On April 24, 2013, the Pennsylvania Supreme Court upheld a Commonwealth Court ruling that the fiscal process imposed on counties and private service providers since 2009 by the Office of Children, Youth and Families (OCYF) of the Pennsylvania Department of Welfare (DPW) was illegal. The power grab by OCYF created a bureaucratic nightmare that wreaked financial and programmatic havoc. Cumbersome procedures delayed annual county purchase-of-service contracts for as long as a year or more, depriving agencies of funds to pay their staff, curtailing urgently needed services for vulnerable young people and their families, and driving some long-standing non-profit programs out of business.
OCYF established its mandatory process by publishing a DPW bulletin—bypassing the Independent Regulatory Review Commission (IRRC) established by the state legislature in 1982 “to provide uniform oversight of the rulemaking process in Pennsylvania and to act as a consensus builder.” Consensus has been conspicuously absent between DPW and Pennsylvania’s private providers and counties, who were not consulted when DPW arbitrarily imposed its impractical regulations. Bulletins should be used to interpret regulations, not be regulations.
Under the guise of addressing federal concerns about the appropriate use of Title IV-E funding, DPW exceeded its legitimate need to respond to those concerns by incorporating county Act 148 fiscal rate reviews into the new process. The state agency thereby placed itself in the unprecedented role of dictating the rates counties could pay private providers. The poorly implemented process caused outrageous delays. In November of 2010, only 31 providers out of a total of 250 had their “maximum allowable expenditures” approved for fiscal year contracts that were supposed to begin on July 1, with several providers not getting their rates approved until the next fiscal year. Some private providers had to borrow large sums of money to continue to provide services to young people in their care while waiting for their rates to be approved by OCYF. At a time of limited resources and increased needs for services for young people and their families, counties and providers wasted time and energy in a bureaucratic maze that yielded nothing but frustration and cost some providers their existence.
The OCYF administration’s manipulative strategy fostered an atmosphere of hostility, disrupting a healthy system of private providers that for many years had offered county agencies a wide range of service choices. County agencies previously had been free to make their own decisions based on local needs. Competition ensured reasonable rates. If counties had concerns about a provider’s rates or services, they could simply choose another provider. OCYF undermined the existing fair market approach by imposing centralized state control and often set rates that did not even keep pace with inflation or cover the cost of delivering services. All of which is contrary to Pennsylvania law that says counties, not the state, must negotiate rates with providers.
Thanks to the Supreme Court’s decision, Pennsylvania now has the opportunity to restore a balanced system marked by engaging all of the stakeholders, as the IRRC regulatory process requires. Together they can create a streamlined procedure for monitoring the use of federal Title IV-E monies, based on proven models implemented by other states, while restoring the market-driven system of private providers that had effectively served the needs of Pennsylvania’s children and youth in the past. Helping children who are abused, neglected or delinquent is hard work, but the system only works when there is collaboration and respect between the state, counties, providers, schools and families.