Human Services

Department of Developmental Services (DDS)

Overview

Projects Increased Spending. The spending plan provides $18.7 billion from all fund sources for DDS in 2025-26, an increase of 19.3 percent over revised 2024-25 expenditures ($15.6 billion). Of the total 2025-26 DDS budget, $18.2 billion is for the regional center system, $310 million is for the state-operated facilities program, and $163 million is for DDS headquarters staff and activities.

The General Fund—which comprises 65 percent of the total DDS budget—provides $12.2 billion in 2025-26, an increase of 20 percent over revised 2024-25 General Fund expenditures ($10.1 billion). While General Fund spending is increasing by about $2 billion for the regional center system, General Fund spending for state-operated facilities and DDS headquarters is largely flat across the two fiscal years. Most of the year-over-year growth in General Fund spending is due to a combination of caseload growth, changes in service utilization, and costs associated with scheduled increases to the state minimum wage.

Projects Caseload to Continue Growing Rapidly. The spending plan assumes that regional centers will serve 491,080 individuals in 2025-26 (58,652 infants and toddlers under age three, 15,282 provisionally eligible children three or four years of age, and 417,146 “consumers” ages three and older [the term used in statute]). This represents an increase of 8.6 percent in total caseload compared to 2024-25. This growth assumption is generally in line with historical trends. The spending plan assumes that state-operated residential and community facilities will serve 302 individuals in 2025-26, the same number served in 2024-25.

Budget Solutions

Accelerates the End of “Hold Harmless” Provision in Service Provider Rate Reform Implementation. The spending plan achieves savings by modifying the time line for a component of service provider rate reform. Since the 2021-22 budget, the state has been implementing a multiyear effort to modernize the rate models used to pay service providers. This effort is intended to establish rates that are consistent statewide and support an adequate supply of providers. The final stage of rate reform implementation has been in effect since January 1, 2025. As part of this process, statute requires that certain providers be temporarily “held harmless” if their rates will decrease after being adjusted to conform with the new models. This means that these providers have been given a transitionary period in which they can continue to be paid their historical rates, even if these historical rates exceed the new models used for other providers within the same service category and region. This hold harmless period was originally scheduled to end on June 30, 2026. The spending plan accelerates the end of the hold harmless period to February 28, 2026, resulting in one-time savings of $75 million General Fund.

Establishes Additional Criteria That Service Providers Must Satisfy in Order to Be Eligible to Earn Quality Incentive Payments. As part of service provider rate reform, statute requires that provider rates consist of two components beginning in January 2025: (1) a base rate equal to 90 percent of the rate model, and (2) a quality incentive payment equal to 10 percent of the rate model. Providers must satisfy specified metrics in order to receive the 10 percent of the rate model reserved for quality incentive payments.

The spending plan reflects an additional set of requirements that providers will need to satisfy in order to be eligible to earn the quality incentive portion of rate models beginning in July 2026. Specifically, providers will need to comply with Electronic Visit Verification, federal Home- and Community-Based Services (HCBS), and independent audit and fiscal review requirements. Not all providers will be subject to all three requirements (for example, the HCBS rules only apply to providers of certain service types, while the audit requirement only applies to providers that receive a certain amount of federal funding per year). As the spending plan assumes that some providers will not comply with these enhanced requirements, it reflects savings from quality incentive payments being lower than they otherwise would be. This solution will provide $222 million in ongoing General Fund savings.

Reduces Funding for Two Regional Center Activities. Since 2021, regional centers have received funding for two operational activities: (1) implicit bias training for regional center staff, and (2) health and safety waiver application assistance provided by regional center staff to families served. The spending plan eliminates funding for both activities, resulting in $5.6 million and $3 million General Fund ongoing savings, respectively.

Establishes New Requirements for Spending in the Self-Determination Program. Participants in the self-determination program are provided an individual budget, a fixed amount of money with which to purchase the services of their choosing. Participants then decide how to use the money in their individual budget by developing a spending plan, which identifies the services and items the participant needs. Budget-related legislation places new requirements on the way that individual budgets and spending plans will be developed going forward, resulting in estimated General Fund savings of $22.5 million General Fund in 2025-26 and $45.5 million in 2026-27 and ongoing. The administration stated that these changes will improve oversight of spending in the self-determination program. Additionally, budget-related legislation directs DDS to develop statewide standardized processes and procedures for the self-determination program with input from the community by March 2027.

Reduces Funding at Porterville Developmental Center. The spending plan reduces funding for Porterville Developmental Center by $15 million General Fund in 2025-26 and $16 million General Fund from 2026-27 onward. The administration stated that these reductions reflect historical savings relative to budgeted levels.

Discretionary Spending

Approves Funding for Continued Planning of the Life Outcomes Improvement System (LOIS) Information Technology (IT) Project. DDS is undergoing a multiyear effort to modernize the IT systems used for case management and accounting in regional centers and state-operated facilities. The spending plan provides $13.3 million one-time total funds ($5.1 million General Fund) to continue planning the new system, called LOIS. The spending plan also includes supplemental report language directing the department to submit quarterly progress updates to the Legislature on activities and expenditures related to LOIS.

Policy and Other Actions

Includes Legislative Intent Regarding Master Plan for Developmental Services Implementation and Reporting. In March 2025, the administration published the Master Plan for Developmental Services following several months of committee and stakeholder meetings. In previous legislation (Chapter 47 of 2024 [AB 162, Committee on Budget]), the Legislature codified its intent that the Master Plan should strengthen accessibility, quality, and equity for all consumers of the developmental services system and their families. Budget-related legislation in connection with this year’s spending plan—Chapter 12 of 2025 (AB 143, Committee on Budget)—expands upon this by codifying legislative intent that the administration will provide a structure for implementation of Master Plan recommendations in March 2026, as well as annual reports on progress through 2036.

Repeals the Parental Fee Program. Previous law required DDS to assess monthly fees on higher-income families whose minor child received 24-hour out-of-home care services through a regional center. This fee was suspended during the COVID-19 pandemic. Budget-related legislation now eliminates the fee program due to its administrative complexity and minor impact on revenues. The 2024-25 spending plan eliminated two similar fees for higher-income families with children served by regional centers.

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