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Client fund management at STS appears tighter than in private group homes

October 1, 2012

By David Kassel

Opponents of the Southbury Training School contend it is too expensive to continue to operate, but the amount of any financial waste and fraud that exists at STS may well be much lower on a per-client basis than in the privately operated group home system in Connecticut.

Department of Developmental Services records indicate that the financial management system at STS and in other state-run facilities for persons with intellectual disabilities is tighter and better overseen than in the privately operated group-home system.  This appears to be largely due to the fact that detailed policies and procedures are in place for the management of residents’ funds, in particular, in state-run DDS facilities.

In contrast, the state-funded, nonprofit providers who run group homes in Connecticut are given the discretion to develop their own policies and procedures for managing client funds.  DDS provides guidelines for the providers, but there is no force of law behind those guidelines, which are not even official policies or procedures of the department.

There are some 730 group homes and apartments in the state for persons with intellectual disabilities that are run by state-funded, nonprofit providers.  I’ll refer to these as privately operated group homes to distinguish them from the 70 state-operated group homes in Connecticut.

The state-operated facilities that are subject to detailed state requirements for managing residents’ funds include the state-operated group homes, STS, and five state-run regional centers.  Both STS and the regional centers are classed as Intermediate Care Facilities for persons with developmental disabilities (ICFs/DD), which must also meet federal requirements for managing client funds. 

One other relatively small class of residential facility in Connecticut consists of privately operated ICFs/DD.  Unlike the privately operated group homes, the roughly 70 privately run ICFs/DD in Connecticut are subject to the same federal requirements for managing client funds as are STS and the regional centers.

In at least one recent case, a discretionary financial management system for privately run group homes has blown up into a scandal for DDS.   The Hartford Courant reported on September 11 that an audit of group homes operated in the Hartford area by Humanidad, Inc. found numerous financial problems and irregularities, including payments to staff from client funds for  meals and transportation — items for which the provider is already paid in state funds.

The audit also found that Humanidad was comingling some client and staff funds.  And there were nearly $7,000 in withdrawals from client accounts with no supporting documentation.  The Courant  also reported that separate DDS investigations in 2009 and 2011 confirmed the theft by Humanidad staff members of over $14,000 in client funds.  In some cases, staff members were listed as beneficiaries on client bank accounts.

The Courant previously reported a number of other problems at Humanidad homes, including staffing shortages, a lack of resources such as groceries and activities programs, and that clients in general were receiving subpar treatment.

It is unclear what policies and procedures were or are in place at Humanidad for managing client funds in its residences.  A DDS spokeswoman is quoted in the Courant article as saying that DDS would work with Humanidad to revise their procedures to “ensure compliance with DDS requirements.”

The problem is that the only requirements concerning the management of client funds in privately operated group homes appear to exist in DDS regulations, which state that providers such as Humanidad must develop their own policies and procedures that:

(1) provide for the safekeeping, availability and the accountability of the individual’s financial interests;

(2) ensure that individual finances shall be separate from the licensee’s financial records;

(3) ensure maintenance of receipts of monies disbursed or received for items in excess of $20.00; and

(4) address the licensee’s responsibility for individuals who are independent in managing their finances.

The only aspects of these regulations that are specific in nature are the requirements for separating the individual’s and provider’s financial records and for maintaining receipts for expenditures or income greater than $20. 

The far more detailed and specific requirements regarding client funds that apply to state-operated facilities can be found in an online DDS Manual

Among other things, the DDS Manual establishes a four-tiered level of procedures for managing client funds of state-operated facilities, based on the ability of the client to participate in the management of their own money.  The Manual also requires that each DDS Regional Business Office oversee the management of facility finances in that region and that each region establish an aggregate checking account known as a Client Fund.

The Manual notes, for instance, that for clients in state facilities who are unable to manage their own money, all Social Security and other checks received by the client are sent to the client’s individual account in the Client Fund, where the money earns interest.  In addition, an in-house cash account is maintained for each client, and staff are required to keep standardized records to account for all money coming in and spent for that client.

Receipts must be kept as well for all purchases made by state facility clients other than from weekly cash allowances, and the Manual specifically states that clients will never pay for staff or other client costs.

The DDS Manual also establishes procedures to allow state facility clients, who are able to do so, to keep their funds in community bank accounts.  Among the  procedures listed is that all checking account transactions must be recorded and initialed by DDS staff.  The Manual specifically prohibits DDS staff from signing a client’s checks or accessing a client’s personal bank account.

The DDS Manual further states that if there is a shortfall of cash on hand which cannot be accounted for, residential staff in the state facility must report this immediately to the Region’s Business Office.   And the Manual states that personal funds cannot be used to purchase any item that the facility would be expected to provide as part of its responsibility to the client.  This last rule would have prohibited the apparent practice at Humanidad of charging clients for services or items such as food and transportation.

As noted, DDS provides a set of guidelines for management of client funds by private providers; but a DDS official stated in response to a Freedom of Information request that the guidelines are not offical departmental procedures, policies, or regulations.  

The DDS financial management guidelines for privately run group homes state,  for instance, that all expenditures of client funds have to be for the benefit of the clients and must be recorded on a ledger.  However, as neither of those things appears to be specifically required in the DDS regulations, it is unclear that any provider would be required to include them in its own policies and procedures.

We’ve previously reported here how federally regulated Intermediate Care Facilities such as STS have more stringent staffing requirements than do privately operated group homes in Connecticut, and how the process for investigating and licensing STS is more transparent and comprehensive than the privately operated group home system.

Policies and procedures regarding financial management of state versus privately operated facilities appears to fit this pattern as well.  In all of these cases, policies and procedures, transparency, and oversight appear to be more abundant and stringent for the state-operated facilities and less so for the privately operated facilities. 

We’ve already seen the recent results of allegedly poor financial mangement, staffing, and other policies on group homes operated by Humanidad and another provider, Options Unlimited.  We doubt these same types of problems are likely to crop up at state facilities such as STS for all the reasons we’ve given here. 

These are further reasons why we question the administration’s  assertions that care and conditions in the privatized group home system in Connecticut are equal or better than they are at STS.

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2 Comments
  1. Rose P. permalink

    Thank you for this very comprehensive and detailed investigation of the way client funds are administered by private providers vs. providers such as STS. Is DDS to assure private providers follow the same guidelines and procedures? What the extent of their reach(DDS) in this case. Shouldn’t these procedures be a prerequisite to their licensing as private providers in CT?

    I’m happy and relieved to know there are providers such as STS, that adhere to stringent guidelines that are protecting the clients financial best interests and creating a deterrent to those who think they can exploit them.

    Thank you!

  2. Hugo Dwyer permalink

    I am amazed by the number of good regulations that are required to operate state run facilities that are not required by privately operated facilities. This is an excellent example. These regulations are not burdensome to the operator, but they protect the vulnerable. The State of Connecticut needs to make sure that reasonable regulations like this are in place to protect the residents of all facilities, and they need to enforce them statewide.

    The Malloy / Macy administration is doing everything in its power not only to get rid of all of the state-run facilities in Connecticut, but to absolve itself of responsibility in monitoring privately run facilities. As we have seen, a variety of abuse charges have been uncovered in recent months.

    One need only look to our neighboring state of New York to see how bad the systemic abuse and neglect can get. New York has proven that the problem is not with the size or type of institution, but with the lack of consistent regulation and monitoring of the entire system. We need the DDS in Connecticut to do their job and to protect the DD/ID population.

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