BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1226 (Beall) - Regional centers: audits and reviews
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: March 28, 2016 |Policy Vote: HUMAN S. 5 - 0 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: April 25, 2016 |Consultant: Brendan McCarthy |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 1226 would require regional centers to submit
copies of independent audit reports on vendors to the Department
of Developmental Services for review.
Fiscal
Impact: Ongoing costs of $110,000 per year for an additional
auditor position at the Department of Developmental Services to
review audit reports and report to the Legislature (70% General
Fund, 30% federal funds)
Background: The Department of Developmental Services is responsible for
coordinating care and services for about 250,000 people with
developmental disabilities. The vast majority of these people
are served by 21 regional centers, which are non-profit entities
that contract with the state. The regional centers, in turn,
contract with a variety of vendors to provide direct services to
the developmentally disabled.
An report by the Bureau of State Audits in 2010 found that
SB 1226 (Beall) Page 1 of
?
regional centers were not appropriately monitoring expenditures
by vendors. In response to the report, the 2011 developmental
services trailer bill (SB 74, Committee on Budget and Fiscal
Review, Statutes of 2011), imposed new auditing requirements on
regional center vendors. SB 74 requires vendors that receive
payments of more than $500,000 per year to obtain an independent
fiscal audit. Regional center vendors that receive payments
between $250,000 and $500,000 per year are required to obtain
either an independent audit or an independent financial review.
The 2011 Budget Act assumed that these additional auditing
requirements would reduce inappropriate billing for services and
save the state General Fund about $22 million per year.
AB X2 1 (Thurmond, Statutes of 2016) made changes to the
thresholds at which audits or independent financial reviews are
required. Under that bill, the threshold for requiring an audit
or review was raised to $500,000 per year and the threshold for
requiring an audit was raised to $2,000,000 per year. In
addition, the bill allows vendors whose review or audit raises
no material issues to be granted a two-year exemption from the
audit or review requirement. These changes to the audit
requirements are expected to reduce by 70% the number of vendors
subject to annual audit. AB X2 1 will go into effect on June 9,
2016.
Proposed Law:
SB 1226 would require regional centers to submit copies of
independent audit reports on vendors to the Department of
Developmental Services. The Department would be required to
analyze the reports to determine if they are effective in
preventing fraud and improving vendor accounting practices. The
Department would be required to report its findings annually to
the Legislature.
Related
Legislation: SB 490 (Beall) would have made adjustments to
audit requirements similar to those made in AB X2 1. SB 490 was
held on the Assembly Appropriations Committee's Suspense File.
Staff
Comments: Since the enactment of the initial audit requirement
SB 1226 (Beall) Page 2 of
?
on regional center vendors, the Department of Developmental
Services has not been able to document savings due to the audit
requirement. Because auditors are not looking at the
appropriateness of the services provided, staff does not believe
that the audit requirement is likely to generate significant
savings. Requiring the Department to review audit reports and
analyze them to determine if they are improving accounting
practices or preventing fraud may help determine whether the
existing audit requirement is a useful tool for preventing
unnecessary state expenditures.
-- END --