BILL NUMBER: AB 1400AMENDED BILL TEXT AMENDED IN ASSEMBLY JUNE 1, 2015 AMENDED IN ASSEMBLY MAY 6, 2015 AMENDED IN ASSEMBLY APRIL 21, 2015 INTRODUCED BY Assembly Member Santiago FEBRUARY 27, 2015 An act to add Section 4629.8 to the Welfare and Institutions Code, relating to developmental services. LEGISLATIVE COUNSEL'S DIGEST AB 1400, as amended, Santiago. Developmental services: regional center contracts. Existing law, the Lanterman Developmental Disabilities Services Act, requires the State Department of Developmental Services to enter into contracts with private nonprofit corporations to operate regional centers for the provision of community services and support for persons with developmental disabilities and their families. Existing law sets forth the duties of the regional centers, including, but not limited to, development of individual program plans, the purchase of needed services to implement the plan, and monitoring of the delivery of those services. Existing law requires the regional center contracts and agreements with service providers in which rates are determined through negotiations between the regional center and the service providers to expressly require that not more than 15% of regional center funds be spent on administrative costs, as defined. This bill would require all regional center contracts or agreements with contracting entities that provide in-home respite services and that have an annual revenue attributable to in-home respite services provided to regional center consumers of at least $7,000,000, as specified, to expressly require that at least 85% of regional center funds be spent on direct service expenditures, as defined. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 4629.8 is added to the Welfare and Institutions Code, to read: 4629.8. (a) For purposes of this section, the following definitions apply: (1) "Administrative costs" means all costs other than direct service expenditures, including all amounts actually paid and all accounts payable, as calculated in accordance with generally accepted accounting principles, including, but not limited to, all of the following: (A) Compensation and benefits, including federal, state, and local payroll taxes, workers' compensation and unemployment insurance premiums, and recruiting, training, orientation, and background checks for managerial personnel whose primary purpose is the administrative management of the entity, including, but not limited to, directors and chief executive officers. (B) Compensation and benefits, including federal, state, and local payroll taxes, workers' compensation and unemployment insurance premiums, and recruiting, training, orientation, and background checks for employees who perform administrative functions, including, but not limited to, payroll management, personnel functions, accounting, budgeting, and facility management. (C) Facility and occupancy costs directly associated with administrative functions. (D) Maintenance and repair. (E) Data processing and computer support services. (F) Contract and procurement activities, except those provided by a direct service employee. (G) Training directly associated with administrative functions. (H) Travel directly associated with administrative functions. (I) Licenses directly associated with administrative functions. (J) Taxes. (K) Interest. (L) Property insurance. (M) Personal liability insurance directly associated with administrative functions. (N) Depreciation. (O) General expenses, including, but not limited to, communication costs and supplies directly associated with administrative functions. (P) Consultants and professional services, including, but not limited to, accounting and legal services. (Q) Distributions to shareholders. (R) Advertising costs. (S) Conference, convention, and meeting costs. (T) Facility and office equipment costs, including, but not limited to, rent, lease, and mortgage payments, directly associated with administrative functions. (U) Transfers to a corporate parent or franchisor, including, but not limited to, franchise fees, fees for copyright or trademark usage, fees for advertising materials, royalty fees, or conference fees. (V) Other general operating and overhead costs. (2) "Direct service expenditures" means all amounts actually paid and all accounts payable, as calculated in accordance with generally accepted accounting principles, in the following categories: (A) Wages and benefits, including state, federal, and local payroll taxes, workers' compensation and unemployment insurance premiums, and recruiting, training, orientation, and background checks for respite care aides. (B) Expenses substantially similar to those in subparagraph (A) that are directly related to the provision of in-home respite services. (b) (1) Notwithstanding Section 4629.7 or any other law, all regional center contracts or agreements with contracting entities that provide in-home respite services and that have an annual revenue attributable to in-home respite services provided to regional center consumers of at least seven million dollars ($7,000,000) shall expressly require that at least 85 percent of regional center funds be spent on direct service expenditures. Direct service expenditures shall not include administrative costs. (2) A contracting entity may meet the annual revenue attributable to in-home respite services specified in paragraph (1) in either of the following ways: (A) The annual revenue of the contracting entity that is attributable to in-home respite services provided to regional centerconsumersconsumers, excluding financial management services and other administrative services, meets or exceeds seven million dollars ($7,000,000). (B) The annual revenue of the contracting entity's parent organization that is attributable to in-home respite services provided to regional center consumers in this state, excluding financial management services and other administrative services, whether earned directly by the parent organization or by subcontractors and subsidiaries of the parent organization, meets or exceeds seven million dollars ($7,000,000). (c) Consistent with subdivision (b), service providers and contractors, upon request, shall provide regional centers with access to books, documents, papers, computerized data, source documents, consumer records, or other records pertaining to the service providers' and contractors' rates.