AB 2623: Developmental disabilities: regional centers.
- Session Year: 2017-2018
- House: Assembly
- Latest Version Date: 2018-02-15
Under existing law, the Lanterman Developmental Disabilities Services Act, the State Department of Developmental Services is responsible for providing various services and supports to persons with developmental disabilities, and for ensuring the appropriateness and quality of those services and supports. Existing law authorizes the department to contract with regional centers to provide these services and supports. Existing law sets forth the departments and the regional centers authority to establish provider rates. 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. Existing law further requires the department to adopt regulations that specify rates, calculated on the basis of a cost model, including, among other things, changes in the state or federal minimum wage, for community care facilities serving persons with developmental disabilities, as specified. Existing law authorizes the department to approve rate adjustments for a work activity program that demonstrates to the department that the adjustment is necessary, as specified. Existing law authorizes community-based day program and in-home respite services agency providers with temporary payment rates set by the department to seek unanticipated rate adjustments from the department, as specified.
This bill would require the cost model described above to also include changes in local minimum wage. The bill would additionally authorize adjustment of prescribed provider rates if the adjustment is necessary in order to pay employees no less than the minimum wage required to comply with an ordinance that increases the minimum wage, as specified. The bill would provide that these provisions become operative on July 1, 2019.
(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 persons 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 persons 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 persons 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 persons 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)Commencing July 1, 2019, changes in local minimum wage.
(4)(5)Increases in fees, taxes, or other business costs.
(5)(6)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.
SEC. 2.Section 4681.6 of the Welfare and Institutions Code is amended to read: 4681.6.(a)Notwithstanding any other law or regulation, commencing July 1, 2008:
(1)A regional center shall not pay an existing residential service provider, for services where for which 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 consumers 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 for which rates are determined through a negotiation between the regional center and the provider, that is higher than the regional centers 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 departments biennial fiscal audit of the regional center.
(b)(1)Notwithstanding subdivision (a), commencing January 1, 2017, 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 4 of the Statutes of 2016, 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.
(2)Notwithstanding subdivision (a), commencing July 1, 2019, a regional center 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 required to comply with an ordinance that increases the minimum wage, and only for the purpose of adjustment to payroll costs associated with the minimum wage increase.
(c)Notwithstanding subdivision (a), commencing July 1, 2015, 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 to implement Article 1.5 (commencing with Section 245) of Chapter 1 of Part 1 of Division 2 of the Labor Code, as added by Chapter 317 of the Statutes of 2014. The rate adjustment may be applied only if a minimum of 24 hours or three days of paid sick leave per year was not a benefit provided to employees as of June 30, 2015, and shall be specific to payroll costs associated with any increase necessary to compensate an employee up to a maximum of 24 hours or three days of paid sick leave in each year of employment.
(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. 3.Section 4691.6 of the Welfare and Institutions Code is amended to read:4691.6.(a)Notwithstanding any other law or regulation, commencing July 1, 2006, the community-based day program, work activity program, and in-home respite service agency rate schedules authorized by the department and in operation June 30, 2006, shall be increased by 3 percent, subject to funds specifically appropriated for this increase in the Budget Act of 2006. The increase shall be applied as a percentage, and the percentage shall be the same for all providers. Any subsequent increase shall be governed by subdivisions (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), and (l), and Section 4691.9.
(b)Notwithstanding any other law or regulation, the department shall not establish any permanent payment rate for a community-based day program or in-home respite service agency provider that has a temporary payment rate in effect on June 30, 2008, if the permanent payment rate would be greater than the temporary payment rate in effect on or after June 30, 2008, unless the regional center demonstrates to the department that the permanent payment rate is necessary to protect the consumers health or safety.
(c)Notwithstanding any other law or regulation, neither the department nor any regional center shall approve any program design modification or revendorization for a community-based day program or in-home respite service agency provider that would result in an increase in the rate to be paid to the vendor from the rate that is in effect on or after June 30, 2008, unless the regional center demonstrates that the program design modification or revendorization is necessary to protect the consumers health or safety and the department has granted prior written authorization.
(d)Notwithstanding any other law or regulation, the department shall not approve an anticipated rate adjustment for a community-based day program or in-home respite service agency provider that would result in an increase in the rate to be paid to the vendor from the rate that is in effect on or after June 30, 2008, unless the regional center demonstrates that the anticipated rate adjustment is necessary to protect the consumers health or safety.
(e)Notwithstanding any other law or regulation, except as set forth in subdivisions (f) and (i), the department shall not approve any rate adjustment for a work activity program that would result in an increase in the rate to be paid to the vendor from the rate that is in effect on or after June 30, 2008, unless the regional center demonstrates that the rate adjustment is necessary to protect the consumers health and safety and the department has granted prior written authorization.
(f)(1)Notwithstanding any other law or regulation, commencing January 1, 2017, the department may approve rate adjustments for a work activity program that demonstrates to the department that the rate adjustment is necessary in order to pay employees who, prior to January 1, 2017, were being compensated at a wage that is less than the minimum wage established on and after January 1, 2017, by Section 1182.12 of the Labor Code, as amended by Chapter 4 of the Statutes of 2016. The rate adjustment pursuant to this subdivision 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 constitute a general wage enhancement for employees paid above the increased minimum wage.
(2)Notwithstanding any other law or regulation, commencing July 1, 2019, the department may approve rate adjustments for a work activity program that demonstrates to the department that the rate adjustment is necessary in order to pay employees no less than the minimum wage required to comply with an ordinance that increases the minimum wage, and only for the purpose of adjustment to payroll costs associated with the minimum wage increase.
(g)(1)Notwithstanding any other law or regulation, commencing January 1, 2017, community-based day program and in-home respite services agency providers with temporary payment rates set by the department may seek unanticipated rate adjustments from the department due to the impacts of the increased minimum wage as established by Section 1182.12 of the Labor Code, as amended by Chapter 4 of the Statutes of 2016. The rate adjustment 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 constitute a general wage enhancement for employees paid above the increased minimum wage.
(2)Notwithstanding any other law or regulation, commencing July 1, 2019, community-based day program and in-home respite services agency providers with payment rates set by the department may seek unanticipated rate adjustments from the department if the community-based day program or in-home respite services agency demonstrates to the department that the rate adjustment is necessary in order to pay employees no less than the minimum wage required to comply with an ordinance that increases the minimum wage, and only for the purpose of adjustment to payroll costs associated with the minimum wage increase.
(h)Notwithstanding any other law or regulation, commencing January 1, 2015, the in-home respite service agency rate schedule authorized by the department and in operation 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.
(i)Notwithstanding any other law or regulation, commencing July 1, 2015, the department may approve rate adjustments for a work activity program that demonstrates to the department that the rate adjustment is necessary to implement Article 1.5 (commencing with Section 245) of Chapter 1 of Part 1 of Division 2 of the Labor Code, as added by Chapter 317 of the Statutes of 2014. The rate adjustment may be applied only if a minimum of 24 hours or three days of paid sick leave per year was not a benefit provided to employees as of June 30, 2015, and shall be specific to payroll costs associated with any increase necessary to compensate an employee up to a maximum of 24 hours or three days of paid sick leave in each year of employment.
(j)Notwithstanding any other law or regulation, commencing July 1, 2015, community-based day program and in-home respite services agency providers with temporary payment rates set by the department may seek unanticipated rate adjustments from the department if the adjustment is necessary to implement Article 1.5 (commencing with Section 245) of Chapter 1 of Part 1 of Division 2 of the Labor Code, as added by Chapter 317 of the Statutes of 2014. The rate adjustment may be applied only if a minimum of 24 hours or three days of paid sick leave per year was not a benefit provided to employees as of June 30, 2015, and shall be specific to payroll costs associated with any increase necessary to compensate an employee up to a maximum of 24 hours or three days of paid sick leave in each year of employment.
(k)Notwithstanding any other law or regulation, commencing July 1, 2016, and to the extent funds are appropriated in the annual Budget Act for this purpose, the in-home respite service agency rate schedule authorized by the department and in operation June 30, 2016, shall be increased by 5 percent. The increase shall be applied as a percentage, and the percentage shall be the same for all providers.
(l)Notwithstanding any other law or regulation, commencing July 1, 2016, and to the extent funds are appropriated in the annual Budget Act for this purpose, the independent living service rate schedule authorized by the department and in operation June 30, 2016, shall be increased by 5 percent. The increase shall be applied as a percentage, and the percentage shall be the same for all providers.
SEC. 4.Section 4691.9 of the Welfare and Institutions Code is amended to read:4691.9.(a)Notwithstanding any other law or regulation, commencing July 1, 2008:
(1)A regional center shall not pay an existing service provider, for services where for which 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 consumers 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 for which rates are determined through a negotiation between the regional center and the provider, that is higher than the regional centers 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 departments biennial fiscal audit of the regional center.
(b)(1)Notwithstanding subdivision (a), commencing January 1, 2017, 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 4 of the Statutes of 2016, 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.
(2)Notwithstanding subdivision (a), effective July 1, 2019, a regional center 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 required to comply with an ordinance that increases the minimum wage, and only for the purpose of adjustment to payroll costs associated with the minimum wage increase.
(c)Notwithstanding any other law or regulation, 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)Notwithstanding subdivision (a), commencing July 1, 2015, regional centers may negotiate a rate adjustment with existing service providers for services for which rates are determined through negotiation between the regional center and the provider, if the adjustment is necessary to implement Article 1.5 (commencing with Section 245) of Chapter 1 of Part 1 of Division 2 of the Labor Code, as added by Chapter 317 of the Statutes of 2014. The rate adjustment may be applied only if a minimum of 24 hours or three days of paid sick leave per year was not a benefit provided to employees as of June 30, 2015, and shall be specific to payroll costs associated with any increase necessary to compensate an employee up to a maximum of 24 hours or three days of paid sick leave in each year of employment.
(e)Notwithstanding any other law or regulation, commencing July 1, 2016, and to the extent funds are appropriated in the annual Budget Act for this purpose, rates for transportation services in effect on June 30, 2016, shall be increased by 5 percent. The increase shall be applied as a percentage to existing rates, and the percentage shall be the same for all applicable providers.
(f)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.
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Date
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Status
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| May 25, 2018 | In committee: Held under submission. |
| Apr 25, 2018 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 11, 2018 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (April 10). Re-referred to Com. on APPR. |
| Mar 8, 2018 | Referred to Com. on HUM. S. |
| Feb 16, 2018 | From printer. May be heard in committee March 18. |
| Feb 15, 2018 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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| Apr 10, 2018 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Human Services |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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| Association Of Regional Center Agencies | ** Support | Apr 6, 2018 |
| California Association For Health Services At Home | ** Support | Apr 6, 2018 |
| Disability Right California | ** Support | Apr 6, 2018 |
| State Council on Developmental Disabilities | ** Support | Apr 6, 2018 |
| The Arc and United Cerebral Palsy California Collaboration | ** Support | Apr 6, 2018 |
Date of Hearing: April 25, 2018
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez Fletcher, Chair
ABPCA Bill Id:AB 2623
Author:(Holden) – As Introduced Ver:February 15, 2018
Policy Committee: | Human Services | Vote: | 7 - 0 |
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Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill allows, beginning July 1, 2019, the Department of Developmental Services (DDS) and regional centers to adjust rates for providers who operate in regions where the local minimum wage is higher than the statewide minimum wage. Specifically, this bill:
- Requires the cost model design used to establish rates for individual community care facilities serving persons with developmental disabilities to include consideration of changes in local minimum wage.
- In order to pay employees at least the local minimum wage, and only for the purpose of adjusting payroll costs associated with the minimum wage increase:
- Allows regional centers to negotiate rates, as specified, with residential services providers.
- Authorizes DDS to approve rate adjustments for a work activity program that demonstrates to the department that a rate adjustment is necessary.
- Permits community-based day program and in-home respite services agency providers, as specified, to seek unanticipated rate adjustments from DDS if the provider demonstrates that the rate adjustment is necessary.
- Enables a regional center to negotiate a rate adjustment with providers of nonresidential services regarding rates if the adjustment is necessary.
FISCAL EFFECT:
Estimated annual costs of $30 - $40 million per year to comply with existing local minimum wage levels that exceed the current state minimum wage (GF and federal funds). This estimate is based on the current statewide minimum wage and the existing local minimum wages that exceed the statewide level.
The state minimum wage is set in law to increase to $15 per hour by 2022 for large employers and by 2023 for small employers. Assuming the state continues to fund increases in the state minimum wage and local minimum wages remain constant, the cost to fill the gap between the state and local minimum wages will narrow over time. Currently, there are 13 cities in the state that have a local minimum wage requirement that is higher than the statewide minimum wage.
COMMENTS:
- Purpose. According to the author:
California is home to several of the highest cost of living regions in the nation. Local governments have found it necessary to raise their legal minimum wage levels to ensure their local workforce can afford to live and work in their home communities. Rates of reimbursements paid to local organizations that provide services to individuals with developmental disabilities in these communities are set by the State or by local regional centers and frozen by the State unless statutory authority is granted for adjustments. These service providers are required to pay wage levels established by local ordinance and, therefore, must be granted adjustments to their rates in order to remain in business and to provide services legally required by the state.
- 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 with DDS for the provision of various services and supports to people with developmental disabilities.
Regional centers do not provide services directly to consumers, but instead, contract with and provide funding for providers to provide those services. The rates at which services are purchased vary depending on the type of service and the type of provider and are established based on a variety of factors, including historical cost statements, rate schedules, statutes, and regulations.
In recent years, the state imposed a variety of rate freezes and rate reductions on the regional center system to help balance the state budget. Generally, funding for the regional centers and rates paid to regional center vendors have not automatically increased with cost-of-living expenses or increased state or local minimum wage requirements. Current law allows DDS and regional centers to adjust rates to offset raises in the state minimum wage. To that end, additional funding was provided to DDS through the annual budget act several times in recent years. The 2016-17 Budget Act provided $22 million in additional funding to pay for the cost of the statewide minimum wage increase that took place in January 2017. However, existing law does not provide authority for DDS and regional centers to adjust rates for higher local minimum wage requirements.
Generally, vendors are able to request exemptions or changes to rates, and current law allows DDS to approve exemptions to rate freezes to mitigate risks to consumer health and safety. However, the number of local minimum wage-related requests has increased each year from 11 in FY 2014-15 to 98 in FY 2016-17. In FY 2017-18 (through February 28), DDS has received 93 waiver requests related to local minimum wage ordinances. These requests are overwhelming a waiver system that was not intended to address systemic issues.
- Related Legislation. AB 2244 (Acosta), of the 2017-18 Legislative Session, makes a number of changes to the health and safety waiver request process for requests submitted to DDS by specified providers, in part, due to the substantial increase in the number of waiver requests citing local minimum wage ordinances as the reason for the request. That bill is pending on this committee’s Suspense File.
- Prior Legislation.
AB 279 (Holden), of the 2017-18 Legislative Session, is substantially similar to this bill and would have permitted DDS and regional centers to negotiate rates with certain providers for purposes related to local minimum wage. It was held on the Suspense File in the Senate Appropriations Committee.
AB 2x1 (Thurmond), Chapter 3, Statutes of 2016, appropriated $287 million from the GF for rate increases for the regional center system. That bill also requires DDS to conduct a rate study to assist the administration and the Legislature in determining the appropriate process for setting rates in the regional center system. The report is due to the Legislature in March 2019.
SB 3 (Leno), Chapter 4, Statutes of 2016, among other things, incrementally increases the state minimum wage each year to $15 by 2022 for employees with over 25 employees and by 2023 for employers with 25 or fewer employees, after which it requires an annual adjustment of the minimum wage per a specified formula.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
Date of Hearing: April 10, 2018
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Blanca Rubio, Chair
ABPCA Bill Id:AB 2623 (
Author:Holden) – As Introduced Ver:February 15, 2018
SUBJECT: Developmental disabilities: regional centers
SUMMARY: Provides the Department of Developmental Services (DDS) and regional centers with the statutory authority to adjust rates for providers who operate in regions where the local minimum wage is higher than the statewide minimum wage.
Specifically, this bill:
- Requires the cost model design used to establish rates for individual community care facilities serving persons with developmental disabilities to include, among other elements already required by law, a consideration of changes in local minimum wage.
- Allows a regional center to negotiate a rate adjustment with residential service providers if the adjustment is necessary in order to pay employees at least the local minimum wage, and only for the purpose of adjusting payroll costs associated with the minimum wage increase.
- Allows DDS to approve rate adjustments for a work activity program that demonstrates to DDS that the rate adjustment is necessary in order to pay employees at least the local minimum wage, and only for the purpose of adjusting payroll costs.
- Permits community-based-day program and in-home respite services agency providers, as specified, to seek unanticipated rate adjustments from DDS if the provider demonstrates that the rate adjustment is necessary in order to pay employees at least the local minimum wage, and only for the purpose of adjusting payroll costs associated with the minimum wage increase.
- Gives regional centers the ability to negotiate a rate adjustment with providers of nonresidential services regarding rates if the adjustment is necessary in order to pay employees at least the local minimum wage, and only for the purpose of adjustment to payroll costs associated with the minimum wage increase.
- Makes the provisions of this bill operative as of July 1, 2019.
- Makes technical changes.
EXISTING LAW:
- Establishes an entitlement to services for individuals with developmental disabilities under the Lanterman Developmental Disabilities Services Act. (WIC 4500 et seq.)
- Grants all individuals with developmental disabilities, among all other rights and responsibilities established for any individual by the United States Constitution and laws and the California Constitution and laws, the right to treatment and habilitation services and supports in the least restrictive environment. (WIC 4502)
- Establishes a system of 21 nonprofit regional centers throughout the state to identify needs and coordinate services for eligible individuals with developmental disabilities and requires DDS to contract with regional centers to provide case management services and arrange for or purchase services that meet the needs of individuals with developmental disabilities, as defined. (WIC 4620 et seq.)
- Creates a process by which regional centers may “vendorize” service providers, thereby providing a path to contract for services with that provider and ensuring maximum flexibility and availability of appropriate services and support for persons with developmental disabilities. (WIC 4648)
- Establishes the Fair Labor Standards Act and sets the federal minimum wage at $7.25 an hour. (29 U.S.C. 8)
- Requires an employer to comply with the more restrictive requirement when state and federal minimum wage laws differ. (LAB 1182.12)
- Allows local jurisdiction to adopt local minimum wage ordinances that are higher than the federal minimum wage provided for in the Fair Labor Standards Act. (29 U.S.C. 8)
- Raises the statewide minimum wage to $15 an hour by January 1, 2022, using a phased in implementation method over several years and based on the number of employees employed by a business, and for each year thereafter, increases the minimum wage up to 3.5% for inflation as measured by the national Consumer Price Index. (LAB 1182.12)
- Requires DDS to adopt regulations that specify rates for community care facilities serving persons with developmental disabilities, as specified. (WIC 4681.1 et seq.)
- Allows regional centers to negotiate a rate adjustment with residential service providers that are otherwise restricted by Section 1182.12 of the Labor Code for the sole purpose of adjusting payroll costs associated with the minimum wage increase. (WIC 4681.6)
FISCAL EFFECT: Unknown.
COMMENTS:
Developmental Services: In 1969, The Lanterman Developmental Disabilities Act established that individuals with developmental disabilities and their families have a right to receive the necessary supports and services required to live independently in the community. The Lanterman Act enumerates the rights of individuals with developmental disabilities, as well as the rights of their families, what services and supports are available to these individuals, and how regional centers and service providers work together to provide these supports and services. The term “developmental disability” is defined as a disability that originates before a person reaches 18 years of age, is expected to continue indefinitely, and is a significant disability for those individuals; such disabilities include, among others: epilepsy, autism spectrum disorder, and cerebral palsy.
In addition to establishing the rights of individuals, the Lanterman Act also created California’s regional center system comprised of 21 regional centers throughout the state whose primary purpose is to connect individuals with services in the community. While regional centers do not directly provide services to individuals and their families, they are charged with providing information and coordinating the delivery of services to consumers.
Regional center vendors: Prior to the provision of services, vendors must undergo an approval process known as “vendorization,” wherein providers apply for contracts that enable them to serve individuals with disabilities. Through the vendorization process, regional centers verify that an applicant meets specific requirements and standards required to best serve the needs of regional centers consumers. While the vendorization process deems a vendor as eligible to provide services, it does not guarantee that a regional center will refer consumers. Vendors are also allowed to be vendorized by more than one regional center.
Minimum wage increases: SB 3, (Leno), Chapter 4, Statutes of 2016, increased the California state minimum wage over the course of several years, depending on the size of a business. For business with 26 or more employees, the minimum wage increased to $11 per hour in 2018, and will continue to increase one dollar every year thereafter until $15 per hour is reached in 2022. For businesses with 25 or fewer employees, these increases will be delayed by one ear, meaning that the minimum wage will not reach $15 per hour for smaller businesses until 2023. Once the minimum wage reaches $15 per hour, calculations specified in current law will be utilized to annually adjust the minimum wage. Federal law allows local entities, including cities and counties, to enact local minimum wage ordinances in an effort to address higher costs of living, particularly in regions such as the Bay Area and parts of Los Angeles. Current law also requires that if there is a discrepancy in minimum wage rates such that a local minimum wage is higher than the state or federal minimum wage, businesses must comply with the stricter standard.
Regional center rates: Because regional centers coordinate the provision of services from vendors for consumers, regional centers must purchase services from vendors, which are largely dictated by rates set by DDS or negotiated between a regional center and a vendor. Rates at which services are purchased vary depending on the type of service and the type of provider and are established based on a variety of factors, such as rate schedules, statute or regulations, or historical cost statements. The complex nature of rate-setting methodologies, as well as attempts to control budgetary increases, have contributed to rate restrictions and freezes over recent years. Beginning in 2008-2009, median rates and an upper limit were placed on new service providers. Median rates prevented regional centers from negotiating rates that exceeded the statewide median rate or the regional center median rate for the service, whichever is lower. Provider payment reductions were implemented between 2009 and 2011 such that all providers, with the exception of supported employment providers, experienced a reduction in rates. However, funding for provider payments was restored by 2013-14.
Special session legislation: Governor Brown convened a special Legislative session in June 2015 to examine health and human services issues, including sufficient funding and rate increases for community service providers serving individuals with disabilities. AB 2x1 (Thurmond), Chapter 3, Statutes of 2016, was signed into law and directly appropriated $287 million General Fund for select increases to regional centers and community service providers for 2016-17. The legislation also required DDS to submit a rate study to the Legislature no later than March 2019 addressing the sustainability, quality, and transparency of community-based services for individuals with developmental disabilities.
Need for this bill: According to the author, “California is home to several of the highest cost of living regions in the nation. Local governments have found it necessary to raise their legal minimum wage levels to ensure their local workforce can afford to live and work in their home communities. Rates of reimbursements paid to local organizations that provide services to individuals with developmental disabilities in these communities are set by the State or by local regional centers and frozen by the State unless statutory authority is granted for adjustments. These service providers are required to pay wage levels established by local ordinance and, therefore, must be granted adjustments to their rates in order to remain in business and to provide services legally required by the state. Many service providers have had to close their doors due to this funding issue.”
PRIOR LEGISLATION:
AB 279 (Holden), 2017, was substantially similar to this bill and would have permitted DDS and regional centers to negotiate rates with certain providers for purposes related to local minimum wage. It was held in the Senate Appropriations Committee.
AB 2x1 (Thurmond), Chapter 3, Statutes of 2016, appropriated, among other things, $287 million General Fund for increases to regional centers and community service providers in 2016-17, and imposed reporting requirements to ensure proper allocation of funds and program accountability.
SB 3 (Leno), Chapter 4, Statutes of 2016, among other things, incrementally increased the state minimum wage each year to $15 by 2022 for employees with over 25 employees and by 2023 for employers with 25 or fewer employees, after which it required an annual adjustment of the minimum wage per a specified formula.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of Regional Center Agencies
California Association for Health Services at Home
Disability Right California
State Council on Developmental Disabilities
The Arc and United Cerebral Palsy California Collaboration
Opposition
None on file.
Analysis Prepared by: Kelsy Castillo / HUM. S. / (916) 319-2089
Bill Author
Bill Co-Author(s):