Amended in Senate July 6, 2015

Amended in Assembly June 1, 2015

Amended in Assembly May 6, 2015

Amended in Assembly April 21, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 1400


Introduced by Assembly Member Santiago

February 27, 2015


An act to add Section 4629.8 to the Welfare and Institutions Code, relating to developmental services.

LEGISLATIVE COUNSEL’S DIGEST

AB 1400, as amended, Santiago. Developmental services: regional center contracts.

Existing law, the Lanterman Developmental Disabilities Services Act, requires the State Department of Developmental Services to enter into contracts with private nonprofit corporations to operate regional centers for the provision of community services and support for persons with developmental disabilities and their families. Existing law sets forth the duties of the regional centers, including, but not limited to, development of individual program plans, the purchase of needed services to implement the plan, and monitoring of the delivery of those services.

Existing law requires the regional center contracts and agreements with service providers in which rates are determined through negotiations between the regional center and the service providers to expressly require that not more than 15% of regional center funds be spent on administrative costs, as defined.

This bill would require all regional center contracts or agreements with contracting entities that provide in-home respite services and that have an annual revenue attributable to in-home respite services provided to regional center consumers of at least $7,000,000, as specified, to expressly require that at least 85% of regional center funds be spent on direct service expenditures, as defined.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 4629.8 is added to the Welfare and
2Institutions Code
, to read:

3

4629.8.  

(a) For purposes of this section, the following
4definitions apply:

5(1) “Administrative costs” means all costs other than direct
6service expenditures, including all amounts actually paid and all
7accounts payable, as calculated in accordance with generally
8accepted accounting principles, including, but not limited to, all
9of the following:

10(A) Compensation and benefits, including federal, state, and
11local payroll taxes, workers’ compensation and unemployment
12insurance premiums, and recruiting, training, orientation, and
13background checks for managerial personnel whose primary
14purpose is the administrative management of the entity, including,
15but not limited to, directors and chief executive officers.

16(B) Compensation and benefits, including federal, state, and
17local payroll taxes, workers’ compensation and unemployment
18insurance premiums, and recruiting, training, orientation, and
19background checks for employees who perform administrative
20functions, including, but not limited to, payroll management,
21personnel functions, accounting, budgeting, and facility
22management.

23(C) Facility and occupancy costs directly associated with
24administrative functions.

25(D) Maintenance and repair.

26(E) Data processing and computer support services.

P3    1(F) Contract and procurement activities, except those provided
2by a direct service employee.

3(G) Training directly associated with administrative functions.

4(H) Travel directly associated with administrative functions.

5(I) Licenses directly associated with administrative functions.

6(J) Taxes.

7(K) Interest.

8(L) Property insurance.

9(M) Personal liability insurance directly associated with
10administrative functions.

11(N) Depreciation.

12(O) General expenses, including, but not limited to,
13communication costs and supplies directly associated with
14administrative functions.

15(P) Consultants and professional services, including, but not
16limited to, accounting and legal services.

17(Q) Distributions to shareholders.

18(R) Advertising costs.

19(S) Conference, convention, and meeting costs.

20(T) Facility and office equipment costs, including, but not
21limited to, rent, lease, and mortgage payments, directly associated
22with administrative functions.

23(U) Transfers to a corporate parent or franchisor, including, but
24not limited to, franchise fees, fees for copyright or trademark usage,
25fees for advertising materials, royalty fees, or conference fees.

26(V) Other general operating and overhead costs.

27(2) “Direct service expenditures” means all amounts actually
28paid and all accounts payable, as calculated in accordance with
29generally accepted accounting principles, in the following
30categories:

31(A) Wages and benefits, including state, federal, and local
32payroll taxes, workers’ compensation and unemployment insurance
33premiums, and recruiting, training, orientation, and background
34checks for respite care aides.

35(B) Expenses substantially similar to those in subparagraph (A)
36that are directly related to the provision of in-home respite services.

begin insert

37(3) “Financial management services” means services as defined
38by Section 4685.7 and any similar service, including, but not
39limited to, payroll duties, processing payments for the
40reimbursement of services, and other employer responsibilities
P4    1that are required by federal and state law, when the agency is the
2employer for those purposes, but the consumer or his or her family
3member recruits the worker.

end insert
begin insert

4(4) “Service agency” means an organization or corporation
5that provides in-home respite services, as defined in Section 4690.2.

end insert

6(b) (1) Notwithstanding Section 4629.7 or any other law, all
7regional center contracts or agreements with contracting entities
8that provide in-home respitebegin delete servicesend deletebegin insert servicesend insertbegin insert, as defined in Section
94690.2,end insert
and that have an annual revenue attributable to in-home
10respite services provided to regional center consumers of at least
11seven million dollarsbegin delete ($7,000,000)end deletebegin insert ($7,000,000),end insert shall expressly
12require that at least 85 percent of regional center funds be spent
13on direct service expenditures. Direct service expenditures shall
14not include administrative costs.

15(2) A contractingbegin delete entityend deletebegin insert service agencyend insert may meet the annual
16revenue attributable to in-home respite services specified in
17paragraph (1) in either of the following ways:

18(A) The annual revenue of the contractingbegin delete entityend deletebegin insert service agencyend insert
19 that is attributable to in-home respite services provided to regional
20center consumers, excluding financial managementbegin delete servicesend delete
21begin insert servicesend insertbegin insert, as defined in paragraph (3) of subdivision (a),end insert and other
22administrative services, meets or exceeds seven million dollars
23($7,000,000).

24(B) The annual revenue of the contracting entity’s parent
25organization that is attributable to in-home respite services provided
26to regional center consumers in this state, excluding financial
27managementbegin delete servicesend deletebegin insert servicesend insertbegin insert, as defined in paragraph (3) of
28subdivision (a),end insert
and other administrative services, whether earned
29directly by the parent organization or by subcontractors and
30subsidiaries of the parent organization, meets or exceeds seven
31million dollars ($7,000,000).

32(c) Consistent with subdivision (b), service providers and
33contractors, upon request, shall provide regional centers with access
34to books, documents, papers, computerized data, source documents,
35consumer records, or other records pertaining to the service
36providers’ and contractors’ rates.



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