BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1427 (Pavley) - Workforce development:  developmentally  
          disabled individuals
          
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          |Version: March 28, 2016         |Policy Vote: HUMAN S. 4 - 0     |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 2, 2016       |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.

          Bill  
          Summary:  SB 1427 would require the Department of Developmental  
          Services to establish a Work Transition Project to assist  
          regional center consumers currently placed in segregated work  
          settings to transition to competitive integrated employment.


          Fiscal  
          Impact:  
           Likely one-time costs up to $150,000 for the Department of  
            Developmental Services to develop program requirements,  
            accountability measures, and data collection requirements  
            (General Fund and federal funds).

           Likely ongoing administrative costs in the hundreds of  
            thousands per year for regional centers to administer and  
            monitor participation in the program (General Fund and federal  
            funds).

           Likely annual costs of $5 million to $10 million per year to  
            provide additional job readiness and support services to  







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            regional center consumers currently participating in work  
            activity programs or group supported employment programs  
            (General Fund and federal funds). 

            There are about currently about 15,000 regional center  
            consumers who participate in one of these two programs.  
            Assuming that 10% of those consumers participate in the  
            program authorized in the bill and that those consumers, on  
            average, receive the newly authorized services for two  
            quarters, total net costs for those new services would be  
            about $8 million per year. (This includes an offsetting  
            reduction in service hours those consumers are currently  
            receiving.)

           Likely annual savings in the millions per year (General Fund  
            and federal funds). To the extent that the new services  
            authorized in the bill improve the employment prospects of  
            regional center consumers, it is likely that consumers will  
            shift from more expensive work activity programs and group  
            supported employment programs to less expensive individual  
            supported employment programs (wherein consumers are employed  
            in the community, with ongoing assistance from regional center  
            vendors). For example, if 50% of program participants are able  
            to shift to individual supported employment, annual savings  
            would be about $3 million per year. 

            It is important to note that the increased costs for a  
            regional center consumer using the new services would likely  
            only occur for the first year or two, whereas savings would  
            continue as long as the consumer stays in individual supported  
            employment. Thus the savings would increase over time while  
            program costs are likely to remain relatively flat.


          Background:  The Department of Developmental Services is responsible for  
          coordinating services and supports 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 vendors to provide direct services to the  
          developmentally disabled.

          Regional centers provide a variety of services to consumers  
          whose disabilities do not preclude them from some level of  








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          employment. Work activity programs (often referred to as  
          sheltered workshops) allow consumers to work alongside other  
          individuals with disabilities in a managed location, under the  
          supervision of regional center vendor employees. Group supported  
          employment programs allow consumers to work outside of a  
          sheltered location, but still with the support of regional  
          center vendors - for example alongside other consumers on  
          landscaping or janitorial crews. Individual supported employment  
          services are designed to support consumers working in a  
          competitive employment situation. Individual supported  
          employment services assist consumers in seeking out employment  
          opportunities, getting hired, and adjusting to working in a  
          competitive employment situation.

          The federal Centers for Medicare and Medicaid Services has  
          adopted revised program regulations that apply to regional  
          center consumers participating in the state's Home and Community  
          Based Services Waiver. Under the changes, the state will be  
          obligated to ensure that consumers are integrated into the  
          community, including having access to work in competitive  
          employment. The Department of Developmental Services is in the  
          process of developing a plan to bring its waiver programs into  
          compliance with the new federal requirements. It is likely that  
          the state will have to phase out work activity programs as a  
          placement for most consumers under the federal regulations.

          AB X2 1 (Thurmon, Statutes of 2016) raised a number of rates for  
          services provided through the regional center system, including  
          implementing an 11.1% rate increase for supported employment  
          services and a 7.5% increase for enhancing wages and benefits  
          for staff who spend most of their time providing direct services  
          to consumers. That bill also requires the Department to submit a  
          rate study to the Legislature by March 1, 2019.


          Proposed Law:  
            SB 1427 would require the Department of Developmental Services  
          to establish a Work Transition Project to assist regional center  
          consumers currently placed in segregated work settings to  
          transition to competitive integrated employment.
          Specific provisions of the bill would:
           Require the Department to establish a Work Transition Project  
            by July 1, 2017;
           Require the Project to allow regional centers to allow blended  








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            or braided forms of integrated services;
           Authorize up to 75 hours per quarter, at a rate up to $40 per  
            hour, for vendors to provide individual job readiness and  
            support services for consumers currently placed in segregated  
            work settings to move towards competitive integrated  
            employment;
           Require the Department to allow the regional centers to  
            customize programs for consumers, by partnering with work  
            activity program and group supported employment program  
            vendors to transition consumers to integrated competitive  
            employment;
           Authorize the Department to waive regulatory requirements that  
            conflict with the bill's requirements;
           Require the Department to assess outcomes and report to the  
            Legislature.


          Related  
          Legislation: 
                 SB 1024 (Hancock) would require the Department of  
               Developmental Services to provide an incentive (of at least  
               a 10% rate differential) to encourage the provision of  
               individual supported employment services. That bill will be  
               heard in this committee.
                 SB 577 (Pavley, Statutes of 2014) created a pilot  
               project to evaluate whether community based vocational  
               development services are necessary for supported  
               employment. That pilot project has not been implemented.


          Staff  
          Comments:  The intent of the bill is to provide services needed  
          to move regional center consumers from less-integrated  
          employment settings (work activity programs and group supported  
          employment programs) to employment opportunities more fully  
          integrated in the community and the competitive job market. This  
          concept is aligned with the general requirements of the new  
          federal guidelines for regional center consumers who participate  
          in the Home and Community Based Services Waiver. However,  
          because the Department has not fully developed its plan to  
          transition the current system to one compliant with those  
          requirements, it is not yet clear how the proposed program in  
          this bill will conform to those plans.









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