Florida Senate - 2024 CS for CS for CS for SB 536 By the Committee on Fiscal Policy; the Appropriations Committee on Health and Human Services; the Committee on Children, Families, and Elder Affairs; and Senator Garcia 594-03821-24 2024536c3 1 A bill to be entitled 2 An act relating to community-based child welfare 3 agencies; amending s. 409.016, F.S.; defining the term 4 management functions; amending s. 409.987, F.S.; 5 revising requirements for contracts the Department of 6 Children and Families has with community-based care 7 lead agencies; providing duties for board members of 8 lead agencies; requiring that lead agencies ensure 9 that board members participate in certain annual 10 training; requiring the posting of a fidelity bond; 11 revising the definition of the term conflict of 12 interest; defining the term related party; 13 requiring the lead agencys board of directors to 14 disclose to the department any known actual or 15 potential conflicts of interest; prohibiting a lead 16 agency from entering into a contract or being a party 17 to any transaction with related parties if a conflict 18 of interest is not properly disclosed; prohibiting a 19 lead agency from entering into a contract or being a 20 party to any transaction with related parties for 21 officer-level or director-level staffing to perform 22 management functions; requiring the contract with the 23 department and the lead agency to specify the 24 administrative functions and services that the lead 25 agency may subcontract; authorizing a lead agency to 26 enter into certain contracts or be a party to certain 27 transactions, provided that a certain requirement for 28 fees, rates, and prices paid is met and any conflict 29 of interest is properly disclosed; requiring 30 department contracts to impose contractual penalties 31 on lead agencies for undisclosed conflicts of 32 interest; providing applicability; requiring certain 33 contracts to be reprocured; authorizing the department 34 to recoup lead agency expenses for the execution of 35 certain contracts; amending s. 409.988, F.S.; revising 36 lead agency duties; repealing s. 409.991, F.S., 37 relating to allocation of funds for community-based 38 care lead agencies; creating s. 409.9913, F.S.; 39 defining the terms core services funding and 40 operational and fixed costs; requiring the 41 department, in collaboration with the lead agencies 42 and providers of child welfare services, to develop a 43 specific funding methodology for the allocation of 44 core services which must meet certain criteria; 45 requiring the lead agencies and providers of child 46 welfare services to submit to the department certain 47 financial information; requiring the department to 48 submit to the Governor and the Legislature certain 49 reports by specified dates; providing construction; 50 authorizing the department to include certain rates 51 and total allocations in certain reports; requiring 52 the Legislature to allocate funding to the lead 53 agencies with due consideration of the specified 54 funding methodology, beginning with a specified fiscal 55 year; prohibiting the department from changing a lead 56 agencys allocation of funds provided in the General 57 Appropriations Act without legislative approval; 58 authorizing the department to approve certain risk 59 pool funding for a lead agency; requiring the 60 department to submit to the Governor and the 61 Legislature certain monthly reports for a specified 62 period of time; amending s. 409.992, F.S.; revising 63 requirements for lead agency practices in the 64 procurement of commodities and contractual services; 65 requiring the department to impose certain penalties 66 for a lead agencys noncompliance with applicable 67 procurement law; requiring the contract between the 68 department and the lead agency to specify the rights 69 and obligations with regard to real property held by 70 the lead agency during the term of the contract; 71 providing applicability of certain limitations on the 72 salaries of community-based care lead agency 73 administrative employees; amending s. 409.994, F.S.; 74 revising the conditions under which the department may 75 petition a court for the appointment of a receiver for 76 a community-based care lead agency; amending s. 77 409.996, F.S.; revising requirements for contracts 78 between the department and lead agencies; revising the 79 actions the department may take under certain 80 circumstances; making a technical change; providing 81 duties of the department; requiring the department, by 82 specified dates, to submit certain reports to the 83 Governor and the Legislature; providing an effective 84 date. 85 86 Be It Enacted by the Legislature of the State of Florida: 87 88 Section 1.Present subsections (3) and (4) of section 89 409.016, Florida Statutes, are redesignated as subsections (4) 90 and (5), respectively, and a new subsection (3) is added to that 91 section, to read: 92 409.016Definitions.As used in this chapter: 93 (3)Management functions means: 94 (a)Planning, directing, organizing, coordinating, and 95 carrying out oversight duties of the lead agency; 96 (b)Contracting for officer or director level staffing in 97 performance of the planning, directing, organizing, 98 coordinating, and carrying out oversight duties of the lead 99 agency. 100 Section 2.Subsections (3) and (4) and paragraphs (a) and 101 (b) of subsection (7) of section 409.987, Florida Statutes, are 102 amended, and paragraph (g) is added to subsection (7) of that 103 section, to read: 104 409.987Lead agency procurement; boards; conflicts of 105 interest. 106 (3)Notwithstanding s. 287.057, the department shall use 5 107 year contracts with lead agencies. The department may only 108 extend a contract for a period of 1 to 5 years, in accordance 109 with s. 287.057, if the lead agency has met performance 110 expectations within the monitoring evaluation. 111 (4)In order to serve as a lead agency, an entity must: 112 (a)Be organized as a Florida corporation or a governmental 113 entity. 114 (b)Be governed by a board of directors or a board 115 committee composed of board members. Board members shall provide 116 oversight and ensure accountability and transparency for the 117 system of care. The board of directors shall provide fiduciary 118 oversight to prevent conflicts of interest, promote 119 accountability and transparency, and protect state and federal 120 funding from misuse. The board of directors shall act in 121 accordance with s. 617.0830. The membership of the board of 122 directors or board committee must be described in the bylaws or 123 articles of incorporation of each lead agency, which must 124 provide that at least 75 percent of the membership of the board 125 of directors or board committee must be composed consist of 126 persons residing in this state, and at least 51 percent of the 127 state residents on the board of directors must reside within the 128 service area of the lead agency. The lead agency shall ensure 129 that board members participate in annual training related to 130 their responsibilities. The department shall set forth minimum 131 training criteria in the contracts with the lead agencies. 132 However, for procurements of lead agency contracts initiated on 133 or after July 1, 2014: 134 1.At least 75 percent of the membership of the board of 135 directors must be composed consist of persons residing in this 136 state, and at least 51 percent of the membership of the board of 137 directors must be composed consist of persons residing within 138 the service area of the lead agency. If a board committee 139 governs the lead agency, 100 percent of its membership must be 140 composed consist of persons residing within the service area of 141 the lead agency. 142 2.The powers of the board of directors or board committee 143 include, but are not limited to, approving the lead agencys 144 budget and setting the lead agencys operational policy and 145 procedures. A board of directors must additionally have the 146 power to hire the lead agencys executive director, unless a 147 board committee governs the lead agency, in which case the board 148 committee must have the power to confirm the selection of the 149 lead agencys executive director. 150 (c)Demonstrate financial responsibility through an 151 organized plan for regular fiscal audits; and the posting of a 152 performance bond; and the posting of a fidelity bond to cover 153 any costs associated with reprocurement and the assessed 154 penalties related to a failure to disclose a conflict of 155 interest under subsection (7). 156 (7)(a)As used in this subsection, the term: 157 1.Activity includes, but is not limited to, a contract 158 for goods and services, a contract for the purchase of any real 159 or tangible property, or an agreement to engage with a lead 160 agency for the benefit of a third party in exchange for an 161 interest in real or tangible property, a monetary benefit, or an 162 in-kind contribution. 163 2.Conflict of interest means when a board member, 164 director, or an officer, or a relative of a board member, 165 director, or an officer, of a lead agency does any of the 166 following: 167 a.Enters into a contract or other transaction for goods or 168 services with the lead agency. 169 b.Holds a direct or indirect interest in a corporation, 170 limited liability corporation, partnership, limited liability 171 partnership, or other business entity that conducts business 172 with the lead agency or proposes to enter into a contract or 173 other transaction with the lead agency. For purposes of this 174 paragraph, the term indirect interest has the same meaning as 175 in s. 112.312. 176 c.Knowingly obtains a direct or indirect personal, 177 financial, professional, or other benefit as a result of the 178 relationship of such board member, director, or officer, or 179 relative of the board member, director, or officer, with the 180 lead agency. For purposes of this paragraph, the term benefit 181 does not include per diem and travel expenses paid or reimbursed 182 to board members or officers of the lead agency in connection 183 with their service on the board. 184 3.Related party means any entity of which a director or 185 an officer of the entity is also directly or indirectly related 186 to, or has a direct or indirect financial or other material 187 interest in, the lead agency. The term also includes any 188 subsidiary firm, parent entity, associate firm, or joint 189 venture. 190 4.3.Relative means a relative within the third degree of 191 consanguinity by blood or marriage. 192 (b)1.For any activity that is presented to the board of a 193 lead agency for its initial consideration and approval after 194 July 1, 2021, or any activity that involves a contract that is 195 being considered for renewal on or after July 1, 2021, but 196 before January 1, 2022, a board member, a director, or an 197 officer of a lead agency shall disclose to the board any 198 activity that may reasonably be construed to be a conflict of 199 interest before such activity is initially considered and 200 approved or a contract is renewed by the board. A rebuttable 201 presumption of a conflict of interest exists if the activity was 202 acted on by the board without prior notice as required under 203 paragraph (c). The board shall disclose any known actual or 204 potential conflicts to the department. 205 2.A lead agency may not enter into a contract or be a 206 party to any transaction with related parties if a conflict of 207 interest is not properly disclosed. A lead agency may not enter 208 into a contract with a related party for officer-level or 209 director-level staffing to perform management functions. The 210 contract with the department and lead agency must specify the 211 administrative functions and services that the lead agency may 212 subcontract For contracts with a lead agency which are in 213 existence on July 1, 2021, and are not subject to renewal before 214 January 1, 2022, a board member or an officer of the lead agency 215 shall disclose to the board any activity that may reasonably be 216 construed to be a conflict of interest under this section by 217 December 31, 2021. 218 3.Subject to the requirements of subparagraph 2., a lead 219 agency may enter into a contract or be a party to any 220 transaction with related parties as long as the fee, rate, or 221 price paid by the lead agency for the commodities or services 222 being procured does not exceed the fair market value for such 223 commodities or services. The lead agency shall disclose any 224 known actual or potential conflicts to the department. 225 (g)1.All department contracts with lead agencies must 226 contain the following contractual penalty provisions: 227 a.Penalties in the amount of $5,000 per occurrence must be 228 imposed for each known and potential conflict of interest, as 229 described in paragraph (b), which is not disclosed to the 230 department. 231 b.If a contract is executed for which a conflict of 232 interest was not disclosed to the department before execution of 233 the contract, the following penalties apply: 234 (I)A penalty in the amount of $25,000 for a first offense. 235 (II)A penalty in the amount of $50,000 for a second or 236 subsequent offense. 237 (III)Removal of the board member who did not disclose a 238 known conflict of interest. 239 2.The penalties for failure to disclose a conflict of 240 interest under sub-subparagraphs a. and b. apply to any contract 241 entered into, regardless of the method of procurement, 242 including, but not limited to, formal procurement, single-source 243 contracts, and contracts that do not meet the minimum threshold 244 for formal procurement. 245 3.A contract procured for which a conflict of interest was 246 not disclosed to the department before execution of the contract 247 must be reprocured. The department shall recoup from the lead 248 agency expenses related to a contract that was executed without 249 disclosure of a conflict of interest. 250 Section 3.Paragraphs (c), (j), and (k) of subsection (1) 251 of section 409.988, Florida Statutes, are amended to read: 252 409.988Community-based care lead agency duties; general 253 provisions. 254 (1)DUTIES.A lead agency: 255 (c)Shall follow the financial guidelines developed by the 256 department and shall comply with regular, independent auditing 257 of its financial activities, including any requests for records 258 associated with such financial audits within the timeframe 259 established by the department or its contracted vendors provide 260 for a regular independent auditing of its financial activities. 261 The results of the financial audit must Such financial 262 information shall be provided to the community alliance 263 established under s. 20.19(5). 264 (j)1.May subcontract for the provision of services, 265 excluding subcontracts with a related party for officer-level or 266 director-level staffing to perform management functions, 267 required by the contract with the lead agency and the 268 department; however, the subcontracts must specify how the 269 provider will contribute to the lead agency meeting the 270 performance standards established pursuant to the child welfare 271 results-oriented accountability system required by s. 409.997. 272 Any contract with an unrelated entity for officer-level or 273 director-level staffing to perform management functions must 274 adhere to the executive compensation provision in s. 409.922(3). 275 2.The lead agency shall directly provide no more than 35 276 percent of all child welfare services provided unless it can 277 demonstrate a need, within the lead agencys geographic service 278 area, where there is a lack of qualified providers available to 279 perform necessary child welfare services. The approval period to 280 exceed the threshold is limited to 2 years to exceed this 281 threshold. After the 2-year period, the lead agency may submit 282 annual 1-year extension requests with a detailed report of all 283 efforts to recruit a qualified provider to perform the necessary 284 services in that geographic service area. If the department 285 determines the lead agency is not making a good faith effort to 286 recruit a qualified provider, it must deny the extension request 287 and require reprocurement. The local community alliance in the 288 geographic service area in which the lead agency is seeking to 289 exceed the threshold shall review the lead agencys 290 justification for need and recommend to the department whether 291 the department should approve or deny the lead agencys request 292 for an exemption from the services threshold. If there is not a 293 community alliance operating in the geographic service area in 294 which the lead agency is seeking to exceed the threshold, such 295 review and recommendation shall be made by representatives of 296 local stakeholders, including at least one representative from 297 each of the following: 298 1.The department. 299 2.The county government. 300 3.The school district. 301 4.The county United Way. 302 5.The county sheriffs office. 303 6.The circuit court corresponding to the county. 304 7.The county childrens board, if one exists. 305 (k)Shall publish on its website by the 15th day of each 306 month at a minimum the data specified in subparagraphs 1.-10. 307 subparagraphs 1.-5., calculated using a standard methodology 308 determined by the department, for the preceding calendar month 309 regarding its case management services. The following 310 information shall be reported by each individual subcontracted 311 case management provider, by the lead agency, if the lead agency 312 provides case management services, and in total for all case 313 management services subcontracted or directly provided by the 314 lead agency: 315 1.The average caseload of case managers, including only 316 filled positions; 317 2.The total number and percentage of case managers who 318 have 25 or more cases on their caseloads; 319 3.The turnover rate for case managers and case management 320 supervisors for the previous 12 months; 321 4.The percentage of required home visits completed; and 322 5.Performance on outcome measures required pursuant to s. 323 409.997 for the previous 12 months. 324 6.The number of unlicensed placements for the previous 325 month; 326 7.The percentages and trends for foster parent and group 327 home recruitment and licensure for the previous month; 328 8.The percentage of families being served through family 329 support services, in-home services, and out-of-home services for 330 the previous month; and 331 9.The percentage of cases that were converted from 332 nonjudicial to judicial for the previous month. 333 10.Childrens legal service staffing rates. 334 Section 4.Section 409.991, Florida Statutes, is repealed. 335 Section 5.Section 409.9913, Florida Statutes, is created 336 to read: 337 409.9913Funding methodology to allocate funding to lead 338 agencies. 339 (1)As used in this section, the term: 340 (a)Core services funding means all funds allocated to 341 lead agencies. The term does not include any of the following: 342 1.Funds appropriated for independent living services. 343 2.Funds appropriated for maintenance adoption subsidies. 344 3.Funds allocated by the department for child protective 345 investigation service training. 346 4.Nonrecurring funds. 347 5.Designated mental health wrap-around service funds. 348 6.Funds for special projects for a designated lead agency. 349 7.Funds appropriated for the Guardianship Assistance 350 Program established under s. 39.6225. 351 (b)Operational and fixed costs means: 352 1.Administrative expenditures, including, but not limited 353 to, information technology and human resources functions. 354 2.Lease payments. 355 3.Asset depreciation. 356 4.Utilities. 357 5.Administrative components of case management. 358 6.Mandated activities such as training, quality 359 improvement, or contract management. 360 (2)The department shall develop, in collaboration with 361 lead agencies and providers of child welfare services, a funding 362 methodology for allocating core services funding to lead 363 agencies which, at a minimum: 364 (a)Is actuarially sound. 365 (b)Is reimbursement-based. 366 (c)Is designed to incentivize efficient and effective lead 367 agency operation, prevention, family preservation, and 368 permanency. 369 (d)Considers variable costs, including, but not limited 370 to: 371 1.Direct costs for in-home and out-of-home care for 372 children served by the lead agencies. 373 2.Direct costs for prevention services. 374 3.Operational and fixed costs. 375 (e)Is scaled regionally for cost-of-living factors. 376 (3)The lead agencies and providers shall submit any 377 detailed cost and expenditure data that the department requests 378 for the development of the funding methodology. 379 (4)The department shall submit a report to the Governor, 380 the President of the Senate, and the Speaker of the House of 381 Representatives by December 1, 2024, which, at a minimum: 382 (a)Describes a proposed funding methodology and formula 383 that will provide for the annual budget of each lead agency, 384 including, but not limited to, how the proposed methodology will 385 meet the criteria specified in subsection (2). 386 (b)Describes the data used to develop the methodology and 387 the data that will be used to annually calculate the proposed 388 lead agency budget. 389 (c)Specifies proposed rates and total allocations for each 390 lead agency. The allocations must ensure that the total of all 391 amounts allocated to lead agencies under the funding methodology 392 does not exceed the total amount appropriated to lead agencies 393 in the 2024-2025 General Appropriations Act. 394 (d)Provides risk mitigation recommendations that ensure 395 that lead agencies do not experience a reduction in funding that 396 would be detrimental to operations or result in a reduction in 397 services to children. 398 (5)By October 31, 2025, and each October 31 thereafter, 399 the department shall submit a report to the Governor, the 400 President of the Senate, and the Speaker of the House of 401 Representatives which includes recommendations for adjustments 402 to the funding methodology for the next fiscal year, calculated 403 using the criteria in subsection (2). Such recommendations must, 404 at a minimum, be based on updated expenditure data, cost-of 405 living adjustments, market dynamics, or other catchment area 406 variations. The total of all amounts proposed for allocation to 407 lead agencies under the funding methodology for the subsequent 408 fiscal year may not exceed the total amount appropriated in the 409 General Appropriations Act for core services funding in the 410 present fiscal year. The funding methodology must include risk 411 mitigation strategies that ensure that lead agencies do not 412 experience a reduction in funding that would be detrimental to 413 operations or result in a reduction in services to children. 414 (6)(a)The requirements of this section do not replace, and 415 are in addition to, any requirements of chapter 216, including, 416 but not limited to, submission of final legislative budget 417 requests by the department under s. 216.023. 418 (b)The data and reports required under subsections (4) and 419 (5) may also include proposed rates and total allocations for 420 each lead agency which reflect any additional core services 421 funding for lead agencies which is requested by the department 422 under s. 216.023. 423 (7)(a)Beginning with the 2025-2026 fiscal year, the 424 Legislature shall allocate funding to lead agencies through the 425 General Appropriations Act with due consideration of the funding 426 methodology developed under this section. 427 (b)The department may not change the allocation of funds 428 to a lead agency as provided in the General Appropriations Act 429 without legislative approval. The department may approve 430 additional risk pool funding for a lead agency as provided under 431 s. 409.990. 432 (8)The department shall provide to the Governor, the 433 President of the Senate, and the Speaker of the House of 434 Representatives monthly reports from July through October 2024 435 which provide updates on activities and progress in developing 436 the funding methodology. 437 Section 6.Subsections (1) and (3) of section 409.992, 438 Florida Statutes, are amended to read: 439 409.992Lead agency expenditures. 440 (1)The procurement of commodities or contractual services 441 by lead agencies is shall be governed by the financial 442 guidelines developed by the department and must comply with 443 applicable state and federal law and follow good business 444 practices. Pursuant to s. 11.45, the Auditor General may provide 445 technical advice in the development of the financial guidelines. 446 (a)1.Lead agencies shall competitively procure all 447 contracts, consistent with the federal simplified acquisition 448 threshold. 449 2.Lead agencies shall competitively procure all contracts 450 in excess of $35,000 with related parties. 451 3.Financial penalties or sanctions, as established by the 452 department and incorporated into the contract, must be imposed 453 by the department for noncompliance with applicable local, 454 state, or federal law for the procurement of commodities or 455 contractual services. 456 (b)The contract between the department and the lead agency 457 must delineate the rights and obligations of the lead agency 458 concerning the acquisition, transfer, or other disposition of 459 real property. At a minimum, the contract must: 460 1.Require the lead agency to follow all federal law on the 461 acquisition, improvement, transfer, or disposition of real 462 property acquired by the lead agency using federal dollars. 463 2.Require the department to obtain the rights to and 464 ownership of all real property acquired by the lead agency using 465 state funds. 466 3.Require the department to approve any sale, transfer, or 467 disposition of real property acquired and held by the lead 468 agency using state funds. 469 4.Require the department to retain all rights to and 470 ownership of all real property acquired with state funds and 471 held by the lead agency upon termination of the lead agency 472 contract. 473 (3)Notwithstanding any other provision of law, a 474 community-based care lead agency administrative employee may not 475 receive a salary, whether base pay or base pay combined with any 476 bonus or incentive payments, in excess of 150 percent of the 477 annual salary paid to the secretary of the Department of 478 Children and Families from state-appropriated funds, including 479 state-appropriated federal funds. This limitation applies 480 regardless of the number of contracts a community-based care 481 lead agency may execute with the department. This subsection 482 does not prohibit any party from providing cash that is not from 483 appropriated state funds to a community-based care lead agency 484 administrative employee. 485 Section 7.Paragraph (d) of subsection (1) of section 486 409.994, Florida Statutes, is amended to read: 487 409.994Community-based care lead agencies; receivership. 488 (1)The Department of Children and Families may petition a 489 court of competent jurisdiction for the appointment of a 490 receiver for a community-based care lead agency established 491 pursuant to s. 409.987 if any of the following conditions exist: 492 (d)The lead agency cannot meet, or is unlikely to meet, 493 its current financial obligations to its employees, contractors, 494 or foster parents. Issuance of bad checks or the existence of 495 delinquent obligations for payment of salaries, utilities, or 496 invoices for essential services or commodities constitutes shall 497 constitute prima facie evidence that the lead agency lacks the 498 financial ability to meet its financial obligations. 499 Section 8.Paragraph (d) of subsection (1) of section 500 409.996, Florida Statutes, is amended to read: 501 409.996Duties of the Department of Children and Families. 502 The department shall contract for the delivery, administration, 503 or management of care for children in the child protection and 504 child welfare system. In doing so, the department retains 505 responsibility for the quality of contracted services and 506 programs and shall ensure that, at a minimum, services are 507 delivered in accordance with applicable federal and state 508 statutes and regulations and the performance standards and 509 metrics specified in the strategic plan created under s. 510 20.19(1). 511 (1)The department shall enter into contracts with lead 512 agencies for the performance of the duties by the lead agencies 513 established in s. 409.988. At a minimum, the contracts must do 514 all of the following: 515 (d)Provide for contractual actions tiered interventions 516 and graduated penalties for failure to comply with contract 517 terms or in the event of performance deficiencies, as determined 518 appropriate by the department. 519 1.Such contractual actions must interventions and 520 penalties shall include, but are not limited to: 521 a.1.Enhanced monitoring and reporting. 522 b.2.Corrective action plans. 523 c.3.Requirements to accept technical assistance and 524 consultation from the department under subsection (6). 525 d.4.Financial penalties, which shall require a lead agency 526 to direct reallocate funds from administrative costs to the 527 department. The department shall use collected funds to support 528 and provide services to children and families in the geographic 529 service area of the lead agency from which the funds were 530 obtained direct care for children. 531 e.5.Early termination of contracts, as provided in s. 532 402.7305(3)(f) s. 402.1705(3)(f). 533 2.No later than January 1, 2025, the department shall 534 ensure that each lead agency contract executed includes a list 535 of financial penalties for failure to comply with contractual 536 requirements. 537 Section 9.By September 30, 2024, and February 1, 2025, 538 respectively, the Department of Children and Families shall 539 submit a report to the Governor, the President of the Senate, 540 and the Speaker of the House of Representatives on rules and 541 policies adopted and other actions taken to implement this act. 542 Section 10.This act shall take effect July 1, 2024.