ResCoalition Updates - Regional Center Funded Programs

Summary of ResCoalition Report - June 2012

This week is a big week for residential care providers so it seems fitting to send out an update.  First, the governor is passing a budget giving back 3 of the 4.25% in cuts.  This is effective July 1, so congrats on the little July 4^thbonus.  Our strong advocacy both in Sacramento and at the DDS stakeholder meetings made them understand the severity of the fiscal crisis of what’s going on.  Not only did we avoid any further cuts – keep in mind $200 million in additional cuts were made to the DD system budget – but the 3% is coming back. 

The US Supreme Court just upheld the Federal Patient Protection and Affordable Care Act.  This means that it is going to become a significant issue for a lot of residential care providers and we need to begin pushing it in Sacramento.  The law states that small businesses do NOT have to provide insurance for their employees.  Small business is defined as less than 50 employees.  The kicker however is that it DOES require employees to buy health insurance or pay a tax.  So if you're self-employed or an employee you will be required to buy health insurance or pay a tax for failing to purchase it. 

Regarding the new Audit requirement:  SB1259, the audit bill, is dead for the year.  Initially, Senator Liu's staff recommended changing the bill to only allow vendors under 1 million dollars a one year waiver from the audit requirement IF they had an unqualified the previous year.  We thought there was agreement on an amendment until another group proposed an alternative that was even more flexible than ours - Senator Liu's office decided to stay with the original amendment. 

We're initiating dialogue with Senator Liu's office to consider a new bill next year that would provide relief. We're expecting late in the year that there will be some challenges to the Audits because, while there is a requirement that they be done, there is no compliance requirement.  This means you can get the audit done when you choose, not when the RC's are requesting it be done.  If/when any action is taken, we expect to challenge said action under the law.  We have some RC's saying they will not be "enforcing" any timeline, some saying within 6 months of the end of the fiscal year, and some following ARCA's recommendation which is 12 months after the end of the fiscal year.  

As some of you know, we’re encouraging members to consider whether they are going to do the Audit. We encourage members, if you're not going to do the audit, to merely say your in process.  By saying you're in process,  you are technically meeting the letter of the law, thus cannot be punished.  I understand it is controversial so below is from CDSA (California Disabilities Services Association) so you can see what other member groups (CDSA is primarily day programs, ILS/SLS) are advising as well.

With SB 1259's demise, existing law remains in force. That means that all agencies are required to secure CPA fiscal audits or financial reports beginning with the fiscal year in which your agency was operating in March of 2011.

But existing law has no deadline for those audits to be completed or turned in.

This lack of specificity means that there is no urgency for agencies to have the audits prepared and it gives us additional time to work with the department and others to try to unravel this problem and come up with a workable alternative.

There is still work to do:

• New and appropriate legislation to address the Audit issue
• Wage Order 5 issues
• Funding to cover medical insurance
• Return of the 1.25%
• Action to recommend should the Governor's tax increase not pass

CCLD Reorganization

The reorganization of the Adult and Senior Care divisions has been delayed until at least July 1, 2012.  CCLD remains committed to the reorganization by geography (not by program type) and continues training staff.  Watch this space for further developments. 

ResCoalition Notes

ResCoalition has been busy. . . 

We now have one bill moving forward in the legislature - AB1554 - this is to require regional centers to make all vendor rates public and any money given to housing cooperatives.  We defended it last week at hearing and it passed without opposition.  In addition we have a spot bill with Senator Emerson that we've finalized and the language is not getting "written" for the bill. This bill will be the new Audit bill.  Contrary to what we said LAST MONTH, Emerson has changed his mind and the bill will now state that no one under $2 million dollars in revenue will have to get an audit.  Feel free to let us know your thoughts on this change.  

Budget update . . . 

DDS has finished it's 6 stakeholder meetings.  This week they're in budget hearings with the legislature - yesterday and Wed and yes, ResCoalition is there.  It was expected that they'd tell the legislature the outcome of the dialogue of the stakeholder meetings.  This didn't happen yesterday.  DDS basically just stated the governor's proposal and that they were working on, as yet named, options.  So we still have no clue what DDS is considering regarding the return of the 4.25% cuts.  

SB 74 - News for Regional Center programs

From a position paper by ResCoalition: 

CONCERN

The Department of Developmental Services testified this new audit process was in response to the BSA audit, yet, the BSA audit was of Regional Centers, not vendors and there was no recommendation that vendors get audited. Yet, SB 74 is targeted at the providers/vendors. The way SB 74 was written requires that small entities providing direct service through multiple Regional Center contracts be required to obtain audits at their own expense, a daunting budgetary concern in this economy, especially as the majority of providers have received a 4.25% rate cut passed in the past couple of budget years. Under SB 74 requirements, entities providing residential services to as few as five individuals will fall under this requirement despite the fact that they hold five separate contracts for approximately $60,000/year, one contract per individual they serve. This has created an unfunded mandate with a cost range of six to twelve thousand dollars per year.

ResCoalition is concerned that this sweeping legislation negates the purpose of accountability and transparency both recommended by the BSA and directed by the Governor. Firstly, it is unlikely that the Regional Centers will have the ability to review audits from all the providers/vendors which will prove this requirement to be inadequate and an unnecessary financial burden. In this time of budget crisis it is important for funds to be focused on direct service to the population, this audit requirement as written, will only take money away from this effort.


Fiscal audits won’t address service issues related to improving quality of services to individuals with developmental disabilities. A fiscal audit only ensures there are adequate fiscal process to track dollars, it does not address if those dollars were spent on the correct services.

This audit requirement does, however, make sense for larger contracts/purchase of services as outlined in the BSA audit recommendations. Therefore, specifying the contract/purchase of service amounts of over $250,000 and $500,000 will be required to obtain an independent audit which will be submitted to and reviewed by the Regional Center allows for manageable loads for the Regional Center in addition to narrowing the most likely concerns for financial mismanagement of public funds as outlined in the BSA audit recommendations. This also meets the mandate for accountability and transparency of public funds which is the concern within this system.

INTENT
ResCoalition believes that the true intent of the BSA audit findings/recommendations and the Governor’s directive was to address the issues pertaining to RC contracts/purchase of service that exceed certain financial thresholds. Unfortunately, this bill currently dilutes the ability for the system to locate large pockets of misused or misappropriated public funds while creating an expensive unfunded mandate for the community.

RECOMMENDATIONS

ResCoalition recommends adding the clarification that these audits will be necessary for individual contracts or purchase of service that meet the fiscal threshold outlined in the legislation:

(A) When the contract/purchase of service amount received from the regional center or regional centers during the entity’s fiscal year is more than or equal to two hundred fifty thousand dollars ($250,000) but less than five hundred thousand dollars ($500,000), the entity shall obtain an independent audit or independent review report of its financial statements for the period. Consistent with Subchapter 21 (commencing with Section 58800) of Title 17 of the California Code of Regulations, this subdivision shall also apply to work activity program providers receiving less than two hundred fifty thousand dollars ($250,000).

(B) When the contract/purchase of service amount received from the regional center or regional centers during the entity’s fiscal year is equal to or more than five hundred thousand dollars ($500,000), the entity shall obtain an independent audit of its financial statements for the period.

QUESTIONS TO CONSIDER
As we consider the implications of this change, there are some issues that might arise. One concern that was presented was the manpower it would take to identify those contract/POS agreements over the identified thresholds. With the transition to electronic data systems including billing, it is anticipated this will actually be minimal. A second concern and legitimate question is to whether this provides adequate oversight. When one reviews the BSA audit, the problem contracts identified, would all still qualify under this modification.

 

Paraprosdokians

This made me chuckle:

A paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to re-frame or reinterpret the first part. It is frequently used for humorous or dramatic effect, sometimes producing an anticlimax. For this reason, it is extremely popular among comedians and satirists.

"Where there's a will, I want to be in it," is a type of paraprosdokian.

I asked God for a bike, but I know God doesn't work that way, so I stole a bike and asked for forgiveness.

Do not argue with an idiot. He will drag you down to his level and beat you with experience.

Going to church doesn't make you a Christian any more than standing in a garage makes you a car.

The last thing I want to do is hurt you, but it's still on the list.

Light travels faster than sound. This is why some people appear bright until you hear them speak.

If I agreed with you, we'd both be wrong. (I have to remember this one)

We never really grow up, we only learn how to act in public.

War does not determine who is right - only who is left.

Knowledge is knowing a tomato is a fruit; Wisdom is not putting it in a fruit salad.

The early bird might get the worm, but the second mouse gets the cheese.

Evening news is where they begin with 'Good evening', and then proceed to tell you why it isn't.

To steal ideas from one person is plagiarism; To steal from many is research.

A bus station is where a bus stops. A train station is where a train stops. On my desk, I have a work station.

How is it one careless match can start a forest fire, but it takes a whole box to start a campfire?

Some people are like Slinkies ... Not really good for anything, but you can't help smiling when you see one tumble down the stairs.

Dolphins are so smart that within a few weeks of captivity, they can train people to stand on the very edge of the pool and throw them fish.

I thought I wanted a career, turns out I just wanted pay checks.

A bank is a place that will lend you money, if you can prove that you don't need it.

Whenever I fill out an application, in the part that says "If an emergency, notify:" I put "DOCTOR".

I didn't say it was your fault, I said I was blaming you.

I saw a woman wearing a sweat shirt with "Guess" on it...so I said "Implants?"

Why does someone believe you when you say there are four billion stars, but check when you say the paint is wet?

Women will never be equal to men until they can walk down the street with a bald head and a beer gut, and still think they are sexy.

Why do Americans choose from just two people to run for president and 50 for Miss America?

Behind every successful man is his woman; behind the fall of a successful man is usually another woman.

A clear conscience is usually the sign of a bad memory.

You do not need a parachute to skydive. You only need a parachute to skydive twice.

The voices in my head may not be real, but they have some good ideas!

Always borrow money from a pessimist. He won't expect it back.

A diplomat is someone who can tell you to go to hell in such a way that you will look forward to the trip.

Hospitality: making your guests feel like they're at home, even if you wish they were.

Money can't buy happiness, but it sure makes misery easier to live with.

I discovered I scream the same way whether I'm about to be devoured by a great white shark or if a piece of seaweed touches my foot.

Some cause happiness wherever they go. Others whenever they go.

There's a fine line between cuddling and holding someone down so they can't get away.

I used to be indecisive. Now I'm not sure.

When tempted to fight fire with fire, remember that the Fire Department usually uses water.

You're never too old to learn something stupid.

To be sure of hitting the target, shoot first and call whatever you hit “the target”.

Nostalgia isn't what it used to be.

Some people hear voices. Some see invisible people. Others have no imagination whatsoever.

A bus is a vehicle that runs twice as fast when you are after it as when you are in it.

Change is inevitable, except from a vending machine.

Regional Centers and audits

From ResCoalition:

In March of this year, the legislature passed SB74. This bill was intended to find additional savings in an effort to reduce the budget deficit. Within this bill there five (5) trailer bills in addition to specific savings. One trailer bill was titled Regional Center Audits. Within this trailer bill were provisions that mandate vendors to also get audits in some cases. Since this trailer bill has created a great deal of confusion and frustration amongst the vendor community this is being written to clarify what the new requirements are. First, you are only required to get a financial audit IF you receive more than $500,000.00 in payments from one or more regional centers a year. This means total gross income from one or more regional centers, not just more than 500,000.00 per vendorized program. It is important to remember that it is regional center payments NOT room and board payments. This means that if the regional center is payee, you don’t include the SSA/SSI payments in calculating your threshold. You also exclude any money paid by the RC for P&I.

If you have gross revenues from one or more regional centers you must get a financial audit from an independent CPA, and must be done in accordance with the American Institute of Certified Public Accountants. This means they’ll look at your accounting practices and methods, and your procedures for recoding, classifying, and summarizing transactions and accumulating information. If yours is a nonprofit you should already be doing annual independent financial audits. As a result, you wouldn’t be required to do another. You can turn in that one.

If you have gross revenues from one or more regional centers between 250,000 and 500,000 (remember excluding room and board payments and no P&I), you are not required to do a financial audit. Instead you are required to get a financial review. This is a less cumbersome (and cheaper) process.

Now there is an interesting issue surrounding this mandate. There is no legal requirement for when the audits must be completed. By this we mean there are no timelines for completion. This means that a Regional Center cannot cite you for failing to get an audit done on time – there is no time requirement. We appreciate this will be a contentious issue because RC’s will attempt to give us deadlines. However, these deadlines are not enforceable and they cannot penalize us for failing to comply.

If you have any thoughts or questions please don't hesitate to throw them back. If you have a question, I'd bet at least 30 other people are thinking the same thing so get back to us.

Since we're talking about XB/SB74 trailer bill language, there is a section that now requires negotiated rate programs (if you are funded under the ARM rate structure, you are not negotiated rate) to spend at least 85% of funding on direct service expenditures. If more information on this is of interest to you, please let us know.

Boyd Bradshaw

President ResCoalition

Total Care Exceptions and Hospice Care

Here's the policy:

Health and Safety Code Section 1569.73 requires facilities to obtain a Hospice Care
Waiver from the California Department of Social Services if they wish to retain clients
receiving hospice care services. Residents receiving hospice care services may
eventually require “total care,” which is a prohibited health condition as outlined in
California Code of Regulation (CCR), Title 22, Section 87615(a)(5).

Total care isdefined as a condition where residents depend on others to perform all of their activities of daily living, see (CCR) Title 22, Section 87459 Functional Capabilities.
A licensee must request a total care exception to allow a resident to be retained in the
Residential Care Facility for the Elderly (RCFE) if the resident’s condition requires total
care. The requirements for requesting this total care exception are found in California
Code of Regulation (CCR), Title 22, Section 87616.

To see the new and improved procedure, to to
http://ccld.ca.gov/res/pdf/10rcfe04.pdf