Appropriations Health and Hospitals Subcommittee Work Group
February 19, 2008
Co-Chairs: Senator Jonathan Harris & Representative Jack Malone
We appreciate the opportunity to discuss the proposed midterm adjustments to the budget for the biennium ending June 30, 2009 as it relates to the Department of Developmental Services (DDS).  We have included the following information in response to questions posed at the Appropriations Public Hearing on February 13, 2008:
1. Detail about the proposed reduction of $1.1 M in day and residential services:
This is a reduction of cash during FY09 that will not effect the annualization of services in FY10. We will absorb this cash reduction by delaying the start of programs for high school graduates and individuals receiving age out or Waiting List support starting in FY09.  Anyone needing to begin adult day services or supported employment in July who is a school graduate will have the opportunity to do so. The funding reduction will be accomplished as a result of normal late starts by some graduates either because they take more time to select a service provider or because they first receive temporary job assessment and training support from BRS before starting with DDS. The residential reduction can be made by delaying the start of programs by an average of 8 days.
2. The conversion of the Community Living Arrangement (CLA) to a Respite Center. How can DDS provide quality services with a reduction of $210,000? Why do we provide this through the public sector instead of the private sector?
DDS has a long history of providing out of home respite services through the public sector since the 1980’s. We now have 11 respite centers throughout the state. Each serves an average of 150 families each year. This is much needed relief for families who still have their child living at home with them. The availability of respite often averts the need for emergency placements. There is always requests for more respite than can be provided so we try to increase the availability of respite centers whenever possible.
This can be achieved without additional cost to the state by converting public CLAs to respite centers when we experience a census reduction through attrition or through the movement of individuals within the system. Although our client census reduces, we maintain a commitment and a contractual obligation to our direct support employees. Their experience and training poise them to be excellent providers of respite services. Family satisfaction with this service is high.
We are able to achieve a savings of $210,000 through this change because our Respite Centers, unlike our CLAs, are open 5 days rather than 7 days per week, with the exception of 6 weeks in the summer to respond to family demand. The review of family utilization demonstrates that these services are in highest demand around the weekend days and not typically used 7 days per week. The change in the staffing requirement from 7 to 5 days accounts for the savings. It does not reduce the amount of available staffing when individuals are using the respite center. These centers are reviewed by Central Office Quality Management staff to make sure the quality of services is maintained.  In addition, the clients in this specific group home will be or have been offered vacancies in other DDS funded homes with comparable services and all staff will be offered positions in other DDS CLAs in accordance with labor management agreements.
Respite is also a service available as a waiver service and is provided by some private sector agencies. However, greater utilization of these programs would take additional funding. For respite, a Private Provider is paid a daily rate of $126.80 to $400.64 per day depending on the support needs of the individual.
3. Where is the funding from that is in the newly created line item for VSP (Voluntary Services Program)?
The Governor is creating a new SID for VSP by transferring funds from the residential community services account so that we are better able to track these specific expenditures. The funding in this new account is a combination of money originally transferred from DCF, new appropriations over the past 2 years and the funds proposed for FY09.
4. Provide information re: trends, quality & licensing data relative to the concern about the impact of no COLA for the private sector.
Number of and Stability of Providers:
There is no question that the rising costs of goods, energy, insurance, etc. and the low wage issue are having an impact on our private provider community.  However, in reviewing the data on our private provider community, we at this time cannot validate a systemic crisis in care. 
In response to comments that private sector employees are hired by the state, thus destabilizing their workforce, we track the private sector employees hired by DDS.  In the first two quarters of FY08, DDS hired 8 full time and 15 part time employees from the private sector employee base of over 11,000.
The number of qualified providers has increased from 138 (January 1, 2005) to 176 (January 1, 2008) an increase of 38.  A handful of smaller providers have gone out of business in this same time frame, however, there were very specific circumstances related to the closures not related to cost issues (ex: one provider’s status was revoked for fraudulent billing to DSS, for another, the owner died unexpectedly with no succession plan and services had to be relocated.)  The number of providers with a positive cost settlement (profit) has grown from 36 to 51 and the total cost settlement in 2006 was $1,482,891 retained by providers. Total fundraising efforts by the private sector were $22.3 million dollars and total agency profits in FY06 were $27.2 million.  Losses attributable to DDS were $4.1 million.
What are we doing to assist providers?
The department has taken several steps to help its providers within the parameters of each year’s budgetary allocation. Our initiatives include:
· The availability of one time funding totaled $ 9,816,247 million in FY07. This is money that is distributed to providers in addition to the funded contract amount. It is used to help offset the costs of meeting changing or increased needs of our consumers which may be the result of aging, change in medical condition or temporary behavioral challenges. Secondarily, if there is sufficient money the department also addresses infrastructure requests from providers.
· The department is unique among state agencies in having the ability to cost settle with providers.  If a provider is able to accrue a surplus in funding by the end of the fiscal year, they are allowed to keep 50% of this “profit”. In FY06 this provided $1,482,891 in retained funding over costs.
· The department conducts required registry and criminal background checks at no cost to the providers.
· The department has collaborated with other state agencies to create CT Health Jobs.com which is a repository of resumes of individuals seeking employment in human services.
· This year the department offered a new online training system that providers can access for new employee training.
· The Department has operated the Community Residential Facility Revolving Loan Program since fiscal year 1996.  This is a program that provides Residential mortgages to non-profit, licensed residential private providers to assist in the development of new CLAs, and for renovations up to $60,000 on existing CLAs. In fiscal year 1997 the Legislature created a Capital Repair Improvement loan program with the Community Residential Revolving Loan Program.  The capital repair program provides capital repair loans from $3,000 to $40,000 to finance capital projects at existing licensed CLAs.  As a “revolving loan” program, monthly interest and principal repayments from mortgages and capital loans are deposited back into to the accounts to perpetuate the program to enable the Department to continuously fund new mortgage and loan requests.  These two loan programs have been operating continuously since their inceptions based upon their initial appropriations, with some additional appropriations by the Legislature, and the ongoing monthly revenue received from mortgage and loan repayments.  The Department currently has 92 outstanding mortgages valued at $14.7 million and 130 outstanding capital repair loans valued at $1.3 million. 
· A Grant In Aid program to provide private, non-profit organizations funding for alterations and improvements to nonresidential facilities was established in 2005.  The Department was awarded Grant In Aid funding of $2 million in Fiscal Year 2006, and an additional $2 million in Fiscal Year 2007.  To date the Department has received Grant requests from 12 agencies totaling $1.67 million.  Of the 12 requests, 8 totaling $1.02 million have been approved by the Bond Commission. 
· The department has provided technical assistance and support to providers who have wanted to merge or to cooperatively share support functions to reduce indirect and A&G costs. Last year there was a successful merger between 2 providers, which resulted in the savings being applied to a wage increase of $1/hour for direct support staff.
· In addition, the OPM budget includes $3.2 million in both 2008 and 2009 for transportation, energy and other costs to be allocated to private providers at the discretion of the Secretary.
Quality of Services: 
DDS uses a variety of quality indicators including:
· Mortality/morbidity
· Abuse/neglect
· Accidents/injuries
· Licensure status
· Enhanced monitoring status
· Family/consumer complaints
· Program integrity process
· Quality system review
All of these data points as well as on-site inspection and reviews are used to monitor quality and alert us to emerging trends that may indicate sub-standard care or jeopardy.   Over the course of the year, sometimes intervention or remediation is initiated for an individual, a specific residential site or a provider organization.  Our assessment of these interventions over the past three years has remained fairly constant as well as the indices we review are not demonstrating system failure.  To the contrary, the private sector does quite well with regard to standard compliance overall.
 Number of consumers receiving services from the private sector:
According to 2008 data, Connecticut ranks third nationally in total spending for Intellectual/Developmental Disability services per $1000 of aggregate statewide personal income. (Source: Braddock et al., Coleman Institute and Department of Psychiatry, University of Colorado, 2008.)
A comment was made at the hearing last week, regarding the percent of the DDS budget spent on public vs. private sector services.  To clarify: a total of $559,826,776 is spent on private sector costs. This is more than half of the total DDS budget.  The remainder of the DDS budget not only supports public programs (Regional Centers, STS, public CLAs, respite centers and family support) but also supports the entire infrastructure of the Department that supports almost 20,000 clients with quality assurance, case management, administrative support and $42 million for the Birth to Three System.  So, to imply that the clients in the DDS residential and day programs receive the majority of DDS funds is misleading.
The department serves 15,134 individuals exclusive of Birth to Three. The following is a breakdown of how these individuals are served.
Residential services and supports:
1706 (26%)  Public
4267 (65%)  Private
600  (9%)    Self Direction where families or consumers hire their own staff
Day services and supported employment:
696 (8%)     Public
8263 (91%)  Private
138 ( 1%)    Self Direction

These numbers reflect growth in private sector programs.  In the previous 3 fiscal years, 536 people received residential services and 1,143 individuals participated in private day services.  This is a total increase of 1679. 
The department provides residential services to 6573 individuals and day/employment supports to 9097. The remainder of the 15,134 do not receive waiver services but include children living at home, people in nursing homes and individuals in DMHAS, DCF or DOC facilities who all receive case management and some support services from DDS.
What is the department’s Waiting List?
Currently there are 634 individuals on the Waiting List for residential services, which is a reduction of 46 since the beginning of the fiscal year.  Each region maintains a waiting list for the families and individuals who reside in their geographic area. As vacancies occur in existing residential programs referrals are made based on urgency, compatibility and the ability of the particular setting to meet the needs of the individual. The waiting list is also used to prioritize who receives the new funding allocated each year for the waiting list initiative. There are families whose preference is to be served by a particular provider and the department honors consumer choice. Individuals with new resources are free to select the provider they want or hire staff to work directly for them. All referrals for new residential services or to reuse vacancies are made by the department using the DDS Waiting List.
Impact of a Flat COLA:
· Widens salary gap between higher wage providers and lower wage providers
· Encourages turnover in lower wage agencies as staff leave to earn more
· Example: An employee working for Agency A makes $11.00 per hour.  Another employee at Agency B makes $14.00 per hour.   If they received the COLA since 2000 the first employee would be making $13.40 and the second would earn $17.05.  The gap in their annual salary has increased by nearly $1,400 a year.
· One alternative would be to close the gap by giving a sliding scale percentage for salaries and a flat percentage for other costs.
Wage Enhancement:
· To bring all providers paying direct care wages below $14.20 per hour up to that level would cost approximately $22,478,000.  This was one of our FY 09 budget option proposals.
· To bring all providers direct care staff up to the top average wage in the private sector, $17.59 per hour, would cost approximately $68,547,000.
· To bring all providers to the mid range of the DDS pay scale, $21.76 per hour, would cost approximately $140,000,000.  This would be at the provider’s benefit rate.  In FY07 we did an analysis using the state benefit rate and the cost was $209,000,000. 

5. Can the needs of the Providers for Cost of Living Increases be met through the closure of Southbury Training School (STS) or other public programs? 
The state of Connecticut remains committed to operating public sector services as evidenced by longstanding collective bargaining agreements and recent legislation that precludes closing public services through privatization. State employees cannot be laid off as a result of privatization. The majority of the cost difference between the public and private sectors is in wages and benefits.
Southbury Training School continues to operate meeting requirements established under federal court order. STS census has reduced to 513 individuals and there is state law that prohibits future admission. As the average age of the residents is 59, the population will continue to decline. Since July 2002, STS has decreased the number of staff it has by 331 full time positions and 77 part time positions.  During the same time period the department has decreased its full time count by 539 and has 215 fewer part time employees.  STS has remained open to honor the choice of the families whose children remain there. Community placement opportunities are regularly made available to anyone who prefers this option. Last year 5 women moved to a newly developed CLA. However, due to the age of the population, the acuity of their needs and the bond between residents and staff, many families choose to remain at STS. There are appropriate clinical and health resources available for an aging population and STS ranks highly in all quality indicators.
The closure of STS could be accomplished under collective bargaining requirements through the development of CLAS staffed by public sector employees. This would not only be highly disruptive to the residents and their families, but would cost Connecticut more money than it currently costs to operate STS because of the economy of scale of this residential community.
DDS would need to develop approximately 100 new CLAs, which would be funded by DSS. We recently set costs for the development of a newly constructed CLA for 6 people, meeting all the new codes. The cost of construction through DPW exceeds $1 million.  A quick review of the staffing patterns we would need to provide appropriate supports in over 100 homes would require more direct support staff to be hired than currently work at STS. 

6. Federal Revenue/Case Management: 
At the public hearing, a concern was raised regarding DDS returning federal revenue due to case management caseload issues.  We have many ongoing initiatives to support case managers.  The number of case managers has steadily increased (since July 2003, 97 additional case managers have been added and 7 Case Management Supervisors), caseloads have decreased, and new technology has been introduced to ease paperwork.  Only one federal financial participation (FFP) error for $40 has been cited by state auditors and none have been cited by CMS.  DDS has identified three sets of bills where clerical errors or omission necessitated an adjustment.