Developmental Disabilities Oversight Committee sunset review

              AUDITOR GENERAL
LEmER REPORT DOUGLAS R NORTON, CPA
AUUITOK GENERAL
October 17,1996 Letter Report No. 96- L2
Members of the Arizona Legislature
The Honorable Fife Symington, Governor
Ms. Eduarda Yates, Chair
Developmental Disabilities Oversight Committee
Subject: Developmental ~ isabilitie'sO versight Committee
Sunset Review
Transmitted herewith is a letter report of the Auditor General, Sunset review of the Developmental
Disabihties Oversight Committee. This letter is in response to a May 17,1995, resolution of the Joint
Legislative Audit Committee. This review was conducted as part of the Sunset review set forth in A. R. S.
5541- 2951 through 41- 2957. In addition to the issues normally contained in a Sunset review, one purpose
of this review as directed by the Forty- First Legislature and outlined in Laws 1994, Chapter 35/ 53,
is:
". . . to provide for a legislative review of monies expended from the developmentally
disabled client services trust fund to ensure that these monies are spent only for client
services provided by the department of economic security."
Summary
Our review found that the Developmental Disabilities Oversight Committee ( Committee) has not
expended any Client Services Trust Fund ( Trust Fund) monies on services for clients. Though some
money was expended on nonclient uses in fiscal years 1992 and 1993, the Trust Fund has been fully
reimbursed. The Committee has not developed expenditure guidelines and should do so to fulfill its
primary purpose of overseeing Trust Fund expenditures. In addition, we found that the Committee's
responsibility for investigating and recommending compatible uses for the Coolidge and Tucson training
facilities is not necessary because the Director of the Department of Economic Security also has been
charged with this responsibility.
29 10 NORTH 44Tk1 STREET a SU! i E 4 10 * PHOENIX ARIZONA 850 18 1602) 553- 0333
Background
The Developmental Disabilities Oversight Committee was originally established as a result of Laws
1985, Chapter 313,510 ( A. RS. 536- 573) with the closing of the Arizona Training Program at Phoenix
( ATPP). The ATPP was a state- operated facility that provided housing and training for persons with
developmental disabilities. The Committee was created primarily to ensure that monies derived from
the lease or sale of the ATPP property were used for persons with developmental disabilities. The same
enactment ( A. RS. 536- 572) also established the Client Services Trust Fund, which consists of the proceeds
from the sale or lease of the ATPP property and buildings. As of June 30,1996, the ATPP property
had not sold and there was approximately $ 273,000 in the Trust Fund generated from leasing the
property and interest earned. Both the leasing income and interest earnings may be expended for client
services. However, if and when the property is sold, the Committee is limited by statute to expending
only the interest earned on the proceeds of the property sale. A. R. S. 536- 572( D) requires that the money
in the Trust Fund be spent only for client services provided by the Department of Economic Security
( DES). A. R. S. 536- 573( D) states that the Committee shall:
1. Review and approve or disapprove expenditures of monies from the Client Services Trust Fund;
and
2. Investigate compatible uses for Arizona training program facilities and make recommendations
to the Legislature on possible uses of those facilities.
Committee membership consists of one parent of a person with developmental disabilities, two
individuals from organizations that represent people with developmental disabilities, one DES
representative, and two non- voting members from the Legislature. A DES employee also provides
the Committee with administrative support.
Committee Should
Complete Guidelines for
Trust Fund Expenditures
The Committee should develop Trust Fund expenditure guidelines and recommend that the
Legslature place the guidelines in statute. To date, no Trust Fund monies have been spent on client
services due to a lack of expenditure guidelines and the limited monies available. By developing
expenditure guidelines that could be placed in statute, the Committee can fulfill its general
responsibility to oversee Trust Fund expenditures.
Few Triisf Fzwd exyazditzrres- The Committee has not expended money from the Trust Fund on
persons with developmental disabdities. Currently, there is approximately $ 273,000 in the Trust Fund
generated from leasing the Arizona Training Program at Phoenix ( ATPP) property and earned interest
Some monies in the Client Services Trust Fund were spent inappropriately but have since been
reimbursed. In fiscal years 1992 and 1993, approximately $ 226,000 of Trust Fund monies were
expended for items such as ATPP building security, demolition, and related cleanup expenditures.
Since the monies were spent on building- related services, and not on client services as required by
A. R. S. $ 36- 572@), the expenditures were inappropriate. In fiscal year 1995, the DES Assistant Director
of the Division of Developmental Disabilities ( Division) directed DES to reimburse the Trust Fund
for the full amount expended.
I Exyerrditzweguidelines aw needed- The Committee can fulfill its mission by developing expenditure
guidelines for the Client Services Trust Fund and by recommending that the Legislature include these
guidelines in the statutes. The Committee formed a subcommittee in October 1994 to begin drafting
guidehes outlining the services for which the Trust Fund monies should be expended. To date, ideas
generated by the subcommittee include using the monies for nonrecurring expenses related to housing
or transportation.
Once the Client Services Trust Fund expenditure guidelines are completed, the Legislature should
consider amending A. R. S. 536- 572( D) to include these guidelines to ensure that Trust Fund monies
are spent appropriately. Placing the expenditure guidelines in statute will help to ensure that Client
Services Trust Fund monies are spent on clients, fulfilling the Committee's general responsibility to
oversee Trust Fund expenditures.
Committee's Responsibility for
Training Program Facilities
Is Not Necessary
Although the State continues to operate residential training facilities for persons with developmental
disabilities in Coolidge and Tucson, the Committee does not have a critical role regarding these
fachties. A. R. S. $ 36- 573@)( 2) requires the Committee to investigate and recommend to the Legislature
any possible compatible uses for these facilities. According to legislative staff, the Committee is to
review proposals that it receives; however, the Committee is not responsible for seelung out compatible
use groups, such as nursing homes, to occupy the facilities. Under A. R. S. 536- 554( A)( 9) the Director
of the Department of Economic Security ( DES) is also required to make recommendations for
compatible uses to the Committee. To date, the Committee has not received any proposals for
compatible uses.
Compatible uses for the existing training facilities may not be feasible in the near term because of
statutory provisions and other factors. A. R. S. $ 36- 554( A)( 8) requires training facilities to be maintained
for residents for whom the community lacks an appropriate residential setting and for residents whose
parents or guardians wish them to remain in state- operated facilities. As long as these facilities are
statutorily required to remain open, it may be difficult to accommodate any compatible use groups.
There are approximately 150 residents at the Coolidge facility. In addition, according to the Assistant
Director of the Division, the need for extensive renovations to the Coolidge facility makes it difficult
to accommodate an outside group.
At the Tucson facility the State must provide services for persons with developmental disabilities or
lose use of the federal land on which the facility is located. A federal agreement requires the Tucson
facility to continue to meet the needs of persons with developmental disabilities. The program at
Tucson anticipates completely phasing out its residential services by early 1997, but it will continue
to offer day programs for clients.
Committee Could Be
Allowed to Terminate
When Mandates Are Met
Once the Committee completes the Chet Services Trust Fund expenditure guidelines and necessary
legislative changes are made, it will have fulfilled its general responsibilities and could be allowed
to sunset The Committee indicates it will need no more than two years beyond its sunset date of July
1,1997, to accomplish its responsibilities. To achieve this termination by July 1,1999, we recommend
the following:
The Committee should develop expenditure guidelines for monies in the Client Services Trust Find;
The Legislature should consider amending A. R. S. 536- 572@) to include the expenditure guidelines
to help ensure that the Trust Fund monies are spent appropriately;
The Legislature should modlfy A. R. S. 536- 572@) to grant authority to the Division of Developmental
Disabilities to expend monies from the Client Services Trust Fund using the Committee's guidehes;
A. R. S. 536- 573( D)( 2), requiring the Committee to recommend compatible uses for the facilities,
should be deleted.
A. R. S. § 36354( A)( 9), requiring the DES Director to make recommendations for compatible uses
for the facilities to the Committee, should be deleted.
The Auditor General and staff express appreciation to the Chair and members of the Developmental
Disabilities Oversight Committee and to Department of Economic Security staff for their cooperation
and assistance during the review. A copy of the sunset factors and the Committee's response to this
letter report are attached.
My staff and I will be pleased to discuss or clanfy items in this report.
Sincerely,
" Douglas R. Norton
Auditor General
Attachments
Sunset Factors
Developmental Disabilities Oversight Committee
In accordance with A. R. S. 541- 2954, the Legislature should consider the following 12 factors in
determining whether to continue or terminate the Developmental Disabilities Oversight Committee
( Committee).
1. The objective and purpose in establishing the Committee.
The Developmental Disabilities Oversight Committee was first established in 1985 as part
of legislation outlining the closure of the Arizona Training Program at Phoenix ( ATPP). The
legislation also set up the Developmentally Disabled Client Services Trust Fund ( Trust Fund)
for proceeds from the lease or sale of ATPP property once the closure was complete. The
Committee is responsible for reviewing and approving or disapproving expenditures of monies
from the Client Services Trust Fund under A. R. S. $ 36- 573( D)( 1). A. R. S. 536- 573( D)( 2) also
requires the Committee to assess compatible uses for state training facilities at Coolidge and
Tucson and make recommendations to the Legislature.
The Legislature mistakenly terminated the Committee in 1993. Laws 1992, Chapter 70, repealed
statutes relating to government organizations that had completed assigned tasks; $ 2( N) of
the legislation established a termination date of October 1,1993, for the Committee. Laws
1994, Chapter 35, $ 1, reestablished the Committee because it was still statutorily responsible
for approving expenditures from the Client Services Trust Fund and recommending compatible
uses for the Arizona training program facilities.
2. The effectiveness with which the Committee has met its objective and purpose and
the efficiency with which it has operated.
The Committee has not spent Client Services Trust Fund monies for client services because
it has yet to set expenditure guidelines; there are currently only limited monies in the Trust
Fund; and it has been concentrating its efforts on the sale of the ATPP property. While monies
have not been spent on client services, approximately $ 226,000 from the ~ r u s t ' ~ u nwdas
expended inappropriately in fiscal years 1992 and 1993 for items such as security for the ATPP
premises and demolition of the ATPP buildings. The Department of Economic Security ( DES)
reimbursed the Trust Fund in fiscal year 1995.
The Committee has not recommended to the Legislature any compatible uses for the Arizona
Training Program facilities at Coolidge and Tucson as required by A. R. S. $ 36- 573( D)( 2). To
date, no proposals for compatible uses have been presented to the Committee.
~ 3. The extent to which the Committee has operated within the public interest.
According to DES staff who work with the Committee, its meetings can generally serve the
public interest by providing an opportunity to hear from developmentally disabled clients,
advocates, and parents of disabled persons. However, other entities such as the Governor's
Advisory Council on Developmental Disabilities already have the responsibility to receive
input from the developmentally disabled community.
To the extent that BES does not keep all monies from the Client Services Trust Fund invested
with the State Treasurer pursuant to A. R. S. 536- 572( C) and ( F), the Trust Fund is not being
managed in the public interest. According to a DES official, the Agency normally keeps some
cash available from funds it administers in case it needs to access a portion of the fund. The
Agency keeps approximately $ 2,500 of the Client Services Trust Fund available as cash.
However, it would appear that there would be few, if any, instances calling for monies from
the Trust Fund, particularly since none of these monies have been spent on clients. Moreover,
since monies in the Trust Fund must be invested with the Treasurer, DES policy regarding
this Trust Fund is inconsistent with the statutory mandate.
4. The extent to which rules adopted by the Committee are consistent with the legislative
mandate.
This factor does not apply because the Developmental Disabilities Oversight Committee has
not adopted rules, nor is this activity a component of the legislative mandate.
5. The extent to which the Committee has encouraged input from the public before
adopting its rules and the extent to which it has informed the public as to its actions
and their expected impact on the public.
Our review found that the subcommittee responsible for developing expenditure guidelines
for the Client Services Trust Fund did not post notices of its meetings in compliance with
open meeting laws under A. R. S. 538- 431( 5) and A. R. S. 538- 43l002( A)( 1). Although the
subcommittee's membership includes representatives from developmental disabilities advocacy
groups, to ensure future compliance with open meeting laws, the subcommittee should post
notices of its meetings so the general public can provide input regarding the spending
guidelines.
6. The extent to which the Committee has been able to investigate and resolve complaints
that are within its jurisdiction.
Since the Committee does not have investigative or regulatory authority, this factor does not
apply*
7. The extent to which the Attorney General or any other applicable committee of state
government has the authority to prosecute actions under the enabling legislation.
This factor is not applicable to the Committee.
8. The extent to which the Committee has addressed deficiencies in its enabling statutes
that prevent it from fulfilling its statutory mandate.
The Committee has not proposed any legislation in recent years, nor does it intend to propose
legislation during the next session.
9. The extent to which changes are necessary in the laws of the Committee to adequately
comply with the factors listed in the Sunset Law.
Once the Committee develops spending guidelines for the Client Services Trust Fund, the
Legislature should consider amending A. R. S. $ 36- 572( D) to include these guidelines to ensure
that the monies in the Trust Fund are expended appropriately.
10. The extent to which the termination of the Committee would significantly harm the
public health, safety, or welfare.
Termination of the Committee would not significantly harm the public health, safety, or
welfare if the Committee first establishes expenditure guidelines and these guidelines are
added to the statutes. Expenditure guidelines, set in statute, would help ensure that the monies
in the Client Services Trust Fund are expended on client services. In addition, other entities
could receive input from the developmentally disabled community.
11. The extent to which the level of regulation exercised by the Committee is appropriate
and whether less or more stringent levels of regulation would be appropriate.
Since the Committee is not a regulatory body, this factor does not apply.
12. The extent to which the Committee has used private contractors in the performance
of its duties and how effective use of private contractors could be accomplished.
This factor does not apply since the Committee does not use private contractors.
ARIZONA DEPARTMENT OF ECONOMIC SECURITY
1789 W. Jefferson, Site Code 791A, 85007 - P. O. Box 6123 - Phoenix, AZ 85005
Fife Symington Linda J. Blessing, DPA
Governor Director
October 9, 1996
Mr. Douglas R. Norton
Office of the Auditor General
2910 North 44th Street Suite 410
Phoenix, Arizona 85018
Dear Mr. Norton,
The Committee would like to thank you for the opportunity meet with you and your
team on September 27th and to review and respond to the revised preliminary
report draft of the Performance Audit to the Developmental Disabilities Oversight
Committee. The Committee supports the recommendation to extend the
Committee beyond the current termination date of July 1, 1997. Additionally, we
agree that the Committee should continue the development of the expenditure
guidelines for the Client Services Trust Fund. Once developed, we recommend that
the guidelines be placed into law to ensure that trust funds are appropriately spent.
With the passage of Senate Bill 1072, a commitment was made to the people of
Arizona that funds generated by the sale of the Arizona Training Program ( ATPP)
at Phoenix would be used to benefit people with developmental disabilities. Further,
SB 1072 acknowledged the obligation to directly involve people with developmental
disabilities, their families, and organizations who support them by mandating the
composition of the DDOC to include this representation. The Committee believes
that is was the intent of the Thirty- Seventh Legislature that the people who benefit
from the funds generated should continue to have a voice in how funds are spent.
In the coming months the DDOC will:
1. Complete and implement expenditure guidelines for the Client Services
Trust Fund.
2. Design and pilot a process to access funds.
3. Devise a method to evaluate the Client Service Trust Fund's impact and
usefulness.
4. Develop and review with the Arizona State Land Department specific plans
for the aggressive marketing and sale or lease of the ATPP land to ensure a
maximum return is realized.
As these plans and processes are developed, the Committee will be in a position to
evaluate and to provide a recommendation as to the need for continued oversight.
In closing, I have provided you with a copy of our initial response and request that it
be submitted along with this letter with your final report.
Sincerely,
Eduarda Yates C/
Chair, Developmental Disabilities Oversight Committee
Roger Deshaies
Assistant Director, Division of Developmental Disabilities
I Developmentat Disabilities Oversight Committee
=
I I Response to the draft report of the Auditor General's Sunset Review
The Developmental Disabilities Oversight Committee ( Committee) met on
September 23, 1996 in executive session to review the draft report of the
Auditor General's Sunset review of the Developmental Disabilities Oversight
Committee. Following are the Committee's comments and feedback.
In general, it is the Developmental Disabilities Oversight Committee's
opinion that the Committee should continue beyond the statutory
termination date of July 1, 1997. Members of the Committee feel they
have a responsibility for public oversight of the Client Services Trust Fund.
While acknowledging that the statute provides for legislative oversight of
expenditures, this oversight is after- the- fact and the Committee has a strong
commitment to on- going oversight, at least for a non- specified period of
time after the expenditure guidelines are first established and implemented.
They also feel they have an inherent responsibility to work with the State
Land Department to develop specific plans for the aggressive marketing of
the land to ensure that the maximum return is realized when the property is
leased or sold.
The Committee questions the interpretation of ARS 36- 572 relating to the
statement in the " background" section of the report which states " if and
when the property is sold, the Committee is limited by statute to expending
the interest earned on the proceeds of the property sale". It is the
contention of the Committee that both the interest and principal can be
expended to enhance the services presently available to the developmentally
disabled and to extend such services to developmentally disabled persons
on the waiting list.
The Committee agrees that expenditure guidelines need to be completed for
the Client Services Trust Fund. However, under Sunset factor # 4, " The
extent to which the Committee has encouraged input from the public before
adopting its rules and the extent to which it has informed the public as to its
actions and their expected impact on the public", the report suggests that
since the subcommittee did not post public notices of the subcommittee
meetings, the public did not have an opportunity to provide input regarding
the spending guidelines. While it is true that public notices were not
posted, it is important to note that the membership of the subcommittee
provides for a wide representation of the Division of Developmental
Disabilities' advocacy groups. Specifically, the following advocacy groups
are represented on the subcommittee: The Arc, Pilot Parents, Center for
Disability Law, Developmental Disabilities Advisory Council, the Governor's
Council on Developmental Disabilities, the Arizona Consortium for Children
with Chronic Illnesses and the Arizona Association for People with
Disabilities. These are the very organizations which receive notice of public
of meetings. The is only one member who is a state employee. Future
subcommittee meeting notices will be posted.
As to the Committee's responsibility to investigate compatible uses for
Arizona training facilities and make recornmenda tions to the Legislature on
possible uses of those facilities, the Committee agrees that they do not need
a formal role in reviewing and recommending compatible uses o f the two
remaining Arizona Training Programs.
In closing, the Developemntal Disabilities Oversight Committee recommends
that they continue for at least 18 months beyond the July 1, 1997 date in
order that they develop clear guidelines of the Client Services Trust Fund,
oversee implementation of the guidelines and provide initial oversight of the
disbursement of the funds. In addition they take responsibility for
aggressively pursuing, via the State Land Department, the marketing and
sale or lease of the land.