Richard Royse began a career working with developmentally disabled people in California about 40 years ago, in the afterglow of lawmakers’ approval of the Lanterman Act, which put the state at the forefront of helping people historically warehoused in state-run institutions and forgotten.
After working around the country, Royse returned last year to lead Sacramento’s InAlliance, a nonprofit that provides housing, employment and other services to clients with developmental and intellectual disabilities.
What he encountered shocked him, he said.
“We won the entitlement war,” he said, referring to the Lanterman law, “but we’re losing the funding battle.”
Rate freezes imposed as the state slid into recession, combined with inflation and minimum-wage hikes, advocates say, have hollowed out the ranks of the nonprofit agencies and businesses the state relies on to serve those with autism, cerebral palsy, traumatic brain injuries and other developmental disabilities.
Lawmakers last month began the process of closing the state’s three remaining developmental centers, relics of the institutionalization era that cost about $500,000 per person to run. But as the centers’ highly disabled patients begin shifting into the community, advocates warn of a lack of specialized providers to serve them.
Looming federal regulations, meanwhile, could force significant changes to the state program. Failing to meet the new federal rules would put at risk up to $1.4 billion in federal money.
Advocates say the confluence of events has pushed the system to the brink of collapse. During the spring, they unsuccessfully sought a 10 percent across-the-board increase in the rates paid to nonprofits and businesses that serve nearly 300,000 developmentally disabled people. Now the issue is part of a health-centered special session called by Gov. Jerry Brown, along with one focused on transportation.
Yet prospects for more money are uncertain, at best. Brown has rejected using money from the general fund, which pays for most state services. Lawmakers of both parties agree the program needs more money, but sharply differ on proposed new or expanded taxes on health plans, tobacco or other products to help pay for any funding increases.
“The history of special sessions is not that encouraging,” acknowledged Christopher Rice of the California Disability Services Association, which represents several dozen providers. “We have counseled people that we need to keep encouraging legislators to find a way to make a deal.”
Advocates for the developmentally disabled will never show up on tallies of top campaign and lobbying spenders, unlike some of the other interests pushing for more money in the special sessions. Doctors and health worker unions want an increase in Medi-Cal reimbursement rates, while business groups and construction unions want more money for roads in the transportation special session.
“They are the unseen and, based on the state budget, unwanted part of our society,” said state Sen. Jim Beall, D-San Jose, who has introduced legislation to increase funding for the program, as have Sens. Jim Nielsen, R-Gerber, and Jeff Stone, R-Temecula. “We’ve become jaded by our interest-based politics that we have in Sacramento towards the needs of the developmentally disabled, I think, including everybody from the governor on down.”
Passed in 1969, the Lanterman Act for the first time made it a state responsibility to fund community-based services to people with developmental disabilities. Services are free for life, regardless of a family’s income.
Today, 21 private, nonprofit regional centers work with clients and their families to buy about 100 types of services, such as day programs, transportation and helping clients find jobs. Trying to curtail rising costs, lawmakers in 2003 began freezing provider rates and approved further cuts to the program during the recession.
All told, advocates say, the money-saving measures have taken about $1 billion out of the service-purchase system. Also, increases in the minimum wage and the improving economy have made it harder to find and keep quality employees who work with the developmentally disabled, regional center officials say. The state provides more money to cover increases in the state minimum wage, but no money for local minimum-wage increases in Los Angeles, San Francisco and other cities.
Some providers have shut down or gotten out of the business, creating waiting lists for developmentally disabled residents and their families. In the Sacramento region, the number of homes serving developmentally disabled people has dropped from 431 to 390 in the last 18 months, according to the Alta California Regional Center. Officials have had to scramble to find clients a place to live, executive director Phil Bonnet said.
“There used to be a buffer between working in fast food and working with developmentally disabled people,” Bonnet said. “The rates are so bad.”
The across-the-board rate hike, as well as more money for regional centers, sought by Bonnet and other Lanterman Coalition advocates would cost about $300 million. The budget approved by the Legislature on June 15 included an additional $63 million. Days later, the final deal with Brown days stripped out that money.
The outcome, Rice said, “was tremendously disheartening.”
Overall, state general fund spending on developmental services grew by $400 million in the new budget. Advocates and budget experts said the increase reflects the growth in the number of people receiving services, as well as the increased use of more costly services.
H.D. Palmer, a spokesman for Brown’s Department of Finance, said the administration seeks to provide services for the developmentally disabled while protecting against future deficits. Projected spending will exceed revenue by $1.7 billion in the budget year beginning in July 2018 under last month’s plan.
“We have not bought back many of the reductions that were necessary to bring the budget back into balance,” Palmer said, referring to the provider rate cuts during the recession. “We are certainly willing to entertain a discussion of rate increases that is outside of the general fund.”
Last week at InAlliance, a Sacramento nonprofit that provides day programs, job training and other services, the budget defeat and health care special session was the focus of a letter-writing session by about 20 clients.
“We want to remind our legislators, what is it you do in the community? Why is it important?” program director Elizabeth England asked the group.
Pete Amirani, who has a developmental disability and receives help through InAlliance, has jobs at UC Davis Medical Center and in a Sacramento office of Edward Jones, the financial advice company, doing janitorial work. He also volunteers around the community.
“I always thank that I have a job to do and somewhere to go to,” Amirani said. “I like to get out. I like to do stuff. I don’t like to stay at home.”
Besides the ongoing battle over money, there have been regular calls to revamp the provider rate system. Reports by the California Bureau of State Audits in 2010 and last week highlighted a lack of evidence that regional centers shop around for the least-expensive providers who can provide the same level of service to a client.
In 2005, the nonpartisan Legislative Analyst’s Office noted a “flawed, complex, and inconsistent system” for setting provider rates. A decade later, rate reform is the focus of a developmental services task force overseen by Brown’s health and human services secretary, Diana Dooley, but it’s unclear when the panel will propose any changes.
Health and human service programs typically have their strongest allies among legislative Democrats. Republican lawmakers, though, have come out strongly for the program that is the legacy of then-Assemblyman Frank Lanterman, a conservative Republican from Pasadena, and party icon Ronald Reagan, who signed the law as governor.
Stone said the state has an obligation to care for its residents who are least able to care for themselves.
“I have a strong place in my heart” for the developmentally disabled, he said, recalling a recent visit with severely disabled residents in his district. “Unfortunately, they seem to be at the bottom of the food chain here in Sacramento.”
Regional center purchase of services
Much of the developmental services budget goes to 21 nonprofit regional centers that purchase services for 290,000 clients.
Community care facilities: $1.06 billion
Medical facilities: $21 million
Day programs: $949.9 million
Habilitation: $149.2 million
Transportation: $285.7 million
Support services: $1.02 billion
In-home respite: $263.5 million
Out-of-home respite: $40.2 million
Health care: $111.7 million
Miscellaneous: $460.7 million
Quality assurance fees: $9.2 million
Total: $4.4 billion
Source: Gov. Jerry Brown’s revised budget