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Last Updated: 5/4/2010
Budget Issue: Lanterman Closure Proposal Has Merit, But Plan Lacks Fiscal Details
Program: Department of Developmental Services
Finding or Recommendation: Recommend closure on a policy basis. It is consistent with state and federal laws, legal rulings, and past actions of the Legislature. As the population of developmental centers continues to decline, and more individuals with disabilities receive services in a community setting, it makes sense for the state to close these facilities. Withhold recommendation on closure plan pending receipt by the Legislature of fiscal and programmatic details of the plan.
Further Detail

Lanterman Closure Proposal Has Merit, but Plan Lacks Fiscal Details


In January, the administration announced that it planned to close Lanterman Developmental Center (DC) located in Pomona and on April 1 it released its closure plan for this facility as required by statute. In this analysis, we provide some background information on Lanterman DC and the closure process, as well as assess the administration’s closure plan for the Lanterman DC.


The state Department of Developmental Services (DDS) operates four DCs and one small leased facility. These institutional facilities are home to approximately 2,150 individuals with developmental disabilities such as epilepsy, autism, and cerebral palsy. About 6,500 permanent and temporary state staff provide a full range of medical and other services to assist the residents in daily living.

Lanterman DC. The Lanterman DC is licensed to provide three levels of care to its 393 residents including: (1) an intermediate care facility for the developmentally disabled (ICF/DD), (2) a nursing facility, and (3) acute care. About 1,300 state staff work at the Lanterman DC. The “campus” consists of 120 structures—built mostly in the 1950s and 1970s—on approximately 290 acres.

The DC Closure Process. When a DC is closed, the residents are transferred either to community placements or to other DCs based on their medical and support services needs and preferences. Figure 1 provides a list of the different community living options for persons with developmental disabilities. The transfer process can take a few years because it requires thorough assessment of the needs of each resident and existing community resources, as well as the development of residential and support services tailored to the needs of each resident. 

Figure 1

Community Living Options for Persons With Developmental Disabilities


Supported Living Services

Welfare & Institution (W&I) Code Section 4689

These services allow individuals to live in their own home by assisting with activities of daily living. Typically, the individual pays other, basic expenses (rent, utilities, food, and entertainment) using Supplemental Security Income and earned income.

Adult Family Homes Chapter 1095, Statutes of 1994

W&I Code Section 4689.1

These homes are the residences of families and individuals willing and able (and compliant with established standards) to provide living space for individuals with developmental disabilities. Up to two adult consumers may reside with a family.

Family Teaching Homes

Chapter 831, Statutes of 2004
AB 2100

W&I Code 4689.1

These homes are owned, leased, or rented by the family home agency and consists of two separate residential units either contiguous or attached. The family home provider lives in one unit, and no more than three adult consumers live together in the other.

Community Care Facilities (CCFs)

Health and Safety Code
Section 1502

These provide 24-hour non-medical residential care to children and adults with developmental disabilities. These facilities are licensed by the state Department of Social Services (DSS). There are four levels of CCF’s that provide a range of types of services.

Intermediate Care Facilities (ICFs)

Health and Safety Code
Sections 1250, 1255.6

These facilities (licensed by the state Department of Public Health) provide 24-hour personal care, habilitation, and supportive health services to developmentally disabled clients. There are four types of IFCs that differ based on the intensity of the medical care provided to the residents. A single facility may serve between 4 to 15 consumers.

Adult Residential Facilities for
Persons with Special Health Care Needs

Chapter 558, Statutes of 2005
(SB 962, Chesbro)

W&I Code Section 4684.5

These facilities for persons with special health care needs provide 24-hour health care and intensive support services in a homelike setting. They are licensed by the DSS to serve up to five adults with developmental disabilities.




LAO Findings

DC Closure Is Consistent With State and Federal Policy

The proposed closure of Lanterman is consistent with a state policy adopted many years ago—known as the Lanterman Developmental Disabilities Act. This 1969 legislation created the system of community services for persons with developmental disabilities so that they may be integrated into the community and receive services in the least restrictive environment. One of the major objectives of the act is to deflect individuals from being placed in DCs and to create opportunities for those individuals to move out into the community. The enactment of federal laws and litigation have reinforced this state policy. Congress enacted the Americans with Disabilities Act, which has been interpreted by the courts in the Olmstead case to generally require treatment of individuals in the least restrictive setting, such as in the community. A state legal settlement, known as the Coffelt case, similarly resulted in a shift of individuals from DCs to a community setting. Taken together, these policies and court rulings largely explain the significant decline over the past few decades in the census of the state DCs. The DC population has declined from a peak of over 13,000 in the late 1960s to 2,150 today.

Closure Plan Meets Most Requirements of Lanterman Act

The Lanterman Act specifies the process for obtaining authority to close a DC. As part of the state budget process, the administration is statutorily required to submit to the Legislature by April 1 a plan for a proposed closure. The plan cannot be implemented without legislative approval. State law requires the department—prior to submission of the plan—to seek input from stakeholders and to hold at least one public hearing in the community in which the DC is located. Statute requires that the plan include certain key information, such as the impact of the plan on residents and their families and a description of efforts to mitigate the effect of the closure on employees.

Figure 2 shows the specific issues required to be included in the closure plan. Our review finds that the plan generally meets the statutory requirements. As the figure shows, the submitted plan covers—to varying degrees—each of the required issues. The plan also documents that the department has held public hearings and sought the input of stakeholders as required by law. Given the announcement of the proposed closure in January, and the limited time the department had to prepare the report, we think the plan represents a good start. However, we think the Legislature would benefit from additional information on issues that we felt were only partially addressed by the report: alternative placements and the fiscal impact of closure. We discuss these issues in more detail below. 


Figure 2

LAO Assessment of Compliance With
Closure Plan Requirements


Included in the Plan?



Partially Addressed


Description of the land and building affected




Description of existing lease arrangements




Impact on residents and their families




Anticipated alternative placements for residents




Impact on regional center services




Where services will be obtained upon closure




Potential job opportunities for employees




Fiscal impact of closure




Timeframe for closure






Programmatic Elements of Plan Largely Modeled on Agnews Closure

Concurrent with receipt of the Lanterman Closure Plan, the Legislature received the Final Report on the Closure of Agnews Developmental Center. As required by statute, the report provides details on the Agnews DC closure, including a summary of the fiscal impacts of the closure and the status of former Agnews’ employees.

Our review of the plan and report indicates that the administration has modeled the proposed closure of Lanterman DC on the recent Agnews closure. Further, our discussions with some stakeholders indicate that the transfer of Agnews’ residents to community placements was a success. The Lanterman closure plan, for example, envisions transition planning that is consumer-centered and based on the individual program plan process which takes into account the needs and preferences of the consumer. As with the Agnews closure, the Lanterman plan also envisions:

  • Development of Adult Residential Facilities for Persons with Special Health Care Needs, also known as “962 homes.” Chapter 558, Statutes of 2005 (SB 962, Chesbro) enacted this model of service delivery.
  • Adoption of statute to authorize Lanterman employees to work in the community to support the transition of Lanterman residents into community living options.
  • Establishment of an outpatient clinic at Lanterman to provide continued access to health care for Lanterman residents after transition from the DC.
  • Continuation of the quality management system that was adopted for the Agnews closure, which focuses on consumer and family outcome measures.

Fiscal and Programmatic Details Lacking

In the plan, the department indicates that it believes the Lanterman DC closure can be accomplished without additional resources “if its existing level of funding is maintained.” While this may be true, the plan does not provide enough fiscal detail to support this conclusion. For example, it provides no estimate of the net fiscal effect of the proposed closure, or the potential range of costs—both one-time development and ongoing support—for various community placement options as compared to the cost of the status quo.

While the plan mentions a number of possible placement options, including supported living services, adult family homes, family teaching homes, ICF, and adult residential facilities for persons with special health care needs, the plan does not include an estimate of how many current Lanterman residents would be moved to each type of placement. The plan also does not provide information on the current availability of these placement options in the Southern California region.

Some Funds Are Already Budgeted. Some state funding has been provided annually to the department for developing community services for individuals moving out of the DCs, as well as to deflect individuals from the DCs. This is known as Community Placement Plan funding. The 2010-11 budget plan presented by the Governor in January would allocate $77.4 million for these purposes. The department indicates that it plans to target the portion of these funds (55 percent) that support program development in Southern California for the closure effort. However, without an assessment of the existing community resources or information on the average cost to develop and support the various placement options, it is impossible for the Legislature to evaluate whether these funds alone are sufficient to carry out the plan.

Based upon our conversations with the department, we anticipate that some additional information about these matters will be available later in the budget process.

Closure Unlikely to Result in Major Budget Savings Immediately

Closure of Lanterman DC would not likely result in significant immediate state savings. In theory, community services could be less costly than institutional care. However, the achievement of any savings would depend on the types of care selected for community placements and how those placements are developed. If, for example, the state were to purchase property to develop 962 homes as it did with the Agnews closure, this would increase the cost. Alternatively, the state may choose to develop 962 homes in rented or leased space at a lower cost.

Moreover, even if the community placements were cheaper on a per capita basis than operating DC beds, the state would face one-time start-up costs to develop the community living arrangements as well as incidental costs that are normally a part of the cost of closing state facilities. For example, the state may incur additional costs to pay for staff overtime and registry workers in order to maintain staffing ratios should the closure lead to a rapid exodus of state staff from the DC. Depending on these factors, it is possible that such costs could offset any marginal savings from shifting DC residents to community placements, perhaps even leading to a net increase in expenditures in the short term.

The most significant fiscal impact of the DC closure would likely be the one-time revenues from sale of the state property. We expect, however, that it will likely be many years before the property is sold. The department indicates in the report that it expects the property will be sold as surplus property. The department does not have an estimate of its value. We would note that until it is sold, there would be some costs to maintain the facility. The State Constitution (Article III, Section 9) provides that the sale of such surplus properties are to be used to help pay off state deficit reduction bonds or, if the bonds have been fully repaid, into the state’s reserve fund for emergencies.

Analyst’s Recommendations

Recommend Closure on a Policy Basis. We think the proposal to close Lanterman DC has merit on a policy basis. As discussed above, this proposal is consistent with state and federal laws, legal rulings, and past actions of the Legislature. As the population of DCs continues to decline, and more individuals with disabilities receive services in a community setting, it makes sense for the state to close these facilities.

We also think that Lanterman is a good facility to close because of the age of the facility, and the high per capita cost for residents. At $289,000 per resident, Lanterman has the highest per capita cost of the remaining DCs. This is primarily because of the high fixed costs to operate the facility and the small and declining population.

Withhold Recommendation on Closure Plan Until More Information Is Provided. We withhold recommendation on approval of the closure plan submitted by the administration pending the receipt by the Legislature of additional details on the fiscal and programmatic aspects of the plan.

We recognize that a full determination of the costs of the closure will largely depend on the individual needs of Lanterman residents and the mix of services required to serve the population in the community. Until those assessments are completed, the department will not know with certainty, for example, how many residents will transfer to another DC versus being placed in the community; and, of those placed in the community, what type of residential placement option they will be provided.

However, we believe that the department can provide more fiscal and programmatic detail to support the closure plan. In particular, the department should be directed to provide an estimate of the potential one-time and ongoing costs associated with the various community placement options, as well as the department’s initial estimate of the number of individuals expected to be placed in each type of community setting after closure of Lanterman. Such information could be based, in part, on the actual costs for consumers who have recently transferred to the community from Agnews. The administration should also provide the Legislature with information on the current availability of community programs in the Southern California region for persons who would be moved from Lanterman.

We believe this additional information is critical if the Legislature is to understand the operational and fiscal implications of the closure plan and that DDS resources are neither overbudgeted nor underbudgeted in the 2010-11 spending plan.