STAND. COM. REP. NO. 2374

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2433
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committees on Judiciary and Labor and Environment, to
which was referred S.B. No. 2433 entitled: 

     "A BILL FOR AN ACT RELATING TO PRISONS,"

beg leave to report as follows:

     The purpose of this bill, as received by your Committees,
is to provide that the development and management of in-state
correctional facilities be subject to the managed competition
process.

     Your Committees find that the State can no longer afford to
postpone its need for the construction of a new medium security
prison and the additional bed spaces that it will provide.  Your
Committees further find that as overcrowding continues, the State
is placed in an extremely vulnerable position with regards to
exposure for civil rights violations and security risks.

     Your Committees note that under existing law, the Governor
and the Director of Public Safety have the authority to act to
reduce prison overcrowding.  For example, the law provides that
the governor may negotiate with private entities for the
development and construction of out-of-state correctional
facilities, which the State or a private entity may own.
However, your Committees recognize that similar authorization has
not been enacted to permit the Governor or the Director of Public
Safety to negotiate with a private entity for the management and
operation of in-state correctional facilities.


 
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     In Konno v. County of Hawaii, 85 Haw. 69 (1997), the Supreme
Court concluded that absent legislative authorization for non-
civil servants to perform services customarily and historically
performed by civil servants, such services must be performed by
civil servants.  Within the State of Hawaii, correctional
facilities have been customarily and historically staffed by
state employees who are civil servants.  If in-state correctional
facilities, particularly those developed by private entities to
relieve prison overcrowding, are to be staffed by persons other
than civil servants, express authority for implementing such a
staffing plan must be conferred by the legislature.  Thus, it is
your Committee's intent that this measure overrule the Supreme
Court's decision in Konno, with respect to staffing of the
correctional facilities.

     Your Committees further believe that the management and
operation of a newly constructed correctional facility would have
been a good pilot project for the managed competition process,
had the managed competition process been developed in a timely
manner by the Department of Accounting and General Services.  Due
to the delay in the implementation of the managed competition
process and because of the great urgency surrounding the
construction of a new prison, your Committees agree that it is
prudent to take action now.  However, should the construction of
the new in-state correctional facility be delayed and the managed
competition process be approved and implemented, it is your
Committees' intent to revisit this issue.

     Your Committees are also aware of the concerns voiced by
Hawaii collective bargaining unit representatives regarding: (1)
whether there is a violation of state law if the operator of a
privately managed and operated prison does not pay the
correctional workers prevailing wages as required under section
103-55, Hawaii Revised Statutes (HRS); and (2) whether section
89-12(c), HRS, which prohibits strikes that "endanger the health
and safety of the public," be applicable to a privatized prison.
These are valid concerns that must be addressed.  Therefore, your
Committees asked that the Attorney General research these issues.

     The Attorney General formulated the following responses to
the Committees' questions:

     (1)  Section 103-55, HRS, does not apply to the State's
          current contracts to house Hawaii inmates in mainland
          correctional facilities for several reasons.  First,
          the Legislature did not intend for section 103-55, HRS,
          to apply when it subsequently enacted section 353-16.2,
          HRS, which conferred authority to the Director of
          Public Safety to transfer inmates to mainland

 
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          correctional facilities.  Second, section 103-55, HRS,
          does not apply because the contracts are not personal
          services contracts but rather contracts to obtain room,
          board, and programs for inmates at existing
          correctional facilities on the mainland that were built
          to house other inmates from other jurisdictions.
          Finally, even if the contracts are for personal
          services, they qualify for the exception under section
          103-55(c)(4), HRS, because they are contracts with
          independent contractors who are in the business of
          housing inmates and as such the contracts expressly
          permit them to house inmates from other jurisdictions
          in the facilities in which Hawaii's inmates are housed.
          Therefore, the contracts may be regarded as contracts
          for personal services exempt from the civil service
          under section 76-16(15), HRS;

     (2)  Whether section 103-55, HRS, will apply to a contract
          with a private entity to house Hawaii inmates in a
          state- or privately-owned facility in Hawaii, or to
          manage, operate, and staff a state-owned correctional
          facility in Hawaii will depend primarily upon whether
          the facility is state or privately owned, how the
          contractor is paid, and whether the contractor is free
          to house inmates from other jurisdictions in the Hawaii
          facility; and

     (3)  Under current federal precedent, a government
          contractor is an "employer" under the National Labor
          Relations Act (NLRA) and, thus, its employees may
          organize for purposes of collective bargaining under
          that Act.  The NLRA does not exempt prison operations
          from its purview and does not limit a covered
          employee's right to strike as section 89-12, HRS, does
          with respect to "essential workers."  However, while
          the preemptive powers of the NLRA is extensive, they
          are not absolute and the State should not be foreclosed
          from including provisions in its contract with the
          private entity to ensure the safety of the inmates and
          the community in the event of a strike.  The State
          should be able to include provisions to terminate the
          contract and remove inmates from the facility, or to
          make other reasonable arrangements to manage, operate,
          and staff the facility in the event of a strike.

     Your Committees appreciate the diligence of the Attorney
General in responding promptly to our requests for clarifications
concerning the applicability of existing law.  It is your
Committees' intent that the information provided by the Attorney

 
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General be the subject for future discussions as this measure
moves through the legislative process.

     In conclusion, your Committees believe that private entities
should be given the opportunity to manage and operate any newly
built correctional facility, and your Committees support
construction of a new correctional facility within the State.

     Testimony in support of the intent of this measure was
submitted by the Department of Public Safety.  Testimony in
opposition to this measure was submitted by: the Department of
Accounting and General Services; United Public Workers, Local 646
AFL-CIO; the Hawaii Government Employees Association, Local 152,
AFL-CIO; and the Community Alliance on Prisons.

     Upon further consideration, your Committees have amended
this bill by deleting its contents and substituting the contents
of S.B. 2937, S.B. 2270, and S.B. 2271.  More specifically, your
Committees have amended this bill by:

     (1)  Repealing the provision that authorizes the governor or
          the director of public safety to negotiate with an out-
          of-state jurisdiction for the development of
          correctional facilities;

     (2)  Clarifying that the private management and operation of
          an in-state correctional facility be allowed for any
          facility constructed after the effective date of this
          Act and will not apply to any existing correctional
          facilities;

     (3)  Providing that private construction and management
          contracts be exempt from chapters 76, 77, 89, 102, 171,
          and 343, but comply with community partnering
          provisions of section 353-16.67;

     (4)  Providing that the director of public safety be
          authorized to negotiate with other state agencies,
          including the Department of Hawaiian Home Lands for
          leasing of public lands; 

     (5)  Providing that any contract with a private entity
          executed under this new section shall include strict
          safeguards to ensure the accountability of the private
          entity; and

     (6)  Making technical, non-substantive changes for the
          purposes of style and clarity.


 
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     As affirmed by the records of votes of the members of your
Committees on Judiciary and Labor and Environment that are
attached to this report, your Committees are in accord with the
intent and purpose of S.B. No. 2433, as amended herein, and
recommend that it pass Second Reading in the form attached hereto
as S.B. No. 2433, S.D. 1, and be referred to the Committee on
Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Judiciary and
                                   Labor and Environment,



____________________________       ______________________________
BOB NAKATA, Chair                  AVERY B. CHUMBLEY, Co-Chair



                                   ______________________________
                                   MATTHEW M. MATSUNAGA, Co-Chair

 
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