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California Code of Regulations
Title 17, Division 2
Chapter 3 - Community Services SubChapter 21 - Habilitation Services Program
Article 8 - Ratesetting Methodology for Work Activity Programs
§58871. Cost Containment Policies.
§58871. Cost Containment Policies.
(a) All cost containment policies shall be applied to historical period costs.
(b) Administrative costs of a Work Activity Program shall be determined by the Department to be excessive when, as a percentage of the total gross cost of the Work Activity Program in the historical period, such costs exceed the maximum of 32.12%. The procedure to determine administrative costs is:
(1) To determine the percentage of administrative cost to total gross cost of each Work Activity Program, the Department shall divide the gross administrative cost applicable to the Work Activity Program by the total gross cost of the Work Activity Program.
(2) If a Work Activity Program's administrative cost percentage exceeds the maximum allowable percentage, the Department shall reduce the administrative cost to the maximum level.
(3) The only exception to the above policy is that a service provider's cost of administration of the Work Activity Program shall not be reduced below the minimum cost necessary to support the salaries and overhead for the basic core administrative staff which is defined as the director, clerical, and fiscal support staff.
(c) Retirement plan expenses costs shall be contained as follows:
(1) The Department shall allow as an expense FICA contributions actually incurred during the historical period as described in (2) and (3) below. In addition, the contribution made by the employer to a qualified plan shall be allowed subject to the exceptions, conditions, and limitations contained herein.
(A) As used in this section, “Qualified Plan” means a pension, retirement, or other similar deferred compensation plan that has been approved, certified, and is legal as required by federal and state laws, regulations, and case law.
(B) As used in this section, “FICA Rate” means the employer's portion of the FICA contribution rate expressed as a percent of gross wages. The rate used shall be the rate in effect during the historical period.
(2) If the employee was covered by FICA during the historical period, the allowed percentage for the employer contributions to a qualified plan shall be five percent (5%).
(3) If the employee was not covered by FICA during the historical period, the allowed percentage shall be the sum of the FICA rate plus five percent (5%).
(4) The total allowable expense of this section shall not exceed the amount defined by either (2) or (3) above.
(5) Notwithstanding any other provision of this section, the maximum allowance for employer contributions to a qualified plan shall not exceed the lesser of either:
(A) The required employer contribution as determined by the trustee of the qualified plan; or
(B) The contribution required to keep the plan actuarially sound.
(6) To determine the percentage allowed for retirement plans, the Department shall divide the total amount reported for indirect expenses for retirement by the total amount reported for staff salaries.
(7) If the percentage is less than or equal to the allowed percentage, no adjustment shall be made.
(8) If the percentage is more than the allowed percentage, the expense applicable to the excess percentage not allowed shall be deducted from the amount reported for retirement on a prorated basis from each cost center.
Note
Authority cited: Section 11152, Government Code; and Sections 4857.1, 4859(a), 4860(b) and 4866, Welfare and Institutions Code. Reference: Sections 4859 and 4861(b), Welfare and Institutions Code.
History
1. New section filed 7-22-2004 as an emergency; operative 7-22-2004 (Register 2004, No. 30). A Certificate of Compliance must be transmitted to OAL by 11-19-2004 or emergency language will be repealed by operation of law on the following day.
2. Repealed by operation of Government Code section 11346.1(g) (Register 2004, No. 49).
3. New section refiled 11-29-2004 as an emergency; operative 11-29-2004 (Register 2004, No. 49). A Certificate of Compliance must be transmitted to OAL by 3-29-2005 or emergency language will be repealed by operation of law on the following day.
4. New section refiled 3-30-2005 as an emergency; operative 3-30-2005 (Register 2005, No. 13). A Certificate of Compliance must be transmitted to OAL by 7-28-2005 or emergency language will be repealed by operation of law on the following day.
5. Certificate of Compliance as to 3-30-2005 order, including amendment of section heading and section, renumbering and amendment of former section 58872 to
section 58871
(c)-(c)(8) and amendment of Note, transmitted to OAL 6-21-2005 and filed 8-1-2005; amendments operative 8-31-2005 (Register 2005, No. 31).
California Department of Developmental Services