Joint Appropriations Minutes 01/20/2005 8:00 AM

Betty Oldenkamp, Secretary and Dan Lusk, Director of Budget & Finance, presented the budget and, in response to the Committee's questions, distributed Document 1.

Secretary Oldenkamp gave the Committee a brief overview of the department (Document 2). The department's mission is to promote the highest level of independence for all individuals, regardless of disability or disorder. The department's recommended budget consists of $85,234,170 from the General Fund, $108,206,104 from federal funds, $4,140,203 from other funds, for a total budget of $197,580,477 and 1232.7 FTE, an increase of 3%.

Secretary Oldenkamp told the Committee the department projects 62,877 clients will seek or receive assistance from Community Based programs in FY 06. Secretary Oldenkamp explained that because clients may receive assistance from more than one program, there is some duplication in this number; however, this is an increase of 5,020 clients or 8.7%. The FY06 projected average daily census at the Human Services Center (HSC) in Yankton is 272 with projected admissions of 2,050. The projected average daily census at the Developmental Center (SDDC) in Redfield is 178 and projected admissions of 44. Secretary Oldenkamp said the projected admissions at HCS for FY06 are the same as FY05. The percentages of growth will be provided to the Committee.

Dan Lusk, Finance Officer for Human Services presented the recommended budget for FY 06.

Secretary - The total recommended budget consists of $932,093 from General Funds, $799,177 from federal funds, and $1,334 from other funds, for a total budget of $1,732,604 and 26.0 FTE, including a $9,990 increase in Personal Services and Travel.

Developmental Disabilities - Wanda Seiler, Director of the Division of Developmental Disabilities told the Committee the recommended budget consists of $28,491,981 from the General Fund, and $51,504,340 from federal funds for a total of $79,996,321 and 16.0 FTE. This is a $3,097,341 increase. An increase is requested for Family Support programs of $287,353 from General Funds and $309,937 from federal funds. A consumer expansion of 45, as predicted by historical attrition/expansion is recommended at $1,406,477 and involves $487,907 in General Funds and $918,570 in federal funds. The FMAP change for Developmental Disabilities is $425,534 and the 1.4% provider inflation is $1,035,164.

Senator Apa asked what consumer expansion was. Mr. Lusk said consumer expansion is the number of additional people who will be served in each division.

Ms. Seiler told the Committee the $1,406,177 expansion in Home & Community Based Services (HCBS) will serve 45 clients. The $597,290 increase in Community & Family Support will serve 50 of the 202 children presently on a waiting list and 150 adults in 3 community programs, at an average of $3,800/client. Representative Putnam asked if these programs operated under Advisory Boards. Ms. Seiler said the Community & Family Support has an Advisory Board that is under Executive Order of the Governor. Representative Hunhoff asked if these services were in-home services. Ms. Seiler said Community & Family Support is a variety of services, whatever the client may need, some may be in-home. Ms. Seiler said the projected costs of these services for FY 06 would include the actual costs at that time. Representative Dennert asked the age of the children on the waiting list. Ms. Seiler said the people on the list are under the age of 22 and may have been on the list for as long as three years because there were no funds to serve them. Representative Hunhoff asked if medicaid is paying for services for those over 21. Ms. Seiler said yes, HCBS is basically a medicaid waiver. In the area of Community & Family Support, the department's request is to receive a medicaid waiver to provide the services. Representative Glenski asked if the services were involved in the re-base last year. Ms. Seiler said yes.

Representative Putnam invited Daryl Kilstrom, Executive Director of the Mitchell Area Adjustment Training Center and President of the South Dakota Association of Community Based Services, and Fred Romkema, CEO of the Northern Hills Training Center in Spearfish to present testimony. Document 3 was distributed. Mr. Romkema told the Committee the South Dakota Association of Community Based Services (SDACBS) represents 17 Adjustment Training Centers that serve nearly 95% of adults with developmental disabilities in South Dakota. Mr. Romkema said when he started 28 years ago there were 2400 clients at Redfield, today's population is 178. When the Custer facility closed those clients were moved to ATC's in communities across South Dakota. Most clients have moved out to community based agencies, 40% have jobs in the community, 50% live on their own. Medical needs have increased as the clients get older. Mr. Romkema said the system is working; however, the system needs good people to make it work.

Senator Earley asked why two of the adjustment training centers did not provide the 3% salary increase last year as directed by the Appropriations Committee. Mr. Romkema said he didn't know why and wasn't aware they hadn't provided the increase.

Mr. Kilstrom told the Committee the ATC's receive, on average, 74% of their funds from the Department of Human Services. The $1,406,477 will allow the Adjustment Training Centers to continue services for those already in the system, as well as additional clients. Mr. Kilstrom said the1.4% inflationary increase is simply not enough, insurance increases alone cost over half-million leaving less than 1% for salary increases. Mr. Kilstrom said turnover is on the rise, most ATC salaries are 75 cents/hour behind the major competitors. Mr. Kilstrom told the Committee the SDACBS supports an additional 1.6% inflationary increase to the budget. These additional dollars would help to cover increased health insurance costs so the ATC's can maintain this benefit as well as increase staff wages.

Representative Hunhoff asked if each of the ATC's have their own health insurance and if so, why haven't they pooled together. Mr. Kilstrom said yes, they each contract their own. It has been discussed but because of the pool size, the rates are not always the best. Senator Apa asked about the criticism voiced regarding ATC's means of raising funds. Mr. Kilstrom said they do have fund raisers/endowments and ATC's raise close to 2% of their funding through these means.

Representative Hunhoff asked for the actual ATC turnover figure. Mr. Kilstrom said currently its at 42% and it has been as high as 50%. Each turnover costs an estimated $1,600.

Senator Earley asked for information on the grants referenced in the handout (Document 3). Tom Scheinost, Executive Director of the South Dakota Community Based Services (SDACBS) told the Committee the grant for internet training is about $60,000 per year matched by money raised by the ATC, each is required to pay $2,800. This is high quality training for direct support professionals. Mr. Scheinost said the grant for media is actually 2 separate grants - $16,000 and $12,000. This is a series of radio ads, posters and other advertisements to recruit new direct support staff.

Representative Hunhoff asked if the ATC's are accredited. Mr. Kilstrom said the department has licensing authority over the ATC's; however the ATC's are seeking national accreditation. The cost of this accreditation is paid through the department budget.

Senator Smidt asked what improvement the ACT's would expect if the increased inflationary rate was approved. Mr. Kilstrom said just to get the .75/hour salary increase would cost $2.8 million. The 3% would keep the ATC's current, the 1.4% would cause the ATC's to continue to fall behind. Representative Putnam asked for comments on re-basing. Mr. Kilstrom said re-basing is done very 3^rd year and is a labor intensive process.

Representative Putnam invited Vanessa Harty, Coordinator of Sioux Vocational Services in Sioux Falls to present testimony. Ms. Harty told the Committee she lives in an ATC home in Sioux Falls with 12 clients ranging in age from 27-74 years of age, 7 males, 5 females, each have numerous and varied degrees of disability. Ms. Harty started 8 months ago and was the 4^th supervisor in the home in one year. Ms. Harty gave a synopsis of an average day at the home, describing the work as physically demanding and mentally taxing. Hiring and training staff is a constant battle. Ms. Harty said despite the working conditions she enjoys her job and the rewards she receives from the clients. Representative Tidemann asked about the paper work involved in the job. Ms. Harty said each client has an individual plan and details need to be recorded. Representative Hunhoff asked who was responsible for dispensing medications. Ms. Harty said staff is trained to dispense medications. Staff hours per client are done by a ratio, individually based on the clients needs. One staff per 3 clients is not always enough.

Representative Putnam invited Senator Duenwald and Mary Keller of Hoven to present testimony regarding their sister Nancy, a resident in the Aberdeen ATC. Ms. Keller stressed the need for consistency in caring for those individuals who can't care for themselves. Ms. Keller said consistency is lost with the amount of turnover these facilities are experiencing.

Representative Haverly asked for the breakout of the ATC's & Community Based services, rural vs. metro and what the turnover rate was based on location. Mr. Kilstrom directed the Committee to page 2 of the handout (Document 3) where the ATC's were listed. The 42% turnover rate was a statewide average. Mr. Scheinost said it ranges from 5% at Lemmon to 100% at Vermillion.

Senator Napoli commented there are jobs that people don't want to do despite the wages. Senator Napoli asked if the increase was made, would it make a difference, or does the Committee needs to do more. Senator Napoli suggested perhaps the department didn't ask for enough. Mr. Kilstrom said the 3% would definitely make a difference, enabling the ATC's to keep their heads above water. Mr. Kilstrom said the department could have asked for 5-10% over a 3 year period, however, they wanted to be fiscally responsible. Senator Napoli said the ATC's are currently holding their own, but not getting to where they need to be, asking for more over a 3 year period might get them there. Senator Napoli said it's not a budget restraint but a matter of prioritizing goals. Representative Putnam said that could be a special appropriation, any legislator could bring that bill and receive a special hearing.

Senator Apa asked which ATC was the smallest, Mr. Romkema said Lemmon, where 30 clients are served. Senator Apa asked if those 30 clients would become the state's responsibility if the ATC at Lemmon were to close. Mr. Kilstrom said yes and he wasn't sure of the cos to the state. The only state facility is at Redfield and those 30 clients may not need the services provided at Redfield. Representative Putnam asked Ms. Seiler what would happen financially if one of the ATC's would close and were there statutes that guide placement of the clients. Ms. Seiler said these particular clients would not be appropriate for Redfield. The department would work with the families and the remaining ATC's to find the appropriate placement for them. Representative Putnam asked for written information on this issue including a cost breakdown of other locations vs. Lemmon. Ms. Seiler told the Committee each client has their rate based on their individual needs.

Senator Greenfield asked what happened to the remaining $2.2 million of the FY 04 $25 million General Fund appropriation. Mr. Lusk said in FY 04 the federal government passed down fiscal relief which enhanced the FMAP. The General Funds were pulled out of the budget. The money was reverted back to the General Fund.

Developmental Center - Ted Williams, Director of the Developmental Center spoke to the budget request. The total recommended budget for the Redfield Center consists of $7,960,113 from the General Fund, $13,292,872 from federal funds, and $127,902 from other funds for a total budget of $21,380,887 and 418.1 FTE. This budget involves an increase of $121,161 for FMAP, an increase of $415,115 for food services change, and an increase of $157,034 for utility services. Most of the funds come from federal Title 19 money. Discussion followed on the levels of support determined by the level of risk of the clients at the SDDC. Mr. Williams told the Committee these percentages were based on the current population at the center. Mr. Williams said the average length of stay at discharge is 3-1/2 years. Senator Earley asked how many clients will leave this year and how long before they come back. Mr. Williams said 32 left the center last year with the same number projected this year. Readmittance time varies, the center doesn't consider itself to be a long-term facility.

Senator Glenski asked about the increases in food services. Mr. Williams said the new contract price is $3.18/per day, the old contract was $1.99/day. The new contract is based on individual needs, many patients have diabetes or other specific dietary needs. Secretary Oldenkamp said the same dietary needs were in the prior RFP; however, the former provider was not able to meet the needs probably due to the rate. Mr. Lusk told the Committee more information was available on the new food service contract in Document 1.

Senator Apa asked for the average salary of a care giver at Redfield. Mr. Williams stated the starting salary was $8.93/hour with a 5% increase in 6 months.

Representative Hunhoff asked if the center has a contract for purchasing medications and what is the percent of inflation. Mr. Williams said the center is part of a multi-state consortium and the inflation rate is 7.58%.

Senator Earley asked for justification of the $440,000 General Fund increase in the FY 06 budget. Secretary Oldenkamp said approximately 25% was FMAP in addition to food service rate adjustments, heating and utility costs. Secretary Oldenkamp said the department is not doing anything new or different, it is just the dollars needed to run the current programs.

Committee recessed at 10:05 a.m.

Co-Vice Chair Klaudt reconvened the meeting at 10:20 a.m.

Alcohol and Drug Abuse - Gib Sudbeck, Director of the Division explained the budget recommendations. The recommended budget consists of $4,088,615 from the General Funds, $7,815,589 from federal funds, and $638,614 from other funds for a total budget of $12,542,818 and 49.0 FTE, a decrease of $64,057.

Mr. Sudbeck said the number of people coming in with a methamphetamine addiction diagnosis has increased. The department saw 932 clients in the last year, 511were referred to residential treatment. Last year the department received $240,000 to create a methamphetamine addiction treatment program at Canton and it has been in operation only 6 months. Senator Apa referenced an article in the Rapid City Journal that said there was an 80% decrease in meth lab seizures in Oklahoma since the sale of certain over-the-counter drugs were banned. Secretary Oldenkamp told the Committee a task force has met and the Governor is expected to introduce a bill for that same purpose. Mr. Sudbeck said the cost estimate for a meth addict is $12,000/year, twice as much as for those addicted to other stimulants. The statistics on success rate statistics vary and there are very few long-term treatment programs. South Dakota's numbers show a 31% success rate for stimulants in general. Mr. Lusk told the Committee the department had received word last week the division will receive a $694,400 federal earmark specifically for meth. This number is not reflected in budget and there is no General Fund match. Mr. Lusk indicated the department would bring this issue back to the Committee for approval at a later date.

Representative Putnam resumed the chair.

Senator Greenfield asked what the division did with tobacco prevention money. Mr. Sudbeck said there is $42,000 that allows inspections for retailer compliance on tobacco sales to minors, 1800 inspections are done a year. Mr. Sudbeck said approximately 2000 retailers sell tobacco. Senator Apa asked if that inspection is referred to as a sting. Mr. Sudbeck said yes.

Representative Putnam asked if the number of parolees needing assistance was increasing. Mr. Sudbeck said there are substantially higher number in after care groups as well as other programs. The FY06 estimates are that 2,221 individuals will be placed on parole, an increase of 384 and of that number 326 will need community based services. Representative Peters asked what the contracting procedures were for half-way houses/services and what does the department do to ensure the services are adequate for the whole year. Mr. Sudbeck said the department starts out each year based on previous years budgeted amount. Typically the department does not obligate all funds at the beginning, but keeps some in reserve if they see a demand in a particular area. Mr. Sudbeck said meth use is a big problem, these clients require more care and with the increased number of parolees comes the increase in number of people being served. Representative Peters asked if there was a way to get ahead of this issue, halfway houses provide an important service. Mr. Sudbeck said it was difficult to estimate or predict how many people will present themselves for treatment. This year the department will use some of the money received from Corrections for halfway house placements.

Representative Glenski asked about the jump in dollar amounts for gambling addiction treatment. Mr. Lusk said this increase was merely a lapse in the timing of receiving the money from the Lottery, the amount of funds received has not changed. Representative Glenski said it appears the number of people needing services has increased; if so, why wasn't there an increase in funds received from the Lottery. Mr. Sudbeck said looking at the growth it would be minimal. If there is an increased demand above the funding, the department would approach the Lottery for additional funding.

Rehabilitation Services - Grady Kickul, Director of Rehabilitation Services discussed the budget. The recommended budget consists of $3,570,305 from General Funds, $14,148,592 from federal funds, and $$593,683 from other funds, for a total of $18,312,580 and 101.1 FTE. This is a budget increase of $419,747. Mr. Kickul told the Committee that at 63.5%, South Dakota is second highest in the nation for the employment rate of people with work disabilities who are working. Mr. Kickul said in FY 2004, 750 people were rehabilitated and entered the workforce. The average annual income of consumers rehabilitated is $13,547 compared to $2,704 before rehabilitation.

Mr. Lusk presented the following informational budgets:
1 *      Telecommunications Devices for the Deaf - $1,251,680 from other funds
2 *      Board of Counselor Examiners - $66,205 from other funds, an increase of $3,090
3 *      Board of Psychology Examiners - $67,841 from other funds, an increase of $12,305.
4 *      Board of Social Work Examiners - $87,763 from other funds, an increase of $31,122.
5 *      Certification Board for Alcohol & Drug Practitioners - $91,011 from other funds, an increase of $3,893.

Representative Putnam asked if the Secretary had oversight of these funds. Mr. Lusk said the funds are receipted through the department. The department has access and monitors fund balances.

Service to the Blind and Visually Impaired - Gaye Mattke, Director presented the Division's budget. The recommended budget consists of $829,052 from the General Fund, $1,949,929 from federal funds, and $219,716 from other funds, for a total budget of $2,998,697 and 30.2 FTE, a $67,862 increase in federal and other funds. Representative Hunhoff asked if any of the clients are direct pay. Ms. Mattke said if the client has insurance the division uses it. Medicaid pays for eye exams. Ms. Mattke said the division's funding is primarily federal, Section 110 vocational rehabilitation funds. Senator Earley noted the FY 04 FTEs were 25.5, and last year 30.2. Ms. Mattke said the FTE are based on utilization and turnover is often an issue. The division has a difficult time filling some positions.

Human Service Center - Cory Nelson, Administrator presented the budget. The recommended budget consists of $26,887,505 from the General Fund, $8,534,139 from federal funds, and $209,373 from other funds, for a total of $35,631,017 and 558 FTE. This is a $952,168 increase. Mr. Nelson told the Committee admissions have increased significantly, 14% since 02 and 03 and 67% from 2002-2005. The Center is accepting more involuntary admissions and staff schedules and duties have been realigned to deal with the increased number of patients. Mr. Nelson said the Center is working with communities like Rapid City and Sioux Falls to better utilize resources in their community.

Representative Rausch asked why the difference between voluntary and involuntary. Mr. Nelson said it was primarily increases from Minnehaha County who no longer sends patients to Sioux Valley or Avera McKennan.

Representative Putnam asked about the financial ability of involuntary admissions. Mr. Nelson said these patients fall within the adult acute psychiatric unit, ages 18 to 65 and are not eligible for medicare/medicaid. The admitting county pays a $200 admission fee, and the center receives $1.5 million from Indian Health Services. The $3 million is collected and deposited in the General Fund from admissions. Representative Glenski asked if the Center anticipated any change with a new hospital in Sioux Falls. Mr. Nelson said no, the hospital in Sioux Falls is reallocating their bed space, making room for a small increase in beds.

Representative Hunhoff asked what the time frame was on an involuntary admission. Mr. Nelson said approximately 5 days. The hearings are primarily done in Yankton and paid for by the county. This fee is not part of the $200 admitting fee. The assessment has to be done on-sight to insure the patient meets admission criteria.

Representative Glenski said in the past there was a great deal of discussion regarding the change in requirements for the Administrator of the Human Services Center. Secretary Oldenkamp commented things were going good at the center.

The recommended budget includes an increase of 2.5 FTE and $129,789 from all funds for acute psychiatric programs. A deficiency was recently noted in the Adolescent Acute Psychiatric Unit during the CMS audit. The 2.5 FTE nursing positions will allow the center to provide continuous 24 hour nursing coverage for the unit. Mr. Nelson said the Center is covering the nursing shortage with overtime and temporary staff to ensure the Center doesn't lose its accreditation. Mr. Nelson said the Center is in compliance now but pushing staff to the limit.

Senator Earley asked about the $117,000 consultant contract with Yankton Medical Clinic. Mr. Nelson said the contract was for consulting services on primary care. Mr. Nelson said there is an increased number of patients with significant health needs. Senator Earley asked if the Center had internal medicine doctors on staff. Mr. Nelson said no, 5 mid-level practitioners and physician assistants. The contract amount is based on an hourly basis and the contract is capped at $117,000.
Representative Klaudt said it appears some vacant buildings are costing money. Mr. Nelson said 8 buildings are vacant and have been taken off the service grid. The Center is attempting to get some of the buildings filled by other agencies. Mr. Nelson said it is too expensive to demolish the buildings, consequently they have been fenced off and left standing.

Mental Health - Kim Malsam-Rysdon, Director presented the budget. The recommended budget consists of $12,474,506 from the General Fund, $10,161,466 from federal funds, and $785,081 from other funds, for a total budget of $23,421,053 and 33.0 FTE. The department is requesting a total Medicaid expansion of $494,752 to provide services for 106 children on a waiting lists and services to families of children with SED. The decrease in other funds is related to positions transferred to the Department of Corrections. Representative Peters asked if the children and adults on waiting lists are serviced in a community facility. Ms. Malsam-Rysdon said these people have sought assistance at a community mental health clinic, met the state funding criteria, however there is no funding available to assist them.

Representative Hunhoff asked where the FTE transfers to Corrections were located. Ms. Malsom- Rysdon said 2 are in Springfield and 2 in Sioux Falls. These positions are job specific.

Representative Putnam said the Committee is seeing the terms “Consumer Expansion” a lot. Does the division advertise or solicit their services? Ms. Malsam-Rysdon said no.

Representative Glenski asked what other agencies, other than the ACT's, are eligible for re-basing. Secretary Oldenkamp said the community mental health and alcohol and drug programs. Secretary Oldenkamp noted no re-basing is planned for FY 06. Mr. Lusk told the Committee the department has changed their process of scheduled re-basing. Agencies provide cost reports and the department will analyze the reports and look for re-basing opportunities.

Terry Dosch, Director of the SD Council of Mental Health Directors and part-time executive director for substance abuse agencies addressed the Committee. Mr. Dosch said the 1.4% inflation increase is inadequate to cover their costs and that maintaining qualified staff is 70-80% of the cost. Mr. Dosch said their turnover is not as high, but recruitment is an issue especially in the rural areas. Mr. Dosch said his organizations have explored insurance pools; however, the size of the pool is an issue. Mr. Dosch provided written testimony in reference to the inflationary increase (Document 4).

Pat Schaefer, Vice President of Children's Care Hospital & School told the Committee the Children's Care Hospital will be before the Committee next week to provide more information. The Children's Care Hospital and School gets their funding through the Department of Social Services. Their biggest concern is the time frame between when the amount is decided and when it is received, as well as reimbursement rates with clients in Rapid City.

Mr. Lusk said the department is working with the Bureau of Finance & Management on a general bill amendment for spending authority on the $694,400 federal earmark on meth and the $250,000 federal spending authority granted at the December interim. Representative Putnam said an omnibus bill will be put together that will list the various items.

Senator Apa asked if there were still problems at the Redfield and Yankton centers with workers having eye glasses broken and clothing ruined. Secretary Oldenkamp said there has been a change in policy and if there is a legitimate complaint they get their items replaced either through workers comp or the Department.

MOTION:     ADJOURN

Moved by:    Klaudt
Second by:    Hunhoff
Action:    Prevailed by voice vote.

Barb Bjorneberg

____________________________

Committee Secretary

J.E. “Jim” Putnam, Chair

../01200800.JAP

Page 1