Legislative Analyst's Office

Analysis of the 2001-02 Budget Bill

Department of Developmental Services (4300)

A developmental disability is defined as a disability, related to certain mental or neurological impairments, that originates before a person's eighteenth birthday, constitutes a substantial handicap, and is expected to continue indefinitely. The Lanterman Developmental Disabilities Services Act of 1969 entitles individuals with developmental disabilities to a variety of services, which are overseen by the Department of Developmental Services (DDS). The department contracts with 21 nonprofit regional centers (RCs) to coordinate educational, vocational, and residential services for more than 160,000 clients each year. In addition to providing some services directly, such as intake and assessment, individual program planning, and case management, RCs purchase a variety of services from community-based providers.

Individuals with developmental disabilities have a number of residential options. While most live with their parents or other relatives, thousands live in their own apartments or in group homes that are designed to meet their medical and behavioral needs. The department also operates five developmental centers (DCs) and two smaller facilities, which provide 24-hour care and supervision to approximately 3,800 individuals.

The budget proposes $2.7 billion from all funds for support of DDS programs in 2001-02, which is a 5 percent increase over estimated current-year expenditures.

General Fund expenditures are proposed at $1.8 billion, an increase of $657 million. About $600 million of this increase is attributable to a purely technical shift of Medi-Cal General Fund expenditures from the Department of Health Services (DHS) to DDS. Prior to 2001-02, both General Fund and federal Medi-Cal dollars were displayed in the DHS budget and shown as reimbursements in the DDS budget. Beginning in 2001-02, only the federal match would be shown as a reimbursement in the DDS budget.

In addition to the General Fund transfer from DHS, the proposed increase in General Fund in the budget year is partly the result of caseload and cost increases for community-based services, and an enhanced system for reporting abuse, neglect, and exploitation of persons with developmental disabilities.

Community Services Program

The Community Services Program provides community-based services to clients through the RCs. The RCs are responsible for client assessment and diagnosis, the development of an individualized program plan, case management, and the coordination and purchase of various services. Services fall into three broad categories: residential, supported living, and day program services. Day program services include early intervention services for infants and young children, daytime activity programs for adults, and in-home respite care.

The budget proposes $2 billion from all funds ($1.5 billion from the General Fund) for support of the Community Services Program in 2001-02. The budget proposes a $142 million General Fund increase over the previous year for caseload and utilization growth in RC purchase of services.

Early Start Coordination Not Clear

We recommend approval of $2.6 million from the General Fund to increase regional center (RC) resources for evaluation and assessment functions under the Early Start program. However, we also recommend that the Legislature adopt supplemental report language directing the Department of Developmental Services to report to the Legislature by December 1, 2002, on RC and local education agency coordination, and RC performance in completing evaluation and assessment within statutory time frames.

Background. The Early Start program currently provides services through RCs to children from birth through two years of age. Early Start provides early intervention services to infants who have disabilities, or who are at risk of having disabilities, in order to enhance their development and to minimize the potential for developmental delays. An ultimate goal of the program is to promote educational attainment and quality of life for children with disabilities. The total number of children receiving RC services and eligibility testing has increased from nearly 13,000 in July 1993 when state participation in the federal program began, to about 19,000 currently, and is expected to reach more than 20,000 during 2001-02.

The Early Start program requires evaluation and assessment of children who are either applying for or receiving services. Evaluation involves the determination by qualified personnel of a child's present level of development, in the following five specific areas: cognitive development; physical and motor development, including vision and hearing; communication development; social or emotional development; and adaptive development. Assessment involves identification of a child's needs and services appropriate to meet those needs.

The DDS is the lead state agency for the administration of Early Start, which is operated in partnership with the State Department of Education (SDE). The program receives federal funding through Part C of the Individuals with Disabilities Education Act. In 2000-01, DDS received about $45 million in Part C funds, $20 million of which was transferred to SDE and other agencies. In 2000-01, the state for the first time contributed $1.3 million from the General Fund to pay for the cost of Part C services in excess of the available federal funds.

Governor's Budget Proposal. The Governor's budget includes about $48 million for the Early Start program ($28 million for RCs and $20 million for transfer to other agencies). Of that sum, $3.3 million would be used to offset an anticipated shortfall in federal funds. The budget proposes an additional $2.6 million from the General Fund to provide sufficient funding for qualified professionals to determine child eligibility, conduct assessments for service needs, and prepare for individualized family service plan development. Qualified professionals would include speech, physical, and occupational therapists, as well as audiologists, physicians, psychologists, and nurses. The additional resources would help ensure that the state complies with federal and state requirements to conduct multidisciplinary evaluations and assessments involving the five specific developmental areas within 45 days of receipt of a child's referral to the RC. In 1999, a federal review found that Early Start was not complying with the required time frame for conducting evaluations and assessments. It also found that Early Start evaluators did not always conduct multidisciplinary evaluations in all five developmental areas, as required.

Coordination With Local Education Agencies (LEAs). Not all of the evaluations and assessments of children served by the RCs are conducted by the RCs themselves. They are sometimes conducted by LEAs, which have overlapping responsibilities to provide evaluations and assessments of these children. The LEAs also provide certain early intervention services for these children. Because both RCs and LEAs have responsibility for providing these services at the local level, the RCs are required to have local interagency agreements with LEAs for the purpose of coordinating their efforts.

However, the extent to which the RCs and LEAs are actually coordinating their intake, evaluation, assessment, and case management services for eligible children is unclear. Although DDS liaisons review the interagency agreements and provide technical assistance to RCs each year, there is no detailed information available which indicates how good a job RCs and LEAs are doing in coordinating their efforts. Consequently, the Legislature cannot determine whether the program is being appropriately coordinated.

Analyst's Recommendation. In order to ensure service delivery to children under three years of age and their families as intended by the proposal, we recommend that the Legislature approve the augmentation requested for Early Start, but also adopt supplemental report language directing the department to report to the Legislature, by December 1, 2002, regarding several key issues. These include the coordination of Early Start activities between RCs and LEAs, and whether multidisciplinary evaluations and assessments are being completed for all five specific developmental areas within the 45-day period required by law. The December 1, 2002, deadline would allow sufficient time for DDS to determine whether the additional resources provided in the budget for Early Start have improved the services provided to participating children. We recommend the adoption of the following language:

It is the intent of the Legislature that the Department of Developmental Services (DDS) report to the Chair of the Joint Legislative Budget Committee and the chairs of the fiscal committees of both houses of the Legislature by December 1, 2002, on the coordination of Early Start activities between regional centers (RCs) and local education agencies (LEAs), and the performance of RCs in completing initial evaluations and assessments within 45 days of a child's referral as required. Specifically, the department shall provide the following information:

A summary of RC interagency agreements with LEAs, and an analysis of how effectively evaluation, assessment, and case management functions are being coordinated.

A summary of DDS' efforts to provide technical assistance to RCs to improve the quality of the agreements and the delivery of Early Start services.

A determination as to whether, within each RC catchment area, multidisciplinary evaluations and assessments of children are being completed as required by law for all five specific developmental areas within 45 days of referral, and, if this is not the case, the actual time required for the completion of evaluations and assessments.

Identification and description of any proposed models for coordination which would result in more cost-effective and consistent service delivery, and any other recommendations for improved service delivery.

Developmental Centers Program

The DCs provide residential care for developmentally disabled persons. The budget proposes $601 million from all funds ($322 million from the General Fund) for support of the DCs in 2001-02.

Report on DC Restructuring Due

We recommend the department report to the Legislature prior to budget hearings regarding (1) the recommendations for restructuring the developmental centers (DCs), (2) the effect these recommendations will have on the existing capital outlay program and assets, (3) the future capital outlay needs resulting from any changes in service delivery, (4) the effect of the recommendations on DC operating costs, and (5) a proposed timeline for implementing any changes.

For more detailed information about this recommendation, please see the "Department of Developmental Services" section of the "Capital Outlay" chapter of this Analysis.

Administrative Issues

The DDS Proposal to Comply With Health Insurance Portability and Accountability Act (HIPAA)

We recommend that funding requested for activities relating to compliance with the Health Insurance Portability and Accountability Act (HIPAA) be deleted from the department's budget and instead be funded from a newly established fund for statewide HIPAA compliance activities in order to further legislative oversight.

For more detailed information about this recommendation, please see the "Crosscutting Issues" section of this chapter of the Analysis.

Return to Health and Social Services Table of Contents, 2001-02 Budget Analysis