- Associated Press - Tuesday, October 25, 2016

SACRAMENTO, Calif. (AP) - California companies that provide in-home services for people with disabilities are getting higher payments from taxpayers to contend with a higher minimum wage and new labor laws, but they aren’t passing all of it on to their workers, California’s state auditor said Tuesday.

Respite care workers provide basic needs for people with disabilities, giving family caregivers a break. The services are provided by private companies overseen by the Department of Developmental Services.

But unlike other programs overseen by the department, the respite-services program has no cap on how much companies can charge for administrative expenses and profit, State Auditor Elaine Howell wrote in a report issued Tuesday.

Payments to vendors who provide in-home respite services increased 19 percent on average over a nearly two-year period, while payments to workers increased by an average of 13 percent.

“Because the increases in vendors’ hourly rates are largely due to statutory changes in minimum wage and labor laws, we expected that the hourly wages paid to respite workers would increase at a similar rate,” auditors wrote.

Between June 2014 and March 2016, vendor pay for the more expensive full-service option rose from $17.76 to $21.21 on average, while workers’ hourly wages increased from $9.89 to $11.14. A department official told auditors that a $1 increase in pay actually costs about $1.25 due to higher taxes, Social Security payments and other costs.

But auditors say the department has not conducted a study to determine whether vendors are retaining an appropriate amount of money for profit and administrative costs. It used to require vendors to submit information about their costs but no-longer does so.

Administrative costs varied significantly for a handful of providers that auditors reviewed, ranging from less than 15 percent to nearly 30 percent of revenue.

In-home respite services accounts for about 5 percent of the $4.6 billion California spent last year for private vendors to provide direct service to people with developmental disabilities. Just over 51,000 workers employed by 303 vendors care for 61,000 Californians, according to the audit.

Auditors recommended that the Legislature order a review of payments by late next year and require the department to resume collecting cost information from vendors. They also recommended background checks for workers.

The department said it agreed with some findings for increased oversight but warned that it will come with higher costs. It disputes the need for an immediate analysis of payments, saying they’ll be included in a broader review scheduled for completion in 2019.

DDS appreciates the auditor’s review and, where we agree, will implement the auditor’s recommendations to address the findings identified in the audit report,” agency director Nancy Bargmann wrote in response to the review.

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