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Budget and Policy Post
October 21, 2022

The 2022-23 California Spending Plan

Human Services

The Department of Developmental Services

The spending plan provides $12.9 billion from all fund sources for the Department of Developmental Service (DDS), an increase of 19.7 percent over revised 2021-22 expenditures ($10.8 billion). Of the total 2022-23 DDS budget, $12.5 billion is for the regional center (RC) system, $316.3 million is for the state-operated facilities program, and $154.7 million is for DDS headquarters staff and activities.

The General Fund—which comprises 59 percent of the total DDS budget—provides $7.7 billion in 2022-23, up $1.4 billion, or 22 percent, over revised 2021-22 General Fund expenditures ($6.3 billion). While General Fund spending is increasing by $1.4 billion for the RC system and by $7.6 million for DDS headquarters (including $3 million in direct support to two organizations per legislative priorities), these increases are offset slightly by declining costs of $16.3 million in the state-operated facilities budget (due to reduced COVID-19-related costs and the expiration of some one-time funds for deferred maintenance).

About two-thirds of the growth in General Fund spending is due to caseload growth and changes in service utilization, costs associated with scheduled increases to the state minimum wage, and annualizing service provider rates that took effect in April 2022. The remaining one-third of year-over-year General Fund growth is the result of numerous new or expanded activities, which are discussed in greater detail below.

Projects Caseload to Continue Growing Rapidly. The spending plan assumes that RCs will serve 400,485 individuals in 2022-23 (57,915 infants and toddlers under age 3 and 342,570 “consumers” [the term used in statute] ages 3 and older), up 7.8 percent from 2021-22. This growth assumption is roughly in line with pre-pandemic trends (the pandemic caused a likely temporary decrease in new entrants to DDS). The spending plan assumes that state-operated residential and community facilities will serve 322 individuals in 2022-23, the same as in 2021-22.

Accelerates Ongoing Reform of Service Provider Rates. As part of the 2021-22 Budget Act, the state established a five-year plan to reform service provider rates and rate setting, including implementing a quality incentive program. The spending plan includes an augmentation of $159.1 million General Fund to accelerate this reform, with budget-related legislation further requiring rate reform to be implemented fully a year earlier than initially budgeted—by July 2024.

Provides $185.3 Million One Time and $1.1 Million Ongoing to Promote Recruitment and Retention of DDS Workforce. This workforce-related funding ($186.1 million of which is from the General Fund) is targeted at both RC service coordinators and direct support professionals, and includes:

  • $127.8 million for $500 training stipends to direct support professionals (each of whom would be eligible for up to two such stipends).

  • $22.5 million for a new training and internship program for workers interested in becoming direct support professionals, including $500 retention stipends for such workers.

  • $30 million for tuition reimbursement to RC service coordinators pursuing degrees or certifications in related fields.

  • $5 million for a pilot program using technology systems to substitute for some in-person and around-the-clock services.

  • $1.1 million ongoing and authority for seven new positions at DDS to administer these programs.

Funds Several Augmentations for Services to Infants and Toddlers. The spending plan provides $65.5 million total funds ($45.1 million General Fund) in 2022-23 and $82.5 million ($55.8 million General Fund) ongoing to support young children with developmental disabilities or developmental delays. These funds support several augmentations, including funding for:

  • Expanded eligibility for early intervention services in the Early Start program (which serves children under age 3) by (1) including fetal alcohol syndrome as an eligible condition, (2) making infants/toddlers eligible if they have a 25 percent delay in one or more developmental areas (prior law required a 33 percent delay), and (3) making a child eligible if they have a delay in either receptive or expressive communication (prior law required a delay in both forms of communication).

  • A statutory average service coordinator-to-child caseload ratio of 1:40 for children 5 years of age or younger (under prior law, the statutory ratio for children under 3 was 1:62; there was no specific statutory ratio for children ages 3 through 5).

  • A new requirement that each RC maintain a specialist focused on the transition at age 3 from early intervention in the RC system to special education at schools.

  • A grant program to support preschools becoming more inclusive of children with developmental disabilities.

  • Six newly authorized permanent positions at DDS to increase statewide leadership and expertise in early intervention and the transition at age 3 to services administered by schools.

Revises Dispute Resolution Process. Prior law required all RCs to maintain fair hearing and mediation procedures for resolving disputes between consumers and the RC. The spending plan includes two main provisions to augment and reform this process, including:

  • An ongoing allocation of $4.4 million total funds ($3.7 million General Fund)—and authority for 20 new positions—for DDS to establish a new Division of Community Assistance and Resolutions, intended to oversee and improve dispute resolution procedures. This includes providing improved and ongoing training for administrative law judges at the Department of General Services, which contracts with DDS to hear DDS cases.

  • A new requirement for RCs to have an appeals procedure for disputes that includes options for an informal meeting, mediation, and a fair hearing. Budget-related legislation requires DDS (with input from stakeholder groups) to create and distribute standard appeals process packets to the RCs.

Establishes Pilot Program to Create New Employment Opportunities for Consumers. The spending plan includes $8.3 million total funds ($5 million General Fund) one time to establish a pilot program for expanding employment opportunities for DDS consumers. This program has three years to expend the funds, with details on program implementation to be developed collectively by DDS, the State Council on Developmental Disabilities, other relevant state departments, RCs, and various stakeholders. The program is motivated in part by recent legislation which phases out the use of subminimum wages by January 1, 2025 (approximately 3,800 DDS consumers currently work in programs that pay below the state’s minimum wage).

Funds Communications Assessments for Consumers Who Are Deaf or Hard of Hearing. The spending plan includes $15 million total funds ($9 million General Fund) one time for communications assessments of consumers who are deaf or hard of hearing. These assessments will determine the best method for these individuals to express themselves and receive information, including any supports they need to communicate. This is in part responsive to litigation by Disability Rights California on behalf of deaf consumers who allege discrimination by RCs for not providing what they view as adequate communications support.

Temporarily Augments Funding for Service Access and Equity Grant Program. Each year, this program allocates $11 million General Fund in grants to select RCs and community-based organizations for projects focused on reducing disparities in service access and spending. The spending plan provides an additional $11 million one-time General Fund to augment this program in 2022-23.

Pays Financial Management Service Costs for Self-Determination Program Participants. The Self-Determination Program provides consumers with greater control over which services they will receive and from whom. Participants are provided a fixed amount of resources (based on that participant’s purchase of service expenditures over the prior 12 months) with which to purchase these services. Under prior law, participants were required to pay for a Financial Management Service provider from this fixed amount. The spending plan eliminates this requirement by providing $7.2 million total funds ($4.4 million General Fund) ongoing to cover these costs.

Eliminates the Half-Day Billing Option. Prior law required day programs (and other, similar programs) to bill DDS in increments of full days or half days, with these programs receiving a half-day rate when consumers attended for less than 65 percent of the approved full-day schedule. Budget-related legislation now eliminates this policy, meaning programs will now be paid the full-day rate per participant, regardless whether the consumer participated for a full or partial day. The spending plan provides $2.8 million total funds ($1.9 million General Fund) ongoing for this purpose.

Extends Suspension of Family Fees. Existing law requires DDS to assess fees on higher-income families whose minor child receives services in the DDS system. One fee is an annual flat fee of $200. Another fee is assessed on a sliding scale, relative to family income, for respite, day care, and camping services. These two fees have been suspended since March 2020 due to the COVID-19 pandemic. Budget-related legislation extends this suspension through June 30, 2023 at a one-time cost of $4.7 million General Fund.

Supports Compliance With Federal Medicaid Rules. The spending plan provides $1.2 million total funds in 2022-23 ($993,000 General Fund) and $811,000 total funds ($669,000 General Fund) ongoing for five permanent positions and three limited-term positions to ensure systemwide compliance with various federal Medicaid rules, including the Home- and Community-Based Services (HCBS) Final Rule set to take effect in March 2023. The HCBS Final Rule includes a variety of requirements to ensure integration of consumers in the wider community and to promote greater consumer independence and choice. DDS is in the process of assessing service providers’ compliance with this rule. For certain services, noncompliance as of March 2023 could put some federal funding at risk. The budget act requires monthly reporting by DDS beginning in July 2022 about the status of provider assessments, including identification of the factors that could result in possible noncompliance.