Previous Page
Rebuttal to Republican AnalysisFor those who are not familiar with Assembly Bill 896, which proposes to
close California's institutions for people with developmental disabilities,
more information is available from this Inclusion Daily Express web page:
TO: Assembly Republican Caucus
DATE: April 22, 2001
RE: Caucus Opposition to AB 896 (Aroner)
The Assembly Republican Caucus opposition to AB 896 is encouraging because it reflects an understanding of the problems addressed by the bill and a desire to solve those problems in a compassionate and cost-effective way, perhaps in collaboration with the bill's author, Dion Aroner. The question “How should the state best serve its citizens with developmental disabilities?” requires a nonpartisan answer. This bill is part of that answer.
For more than three decades, California - like the rest of the country - has been moving away from the 19th century approach to serving its citizens with developmental disabilities in large, centralized, state-run institutions, building a community-based system to replace it. The process has now reached the point where the last of the institutions can no longer justify their expense and the completion of the privatization of the developmental services system is at hand.
Everyone recognizes the fears and concerns of the parents of the few individuals remaining in the developmental centers. Unfortunately, it is no longer possible to make the expenditures involved - $600 million to keep the DC's open, $300 million of which is lost to overhead - to satisfy the very sincere but largely subjective concerns of a handful of people. At most, there are a few hundred families opposed to closing the institutions, with little in the way of objective evidence to support their positions. At the same time, there are many thousands of families whose children have always lived in a community setting and who demand that the state begin to look more closely at their concerns.
There are only five large institutions, with populations come from all over the state. While there may be a few families who happen to live near a DC, the vast majority of people living in the developmental centers are already hundreds of miles from their birthplaces, where their families likely still reside. The state has continuously tracked former DC consumers who, years ago, were returned to the community, and there is no objective evidence that former DC residents have been displaced from their families as the result of moving from institutions. Indeed, the opposite is true. By returning people to the communities from which they came, the movement out of developmental centers has tended to bring families back together, not further separate them.
Second to human concerns, the Caucus analysis has reservations about the costs which might be entailed if AB 896 were to become law as written.
There is a concern that federal funding will be lost. While the funds come from different federal pots, the plan under AB 896 is to replace “lost” institutional federal dollars with “found” community support federal dollars. It will be a wash from the perspective of the General Fund. Federal public policy supports the closure of institutions and the redirection of resources to community-based programs. Not only is this a long-standing policy of the federal Health Care Financing Administration (HCFA), but it is reflected in several federal court cases, most recently the holding in Olmstead, in which the Supreme Court found that unnecessary institutionalization
is a violation of the equal protection mandates of the Americans with Disabilities Act, which became law under the first President Bush. The second President Bush has announced his “New Freedom Initiative” in which he states hin intention to implement Olmstead by executive order.
The analysis states: “Fixed costs of the DC's will have to be absorbed even if clients are transferred to the community.” The way the state approaches the running of the developmental centers is full speed ahead. Even as closures are contemplated, the state simply does not think in terms of, say, closing down some of its expensive acute care hospitals on the DC grounds, as consumers move to medical facilities in the community, or shutting down its redundant police and fire departments and otherwise decreasing the number of state employees required at the institutions, as the number of consumers decline and the available funds slowly decrease. If the five developmental centers were a private hospital chain, there would be a better understanding that overhead must be decreased as demand for services - and corresponding income - decreases.
If the state is unable to decrease its overhead during the downsizing of DC populations, the phasing out of programs and the closing of whole institutions, then there are consultants to whom the state can turn, people who have already guided private hospital groups through the same process when managed care forced hospital closures in the private sector. Because it will not act on its own, the bill compels the state to effect decreases in its overhead as it experiences decreases in its DC population and budget. It is a delicate task which happens in the world of business whenever there is a decrease in demand and a corresponding decrease in income.
The overriding fact is, no matter what is done to reform a system of this size, a system which is already in crisis, it is going to cost money - and the numbers will be high, regardless. Here is what the argument might sound like:
"Yes, down the road, there will be significant dollars spent. The largest segment of the system - the community side, serving 98% of the population - is already greatly underfunded. The need for more funding is what the pending Sanchez v. Johnson class action lawsuit is all about. When the lawsuit is finally resolved, the state will no longer be able to sidestep the need for increased expenditures. This will happen, regardless of whether or not AB 896 is passed.
“What this bill is all about is preparation for the inevitable. This bill would streamline the system, over time, so that, when the increases come, they will not be as great a strain on the General Fund as otherwise would be the case. The plaintiffs to the lawsuit say that, to bring wages & benefits for private direct care workers up to the level of comparable state workers, it will cost $1 billion in today's dollars.
“By unifying the system, this bill frees up some $300 million for programs which presently goes into bricks and mortar. At the same time, it enables the state to avoid making the required upgrades to the institutions, which is an additional one time savings of some $1.5 billion. In recent years, the state has been unable to keep all the institutions certified by HCFA, losing some $50 million in federal funds each year which it must then backfill with $50 million out of the General Fund. This hemorrhaging of General Fund dollars will cease when the institutions are finally closed.
“If people want to think about AB 896 as `a money bill,' then they should think about it as a money bill that is designed to save the state significant dollars, rather than cost it anything.”
The mechanism which results in wage scales for the community is in serious need of reform. However, AB 896 does not set out to perform the necessary changes. Sanchez v. Johnson will bring about a change in the way workers in the private sector are compensated. The bill recognizes the need to create the best possible circumstances for people moving out of the institutions or being deflected from entering them in the first place. Because the existing wage-setting methodologies are inadequate, in order to create “models of excellence” for the consumers funded by the SHIFT and CARE accounts, the regional centers are given special dispensation in contracting with service providers, allowing them to pay their direct care workers in wages comparable to the state's practices with its own workers. Eventually, a court will address the unfair wage scales paid in the community. In the meanwhile, the bill only permits necessary exceptions.
The bill does talk about hiring state employees - but not while they remain on the state payroll. The hope is that state employees will leave state service because of the incentives offered by the regional centers to work in programs which are “models of excellence.” Not only would the programs funded by the SHIFT and CARE accounts pay state level wages, but there existing law enables employees of private providers working in this area to subscribe to CalPERS, so former state workers can bring their retirement packages with them. There will be a net decrease in the number of state workers. Instead of being tossed out on the street as the institutions close, the former state employees will find new and rewarding opportunities opening up for them in the private sector.
The need for additional funding at some point in the future is just one of several things that we do not like to talk about in connection with developmental services. Another is the abuse which occurs in both the institutions and the community and which the press regularly reports on in expose! fashion. Another is the mismanagement which has led to the loss of many millions federal dollars in both the institutions and in the community. These things are upsetting to contemplate. But they will not go away. If the lawsuit does not force change, then the growing number of stories in the press of abuse and mismanagement will force the issue.
The federal court in Sanchez is being asked: "How can California justify paying its state workers 2x in wages (3x when benefits are taken into account) when the state only provides funds with which to pay its private sector workers 1x in wages (and generally no benefits)? When the time comes to answer that question in court, the state will not be able to justify the Great Divide between these groups of workers. Trial will be had next year. The state will most likely lose: the evidence is data taken from the state's own studies of the problem. The issue will then be tied up on appeals for a couple more years.
What AB 896 does is restructure the system. When the trial and appellate courts start handing down judgements which finally compel the state to comply with the law, then, thanks to the restructuring brought about by AB 896, the state will at least be in the best possible posture to accommodate the court orders - and thereby avoid still more loss of federal funding.
The government unions oppose the bill as a bread-and-butter issue. A spokesman for the California Association of Psychiatric Technicians candidly told a reporter for the Santa Rosa Press Democrat just last week: “If the only way to keep our people employed is to keep the [developmental] centers open, that will be our position because, obviously, we're not going to advocate having our members laid off."
Though opposed for obvious reasons by the powerful government workers' unions, the bill is authored by a politician with some of the most impeccable union credentials in the Legislature. She has studied the developmental services system for a couple of decades, not only as a legislator but also as a legislative staffer. In spite of her union loyalties, she has shown the courage to “play against type” in this instance, making it possible to achieve a significant reform in the way the developmental services system is structured, in spite of the opposition of organized labor.
This is an opportunity for the Republican Caucus to encourage its members to support this nonpartisan bill. In addition to offering support, Republican legislators should seek to co-author the bill, so they are in an even stronger position to contribute their own ideas and values to this necessary reform effort.
Bruce MacKenzie, Parent Advocate
Santa Barbara, California
(805) 452-3535 & (855) 565-1840