BusinessTN

It is arguably the most unique of Tennessee's fast-growing "private" companies. Over the past six years, its revenues have increased by around 35% to over $32 million. All of its capital improvements during that span have been paid for out of its reserves, a feat of which any of the 100 companies listed in this month's inaugural BusinessTN Hot100 list would be proud to boast.

Tennessee prison industries, the inmate program that provides jobs for state prisoners ranging from dairy production to furniture manufacturing, was nearly terminated 13 years ago over its chronic money-losing ways. Its turn-around since 1994 under the governor-appointed leadership of the Tennessee Rehabilitative Initiative in Correction (TRICOR) board, a quasi-governmental agency comprised largely of private industry executives, is nothing short of praiseworthy. It's also a sterling example of how free enterprise principles and private market executive know-how can drastically improve government.

Detached administratively from the Tennessee Department of Correction in 1999, TRICOR operates more like a business than most any other state agency. It meets more frequently than most state boards and its meetings resemble private industry board meetings more than government ones—focused on performance and the bottom line. As one example, TRICOR has the discretion to pay bonuses linked to performance of its employees.

Though subject to same legislative oversight as other government agencies, TRICOR uses no taxpayer funds. The agency also saves the Department of Correction millions of dollars annually by supervising inmates at 11 state prisons during work shifts. And, as previously mentioned, TRICOR self-funds its own capital upgrades, such as the state's new state-of-the-art license plate stamping machinery that otherwise would be paid for by taxpayers.

Not that it is all sweetness and light. Hiccups in the roll-out of the state's proposed Morgan County prison project have slowed TRICOR's growth of late, as has a drop-off in the license plate production market. Not unlike other private business, TRICOR also faces stiff overseas competition for its products and services. That's the case even though TRICOR's labor pool, comprised of roughly 1,000 inmates (including some on death row), is paid on average $1 per hour.

Does TRICOR take jobs away from private enterprise in Tennessee? In some prison industries, namely furniture-making, the reality is that most or all private industry competition has shut down and gone to China or Vietnam over the past decade anyway. Other work TRICOR has done would not be of interest to traditional industry. For instance, Wilson Sporting Goods, which makes all their balls in China and for space-saving purposes ships its products without inflating them, utilized TRICOR's workforce for a number of years to blow up and package its balls. To its credit, the TRICOR board goes to great lengths to stay connected to labor and industry in the state, particularly when making decisions about new business lines. Its track record suggests that overall it has gotten along without major opposition with private industry through the years.

The Pew Charitable Trusts reported in February that the U.S. prison population is growing at a 13% annual clip. It's data that could be construed as more good news for TRICOR. That said, the agency's real purpose is not to make money but rather to train prisoners so that when they earn release—perhaps with a little earned money in their pockets—they have the skills needed to support themselves and avoid future trouble. Statistics bear out that the recidivism rate of inmates who participate in TRICOR prior to release is lower than that of the general population.

Now that's government working.

Drew Ruble, Editor