Audit: California prison program illegally spent $1.3M

The "repeated violations of state laws governing spending and hiring constitute gross misconduct," auditors said. The executives "neglected their duties as stewards of CalPIA funds, failed to act in the best interest of CalPIA, and harmed prospective job applicants."

The semi-independent authority employs state prison inmates, with the goal of teaching good work habits and occupational skills. It oversees inmates who produce more than 1,400 goods and services including things like office furniture, clothing, food and printed products, much of which is sold to state agencies.

It is supposed to be financially self-sufficient from sales of the products, and to operate as much as possible like private industry.

PIA is under new leadership since the problems 2 1/2 years ago, authority spokeswoman Michele Kane said in a statement, adding that it has since taken steps to increase accountability and oversight.

Authority executives made at least 10 "bad faith" job appointments from 2016 through 2019, the auditors found. They urged the state to take steps like voiding the appointments, reclassifying the jobs and requiring employees to return their compensation.

They included a classmate of a staff manager in 2018 who was improperly hired as a "special consultant," at least two children of executives, and an employee who is both the son-in-law of an executive and the spouse of another authority employee.

In perhaps the most egregious case, another employee was the son of one authority executive and the brother of another employee, and was hired after officials "manipulated the process" to put aside his poor test score. Officials then promoted him despite a lack of qualifications, and auditors suggested the state could require him to return more than $266,000 that they said was "unlawfully earned."

It suggested a different employee, an executive's son-in-law, should have to return $169,000 in wages. The authority said it has asked the state's human resources department to review those recommendations.

The "wasteful" spending on the turf and other purchases that benefited other state agencies were unlawful because they didn't advance the authority's mission, auditors found. The authority bought the turf in 2018 but prison officials hadn't installed as of March 2021 because it would cost another $100,000 to do so and would require using metal stakes that inmates could turn into weapons.

Aside from buying the artificial turf, the authority improperly spent $433,000 for a camera system around a prison, $350,000 on equipment and other purchases for the California Department of Corrections and Rehabilitation, and more than $213,000 for prison warden training, auditors found.

It also unlawfully gave nearly $163,000 worth of inmate-made furniture to other state agencies. Other improper gifts of public funds to other agencies included $66,000 for digital cameras and $7,000 for a "bronzed state seal," auditors said.

An unnamed executive "refused to answer our questions, invoking the Fifth Amendment privilege against self‑incrimination," auditors said.

However, the authority's response said current employees were not responsible for the purchases, so there would be no disciplinary action. Kane would not say if the executive had left the authority.

Some employees said they carried out executives' direction on the hiring and gifts because they feared possible retaliation, auditors said.

The authority said it had asked state corrections officials to investigate the improper hiring and recommend appropriate disciplinary action.

Prison-based programs that rely on inmate labor have come under increased criticism recently from those who say the state is benefiting from cheap inmate labor. A proposed constitutional amendment awaiting action by state lawmakers would remove an exemption for people who are being punished for crimes.