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Special Session 3% Developmental Services Reduction Bill Passes Out of Assembly Budget Committee – Cut Totals Over $115 Million State/Federal Funds

Bill Would Extend 3% Cut to Most Regional Center Provider Payments and Regional Center Operations Into the 2010-2011 State Budget Year – Amendments Would Reinstate July 1 Several Previously Suspended Regional Center Reporting Requirements – Bill Requires Final Approval by Assembly Expected Thursday and in the State Senate – No Other Major Cuts to Health and Human Services As This Point In Process

SACRAMENTO, CALIF (CDCAN) [Updated 02/24/2010  07:00 PM  (Pacific Time)]  - The Assembly Budget Committee passed, with amendments, a special session budget related bill dealing with continuing additional cuts to the 21 regional centers that coordinate services to over 240,000 children and adults with developmental disabilities, and savings by increasing federal funding to the foster care program, that also includes many children with developmental disabilities and other special needs.  Those two programs are the only cuts or savings to health and human services that legislative Democrats are willing to agree to at this point in the budget process.Action by the Legislature on all of the Governor’s other major proposed cuts to health and human services have been put off until later this year – though legislative Republicans today and earlier this week and last week, strongly urged that additional cuts be made now in order to address the State’s huge budget hole that remains.

Bill Covers Regional Centers and Foster Care Programs

SBx8 4 (the “x8” refers to the 8^th special or extraordinary session of the Legislature since January 2009) covers two areas of reductions:

• Continuing the 3% reductions to most regional center provider payments and 3% cut to regional center operations that were set to expire June 30, 2010, for at least another full year. 
• The amendments made by the committee  – which were a surprise to some observers – would reinstate some of the previously suspended regional center reporting requirements.  The amendments would not however, according to the Assembly Budget Committee or the Governor’s Department of Finance reduce the estimated reductions to regional center operations.   
• The bill also includes proposal that would expand eligibility requirements in the state’s foster care program that lawmakers and the Governor hope will result in increased federal matching funds that could total $6 million in the remaining months of the 2009-2010 State Budget year that ends June 30, 2010 and another $69.5 million for the 2010-2011 State Budget year that begins July 1.  No cuts in services or eligibility are proposed for the foster care program in the bill. 

Cuts In Bill To Regional Centers Total Over $115 Million All Funds

The total reduction to regional centers (operations and also to the budget that funds community-based services and supports) for the entire 2010-2011 State Budget year (July 1, 2010 through June 30, 2011) would be $115.7 million ($99.5 million resulting from 3% reduction to payments to most regional center providers, of which $49.7 million is State general fund money and $16.2 million to regional center operations, of which $11.2 million would be State general fund money.

This reduction is on top of the cuts to developmental services, including regional centers, made last July as part of the revised 2009-2010 State Budget that reduce State general fund spending by over $400 million (including the 3% cut that was made retroactive to February 2009 and was set to expire June 30, 2010, which SBx8 4 would continue into the 2010-2011 State Budget year, and also cuts to supported employment program providers made in September 2008 as part of the 2008-2009 State Budget.  The extension of these reductions was expected by advocates and others.  That total figure does not include lost federal matching funds.

Some of the reductions in State general fund spending for 2010-2011 and this year is also linked to increasing federal matching funds by covering more people or programs previously only state funded – an effort strongly urged and applauded by advocates.

Next Steps

The bill still needs final approval by the full Assembly, expected as early as Thursday (February 25^th), and also because the bill was changed Assembly, another final vote in the State Senate it heads to the Governor.  Passage in both houses and approval by the Governor is expected.

The Assembly is scheduled to meet in floor session on Thursday (February 25) at 09:30 AM and is expected to take up the remaining special session budget related bills, including SBx8 4.

The State Senate is also scheduled to meet in floor session on Thursday, at 09:00 AM, though action on special session bills is upon call of Senate President Pro Tem Darrell Steinberg (Democrat – Sacramento). 

Amendments to SBx8 4 Made to Address “Contract Transparency and Caseload Reporting”

Assembly Budget Committee staff said the changes were proposed “…in an effort to address concerns regarding contract transparency and caseload reporting” but still “…accomplish the retention of reporting requirements, without changing the caseload ratio and contracting expertise suspensions” which as a result, would still maintain the level of the 3% spending reductions (or savings to the State general fund) for regional center operations that the bill extends into the 2010-2011 State Budget year.  

Bill Part of Package of Special Session Legislation – Nearly All of the Proposed Cuts Have Been Put Off For Final Action Later This Year

The bill, which follows a package of legislation passed late last week by the State Senate and on Monday by the Assembly dealing with addressing about $2.3 billion of the projected $19.9 billion deficit that is projected by June 30, 2011 unless new revenues or reductions or a combination of both are made in the coming months.   Legislative Democrats hope to send this week or early next week, in addition to SBx8 4, several other bills that would, taken together with the previous bills already passed, could total about $5 billion in ways to reduce the budget shortfall – though that target could fall short depending on the outcome of some bills.   

The Governor in January called a special session declaring a “fiscal emergency” and sent proposals to the Legislature to address nearly $9 billion of the projected shortfall, including major proposed cuts to health and human services ranging from cutting SSI/SSP individual grant levels to the lowest level allowed by the federal government, to major cuts to eligibility to the In-Home Supportive Services (IHSS) program to cuts or major fund shifts from the Mental Health Services Act under Proposition 63 and the California Children and Families Commission under Proposition 10.

Legislative Democrats, did not approve any of those proposed cuts, and while not outright rejecting any of those proposals, instead opted to delay action on nearly all of them until later this year. 

DETAILS OF TWO AMENDMENTS MADE TO SBx8 4

1. Amendment #1:  Eliminates Section 1 from the current version of the bill
   • This amendment, by eliminating section 1 of the bill, would require that certain regional center reporting requirements currently in state law that was suspended from February 1, 2009 to June 30, 2010, take effect again on July 1, 2010. 
   • Those reporting requirements relate to current salary schedule reports and prior year budget year spending for regional center administrative services. 
   • Existing State law, which was suspended last year effective February 1, 2009 through June 30, 2010, requires each regional center, by December 1 of each year, to  provide a listing to the Department of Developmental Services a complete current salary schedule for all personnel classifications used by the regional center, in a format requested by the department, and made available to the public upon request.
   • Existing State law, which also was suspended last year effective February 1, 2009 through June 30, 2010, requires each regional center by December 1 of each year to report information to the Department of Developmental Services on all prior budget year spending (expenditures) from the regional center operations budget for all administrative services, including managerial, consultant, accounting, personnel, labor relations, and legal services, whether procured under a written contract or otherwise. The report is required to be prepared in a format as requested by the department and shall include, at a minimum, for each recipient the amount of funds expended, the type of service, and purpose of the expenditure. State law requires that the Department of Developmental Services shall provide this information to the public upon request.
   • The amendment, by eliminating section 1 of SBx8 4, approved by the Assembly Budget Committee today, would reinstate both of these reporting requirements by not extending the suspension beyond June 30, 2010.  This suspension was part of the original overall 3% cut to regional center operations that was passed in February 2009 – but Assembly Budget Committee staff and the Governor’s Department of Finance say reinstating these reporting requirements would not impact the 3% amount of savings or reduction to operations. 
2. Amendment #2 Amends Section 2 of the bill
   • This amendment changes (but does not eliminate) the provision in SBx8 4 that continues the extension of the suspension of coordinator-to-consumer ratios and the requirement for in-house or contract expertise in the areas of criminal justice, special education, family support, housing, community integration, and quality assurance for an additional year, from July 1, 2010 to June 30, 2011, but makes a change that would reinstate, effective July 1, 2010, the requirements regarding caseload data reporting. 
   • Those caseload reports, which would be reinstated July 1, 2010, is a requirement in existing State law “…in order to ensure that caseload ratios are maintained pursuant to this section [in State law]”, requires that each regional center shall provide service coordinator caseload data to the department, annually for each budget (fiscal) year. The data or information shall be submitted in the format, including content, requested by the Department of Developmental Services and make a summary of the information (data) available to the public upon request, within 30 days of receipt of the data submitted.
   • State law requires that the Department of Developmental Services shall verify the accuracy of the data when conducting regional center fiscal audits.

IMPACT ON REGIONAL CENTERS BY SBx8 4

• Extends the 3% reduction of reimbursement payments to most regional center providers for services delivered from July 1, 2010 to June 30, 2011, inclusive, by 3%, with some exceptions.
• Would continue the exemption from this reduction are Supported Employment, the SSP supplement for independent living, and services with "usual and customary" rates as established in regulation. In addition, other services may be exempt from this reduction if a Regional Center demonstrates that a non-reduced payment is necessary to protect the "health and safety" of a consumer and the Department of Developmental Services (DDS) has granted written approval of this specific exemption.
• This reduction would result in reductions to the regional center's “Purchase of Services” (or “POS”) budget – the budget that funds community-based services and supports provided through community organizations and individuals, of $99.5 million of which $49.7 million is State general fund money, and the remaining federal matching funds.
• Extends the 3% reduction to the Regional Center “Operations” budget which has been in effect since February 1, 2009, that suspended several administrative and case management requirements in existing State law. 
• SBx8 4 would extend this reduction – with the changes made by the two amendments approved by the Assembly Budget Committee that reinstated several reported requirements – from July 1, 2010 to June 30, 2011, inclusive (Note: the Assembly Budget Committee analysis says the extended cut would cover February 1, 2010 through June 30, 2011, inclusive)
• This reduction results in cuts to regional center operations of $16.2 million ($11.2 million of that State general fund money – the rest is federal matching funds) from July 1, 2010 through June 30, 2011. 

The requirements that would continue to be suspended as part of the cut to regional center operations include (see above section on amendments):

• The average service coordinator-to-consumer ratio for certain consumers currently established at 1 service coordinator to 66 regional center consumers
• The overall average service coordinator-to-consumer ratio at a Regional Center for all consumers who have not moved from a Developmental Center to the community, currently established at 1 service coordinator to 62 regional center consumers.
• The requirement that regional centers shall either have in-house or contract from the following expertise: (i) criminal justice; (ii) special education; (iii) family support; (iv) housing; (v) community integration; and, (vi) quality assurance;

The following requirements (see above section on amendments to SBx8 4) that were suspended as part of the 3% cut to operations, would be reinstated, though with no change in the overall total reduction to operations:

• The reporting to the Department of Developmental Services regarding current salary schedules for all personnel classifications used by a regional center;
• The reporting to the Department of Developmental Services of prior year State budget expenditures for regional center administrative services, including salary schedule, legal services, and consultant contracts.

IMPACT TO FOSTER CARE PROGRAM  BY SBx8 4

The bill, while containing reductions in State general fund spending for the foster care program, would do so not by cuts in services but by getting more federal matching funds by expanding eligibility for the program.  SBx8 4 would do the following regarding the foster care program – which includes many children with special needs, including developmental disabilities:

• Would expands eligibility that would increase federal matching funds (federal financial participation) in foster care program costs and is estimated to save the State general fund $6 million in the current 2009-2010 State budget year and another $69.5 million in the 2010-2011 State Budget year that begins July 1.
• These changes are part of the Schwarzenegger Administration’s larger proposal for additional federal funds, and can only happen if there are changes made to existing federal law.  The Assembly Budget Committee staff reported that California currently receives federal funds for the care “…of only around 71% of its approximately 60,000 foster children, even though the state is obligated by federal law to serve all of those children” and that by eliminating the link between family income and assets requirements from 1996 Aid to Families with Dependent Children laws and foster care funding under Title IV-E of the federal Social Security Act, the federal government would increase its financial participation in California’s foster care cases.