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116th Congress }                                              { Report
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                              { 116-344

======================================================================



 
                      PRISON TO PROPRIETORSHIP ACT

                                _______
                                

 December 12, 2019.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Ms. Velazquez, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5078]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 5078) to amend the Small Business Act to provide re-
entry entrepreneurship counseling and training services for 
incarcerated individuals, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
   I. Purpose and Bill Summary........................................1
  II. Background and Need for Legislation.............................2
 III. Hearings........................................................3
  IV. Committee Consideration.........................................4
   V. Committee Votes.................................................4
  VI. Section-by-Section Analysis for H.R. 5078.......................6
 VII. Congressional Budget Office Cost Estimate.......................7
VIII. Unfunded Mandates...............................................7
  IX. New Budget Authority, Entitlement Authority, and Tax Expenditure7
   X. Oversight Findings..............................................8
  XI. Statement of Constitutional Authority...........................8
 XII. Congressional Accountability Act................................8
XIII. Federal Advisory Committee Act Statement........................8
 XIV. Statement of No Earmarks........................................8
  XV. Statement of Duplication of Federal Programs....................8
 XVI. Disclosure of Directed Rule Makings.............................8
XVII. Performance Goals and Objectives................................8
XVIII.Changes in Existing Law, Made by the Bill, As Reported..........9


                      I. Purpose and Bill Summary

    The purpose of H.R. 5078, the Prison to Proprietorship Act 
is to provide in-depth entrepreneurship training to federal 
prisoners.

                II. Background and Need for Legislation

    H.R. 5078, the Prison to Proprietorship Act was introduced 
by Chairwoman Nydia Velazquez (D-NY) and Ranking Member Steve 
Chabot (D-OH) on November 13, 2019.
    Every year, thousands of formerly incarcerated individuals 
return to their communities seeking to rebuild their lives. In 
2018, more than 37,000 incarcerated individuals were released 
from federal prisons,\1\ and more than 97 percent of the 
nation's 180,000 federal inmates will eventually be 
released.\2\ Unfortunately, nearly half of those released will 
be rearrested within 8 years.\3\ In 2016, the United States 
Sentencing Commission (USSC) released a study that examined the 
recidivism rates among 25,000 federal inmates who were released 
in 2005. The study followed offenders and probationers for 
eight years to determine rates of rearrest, reconviction, and 
incarceration. About half of the offenders were rearrested for 
a new crime or a violation within eight years, nearly a third 
were reconvicted, and about a quarter were incarcerated. The 
median time to first arrest was 21 months.\4\
---------------------------------------------------------------------------
    \1\Bureau of Fed. Prisons, https://www.bop.gov/about/statistics/
statistics_inmate_releases.jsp.
    \2\Adam Gelb & John Gramlich, Recidivism Study Offers Lessons for 
Federal Policy (The PEW Charitable Trusts, 2016).
    \3\U.S. Sent'g Commission, Recidivism Among Federal Offenders: A 
Comprehensive Overview, (2016).
    \4\The PEW Charitable Trust, supra note 2.
---------------------------------------------------------------------------
    Entrepreneurship training can play a key role in helping 
these individuals overcome barriers to re-entry and 
successfully transition back into the workplace and their 
communities. Programs focused on entrepreneurship can provide 
the formerly incarcerated with support to create businesses 
that not only build wealth but create greater economic 
mobility. As noted above, lack of employment opportunities is a 
significant factor resulting in recidivism. Providing a pathway 
to entrepreneurship has the potential to empower former inmates 
to start and run their business. Programs that focus on 
leadership skills, financial literacy, developing a business 
plan, and building networks have the potential to reduce 
recidivism, provide a great return on investment by leading to 
economic expansion and ultimately save the taxpayers millions 
of dollars. As the flagship Agency tasked with supporting 
entrepreneurs and small businesses, the SBA can play a pivotal 
role in this regard.
    The Small Business Administration (SBA) offers a wide range 
of free or low-cost counseling and training services through 
its entrepreneurial ecosystem to help entrepreneurs launch and 
grow their small businesses. To deliver these resources, the 
SBA relies on its primary resource partners: Small Business 
Development Centers (SBDCs), Women's Business Centers (WBCs), 
and SCORE.
    The Women's Business Centers (WBCs) were created to assist 
small businesses primarily owned by women, many of whom are 
socially and economically disadvantaged. The WBC program funds 
more than 100 centers nationwide and offers a full range of 
counseling and training services for all stages of business 
development.\5\ WBCs provide financial education and literacy 
programs and are uniquely suited to provide the basic financial 
literacy skills, which may be lacking with those who are 
incarcerated. Several WBCs already provide entrepreneurship 
training to incarcerated individuals. For example, the Center 
in Spokane, Washington teaches financial literacy classes, 
offers business training, coaches this population on ways to 
avoid predators, the dangers of debt, and the difference 
between consumer debt and capacity/asset debt.\6\
---------------------------------------------------------------------------
    \5\The Association of Women's Business Centers is the resource 
partner for WBC. WBC Resources, available at https://irp-
cdn.multiscreensite.com/fb72abcb/files/uploaded/WBC-One-Pager-and-2018-
Policy-Priorities.pdf.
    \6\Prison to Proprietorship: Entrepreneurship Opportunities for the 
Formerly Incarcerated: Hearing Before the Comm. on Small Business, 
116th Cong. (2016) (statement of Corinne Hodges, CEO of the Association 
of Women's Business Centers).
---------------------------------------------------------------------------
    The largest of the resource partners within SBA's 
entrepreneurial ecosystem, the Small Business Development 
Center (SBDC) network is comprised of 63 lead organizations and 
more than 900 subcenters.\7\ They are in rural, urban, and 
suburban communities nationwide, and many are housed at 
universities or state agencies. The network delivers free face-
to-face counseling and at-cost training in all aspects of small 
business management to new and existing small businesses. The 
services include, but are not limited to, assisting small 
businesses with developing a business plan, accessing capital, 
marketing, regulatory compliance, technology development, and 
international trade.\8\ Their nearly forty-year history of 
providing counseling and training, coupled with their far-
reaching network makes them well-positioned to provide these 
services in federal prisons.
---------------------------------------------------------------------------
    \7\U.S. Small Bus. Admin., Office of Small Business Development 
Centers, available at https://www.sba.gov/offices/headquarters/osbdc/
resources/11409.
    \8\America's SBDCs is the association for SBDCs, SBDC Web 
Resources, available at https://americassbdc.org/about-us/.
---------------------------------------------------------------------------
    Education is known to be a great equalizer as it can boost 
economic mobility and reduce recidivism, yet approximately 30 
percent of incarcerated individuals do not hold a high school 
diploma.\9\ As a result, securing employment without an 
education or job skills can be difficult for those individuals 
reentering society. In 2016, a Rand Corporations report found 
that individuals ``who participated in any type of educational 
program--from remedial math to vocational auto shop to college 
level courses--while in prison were 43 percent less likely to 
return to prison.'' They also are far more likely to find a job 
after release.\10\ While studies have shown that employment is 
central to the successful reintegration into the communities, 
it can be elusive for the reasons mentioned above. Encouraging 
entrepreneurship can be a viable option for formerly 
incarcerated individuals who are committed to rebuilding their 
lives. Moreover, it can reduce recidivism with the added 
benefit of creating jobs on Main Street.
---------------------------------------------------------------------------
    \9\ U.S. Dep't of Educ., International Center for Education 
Statistics, Highlights from the U.S. PIAAC Survey of Incarcerated 
Adults: Their Skills, Work Experience, Education and Training, 2014.
    \10\Rand Corporation, The Case for Correctional Education in U.S. 
Prisons, Jan. 3, 2016.
---------------------------------------------------------------------------

                             III. Hearings

    In the 116th Congress, the Committee held a hearing titled 
``Prison to Proprietorship: Entrepreneurship Opportunities for 
the Formerly Incarcerated'' on October 23, 2019 to develop H.R. 
5078. The hearing examined the role entrepreneurship can play 
in overcoming barriers to employment for the formerly 
incarcerated and reducing recidivism. It also examined 
entrepreneurship training options for incarcerated and formerly 
incarcerated individuals.

                      IV. Committee Consideration

    The Committee on Small Business met in open session, with a 
quorum being present, on November 20, 2019, and ordered H.R. 
5078 reported favorably to the House of Representatives. During 
the markup, no amendments were offered.

                           V. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. The Committee voted by voice vote to favorably report 
H.R. 5078 to the House at 11:44.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         VI. Section-by-Section

    Based on Committee outreach and hearings, Chairwoman 
Velazquez and Ranking Member Chabot introduced H.R. 5078, the 
``Prison to Proprietorship Act''.

Section 1. Short title

    This section provides that the bill may be cited as the 
``Prison to Proprietorship Act.''

Section 2. Re-entry entrepreneurship counseling and training for 
        incarcerated individuals

    This section amends the Small Business Act (15 U.S.C.).
    Subsection (a) requires the Administrator to work closely 
with the Director of the Bureau of Prisons, to provide 
entrepreneurship counseling and training services to covered 
individuals.
    Subsection (b) requires the Administrator to develop an 
annual plan to match Women's Business Centers and Small 
Business Development Centers with federal prisons, giving 
priority to the centers in closest proximity to the applicable 
Federal prison. If the closest Women's Business Center or Small 
Business Development Center is unable to provide the services 
at the federal prison, then another Women's Business Center, 
Small Business Development Center, or relevant association 
shall provide such services.
    Subsection (c) delineates the services provided, which 
include in-depth training on how to start and expand a small 
business as well as the tools, skills, and knowledge required 
to identify a business opportunity. More specifically, the 
services will include but are not limited to, drafting a 
resume, business plan, and transition plan, as well as 
identifying sources of capital and connecting with local 
resources regarding small business concerns. The Committee 
learned that one of the biggest issues facing the formerly 
incarcerated is finding gainful employment. For those locked 
out of the labor market, the services provided will equip them 
with the tools and skills necessary to overcome the barriers 
associated with reentering the workforce.
    Subsection (d) lists additional services provided under the 
bill, which include a presentation on self-employment and small 
business ownership, a self-study course manual geared towards 
increasing financial literacy, five two-day sessions of 
classroom instruction on the foundations of self-employment, 
and in-depth training delivered through one-on-one mentorship, 
particularly in the building of a business plan and relevant 
strategies for starting a small business. A certificate is to 
be presented upon successful completion of this extensive 
training.
    Subsection (e) requires the Administrator, to the extent 
practicable, prioritize services for those inmates who are 
scheduled to be released within 18 months.
    Subsection (f) allows individuals receiving services in 
prison to continue to receive services after release from 
Federal custody.
    Subsection (g) allows the Administrator to award a grant to 
an association formed solely to protect the interests and 
concerns of Small Business Development Centers or Women's 
Business Centers to assist with the development of a 
curriculum, training of mentors, identify opportunities to 
access capital, and the establishment of a public-private 
partnership to support covered individuals.
    Subsection (h) requires the Administration to print 
curriculum or course material and make it accessible to Women's 
Business Centers and Small Business Development Centers.
    Subsection (i) requires Women's Business Centers and Small 
Business Development Centers to survey individuals receiving 
services regarding their overall experience with the services 
provided to them.
    Subsection (j) requires the SBA to submit an annual report 
on the performance and effectiveness of the services, beginning 
one year after the date of the enactment of the legislation. 
The report shall include: (1) the number of covered individuals 
counseled or trained; (2) the number of hours of counseling 
provided by each Women's Business Center and each Small 
Business Development Center; (3) the number of certificates 
presented; (4) the demographics of covered individuals who 
received services, including age, gender, race, and ethnicity; 
(5) the level of understanding of business concepts of covered 
individuals upon completion of the counseling and training; (6) 
a summary and analysis of surveys conducted by resource 
partners and (i); any additional information the SBA may 
require.
    Subsection (k) defines a `covered individual' as an 
individual who is incarcerated in a federal prison that the 
Director of the Bureau of Prisons has designated as a minimum, 
low, or medium security prison.
    Subsection (l) allows the Administrator to reimburse 
Women's Business Centers, Small Business Development Centers, 
and all relevant associations of these centers, for service-
related costs, subject to the availability of resources.

                VII. Congressional Budget Cost Estimate

    At the time H.R. 5078 was reported to the House, the 
Congressional Budget Office had not provided a cost-estimate.

                        VIII. Unfunded Mandates

    H.R. 5078 contains no intergovernmental or private sector 
mandates as defined in the Unfunded Mandates Reform Act, Public 
Law No. 104-4, and would impose no costs on state, local, or 
tribal governments.

 IX. New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House, the Committee provides the following opinion and 
estimate with respect to new budget authority, entitlement 
authority, and tax expenditures. While the Committee has not 
received an estimate of new budget authority contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to Sec. 402 of the Congressional Budget 
Act of 1974, the Committee does not believe that there will be 
any additional costs attributable to this legislation because 
all authorizations would be subject to future appropriation 
action.

                         X. Oversight Findings

    In accordance with clause 2(b)(1) of rule X of the Rules of 
the House, the oversight findings and recommendations of the 
Committee on Small Business with respect to the subject matter 
contained in H.R. 5078 are incorporated into the descriptive 
portions of this report.

               XI. Statement of Constitutional Authority

    Pursuant to clause 7 of rule XII of the Rules of the House, 
the Committee finds the authority for this legislation in Art. 
I, Sec. 8, cl. 1.

                 XII. Congressional Accountability Act

    H.R. 5078 does not relate to the terms and conditions of 
employment or access to public services or accommodations 
within the meaning of Sec. 102(b)(3) of Public Law 104-1.

             XIII. Federal Advisory Committee Act Statement

    H.R. 5078 does not establish or authorize the establishment 
of any new advisory committees as that term is defined in the 
Federal Advisory Committee Act, 5 U.S.C. App.2.

                     XIV. Statement of No Earmarks

    Pursuant to clause 9 of rule XXI, H.R. 5078 does not 
contain any congressional earmarks, limited tax benefits, or 
limited tariff benefits as defined in subsections (d), (e), or 
(f) of clause 9 of rule XXI of the Rules of the House.

            XV. Statement of Duplication of Federal Programs

    Pursuant to clause 3 of rule XIII of the Rules of the 
House, no provision of H.R. 5078 establishes or reauthorizes a 
program of the federal government known to be duplicative of 
another federal program, a program that was included in any 
report from the United States Government Accountability Office 
pursuant to Sec. 21 of Pub. L. No. 111-139, or a program 
related to a program identified in the most recent catalog of 
federal domestic assistance.

                XVI. Disclosure of Directed Rulemakings

    Pursuant to clause 3 of rule XIII of the Rules of the 
House, H.R. 5078 does not direct any rulemaking.

                 XVII. Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XII of the Rules of the 
House, the Committee establishes the following performance-
related goals and objectives for this legislation:
    H.R. 5078 would direct the Small Business Administration's 
(SBA) resource partners--the Small Business Development Centers 
(SBDCs) and Women's Business Centers (WBCs)--to provide 
entrepreneurship training to federal prisoners.

      XVIII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause (E) of rule XIII of the Rules of 
the House, changes in existing law made by the bill, as 
reported, as shown as follows: existing law proposed to be 
omitted is enclosed in black brackets, new matter is printed in 
italic, and existing law in which no change is proposed is 
shown in roman:

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                           SMALL BUSINESS ACT




           *       *       *       *       *       *       *
SEC. 49. RE-ENTRY ENTREPRENEURSHIP COUNSELING AND TRAINING FOR 
                    INCARCERATED INDIVIDUALS.

  (a) Services Required.--The Administrator, in coordination 
with the Director of the Bureau of Prisons, shall require 
women's business centers and small business development centers 
identified under the plan described in subsection (b) to 
provide entrepreneurship counseling and training services to 
covered individuals.
  (b) Plan.--
          (1) In general.--The Administrator, in consultation 
        with an association formed to pursue matters of common 
        concern to women's business centers and an association 
        of small business development centers formed pursuant 
        to section 21(a)(3)(A), shall develop a plan, which 
        shall be updated annually, to match women's business 
        centers and small business development centers with 
        covered individuals in Federal prisons who are eligible 
        to receive services under this section.
          (2) Matching.--In determining matches under paragraph 
        (1), the Administrator shall prioritize matching the 
        women's business center or small business development 
        center in closest proximity to the applicable Federal 
        prison to provide such services.
          (3) Association responsibilities.--If the women's 
        business center or small business development center 
        identified under the plan in paragraph (1) is unable to 
        provide such services to covered individuals in such 
        Federal prison, another women's business center or 
        small business development center, an association of 
        women's business centers, or an association of small 
        business development centers shall provide such 
        services in accordance with the requirements of this 
        section.
  (c) Goals.--The goal of the services provided under this 
section is to provide covered individuals with the following:
          (1) Assistance and in-depth training on how to start 
        or expand a small business concern.
          (2) Tools, skills, and knowledge necessary to 
        identify a business opportunity, including how to--
                  (A) draft a resume, business plan, and 
                transition plan;
                  (B) identify sources of capital; and
                  (C) connect with local resources for small 
                business concerns.
  (d) Additional Requirements.--The services provided under 
this section shall include--
          (1) a presentation providing exposure to the 
        opportunities involved in self-employment and ownership 
        of a small business concern;
          (2) a self-study course manual focused on the basic 
        skills of entrepreneurship, financial literacy, the 
        language of business, and the considerations and life 
        skills relevant to self-employment and ownership of a 
        small business concern;
          (3) five two-day sessions of in-depth classroom 
        instruction introducing the foundations of self-
        employment and ownership of small business concerns, 
        including guided discussions to explore personal 
        entrepreneurial development interests;
          (4) in-depth training delivered through one-on-one 
        mentorship, including individual support in the 
        development of a business plan, entrepreneurial skills, 
        and strategies for starting up a small business 
        concern; and
          (5) upon completion of the counseling and training, a 
        presentation of a certificate.
  (e) Priority.--The Administrator shall, to the extent 
practicable, ensure that women's business centers and small 
business development centers prioritize providing 
entrepreneurship counseling and training services to covered 
individuals who will be released from Federal custody not later 
than 18 months after the date on which such a covered 
individual begins to receive such services.
  (f) Continuation of Services.--A covered individual receiving 
services under this section may continue to receive such 
services after release from Federal custody.
  (g) Grant Authority.--In carrying out this section, the 
Administrator may award a grant to an association formed to 
pursue matters of common concern to women's business centers or 
small business development centers to coordinate the services 
described under this section, including to develop curriculum, 
train mentors and instructors, and establish public-private 
partnerships to support covered individuals and identify 
opportunities to access capital.
  (h) Curriculum.--The Administration shall print and make 
available to women's business centers, small business 
development centers, an association of women's business 
centers, or an association of small business development 
centers any curriculum or course materials developed pursuant 
to this section.
  (i) Survey.--Each women's business center or small business 
development center that provided services under this section 
shall survey covered individuals who received such services to 
assess the satisfaction of such covered individuals with such 
services.
  (j) Report.--Not later than 1 year after the date of the 
enactment of this section and annually thereafter, the 
Administrator shall submit to the Committee on Small Business 
of the House of Representatives and the Committee on Small 
Business and Entrepreneurship of the Senate a report on the 
performance and effectiveness of the services provided under 
this section, which may be included as part of another report 
submitted to such committees by the Administrator, and which 
shall include--
          (1) the number of covered individuals counseled or 
        trained under this section;
          (2) the number of hours of counseling provided by 
        each women's business center and each small business 
        development center under this section;
          (3) the number of certificates presented under 
        subsection (d)(5);
          (4) the demographics of covered individuals who 
        received services, including age, gender, race, and 
        ethnicity;
          (5) the level of understanding of business concepts 
        of covered individuals upon completion of the 
        counseling and training described under this section;
          (6) a summary and analysis of surveys conducted under 
        subsection (i); and
          (7) any additional information the Administrator may 
        require.
  (k) Covered Individual Defined.--In this section, the term 
``covered individual'' means an individual incarcerated in a 
Federal prison that the Director of the Bureau of Prisons has 
designated as a minimum, low, or medium security prison.
  (l) Funding.--Subject to the availability of appropriations, 
the Administrator shall reimburse women's business centers, 
small business development centers, an association of women's 
business centers, or an association of small business 
development centers for the costs relating to the services 
provided under the section.
  Sec. [49.] 50. All laws and parts of laws inconsistent with 
this Act are hereby repealed to the extent of such 
inconsistency.

                                  [all]