How Prisons Use “Inmate Welfare Funds” Filled with Commissary and Communication Fees to Supplement Their Budgets

In prison systems across the U.S., portions of the fees charged to incarcerated people and their families — for phone calls, financial services, commissary items, and more — flow into what are known as “Inmate Welfare Funds.” 

As the name suggests, these pots of money are ostensibly meant to pay for things that benefit incarcerated people as a whole, like recreational and educational services.

Yet, in many states, lenient laws and lack of oversight allow prison officials to use the money to pay for staff salaries, building renovations, and essentials that prisons are already required to provide.

A new report from Prison Policy Initiative examines the laws and policies that determine how prison systems in every state, as well as the Federal Bureau of Prisons, fill their Inmate Welfare Funds, and how they spend the money.

PPI’s senior editor and researcher, Brian Nam-Sonenstein, found that Welfare Fund money is extracted from commissary purchases in 39 prison systems, from kickbacks from companies charging for phone and video calls and emails in 19 prison systems, and from contraband in 14 prison systems. Vague laws and policies in 16 states gave officials “wide discretion” to choose funding streams.

Nine prison systems say Welfare Fund money can be spent on Alcoholics and Narcotics Anonymous and other self-help and treatment-related programs. Ten prison systems allow the fund to pay for pre-release programs, transportation, gate money, or housing. Six systems can use the money to provide necessities for indigent incarcerated individuals. In 16 prison systems, Welfare Fund money can pay for educational services. Nine systems allow prisons to spend the money on construction and facility maintenance.

In 25 states, prison systems essentially have free reign to spend Welfare Fund money on whatever they want, even rewards for prison guards and staff.

“Prisons sometimes sit on heaps of money while jails treat themselves to shopping sprees for bullets, break room supplies, and gift cards for honey-baked hams,” PPI’s Nam-Sonenstein writes.

While education programs, necessities for indigent incarcerated people, and gate money are arguably better uses of the Welfare Fund than special treatment for staff, advocates argue that prisons shouldn’t be collecting money from incarcerated people and their families to pay for beneficial services either.

For decades, private vendors with prison contracts have charged exorbitant rates for communication, commissary, and other services, leaving families stuck with bills that frequently add up to hundreds of dollars per month  — far beyond the means of the low-income families.

To mitigate the harm done to incarcerated individuals and their loved ones, PPI recommends abolishing these “exploitative pricing schemes.” Regular contact with family, hygiene products, food, medical care, and other necessities should be provided by prisons, rather than requiring great financial sacrifice from people with family members in prison, according to the report.

“Incarceration is already experienced as one big financial sanction from arrest forward,” Brian Nam-Sonenstein writes. “So long as they choose to incarcerate, states and local governments must take all necessary steps to avoid offloading the costs of incarceration onto people and their families. Here, we must be explicit: we are not advocating for expanding corrections budgets; instead, we are calling for a change in revenue streams away from the shadowy system of prison retailing and toward existing department budgets that are publicly appropriated by legislatures.”

In 17 of the prison systems PPI examined, there was no language requiring fiscal reporting or oversight of how Welfare Fund money is spent. Just 14 prison systems have a governing body that determines where the money goes, yet in only three of those states — California, Minnesota, and Vermont — are incarcerated people permitted to join. One other state, Mississippi, allows a family member of an incarcerated person to be part of the governing body. 

California is one of five states that require prison officials to post Welfare Fund audits where incarcerated populations can see them.

Yet, in California rules governing the use of such funds were watered down in the 1990s.

In 1949, when then-Governor Earl Warren established welfare funds, local sheriffs were allowed to sell commissary items, as long as the revenue went into a fund meant “solely” for the “benefit, education, and welfare” of incarcerated people. Moreover, the money was not to be spent on normal expenses like food, clothing, and medical care that should already be paid for by the regular budget.

In 1993, the state penal code was revised to allow sheriffs much greater discretion, explicitly saying that the money could be spent on facility maintenance and “the salary and benefits of personnel used in the programs to benefit the inmates, including, but not limited to education, drug and alcohol treatment, welfare, library, accounting, and other programs deemed appropriate by the sheriff.”

In 2019, California Governor Gavin Newsom vetoed a bill by then-Senator Holly Mitchell that would have significantly reduced the power of local sheriff and probation officials and vendors to profit from exorbitant commissary and phone call mark-ups in jails and juvenile lockups.

Two years later, after Mitchell was elected to the LA County Board of Supervisors, the board approved a motion by Supervisor Hilda Solis directing county officials to explore options for bringing free phone calls and at-cost commissary prices to LA’s jails and juvenile facilities.

At the time, the sheriff’s department was charged $3.51 for a four-ounce bag of instant coffee, which was then sold to people in jail for $7.47. A packet of beef-flavored ramen cost the LASD $.55, but was sold to incarcerated people for $1.15. A $.68 bar of soap was marked up 47 percent to $1.45.

In her motion, Supervisor Solis also pointed out that the Inmate Welfare Fund was an “opaque” system that could use better data analysis and oversight. The motion called on the sheriff’s department to provide an itemized statement of how the money is spent.

More than a year later, reporting by Spectrum News’ Kate Cagle revealed that commissary prices had shot up even higher. Toothpaste formerly sold to people in LA County jails for $2.16 had jumped to $4.00, for example.

(Phone calls, however, were made free for LA’s incarcerated people on December 1, 2023.)

According to the PPI report, policies regarding how carceral systems can spend welfare fund money should be more specific and strict, there should be more independent oversight, and incarcerated people should have more say in how the fund is used. More critically, reducing the number of people behind bars will make the biggest difference.

“If jails and prisons are struggling so badly that they feel the need to draw money from welfare funds to fix their HVAC systems, pay staff salaries, or cover tens of thousands of dollars in ham gift cards, the problem is surely not one of resources but of incarceration as a policy choice,” writes Nam-Sonenstein.