Thanks to a recent decision by a new manager at the California Prison Industries Authority, Susanville’s Morning Glory Dairy is poised to lose its two largest customers — High Desert State Prison and the California Correctional Center — forcing the company to layoff half its workforce. In addition, the local economy will lose about $1.3 million annually and all of us in Lassen County could be paying higher prices for milk and eggs as a result.
The CALPIA would charge the two local prisons about $110,000 more per year and offer fewer delivery days when compared to Morning Glory Dairy, according to a recent presentation the business made to the Lassen County Board of Supervisors and the Susanville City Council.
In addition, the decision by the CALPIA to dump Morning Glory Dairy allegedly violates an unwritten “good neighbor policy” the state promised to follow when the prisons were built, allowing local vendors an opportunity to provide goods and services to the prisons.
According to a Dec. 18 letter from the supervisors to Charles Pattillo, the general manager of CALPIA, “Such impacts to Morning Glory, Inc., its employees and the county would come at a time when the county’s economy is shrinking, population decline is placing the local economy at risk of long-term stagnation and there has been six years of job declines in the last decade.”
“As taxpayers we are outraged that the prisons would be forced to pay significantly more money for their milk and eggs than necessary,” wrote McKernan and Mike O’Kelly, chief financial officer for Morning Glory Dairy in a letter to the supervisors. “As businessmen we are outraged that our employees will lose their jobs so that convicts can do those jobs at a higher cost and with worse service.”
Michele Kane, the chief of external affairs with CALPIA, responded to the newspaper’s request for comment for this story.
“Here is our response to the letter that you received from Morning Glory,” Kane wrote. “The California Department of Corrections and Rehabilitation and the California Prison Industry Authority are also significant Lassen County employers and we understand businesses in the region may be affected by the decisions we make. CALPIA added 29 civil service positions to Lassen County in the last 36 months.
“CALPIA strives to ensure we are discussing the facts in this matter including accurate pricing, services and impacts. We have reached out directly to this vendor to discuss this matter.
“Unlike any other vendor that supplies products to prisons, CALPIA also provides support to CDCR prisons in the form of hard dollar rebates along with program and capital investments which far outweigh any weekly upfront price variances observed. In the last two years CALPIA returned more than $4.4 million to CDCR institutions in direct price rebates, $41 million in institution capital investments and $63 million to the General Fund.
“CALPIA produces California milk as a producer-bottler of milk products sourced only from California cows which was the legislature’s intent when requesting prisons buy only California-sourced products rather than milk produced and bottled in another state.”
McKernan said he also distributes milk from California cows produced at Crystal Creamery, a Foster-family-owned dairy located in Modesto.
The current battlefield
McKernan described the most recent developments in his battle with PIA.
McKernan said he got a call from Suzanne Peery, the warden at CCC, that the new PIA manager had pulled the dairy’s waivers to supply milk and eggs. He said both he and Peery then applied for waivers for the diary and “they denied them in 24 hours.” Then he said a day later, the new manager also pulled the milk waiver at High Desert State Prison.
On Tuesday, Dec. 18, McKernan said he was allowed to bid on the milk at HDSP, but the state agency would only allow the time left on his contract (one year) and the egg waiver would go until June, and the CCC waivers were gone as of Jan. 1, “and they don’t care what we say. What that does is take my volume down and leads to higher pricing for everybody, including schools, hospitals and the whole deal because I can’t produce enough volume to get that special distributor pricing.”
He said he would lose about half of his employees and essentially this decision would “burn the whole town. We’re $1.5 million in local revenue here.”
The Lassen County Board of Supervisors has written letters of support for the dairy to the wardens at both Susanville state prisons, the general manager of the California Prison Industries Authority and the secretary of the California Department of Corrections and Rehabilitation. The Susanville City Council is expected to lend its support to the dairy as well.
Peery said she and the warden at HDSP are doing everything they can do to support the dairy.
On Tuesday, Dec. 18, Brian Dahle, the area’s representative in the state assembly, said he was unaware of the issue until the newspaper contacted him, but he said he would do everything he could to support the local dairy.
Dahle said he remembers a similar conflict from his days as a member of the Lassen County Board of Supervisors, and the state’s promise of a good neighbor policy for local businesses.
“I remember that,” Dahle said. “I remember us working on that when I was on the board of supervisors — the buy local thing.”
Back then the PIA allowed the Morning Glory waivers to continue after Dave Cox, then a state senator, proposed legislation that would “take away the authority of the PIA to force state agencies to purchase their products” and instead allow for competitive bidding.
“I don’t know enough about the permit process they’re working on now to comment on it,” Dahle said, “but I’m more than happy to help them if it’s state stuff, absolutely. We need to have local jobs, better service and that drives the price down, too.”
Dahle immediately jumped directly into the fray with a Dec. 18 letter to Ralph Diaz, acting secretary of the California Department of Corrections and Rehbilitation.
Dahle shared his “deep disappointment” that Morning Glory Dairy was losing its contract in favor of CALPIA.
“If this decision is carried out, it will force employee layoffs, gravely damage the fortunes of a well-respected locally owned business in Lassen County and harm community relations with the neighbors of High Desert State Prison and the California Correctional Center. If this were based on a fair and businesslike bidding process, that might nonetheless be the appropriate decision, but I am informed CALPIA’s costs are in fact higher than Morning Glory’s and the change will require costly new capital investments by the state to store perishable foodstuffs.”
Dahle wrote while he supported CALPIA’s mission, “state government must also be a good steward of the taxpayer’s dollars and a good neighbor to local communities. I strongly urge you to carefully consider renewing the contract with Morning Glory, Inc.”
State Senator Ted Gaines also said he was unaware of the issue until the Lassen County Times contacted him on Dec. 18.
“I want to do everything I can to try and promote CDCR to do business with locals,” Gaines said. “We’re going to open a case on this and look into it and see what we can do to help.”
According to correspondence from the board of supervisors, a similar issue arose with CCC in 1993 but was resolved after Tim Leslie, then a state senator, became involved. It came up again in 2003-2005, and now it’s here again in 2018.
Good neighbor policy
McKernan and O’Kelly described the prison’s promised good neighbor policy in their letter to the supervisors.
“When the prisons were first built in Susanville,” they wrote, “and upon every enlargement thereof the constituents of Susanville were always promised by the department of corrections that local goods and services would be utilized whenever possible in order to help mitigate the negative impacts that institutions of this size invariably have on a small community such as ours … Several times now, PIA has tried to take our business and each time our elected powers-that-be have stepped up and prevented this from happening. We find it incredible that the authority to give or not to give this business to local bidders lies within the very PIA bureaucracy that seeks to gain from our loss. PIA’s repeated efforts to take our business away from us are completely contrary to the ‘good neighbor’ promises made to the Susanville City Council and the Lassen County Board of Supervisors and to all of the citizens of our small area.”
Who and what is the PIA?
According to its website, “The California Prison Industry Authority is a state-operated agency that provides productive work assignments for approximately 7,000 offenders annually in California’s adult correctional institutions. CALPIA operates more than 100 manufacturing, service and consumable factories in 34 CDCR institutions throughout California. CALPIA is self-supporting from the sale of its products and services and does not receive an annual appropriation from the legislature.”
According to its mission statement, “CALPIA is a self-supporting, customer-focused business that reduces recidivism, increases prison safety and enhances public safety by providing offenders productive work and training opportunities.”
According to its vision statement, the agency is “Changing offenders’ lives through innovative job training for a safer California.”
In order to reach its goals and objectives, “CALPIA has established four main strategic and business goals: reduce offender recidivism; maintain self-sufficiency; develop high performing staff and organization; and, increase customer satisfaction.”
We’ve fought this fight before
According to a March 2005 letter from then Susanville Mayor Rodney De Boer to then State Senator Dave Cox, “We fully understand the concept of rehabilitation and the instilment of work ethics in the prison population and the desire to keep inmates productively busy in job training type programs but were an inmate to graduate from PIA’s milk program and gain his freedom, Morning Glory Dairy could not hire him to deliver to our prison since ex-convicts are not allowed on prison grounds. So in this instance, PIA seems to be training convicts for jobs that will only be available if they fall victim to recidivism and reenter the prison system.
“Since we have fought these battles before and would rather not have to fight them again in the future, we would like a more permanent solution to be found. Perhaps a legislative waiver can be initiated that would allow our local prisons to always seek the best pricing available on the open free market … a freedom they can enjoy only when given a waiver to do so by the PIA.