The 2020-21 Spending Plan

Human Services

Department of Developmental Services (DDS)

The spending plan provides $9.8 billion from all fund sources for DDS in 2020‑21, an increase of 16.2 percent over revised 2019‑20 expenditures of $8.5 billion. The General Fund provides $5.9 billion in 2020‑21, or 60 percent of the DDS budget, while federal funds account for $3.9 billion, or 40 percent. General Fund spending is up $854 million, or 17 percent, relative to the revised 2019‑20 budget. More than half of the year-over-year growth in General Fund spending is a result of caseload growth, changes in service utilization, and costs associated with scheduled increases to the state minimum wage. Other policy changes, including costs associated with coronavirus disease 2019 (COVID-19), account for the rest of the General Fund growth and will be discussed below. General Fund spending increases are offset somewhat by temporarily increased federal Medicaid funding during the public health emergency, also discussed below.

Of the total 2020‑21 DDS budget, $9.3 billion is for the community services program, while $398.5 million is for the state-operated residential and community facilities program.

Caseload Estimates. The spending plan assumes that DDS will serve 366,352 individuals in 2020‑21 (50,200 infants and toddlers under age 3 and 316,153 consumers ages 3 and older), up 5.2 percent from 2019‑20. Caseload could end up somewhat lower than anticipated, however, as recent monthly reports are reflecting fewer new enrollments.

Effect of COVID-19 on Evolution of DDS Budget

The state was on strong financial footing when the Governor released his January budget proposal, which included several augmentation proposals in the DDS budget aimed at improving program operations. Once the public health emergency and recession took hold, the Governor released a revised DDS budget proposal in May that not only withdrew most January spending proposals, but also included spending reductions for consumer services and regional center (RC) operations. While the Legislature agreed the January spending proposals should be withdrawn, it rejected the Governor’s proposed spending reductions. The final agreement essentially preserved the status quo.

Several January Spending Proposals Were Withdrawn in the Wake of COVID-19 and Recession. The following January proposals were not included in the final budget agreement.

• RC Performance Incentive Program. This proposal for $60 million General Fund ($78 million total funds) would have provided incentive payments to RCs for meeting certain performance targets.

• Lower Caseloads for Service Coordinators Working With Young Children. This proposal for $11.8 million General Fund ($17.4 million total funds) would have funded additional service coordinators at RCs to lower the caseloads of those working with children ages 3, 4, and 5.

• Crisis Training. This proposal for $2.6 million General Fund ($4.5 million total funds) would have expanded DDS’s new crisis training model—Systemic, Therapeutic, Assessment, Resources, and Treatment (START) training—at four additional RCs. DDS began implementing the START model in 2019‑20 at two RCs. (Instead, this augmentation will be delayed until 2021‑22. In addition, DDS may still try to provide additional training within existing resources in 2020‑21.)

• Information Technology (IT) Proposals. The January budget proposal included $3.8 million General Fund ($4.3 million total funds) for three IT-related proposals—one to modernize the uniform fiscal system ($1.3 million General Fund, $1.4 million total funds), one to develop an electronic document management system ($531,000 General Fund, $714,000 total funds), and one for IT and data planning ($1.9 million, $2.2 million total funds).

Final Budget Agreement Rejected Several Solutions Proposed in May. The Governor’s revised budget proposal released in May included several budget solutions that the Legislature rejected and which were not included in the final budget agreement.

• Service Provider Rate Reductions and Other Efficiencies. The Governor proposed saving $300 million General Fund by implementing service provider rate reductions and by finding efficiencies through the review of service utilization.

• Enforcement of Uniform Holiday Schedule. The uniform holiday schedule—currently in statute, but not enforced—prohibits payments for services on 14 set days per year. The Governor proposed reinstating this policy to save $31.3 million General Fund.

• Reduction in RC Operations Funding. The Governor proposed saving $30 million General Fund by reducing RC operations budgets.

• Changes to the Family Cost Sharing Program. In certain circumstances, families must contribute to the cost of services. The May Revision included a proposal to redesign this program and generate $2 million General Fund in revenue in 2020‑21 and $4 million in 2021‑22 and ongoing.

• Increasing Enrollment in the Medicaid Program. The Governor proposed increasing enrollment in Medicaid waiver programs to draw down an additional $27 million in federal reimbursements and reducing General Fund spending by the same amount. (The Supplemental Report of the 2020‑21 Budget Act instead asks our office to evaluate this issue and provide a report to the Legislature by March 1, 2021.)

COVID-19 Impacts on DDS Services

The spending plan includes $237.5 million General Fund ($336.7 million total funds) one time in 2020‑21 for costs associated with the COVID-19 pandemic. The revised 2019‑20 budget includes $154.7 million General Fund ($227.8 million total funds) for this purpose. As of September 25, nearly 3,000 DDS consumers had tested positive for COVID-19 and about 160 had died from the disease. A disproportionate share of deaths had occurred among consumers living in congregate settings, such as skilled nursing facilities.

Developmental Centers (DCs) Are Providing Surge Capacity. Fairview DC and Porterville DC’s general treatment area—both of which had moved their final residents by February 2020—have been set up as health care surge capacity sites for patients with intellectual or developmental disabilities who have tested positive for, or are at risk of contracting, COVID-19. Fairview DC has 241 beds available (including 75 for individuals without disabilities), while Porterville DC has 102 beds available. Relatively few of these beds have been needed thus far. The spending plan includes $66.7 million General Fund ($82.6 million total funds) in 2020‑21 to support the COVID-19 response at these facilities. The revised 2019‑20 budget includes $19.7 million General Fund ($23.7 million total funds) in 2019‑20 for this purpose.

RCs Can Authorize Additional Services to Support Consumer Safety. The spending plan includes $170.8 million General Fund ($254.1 million total funds) to provide additional supports to consumers in their homes. The revised 2019‑20 budget includes $135 million General Fund ($204.1 million total funds) for this purpose.

Various Flexibilities Have Been Allowed in Response to the Crisis. While not part of the spending plan specifically, numerous service delivery flexibilities have been implemented to protect consumer safety, while still providing necessary services and supports. For example, RC service coordinators can meet with consumers via telephone or through electronic means rather than meet in person. In addition, nonresidential service providers, such as day program providers, were allowed to receive retainer payments for about five months and are now allowed to bill for services delivered in alternative ways, such as via video conference.

Federal Government Temporarily Increasing Reimbursement Rate for Eligible Services. The federal Families First Coronavirus Response Act passed in March temporarily increases the federal match rate by 6.2 percentage points for Medicaid-eligible services. For DDS, federal reimbursements will increase by an estimated $370.8 million in 2020‑21, with a commensurate reduction in General Fund spending. In the revised 2019‑20 budget, an additional $177 million in federal funding is estimated, with reduced General Fund spending of the same amount.

Service Provider Rates

The 2019‑20 Budget Act included $124.5 million General Fund ($206.2 million total funds) to implement supplemental service provider rate increases in numerous service categories. The increases took effect in January 2020 and were subject to possible suspension on December 31, 2021 if General Fund revenues did not meet a certain threshold.

Spending Plan Maintains Supplemental Provider Rate Increases Implemented in 2019‑20. The spending plan includes an additional $124.5 million General Fund ($206.2 million total funds) to annualize the supplemental provider rate increases. They remain subject to possible suspension on December 31, 2021.

Three Additional Service Categories to Receive Supplemental Provider Rates. The supplemental rate increases approved in 2019‑20 did not include three service categories that should have been included—early intervention services, Early Start therapeutic services, and independent living services. (DDS had used draft findings from a three-year rate study to identify which service rates to increase in 2019‑20; these three services were not included. As the study was finalized, however, assumptions about how these services are delivered and how much that delivery model costs were reexamined, which led to the conclusion they should have been included.) The spending plan includes $10.8 million General Fund ($18 million total funds) to supplement the rates for these three services starting in January 2021. These supplemental payments are also subject to suspension in December 2021.

Continued Expansion of Specialized Community-Based Homes

As the final general treatment DCs were closed over the past decade, DDS has simultaneously been building up a community-based network of crisis and safety net services, which provide safeguards for individuals in crisis. DCs formerly played this role, acting as a place of last resort that could not refuse to serve a consumer in need. One DC remains in place—Porterville DC’s secure treatment program—to serve individuals under court order.

Porterville DC Currently Serves Consumers Under Two Types of Court Orders. Individuals with developmental disabilities may be placed at Porterville DC in two primary circumstances: (1) when they have been deemed a safety risk to themselves or others or (2) when they have been accused of a crime and deemed incompetent to stand trial (IST) and need training and education to regain competency, which Porterville DC provides.

Number of Beds at Porterville DC Is Capped in Statute. Because Porterville DC’s secure treatment program is a restrictive institutional setting, statute limits the number of beds to 211 as a way to ensure that other community-based safety net options are considered for treatment.

Many DDS Consumers Are Held for Long Periods at County Jails. If Porterville DC has reached its maximum capacity, individuals with developmental disabilities who have been accused of crimes and deemed IST are held in county jails while they await placement at Porterville DC. County jails are not the most appropriate placement for individuals with developmental disabilities, who need special competency training and staff who are experienced in working with this population. Sometimes, individuals who would otherwise be eligible to receive services at Porterville DC remain in jail for years.

The Spending Plan Includes Two Activities to Address Consumers Held in County Jails. For the individuals placed at Porterville DC because they are a risk to themselves or others, DDS intends to increase community-based capacity to provide the necessary crisis services and supports to help these individuals. This will free up beds at Porterville DC for individuals with developmental disabilities held at county jails who have been deemed IST. DDS estimates completing development of five specialized homes (enhanced behavioral supports homes) that include secured fences around the property as well as special locking features on home exits. The details of these activities are as follows.

• Temporarily Increase Number of Beds at Porterville DC. To move individuals currently held at county jails to Porterville DC while the new community homes are developed, the spending plan provides $8.9 million General Fund annually until June 30, 2024 to temporarily add 20 beds.

• Develop Five Community-Based Homes to Serve Some Porterville DC Consumers. The spending plan includes $7.5 million General Fund one time to develop the five community-based specialized homes, which will each house up to four individuals.

Other RC Issues

Increased Funding for Administration of Self-Determination Program. The spending plan includes $3.1 million General Fund ($4.4 million total funds) ongoing to support administration of the Self-Determination Program.

Self-Determination Program Evaluation Report Deadline Pushed Back One Year. State statute implementing the Self-Determination Program requires the State Council on Developmental Disabilities to submit an evaluation of the program three years after approval of federal funding for the program, which occurred in June 2018. Budget-related legislation instead gives the State Council until December 2022 (an 18-month extension) to complete the report in light of program implementation delays, but requires an interim report to be submitted by June 30, 2021.

DDS Budget Must Correct for Previous Medicaid Claiming Error. The spending plan provides $307.4 million to repay the federal government for an error in Medicaid claiming that began in 2010‑11. The administration became aware that it mistakenly had been claiming federal reimbursements for individuals who were not eligible for Medicaid due to their immigration status. Funding in 2020‑21 will repay the federal government for services already provided from 2010‑11 through 2019‑20 as well as annual funding in 2020‑21 (and ongoing) to pay directly for services that are ineligible for federal reimbursement.

Other DC Issues

Fairview DC to Remain in Warm Shutdown in 2020‑21. The spending plan provides $12 million General Fund one time for warm shutdown costs at Fairview DC while the Department of General Services conducts a site assessment before determining the disposition of the property.

Regional Resource Development Project Expanded in Southern California. The Regional Resource Development Project aids consumers transitioning from DCs into the community, including follow-up and assessment to ensure successful community living. The spending plan provides $1.1 million General Fund to increase services in the Southern California program.

Spending Plan Includes Porterville DC Infrastructure Funding. The spending plan provides $1.35 million General Fund one time to upgrade the fire alarm system at Porterville DC and reappropriates $3.2 million General Fund (originally approved in 2017‑18) one time to complete a project to remove nitrate from the drinking water supply.

DDS Headquarters

Spending Plan Includes Funding to Lease and Equip Southern California Headquarters Office. Budget-related legislation in 2019‑20 approved opening a Southern California DDS headquarters office. Staff initially worked out of Fairview DC in Costa Mesa, but will need to move into a separate office space as Fairview DC is now in warm shutdown. The spending plan includes $1.6 million General Fund ($2 million total funds) to lease and furnish a new office space in Orange County in 2020‑21. The annual cost will decline to $1 million General Fund ($1.2 million total funds) in 2021‑22 and ongoing.

Electronic Visit Verification (EVV) Funding Included. Federal Medicaid rules require states to implement an EVV system in two phases: Phase I for personal care services and Phase II for home- and community-based services. This IT system will electronically verify the hours and locations that services are provided. The spending plan includes $5.1 million General Fund to pay a penalty for not implementing the DDS EVV system for Phase I on time and $626,000 General Fund ($3 million total funds) one time to plan for Phase II. See the “Secretary of the California Health and Human Services Agency: Office of Systems Integration” write-up in 2020‑21 Budget: Health Spending Plan for more details on this issue.

Spending Plan Includes Funding for Relocation of DDS Staff to New Office Building. The spending plan includes $861,000 to fund activities associated with the relocation of the DDS headquarters office in Sacramento to a new building.

DDS Information Security Enhanced. The spending plan includes $234,000 General Fund ($293,000 total funds) ongoing to improve DDS’s information security practices and software in response to assessments by the California Department of Technology and the California Military Department, among other entities.