Evaluating California’s System for Serving Infants and Toddlers With Special Needs

Evaluating California’s System for Serving Infants and Toddlers With Special Needs MAC TAYLOR LEGISLATIVE ANALYST JANUARY 4, 2018 analysis full gutter AN LAO REPORT LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Executive Summary California Serves More Than 40,000 Infants and Toddlers With Special Needs. In 2015-16, California provided early intervention services to about 41,000 infants and toddlers with special needs. These infants and toddlers either have a disability (such as a visual or hearing impairment) or a significant developmental delay (such as not beginning to speak or walk when expected). The state’s early intervention system provides these infants and toddlers with services such as speech therapy and home visits focused on helping parents promote their child’s development. Parts of California’s early intervention system date back more than 35 years. During this time, the state has not regularly, or even periodically, evaluated this system. In this report, we provide a comprehensive assessment of the system. Background Services Are Provided Through Three Programs. California’s plan for serving infants and toddlers with special needs involves three programs operated by two types of local agencies. • Regional Centers’ Early Start Program. Regional centers are the main provider of early intervention services in California. These centers are nonprofit agencies overseen by the Department of Developmental Services. In addition to their original mission—coordinating community-based services for adults and school-aged children with developmental disabilities— regional centers coordinate services for about 33,500 infants and toddlers with special needs. • Schools’ Legacy Program. The state also provides early intervention funding for 97 schools that have a long legacy of providing early intervention services. The state funds these schools to serve the same number of infants and toddlers as they served when they first received state funding back in the 1980s—about 5,000. • Schools’ Hearing, Visual, and Orthopedic Impairments (HVO) Program. Although regional centers are required to serve most infants and toddlers not served in the school legacy program, schools are required to serve infants and toddlers who have solely HVO impairments and no other eligible condition. Schools currently serve about 2,500 infants and toddlers with HVO impairments, of which about 1,500 are served in the school HVO program and 1,000 are served in the legacy program. State Provides Most Funding for Early Intervention Services. Although services are required as a condition for receiving a federal early intervention grant, this grant covers a relatively small portion (about $50 million, or 10 percent) of associated service costs. State funding covers the bulk of service costs (about $370 million, or 77 percent), with other fund sources (such as health insurance billing) covering the remainder of costs (about $60 million, or 13 percent). Schools and Regional Centers Provide Similar Services Using Different Delivery Models. Although federal law outlines a general process both schools and regional centers must follow in serving infants and toddlers with special needs, the two types of agencies use notably different service delivery models. Specifically, schools tend to employ their own service providers (such as speech therapists), whereas regional centers coordinate services offered by independent service providers. www.lao.ca.gov 1 analysis full gutter AN LAO REPORT Assessment Important Differences Between Schools and Regional Centers. Although considerable overlap likely exists in the populations served by the two types of agencies, schools spend much more per child than regional centers (about $16,000 as compared to about $10,000). Additionally, regional centers tend to offer parents more choice among service providers. Finally, regional centers are better equipped to help parents access public or private insurance coverage. California’s Bifurcated System Likely Causes Service Delays. Because California’s system is divided between three programs and two types of agencies, parents and agency staff are frequently confused as to which program is responsible for serving each child. Moreover, California lags nearly all states in providing timely services. Many infants and toddlers wait weeks or even months before being placed in the appropriate program, during which time they do not receive services. California also performs worse than other states in facilitating transition from early intervention services to preschool special education. Based upon our conversations with stakeholders, we believe these preschool delays likely result from some regional centers struggling to coordinate with schools. Recommendations Unify All Services Under Regional Centers. Given the shortcomings of California’s bifurcated system, we recommend the state unify the system under one lead agency. Compared to California’s existing system, a unified system likely would provide more timely services and provide more equal funding for each child served. Given how the state’s early intervention system has evolved over the past 35 years, we believe regional centers currently are better positioned than schools to serve in this lead capacity. Specifically, regional centers already serve the vast majority of infants and toddlers with special needs, provide more parental choice, and are better equipped to access public and private insurance billing. Establish a Transition Plan. We recommend the state develop a plan to help ensure continuity of services for families during the transition to a unified system. As part of the transition plan, we recommend the state allow regional centers some flexibility in contracting with schools to continue serving some infants and toddlers. We also recommend the regional centers develop transition plans for serving infants and toddlers who are deaf or hard of hearing. In addition, we recommend the state require regional centers to follow established best practices to ensure smooth transitions to preschool. New System Would Produce State Savings. Though we recommend transitioning to a new system for the direct benefits it would have for infants and toddlers with special needs, a unified system under the regional centers also would generate state savings. We estimate savings in the range of $5 million to $35 million. The state could repurpose these savings for any budget priority or use them to expand or enhance early intervention services (for example, by conducting more outreach or raising associated reimbursement rates). 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT INTRODUCTION In 2015-16, California provided early intervention and regional centers for persons with developmental services to about 41,000 infants and toddlers with disabilities. This report provides the first comprehensive special needs. These infants and toddlers either have analysis of this system since it was established in a disability (such as a visual or hearing impairment) 1993. The report has three main sections. We first or a significant developmental delay (such as not provide background on California’s early intervention beginning to speak or walk when expected). California’s system, then assess this system, and conclude by early intervention system consists of three programs recommending several ways to improve the system. administered by two types of local agencies—schools BACKGROUND Below, we describe the history of early intervention Regional Centers Also Have a Long History of programs in California, the state’s current approach Serving Some Infants and Toddlers With Special to placing infants and toddlers into each of its three Needs. In 1965, the state began developing a network programs, what types of services these three programs of regional centers to coordinate services for individuals provide, and how these programs are funded. with developmental disabilities. The centers— nonprofit agencies overseen by the Department of Origins of System Developmental Services (DDS)—were designed as Some Schools Have a Long Legacy of Serving a community-based alternative to state institutions. Infants and Toddlers With Special Needs. Originally serving adults and school-aged children Immediately prior to Proposition 13 (1978), 61 schools with developmental disabilities, regional centers were providing services to a small number of infants began receiving state funding in 1983 to serve infants and toddlers with special needs. (Throughout this and toddlers deemed “at risk” of becoming lifelong paper, we use the term “schools” to refer to both consumers of community-based services. Throughout school districts and county offices of education. “Infants the 1980s, the state provided several rounds of and toddlers” refer to children from birth until their third one-time funding to expand these early intervention birthday.) These 61 programs were funded by local services. By 1988, regional centers were serving about property tax revenue and established at the discretion 6,000 infants and toddlers per year. of local school administrators. Following the passage of In 1993, the State Developed a Plan to Serve All Proposition 13, schools across the state experienced Infants and Toddlers With Special Needs. Starting in significant reductions in property tax revenue and the mid-1980s, the federal Individuals with Disabilities began eliminating some locally funded programs. Education Act (IDEA) authorized annual grants to To backfill for lost property tax revenue, California in states that agreed to identify and serve all infants and 1980 began providing state funding to the 61 schools toddlers with special needs. California was the last already operating early intervention programs. Between state to apply for this federal program (now known 1985 and 1987, California expanded this state funding as IDEA Part C), submitting a comprehensive early to an additional 36 schools. The state continues to intervention plan in 1993. Relative to California’s early fund these 97 schools for serving the same number of intervention programs before 1993, this comprehensive infants and toddlers they each served when they first plan significantly expanded the role of regional centers received state funding—a total of about 5,000 infants but required all schools to serve infants and toddlers and toddlers statewide. We refer to this state funding who had only a hearing, visual, or orthopedic (HVO) for these 97 schools as the school “legacy program” impairment. In the first year under this comprehensive throughout the remainder of this report. plan, regional centers served about 11,000 infants and toddlers with special needs, compared to 6,000 infants www.lao.ca.gov 3 analysis full gutter AN LAO REPORT and toddlers being served by schools (5,000 in the toddler and must serve at least as many infants and legacy program and 1,000 in the new HVO program). toddlers as they served in the mid-1980s (5,000, or 12 percent of all existing infants and toddlers receiving Current System early intervention services). In 2015-16, in addition to Under State’s Plan, Regional Centers Serve serving approximately 1,000 infants and toddlers with Most Infants and Toddlers With Special Needs. only HVO impairments, the legacy program served Since 1993, California’s early intervention plan has 4,000 infants and toddlers with other disabilities. made regional centers the default agency for serving Figure 1 summarizes the history of California’s three most infants and toddlers with special needs. In early intervention programs, and Figure 2 illustrates 2015-16, the state’s 21 regional centers served about the relative proportions of infants and toddlers currently 33,500 (82 percent) of the 41,000 infants and toddlers served in each program. receiving early intervention. Most infants and toddlers Schools and Regional Centers Use the Same served by regional centers have developmental delays, Process to Develop Individual Service Plans. Both meaning they are significantly behind most children schools and regional centers follow a five-step process in developing important abilities such as speech or outlined in federal law for serving infants and toddlers. motor skills. A smaller number of infants and toddlers • Referral. Infants and toddlers typically are served by regional centers have disabilities such as referred to a school or regional center by primary autism or Down syndrome. The regional centers’ early care physicians following routine check-ups. intervention program is called Early Start. • Evaluation. Following each referral, school Infants and Toddlers With Only HVO Impairments or regional center staff evaluate the child to Are Served by Schools. Although California requires determine eligibility for early intervention. schools to serve infants and toddlers who have only • Individualized Family Service Plan. For each HVO impairments, it does not require schools to serve child deemed eligible for services, his or her family infants and toddlers who have HVO impairments in meets with staff to develop an individualized combination with any other eligible condition. For family service plan. These plans are reviewed at example, the state requires schools to serve infants least once every six months. Typically, these plans and toddlers who are deaf and have no other eligible include targeted services like weekly speech condition but requires regional centers to serve therapy sessions and regular home visits from an infants and toddlers who are both deaf and have a early education specialist who provides support developmental delay. Nearly 25 years after the state on a wide range of developmental issues. developed its early intervention system, the original rationale for this division of responsibilities is somewhat • Identification of Providers. Staff identify unclear. In conversations with stakeholders, we heard appropriate providers for the services listed in the many suggest that schools have a long history of plan. serving older children with HVO impairments and thus • Service Provision. Direct service providers travel were well positioned in 1993 to serve infants and to each child’s home whenever possible, generally toddlers with similar impairments. Schools currently providing services alongside the child’s parents (or serve about 2,500 infants and toddlers with only HVO other primary caregiver). This final requirement is impairments, comprising 8 percent of all infants and intended to ensure parents learn how to promote toddlers receiving early intervention services. About their child’s development as part of their daily 1,000 of these 2,500 infants and toddlers are served routines. in the school legacy program, whereas the other 1,500 Schools and Regional Centers Use Different are served in the school HVO program. Service Delivery Models. Schools typically employ Schools in the Legacy Program Continue to their own early intervention service providers (such as Serve Any Eligible Child. The state continues to speech therapists), whereas regional centers coordinate fund the 97 schools that have a long legacy of serving services from independent providers. Before directly infants and toddlers with special needs. Schools in paying for services, regional centers are required by this legacy program can serve any eligible infant or 4 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Figure 1 California's Early Intervention System Developed Over Many Years HVO = hearing, visual, or orthopedic impairments. law to first access services paid for by families’ health insurance plans, including Medi-Cal and private insurance. Regional center service coordinators typically help families navigate the health insurance system to get early intervention services covered. When a family’s insurance network does not provide easy access to a specified early intervention provider (as is frequently the case), regional centers pay for these services with state funding. In Some Cases, Schools Provide Services Under Regional Center Contracts. Regional centers can contract with any qualified provider of early intervention services. Typically, these providers are either nonprofit organizations specializing in early intervention or independent clinics offering speech therapy, physical therapy, or other specialized services. Regional centers also sometimes contract with schools to provide early intervention services. These schools typically provide the same www.lao.ca.gov 5 sloohcS Legacy Program HVO Program lanoigeR sretneC analysis full gutter Before 1980 1980 1983 1985 - 1987 1993 - Current 61 districts fund early State backfills State funds additional State continues intervention with local 61 districts for 36 districts to provide funding 97 districts to property tax revenues. revenue lost due early intervention. serve any eligible child. to Proposition 13. State requires schools to serve all children with only HVO impairments. State funds regional State requires regional Early centers to serve “at-risk” centers to serve all eligible Start infants and toddlers. infants and toddlers not served by schools. Figure 2 Regional Centers Serve Most Infants and Toddlers With Special Needs 2015-16 Regional Centers (Early Start) 33,500 Schools (HVO Program) 1,500 Schools (Legacy Program) 5,000 Children with only HVO All Other Eligible Children Impairments 37,500 2,500 HVO = hearing, visual, or orthopedic impairments. analysis full gutter AN LAO REPORT services to infants and toddlers served under regional ongoing services through DDS (unless parents do not center contracts as they provide to infants and toddlers want their child assessed). To be eligible, children must served in the legacy program. In 2015-16, regional have a developmental disability that is substantial in centers contracted with a total of 18 schools to provide nature and expected to continue indefinitely. Qualifying $13 million of early intervention services. disabilities are autism, epilepsy, cerebral palsy, Federal Law Requires Administering Agencies intellectual disability, or other disabling condition similar to Initiate Services Soon After Referral. Under IDEA, to intellectual disability or that requires similar treatment. schools and regional centers must develop an initial Statewide data show about 20 percent of children who individualized family service plan no later than 45 days receive early intervention go on to become active DDS after each child’s referral. They must begin services consumers. (Most of these children also qualify for no later than 45 days after development of the initial preschool special education.) service plan. These requirements are intended to Funding ensure eligible children do not fall even further behind their peers while waiting to receive early intervention. All State Funds Most Early Intervention Services. states must annually report their compliance with these Figure 3 shows state and federal funding in 2015-16 deadlines to the federal government, which uses such for early intervention services in California. Across the data to evaluate the performance of each state’s early three early intervention programs, the state provided intervention system. $367 million (88 percent), whereas the federal Some Children Transition to Preschool Special government provided $50 million (12 percent). Education Upon Turning Three. Many children Most Early Start Provider Rates Are Determined receiving early intervention show significant progress by State Policy. Prior to 2003, DDS set a range and are determined to no longer require special of allowable rates for providers of most Early Start supports at age three. For example, some infants services. Within the allowable range, regional centers who have not spoken their first words by 18 months set a specific provider’s rate based on that provider’s and are diagnosed with initial communication delays documented costs. (Although schools providing Early overcome those issues by age three. Some three year Start services under regional center contracts were olds, however, have more serious and lingering disabilities (such as Figure 3 visual impairments or autism). About State Funds Most Early Intervention Servicesa 45 percent of children served by LAO Estimates for 2015-16 (In Millions) California’s early intervention system qualify for special education at age Program Amount three. To ensure a seamless transition Regional Centers: Early Start from early intervention to preschool State Non-Proposition 98 General Fund $289.8 services, the federal government Federal IDEA Part C Grant 35.9 requires early intervention providers Subtotal ($325.7) to work with each child’s school to Schools: Legacy Program develop a transition plan no later State Proposition 98 General Fund $74.8 than 90 days before his or her third Subtotal ($74.8) birthday. As with the deadlines for Schools: HVO Program initial service delivery, all states must Federal IDEA Part C Grant $14.2 State Proposition 98 General Fund 2.4 annually report their compliance with Subtotal ($16.6) this transition deadline. Total $417.1 Some Children Become a Does not include (1) Early Start services billed to Medi-Cal and private insurance; (2) Early Start Lifelong Consumers of Regional services reimbursed by federal Early Periodic Screening, Diagnosis, and Treatment funding; or Center Services. At age three, (3) general purpose K-12 funds locally repurposed to support school-based early intervention. HVO = hearing, visual, or orthopedic impairments and IDEA = Individuals with Disabilities regional centers assess children Education Act. to determine if they are eligible for 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT not subject to these allowable ranges, their rates $325 million annually from state and federal funding for were similarly based on each school’s documented Early Start. costs.) Starting in 2003, the Legislature effectively froze State Funds School-Based Programs Using Two rates for existing providers and capped rates for new Funding Formulas. As detailed in the nearby box, the providers at the statewide average rate for existing state maintains one formula to fund the legacy program providers. Since 2003, most Early Start rate increases and another to fund the HVO program. Compared have been due to increases in the statewide minimum to Early Start, neither program receives notable wage. These rate policies do not apply to speech, reimbursements from third-party insurance. Though physical, or occupational therapists, each of which state law does not prohibit schools from accessing receive a uniform statewide rate equal to the Medi-Cal such funding, available data indicate insurance covers rate for such services. Since 2003, Medi-Cal rates for less than 1 percent of school-based early intervention these types of therapists have been largely unchanged. costs. Before Using Early Start Funds, Regional Schools Supplement Early Intervention Funding Centers Determine if Insurance Coverage Is With Locally Repurposed K-12 Funding. School Available. State law requires regional centers to expenditure data show that state and federal early help families access services covered by their private intervention funding is insufficient to cover the full cost or government-sponsored health insurance plans of school-based programs. Consequently, schools before using state funding to pay for early intervention cover some early intervention costs with a combination services. Despite this requirement, we estimate of K-12 general education funding (mostly from the relatively few early intervention services are paid for by Local Control Funding Formula) and K-12 special insurance. Specifically, we estimate Medi-Cal provides education funding. We estimate schools cover between about $40 million annually for early intervention, and $5 million and $10 million annually in early intervention private health insurance provides less than $20 million costs with repurposed K-12 funding. annually. By comparison, regional centers provide about Funding for School Programs Legacy Program Funded Through Complicated Formula. Since 1980, schools in the legacy program have been funded using a formula originally developed for K-12 special education. The formula is linked to the estimated cost of specific K-12 special education services. For example, schools receive one rate for special day classrooms serving only students with special needs and another rate for serving students with special needs in mainstream classrooms. Each district receives a unique rate per special education service based on a statewide survey of special education costs conducted in 1979-80, with cost-of-living adjustments. Importantly, the state no longer uses this formula to fund K-12 special education, having adopted a simpler and more flexible funding formula in 1998. Though the state continues to use the more dated and complicated formula to fund early intervention, stakeholders have long argued the formula is a poor proxy for the cost of these services. More than 30 years have passed and the formula remains unaltered. HVO Program Has Been Flat-Funded for Two Decades. School hearing, visual, or orthopedic (HVO) programs have received no funding increases since 1996-97. Rather, state and federal funding has remained constant at $16.6 million even as the total number of infants and toddlers with only HVO impairments has increased from about 1,500 in 1996-97 to about 2,500 today. Because state and federal funding has not kept pace with increasing service costs, HVO programs likely rely more heavily on locally repurposed K-12 funding than legacy programs. www.lao.ca.gov 7 analysis full gutter AN LAO REPORT ASSESSMENT Below, we compare the programs run by schools schools spent about $16,000 per child whereas and regional centers, assess the timeliness of service regional centers spent about $10,000 per child. Based planning and delivery, and examine how smooth the on conversations with local stakeholders and a review transition is from early intervention services to preschool of the available data, we believe at least two factors special education services. contribute to this large cost difference. First, schools typically pay service providers for travel time and Comparing the Two Types of Agencies cancelled appointments whereas regional centers do Likely Considerable Overlap in Populations not. Second, schools are more likely to provide services Served by Schools and Regional Centers. In theory, through credentialed teachers, who tend to be better the state intended schools to serve mostly infants compensated than other early education specialists. and toddlers with HVO impairments, whereas regional The available data do not allow us to determine what centers would serve most other types of infants and share, if any, of the cost difference is due to schools toddlers. In practice, we think the populations served possibly serving infants and toddlers with more by each agency overlap notably. Specifically, based severe disabilities. Comparative data on the number on available school data, we extrapolate that regional of services provided per child are also unavailable, so centers serve as many as 45 percent of all infants and we could not determine the extent to which that factor toddlers with HVO impairments. Regional centers likely might be driving cost differences. serve such a high share of these children because Parents Largely Satisfied With Both Agencies. the state plan requires them to serve infants and Figure 4 shows the results of a parental satisfaction toddlers who have HVO impairments in combination survey conducted in 2011-12. Large majorities of with any other eligible condition. At the same time, parents reported being satisfied along three different because schools in the legacy program can serve any service dimensions, regardless of which agency served eligible child, statewide school data indicate nearly them. A somewhat larger share of parents served by 60 percent of all infants and toddlers served by schools schools, however, expressed satisfaction than those do not have HVO impairments. Though we suspect served by regional centers. considerable overlap in the types of children served by regional centers Figure 4 and schools, the regional centers do Parents Largely Satisfied With not compile information on infants Both Schools and Regional Centers and toddlers served by type of 2011-12 a, Percentage Reporting Early Intervention Agency Helped . . . disability. Due to this data limitation, whether regional centers, on 94% 93% 91% average, have more or less severe 82% caseload is unknown. 77% 79% Regional Centers Provide Same Types of Services at Much Lower Cost. To help assess relative cost-effectiveness, we compared Schools the per-child expenditures on early Regional Centers intervention services at schools and regional centers in 2015-16. After accounting for all fund sources, we Parents Know Their Parents Communicate Child Develop and Learn Child's Rights Their Child's Needs Important Skills estimate schools spent 60 percent more than regional centers per child a The only year for which these data are disaggregated for parents served by each type of agency. served. Specifically, we estimate 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Regional Centers Offer More Parental Choice placement can sometimes take days or even weeks, Than Schools. Parents served in school programs thereby delaying services. typically cannot choose their early intervention service California Lags Other States in Providing Timely providers. They must accept services from the Services. Figure 5 compares California’s performance school’s own employees. By contrast, parents served in meeting federal early intervention service deadlines by regional centers often have a choice of several with other states. Though most states comply with providers. This could be one reason parents served these deadlines more than 95 percent of the time, by regional centers are nearly as satisfied with their California complies less than 85 percent of the time. services as parents served by schools, despite schools One of the few states to perform worse than California spending notably more per child. on these measures, South Carolina, is also the only Regional Centers Are Better Equipped to Help other state we could identify that divides its early Parents Access Medi-Cal and Private Insurance. intervention system between two state agencies. (South Parents served by schools rarely bill Medi-Cal and Carolina ranks last nationally in meeting both deadlines.) almost never bill private insurance for early intervention, Preschool Transition meaning the state must pick up nearly the entire cost of school-based programs. By comparison, regional California Performs Worse Than Other States in centers are more accustomed to working with families Facilitating Transition to Preschool. Figure 6 (see to access third-party insurers, which produces state next page) compares California’s performance to that savings. of other states with regard to meeting federal deadlines for transitioning children from early intervention to Service Deadlines preschool special education. As with the deadlines for Timely Service Delivery Is Crucial in Early initial service delivery, California lags behind the large Intervention. Children develop rapidly during their first majority of states at key transition phases. In particular, three years, such that babies developing just a few California lags far behind other states in notifying days behind their peers can quickly grow into toddlers schools of children who are receiving early intervention several months or even a year behind. Concerned that services and soon to turn three. When schools are such widening gaps might result in long-run academic not notified ahead of time, they cannot participate in challenges, the federal government sets deadlines for developing transition plans (which are then developed providing early intervention services. solely by the regional centers), likely resulting in less California’s Bifurcated System Likely Causes seamless transitions. Service Delays. Families and early intervention staff Transition Challenges Likely Due to Poor often have difficulty determining whether schools or Regional Center Practices. Unlike with early regional centers are responsible for serving a particular intervention, agencies have no confusion over who is infant or toddler. For example, a toddler who is orthopedically impaired will typically be served in the school Figure 5 HVO program, unless he or she California Does Poorly in Meeting Federal Deadlines also has a developmental delay, in Percentage of Children for Which State Completed Activities on Time, 2013-14a which case he or she will typically Develop Initial Begin be served by a regional center. Service Plan Services However, if this toddler resides near 25th ranked state 97.9% 98.3% a school receiving legacy program funding, he or she typically receives 40th ranked state 95.1 94.6 school services, unless the school Californiab 82.1 82.1 has already filled its legacy program a An initial service plan is to be developed within 45 days of referral. Services are to begin within capacity, in which case he or she can 45 days of developing an initial service plan. b California ranks 46th among the 50 states in meeting the initial service plan deadline and 47th in only be served by a regional center. meeting the begin services deadline. Determining an infant or toddler’s www.lao.ca.gov 9 analysis full gutter AN LAO REPORT responsible for serving children in Figure 6 preschool special education—schools California Does Poorly in always have this responsibility. Planning Preschool Transitions Consequently, regional centers must coordinate with schools to Percentage of Children for Which State Completed Activities on Time, 2013-14a ensure a smooth transition. Many Hold Develop stakeholders indicate regional centers Notify Planning Transition School Conference Plan do not always follow best practices in coordinating these transitions, which 25th ranked state 99.7% 98.0% 99.3% likely explains California’s weak results 40th ranked state 94.3 90.7 94.4 relative to other states in meeting Californiab 74.5 86.2 91.4 a federal deadlines. Deadline for all activities is 90 days before child’s third birthday. b California ranked 47th among the 50 states in notifying schools about impending transitions, 44th in holding planning conferences, and 47th in developing transition plans. RECOMMENDATIONS Below, we make a series of recommendations currently served by schools to regional centers would that if taken together would substantially address the increase the regional center Early Start caseload by concerns highlighted in the previous section. First, 19 percent, shifting the approximately 33,500 infants we recommend unifying the state’s early intervention and toddlers served by regional centers to schools system under a single agency. Second, we recommend would increase the school early intervention caseload the state make several changes to ensure a smooth by more than 500 percent. Because schools spend transition to a unified system. Finally, because we notably more than regional centers per child served, anticipate the new system would result in state savings, shifting all infants and toddlers from schools to regional we briefly discuss options for using these savings to centers also likely would produce state savings. either expand or improve early intervention. By contrast, we estimate it could cost as much as $200 million to shift all infants and toddlers from Unify System regional centers to schools. Finally, we believe the state Unify System Under a Single Agency. We can continue to enjoy the benefits of school-based recommend shifting all major program responsibilities programs (for example, expertise in serving children (along with all state and federal early intervention with HVO impairments) even after shifting all infants funding) to a single agency. We believe such a unified and toddlers to regional centers by encouraging more system would provide families more timely services. schools to provide services under regional center A unified system also would simplify state funding contracts. Shifting all infants and toddlers to schools, allocations and eliminate the current funding differences however, likely would undermine the existing benefits among the state’s three early intervention programs. of regional center programs, including greater parental Additionally, a unified system could offer some families choice and third-party billing. more choice among service providers. Establish Transition Plan Make Regional Centers Responsible for Serving All Infants and Toddlers With Special Needs. Given Encourage Schools to Continue Serving Infants how California’s system has evolved over the years, we and Toddlers Under Regional Center Contracts. believe regional centers currently are better positioned Although we believe regional centers generally are than schools to run an early intervention system. better positioned to oversee a unified early intervention Regional centers already serve the vast majority of system, schools currently are the only early intervention infants and toddlers with special needs. Whereas providers in some rural counties. Moreover, schools shifting the approximately 6,500 infants and toddlers tend to have more expertise in serving children with 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT HVO impairments than other providers. To ensure Repurpose State Savings infants and toddlers who live in rural areas or have Unified System Likely Would Result in State HVO impairments continue to receive services, we Savings. Though we recommend transitioning to a recommend requiring regional centers during the unified system for the direct benefits it likely would have transition period to contract with schools that currently for infants and toddlers with special needs, such a shift participate in the legacy and HVO school programs. We likely also would result in state savings. This is because further recommend funding regional centers such that regional centers are both better equipped than schools they can negotiate higher reimbursement rates for these to help parents access third-party insurance coverage schools during the transition, as these schools currently and tend to pay less than schools for each child served. receive funding rates that are higher than regional We estimate shifting all infants and toddlers with special center rates. In the long run, however, we recommend needs from schools to regional centers would save the any further rate increases apply equally to both schools state between $5 million and $35 million annually. The and other types of Early Start providers. exact savings would depend on many factors, including Require Regional Centers to Develop Transition how many infants and toddlers continue to be served Plans for Serving Infants and Toddlers Who Are by schools under relatively generous interim regional Deaf or Hard of Hearing. Among disabilities and center contracts and how many early intervention developmental delays, deaf or hard of hearing seems therapies are billed to third-party insurers. (These to arouse the greatest policy controversy regarding savings are contingent upon the state removing current appropriate early intervention services. In response to funding from the Proposition 98 minimum guarantee. potential concerns about how deaf or hard of hearing Precedent exists for rebenching the guarantee in such infants and toddlers may fare under a unified system, cases.) we recommend the Legislature require regional centers State Could Repurpose Savings to Expand or to develop specific transition plans for this group. Improve Early Intervention. The Legislature would Specifically, we recommend these regional center have many options for repurposing state savings, plans specify the providers they have lined up to serve ranging from redirecting the savings to other parts these children and outline the approach they will use of the state budget to putting the savings back into to ensure each child receives appropriate support. schools or regional centers. If the Legislature wanted to We recommend subjecting these plans to review and keep the savings within the area of early intervention, approval by the California Department of Education’s it, in turn, would have many options. For example, Office for Deaf and Hard of Hearing Students. Such the state could conduct targeted outreach aimed an approach would leverage the department’s existing at identifying and serving more infants and toddlers expertise in serving these children. with special needs or it could raise reimbursements Establish Best Practices to Improve Preschool rates. Raising rates likely would help retain existing Transition. To improve preschool transitions, we providers in the system and encourage more providers recommend the Legislature adopt statute requiring to participate, which, in turn, would increase parental regional centers to exercise a series of best practices. choice. The Legislature would face difficult trade-offs These best practices would include having regional as they weighed these options. For example, many centers develop annual interagency agreements with DDS programs, as well as other state programs, desire each school in their service area to specify the general higher reimbursement rates. process for handling preschool transitions, identify a specific point of contact at each school for coordinating all transitions, and implement shared data systems to allow both agencies to track children nearing their third birthdays. We believe these recommendations could be accomplished either by reprioritizing existing resources or with a relatively modest increase in regional center funding of no more than $1.5 million. www.lao.ca.gov 11 analysis full gutter AN LAO REPORT CONCLUSION California’s early intervention program has notable unifying the system and serving all infants and toddlers weaknesses. In particular, its bifurcated design results through regional centers. We believe this unified system in service delays and large differences in the amount of would address the system’s major weaknesses while funding and parental choice offered to families served generating state savings that could be used to expand by schools and regional centers. We recommend or improve early intervention services. 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT www.lao.ca.gov 13 analysis full gutter AN LAO REPORT LAO PUBLICATIONS This report was prepared by Ryan Anderson and Sonja Petek, and reviewed by Jennifer Kuhn and Mark C. Newton. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 14 LEGISLATIVE ANALYST’S OFFICE