This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1061e.HCA
DATE: 2/15/2024
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 1061 Community-based Child Welfare Agencies
SPONSOR(S): Health Care Appropriations Subcommittee, Children, Families & Seniors Subcommittee,
McFarland
TIED BILLS: IDEN./SIM. BILLS: SB 536
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Children, Families & Seniors Subcommittee 15 Y, 0 N, As CS DesRochers Brazzell
2) Health Care Appropriations Subcommittee 14 Y, 1 N, As CS Fontaine Clark
3) Health & Human Services Committee
SUMMARY ANALYSIS
Florida’s model for providing child welfare services is unique in the nation. No other state outsources its child
welfare services to private organizations to the extent that Florida does. Accordingly, the performance of those
private organizations – community based-care lead agencies (CBCs) and their subcontractors – has a great
impact on the health, safety, and well-being of the thousands of children and families served by Florida’s child
welfare system.
While most CBC’s are deemed by DCF to overall meet or exceed performance standards, deficiencies remain,
particularly in the well-being of children in care. Additionally, a recent forensic audit of 6 CBC’s identified the
following financial and managerial concerns with one or more of the 6 CBC’s:
Non-compliant contract procurement for related and non-related entities.
Receipt of Paycheck Protection Program Loans that were not properly reimbursed to the State.
Board approval of deficit budgets.
Allocated officer compensation in excess of mandatory caps.
Non-compliance with Cost Allocation Plans.
CS/HB 1061 strengthens the child welfare system in the following ways:
Procurement of CBC’s: The bill prohibits renewal of CBC contracts by DCF, though it allows DCF to
extend a CBC contract for one year.
Contractual Obligations: The bill restricts the ability of CBCs to transact with third-party entities that are
directly or indirectly related to CBC board members, officers, and directors, and certain relatives. The
bill expands the minimum data points that the CBCs must publish on its website every month.
Actuarially-sound funding model: Gradually transitions the allocation of core service funds for CBCs to
an actuarially-based tiered payment model over four state fiscal years, starting with 2024-2025.
CBC Procurements: The bill requires DCF to establish by contract financial penalties or sanctions that
DCF must enforce when a CBC is not compliant with applicable local, state, or federal law for the
procurement of commodities or contractual services.
CBC Receivership: The bill lowers the threshold levels that authorize DCF to petition the court for a
receivership of a CBC.
Remedies for Noncompliance or Inadequate Performance: The bill establishes contractual actions that
DCF may enforce against a CBC if the CBC fails to comply with contract terms or experiences
performance deficiencies.
The bill has no fiscal impact for Fiscal Year 2024-25, but may redistribute funding among CBCs beginning in
Fiscal Year 2025-26 and annually thereafter.
The bill provides an effective date of July 1, 2024. STORAGE NAME: h1061e.HCA PAGE: 2
DATE: 2/15/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Florida’s Child Welfare System
Chapter 39, F.S., creates the dependency system charged with protecting child welfare. The Florida
Legislature has declared four main purposes of the dependency system:
1
to provide for the care, safety, and protection of children in an environment that fosters healthy
social, emotional, intellectual, and physical development;
to ensure secure and safe custody;
to promote the health and well-being of all children under the state’s care; and
to prevent the occurrence of child abuse, neglect, and abandonment.
Florida’s dependency system identifies children and families in need of services through reports to the
central abuse hotline and child protective investigations. The Department of Children and Families
(DCF) works with those families to address the problems endangering children, if possible. DCF’s
practice model is based on the safety of the child within the home by using in-home services, such as
parenting coaching and counseling, to maintain and strengthen that child’s natural supports in his or
her environment. If the problems are not addressed, the child welfare system finds safe out-of-home
placements for these children.
Community Alliances
DCF is required to establish community alliances to serve as a catalyst for community resource
development and promote prevention and early intervention, among other obligations.
2
Each
community alliance may encompass more than one county when such arrangement is determined to
provide for more effective representation.
3
Community Alliances include local stakeholders and representatives in each county to encourage and
maintain community participation and oversight of community-based care lead agencies (CBCs).
4
Community alliances are composed of representatives from:
DCF.
the county government.
the school district.
the county United Way.
the county sheriff’s office.
the circuit court corresponding to the county.
the county children’s board, if one exists.
a faith-based organization involved in efforts to prevent child maltreatment, strengthen families,
and promote adoption.
5
The community alliance must adopt bylaws and may increase the membership of the alliance if such
increase is necessary to adequately represent the diversity.
6
The additional members may include state
1
S. 39.001(1)(a), F.S.
2
S. 20.19(5)(b), F.S.
3
S. 20.19(5)(a), F.S.
4
Id.
5
S. 20.19(5)(d), F.S.
6
S. 20.19(5)(e), F.S. STORAGE NAME: h1061e.HCA PAGE: 3
DATE: 2/15/2024
attorneys, public defenders, their designees, or individuals from funding organizations, community
leaders or individuals who have knowledge of community-based service issues.
7
DCF’s procurement team for CBC contracts must include individuals from the community alliance in the
area to be served under the contract.
8
Community-Based Care Lead Agencies
Florida’s model for providing child welfare services is unique in the nation. No other state outsources
its child welfare services to private organizations to the extent that Florida does. Accordingly, the
performance of those private organizations—community based-care lead agencies, or CBCs-- has
great impact on the health, safety, and well-being of the thousands of children and families served by
Florida’s child welfare system. DCF’s effective management and oversight of contractors is critical to
the successful functioning of the child welfare system.
The Department of Children and Families (DCF) competitively contracts with CBCs as required by
chapters 287 and 409 to provide child protection and child welfare services to children and families in
Florida. These contracts generally cover case management, out-of-home services, and related
services. The outsourced provision of child welfare services is intended to increase local community
ownership of service delivery and design. CBCs in turn contract with a number of subcontractors for
case management and direct care services to children and their families. DCF remains responsible for
a number of child welfare functions, including operating the central abuse hotline, performing child
protective investigations, and providing children’s legal services. Ultimately, DCF is responsible for
program oversight and the overall performance of the child welfare system.
9
At present, there are 18 CBCs that each cover specific geographic areas within the 20 Judicial Circuits
in Florida. The geographic size of the CBC’s varies widely. While a few serve only one county, ranging
from St. Johns County to Broward County, several CBCs cover multiple counties, with one CBC
(Partnership for Strong Families) encompassing 13 rural counties. The following map illustrates DCF
Regions, Judicial Circuits, and CBC geographic areas.
10
7
Id.
8
S. 409.987(5), F.S.
9
S. 409.996, F.S.
10
Florida Department of Children and Families, A Comprehensive, Multi-Year Review of the Revenues, Expenditures, and Financial
Position of All Community-Based Care Lead Agencies with System of Care Analysis, p. 2 (Dec. 1, 2023)
https://www.myflfamilies.com/services/child-family/lmr (last visited Jan. 6, 2024). STORAGE NAME: h1061e.HCA PAGE: 4
DATE: 2/15/2024
Accordingly, the child population of the area served by each CBC varies, and the number of children
and families served by each CBC varies.
STORAGE NAME: h1061e.HCA PAGE: 5
DATE: 2/15/2024
Florida Child Welfare System Performance Serving Children
The DCF infographic below scores the health of Florida’s child welfare system at the circuit level.
11
DCF identifies areas with the most significant systemic impact on improving permanency and well-
being
12
and evaluates progress toward achieving permanency, safety, and well-being for children in the
welfare system. The overall score for each of the 20 circuits aggregates individual circuit performance
scores on permanency, safety, and well-being. For FY21-22, the overall median score is 3.1 out of a
possible 5, and 85% of circuits earned a 3.0 or higher.
13
A score over 3.50 indicates the circuit’s
performance exceeds established standards.
14
A score between 3.00-3.349 indicates the circuit’s
performance meets established standards.
15
A score of 2.00-2.99 indicated the circuit’s performance
does not meet established standards.
16
In FY 2021-2022, DCF gave 17 of 20 circuits a score of 3 or
higher, indicating that the circuit’s performance exceeds established standards. However, there were
still deficiencies. Every CBC except one was rated below expectations or poor for the well-being of
children in care.
17
CBC Funding
11
Florida Department of Children and Families, Annual Accountability Report on the Health of Florida’s Child Welfare System: Fiscal
Year 2021-2022, p. 6 (Dec. 12, 2022) https://www.myflfamilies.com/sites/default/files/2022-12/Accountability_System_Report_2022-
revision12DEC22.pdf (last visited Nov. 28, 2023).
12
Id. at p. 3.
13
Id. at p. 2.
14
Id. at p. 7.
15
Id.
16
Id.
17
Id. at pg. 6. STORAGE NAME: h1061e.HCA PAGE: 6
DATE: 2/15/2024
The source of CBC revenues are predominately federal and state funds appropriated by the Florida
Legislature. Nearly all federal funding for child welfare purposes comes from the Social Security Act
18
and the Child Abuse Prevention and Treatment Act (CAPTA). Each of these federal sources generally
require state matching funds.
19
Historically, CBCs could use Title IV-E funds in a variety of state-
specific, innovative ways because the federal government approved a waiver allowing Florida to
experiment. However, the federal government terminated the Title IV-E waiver authority it had allowed
states on September 30, 2019.
20
This has led to significant change in levels and the mix of federal and
state funds over the last five years.
CBC appropriations from federal and state sources grew from $951.9 million in Fiscal Year (FY) 2018-
19 to $1.3 billion for FY 2023-24.
21
The Legislature appropriates funds from both state and federal
sources to CBC’s through DCF.
State law specifies calculation of annual CBC funding. The Legislature first established a CBC funding
formula in law in 2011 and has changed over time.
22
Before this statutory formula, the allocation of new
state or federal funds to lead agencies was based primarily on the number of children in care with
direction to the department through proviso language in the General Appropriations Act, though at the
time of the formula’s enactment, the Legislature had begun considering additional factors such as those
now in the formula.
23
Under the current formula, 100 percent of the recurring core services funding for each community-
based care lead agency are based on the prior year recurring base of core services funds, and any
new funds are allocated according to a statutory formula.
Generally, all funds allocated to a CBCs are considered “core service funds”, except for:
1. Funds appropriated for independent living.
2. Funds appropriated for maintenance adoption subsidies.
3. Funds allocated by DCF for protective investigations training.
4. Nonrecurring funds (e.g., risk pool appropriations, back of the bill authorizations designed in the
General Appropriations Act, Legislative Budget Commission actions, and prior year excess
federal earnings).
24
5. Designated mental health wrap-around services.
6. Funds for special projects for a designated CBC.
7. Funds appropriated for the Guardianship Assistance Program under s. 39.6225, F.S.
Unless otherwise specified in the General Appropriations Act, any new core service funds are allocated
according to the equity allocation model on the following weighted basis:
70% of new funding must be allocated among all CBCs.
30% of new funding must be allocated among the CBCs that are funded below their equitable
share.
25
18
Relevant provisions of the Social Security Act include the Title IV-A Temporary Assistance for Needy Families (TANF) block grant,
Title IV-B child welfare services, Title IV-B promoting safe and stable families, Title IV-E funds for foster care, Title IV-E funds for
adoption assistance, independent living and education, training and voucher funds, and the Title XX Social Services Block Grant.
19
In addition, a local match is required for the Title IV-B promoting safe and stable families fund.
20
Florida Department of Children and Families, A Comprehensive, Multi-Year Review of the Revenues, Expenditures, and Financial
Position of All Community-Based Care Lead Agencies with System of Care Analysis, p. 3 (Dec. 1, 2023)
https://www.myflfamilies.com/services/child-family/lmr (last visited Jan. 6, 2024).
21
Supra, FN 10 at 3.
22
Ch. 2011-62, L.O.F.
23
Florida Senate Analysis of 2011 Senate Bill 2146, p. 3 (April 1, 2011)
https://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=2011s2146.bc.DOCX&DocumentType=Analysis&BillNu
mber=2146&Session=2011 (last visited Jan. 26, 2024).
24
Supra, FN 3 at 4-5. At the time of DCF’s annual report, the carry-forward balance for FY 2023-24 was not yet determined.
25
S. 409.991(4), F.S. STORAGE NAME: h1061e.HCA PAGE: 7
DATE: 2/15/2024
The equity allocation model weights the proportions of the child population, the child abuse hotline
workload, and the children in care according to the following formula:
The proportion of the child population is weighted at 5% of the total.
The proportion of the child abuse hotline workload is weighted at 35% of the total.
The proportion of the children in care is weighted at 60% of the total.
26
The FY 2023-24 GAA provides the following core service funding amounts to CBC’s:
Community-based Care Lead Agency Core Service Funding for FY 2023-24
Big Bend CBC (Northwest Florida Health Network)-West $55,032,652
Big Bend CBC (Northwest Florida Health Network)-East $35,459,931
Partnership for Strong Families $31,401,300
Kids First of Florida $12,525,871
Family Support Services of North Florida $49,018,528
St Johns Board of County Commissioners (Family Integrity Program) $7,683,739
Community Partnership for Children $43,440,511
Kids Central $54,912,909
Embrace Families $60,761,737
Heartland for Children $46,721,076
Community-Based Care of Brevard (Brevard Family Partnerships) $29,292,110
Communities Connected for Kids $24,247,000
Family Support Services of Suncoast $87,553,887
Safe Children Coalition $34,861,493
Children’s Network of Hillsborough $75,448,412
Children’s Network of Southwest Florida $53,746,134
ChildNet (Palm Beach) $38,086,728
ChildNet (Broward) $60,952,428
Citrus Family Care Network $76,440,546
Total state-appropriated funds available for CBC’s for FY 2023-24 was $1.331 billion.
27
In addition, some CBCs receive revenue from local sources such as local government, private
businesses, and not-for-profit foundations.
28
Risk Pool
Total new funding available to CBC’s varies by year but is generally a small percentage of the total
funding for CBC services. This means that a CBC’s funding does not change significantly year to year.
When extenuating circumstances result in increased expenditures for CBC’s, the funding through the
formula does not change significantly. Thus s. 409.990, F.S., establishes a risk pool for lead agencies.
The risk pool is intended to mitigate the financial risk to eligible lead agencies.
CBC’s must apply for risk pool funding, and then a DCF secretary-appointed risk pool peer review
committee reviews and assesses all risk pool applications. The committee includes both DCF and non-
26
S. 409.991(2), F.S.
27
Supra, FN 10, at 5.
28
Supra, FN 10 at 5. STORAGE NAME: h1061e.HCA PAGE: 8
DATE: 2/15/2024
applicant CBC representatives. The peer review committee then reports its findings and
recommendations to the secretary, providing, at a minimum:
Justification for the specific funding amount required by the risk pool applicant based on the
current year's service trend data, including validation that the applicant's financial need was
caused by circumstances beyond the control of the lead agency management;
Verification that the proposed use of risk pool funds meets at least one of the purposes
specified in paragraph (c); and
Evidence of technical assistance provided in an effort to avoid the need to access the risk pool
and recommendations for technical assistance to the lead agency to ensure that risk pool funds
are expended effectively and that the agency's need for future risk pool funding is diminished.
Upon approval by the secretary of a risk pool application, the department may request funds from the
risk pool in accordance with s. 216.181(6)(a).
The four purposes for which the community-based care risk pool shall be used include:
Significant changes in the number or composition of clients eligible to receive services.
Significant changes in the services that are eligible for reimbursement.
Continuity of care in the event of failure, discontinuance of service, or financial misconduct by a
lead agency.
Significant changes in the mix of available funds.
The Legislature appropriates funding for the risk pool. The amount appropriated varies by year; for FY
23-24, the Legislature appropriated $3.0 million for the risk pool.
29
In FY 2022-23, two CBC’s applied
for risk pool funding, and one of the two (Embrace Families) was approved and awarded $3.1 million.
30
2022 and 2024 Reports on Allocation Options
Current law sets monthly reporting requirements for DCF regarding its case management services or
case management services provided by CBCs or their subcontractors. At a minimum, DCF must
publish the following data points on its website by the 15
th
day of each month:
31
1. The average caseload of case managers, including only filled positions;
2. The total number and percentage of case managers who have 25 or more cases on their
caseloads;
3. The turnover rate for case managers and case management supervisors for the previous 12
months;
4. The percentage of required home visits completed; and
5. Performance on outcome measures required pursuant to s. 409.997 for the previous 12 months.
29
Supra, FN 10, at 3.
30
Department of Children and Families, Risk Pool Peer Review Committee, Executive Summary Report, Fiscal Year 2022-23,
https://www.myflfamilies.com/sites/default/files/2023-05/Risk_Pool_Executive_Summary_FY22-23.pdf, p. 2.
31
S. 409.988(1)(k), F.S. STORAGE NAME: h1061e.HCA PAGE: 9
DATE: 2/15/2024
Procurement by CBCs and Civil Penalties
Federal Requirements Governing Procurement by CBCs
The federal government awards federal program funds to DCF as the federal awarding agency or pass-
through entity. Current law defines the pass-through entity as a non-federal entity that provides a
subaward to a subrecipient to carry out part of a federal program. A non-federal entity means a state,
local government, indigenous tribe, institution of higher education, or nonprofit organization that carries
out a federal award as a recipient or subrecipient.
32
CBCs must comply with state and federal statutory requirements and agency rules in the provision of
contractual services.
33
To determine which federal rules apply to CBCs, DCF must first determine
whether CBCs meet the federal classification of subrecipient or contractor. DCF, as the pass-through
entity, must make a case-by-case determination whether each agreement it makes for the
disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient
or a contractor. The pass-through entity must use judgment in classifying each agreement as a
subaward or a procurement contract. The substance of the relationship is more important the form of
the agreement.
34
The table below describes the criteria that DCF must use to determine whether a CBC is a subrecipient
or contractor; CBC’s meet the criteria for subrecipients.
The Subrecipient Classification
35
The Contractor Classification
36
Determines a person’s eligibility for federal assistance
Providers goods and services within normal
business operations
Has its performance measured in relation to whether
objectives of a federal program were met
Provides similar goods or services to many different
purchasers
Has responsibility for programmatic decision-making Normally operates in a competitive environment
Must adhere to applicable federal program
requirements specified in the federal award
Provides goods or services that are ancillary to the
operation of the federal program
Uses federal funds to carry out a program for a public
purpose authorized in statute (as opposed to providing
goods or services for the benefit of a pass-through
entity)
Is not subject to compliance requirements of the
federal program as a result of the agreement with
the pass-through entity.
At the time of DCF’s subaward to the subrecipient CBC, the DCF must put the CBC on notice of all
federal requirements to ensure the federal award is used in accordance with Federal statutes,
regulations, and the terms and conditions of the federal award.
37
DCF must evaluate each CBC’s risk of
noncompliance with federal statutes, regulations, and terms and conditions of the subaward for
purposes of determining the appropriate subrecipient monitoring protocols.
38
The federal government
authorizes the DCF to consider taking enforcement action against noncompliant subrecipients.
39
The federal government delegates certain federal subaward enforcement responsibilities to DCF. If a
CBC fails to comply with federal law or the terms and conditions of a federal award, DCF may impose
32
2 C.F.R. § 200.1.
33
S. 409.988(1)(i), F.S.
34
2 C.F.R. § 200.331.
35
2 C.F.R. § 200.331(a).
36
2 C.F.R. § 200.331(b).
37
2 C.F.R. § 200.332(a)(2).
38
2 C.F.R. § 200.332(b).
39
2 C.F.R. § 200.332(h). STORAGE NAME: h1061e.HCA PAGE: 10
DATE: 2/15/2024
additional conditions
40
on the subrecipient or contractor. If DCF determines that noncompliance cannot
be remedied by imposing additional conditions, DCF may take one of more the following actions:
41
1. Temporarily withhold cash payments pending correction of the deficiency by the non-federal
entity or take more serve enforcement action.
2. Deny all or part of the cost of the activity or action not in compliance.
3. Wholly or partly suspend or terminate the federal award.
4. Initiate suspension or debarment proceedings.
5. Withhold further federal awards for the project or program.
6. Take other remedies that are legally available.
Under federal law, a nonprofit organization that carries out a Federal award as a recipient or
subrecipient (i.e., a CBC) must provide for full and open competition in procuring goods and services.
42
When the value of the procurement for property or services under a federal award does not exceed the
federal simplified acquisition threshold of $250,000,
43
or a lower threshold established by a non-federal
entity, formal procurement methods are not required.
44
When the value of the procurement for property
or services under a federal financial assistance award exceed the federal simplified acquisition
threshold of $250,000, or a lower threshold established by a non-federal entity, formal procurement
methods are required.
45
A CBC may conduct noncompetitive procurements with federal award dollars if:
1. the acquisition of services does not exceed an established micro-purchase threshold,
2. the item is available only from a single source,
3. there is public exigency or an emergency,
4. the federal awarding agency or pass-through entity expressly authorizes a noncompetitive
procurement in response to a written request from the non-Federal entity
46
, or
5. competition is deemed inadequate after solicitation of a number of sources.
47
State Law Governing Procurement by CBC’s
In Florida, chapter 287 governs the procurement of commodities and contractual services. Generally, if
a procurement request for commodities or contractual services exceeds $35,000, the competitive
solicitation process is mandatory.
48
However, purchases of certain contractual services and
commodities are exempt from this requirement, such as:
Health services involving examination, diagnosis, treatment, prevention, medical consultation, or
administration.
Services provided to persons with mental or physical disabilities by nonprofits recognized as
501(c)(3)s by the IRS.
Medicaid services delivered to Medicaid eligible recipients.
Family placement services.
Prevention services related to mental health operated by nonprofits – including drug abuse
prevention programs, child abuse prevention programs, and shelters for runaways.
49
40
Additional conditions include adjusting specific federal award conditions, requiring payments as reimbursements rather than advance
payments, requiring more detailed financial reports, requiring additional project monitoring, requiring technical or management
assistance, and establishing additional prior approvals. 2 C.F.R. 200.208.
41
2 C.F.R. § 200.339.
42
2 C.F.R. § 200.318-320.
43
48 C.F.R. § 2.101.
44
2 C.F.R. § 200.320(a).
45
2 C.F.R. § 200.320(b).
46
e.g., a DCF waiver to bypass competitive procurement requirements that create inefficiencies or inhibit of the performance of the
CBC’s duties.
47
2 C.F.R. § 200.320(c)(1)-(5).
48
Ss. 287.057(1), 287.017(2), F.S.
49
S. 287.057(3)(e), F.S. STORAGE NAME: h1061e.HCA PAGE: 11
DATE: 2/15/2024
If an agency receives fewer than two responsive bids, proposals, or replies, the procuring agency may
negotiate with the vendor on the best terms and conditions.
50
Also, an agency may award a non-
competitive government contract if state or federal law prescribes with whom the agency must contract
or if the rate of payment or the receipt of funds is established during the appropriations process.
51
CBCs have additional limitations on their procurement under state law beyond the general
requirements in ch. 287, F.S. Specifically, CBC’s cannot directly provide more than 35 percent of all
child welfare services unless the CBC can demonstrate a need within the CBC’s geographic service
area to exceed this threshold. Current law requires community alliances
52
to review the CBC’s
justification for need and to recommend whether DCF should approve or deny the CBC’s request for an
exemption from the 35 percent threshold.
53
When CBCs outsource contractual services, the
subcontracts must specify how the third-party vendor helps the CBC meet established performance
standards under the child welfare results-oriented accountability system.
54
.
CBC Governance and Expenditures
Organization and Board Responsibilities
Each CBC must be organized as a Florida corporation or a governmental entity and be governed by a
board of directors or a board committee composed of by board members.
55
The membership of the
board of directors or board committee must be described in the bylaws or articles of incorporation of
each lead agency.
For boards of directors, at least 75% of the membership must consist of Florida residents, and
at least 51% of these Florida resident members must reside within the CBC service area. The
board of directors must have the power to hire the CBC’s executive director.
For board committees, 100% of its membership must consist of persons residing within the CBC
service area. The board committee must have the power to confirm the selection of an
executive director.
56
Regardless of organization, each governing body must approve its CBC budget, set the CBC’s
operational policy and procedures, and demonstrate financial responsibility through an organized plan
for regular fiscal audits and the posting of a performance bond.
57
Conflict of Interest Requirements
Section 409.987, F.S, addresses conflict of interests in CBC board decision making. A CBC board
member or officer must disclose to the board any activity that may reasonably be construed to be a
conflict of interest before that activity may be initially considered and approved. This mandatory
disclosure also applies to contract renewals.
58
A conflict of interest transaction manifests when a CBC
board member or officer, or their relatives within the third degree of consanguinity by blood or marriage,
does any of the following acts:
enters into a contract or other transaction with the CBC for goods or services.
holds a direct or indirect interest in a corporation, limited liability corporation, partnership,
limited liability partnership, or other business entity that conducts or proposes business with the
CBC.
50
S. 287.057(6), F.S.
51
S. 287.057(11), F.S.
52
Current law requires DCF to establish community alliances in each county to provide a focal point for community participation and
governance of community-based services. s. 20.19(5), F.S.
53
S. 409.988(1)(j). F.S.
54
Id.
55
e.g., St. Johns County Board of Commissioners is the CBC serving St. Johns County in Circuit 7.
56
S. 409.987(4), F.S.
57
S. 409.987(4), F.S.
58
S. 409.987,(7)(b) F.S. STORAGE NAME: h1061e.HCA PAGE: 12
DATE: 2/15/2024
knowingly obtains a direct or indirect personal, financial, professional, or other benefit as a
result of the relationship of such board member or officer, or their relatives, with the CBC.
59
A rebuttable presumption of a conflict of interest exists if the board acted on a proposed conflict of
interest transaction without prior notice on the board’s meeting agenda. The meeting agenda must
clearly identify the existence of a potential conflict of interest for the proposed transaction. At the
meeting, if an affirmative vote of two-thirds of all other non-interested board members present approve
the proposed transaction, only then can the CBC board member or officer engage in the conflict of
interest activity.
60
The interested CBC board member or officer must recuse himself or herself from the
vote.
61
However, if the proposed transaction is not approved, the CBC board member or officer must
decide whether to provide written notice of the board member’s or officer’s intent to not pursue the
proposed transaction or to withdraw from CBC leadership.
62
If a conflict-of-interest contract entered into between the CBC and a CBC board member or officer (or
their relatives) was not properly disclosed, the contract is voidable. The board may terminate the
contract with the formal consent of at least 20% of the voting interests of the CBC.
CBC Executive Compensation
A CBC lead agency administrative employee cannot receive a salary, whether in base pay or base pay
plus bonus or incentive payments, in excess of 150% of the annual salary paid to the DCF Secretary
from state-appropriated funds – including state-appropriated federal funds.
63
Additional federal
requirements also apply. In practice, this is currently a maximum of $350,449.71 of combined state
and federal funds, of which only $213,000 can be federal funds. According to DCF, during recent
audits of CBC spending on executive compensation, some CBCs stated that because they had multiple
DCF contracts, they believed they could exceed this cap.
64
Remedies
As an immediate remedy for failure to comply with contract terms or in the event of performance
deficiencies, all contracts between DCF and the CBCs must provide for tiered interventions and
graduated penalties. Examples of available interventions and penalties include:
Enhanced monitoring and reporting.
Corrective action plans.
Requirements to accept DCF’s technical assistance and consultation.
Financial penalties requiring a CBC to reallocate funds from administrative costs to direct care
for children.
Early termination of contracts.
65
In the event that DCF determines health, safety, and welfare of the dependent children currently cared
for or supervised by a CBC is in imminent danger, DCF may petition a court of competent jurisdiction
for the appointment of a receiver to ensure the continued health, safety, and welfare of the dependent
children.
66
According to current law, DCF can make at least two arguments in a receivership petition:
DCF determines that conditions exist in the CBC which present an imminent danger to the
health, safety, or welfare of dependent children under the CBC’s care or supervision.
The CBC cannot meet its current financial obligations to its employees, contractors, or foster
parents. The issuance of bad checks or the existence of delinquent obligations for payment of
59
S. 409.987(7)(a), F.S.
60
S. 409.987(7)(c), F.S.
61
S. 409.987(e), F.S.
62
S. 409.987(7)(d), F.S.
63
S. 409.992(3), F.S.
64
Florida Department of Children and Families, Agency Analysis of 2024 House Bill 1061, p. 6.
65
S. 409.996(d), F.S.
66
S. 409.994, F.S. STORAGE NAME: h1061e.HCA PAGE: 13
DATE: 2/15/2024
salaries, utilities, or invoices for essential services or commodities constitute prima facie
evidence that the CBC lacks the financial ability to meet its financial obligations.
67
The court may appoint a receiver for up to 90 days. DCF may petition for additional 30-day extensions.
Sixty days after the appointment of the receiver, and every 30 days until the receivership is terminated,
DCF must submit to the court an assessment of the CBC’s ability to ensure the health, safety, and
welfare of the dependent children under its supervision.
68
Forensic Audits of CBCs
In December 2021, the DCF Inspector General (IG) identified 11 CBCs that routinely transferred funds
to related parties. The IG expressed concern over this practice because funds transferred to related
parties compromises DCF’s ability to track further expenditures of state and federal dollars. Current law
mandates that CBCs abide by DCF’s financial guidelines and allow for a regular independent auditing
of its financial activities,
69
and thus DCF procured the services of two auditing firms with the expertise
to perform a forensic audit of these CBCs. As of January 2024, these auditing firms completed forensic
examination reports for 6 CBCs and submitted them to DCF in August 2023.
70
In response to the findings of the initial forensic examinations, the Department issued Corrective Action
Plans (CAPs) to address key findings which included:
Non-compliant contract procurement for related and non-related entities.
Receipt of Paycheck Protection Program Loans that were not properly reimbursed to the State.
Board approval of deficit budgets.
Allocated officer compensation in excess of mandatory caps.
Non-compliance with Cost Allocation Plans.
71
67
S. 409.994, F.S.
68
S. 409.994(2)(d), F.S.
69
S. 409.988(1)(c), F.S.
70
The six CBC’s were Northwest Florida Health Network, Embrace Families, Partnership for Strong Families, Children’s Network of
Southwest Florida, Kids First of Florida, and Brevard Family Partnership. The audit reports for the first six CBC’s are at
https://www.myflfamilies.com/community-based-care-lead-agencies-audit-findings (last visited Jan. 26, 2024).
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DATE: 2/15/2024
Effect of the Bill
Contractual Obligations
Contract Term
The bill prohibits DCF from renewing a CBC contract, instead requiring DCF to reprocure it at the end
of the five-year term. The bill allows DCF to extend a CBC contract for one year.
General Governance
The bill requires board members to provide fiduciary oversight to prevent conflicts of interest, to
promote accountability and transparency for the system of care, and to protect state and federal
funding from misuse. The bill requires at least 75 percent of the membership of the board of directors or
the board committee be composed of Florida residents. CBCs must ensure that board members
participate in annual training related to their responsibilities.
Related Parties and Conflict of Interest Transactions
The bill restricts the ability of CBCs to transact with third-party entities that are directly or indirectly
related to the CBC itself by requiring CBCs to competitively procure all contracts with related parties in
excess of $35,000.
The bill defines related party as “any entity of which a director or an executive of the entity is also
directly or indirectly related to, or has a direct or indirect financial or other material interest in, the lead
agency. The term also includes any subsidiary, parent entity, associate firm, or joint venture, or any
entity that is controlled, influenced, or managed by another entity or an individual related to such entity,
including an individual who is, or was within the immediately preceding 3 years, an executive officer or
a board member of the entity.”
The bill requires the board to disclose any known or actual conflicts of interest – including with related
parties for the provision of management, administrative services, or oversight.
The bill expands the definition of conflict of interest to cover director level positions in the CBCs and the
relatives of a board member, director, or officer of the CBCs. The bill prohibits directors and their
relatives from knowingly obtaining a direct or indirect personal, financial, professional, or other benefit
as a result of the conflict of interest relationship.
The bill requires DCF to assess a civil penalty of $5,000 per occurrence on a CBC for each known and
potential conflict of interest that the CBC fails to disclose to DCF. In addition, the bill requires DCF to
assess a civil penalty on a CBC when that CBC procures a contract for which a conflict of interest was
not disclosed to DCF prior to the execution of the contract. For the first offense, DCF must assess a
civil penalty of $50,000. For each subsequent offense, DCF must assess a civil penalty of $100,000.
Finally, the bill requires the CBCs to reprocure transactions that involved a conflict of interest.
The bill authorizes DCF to prohibit the execution of a contract for which a conflict of interest exists, or
will exist after execution.
CBC Executive Pay
The bill prohibits a CBC administrative employee from receiving a salary, whether base pay or base
pay combined with any bonus or incentive payments from the CBC or any related party, in excess of
150 percent of the annual salary paid to the DCF Secretary from state-appropriated funds. The bill
applies this limitation regardless of the number of contracts a CBC executes with DCF.
Financial Integrity
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DATE: 2/15/2024
The bill requires the CBCs to comply with regular, independent auditing of its financial activities,
including any requests for records associated with such financial audits within the timeframe
established by DCF or its contracted vendors.
Reporting Requirements
The bill expands the minimum data points that the CBCs must publish on its website by the 15th day of
each month. Specifically, the bill requires the CBCs to report four new data points:
1. The number of unlicensed placements for the previous month.
2. The percentages and trends for foster parent and group home recruitment and licensure for the
previous month.
3. The percentage of families being served through family support, in-home, and out-home
services for the previous month.
4. The percentage of cases that converted from nonjudicial to judicial for the previous month.
Funding Methodology
The bill modifies the means by which the funding level for each CBC is determined by replacing the
Equity Allocation Model with an actuarially-sound, reimbursement-based methodology. The bill defines
which variables are to be considered “operational and fixed costs” and reaffirms that “core services
funding” refers to all funds allocated to a CBC with certain exceptions. Operational and fixed costs
include, but are not limited to, administrative expenditures, lease payments, asset depreciation, utilities,
and mandated activities such as training and contract management. Core services funds do not
include funding a CBC receives for independent living services, adoption subsidies, child protective
investigation training, nonrecurring funds, mental health wrap-around services, special projects, and the
Guardianship Assistance Program.
The bill directs DCF to work in collaboration with CBCs and child welfare providers to develop a new
funding methodology. At the least, the methodology must be actuarily sound, reimbursement based,
designed to incentivize efficient and effective CBC operations. It must also promote prevention, family
preservation, and child permanency. When developing the proposed rates, the bill requires that the
new methodology consider the variables that contribute to a CBC’s cost of providing child welfare
services; such as, direct costs for in-home and out-of-home care, for prevention services, and
expenses associated with operational and fixed costs. It must also be scalable to account for regional
cost-of-living differences.
The bill includes three reporting requirements to present the new methodology, to provide monthly
progress reports on the development of the methodology, and to provide annual, recommended
updates to the methodology that account for any changes to variable costs that serve as the basis for
each CBC allocation:
1. From July 2024 through October 2024, DCF is required to submit monthly updates to the
Governor and Legislature on the activities and progress in developing the new funding
methodology.
2. By December 1, 2024, the bill requires DCF to submit the final report on the new methodology
to the Governor and Legislature for consideration during the 2025 Session. The report shall
describe the proposed methodology, the data used to develop the methodology, and include
proposed rates and allocations for each CBC that may not exceed the total amount of funding
provided in the General Appropriations Act for Fiscal Year 2024-25. The report shall also
include risk mitigation recommendations should a CBC’s proposed allocation negatively impact
operations or result in a reduction of services to children.
Beginning October 31, 2025, the bill requires DCF to submit a report annually including recommended
adjustments to the proposed methodology that incorporate fluctuations to the underlying criteria used to
calculate the allocations.
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The bill requires CBCs to competitively procure all contracts, consistent with the simplified acquisition
threshold as specified the Code of Federal Regulations; the simplified acquisition threshold is currently
$250,000. The bill requires DCF to establish by contract financial penalties or sanctions that DCF must
enforce when a CBC is not compliant with applicable local, state, or federal law for the procurement of
commodities or contractual services.
The bill requires CBCs to procure contracts for real property and professionals services according to
established purchasing practices. If a CBC sells, transfers, or dispossesses of real property procured
during the contract term, the bill requires any resulting funds from the sell, transfer, or dispossession to
be returned to DCF. When DCF or a CBC terminates a contract, the bill grants DCF immediate rights to
the retention and ownership of all real property that the CBC procured.
When a CBC subcontracts for the provision of services, the bill requires subcontracts in excess of
$250,000 to comply with the federal competitive procurement process. The bill prohibits a CBC from
subcontracting administrative and management functions.
The bill prevents a CBC from providing more than 35 percent of all child welfare services unless it can
demonstrate a need within its geographic service area where there is a lack of viable providers
available to perform the necessary services. The bill limits the waiver period to two years. The bill
requires CBCs to reprocure each subcontract before the end of the two-year waiver period. If a CBC
wishes to extend an active waiver to exceed the 35 percent cap, the bill requires the CBC to submit a
new, evidenced-based exemption request to DCF and the community alliance for the geographic
service area (if a community alliance serves the area) for approval each time the CBC wishes to extend
an active waiver.
CBC Receivership
The bill lowers the threshold level of danger at which DCF can petition the court for a receivership of a
CBC. Specifically, the bill allows DCF to file a petition in court for the receivership of a CBC when DCF
determines that conditions exist at the CBC which present any danger to the health, safety, or welfare
of the dependent children under that CBC’s care or supervision.
The bill also lowers the threshold risk of financial insolvency at which DCF can petition the court for a
receivership of a CBC. Specifically, the bill allows DCF to file a petition in court the receivership of a
CBC when DCF determines a CBC is unlikely to meet its current financial obligations to its employees,
contractors, or foster parents.
Remedies for Noncompliance or Inadequate Performance
The bill establishes contractual actions that DCF may enforce against a CBC if the CBC fails to comply
with contract terms or experiences performance deficiencies in the opinion of DCF. Specifically, the bill
authorizes DCF to reclaim funds from a CBC’s administrative costs as a financial penalty when the
CBC fails to provide timely, sufficient resolution of deficiencies resulting in a corrective action plan or
other performance improvement plan issued by DCF. The bill allows financial penalties to manifest as
liquidated damages.
If DCF reclaims funds for a CBC’s administrative costs as a financial penalty, the bill requires DCF to
spend those funds to support service delivery of quality improvement activities for children in the CBC’s
care.
The bill requires contracts between DCF and CBCs to include a provision that requires a CBC pay
sanctions and disincentives for failure to comply with contractual terms. The bill requires DCF to
establish a schedule of daily monetary sanctions or disincentives for CBCs. The bill requires the
schedule of daily monetary sanctions or disincentives to be incorporated by reference into the contracts
between DCF and CBCs. The bill vests the right to determine the monetary value of liquidated
damages with DCF. STORAGE NAME: h1061e.HCA PAGE: 17
DATE: 2/15/2024
The bill obligates DCF to submit two special implementation reports to the Governor, the President of
the Senate, and the Speaker of the House of Representatives on the rules and polices adopted and
other actions taken to implement the bill’s requirements. The first special implementation report is due
September 30, 2024. The second special implementation report is due February 1, 2025.
The bill provides an effective date of July 1, 2024.
B. SECTION DIRECTORY:
Section 1: Amending s. 409.987, F.S., relating to lead agency procurement; boards; conflicts of
interest.
Section 2: Amending s. 409.988, F.S., relating to community-based care lead agency duties; general
provisions.
Section 3: Creating s. 409.9913, F.S., relating to the funding methodology to allocate funding to
community-based care lead agencies.
Section 4: Amending s. 409.992, F.S., relating to lead agency expenditures.
Section 5: Amending s. 409.994, F.S., relating to community-based care lead agencies; receivership.
Section 6: Amending s. 409.996, F.S., relating to duties of the department of children and families.
Section 7: Creating an unnumbered section of law relating to reporting requirements.
Section 8: Providing an effective date.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill has no fiscal impact for FY 2024-25 as the only requirements during this fiscal year are for
reports providing monthly updates on the progress of developing the methodology and for the
submission of the proposed funding methodology. For FY 2025-26, the bill specifies that the sum of
the proposed allocations for each CBC may not exceed the total amount appropriated to CBCs for
Fiscal Year 2024-25; however, to the extent that the proposed methodology suggests an amount to
each CBC that is different that its FY 2024-25 allocation, there may be either a positive or negative
fiscal impact to individual lead agencies.
The bill does not require the Legislature to adopt the proposed methodology for FY 2025-26, but
requires due consideration of such when developing the General Appropriations Act for FY 2025-
26. Furthermore, while the bill specifies that each annual update may not exceed the total provided
to CBCs in the prior fiscal year, it does not preclude DCF from making a request for additional CBC
funding through the Legislative Budget Request process.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR: STORAGE NAME: h1061e.HCA PAGE: 18
DATE: 2/15/2024
D. The elimination of the equity allocation model and the substitution of an actuarially sound,
reimbursement-based funding methodology may redistribute funding among the CBCs beginning Fiscal
Year 2025-26. The specific impact to each lead agency is indeterminate.
E. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
DCF has sufficient rulemaking authority to carry out the provisions of this bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
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DATE: 2/15/2024
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On January 29, 2024, the Children, Families, & Seniors Subcommittee adopted a strike-all
amendment and reported the bill favorably as a committee substitute. The amendment:
Gradually transitions the allocation for funds for CBC lead agencies to an actuarially-based
tiered payment model over four state fiscal years, starting with 2024-2025.
o Year One is a hold harmless year, and DCF must collaborate with the CBC lead
agencies to refine the actuarially-based tiered payment model.
o Years Two and Three blend the current and actuarial payment models.
o Year Four and beyond sets 100 percent of payments according to the actuarially-
based tiered payment model.
Establishes reporting requirements for DCF on the details of, and CBC lead agency
performance under, the actuarially-based tiered payment model:
o Starting October 31, 2024, DCF must submit quarterly reports to the Governor,
President of the Senate, and Speaker of the House of Representatives about the
actuarially-based tiered payment model implementation and the Tier 3 incentive
payment program.
o Starting in 2027, DCF must submit an annual report that evaluates the CBC lead
agencies’ fiscal performance under the actuarially-based tier payment model and any
funding adjustment and tiered payment model adjustment recommendations
proposed.
Requires a CBC lead agency with an active waiver to exceed the 35 percent statutory cap
on providing child welfare services to submit a new, evidenced-based exemption request to
DCF and the community alliance for the geographic service area (if a community alliance
serves the area) for approval each time the CBC lead agency wishes to extend an active
waiver.
Requires DCF to submit two reports on the rules adopted, the policies promulgated, and
actions implemented to carry out the provisions of the bill; the first report is due September
30, 2024, and the second report is due February 1, 2025.
On February 13, 2024, the Health Care Appropriations Subcommittee adopted one amendment
that:
Removes the 3-tiered funding model for CBC’s, the multi-year on-ramp to full appropriations
using the model, and the quarterly reports by DCF to the Legislature on the funding model;
Requires DCF, in collaboration with lead agencies and child welfare providers, to develop a
methodology for allocating core services funding;
Specifies requirements for the funding methodology, such as being actuarially sound and
reimbursement based, and incentivizing efficient and effective lead agency operation,
prevention, family preservation, and permanency;
Requires lead agencies and providers to submit detailed cost and expenditure data
requested by DCF for the development of the funding methodology;
Requires a report by December 1, 2024 that presents the proposed funding methodology,
and that the Legislature must give due consideration to the allocations in the report for CBC
appropriations beginning in the 2025-26 fiscal year;
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DATE: 2/15/2024
Requires DCF to provide a report to the Governor and Legislature each year including
recommendations for adjustments to the funding methodology:
o Specifies that DCF must follow standard appropriations procedures, and that the
report can recommend total funding above what CBC’s most recently received as
long as DCF also submits a budget request,
o The methodology must include risk mitigation strategies that ensure that no lead
agency experiences a reduction in funding that would be detrimental to operations or
result in a reduction in services to children,
o Updated recommendations to the proposed methodology must be based on, at a
minimum, updated expenditure data, cost-of-living adjustments, market dynamics, or
other catchment area variations;
Requires DCF to provide monthly reports during the first part of the next fiscal year (July
through October) to update the Legislature on the development of the proposed funding
methodology.
The analysis is drafted to bill as amended by the Health Care Appropriations Subcommittee.