Report 2014-118 Summary - January 2015
California Department of Developmental Services:
Its Process for Assessing Fees Paid by Parents of Children Living in Residential Facilities Is Woefully Inefficient and Inconsistent
Our audit of the California Department of Developmental Services' (Developmental Services) Parental Fee Program highlighted the following:
- Its parental fee assessment process is riddled with unnecessary delays, lack of documentation, incorrect calculations, and inconsistent staff interpretations.
- Developmental Services does not ensure parents provide documentation for all income and expenses.
- Months or years may pass before Developmental Services becomes aware of the need to assess fees on certain families because regional centers do not submit required monthly reports.
- Although required to do so, Developmental Services did not annually reassess most of the parental fee accounts we reviewed.
- Developmental Services' initial fee assessments are inadequate—95 percent of appealed fee assessments from fiscal years 2011-12 through 2013-14 were reduced.
- Developmental Services staff do not use any sort of standardized fee schedule to guide the subsequent reassessment of the fee—the reassessment is based on the judgment of a four-member committee.
- Developmental Services collects only about 60 percent of assessed fees.
RESULTS IN BRIEF
The California Department of Developmental Services (Developmental Services) is responsible for administering the Parental Fee Program, which assesses a fee to parents of children under the age of 18 who receive 24-hour out-of-home care. Developmental Services assesses parental fees based upon a fee schedule that takes into account adjusted gross income, family size, and the age of the child in placement. Although Developmental Services includes a requirement to submit documentation for all income and expenses in its initial letter to parents, parents do not always provide this information, and the department often does not enforce this requirement. In addition, the process used by Developmental Services to assess the parental fee is riddled with unnecessary delays, lack of documentation, incorrect calculations, and inconsistent staff interpretations. As a result, parents with similar financial circumstances may be assessed substantially different levels of fees.
Although the regional centers are responsible for submitting to Developmental Services monthly reports of children who are newly placed in out-of-home care, they generally do not fulfill this requirement, and Developmental Services does not hold them accountable for doing so, causing inefficiencies in the process. Consequently, months or years may pass before Developmental Services becomes aware of the need to assess fees on certain families, and the possibility exists that some families are never identified and therefore are not assessed a fee, causing a significant loss of funds to the program in unbilled parental fees. In addition to late assessments, Developmental Services did not annually reassess, as required by state regulations, most of the parental fee accounts we reviewed.
Parents can appeal initial or subsequent fee assessments. Developmental Services reduced 95 percent of appealed fee assessments from fiscal years 2011-12 through 2013-14, the three years we reviewed, providing further evidence that the department's initial fee assessments are not adequate or comprehensive. Additionally, Developmental Services does not adequately describe its appeals process to all parents. In particular, Developmental Services does not clearly describe what it considers a financial hardship—financial circumstances that parents can cite during an appeal to obtain lower fees. Consequently, some families may not be aware of the types of expenses that can be considered in an appeal.
Although Developmental Services has established deadlines for the receipt of appeals and related documentation, it does not enforce these deadlines. Moreover, after appeal information has been gathered, including family expenses, department staff do not use any sort of standardized fee schedule to guide the subsequent reassessment of the fee. Rather, the reassessment is based on the judgment of a four-member committee, which considers, among other factors, the family's ability to reduce expenses. The end result is that families who are better at advocating for themselves, including being willing to challenge Developmental Services' determinations, will likely have lower fees than those who do not possess these attributes and skills.
The program failures described here, and the fact that Developmental Services collects only about 60 percent of assessed fees, exemplify the department's ineffectiveness in operating the Parental Fee Program. Core to this ineffectiveness is the fact that the unit responsible for overseeing this program has not updated its policies and procedures manual in more than 15 years, and that initial fee determinations and fees adjusted upon appeal receive no management review. Failure to engage in these basic management functions has created widespread errors and inconsistencies in fee determinations and has led to the perception—and the objective reality—that Developmental Services treats some families unfairly in the assessment of fees.
To ensure timelier fee assessments, Developmental Services should hold regional centers accountable for providing the monthly placement reports and copies of information letters required by state regulations. To encourage compliance, Developmental Services should specify in its regional center contracts that noncompliant regional centers will pay financial penalties equal to the amount of revenue lost because of their inaction.
To make the initial parental fee assessment and annual redetermination process more efficient, consistent, and transparent, Developmental Services should determine, as part of a formal policy development process, what family expenses it will consider in its determination of parental fees and what components of the fee determination require documentation from the parents. Developmental Services should then clearly communicate these policies to parents and staff and reinforce these policies with regular management review of fee assessments.
To ensure that the parental fee remains appropriate for each family's current financial condition, Developmental Services should complete annual redeterminations as specified in state regulations. To this end, department management should create a mechanism to determine which accounts have not had a redetermination as required and should follow up with staff to ensure this work is completed.
Developmental Services should eliminate inconsistency between the information it accepts and analyzes as part of the initial fee determination and the information it reviews as part of the appeals process. The fees reassessed during the appeals process should be based on an established fee schedule and should not be based solely on staff judgment. Any exceptions to the fee schedule should be justified in writing and approved by the program manager after thorough review.
To improve its administration of the Parental Fee Program, Developmental Services should engage in a formal policy development process that results in an updated policies and procedures manual by July 2015. The manual should clarify management expectations, describe regular management oversight, and include summary-level performance indicators that must be shared with department officials on an ongoing basis.
Developmental Services generally agrees with our findings and recommendations and outlined actions it plans to take to implement our recommendations.