Amended in Senate April 21, 2015

Senate Bill No. 638

Introduced by Senator Stone

February 27, 2015

An act to amend Sections 4629.7, 4681.1, 4681.6, 4689.8, 4691.9, and 4860 of, and to add Sections 4519.8, 4681.2, 4690.7, 4793, and 4794 to, the Welfare and Institutions Code, relating to developmental services.

LEGISLATIVE COUNSEL’S DIGEST

SB 638, as amended, Stone. Developmental services: funding.

The Lanterman Developmental Disabilities Services Act requires the State Department of Developmental Services to contract with regional centers to provide services and supports to individuals with developmental disabilities. Under existing law, the regional centers purchase needed services for individuals with developmental disabilities through approved service providers or arrange for those services through other publicly funded agencies.

This bill would require the department to submit a plan to the Legislature by August 1, 2016, to ensure the sustainability, quality, and transparency of community-based services for individuals with developmental disabilities. The bill would require the department to regularly consult with stakeholders in developing the plan and would require the plan to address specified topics, including, among others, recommendations for a comprehensive approach to funding regional center operations in a sustainable and transparent manner that begin delete provides incentives for end delete begin insert enables end insert regional centers to deliver high-quality services to consumers.

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

This bill would instead provide that the percentage of the funds that may be spent on administrative costs varies depending on the total value, annually, of the begin delete agreements between the regional center and each service provider. end delete begin insert payments received by a service provider from all regional centers. end insert

Existing law establishes specified rates to be paid to certain service providers and the rates to be paid for certain developmental services. Existing law requires that rates to be paid to other developmental service begin delete provider end delete begin insert providers end insert either be set by the department or negotiated between the regional center and the service provider. Existing law prohibits certain provider rate increases, but authorizes increases to those rates as necessary to adjust employee wages to meet the state minimum wage law.

This bill would increase the rates established by existing law, as specified, and would require an increase to the rates set by the department and the rates negotiated between regional centers and service providers, as specified. The bill would also require the department, when setting rates for community care facilities serving people with developmental disabilities, to ensure that the rates permit the viability of those facilities by establishing different rates for each facility size, as determined by the number of beds available, that reflect reasonable differences in the cost structure of facilities with differing numbers of beds. The bill would require the department to adopt emergency regulations implementing that provision by July 1, 2016.

Existing law requires each regional center to submit, on or before August 1 of each year, to the department and the State Council on Developmental Disabilities a program budget plan for the subsequent budget year. Existing law provides that, to the extent feasible, all funds appropriated for developmental disabilities programs be allocated to those programs by August 1 of each year and designates the department as the agency responsible for the processing, audit, and payment of funds made available to regional centers.

This bill would require the department to increase the funding paid to a regional center for the regional center’s operating budget, beginning begin delete January 1, 2016, by 5% end delete begin insert July 1, 2015, by 10% end insert above the amount the regional center otherwise would have received under the department’s core staffing formula, and, beginning July 1, 2016, by 10% above the amount the regional center otherwise would have received under the department’s core staffing begin delete formula. end delete begin insert formula, plus a percentage equal to the percentage of any increase in the California Consumer Price Index since July 1, 2015. end insert The bill would also require the department to increase the funding provided to a regional center to enable the regional center and the regional center’s purchase-of-service vendors to fund certain costs related to minimum wage requirements.

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

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

SECTION 1.  

(a) The Legislature finds and declares all of the
following:

(1) California’s vision to promote fulfilling lives for persons
with developmental disabilities launched in 1969 with the passage
of the Lanterman Developmental Disabilities Services Act,
authored by Assembly Member Frank Lanterman and signed by
Governor Ronald Reagan. However, the Lanterman Act’s vision
is now threatened by neglect of the community service system and
wasteful spending on outdated state institutions.

(2) The current funding system for regional center operations
and for community-based services is inadequate and outdated. The
funding currently provided has not kept pace with the cost of
delivering high-quality services. Funding formulas and ratesetting
methods are archaic and ill-suited to promote an effective and
efficient community system that delivers high-quality services to
consumers.

(3) The result of inadequate funding for community services
and onerous requirements on providers can be seen in the decline
of the number of vendors serving the community. As documented
in the January 2015 Fact Book issued by the State Department of
Developmental Services, the number of vendors declined by 30
percent from 2009-10 to 2013-14, begin delete inclusive end delete begin insert inclusive, end insert despite an
increase of 12 percent in the number of consumers served in the
community. begin insert The Association of Regional Center Agencies also
reports that 435 licensed residential homes and 57 day and work
programs have closed since July 2011. end insert

(4) California must recommit itself to vibrant and sustainable
community services that maximize opportunities for persons with
developmental disabilities to thrive in their own neighborhoods.

(5) It is imperative that the Legislature take action to ensure the
viability of the community service system by paying sustainable
reimbursement rates, streamlining requirements for community
service providers, and fairly funding the regional center system to
administer services.

(b) Accordingly, it is the intent of the Legislature to enact
short-term increases in reimbursement rates for community services
providers while undertaking a stakeholder process with specific
deadlines to develop and implement long-term reforms to
accomplish these goals. It is also the intent of the Legislature to
establish requirements for greater regional center transparency
with respect to rates paid to vendors and the amount and type of
services provided to consumers across the spectrum of regional
center services. It is further the intent of the Legislature that the
provisions added by this act only remain in place until a revised,
comprehensive rate system that provides adequate and transparent
funding for community-based services, including supported
employment, is implemented.

SEC. 2.  

Section 4519.8 is added to the Welfare and Institutions
Code, immediately following Section 4519.7, to read:

4519.8.  

The department shall submit a plan to the Legislature
to ensure the sustainability, quality, and transparency of
community-based services for individuals with developmental
disabilities. The department shall regularly consult with
stakeholders in developing the plan. The department shall submit
the plan to the Legislature by August 1, 2016. The plan shall
include, but not be limited to, all of the following:

begin delete

(a) For each community services cost savings measure adopted
through the budget process from 2008 through 2014, inclusive,
that is still in effect as of July 1, 2015, an estimate of the savings
generated and the number of program enrollees affected by that
budget savings action. The plan shall recommend whether or not
to continue implementing each savings measure.

(b)

end delete

begin insert (a) end insert  An assessment of the effectiveness of the methods used to
pay each category of community service provider. This assessment
shall include begin insert consideration of end insert the following begin delete consideration end delete begin insert factors end insert
for each begin delete type end delete begin insert category end insert of service provider:

(1) Whether the current method of ratesetting for a service
category is ensuring an adequate supply of providers in that
begin delete category. end delete begin insert category, including, but not limited to, whether there is
a sufficient supply of providers to enable a consumer to have a
choice of providers. end insert

(2)  begin delete For service categories whose rates are not currently
negotiated rates, end delete begin insert A comparison of end insert the likely fiscal effects of begin delete shifting
the rate methodology to negotiated rates for that end delete begin insert using the following
methodologies for each end insert service provider begin delete category. end delete begin insert category: end insert

begin delete

(3) Options for basing a portion of the reimbursement for a
provider category on consumer satisfaction, as measured by
surveys, consumer-generated ratings, or other recognized methods
for measuring consumer satisfaction in a statistically representative
manner.

(c)

end delete begin insert

(A) Negotiated rates, which may be limited to regional medians
or other limits.

end insert begin insert

(B) Rates established through regulations on either a statewide
or regionally adjusted basis.

end insert begin insert

(C) Alternate rate methodologies that may use combinations of
negotiated or regulatory rates on either a statewide or regionally
adjusted basis.

end insert

begin insert (b) end insert  An evaluation of the appropriateness of the number and type
of begin delete billing end delete begin insert service end insert codes for regional center services, including, but
not limited to, recommendations for making begin delete billing end delete begin insert service end insert codes
more reflective of the level and type of services begin delete provided. end delete begin insert provided
and for reducing the number and type of services that are billed
with a service code of “Miscellaneous.” end insert

begin delete

(d)

end delete

begin insert (c) end insert  Recommendations for a comprehensive purchase-of-services
rate structure that would ensure a sustainable, high-quality, and
transparent community services system.

begin delete

(e) For regional center operations, an estimate of the median
cost per consumer to staff each regional center at appropriate levels.

end delete begin delete

(f)

end delete

begin insert (d) end insert  An assessment of the adequacy of the number and locations
of regional centers for providing timely service to consumers. This
assessment shall begin delete consider end delete begin insert consider, at a minimum, end insert all of the
begin delete following: end delete begin insert following factors: end insert

(1) The waiting time for consumers to obtain appointments with
regional center personnel.

(2) The distance consumers must travel for in-person meetings
with regional center personnel.

(3) The type and frequency of interactions between consumers
and regional center personnel that can be accommodated remotely
through electronic means, begin delete including end delete begin insert including, but not limited to, end insert
electronic mail, video conferencing, or telehealth.

begin insert

(4) Whether the number of consumers and the geographic size
of the catchment area served by each regional center are
reasonable for delivering high-quality service to consumers and
their families.

end insert begin delete

(4)

end delete

begin insert (5) end insert  Whether additional regional centers or regional center
locations are necessary to address any identified deficiencies in
access to regional center personnel, or whether technology-enabled
means of access or other solutions are warranted.

begin delete

(g) Development and evaluation of options for basing a portion
of the funding for regional centers on consumer satisfaction, as
measured by surveys, consumer-generated ratings, or other
recognized methods for measuring consumer satisfaction in a
statistically representative manner.

(h)

end delete

begin insert (e) end insert  Recommendations for a comprehensive approach to funding
regional center operations in a sustainable and transparent manner
that begin delete provides incentives for end delete begin insert enables end insert regional centers to deliver
high-quality services to their begin delete consumers. end delete begin insert consumers, including,
but not limited to, recommendations and estimated costs for
increasing the number of regional centers or altering catchment
areas. end insert

SEC. 3.  

Section 4629.7 of the Welfare and Institutions Code
is amended to read:

4629.7.  

(a) Notwithstanding any other law, all regional center
contracts or agreements with service providers in which rates are
determined through negotiations between the regional center and
the service provider shall expressly require that not more than the
amount of funds specified in paragraphs (1) to (3), inclusive, be
spent on administrative costs.

(1) For service providers begin delete whose regional center agreements total end delete
begin insert who receive payments from one or more regional centers totaling end insert
two million dollars ($2,000,000) or more begin delete annually, end delete begin insert annually from
those regional centers, end insert 15 percent of regional center funds.

(2) For service providers begin delete whose regional center agreements total end delete
begin insert who receive payments from one or more regional centers totaling end insert
less than two million dollars ($2,000,000), but more than begin delete one
million dollars ($1,000,000), annually, 17.5 end delete begin insert five hundred thousand
dollars ($500,000), annually from those regional centers, 20 end insert
percent of regional center funds.

(3) For service providers begin delete whose regional center agreements total
one million dollars ($1,000,000) or less, annually, 20 end delete begin insert who receive
payments from one or more regional centers totaling five hundred
thousand dollars or less annually from those regional centers, 25 end insert
percent of regional center funds.

(b) For purposes of this subdivision, direct service expenditures
are those costs immediately associated with the services to
consumers being offered by the provider. Funds spent on direct
services shall not include any administrative costs. Administrative
costs include, but are not limited to, any of the following:

(1) Salaries, wages, and employee benefits for managerial
personnel whose primary purpose is the administrative management
of the entity, including, but not limited to, directors and chief
executive officers.

(2) Salaries, wages, and benefits of employees who perform
administrative functions, including, but not limited to, payroll
management, personnel functions, accounting, budgeting, and
facility management.

(3) Facility and occupancy costs, directly associated with
administrative functions.

(4) Maintenance and repair.

(5) Data processing and computer support services.

(6) Contract and procurement activities, except those provided
by a direct service employee.

(7) Training directly associated with administrative functions.

(8) Travel directly associated with administrative functions.

(9) Licenses directly associated with administrative functions.

(10) Taxes.

(11) Interest.

(12) Property insurance.

(13) Personal liability insurance directly associated with
administrative functions.

(14) Depreciation.

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

(c) Notwithstanding any other law, all contracts between the
department and the regional centers shall require that not more
than 15 percent of all funds appropriated through the regional
center’s operations budget shall be spent on administrative costs.
For purposes of this subdivision, “direct services” includes, but is
not limited to, service coordination, assessment and diagnosis,
monitoring of consumer services, quality assurance, and clinical
services. Funds spent on direct services shall not include any
administrative costs. For purposes of this subdivision,
administrative costs include, but are not limited to, any of the
following:

(1) Salaries, wages, and employee benefits for managerial
personnel whose primary purpose is the administrative management
of the regional center, including, but not limited to, directors and
chief executive officers.

(2) Salaries, wages, and benefits of employees who perform
administrative functions, including, but not limited to, payroll
management, personnel functions, accounting, budgeting, auditing,
and facility management.

(3) Facility and occupancy costs, directly associated with
administrative functions.

(4) Maintenance and repair.

(5) Data processing and computer support services.

(6) Contract and procurement activities, except those performed
by direct service employees.

(7) Training directly associated with administrative functions.

(8) Travel directly associated with administrative functions.

(9) Licenses directly associated with administrative functions.

(10) Taxes.

(11) Interest.

(12) Property insurance.

(13) Personal liability insurance directly associated with
administrative functions.

(14) Depreciation.

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

(d) Consistent with subdivision (a), service providers and
contractors, upon request, shall provide regional centers with access
to any books, documents, papers, computerized data, source
documents, consumer records, or other records pertaining to the
service providers’ and contractors’ negotiated rates.

SEC. 4.  

Section 4681.1 of the Welfare and Institutions Code
is amended to read:

4681.1.  

(a) The department shall adopt regulations that specify
rates for community care facilities serving persons with
developmental disabilities. The implementation of the regulations
shall be contingent upon an appropriation in the annual Budget
Act for this purpose. These rates shall be calculated on the basis
of a cost model designed by the department that ensures that
aggregate facility payments support the provision of services to
each person in accordance with his or her individual program plan
and applicable program requirements. The cost model shall reflect
cost elements that shall include, but are not limited to, all of the
following:

(1) “Basic living needs” include utilities, furnishings, food,
supplies, incidental transportation, housekeeping, personal care
items, and other items necessary to ensure a quality environment
for persons with developmental disabilities. The amount identified
for the basic living needs element of the rate shall be calculated
as the average projected cost of these items in an economically
and efficiently operated community care facility.

(2) “Direct care” includes salaries, wages, benefits, and other
expenses necessary to supervise or support the person’s functioning
in the areas of self-care and daily living skills, physical
coordination mobility, and behavioral self-control, choice making,
and integration. The amount identified for direct care shall be
calculated as the average projected cost of providing the level of
service required to meet each person’s functional needs in an
economically and efficiently operated community care facility.
The direct care portion of the rate shall reflect specific service
levels defined by the department on the basis of relative resident
need and the individual program plan.

(3) “Special services” include specialized training, treatment,
supervision, or other services that a person’s individual program
plan requires to be provided by the residential facility in addition
to the direct care provided under paragraph (2). The amount
identified for special services shall be calculated for each individual
based on the additional services specified in the person’s individual
program plan and the prevailing rates paid for similar services in
the area. The special services portion of the rate shall reflect a
negotiated agreement between the facility and the regional center
in accordance with Section 4648.

(4) “Indirect costs” include managerial personnel, facility
operation, maintenance and repair, other nondirect care, employee
benefits, contracts, training, travel, licenses, taxes, interest,
insurance, depreciation, and general administrative expenses. The
amount identified for indirect costs shall be calculated as the
average projected cost for these expenses in an economically and
efficiently operated community care facility.

(5) “Property costs” include mortgages, leases, rent, taxes,
capital or leasehold improvements, depreciation, and other
expenses related to the physical structure. The amount identified
for property costs shall be based on the fair rental value of a model
facility that is adequately designed, constructed, and maintained
to meet the needs of persons with developmental disabilities. The
amount identified for property costs shall be calculated as the
average projected fair rental value of an economically and
efficiently operated community care facility.

(b) The cost model shall take into account factors that include,
but are not limited to, all of the following:

(1) Facility size, as defined by the department on the basis of
the number of facility beds licensed by the State Department of
Social Services and vendorized by the regional center.

(2) Specific geographic areas, as defined by the department on
the basis of cost of living and other pertinent economic indicators.

(3) Common levels of direct care, as defined by the department
on the basis of services specific to an identifiable group of persons
as determined through the individual program plan.

(4) Positive outcomes, as defined by the department on the basis
of increased integration, independence, and productivity at the
aggregate facility and individual consumer level.

(5) Owner-operated and staff-operated reimbursement, which
shall not differ for facilities that are required to comply with the
same program requirements.

(c) The rates established for individual community care facilities
serving persons with developmental disabilities shall reflect all of
the model cost elements and rate development factors described
in this section. The cost model design shall include a process for
updating the cost model elements that address variables, including,
but not limited to, all of the following:

(1) Economic trends in California.

(2) New state or federal program requirements.

(3) Changes in the state or federal minimum wage.

(4) Increases in fees, taxes, or other business costs.

(5) Increases in federal supplemental security income/state
supplementary program for the aged, blind, and disabled payments.

(d) Rates established for persons with developmental disabilities
who are also dually diagnosed with a mental health disorder may
be fixed at a higher rate. The department shall work with the State
Department of Health Care Services to establish criteria upon
which higher rates may be fixed pursuant to this subdivision. The
higher rate for persons with developmental disabilities who are
also dually diagnosed with a mental health disorder may be paid
when requested by the director of the regional center and approved
by the Director of Developmental Services.

(e) By January 1, 2001, the department shall prepare proposed
regulations to implement the changes outlined in this section. The
department may use a private firm to assist in the development of
these changes and shall confer with consumers, providers, and
other interested parties concerning the proposed regulations. By
May 15, 2001, and each year thereafter, the department shall
provide the Legislature with annual community care facility rates,
including any draft amendments to the regulations as required. By
July 1, 2001, and each year thereafter, contingent upon an
appropriation in the annual Budget Act for this purpose, the
department shall adopt emergency regulations that establish the
annual rates for community care facilities serving persons with
developmental disabilities for each fiscal year.

(f) During the first year of operation under the revised rate
model, individual facilities shall be held harmless for any reduction
in aggregate facility payments caused solely by the change in
reimbursement methodology.

(g) (1) The department shall ensure that rates established for
community care facilities serving persons with developmental
disabilities permit the viability of those facilities, including, but
not limited to, four-bed facilities, by establishing different rates
for each facility size, as determined by the number of beds
available, that reflect reasonable differences in the cost structure
of facilities with differing numbers of beds.

(2) The department shall adopt emergency regulations by July
1, 2016, to implement this subdivision. The adoption, amendment,
repeal, or readoption of a regulation authorized by this paragraph
is deemed to be necessary for the immediate preservation of the
public peace, health and safety, or general welfare, for purposes
of Sections 11346.1 and 11349.6 of the Government Code, and
the department is hereby exempted from the requirement that it
describe specific facts showing the need for immediate action.

SEC. 5.  

Section 4681.2 is added to the Welfare and Institutions
Code, to read:

4681.2.  

(a) Notwithstanding any other law, commencing July
1, 2015, the department shall increase the rates set for community
care facilities serving persons with developmental disabilities by
begin delete 5 end delete begin insert 10 end insert percent above the levels that otherwise would have been in
effect as of July 1, begin delete 2015, and, commencing end delete begin insert 2015. Commencing end insert
July 1, 2016, begin insert except as specified in subdivision (b), end insert the department
shall increase those rates by begin delete 5 percent above the level in effect on end delete
begin insert a percentage equal to the percentage of any increase in the
California Consumer Price Index since end insert July 1, 2015.

begin insert

(b) The rate increase described in subdivision (a) that is
required to commence July 1, 2016, shall only be made if the
Budget Act of 2016 does not implement alternative rate increases
or rate reforms based on the plan required by Section 4519.8.

end insert begin delete

(b)

end delete

begin insert (c) end insert  The funding increases authorized in this section shall only
be made if the begin delete percentage end delete begin insert increase would not result in a reduction
to the amount end insert of federal matching funds available begin delete does not change. end delete
begin insert for these services. end insert

SEC. 6.  

Section 4681.6 of the Welfare and Institutions Code
is amended to read:

4681.6.  

(a) Notwithstanding any other law, commencing July
1, 2008:

(1) A regional center shall not pay an existing residential service
provider, for services where rates are determined through a
negotiation between the regional center and the provider, a rate
higher than the rate in effect on June 30, 2008, unless the increase
is required by a contract between the regional center and the vendor
that is in effect on June 30, 2008, or the regional center
demonstrates that the approval is necessary to protect the
consumer’s health or safety and the department has granted prior
written authorization.

(2) A regional center shall not negotiate a rate with a new
residential service provider, for services where rates are determined
through a negotiation between the regional center and the provider,
that is higher than the regional center’s median rate for the same
service code and unit of service, or the statewide median rate for
the same service code and unit of service, whichever is lower. The
unit of service designation shall conform with an existing regional
center designation or, if none exists, a designation used to calculate
the statewide median rate for the same service. The regional center
shall annually certify to the department its median rate for each
negotiated rate service code, by designated unit of service. This
certification shall be subject to verification through the
department’s biennial fiscal audit of the regional center.

(b) Notwithstanding subdivision (a), commencing July 1, 2014,
regional centers may negotiate a rate adjustment with residential
service providers regarding rates that are otherwise restricted
pursuant to subdivision (a), if the adjustment is necessary in order
to pay employees no less than the minimum wage as established
by Section 1182.12 of the Labor Code, as amended by Chapter
351 of the Statutes of 2013, and only for the purpose of adjusting
payroll costs associated with the minimum wage increase. The
rate adjustment shall be specific to the unit of service designation
that is affected by the increased minimum wage, shall be specific
to payroll costs associated with any increase necessary to adjust
employee pay only to the extent necessary to bring pay into
compliance with the increased state minimum wage, and shall not
be used as a general wage enhancement for employees paid above
the minimum wage. Regional centers shall maintain documentation
on the process to determine, and the rationale for granting, any
rate adjustment associated with the minimum wage increase.

(c) (1) Notwithstanding subdivision (a), commencing July 1,
2015, regional centers shall increase the rates paid to residential
service providers, for services where rates are determined through
a negotiation between the regional center and the provider, by begin delete 5 end delete
begin insert 10 end insert percent above the levels that otherwise would have been in
effect on July 1, begin delete 2015, and, commencing end delete begin insert 2015. Commencing end insert July
1, 2016, begin insert except as specified in paragraph (2), end insert the regional centers
shall increase those rates by begin delete 5 percent above the level in effect on end delete
begin insert a percentage equal to the percentage of any increase in the
California Consumer Price Index since end insert July 1, 2015.

begin insert

(2) The rate increase described in paragraph (1) that is required
to commence July 1, 2016, shall only be made if the Budget Act
of 2016 does not implement alternative rate increases or rate
reforms based on the plan required by Section 4519.8.

end insert begin delete

(2)

end delete

begin insert (3) end insert  The funding increases authorized in this subdivision shall
only be made if the begin delete percentage end delete begin insert increase would not result in a
reduction to the amount end insert of federal matching funds available begin delete does
not change. end delete begin insert for these services. end insert

(d) For purposes of this section, “residential service provider”
includes Adult Residential Facilities for Persons with Special
Health Care Needs, as described in Section 4684.50.

(e) This section shall not apply to those services for which rates
are determined by the State Department of Health Care Services,
or the State Department of Developmental Services, or are usual
and customary.

SEC. 7.  

Section 4689.8 of the Welfare and Institutions Code
is amended to read:

4689.8.  

(a) Notwithstanding any other law, commencing July
1, 2008:

(1) A regional center shall not pay an existing supported living
service provider, for services where rates are determined through
a negotiation between the regional center and the provider, a rate
higher than the rate in effect on June 30, 2008, unless the increase
is required by a contract between the regional center and the vendor
that is in effect on June 30, 2008, or the regional center
demonstrates that the approval is necessary to protect the
consumer’s health or safety and the department has granted prior
written authorization.

(2) A regional center shall not negotiate a rate with a new
supported living service provider, for services where rates are
determined through a negotiation between the regional center and
the provider, that is higher than the regional center’s median rate
for the same service code and unit of service, or the statewide
median rate for the same service code and unit of service,
whichever is lower. The unit of service designation shall conform
with an existing regional center designation or, if none exists, a
designation used to calculate the statewide median rate for the
same service. The regional center shall annually certify to the State
Department of Developmental Services its median rate for each
negotiated rate service code, by designated unit of service. This
certification shall be subject to verification through the
department’s biennial fiscal audit of the regional center.

(b) (1) Notwithstanding subdivision (a), commencing July 1,
2015, regional centers shall increase the rates paid to supported
living service providers, for services where rates are determined
through a negotiation between the regional center and the provider,
by begin delete 5 end delete begin insert 10 end insert percent above the levels that otherwise would have been
in effect on July 1, begin delete 2015, and, commencing end delete begin insert 2015. Commencing end insert
July 1, 2016, begin insert except as specified in paragraph (2), end insert the regional
centers shall increase those rates by begin delete 5 percent above the level in
effect on end delete begin insert a percentage equal to the percentage of any increase in
the California Consumer Price Index since end insert July 1, 2015.

begin insert

(2) The rate increase described in paragraph (1) that is required
to commence July 1, 2016, shall only be made if the Budget Act
of 2016 does not implement alternative rate increases or rate
reforms based on the plan required by Section 4519.8.

end insert begin delete

(2)

end delete

begin insert (3) end insert  The funding increases authorized in this subdivision shall
only be made if the begin delete percentage end delete begin insert increase would not result in a
reduction to the amount end insert of federal matching funds available begin delete does
not change. end delete begin insert for these services. end insert

SEC. 8.  

Section 4690.7 is added to the Welfare and Institutions
Code, to read:

4690.7.  

(a) Notwithstanding any other law, commencing July
1, 2015, the department shall increase the rates set for
nonresidential service providers by begin delete 5 end delete begin insert 10 end insert percent above the levels
that otherwise would have been in effect on July 1, begin delete 2015, and,
commencing end delete begin insert 2015. Commencing end insert July 1, 2016, begin insert except as specified
in subdivision (b), end insert the department shall increase those rates by begin delete 5
percent above the level in effect on end delete begin insert a percentage equal to the
percentage of any increase in the California Consumer Price Index
since end insert July 1, 2015.

begin insert

(b) The rate increase described in subdivision (a) that is
required to commence July 1, 2016, shall only be made if the
Budget Act of 2016 does not implement alternative rate increases
or rate reforms based on the plan required by Section 4519.8.

end insert begin delete

(b)

end delete

begin insert (c) end insert  The funding increases authorized in this section shall only
be made if the begin delete percentage end delete begin insert increase would not result in a reduction
to the amount end insert of federal matching funds available begin delete does not change. end delete
begin insert for these services. end insert

SEC. 9.  

Section 4691.9 of the Welfare and Institutions Code
is amended to read:

4691.9.  

(a) Notwithstanding any other law, commencing July
1, 2008:

(1) A regional center shall not pay an existing service provider,
for services where rates are determined through a negotiation
between the regional center and the provider, a rate higher than
the rate in effect on June 30, 2008, unless the increase is required
by a contract between the regional center and the vendor that is in
effect on June 30, 2008, or the regional center demonstrates that
the approval is necessary to protect the consumer’s health or safety
and the department has granted prior written authorization.

(2) A regional center shall not negotiate a rate with a new service
provider, for services where rates are determined through a
negotiation between the regional center and the provider, that is
higher than the regional center’s median rate for the same service
code and unit of service, or the statewide median rate for the same
service code and unit of service, whichever is lower. The unit of
service designation shall conform with an existing regional center
designation or, if none exists, a designation used to calculate the
statewide median rate for the same service. The regional center
shall annually certify to the State Department of Developmental
Services its median rate for each negotiated rate service code, by
designated unit of service. This certification shall be subject to
verification through the department’s biennial fiscal audit of the
regional center.

(b) Notwithstanding subdivision (a), commencing July 1, 2014,
regional centers may negotiate a rate adjustment with providers
regarding rates if the adjustment is necessary in order to pay
employees no less than the minimum wage as established by
Section 1182.12 of the Labor Code, as amended by Chapter 351
of the Statutes of 2013, and only for the purpose of adjusting
payroll costs associated with the minimum wage increase. The
rate adjustment shall be specific to the unit of service designation
that is affected by the increased minimum wage, shall be specific
to payroll costs associated with any increase necessary to adjust
employee pay only to the extent necessary to bring pay into
compliance with the increased state minimum wage, and shall not
be used as a general wage enhancement for employees paid above
the increased minimum wage. Regional centers shall maintain
documentation on the process to determine, and the rationale for
granting, any rate adjustment associated with the minimum wage
increase.

(c) Notwithstanding any other law, commencing January 1,
2015, rates for personal assistance and supported living services
in effect on December 31, 2014, shall be increased by 5.82 percent,
subject to funds specifically appropriated for this increase for costs
due to changes in federal regulations implementing the federal
Fair Labor Standards Act of 1938 (29 U.S.C. Sec. 201 et seq.).
The increase shall be applied as a percentage, and the percentage
shall be the same for all applicable providers. As used in this
subdivision, both of the following definitions shall apply:

(1) “Personal assistance” is limited only to those services
provided by vendors classified by the regional center as personal
assistance providers, pursuant to the miscellaneous services
provisions contained in Title 17 of the California Code of
Regulations.

(2) “Supported living services” are limited only to those services
defined as supported living services in Title 17 of the California
Code of Regulations.

(d) (1) Notwithstanding subdivision (a), commencing July 1,
2015, regional centers shall increase the rates paid to service
providers, for services where rates are determined through a
negotiation between the regional center and the provider, by begin delete 5 end delete begin insert 10 end insert
percent above the levels that otherwise would have been in effect
on July 1, begin delete 2015, and, commencing end delete begin insert 2015. Commencing end insert July 1,
2016, begin insert except as specified in paragraph (2), end insert the regional centers
shall increase those rates by begin delete 5 percent above the level in effect on end delete
begin insert a percentage equal to the percentage of any increase in the
California Consumer Price Index since end insert July 1, 2015.

begin insert

(2) The rate increase described in paragraph (1) that is required
to commence July 1, 2016, shall only be made if the Budget Act
of 2016 does not implement alternative rate increases or rate
reforms based on the plan required by Section 4519.8.

end insert begin delete

(2)

end delete

begin insert (3) end insert  The funding increases authorized in this subdivision shall
only be made if the begin delete percentage end delete begin insert increase would not result in a
reduction to the amount end insert of federal matching funds available begin delete does
not change. end delete begin insert for these services. end insert

(e) This section shall not apply to those services for which rates
are determined by the State Department of Health Care Services,
or the State Department of Developmental Services, or are usual
and customary.

SEC. 10.  

Section 4793 is added to the Welfare and Institutions
Code, to read:

4793.  

(a) The department shall increase the funding provided
to a regional center for the regional center’s operating budget as
follows:

(1) Beginning begin delete January 1, 2016, end delete begin insert July 1, 2015, end insert increase the amount
paid under the core staffing formula by begin delete 5 end delete begin insert 10 end insert percent.

(2) Beginning July 1, 2016, increase the amount paid under the
core staffing formula by 10 begin delete percent. end delete begin insert percent, plus a percentage
equal to the percentage of any increase in the California Consumer
Price Index since July 1, 2015. end insert

begin insert

(b) The rate increase described in paragraph (2) of subdivision
(a) that is required to commence July 1, 2016, shall only be made
if the Budget Act of 2016 does not implement alternative rate
increases or regional center funding reforms based on the plan
required by Section 4519.8.

end insert begin delete

(b)

end delete

begin insert (c) end insert  The funding increases authorized in this section shall only
be made if the begin delete percentage end delete begin insert increase would not result in a reduction
to the amount end insert of federal matching funds available begin delete does not change. end delete
begin insert for these services. end insert

SEC. 11.  

Section 4794 is added to the Welfare and Institutions
Code, to read:

4794.  

begin insert (a) end insert begin insert   end insert The department shall increase the funding provided
to a regional center to enable the regional center and regional
center’s purchase-of-service vendors to fund all of the following
costs associated with minimum wage requirements:

begin delete

(a)

end delete

begin insert (1) end insert  The costs necessary to comply with a statewide minimum
wage requirement.

begin delete

(b)

end delete

begin insert (2) end insert  The costs necessary to comply with minimum wage
requirements enacted by local governments that exceed the
statewide minimum wage.

begin delete

(c)

end delete

begin insert (3) end insert  The costs necessary to increase compensation for exempt,
salaried employees to comply with wage orders issued by the
Industrial Welfare Commission or any other state regulatory
agency.

begin delete

(d)

end delete

begin insert (4) end insert  Any other wage adjustments that vendors are required to
make in response to minimum wage increases mandated by state
or federal statutes, regulations, or other authorities.

begin insert

(b) The funding increases required by this section shall be in
addition to the funding increases required by Sections 4681.2,
4681.6, 4689.8, 4690.7, 4691.9, 4793, and 4860, as those sections
were added or amended by the act that added this section.

end insert

SEC. 12.  

Section 4860 of the Welfare and Institutions Code is
amended to read:

4860.  

(a) (1) Except as provided in subdivision (f), the hourly
rate for supported employment services provided to consumers
receiving individualized services shall be thirty-four dollars and
twenty-four cents ($34.24).

(2) Job coach hours spent in travel to consumer worksites may
be reimbursable for individualized services only when the job
coach travels from the vendor’s headquarters to the consumer’s
worksite or from one consumer’s worksite to another, and only
when the travel is one way.

(b) Except as provided in subdivision (f), the hourly rate for
group services shall be thirty-four dollars and twenty-four cents
($34.24) regardless of the number of consumers served in the
group. Consumers in a group shall be scheduled to start and end
work at the same time, unless an exception that takes into
consideration the consumer’s compensated work schedule is
approved in advance by the regional center. The department, in
consultation with stakeholders, shall adopt regulations to define
the appropriate grounds for granting these exceptions. When the
number of consumers in a supported employment placement group
drops to fewer than the minimum required in subdivision (r) of
Section 4851, the regional center may terminate funding for the
group services in that group, unless, within 90 days, the program
provider adds one or more regional centers, or Department of
Rehabilitation-funded supported employment consumers to the
group.

(c) Job coaching hours for group services shall be allocated on
a prorated basis between a regional center and the Department of
Rehabilitation when regional center and Department of
Rehabilitation consumers are served in the same group.

(d) When Section 4855 applies, fees shall be authorized for the
following:

(1) A four-hundred-dollar ($400) fee shall be paid to the program
provider upon intake of a consumer into a supported employment
program. No fee shall be paid if that consumer completed a
supported employment intake process with that same supported
employment program within the previous 12 months.

(2) An eight-hundred-dollar ($800) fee shall be paid upon
placement of a consumer in an integrated job, except that no fee
shall be paid if that consumer is placed with another consumer or
consumers assigned to the same job coach during the same hours
of employment.

(3) An eight-hundred-dollar ($800) fee shall be paid after a
90-day retention of a consumer in a job, except that no fee shall
be paid if that consumer has been placed with another consumer
or consumers, assigned to the same job coach during the same
hours of employment.

(e) Notwithstanding paragraph (4) of subdivision (a) of Section
4648, the regional center shall pay the supported employment
program rates established by this section.

(f) (1) Commencing July 1, 2016, the rates established by
subdivisions (a) and (b) shall be thirty-seven dollars and sixty-six
cents ($37.66).

begin delete

(2) Commencing July 1, 2017, the rates established by
subdivisions (a) and (b) shall be forty-one dollars and forty-three
cents ($41.43).

end delete begin insert

(2) The rate increase described in paragraph (1), shall only be
made if the Budget Act of 2016 does not implement alternative
rate increases or regional center funding reforms based on the
plan required by Section 4519.8.

end insert

SEC. 13.  

The Legislature declares that the changes made by
this act are not intended to result in the substantial impairment of
any contract. To the extent any contract would be substantially
impaired as a result of the application of any change made by this
act, it is the intent of the Legislature that the change apply only to
contracts renewed or entered into on or after January 1, 2016.