Report 99111 Summary - February 2000

California's Vocational Rehabilitation Program:

Although Federal Requirements Have Contributed to Its Rising Costs, by More Effectively Managing the Program, the Department of Rehabilitation Can Better Serve More Californians With Disabilities


The Department of Rehabilitation (department) is not using to greatest advantage its limited resources for furnishing vocational rehabilitation services to disabled Californians, and its method for identifying individuals who most need assistance has serious flaws. Over the past eight years, the department's expenditures have escalated for its Vocational Rehabilitation Program (program), which serves people with mental, physical, visual, hearing, and learning disorders as well as those recovering from drug and alcohol addictions. Despite the department's outlay of funds, the number of program clients who have become employed has dropped dramatically. In addition, the department allows a few cases to run up excessive costs because it does not monitor its cumulative costs for each client case in the program. For cases closed in fiscal year 1998-99, it incurred 26 percent of its purchased-service costs on just 3 percent of the cases. Moreover, in an attempt to meet the federal requirement to serve individuals with the most severe disabilities first, the department developed and uses a scoring instrument with a faulty design that gives preference to those with certain mental and learning disorders. With its limited resources, the department cannot afford to mismanage funds or favor particular disabilities, because such practices result in fewer deserving individuals receiving needed services. Indeed, during the past four years, the department's lack of funds prompted it to refuse services to thousands of potential clients during two different periods, and applicants had to wait more than eight months for services or seek assistance elsewhere.

The department's costs have risen partly because it must fulfill requirements imposed by federal regulations, especially some 1992 amendments to the federal Rehabilitation Act of 1973. In particular, four federal regulations have led to higher costs for the department's program, requiring that the department:

  • Presume all individuals applying for services, regardless of the severity of their disabilities, can attain employment with assistance from the program.

  • Allow clients to make informed choices about their vocational goals, the services they receive, and the providers of those services.

  • Coordinate its provision of services with local agencies that furnish services related to the rehabilitation of people with disabilities.

  • First serve the most severely disabled before helping those with less severe disabilities because the department does not have adequate funding to serve all eligible individuals.
Nevertheless, other states under similar constraints have been more successful than California in controlling costs for their vocational rehabilitation programs and in helping clients achieve their employment goals. In addition, our review of four of the department's district offices showed that two offices have been relatively successful at curbing service costs while helping clients become employed, further indicating that the department could more effectively manage its funds and case closures.

Although federal regulations limit many of its decisions, the department could improve the use of its existing management tools to direct aspects of the program that lie within its control. For example, the department currently does not track the cumulative costs of its cases and intervene when needed to ensure clients get the assistance they need to become employed. As a result, it spends unreasonable amounts on some clients. For instance, the department has already spent more than $80,000 for one client whose indecision has caused her to change her course of study numerous times. Although this individual has earned a degree in anthropology, the department continues to fund her education, now helping her pursue a career in law. Additionally, the department does not promptly close expensive cases when conditions indicate the clients cannot attain employment. By not monitoring highly expensive cases and promptly closing those that are unsuccessful, the department spends excessive amounts of money that it could instead use to serve additional deserving clients.


To ensure that it optimizes its limited resources, the department should:

  • Monitor cumulative case costs.

  • Close cases promptly when it becomes apparent that the clients cannot attain employment.

  • Use its existing management tools more effectively to help monitor the program.

  • Identify and adopt strategies used by other states and its own district offices that have effectively reduced costs and improved success rates.
To ensure that the most severely disabled in all disability groups have equal access to services, the department should modify its scoring instrument.


The department concurs with some of our conclusions and recommendations and disagrees with others. In particular, it acknowledges that it needs to optimize the use of its limited resources and states that it has already started to improve its fiscal monitoring by emphasizing accountability for employment outcomes. Additionally, the department plans to identify and implement strategies used by others to increase employment outcomes and better manage costs. It will also consider expanding its use of existing management tools to monitor the program. Further, the department recognizes that its significance scale, the instrument it uses to measure the severity of disabilities, requires revision. However, the department disagrees with our recommendations to improve its management of limited program funds by estimating the costs of its clients' plans, establishing cost standards and requiring approval of plans that exceed them, and monitoring the cumulative costs of plans against department-established standards. Our comments follow the department's response.