               IN THE SUPREME COURT OF IOWA
                                 No. 13–0702

                           Filed January 9, 2015


STATE OF IOWA,

      Appellee,

vs.

BEAU JACKSON MORRIS,

      Appellant.



      Appeal      from   the   Iowa   District   Court   for   Polk   County,

Christopher L. McDonald, Judge.



      Inmate appeals rescission by the district court of prior order

increasing restitution payments deducted from his prison earnings.

REVERSED.



      Beau Morris, Clarinda, pro se.



      Thomas J. Miller, Attorney General, Kevin R. Cmelik and

William A. Hill, Assistant Attorneys General, and John P. Sarcone,

County Attorney, for appellee.
                                          2

CADY, Chief Justice.

      In this appeal, a prison inmate challenges a decision of the district

court to rescind its prior order that increased the amount of restitution

deducted from his prison earnings.              In deciding this case, we must

interpret Iowa Code section 904.809(5) (2013) governing deductions from

earnings by inmates employed by private industry. On our review, we

reverse the order of the district court.

      I. Background Facts and Prior Proceedings.

      Beau Morris was convicted of first-degree robbery and second-

degree sexual assault in 2004. He was sentenced by the district court to

two consecutive twenty-five-year terms of incarceration.                The district

court also ordered him to pay restitution in an amount in excess of

$16,000.      Initially, Morris was required to pay twenty percent of all

credits to his institutional account as restitution. This order was later

modified to fifteen percent of his income.

      In 2011, Morris began working for a private employer through the

Iowa Prison Industries program. He was paid a wage in excess of $10

per hour for the work he performed. This employment allowed him to

earn significantly more than he was paid for performing labor for the

prison.    Morris signed a work agreement as part of his application for

employment with Iowa Prison Industries. Under the agreement, Morris

agreed that fifteen percent of his gross wages would be deducted for

restitution, “unless otherwise specified.” 1


      1The   complete work agreement follows:
      I hereby agree voluntarily to participate in the Federal Prison Industry
      Enhancement Act (PIE) project. Section 904.809 of the Code of Iowa. I
      further agree to the deductions listed in items 1, 2, 3, 4, and 5 below
      made from gross wages, unless otherwise specified, as well as to all other
      financial arrangements made as to earned Federal Prison Industry
                                        3


_____________________
     Enhancement Act (PIE) wages. I will not initiate, acquiesce, or agree to
     any attempt to have my wages garnished or executed upon by any party
     prior to the distribution of such wages pursuant to Section 904.809 Iowa
     Code (2007).       Any deviation from this agreement, or change in
     deductions without written notification from the Department of
     Corrections is prohibited and will result in suspension or termination,
     additionally the offenders will be assessed reasonable Attorneys General
     fees for resolving any changes or attempts to modify this agreement.
     If I am offered and accept employment by H & H Trailer, I agree to the
     following.
     1. Deductions will be made from my wages to be distributed as follows:
        A. Payroll deductions as required by law, which may include but are
           not limited to state and federal income taxes and social security
           assessments. You are allowed one (1) deduction unless you can
           produce a certified document for additional deductions.
        B. An amount legally obligated to pay by court order for the support
           of dependents being child support or family support. If a court
           order does not exist dependent support will not be taken.
        C. Twenty percent (20%) of gross wages deposited to my inmate
           account. Of the 20% of gross wages deposited to my inmate
           account the following, IF IT APPLIES, will be deducted from my
           inmate account; 20% to federal restitution and 10% to savings up
           to a maximum of $100. IF IT APPLIES, deductions for state and
           federal court filing fees and DOC sanctions will be taken from the
           remaining amount deposited to my inmate account.
        D. Five percent (5%) of gross wages deducted for the victim
           compensation fund.
        E. Fifteen percent (15%) of gross wages deducted for state
           restitution. If restitution does not exist, no amount will be taken.
        F. Any amount left above the deductions will go the General Fund as
           provided for in the Code of Iowa.
     2. I understand and agree that Workman’s Compensation while so
        employed is not a responsibility of H & H Trailers and will apply
        according to section 85.59, Code of Iowa.
     3. I understand and agree that I am not eligible for unemployment while
        employed as an inmate, and that my employer will not report my
        wages to the State for unemployment, and according[ly] execute an
        Iowa Short Form Power of Attorney.
     4. If employed under PIE, I hereby constitute and appoint the Director
        of Corrections or his/her designee my true and lawful agent and
        attorney in fact with respect to the receipt, disbursement, and
        custody of the wages arising from my employment, and accordingly
        execute an Iowa Short Form Power of Attorney.
                                         4

      On July 30, 2012, Morris petitioned the district court to modify the

restitution plan to allow him to pay a greater amount for restitution from

his private-employment earnings. He requested that fifty percent of his

earnings be paid as restitution. The district court granted the request

and ordered the Iowa Department of Corrections (DOC) to increase the

restitution deduction to fifty percent on August 15, 2012.

      The DOC did not immediately comply with the order and

eventually filed a motion with the district court requesting that it be

rescinded. The district court, under a different presiding judge, granted

the motion and rescinded the prior order modifying restitution.                  The

court rejected the State’s argument that federal law limited the total

restitution deduction amounts to twenty percent, but held that the

modified restitution order violated the state statutory scheme for the

distribution of inmate earnings from private-sector employment.                  The

district court reinstated the prior restitution plan that set the amount of

restitution at fifteen percent of his earnings. The district court declined

to address the additional claim made by the State that the employment

agreement executed by Morris precluded any modification of restitution.

      Morris appealed. He raises two issues. First, Morris claims the

district court abused its discretion by rescinding the modified restitution

order. Second, he claims the employment agreement did not preclude a

modification of restitution. The State argues the district court properly
_____________________
      5. I will only perform the duties assigned to me by the company and will
         not operate any equipment that the company has not trained or
         certified me to operate. I will also follow all applicable policies,
         procedures and safety regulations as described by the company.
      I have read and understand the forgoing, and if employed, I agree to
      abide by the guidelines set out above. I understand that my employment
      is “at will” and that I am not guaranteed my employment will have any
      specific duration.
                                     5

rescinded the modified restitution order and asserts the issue of whether

the modified restitution order violated the employment agreement was

not properly before the court in this appeal.

      II. Standard of Review.

      Our review of a restitution order is for abuse of discretion.

“ ‘Abuse of discretion may be shown where . . . the court’s . . . decision is

grounded on reasons that are clearly untenable or unreasonable.’ ”

Office of Citizens’ Aide/Ombudsman v. Edwards, 825 N.W.2d 8, 14 (Iowa

2012) (quoting Citizens’ Aide/Ombudsman v. Grossheim, 498 N.W.2d

405, 407 (Iowa 1993)). “A ground or reason is untenable . . . when it is

based on an erroneous application of the law.” Id. (citation and internal

quotation marks omitted); accord Bottoms v. Stapleton, 706 N.W.2d 411,

415 (Iowa 2005) (“A court abuses its discretion when its ruling is based

on clearly untenable grounds, such as reliance upon an improper legal

standard or error in the application of the law.”).     “When reviewing a

restitution order, ‘we determine whether the court’s findings lack

substantial evidentiary support, or whether the court has not properly

applied the law.’ ” State v. Klawonn, 688 N.W.2d 271, 274 (Iowa 2004)

(quoting State v. Bonstetter, 637 N.W.2d 161, 165 (Iowa 2001)).

Statutory construction is reviewed for correction of errors at law. State v.

Dudley, 766 N.W.2d 606, 612 (Iowa 2009).

      III. Discussion.

      The resolution of this case requires us to consider the private-

employment program for inmates in Iowa prisons. While prison inmates

have historically earned very meager wages for performing labor while in

prison, private employment opportunities for inmates now offer jobs that

pay substantially higher wages. See Iowa Code § 904.809(1)(c); Noah D.

Zatz, Working at the Boundaries of Markets: Prison Labor and the
                                      6

Economic Dimension of Employment Relationships, 61 Vand. L. Rev. 857,

870–71 & n.49 (2008) [hereinafter Zatz].           However, inmates are only

permitted to receive a portion of the wages paid.                   Iowa Code

§ 904.809(5)(b)–(c). Most of the earnings are distributed to other entities

designated by statute pursuant to a declared statutory priority scheme.

Id. § 904.809(5). Under this distribution scheme, the amount distributed

to a recipient with priority over another recipient can reduce the amount

ultimately distributed to the lower-priority recipient.         See id.   In this

case, the State challenged the authority of the district court to modify a

restitution order that increased the statutory distribution of an inmate’s

earnings for restitution because it resulted in a decrease in the statutory

distribution of the inmate’s earnings to the DOC as reimbursement for

supervision costs of private-employment programs and to the general

fund of the state as reimbursement for the costs of incarceration. We

first review the private-employment program to shed light on the

resolution of this case.

        Congress   authorized   the       Prison     Industry     Enhancement

Certification Program as part of the Justice System Improvement Act of

1979.    Pub. L. No. 96-157, § 827, 93 Stat. 1167, 1215 (codified at 18

U.S.C. § 1761(c) (1982)). Generally, this program joined private industry

with prison industry by exempting qualified correctional systems from

the existing legislative restrictions on the interstate transportation and

sale of prison goods and generally allowing the unrestricted sales of

goods produced by inmates. See James J. Misrahi, Note, Factories with

Fences: An Analysis of the Prison Industry Enhancement Certification

Program in Historical Perspective, 33 Am. Crim. L. Rev. 411, 412 (1996).

The program, among other things, established a minimum wage and

authorized deductions of up to eighty percent of the inmate’s wages for
                                           7

taxes, room and board, support, and victim compensation funds. Id. at

412–13. The program was originally authorized in only five states, but

has expanded to include over forty participating jurisdictions, including

Iowa.    Zatz, 61 Vand. L. Rev. at 869 n.37; see also Prison Industry

Enhancement Certification Program Guideline, 64 Fed. Reg. 17,000,

17,002 (Apr. 7, 1999).

        The Iowa legislature established the Iowa State Industries program

in 1977. 2 1977 Iowa Acts ch. 87 (codified at Iowa Code ch. 216 (1979)).

The private prison industry program in Iowa is codified in Iowa Code

section 904.809 (2013).          This section establishes the conditions for

private industry employment by inmates of correctional institutions in

Iowa and includes provisions relating to the specific deductions from the

earnings of inmates. 3 Id. Overall, the total earnings of inmates, less the

employee deductions for taxes and other payroll deductions, are

surrendered to the DOC, which then identifies the deductions pursuant

to the statutory scheme contained in section 904.809(5)(b).                          Id.

§ 904.809(5). Under this scheme, an inmate’s gross payroll earnings are

distributed as follows:

              (1) Twenty percent, to be deposited in the inmate’s
        general account.
             (2) All required tax deductions, to be collected by the
        inmate’s employer.

        2In  1989, Iowa became part of the Federal Prison Industry Enhancement
Certification Program. See Nat’l Corr. Indus. Ass’n, Prison Industry Enhancement
Certification Program Certification & Cost Accounting Center Listing 11 (2014), available
at       http://www.nationalcia.org/wp-content/uploads/Quarter-2-2014-Certification-
Listing.pdf.
        3The  deductions were originally established in 1997 Iowa Acts ch.190, § 6
(codified at Iowa Code § 904.809(5) (1999)). The order of deductions was modified by
1999 Iowa Acts ch. 182, § 6 (codified at Iowa Code § 904.809(5) (2001)), and the final
alteration adding the department of corrections staff supervision deduction was added
by 2004 Iowa Acts ch. 1175, § 203 (codified at Iowa Code § 904.809(5)(c)(3) (2005)).
                                        8
           (3) Five percent, to be deducted for            the   victim
      compensation fund created in section 915.94.

Id. § 904.809(5)(b).
      After these deductions are made, the remaining balance is

distributed pursuant to a separate priority scheme. Id. § 904.809(5)(c).

First, any dependent support obligation of the inmate is deducted from

the remaining balance.      Id.    Up to a maximum of fifty percent of the

inmate’s net earnings can be deducted for monthly spousal and child

support obligations, as well as any amount for delinquent child support.

Id. From the remaining funds after this priority is satisfied, an amount

is deducted for any restitution ordered by the court pursuant to an

offender plan of restitution. Id. § 904.809(5)(c)(2). If funds remain after

the restitution order is satisfied, the DOC may retain up to fifty percent

of this balance. Id. § 904.809(5)(c)(3). The purpose of this deduction is

to reimburse the DOC for the staff supervision costs of private-sector

employment of inmates. See id. Finally, any funds that might remain

after this deduction are deposited in the general fund of the state. Id.

§ 904.809(5)(c)(4).    The purpose of this deduction is to reimburse the

state for the costs of the inmate’s incarceration.

      The statute is clear and unambiguous. Specifically, it means that

restitution pursuant to a plan established by the court takes priority over

any amounts that may be retained by the DOC or deposited in the

general fund of the state.        There is no dispute under the statute that

restitution trumps funding for the DOC, just as dependent support

orders trump restitution plans. Additionally, funds are paid out under

the statute after the three required payments identified in section

904.809(5)(b) only to the extent that the greater priority deductions

established by the legislature have been satisfied.
                                            9

       Thus, we turn to the specific dispute before us in this case. The

district court rescinded its prior order that modified restitution after it

determined the modified terms of restitution were contrary to the

statutory scheme prioritizing the distribution of earnings.                  It held the

modified restitution order altered the statutory distribution scheme by

making restitution the first deduction.

       In deciding whether the order to rescind the modified restitution

was based on an erroneous application of law, it is important to

recognize that the modified restitution order only increased the amount

of restitution from fifteen percent of earnings to fifty percent of earnings.

This modification did not address the issue of priority in any way and

expressed no intent for restitution to be elevated to the first deduction in

violation of the statute. The prior restitution plan, which was reinstated

by the district court when it rescinded the modified order, directed fifteen

percent of wages to be paid, and the modified order only increased the

percentage of payment.             A district court is authorized to modify

restitution payments.         See id. § 910.7(2). 4      Additionally, the statutory

        4Authority to modify an offender’s restitution payment plan is governed by the

Iowa Code. See Iowa Code § 910.4(2)(d) (requiring court approval for modification when
offender is on probation); id. § 910.5(1)(d) (permitting the director of the DOC or
director’s designee to modify the plan of payment to reflect the offender’s present
circumstances when incarcerated); id. § 910.5(2)(a) (permitting the chief of the bureau
of community correctional services to modify payment plans for those on work release);
id. § 910.5(3)(a) (permitting the office or individual in charge of supervising an offender
on work release to modify the plan); id. § 910.5(4)(a) (permitting the district department
of correctional services to prepare and modify a parolee’s payment plan); see also id.
§ 910.2 (regarding restitution or community service ordered by sentencing court).
Notwithstanding the delegations to prepare and modify restitution payment plans,
section 910.7 gives the trial court authority to modify the restitution plan and
restitution payment plan of an inmate, parolee, or probationer when petitioned either by
the offender or by the office or individual preparing the plan. See id. § 910.7(1)–(2).
       When preparing or modifying an offender’s restitution payment plan, the
individual or office preparing it is to “tak[e] into consideration the offender’s income,
physical and mental health, age, education, employment and family circumstances,” id.
§ 910.4(2), with modification occurring “[w]hen there is a significant change in the
                                        10

scheme for wage deductions for inmates in the prison industry program

does not limit the percent of net earnings that can be deducted for

restitution.   See id. § 904.809(5)(c)(2); see also Iowa Admin. Code r.

201—20.11(7) (limiting restitution deductions to fifty percent of credits to

offender’s account).

       It is also important to recognize that Morris did not have any

deductions for dependent support.            As a result, the only deductions

higher in priority than restitution were the statutorily required twenty

percent to his inmate account, taxes, and the five percent deduction for

the victim restitution fund. Accordingly, the modified restitution order

was not contrary to the distribution scheme for inmate private-sector

employment under the statute.          The modified restitution order did not

alter any of the categories of distribution with a greater priority under the

statute, but merely increased the amount distributed for restitution,

which left a lesser amount for the DOC and the state’s general fund. See

Iowa Code § 904.809(5)(c)(3)–(4). However, this result is a consequence

of the judgment of our legislature to compensate victims of crimes and

other recipients of restitution before permitting the DOC to be

reimbursed for its costs of supervising the private-sector employment of

inmates and the state to be reimbursed for the costs of incarceration.

       This analysis reveals that the decision by the district court to

rescind the amended restitution order was based on reasoning that

constituted legal error. Contrary to the reasoning of the district court in

the rescission hearing, the amended restitution order was not contrary to

the governing statutory scheme. While the district court had discretion

_____________________
offender’s income or circumstances,” id. § 910.4(2)(d); accord id. § 910.5(1)(d)(1),
(2)(a)(1), (3)(a)(1), (4)(a)(1).
                                     11

to amend the restitution order and rescind or modify the amended order,

it had no discretion to rescind the amended order based on legal error.

See Bottoms, 706 N.W.2d at 415.

      We have discretion to affirm the district court on grounds raised at

trial but not on appeal. See King v. State, 818 N.W.2d 1, 11 (Iowa 2012).

However, we decline to do so in this case by considering whether the

decision of the district court can be affirmed on the ground that the

modified restitution order was contrary to the employment agreement.

The State affirmatively elected not to pursue this issue, and there is no

underlying supporting record. Under the circumstances, we consider the

issue waived on appeal.

      Accordingly, the district court order rescinding the modified

restitution order was an abuse of discretion.       We reverse the district

court decision to rescind the modified restitution order without prejudice

to the State to seek further modification of Morris’s restitution.

      IV. Conclusion.

      We reverse the decision of the district court.

      REVERSED.
