The Department of Rehabilitation (DR) provides basic vocational rehabilitation and habilitation services to persons with disabilities. The purpose of vocational rehabilitation services is to place disabled individuals in suitable employment, while habilitation services help individuals who are unable to participate in vocational rehabilitation programs achieve a higher level of functioning. Services are provided in sheltered workshops under the Work Activity Program (WAP) and to groups or individuals on job sites through the Supported Employment Program (SEP).
In addition, the department helps legally blind clients support themselves as operators of vending stands, snack bars, and cafeterias throughout the state; provides prevocational rehabilitation services to newly blind adults; develops cooperative agreements with school districts, state and community colleges, and county mental health programs to provide services to mutually served clients; and assists community-based rehabilitation facilities such as independent living programs, halfway houses, and alcoholic recovery homes.
The budget proposes $430 million from all funds for support of DR programs in 2000-01, an increase of 4.1 percent over estimated current-year expenditures. The budget proposes $127 million from the General Fund, which is $8 million, or 6.7 percent, above estimated current-year expenditures from this funding source.
The budget does not include funding for the statutory rate increase for the Work Activity Program in 2000-01. However, the budget indicates that the administration will propose a rate increase in May. Preliminary projections by the department indicate that the rate increase would result in a General Fund cost of $7 million in 2000-01.
Current law requires the department to adjust rates for WAP providers every two years. The next adjustment is scheduled to take effect July 1, 2000. Because actual service provider cost statements are used to determine the rate increase, the budget indicates that the increase will be proposed in May when more information is available. The budget as introduced therefore includes no funding for the rate increase. Based on cost statements available through December 1999, the department's preliminary projection is a 12.4 percent rate increase (covering two years), resulting in increased General Fund expenditures of $7 million in the budget year.
Recent trends in the Work Activity Program and the Supported Employment Program indicate that the budget's projected caseloads may be too high in some programs and too low in others, resulting in a potential net underfunding of $6.1 million in General Fund expenditures. The administration will revise its projections in May, when more caseload data will be available.
The budget proposes expenditures of $135 million in total funds ($104 million General Fund) to support vocational rehabilitation and habilitation services programs for clients with developmental disabilities. This is an increase of $1.3 million, or 1 percent, from the General Fund.
Our analysis of the department's caseload projections indicates that the budget does not account for recent caseload trends.
Habilitation Services Program/Work Activity Program (HSP/WAP) Projection Too Low. The budget proposal projects an increase of eight HSP/WAP cases per month during 2000-01, with total cases increasing from 9,165 at the beginning of the fiscal year to 9,209 in June 2001. Based on our analysis of the most recent 12 months of data (December 1998 through November 1999), the actual caseload is increasing by an average of 17 cases monthly, as shown in Figure 1. Applying this trend to the actual caseload of 9,325 in November 1999, we estimate that the caseload will increase to 9,648 by June 2001. We estimate an average monthly caseload of 9,555, which is 368 cases higher than the department's projection. This caseload adjustment would result in increased General Fund expenditures of $2.1 million in 2000-01.
Vocational Rehabilitation/Work Activity Program (VR/WAP) Projection Too High. The budget proposal projects an increase of one VR/WAP case per month during 2000-01, resulting in a caseload of 2,525 in June 2001. However, our review of the most recent eight months of data shows that the actual caseload is decreasing by an average of 29 cases per month, as shown in Figure 1. Applying this trend to the actual caseload of 2,104 cases in August 1999, we estimate that the caseload will fall to 1,466 clients in 2000-01, resulting in an average monthly caseload of 1,626, or 894 less than the department's projection. This caseload adjustment results in a savings of $5.2 million ($1.1 million General Fund) in 2000-01.
| Figure 1 | |||||||
| Department of Rehabilitation
Program Caseload Trends | |||||||
| (In Millions) | |||||||
| Program | Recent Caseload Trends | 2000-01 Average Monthly Caseload | General Fund Impact Difference | ||||
| Monthly Changea | Actual November 1999b | Governor's Budget | LAO | Difference | |||
| HSP/WAP | 17 | 9,325 | 9,187 | 9,555 | 368 | $2.1 | |
| VR/WAP | -29 | 2,104 | 2,520 | 1,626 | -894 | -1.1 | |
| HSP/SEP Group | 21 | 3,223 | 3,081 | 3,507 | 426 | 4.2 | |
| VR/SEP Group | 28 | 957 | 609 | 1,335 | 726 | 1.5 | |
| VR/SEP Individual | -9 | 938 | 1,055 | 790 | -265 | - 0.6 | |
| Net Difference | $6.1 | ||||||
| a Based on most recent 12 months (December 1998 through November 1999, except for the VR/WAP and VR/SEP individual-placement programs, which had data available only through August 1999. For the VR/WAP program, based on data from the most recent eight months). | |||||||
| b Actuals for the VR/WAP and VR/SEP individual-placement programs are from August 1999. | |||||||
Supported Employment Program Projections: Group Placement Too Low, Individual Placement Too High. Supported employment program services can be provided for individual clients as well as in group settings. Chapter 329, Statutes of 1998 (AB 2779, Aroner), changed the rate-setting methodology for SEP from a rate per client hour to a rate per job coach hour. The change was projected to be cost neutral, but General Fund expenditures in 1998-99 increased unexpectedly. The department identified an unexpected increase in the number of SEP groups as one reason for the increased costs.
Chapter 147, Statutes of 1999 (AB 1111, Aroner), extended the 1998-99 rates through 1999-00 with the provision that rates be prorated if necessary to ensure that General Fund expenditures for the program not exceed appropriations. In order to contain costs, the budget proposes to extend this provision in the budget year.
The budget proposal projects a monthly increase of six HSP/SEP group-placement clients and a monthly increase of one VR/SEP group-placement client during 2000-01. Our analysis of the most recent 12 months of data shows that the HSP/SEP group-placement caseload is increasing by 21 clients per month, and the VR/SEP group-placement caseload is increasing by 28 clients per month, as shown in Figure 1. Applying these trends to the actual November 1999 caseloads, we estimate that the HSP/SEP group-placement caseload will increase to 3,622 clients in June 2001, and that the VR/SEP group-placement caseload will increase to 1,489 by the end of the fiscal year. Our average monthly caseload projections are 426 and 726 above the department's projections, respectively. The adjusted caseload projections result in an increase of $5.7 million from the General Fund.
The budget proposal projects that the VR/SEP individual-placement caseload will increase by two clients per month during 2000-01. Our analysis indicates that the caseload is decreasing by an average of nine clients per month. Applying these trends to the actual November 1998 caseload, we project a caseload of 740 in June 2001, with an average monthly caseload of 790 in the budget year. This is 265 clients less than the department's estimate. Our projection would result in a savings of $612,000 from the General Fund.
Summary. Based on the most recent caseload trends, we estimate that WAP and SEP caseload projections would, on net, be higher than the amounts assumed in the budget, resulting in a net increase of $5.8 million in General Fund expenditures. We note, however, that additional caseload data will be available at the time of the May revision of the budget.
We recommend that the department present a staffing plan to the budget committees that either (1) identifies and proposes to eliminate approximately 150 vacant authorized positions from the department's Field Operations Division in order to reflect actual staffing patterns, or (2) proposes funding to fill the vacant positions.
The department's Field Operations Division administers the VR program through the department's 120 field offices. The division has 1,822 authorized positions, most of which are filled by counselors who deliver VR services to clients.
Currently the division has approximately 240 vacancies (13 percent of all authorized positions). This vacancy rate is not new; since 1994-95, the division has had vacancy rates as high as 14 percent. We note that all departments have some vacant positions due to normal personnel turnover and hiring delays, but generally these vacancies are about 5 percent of total positions and are reflected in the department's salary savings requirement. The DR indicates that it intentionally left positions in the Field Operations Division vacant in order to absorb the cost of the 3 percent salary increase granted January 1, 1995, which was not fully funded in the budget for DR and most other departments.
We believe that maintaining such high vacancy rates undermines the Legislature's ability to effectively oversee the VR program because the department's staffing appears to be "richer" than what is actually occurring. A more straightforward method of budgeting would be to keep vacancies at the normal salary savings rate of 5 percent. For this reason, we recommend that the department submit a staffing plan to the budget committees that either (1) identifies and proposes to eliminate approximately 150 of the division's 240 vacant authorized positions (leaving vacant approximately 90 positions, or 5 percent of all positions), or (2) proposes funding to fill the positions, with appropriate justification.