Schneider

We must decide whether a State committed an unconstitutional taking by failing to pay interest on funds deposited in prison inmate trust accounts.

I

Paul J. Schneider and the other Plaintiffs-Appellants are current and former state inmates of the California penitentiary system. For security reasons, inmates are not permitted under California law to possess money while in prison. See 15 C.C.R. § 3006(b). Accordingly, the California Department of Corrections (“CDC”) has established two separate types of trust accounts into which personal funds may be placed during incarceration. One, an Inmate Passbook Savings Account, is administered by Bank of America, and pays interest to the inmate on the principal balance. A second, an Inmate Trust Account (“ITA”) does not pay interest. Each prisoner has the option of authorizing the CDC to establish and to maintain an ITA on his behalf, but he is not required to do so. See 15 C.C.R. § 3075.1(d)(3) (“CDC Form 345”).

Notwithstanding that the inmate is not credited with interest earned on his account, there are compelling reasons to establish an ITA. First, in order to qualify for an interest-bearing account, an inmate is required to…