CS for CS for CS for SB 536 First Engrossed 2024536e1 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 that the lead agency may 25 subcontract; authorizing a lead agency to enter into 26 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; or 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. Lead agencies that hold more than one lead agency 190 contract with the department may request an exemption from the 191 department for specific related party requirements. 192 4.3.Relative means a relative within the third degree of 193 consanguinity by blood or marriage. 194 (b)1.For any activity that is presented to the board of a 195 lead agency for its initial consideration and approval after 196 July 1, 2021, or any activity that involves a contract that is 197 being considered for renewal on or after July 1, 2021, but 198 before January 1, 2022, a board member, a director, or an 199 officer of a lead agency shall disclose to the board any 200 activity that may reasonably be construed to be a conflict of 201 interest before such activity is initially considered and 202 approved or a contract is renewed by the board. A rebuttable 203 presumption of a conflict of interest exists if the activity was 204 acted on by the board without prior notice as required under 205 paragraph (c). The board shall disclose any known actual or 206 potential conflicts to the department. 207 2.A lead agency may not enter into a contract or be a 208 party to any transaction with related parties if a conflict of 209 interest is not properly disclosed. A lead agency may not enter 210 into a contract with a related party for officer-level or 211 director-level staffing to perform management functions. The 212 contract with the department and lead agency must specify the 213 administrative functions that the lead agency may subcontract 214 For contracts with a lead agency which are in existence on July 215 1, 2021, and are not subject to renewal before January 1, 2022, 216 a board member or an officer of the lead agency shall disclose 217 to the board any activity that may reasonably be construed to be 218 a conflict of interest under this section by December 31, 2021. 219 3.Subject to the requirements of subparagraph 2., a lead 220 agency may enter into a contract or be a party to any 221 transaction with related parties as long as the fee, rate, or 222 price paid by the lead agency for the commodities or services 223 being procured does not exceed the fair market value for such 224 commodities or services. The lead agency shall disclose any 225 known actual or potential conflicts to the department. 226 (g)1.All department contracts with lead agencies must 227 contain the following contractual penalty provisions: 228 a.Penalties in the amount of $5,000 per occurrence must be 229 imposed for each known and potential conflict of interest, as 230 described in paragraph (b), which is not disclosed to the 231 department. 232 b.If a contract is executed for which a conflict of 233 interest was not disclosed to the department before execution of 234 the contract, the following penalties apply: 235 (I)A penalty in the amount of $25,000 for a first offense. 236 (II)A penalty in the amount of $50,000 for a second or 237 subsequent offense. 238 (III)Removal of the board member who did not disclose a 239 known conflict of interest. 240 2.The penalties for failure to disclose a conflict of 241 interest under sub-subparagraphs a. and b. apply to any contract 242 entered into, regardless of the method of procurement, 243 including, but not limited to, formal procurement, single-source 244 contracts, and contracts that do not meet the minimum threshold 245 for formal procurement. 246 3.A contract procured for which a conflict of interest was 247 not disclosed to the department before execution of the contract 248 must be reprocured. The department shall recoup from the lead 249 agency expenses related to a contract that was executed without 250 disclosure of a conflict of interest. 251 Section 3.Paragraphs (c), (j), and (k) of subsection (1) 252 of section 409.988, Florida Statutes, are amended to read: 253 409.988Community-based care lead agency duties; general 254 provisions. 255 (1)DUTIES.A lead agency: 256 (c)Shall follow the financial guidelines developed by the 257 department and shall comply with regular, independent auditing 258 of its financial activities, including any requests for records 259 associated with such financial audits within the timeframe 260 established by the department or its contracted vendors provide 261 for a regular independent auditing of its financial activities. 262 The results of the financial audit must Such financial 263 information shall be provided to the community alliance 264 established under s. 20.19(5). 265 (j)1.May subcontract for the provision of services, 266 excluding subcontracts with a related party for officer-level or 267 director-level staffing to perform management functions, 268 required by the contract with the lead agency and the 269 department; however, the subcontracts must specify how the 270 provider will contribute to the lead agency meeting the 271 performance standards established pursuant to the child welfare 272 results-oriented accountability system required by s. 409.997. 273 Any contract with an unrelated entity for officer-level or 274 director-level staffing to perform management functions must 275 adhere to the executive compensation provision in s. 409.992(3). 276 2.The lead agency shall directly provide no more than 35 277 percent of all child welfare services provided unless it can 278 demonstrate a need, within the lead agencys geographic service 279 area, where there is a lack of qualified providers available to 280 perform necessary child welfare services. Beginning July 1, 281 2024, any new request to exceed the threshold is limited to 2 282 years to exceed this threshold. After the 2-year period, the 283 lead agency may submit annual 1-year extension requests with a 284 detailed report of all efforts to recruit a qualified provider 285 to perform the necessary services in that geographic service 286 area. If the department determines the lead agency is not making 287 a good faith effort to recruit a qualified provider, it must 288 deny the extension request and require reprocurement. The local 289 community alliance in the geographic service area in which the 290 lead agency is seeking to exceed the threshold shall review the 291 lead agencys justification for need and recommend to the 292 department whether the department should approve or deny the 293 lead agencys request for an exemption from the services 294 threshold. If there is not a community alliance operating in the 295 geographic service area in which the lead agency is seeking to 296 exceed the threshold, such review and recommendation shall be 297 made by representatives of local stakeholders, including at 298 least one representative from each of the following: 299 a.1.The department. 300 b.2.The county government. 301 c.3.The school district. 302 d.4.The county United Way. 303 e.5.The county sheriffs office. 304 f.6.The circuit court corresponding to the county. 305 g.7.The county childrens board, if one exists. 306 (k)Shall publish on its website by the 15th day of each 307 month at a minimum the data specified in subparagraphs 1.-10. 308 subparagraphs 1.-5., calculated using a standard methodology 309 determined by the department, for the preceding calendar month 310 regarding its case management services. The following 311 information shall be reported by each individual subcontracted 312 case management provider, by the lead agency, if the lead agency 313 provides case management services, and in total for all case 314 management services subcontracted or directly provided by the 315 lead agency: 316 1.The average caseload of case managers, including only 317 filled positions; 318 2.The total number and percentage of case managers who 319 have 25 or more cases on their caseloads; 320 3.The turnover rate for case managers and case management 321 supervisors for the previous 12 months; 322 4.The percentage of required home visits completed; and 323 5.Performance on outcome measures required pursuant to s. 324 409.997 for the previous 12 months;. 325 6.The number of unlicensed placements for the previous 326 month; 327 7.The percentages and trends for foster parent and group 328 home recruitment and licensure for the previous month; 329 8.The percentage of families being served through family 330 support services, in-home services, and out-of-home services for 331 the previous month; 332 9.The percentage of cases that were converted from 333 nonjudicial to judicial for the previous month; and 334 10.Childrens legal service staffing rates. 335 Section 4.Section 409.991, Florida Statutes, is repealed. 336 Section 5.Section 409.9913, Florida Statutes, is created 337 to read: 338 409.9913Funding methodology to allocate funding to lead 339 agencies. 340 (1)As used in this section, the term: 341 (a)Core services funding means all funds allocated to 342 lead agencies. The term does not include any of the following: 343 1.Funds appropriated for independent living services. 344 2.Funds appropriated for maintenance adoption subsidies. 345 3.Funds allocated by the department for child protective 346 investigation service training. 347 4.Nonrecurring funds. 348 5.Designated mental health wrap-around service funds. 349 6.Funds for special projects for a designated lead agency. 350 7.Funds appropriated for the Guardianship Assistance 351 Program established under s. 39.6225. 352 (b)Operational and fixed costs means: 353 1.Administrative expenditures, including, but not limited 354 to, information technology and human resources functions. 355 2.Lease payments. 356 3.Asset depreciation. 357 4.Utilities. 358 5.Administrative components of case management. 359 6.Mandated activities such as training, quality 360 improvement, or contract management. 361 (2)The department shall develop, in collaboration with 362 lead agencies and providers of child welfare services, a funding 363 methodology for allocating core services funding to lead 364 agencies which, at a minimum: 365 (a)Is actuarially sound. 366 (b)Is reimbursement-based. 367 (c)Is designed to incentivize efficient and effective lead 368 agency operation, prevention, family preservation, and 369 permanency. 370 (d)Considers variable costs, including, but not limited 371 to: 372 1.Direct costs for in-home and out-of-home care for 373 children served by the lead agencies. 374 2.Direct costs for prevention services. 375 3.Operational and fixed costs. 376 (e)Is scaled regionally for cost-of-living factors. 377 (3)The lead agencies and providers shall submit any 378 detailed cost and expenditure data that the department requests 379 for the development of the funding methodology. 380 (4)The department shall submit a report to the Governor, 381 the President of the Senate, and the Speaker of the House of 382 Representatives by December 1, 2024, which, at a minimum: 383 (a)Describes a proposed funding methodology and formula 384 that will provide for the annual budget of each lead agency, 385 including, but not limited to, how the proposed methodology will 386 meet the criteria specified in subsection (2). 387 (b)Describes the data used to develop the methodology and 388 the data that will be used to annually calculate the proposed 389 lead agency budget. 390 (c)Specifies proposed rates and total allocations for each 391 lead agency. The allocations must ensure that the total of all 392 amounts allocated to lead agencies under the funding methodology 393 does not exceed the total amount appropriated to lead agencies 394 in the 2024-2025 General Appropriations Act. 395 (d)Provides risk mitigation recommendations that ensure 396 that lead agencies do not experience a reduction in funding that 397 would be detrimental to operations or result in a reduction in 398 services to children. 399 (5)By October 31, 2025, and each October 31 thereafter, 400 the department shall submit a report to the Governor, the 401 President of the Senate, and the Speaker of the House of 402 Representatives which includes recommendations for adjustments 403 to the funding methodology for the next fiscal year, calculated 404 using the criteria in subsection (2). Such recommendations must, 405 at a minimum, be based on updated expenditure data, cost-of 406 living adjustments, market dynamics, or other catchment area 407 variations. The total of all amounts proposed for allocation to 408 lead agencies under the funding methodology for the subsequent 409 fiscal year may not exceed the total amount appropriated in the 410 General Appropriations Act for core services funding in the 411 present fiscal year. The funding methodology must include risk 412 mitigation strategies that ensure that lead agencies do not 413 experience a reduction in funding that would be detrimental to 414 operations or result in a reduction in services to children. 415 (6)(a)The requirements of this section do not replace, and 416 are in addition to, any requirements of chapter 216, including, 417 but not limited to, submission of final legislative budget 418 requests by the department under s. 216.023. 419 (b)The data and reports required under subsections (4) and 420 (5) may also include proposed rates and total allocations for 421 each lead agency which reflect any additional core services 422 funding for lead agencies which is requested by the department 423 under s. 216.023. 424 (7)(a)Beginning with the 2025-2026 fiscal year, the 425 Legislature shall allocate funding to lead agencies through the 426 General Appropriations Act with due consideration of the funding 427 methodology developed under this section. 428 (b)The department may not change the allocation of funds 429 to a lead agency as provided in the General Appropriations Act 430 without legislative approval. The department may approve 431 additional risk pool funding for a lead agency as provided under 432 s. 409.990. 433 (8)The department shall provide to the Governor, the 434 President of the Senate, and the Speaker of the House of 435 Representatives monthly reports from July through October 2024 436 which provide updates on activities and progress in developing 437 the funding methodology. 438 Section 6.Subsections (1) and (3) of section 409.992, 439 Florida Statutes, are amended to read: 440 409.992Lead agency expenditures. 441 (1)The procurement of commodities or contractual services 442 by lead agencies is shall be governed by the financial 443 guidelines developed by the department and must comply with 444 applicable state and federal law and follow good business 445 practices. Pursuant to s. 11.45, the Auditor General may provide 446 technical advice in the development of the financial guidelines. 447 (a)1.Lead agencies shall competitively procure all 448 contracts, consistent with the federal simplified acquisition 449 threshold. 450 2.Lead agencies shall competitively procure all contracts 451 in excess of $35,000 with related parties. 452 3.Financial penalties or sanctions, as established by the 453 department and incorporated into the contract, must be imposed 454 by the department for noncompliance with applicable local, 455 state, or federal law for the procurement of commodities or 456 contractual services. 457 (b)The contract between the department and the lead agency 458 must delineate the rights and obligations of the lead agency 459 concerning the acquisition, transfer, or other disposition of 460 real property. At a minimum, the contract must: 461 1.Require the lead agency to follow all federal law on the 462 acquisition, improvement, transfer, or disposition of real 463 property acquired by the lead agency using federal dollars. 464 2.Require the department to obtain the rights to and 465 ownership of all real property acquired by the lead agency using 466 state funds. 467 3.Require the department to approve any sale, transfer, or 468 disposition of real property acquired and held by the lead 469 agency using state funds. 470 4.Require the department to retain all rights to and 471 ownership of all real property acquired with state funds and 472 held by the lead agency upon termination of the lead agency 473 contract. 474 (3)Notwithstanding any other provision of law, a 475 community-based care lead agency administrative employee may not 476 receive a salary, whether base pay or base pay combined with any 477 bonus or incentive payments, in excess of 150 percent of the 478 annual salary paid to the secretary of the Department of 479 Children and Families from state-appropriated funds, including 480 state-appropriated federal funds. This limitation applies 481 regardless of the number of contracts a community-based care 482 lead agency may execute with the department. This subsection 483 does not prohibit any party from providing cash that is not from 484 appropriated state funds to a community-based care lead agency 485 administrative employee. 486 Section 7.Paragraph (d) of subsection (1) of section 487 409.994, Florida Statutes, is amended to read: 488 409.994Community-based care lead agencies; receivership. 489 (1)The Department of Children and Families may petition a 490 court of competent jurisdiction for the appointment of a 491 receiver for a community-based care lead agency established 492 pursuant to s. 409.987 if any of the following conditions exist: 493 (d)The lead agency cannot meet, or is unlikely to meet, 494 its current financial obligations to its employees, contractors, 495 or foster parents. Issuance of bad checks or the existence of 496 delinquent obligations for payment of salaries, utilities, or 497 invoices for essential services or commodities constitutes shall 498 constitute prima facie evidence that the lead agency lacks the 499 financial ability to meet its financial obligations. 500 Section 8.Paragraph (d) of subsection (1) of section 501 409.996, Florida Statutes, is amended to read: 502 409.996Duties of the Department of Children and Families. 503 The department shall contract for the delivery, administration, 504 or management of care for children in the child protection and 505 child welfare system. In doing so, the department retains 506 responsibility for the quality of contracted services and 507 programs and shall ensure that, at a minimum, services are 508 delivered in accordance with applicable federal and state 509 statutes and regulations and the performance standards and 510 metrics specified in the strategic plan created under s. 511 20.19(1). 512 (1)The department shall enter into contracts with lead 513 agencies for the performance of the duties by the lead agencies 514 established in s. 409.988. At a minimum, the contracts must do 515 all of the following: 516 (d)Provide for contractual actions tiered interventions 517 and graduated penalties for failure to comply with contract 518 terms or in the event of performance deficiencies, as determined 519 appropriate by the department. 520 1.Such contractual actions must interventions and 521 penalties shall include, but are not limited to: 522 a.1.Enhanced monitoring and reporting. 523 b.2.Corrective action plans. 524 c.3.Requirements to accept technical assistance and 525 consultation from the department under subsection (6). 526 d.4.Financial penalties, which shall require a lead agency 527 to direct reallocate funds from administrative costs to the 528 department. The department shall use collected funds to support 529 and provide services to children and families in the geographic 530 service area of the lead agency from which the funds were 531 obtained direct care for children. 532 e.5.Early termination of contracts, as provided in s. 533 402.7305(3)(f) s. 402.1705(3)(f). 534 2.No later than January 1, 2025, the department shall 535 ensure that each lead agency contract executed includes a list 536 of financial penalties for failure to comply with contractual 537 requirements. 538 Section 9.By September 30, 2024, and February 1, 2025, 539 respectively, the Department of Children and Families shall 540 submit a report to the Governor, the President of the Senate, 541 and the Speaker of the House of Representatives on rules and 542 policies adopted and other actions taken to implement this act. 543 Section 10.This act shall take effect July 1, 2024.