PRIDE was
subsequently transferred to ITC. Current law

19

PRIDE officials argued that the Florida Corrections Commission,
another board of the executive branch, lacked the authority to
review PRIDE. However, we note under s. 946.517, F.S., PRIDE is
subject to the oversight and auditing function of the Governor.
20
The Corrections Commission’s 2002 annual report is available
online at http://www.fcc.state.fl.us/fcc/reports/02Chapter3R.pdf.

12

Special Review
PRIDE’s new structure provides cost savings,
flexibility, and liability protection. However,
PRIDE has done a poor job of explaining its
corporate restructuring to the Legislature and
the public. As a result, concerns have arisen that
have hurt PRIDE’s business development. To
address this problem and bolster its business, we
recommend that PRIDE implement the steps
described below.

does not speak to what the state’s interest is in
this type of property.
For example, bank loan documents of PRIDE
demonstrate the lack of clarity in the law
concerning PRIDE’s assets.
At least one
document suggests that the state will assume
both PRIDE’s assets and liabilities should PRIDE
fail. Neither statutes nor PRIDE’s corporate
documents provide for the assumption by the
state of PRIDE liabilities. Nor can PRIDE act to
bind the state to its liabilities.

ƒ

The statute should be clarified to ensure that
state interests are clearly defined, with an
understanding that PRIDE often uses assets as
collateral for capital loans.

Conclusions and
Recommendations ______

ƒ

PRIDE’s programs enhance prison security and
increase opportunities for inmates to find gainful
employment upon release. However, PRIDE
sales have fallen over the past five years, as has
the number of inmates it employs. A number of
factors contributed to this decline in sales,
including reduced state spending, privatization,
and private sector concerns about using
products manufactured by inmate labor. To
enhance business with state agencies and the
private sector, we recommend that PRIDE take
the actions described below.
ƒ

ƒ

ƒ

Work with state agency and local
government purchasing officers to identify
goods and services that PRIDE can produce
that will provide value and cost savings to
the agencies and refine customer service and
quality control to remedy customer
complaints. PRIDE should establish an
advisory group of agency and local
government purchasing officials to aid in this
effort.
Work with Enterprise Florida to identify
ways that PRIDE’s programs could be used
to enhance the attractiveness of the state to
business and increase PRIDE sales.

Enhance its annual reports to the Legislature
to include a descriptive organizational chart
of PRIDE; all statutorily required
information; the state costs for claims and
injuries filed against PRIDE; and information
on related companies as long as they are
intertwined with and indebted to PRIDE,
including the amount and status of loans, the
nature and rationale for gifts and other
pertinent information.
Include comparative information about the
level of PRIDE sales to each state agency so
that decision-makers can use that
information to guide state purchasing
policies and practices.
Conduct a detailed analysis of the effect of
inmate participation in the program on
recidivism rates, taking into account factors
such as post-release placement support,
family ties, and work experience which can
affect recidivism. This analysis should be
communicated to the Legislature as a part of
the annual report and would help PRIDE
identify particular categories of inmates who
best benefit from its programs.

PRIDE should take the steps below to strengthen
its business management.
ƒ

ƒ

13

Formalize its relationship with ITC by
establishing a contract between PRIDE and
ITC that clarifies PRIDE’s interests in assets
owned by ITC and a repayment schedule for
the $8.7 million in existing loans.
Develop and apply corporate policies to
assess the risk of new ventures and establish
a review function, such as internal audit, to
ensure that standard operating procedures
exist and are followed to protect PRIDE
resources.

Special Report

Agency Response _______

Florida statutes provide the state an interest in
property that was transferred to PRIDE at the
time of its creation and any subsequently
constructed or otherwise acquired facilities.
However, the law does not specifically state that
all of the corporation’s assets would revert to the
state if the corporation were to be terminated or
dissolved.
Since the Industries Training
Corporation now presents an alternative party
to claim ownership of these assets, we
recommend that the Legislature address this
issue by taking the action below.
ƒ

In accordance with the provisions of s. 11.51,
Florida Statutes, a draft of our report was
submitted to the Executive Director of PRIDE
Enterprises, Inc., for review and response. The
Executive Director’s response has been
reproduced in its entirety in Appendix D on
page 20.

Revise s. 946.505, Florida Statutes, to provide
for the reversion to the state of all assets
owned by or due to PRIDE in the event that
PRIDE should terminate or dissolve.

14

Special Review

Appendix A

PRIDE Operates Industries in 21 Correctional
Institutions
PRIDE operates industries in 21 correctional institutions. The number of inmates assigned
to each industry varies, depending on how labor intensive the work is. For example,
sectioning citrus fruit is very labor intensive, and more than 100 inmates work in the citrus
operation at Okeechobee Correctional Institution. Beef cattle require minimal supervision,
so only a few inmates are assigned to monitor the beef cattle at Apalachee and Hendry
correctional institutions.

Table A-1
List of PRIDE Industries, by Industry Type, as of October 2003
Agriculture
Location

Operation

Brief Description

Inmates Assigned

Apalachee CI
Apalachee CI
Glades WC
Hendry CI
Hendry WC

Dairy calf management
Beef cattle
Sugarcane
Citrus
Beef cattle

17
4
31
55
6

New River East
Okeechobee CI
Union CI
Union CI

Forestry
Citrus
Food processing
Dairy cattle

Inmates care for privately owned dairy calves to reduce mortality.
Inmates raise privately owned beef cattle.
Inmates plant, maintain, and harvest sugar cane, which is sold to U.S. Sugar.
Inmates maintain and harvest citrus groves.
Inmates raise privately owned beef cattle.
Inmates process raw lumber, treat wood, and construct products such as
picnic tables and shelters for state parks.
Inmates process fruit juice and sections for sale by private company.
Inmates process frozen meat products for distribution.
Inmates care for privately owned dairy heifers.

76
109
70
11

Brief Description

Inmates Assigned

Furniture
Location
New River East
Polk CI
Polk CI
Polk CI
Polk CI
Sumter CI
Union CI

Graphics
Location

Operation
Warehouse
Office Systems
Refurbishing
Seating
Computer Recycling
Wood furniture
Metal furniture

Inmates receive, store, and ship stocked materials to other industries.
Inmates design and manufacture modular office furniture.
Inmates restore used furniture.
Inmates manufacture wood and metal office seating.
Inmates dismantle computers for recycling.
Inmates design and construct wood office furniture.
Inmates manufacture metal furniture construction.

Operation

Apalachee CI
Calhoun CI

Warehouse
Printing

Cross City CI

Graphics

Liberty CI
Sumter CI

Digital services
Printing

Brief Description
Inmates maintain and retrieve vehicle registration records for DHSMV; work
on projects for private businesses as time permits.
Inmates operate full-service paper print shop.
Inmates manufacture identification products and signs, including decals, ring
binders, signs, and other similar products.
Inmates scan records in for electronic storage. Also, inmates do computer
aided drafting, data entry, and computer maintenance.
Inmates operate full-service paper print shop.

15

3
32
12
71 1
8
58
96

Inmates Assigned
20
139
129
71
80

Special Report
Services
Location
Avon Park CI
and WC
Baker WC
Broward CI
Marion CI
South Bay CI
Tomoka CI
Union CI
Union CI

Textile
Location
Apalachee CI
Lawtey CI
Lowell CI and
Annex
Madison CI
Marion WC
Marion CI
Marion CI
New River West

Operation
Tire remanufacturing
Paint factory
Optical lab
Box factory
Torque converter
remanufacturing
Vehicle refurbishing
Dental lab
Tag plant

Brief Description

Inmates Assigned

Inmates retread truck tires.
Inmates produce traffic striping paint.
Inmates assemble prescription eyeglasses, largely for Medicaid patients and
DOC inmates, as well as private insurance companies.
Inmates produce custom corrugated boxes.

59
8

Inmates remanufacture torque converters for resale.
Inmates refurbish emergency vehicles, trucks, cars, and specialty vehicles.
Inmates construct dental work such as dentures and crowns.
Inmates make license tags, including motorcycle and specialty tags.

31
75
45
99

Operation

Brief Description

Inmates Assigned

Mattress factory
Garment factory

Inmates make mattresses and pillows, mostly for correctional agencies.
Inmates produce apparel for law enforcement and public safety markets.

20
100

Garment factory
Shoe factory
Cutting room
Garment factory
Warehouse
Garment factory

Inmates produce apparel for law enforcement and public safety markets.
Inmates cut, sew, and finish shoes and boots for inmate use.
Inmates cut pieces for inmate apparel.
Inmates produce t-shirts and other inmate apparel.
Inmates store finished products for shipment to customers.
Inmates produce various inmate apparel products.

64
106
11
116 1
None directly
90

Sanitary Maintenance and Supplies
Location
Operation
Avon Park CI
and WC

38
31

Sanitary maintenance
and supplies

Brief Description
Inmates manufacture sanitary maintenance products, perform product
testing, and package products to customer specifications.

1

Totals for some industries include inmates assigned to administrative support functions.
Source: PRIDE.

16

Inmates Assigned
30

Special Review

Appendix B

PRIDE Corporate Structure
In 1999, with the assistance of a business consultant, PRIDE created a new structure for the
business. PRIDE created Industries Training Corporation (ITC), a non-profit corporation,
to perform all the administrative duties associated with prison industries. ITC in turn
created Labor Line Services; Labor Line, Inc.; and Global Outsourcing and formed private
partnerships to create Florida Citrus Partners and Diversified Supply Management.
ITC’s purpose is to manage prison work programs for PRIDE by entering into various
business relationships and providing administrative and managerial support. ITC could
provide the same services to any other correctional agency or corporation for a fee. PRIDE
and ITC have a contractual agreement establishing what services ITC provides. The
contract also allows for fees to be determined based on PRIDE’s budget. At times, PRIDE
and ITC have shared some of the same board members and officers. Currently, there are
four mutual board members, and the CEO, treasurer, and secretary of the two
corporations are the same.
Labor Line Services (LLS) is a non-profit corporation wholly owned by ITC. LLS offers
transitional support and job training to PRIDE inmates upon their release from prison.
LLS staff assist the released inmates with finding housing, transportation, and
employment, as well as providing general encouragement and support. These services are
free of charge for the inmates. PRIDE pays LLS to provide these services.
Labor Line, Inc. (LLI), is a for-profit corporation wholly owned by ITC. LLI is a temp-tohire staffing company which provides jobs for former PRIDE inmates as well as other
underemployed individuals. LLI provides labor to several companies throughout Florida.
Inmates who obtain temporary employment with LLI may be hired on permanently by
the companies using LLI staffing.
Global Outsourcing (Global) is a for-profit corporation wholly owned by ITC that develops
new partnerships with private businesses, the primary purpose of which is to create jobs
for PRIDE inmates. When necessary, Global also acts as a private partner for new PRIDE
ventures. Global Outsourcing also does business as Global Digital Services, a company
which uses PRIDE labor to provide various digital services to private sector and
governmental clients. Northern Outfitters is a for-profit corporation wholly owned by
Global Outsourcing that manufactures extreme weather apparel using inmate labor in a
successful PIE program in Utah.
PRIDE and/or ITC have created two other entities. One, Diversified Supply Management,
was a for-profit minority-owned business. The other, Florida Citrus Partners, is a limited
liability corporation, 50% of which is owned by ITC, and 50% by a private partner in the
citrus industry. Both entities have recently been involved in litigation, and it seems likely
that they will both soon be inactive.
To take advantage of privileges granted to minority businesses by the state, ITC created
Diversified Supply Management (Diversified). ITC owned 40% of the stock in this
corporation. The remaining stock was held by the CEO of PRIDE, a former board
member, and relative of a current board member, all of whom are minorities and/or

17

Special Report
women. PRIDE’s CEO signed a form to waive conflict of interest. Due to its lack of
success, Diversified has closed and is not conducting any business.
Florida Citrus Partners (FCP), a limited liability corporation, was created when ITC
partnered with a private company. FCP uses PRIDE labor to make citrus juice and
sections, which is then distributed and sold by the private sector partner. Due to pending
litigation, the future of FCP is unknown.

18

Special Review

Appendix C

Methodology
To assess the affect of participation in PRIDE programs on recidivism, we requested data
on former inmates from the Department of Corrections’ Bureau of Research and Data
Analysis. The data we received included records for inmates who had been released from
Florida correctional institutions hosting PRIDE operations from January 1, 1995, to
December 31, 1996, including both inmates who had worked for PRIDE and those who
had not. Included in the dataset was information on demographic characteristics such as
age, race, and gender, as well as other information on length of sentence, prior recidivism
events, and educational level. The data set also included two recidivism variables, one at
24 months (two years) and one at 60 months (five years). All of our data analysis was
conducted using SPSS 11.0.
We also looked at PRIDE’s own recidivism studies to provide some level of comparison.
The available corresponding data we had from PRIDE was for Fiscal Year 1996 (July 1995
through June 1996). To match our sample to PRIDE’s as closely as possible, we created a
filter for inmates released during Fiscal Year 1996 and conducted all of our analyses on
that sub-sample. In its own studies, PRIDE looks only at inmates who have worked for
PRIDE for at least six months, so the department created a variable for us which tagged
the inmates who had been in PRIDE for six months or more. 21
We first ran crosstabs on the recidivism variables and the PRIDE variable to determine the
simple percentage of former PRIDE inmates who recidivated and those who did not. The
resulting crosstab tables generated the raw number of former PRIDE inmates and
non-PRIDE inmates released during Fiscal Year 1996 who recidivated at two years and at
five years. To determine the percentage, we divided the number of former inmates who
recidivated by the total number released and multiplied by 100.
The department also provided aggregate data on inmates that suggested PRIDE inmates
might be different from the general population based on certain characteristics, such as
age, race, gender, education level, and time served. As discussed above, these variables
have been shown to be correlated with recidivism. To determine PRIDE’s actual affect on
recidivism, it was necessary for us to control for these variables. We constructed a logistic
regression model that controlled for the variables listed above.
We used logistic regression to measure the probability that participation in PRIDE would
reduce the likelihood that a prisoner would recidivate or not. We found that participation
in PRIDE for a minimum of six months does not reduce the probability of a prisoner
reoffending at two years or five years from the date of release. Our results were
statistically significant at the p<.05 significance level.

21

We later found that PRIDE excludes from study any former inmates who did not work for PRIDE for the full six months prior to their release.
Because some inmates are moved away from institutions housing PRIDE operations, such as road prisons and work camps, prior to their
release, the sample we examined can be expected to be slightly different from that which PRIDE uses.

19

Special Report

Appendix D

December 11, 2003
Mr. Byron Brown
Chief Legislative Analyst
Office of Program Policy Analysis
And Government Accountability
111 W. Madison Street, Suite 312
Tallahassee, FL 32399
Dear Mr. Brown:
The following are the responses to the conclusions and recommendations made in the Special
Report of PRIDE dated December 2003:
1. Work with state agency and local government purchasing officers to identify goods
and services that PRIDE can produce that will provide value and cost savings to the
agencies and refine customer service and quality control to remedy customer
complaints. PRIDE should establish an advisory group of agency and local
government purchasing officials to aid in this effort.
Concur:
PRIDE will report the levels of state agency purchases annually. The state
purchasing process is changing to e-procurement and PRIDE will work with the
Department of Management Services to ensure PRIDE is an approved vendor.
PRIDE had a local government purchasing advisory group in the past and will
consider establishing a state government purchasing council.
2. Work with Enterprise Florida to identify ways that PRIDE's programs could be used
to enhance the attractiveness of the state to business and increase PRIDE sales.
Concur:
PRIDE has met several times with Enterprise Florida over the past five years to
establish a working relationship. PRIDE will continue to explore ways to assist
Enterprise Florida in positioning PRIDE as an economic development tool similar to
the way South Carolina Economic Development Officials promote their prison
industry program as a labor source for private sector business.
20

Special Review
3. Enhance its annual reports to the legislature to include a descriptive organizational
chart of PRIDE; all statutorily required information, the state costs for claims and
injuries filed against PRIDE; and information on related companies as long as they
are indebted to PRIDE, including the amount and status of loans, the nature and
rationale for gifts and other pertinent information.
Concur:
PRIDE will enhance its annual reports to include the proposed information suggested.
4. Include comparative information about the level of PRIDE sales to each state agency
so that decision-makers can use that information to guide state purchasing policies
and practices.
Concur:
PRIDE will include information in annual reports.
5. Conduct a detailed analysis of the effect of inmate participation in the program on
recidivism rates, taking into account factors such as post-release placement support,
family ties, and work experience which can affect recidivism. The analysis should be
communicated to the Legislature as a part of the annual report and would help PRIDE
identify particular categories of inmates who best benefit from its programs.
Concur:
PRIDE will work with OPPAGA, Department of Corrections and any other
appropriate entity to develop a new recidivism study for PRIDE workers.
6. Formalize its relationship with Industries Training Corporation (ITC) by establishing
a contract between PRIDE and ITC that clarifies PRIDE's interests in assets owned
by ITC and a repayment schedule for the $8.7 million in existing loans.
Concur:
A management agreement currently exists between PRIDE and ITC. PRIDE will
formalize the debt agreements between PRIDE and ITC. The $8.7 million is
currently comprised of $5.4 million due from ITC; and $3.3 million due from Florida
Citrus Partners (FCP) as of October 31, 2003.
7. Develop and apply corporate policies to assess the risk of new ventures and establish
a review function, such as internal audit, to ensure that standard operating procedures
exist and are followed to protect PRIDE resources.
Concur:
Corporate policies and business development methodologies are currently in place to
provide for review and approval by the Board of Directors for any new ventures. The
Internal Audit function reports to the Board of Directors Audit Committee and will
continue to review current policies and procedures. PRIDE will engage an
independent consultant to support its strategic planning process.

21

Special Report
8. Revise s.946.505, Florida Statutes, to provide for the reversion to the state of all
assets owned by or due to PRIDE in the event that PRIDE should terminate or
dissolve.
Response:
PRIDE's articles of incorporation state:
"In the event it becomes necessary to dissolve this corporation, all of its assets
remaining after the payment of all costs and expenses of such dissolution shall be
distributed to the Department of Corrections of the State of Florida. None of these
assets will be distributed by or to any member, officer, or director of this corporation
or any other entity."
The Articles and By-Laws are required, by law, to be approved by the Governor.
Therefore, no change in either the Articles or By-Laws are effective unless approved
by the Governor.
This reversionary interest to the state is further protected by the IRS 501(c)(3)
designation, which lists the Department of Corrections as the beneficiary in the event
of dissolution.
Other Issues
PRIDE cooperates with all state agencies. However, statutory oversight rests with the
Governor, Legislature, and OPPAGA, pursuant to Part II of Chapter 946, Florida Statutes.
If you need any further information, please contact us.
Sincerely,
/s/ Pamela Jo Davis
CEO

22

The Florida Legislature

Office of Program Policy Analysis
and Government Accountability
Visit the Florida Monitor, OPPAGA’s online service. See http://www.oppaga.state.fl.us. This site
monitors the performance and accountability of Florida government by making OPPAGA's four primary
products available online.
ƒ

OPPAGA publications and contracted reviews, such as policy analyses and performance reviews,
assess the efficiency and effectiveness of state policies and programs and recommend improvements
for Florida government.

ƒ

Performance-based program budgeting (PB²) reports and information offer a variety of tools.
Program evaluation and justification reviews assess state programs operating under performancebased program budgeting. Also offered are performance measures information and our assessments
of measures.

ƒ

Florida Government Accountability Report (FGAR) is an Internet encyclopedia of Florida state
government. FGAR offers concise information about state programs, policy issues, and performance.

ƒ

Best Financial Management Practices Reviews of Florida school districts. In accordance with the
Sharpening the Pencil Act, OPPAGA and the Auditor General jointly conduct reviews to determine
if a school district is using best financial management practices to help school districts meet the
challenge of educating their students in a cost-efficient manner.

Subscribe to OPPAGA’s electronic newsletter, Florida Monitor Weekly, a free source for brief
e-mail announcements of research reports, conferences, and other resources of interest for Florida's
policy research and program evaluation community.

OPPAGA supports the Florida Legislature by providing evaluative research and objective analyses to promote government accountability,
and the efficient and effective use of public resources. This project was conducted in accordance with applicable evaluation standards.
Copies of this report in print or alternate accessible format may be obtained by telephone (850/488-0021 or 800/531-2477), by FAX
(850/487-3804), in person, or by mail (OPPAGA Report Production, Claude Pepper Building, Room 312, 111 W. Madison St., Tallahassee,
FL 32399-1475).
Florida Monitor: http://www.oppaga.state.fl.us/
Project supervised by Byron Brown (850/487-9215)
Project conducted by Cynthia Cline (850/487-9222) and Julie Thomas (850/410-4793),
and Denis D. Jessen of the Office of the Auditor General
Kathy McGuire (850/487-9224), Staff Director
Gary R. VanLandingham, OPPAGA Interim Director

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