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Other Budget Issues

Last Updated: 5/18/2013
Budget Issue: Sonoma Developmental Center Intermediate Care Facility Recertification
Program: Department of Developmental Services
Finding or Recommendation: Recommend approval of funding for a contract for an independent consultative review expert to conduct an analysis and establish an action plan to bring Sonoma Developmental Center into compliance. Recommend the Legislature deny request for provisional budget bill language giving the Director of the Department of Finance authority to augment the department's budget by $10 million General Fund
Further Detail


The Department of Public Health (DPH) licenses health facilities and certifies them on behalf of the federal Centers for Medicare and Medicaid Services (CMS); facilities must be certified to receive federal Medicaid funding. In December of 2012, DPH announced it was taking significant action to protect Sonoma Developmental Center (DC) residents due to deficient practices at the DC that have harmed some residents. (For more information on DC issues, see our report The 2013-14 Budget: Analysis of the Health and Human Services Budget.) In January of 2013, the Department of Developmental Services (DDS) informed CMS that, due to ongoing deficiencies at Sonoma DC, it was withdrawing from federal certification four of Sonoma DC’s ten Intermediate Care Facilities for the Developmentally Disabled (ICF-DD) living units. By voluntarily withdrawing four of the ten units, Sonoma DC will be able to maintain certification and receive federal funding for the remaining six units. The withdrawal of four of Sonoma’s ICF-DDs from federal certification results in lost federal funds of $7.4 million in 2013-13 and $15.7 million in 2013-14. The administration proposes to backfill the lost federal funds with General Fund.

DDS Is Moving To Address Deficiencies in Four ICF-DDs. The DDS has entered into a Program Improvement Plan (PIP) with DPH to address deficiencies in the four ICF-DDs at Sonoma DC that have been withdrawn from certification. The PIP establishes a structure for independent analysis and monitoring of Sonoma DC over the next year in order to improve its services to consumers. As a condition of the PIP, DDS will contract with an Independent Consultative Review Expert (ICRE) to conduct a root cause analysis and establish an action plan to bring all of Sonoma DC’s ICF-DD units back into compliance. The DPH would have to approve the action plan before it would be implemented.

DDS Requests Additional Resources To Address Problems at Sonoma DC. The DDS’ May Revision requests include additional resources to address the decertification of ICF-DD units at Sonoma DC. The administration requests $2.5 million all funds ($1.7 million General Fund) for costs associated with the contract for an ICRE as required by the PIP. The administration also requests provisional budget bill language giving the Director of the Department of Finance (DOF) authority to augment the DDS budget in 2013-14 by up to $10 million General Fund to implement the action plan developed in accordance with the PIP. The funds could be spent for staffing, training and patient safety costs related to implementation of the action plan. The proposed provisional language requires the following:

  • “Any augmentation pursuant to this provision shall be made no sooner than ten days after notification in writing to the Chairperson of the Joint Legislative Budget Committee.”
  • “Such augmentation shall not exceed $10 million, shall only be made for expenditures that cannot be covered by existing resources, and shall be reduced by receipt or eligible federal reimbursement funding to the maximum extent possible.”

Analyst's Comments

Costs To Implement Action Plan Unknown. The DDS is in the process of contracting with an ICRE to conduct an analysis and establish an action plan to bring all of Sonoma DC’s ICF-DD units back into compliance with state and federal requirements. The action plan will not be developed until sometime in 2013-14. Therefore, at this time, any estimate of the costs to implement the action plan is speculative.  

Proposed Provisional Language Is Insufficient To Assure Legislative Oversight. The provisional budget bill language proposed by the administration only allows for a ten-day review period instead of the standard 30-day review period. (We note DOF can ask for an expedited review in cases where it believes Legislative approval is urgently needed and expedited reviews can be completed within ten days.) The provisional budget bill language neither requires a detailed disclosure of the amount of funds that would be spent on specific purposes such as staffing, overtime, training and patient safety nor an explanation for why such costs are not absorbable within existing resources.

Analyst’s Recommendation

Approve Funding for ICRE. We recommend the Legislature approve funding for the ICRE contract. We believe these resources are critical to continue progress towards recertification of the four ICF-DD units at Sonoma DC.

Deny the Proposed Provisional Budget Bill Language. We recommend the Legislature deny the administration’s provisional budget bill language because it is premature to assume any level of costs associated with implementation of the action plan to be developed by the ICRE. There is uncertainty regarding the level of additional staffing, training, overtime or patient safety costs that may result from the action plan. Furthermore, the costs to implement the action plan may be minor and absorbable. If DDS requires additional funding to implement the action plan, it can utilize the deficiency funding process or seek additional expenditure authority through a supplemental appropriations bill.