BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 638 (Stone) - Developmental services: funding ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 21, 2015 |Policy Vote: HUMAN S. 4 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 11, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 638 would raise a variety of rates paid by regional centers to vendors who provide services to developmentally disabled consumers, authorize certain vendors to spend additional funds provided by regional centers for administrative costs, and increase funding to regional centers for staffing. The bill would require the Department of Developmental Services to develop a report on the funding of the regional center system. Fiscal Impact: Ongoing costs of about $420 million per year for the initial increase in rates paid to vendors of certain services 10% (General Fund and federal funds). SB 638 (Stone) Page 1 of ? Additional annual costs in future years of about $100 million per year to adjust vendor rates for inflation (General Fund and federal funds). Ongoing costs in the tens of millions per year for additional purchase of services to offset the redirection of regional center funding to administrative purposed by vendors. The bill authorizes vendors to increase the amount of regional center funding they may use to pay for their administrative costs. As funds are redirected from providing services towards administration, the regional centers will most likely need to purchase additional services from those vendors to ensure consumers' needs are being met. For example, if half of the existing regional center vendors (by revenue) increase their use of funding for administration by five percent, total costs would be about $100 million per year. Ongoing costs of about $50 million per year to provide additional funding to the regional centers to support their core staffing (General Fund and federal funds). Ongoing costs of about $64 million per year to provide additional funding to vendors to offset the increase of the state's minimum wage to $10 per hour (General Fund and federal funds). Note that the Governor's Budget Proposal includes funding for this cost. Ongoing costs of $10 million per year to pay increased rates for supportive employment services (General Fund and federal funds). Unknown costs to ensure that the rates for community care facilities permit the viability of those services (General Fund and federal funds). One-time costs, likely in the hundreds of thousands to develop a plan regarding the provision of services for the developmentally disabled (General Fund). Background: California provides community-based services to approximately 250,000 persons with developmental disabilities and their families through a statewide system of 21 regional centers. Regional centers are private, nonprofit agencies under contract SB 638 (Stone) Page 2 of ? with the Department of Developmental Services for the provision of various services and supports to people with developmental disabilities. As a single point of entry, regional centers provide diagnostic and assessment services to determine eligibility; convene planning teams to develop an Individual Program Plan for each eligible consumer; and either provide or obtain from generic agencies appropriate services for each consumer in accordance with the Individual Program Plan. In recent year, a variety of rate freezes and rate reductions were imposed on the regional center system to help balance the state budget. Currently, the Secretary of the Health and Human Services Agency is leading a taskforce to study the state's system for providing services in the community to individuals with developmental disabilities. Proposed Law: SB 638 would raise a variety of rates paid by regional centers to vendors who provide services to developmentally disabled consumers, authorize certain vendors to spend additional funds provided by regional centers for administrative costs, and increase funding to regional centers for staffing. The bill would require the Department of Developmental Services to develop a report on the funding of the regional center system. Specific provisions of the bill would: Require the Department of Developmental Disabilities to develop a plan to ensure the sustainability, quality, and transparency of community-based services for individuals with developmental disabilities; Relax an existing limit on the use of regional center funds for administrative costs by vendors (currently 15%), allowing vendors who receive between $500,000 and $2,000,000 to spend 20% on administration, and vendors who receive less than $250,000 to spend 25% on administration; Require the Department to ensure that rates established for community care facilities permit the viability of those facilities; Require the Department to adopt emergency regulations to set rates for those facilities; Require the Department to increase rates for specified services by 10%, including community care facilities, SB 638 (Stone) Page 3 of ? residential service providers with negotiated rates, supported living services with negotiated rates, non-residential service providers, service providers with negotiated rates; Require the Department to subsequently increase the rates (listed immediately above) every year in accordance with increases in California Consumer Price Index; Require the Department to increase funding to regional centers for their core staffing by 10%; Require the Department to provide funding to regional centers to pay for the costs of state-wide minimum wage increases, local minimum wage increases, increased compensation to exempt employees relating to minimum wage increases, and other, related wage adjustments; Increase the rates paid for supported employment services to specified levels. Related Legislation: AB 1626 (Maienschein, 2014) would have raised rates for supported employment services, similar to those in this bill. That bill was held on this committee's Suspense File. -- END --