e-Texas e-Texassmaller smarter faster governmentDecember, 2000
Carole Keeton Rylander
Texas Comptroller of Public Accounts

Recommendations of the Texas Comptroller

Chapter 11: Public Safety and Corrections

Expand the Prison Industry
Enhancement Program


The Prison Industry Enhancement (PIE) program in Texas employs about 222 inmates and has contributed more than $2 million to the General Revenue Fund since the program started in 1993. Texas could increase this amount significantly by expanding PIE and increasing the amount that PIE inmates pay for their room and board. The state should solicit private business participation in PIE and create a funding mechanism for future PIE facility construction.


In 1979, Congress created the Prison Industry Enhancement (PIE) program to encourage state and local governments to establish employment opportunities for prison inmates in settings that simulate private workplaces. PIE allows inmates to acquire marketable skills and increase their chances for successful rehabilitation and meaningful employment upon release, while allowing them to earn prevailing industry wages from private employers. By law, PIE programs may not displace non-inmate workers.

The US Department of Justice’s Bureau of Justice Assistance (BJA) administers the program and grants PIE certifications to state and local jurisdictions. The PIE statute limits BJA to the issuance of 50 certificates nationwide. To date, BJA has awarded 40 of the 50 certificates in 36 states, three in Texas to the Texas Department of Criminal Justice (TDCJ), the Texas Youth Commission (TYC), and the Red River Corrections Department, a Red River County correctional facility. Both TDCJ and TYC have surrendered their individual certifications to operate under the BJA-certified Texas Private Sector Industries Oversight Authority, a commission created by the Texas Legislature to oversee PIE projects.

In awarding PIE certificates, BJA scrutinizes applications to ensure that they meet mandatory federal requirements and are accompanied by appropriate state enabling legislation. BJA also oversees existing programs and may revoke PIE certificates in jurisdictions that do not meet federal requirements.[1]

PIE is designed to provide valuable labor incentives to companies that otherwise would locate elsewhere. In addition to inmates, PIE industries often employ management, administrative, and support staff from the local community.

The PIE program allows private companies to hire prison inmates at prevailing wages to produce goods and services; however, it is the use of inmate wages that is attracting growing interest among prison reformers and policy experts across the nation. Under PIE, participating inmates apply their earnings to the cost of their incarceration, restitution to crime victims, income and social security taxes, and dependent support. Inmates must receive 20 percent of their gross wages for their own benefit.

Since PIE’s creation in 1979, state and local governments nationwide have established 148 prison-private “joint ventures.” These programs have produced more than $126 million in inmate gross wages nationally, generating $10 million for victims programs, $29.3 million for incarceration costs, $6.5 million for family support, and $15.5 million for taxes.[2] The New York Times recently reported that state PIE programs have doubled since 1995, and now employ 3,500 inmates.[3]

PIE in Texas

The Texas Private Sector Industries Oversight Authority oversees the PIE program for TDCJ and TYC. One of the authority’s main responsibilities is to ensure that participating companies meet PIE, TDCJ, and state guidelines.[4]

The Lockhart Correctional Facility employs about 222 inmates at two private PIE businesses. Chatleff, Inc. produces brass valves and fittings, while another company, Labor to Industry, manufactures electronic circuit boards. The authority has approved three additional industries to participate in the PIE program that are not yet operating.[5] Two of these programs may not become operational in the near future, due to a lack of facilities in one case and contractual reasons in the other.[6] TYC recently started a PIE program and plans to expand it.

Since their 1993 beginning, Texas PIE programs have generated more than $2.2 million in general revenue to offset inmate incarceration costs, more than $1.3 million for crime victim compensation and restitution, and about $1.1 million for dependent support.[7]

The PIE program succeeds because the state receives money to offset inmate incarceration costs, crime victims receive restitution, and the spouses and children of inmates receive needed support. In addition, paying taxes helps restore inmates’ sense of responsibility and citizenship. Moreover, inmates receive on-the-job training to prepare them for employment after release. Their savings accounts allow them to leave prison, not with $100 and a bus ticket, but with hundreds or even thousands of dollars, giving them a head start at rejoining society.

Correctional experts generally agree that when parolees and released prisoners drift back into the “street” environment, the risk of recidivism increases dramatically. With money, job prospects, and renewed self-esteem, PIE graduates have the tools to begin new lives after their release.

Another advantage of PIE is the exemplary disciplinary record of its participants. To qualify for TDCJ’s PIE program, an inmate must have a general equivalency diploma and maintain a clean disciplinary record for six consecutive months before acceptance and throughout their participation. During PIE’s eight years of operation, participating inmates have had a near-perfect disciplinary record.[8]

With about 150,000 inmates, Texas has the second-largest prison population in the United States. The Texas Legislature has imposed a cap allowing up to 2,000 Texas inmates to participate in PIE, yet only about 222 (0.15 percent of the total prison population) now do so. (Texas expects to add 120 additional inmates to the program in fiscal 2001).[9] South Carolina leads the nation with 513 PIE inmates, followed by California with 392 and Utah with 306.[10] South Carolina uses its prison industry department to promote and expand PIE, and it uses profits from both traditional industry and PIE programs to construct PIE industry facilities.[11]

Deduction Formula

Under the current formula for TDCJ PIE deductions, 25 percent to 35 percent of a PIE inmate’s wages pay for room and board. Increasing the amount inmates contribute to room and board by at least 10 percent would increase the revenue PIE generates for the state. Exhibit 1 shows current TDCJ PIE inmate deductions.

Exhibit 1

Current TDCJ PIE Inmate Wage Deductions

Amount Deducted
Deductions From Gross Wages

Federal Taxes
Room and Board
Crime Victims’ Fund
Dependent Care
Deductions From Net Wages

Inmate Savings Account
Inmate’s Commissary Account

Source: Texas Department of Criminal Justice.

* If an inmate has court-ordered restitution, 5 percent goes to the Crime Victims’ Fund from gross wages, and 10 percent goes toward court-ordered restitution from the net wages.

** If an inmate has no dependents, 20 percent is allocated equally between room and board and the inmate’s savings account.


A. TDCJ should contract for expertise within its Texas Correctional Industries program to recruit businesses to the TDCJ PIE program, with the goal of increasing participation to 1,800 inmates by 2006.

Given the 2,000-inmate cap, this would leave 200 spaces available for the expansion of Texas Youth Commission PIE participation. The number of TDCJ PIE jobs could be expanded over five years as shown on the following table (Exhibit 2).

Exhibit 2

Proposed PIE Participation Increases from Fiscal 2001 Participants

Fiscal Year
Total Number of PIE Jobs
Increase from 2001

Source: Texas Comptroller of Public Accounts.

B. The Texas Department of Criminal Justice (TDCJ) should increase the share of wages that Prison Industry Expansion (PIE) inmates contribute to their room and board.

Under the current wage structure, inmates receive the money remaining after the required deductions. Under the proposed system (Exhibit 3), the inmates would get a defined portion of their gross wages, and the remaining money after other required deductions, would go to the state and could be used to offset inmate room and board costs and construct additional PIE facilities.

Exhibit 3

Proposed TDCJ PIE Inmate Wage Deductions

Amount Deducted
Deductions From Gross Wages
Amount to Inmate
Federal Taxes
Crime Victims’ Fund
Dependent Care
Room and Board

Source: Texas Comptroller of Public Accounts.

* To be divided between Inmate Savings Account and Commissary Account. This would be the first deduction taken.

** If an inmate has court-ordered restitution, 5 percent would go to the Crime Victims’ Fund and 10 percent toward court-ordered restitution.

*** If an inmate has no dependents, this 20 percent would also be allocated to room and board.

Taking the necessary deductions (excluding room and board) from gross wages and using the remainder for room and board would increase revenue directed to the state. If an inmate has no dependents, the 20 percent of wages normally earmarked for this purpose should be applied toward room and board.

C.State law should be amended to ensure that the equivalent of 50 percent of PIE room-and-board deductions is used for PIE expansion.

This money should be deposited into a dedicated account in the General Revenue Fund to be administered by the Texas Private Sector Industries Oversight Authority. It should be used to construct PIE industry work facilities and recruit additional private employers to expand the PIE program.

D. The state should repeal sections 497.056(a) and (c) of the Texas Government Code and amend Section 497.056(b) to reflect this change.

Section 497.056(a) of the Government Code requires private-sector prison industry programs to make a yearly payment equal to the amount of money the company would pay in unemployment insurance if it employed non-prison employees. Section 497.056(c) allows the Private Sector Prison Industries Oversight Authority to determine that amount. Repealing this law would make PIE more attractive to potential PIE partners.

Fiscal Impact

In addition to increased revenue from room and board deductions, savings could result from lower recidivism rates for PIE inmates. Estimated savings from lower recidivism rates are not included in the calculations below.

Fifty percent of room and board deductions from PIE inmate wages would go to the General Revenue Fund. This figure includes lost revenue from the elimination of PIE employer unemployment insurance equivalent payments. (E-Texas estimates the average amount of such to be approximately $161 per PIE inmate, based on available information. Rates vary from employer to employer.) An equivalent of the remaining 50 percent of room and board deductions would go to the PIE expansion account in the General Revenue Fund.

Costs to the General Revenue Fund (shown below) assumes that TDCJ would contract for expertise to recruit businesses to the PIE program in fiscal 2002.

As the number of inmates earning PIE wages increases, corresponding gains would accrue to the Crime Victims’ Compensation Fund. Because inmate contributions to the Crime Victims’ Compensation Fund vary from 5 percent to 15 percent, this increase is not estimated.

Fiscal Year
Gain to the General Revenue Fund
Gain to PIEExpansion General Revenue Account
Costs to the GeneralRevenue Fund
Net Gain/(Cost) to the General Revenue Fund

[1] Correctional Industries Association, “PIE Certification Program,” (1999). (http://www.corrections.com/industries/cia/PIE.html). (Internet document.)

[2] Correctional Industries Association, “Total Cumulative PIE Data: 1979 Through 1st Quarter 1999” (1999) (http://www.corrections.com/industries/cia/totalpiedata.html). (Internet document.)

[3] “As Prison Labor Grows, So Does the Debate,” New York Times (March 19, 2000), p. 1.

[4] Telephone interview with Representative Ray Allen, Texas Legislature, Austin, Texas, June 14, 2000.

[5] Telephone interview with Bob Carter, PIE program specialist, Texas Department of Criminal Justice, Austin, Texas, June 14, 2000.

[6] Telephone interview with Bob Carter, PIE program specialist, Texas Department of Criminal Justice, Austin, Texas, August 24, 2000.

[7] Telephone interview with Bob Carter, PIE program specialist, Texas Department of Criminal Justice, Austin, Texas, August 9, 2000.

[8] Interview with Marsha McLane, director of Specialized Programs Section, Texas Department of Criminal Justice, Austin, Texas, August 9, 2000.

[9] Correctional Industries Association, Listing of Certified Prison Industry Enhancement Programs (Baltimore, Maryland, December 31, 1999); and telephone interview with Bob Carter, August 24, 2000.

[10] Correctional Industries Association, Listing of Certified Prison Industry Enhancement Programs.

[11] Interview with Tony Ellis, director of Division of Industries, South Carolina Department of Corrections, Columbia, South Carolina, August 15, 2000.

e-Texas is an initiative of Carole Keeton Rylander, Texas Comptroller of Public Accounts
Post Office Box 13528, Capitol Station
Austin, Texas

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