Report 97024 Summary - April 1998

Department of Developmental Services: Regional Center Budgets Are Not Based on Needs, and Departmental Oversight Could Be Improved

Results in Brief

The Department of Developmental Services (department) administers the Lanterman Developmental Disabilities Services Act (Lanterman Act). The Lanterman Act entitles developmentally disabled people to any service that allows them, as closely as possible, to integrate with their communities. In addition, the Lanterman Act states that, to the degree possible, developmentally disabled people (clients) should not be dislocated from their families or communities.

The department administers the Lanterman Act in part by contracting with a network of 21 independent, nonprofit regional centers that provide services, such as housing, transportation, health care, and skills training, to approximately 138,000 clients statewide. In fiscal year 1996-97, the 21 centers spent approximately $1 billion to administer the program and purchase services for clients' needs.

The 1997-98 Budget Act required the Bureau of State Audits (bureau) to examine how the department develops and allocates the regional centers' budget. In addition, the bureau was charged with analyzing costs for client case management and purchased services.

We reviewed the department's budget and allocation processes and found that the department's processes do not ensure that clients throughout the State have equal access to needed services. Specifically, we noted that the department budgets funds for services based on historical expenditures of each regional center, not on their separate needs. Moreover, the department's allocation process is designed to ensure that each regional center receives at least the same amount of funding as in the prior year, regardless of individual need.

In addition, the department is not ensuring that regional centers are properly staffed and that their clients have equal access to case managers, who determine clients' needs for services and assist them in obtaining services. We found that the department's estimate for regional center staffing is not representative of true needs or case management costs. The department recognizes this problem and has requested funding to hire 808 more case managers.

Also, the department has not developed a uniform definition for case management costs and does not track each center's costs to assess their staffing levels.

The department does not equitably allocate funds for the centers because it fails to analyze each center's expenditures for trends and cost variances and determine their causes. Our analysis of the regional centers' expenditure patterns over the past five fiscal years indicates that costs for services grew by 61 percent for all regional centers combined, and the rates of growth among regional centers varied widely. In addition, for fiscal year 1996-97, the regional centers exhibited wide swings in cost per client in several service categories; however, the department does not investigate why. We found a number of reasons for cost differences. For example, some centers have enlisted community support to reduce costs and make their purchase-of-services funds go further.

In addition, by failing to effectively administer performance contracts, the department is not ensuring the legislative intent of measuring the regional centers' efforts in attaining more independent, productive, and normal lives for their clients. Specifically, we found that:

Finally, we noted that the department has failed to comply with a number of sections of the Lanterman Act requiring the department to monitor regional center activities or report on program effectiveness.


To ensure equity in budgeting and allocating funds to the regional centers, the department needs to develop methods, such as piloting a master plan for the purchase of services that is based on each regional center's individual needs.

To ensure that regional centers are adequately staffed and that clients receive equal access to case management services, the department needs to take the following actions:

We further recommend the Legislature specifically designate case management funds in the Budget Act to ensure they are spent for that purpose.

The department also needs to take the following steps to improve its budgetary oversight of the regional centers:

To better use performance contracts to measure the benefits that services provide to clients, the department should take the following actions: To more effectively administer performance contracts, the department needs to take the following steps: Finally, to improve monitoring of the regional centers' program effectiveness, the department should comply with each provision of the Lanterman Act.

Agency Comments

The Department of Developmental Services (department) disagrees with many of our conclusions concerning its budget process and its failure to investigate variances in the regional centers' purchase-of-services costs. The department does agree that it needs to review its budget and allocation processes, establish guidelines for the regional centers to follow in reporting case management costs, and study purchase-of-services cost variations among the 21 regional centers. Although the department has concerns with several of our conclusions regarding its administration of the performance contract program, the department agrees with most of our recommendations.