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The last part is probably what this is mainly about. Using it as a punishment = Using prisoners as free workers. This has already been happening everywhere in the US and there is a huge financial interest in allowing these private prisons to continue operating.
AB32 banned private prisons in California. The slavery referred to by this proposition is typically work along the lines of: cook food in the kitchen, do the laundry, clean the bathrooms. In prison you can be compelled to do these things without pay and punished if you don’t (slavery).
I do find it interesting that people tend to be wholeheartedly in support of the Japanese school system that makes the children do all those things above. Maybe it’s just unclear how the slavery is used in California prisons?