Governor’s Cabinet on Nonprofit Health and Human Services

1. Governor’s Cabinet on Nonprofit Health and Human Services Findings and Recommendations from the Workgroup on Contract Procurement and Administration

2. Goal of the Workgroup • To ensure efficiency and cost effectiveness in the state’s procurement process while supporting the nonprofit provider infrastructure. Subcommittees • Bonding Alternatives (June 7, 2013) • Request for Proposal & Procurement Processes • Cost Standards and Surplus Retention 07/10/13

3. Workgroup Charge – RFP & Procurement Processes • Look at best practices within the state and across the country • Monitor status of procurement and action steps recommendations including: • Posting “Principles to Guide the State/Private Nonprofit Provider Partnership” • Training on the principles • Revising procurement standards • Streamlining data reporting requirements • Aggregating audit and other data • Assessing financial health of nonprofit providers • Develop training protocols relating to contract and fee for service reimbursement 07/10/13

4. Workgroup Members – RFP & Procurement Processes Voting Members • Christian Andresen – DPH • Kathy Brennan – DSS • Cindy Butterfield – DCF • Bill Carbone - Judicial • Cheryl Cepelak – DOC • Roberta Cook – BH Care • Bob Dakers – OPM • Marcie Dimenstein – The Connection, Inc. • Alyssa Goduti – CHR • Pat Johnson – Oak Hill • Lois Nesci – Catholic Charities • Dan O’Connell – CCFSA • Sandy Porteus – FSW • Anne Ruwet – CCARC • Participating Members • Linda Burns - DSS • Marcia McDonough – DSS • Valerie Clark – OPM • Mary Anne O’Neill – CCPA • Cynthia Theran – Judicial • Kathy Woodward – DOC • Kim O’Rielly - CCFSA 07/10/13

5. Best Practices Office of Policy and Management Health and Human Services Purchase of Service (POS) Project Efficiency Office (PEO) was created to respond to POS health and human services contracting issues and opportunities raised and identified by non-profit providers, the Nonprofit Liaison to the Governor and State agencies. The charge of the PEO: • Identify, recommend and initiate business process and organizational changes related to POS contracting to streamline, standardize, automate and reduce costs and paperwork for both state agencies and providers. • To improve timeliness of contract execution and payment, increase administrative efficiency and savings and to increase the focus on service and client outcomes and reduce on contract processes. The recommendations of the POS PEO were issued on April 10, 2013. Each participating human service agency (DSS; DMHAS; DPH; DCF; DOC) were instructed to develop implementation and action plans regarding the report’s recommendations. These plans are due by July 31, 2013. Workgroup Recommendation: The Subcommittee recommends utilizing the work of the PEO to address the best practices. We further recommend that the workgroup monitor the progress of the agency responses to the recommendations. 07/10/13

6. Guiding Principles Operationalize “Principles to Guide the State/Private Nonprofit Provider Partnerships” Training on the principles Developing training protocols relating to contract and fee for service reimbursement Findings: • The operationalization of the principles developed in our predecessor RFP and Procurement Procedures Working Group will go hand in hand with the implementation of the recommendations of the PEO. • The implementation of the PEO recommendations will require training of staff for the new processes. The training should incorporate the principles. • The “Principles” should be posted on OPM’s website. Workgroup Recommendation: • The Subcommittee recommends that the workgroup: Formally distribute the principles to all agencies; Participate in the development of training on the PEO recommendations including the principles; and Participate in the development of a compliance tool for monitoring purposes. 07/10/13

7. Revising Procurement Standards Findings: The recommendations in the Governor’s Cabinet on Nonprofit Health and Human Services report issued in October 2012 included sixteen (16) recommended revisions to the OPM Procurement Standards. OPM shared a working draft with the subcommittee (3/20/13) incorporating a number of the recommendations. Those revisions will be shared and discussed today. Workgroup Recommendation: The subcommittee recommends that the workgroup continue to work with the Office of Policy and Management to finalize the revisions to the standards; to share the revisions with the human service agencies and to develop a tool to monitor compliance with standards. 07/10/13

8. Assessing Financial Health of Non-Profit Providers Section 4-70b, subsection c requires the Secretary of OPM to provide an annual assessment of the financial condition of non-profit POS providers. The report of October 19, 2012 summarizes information regarding Purchase of Service (POS) contracting activity of State agencies for State fiscal year 2012 including the assessment of the aggregate financial condition of non-profit, community-based health and human services agencies that enter into POS contracts. The Connecticut Nonprofit Strategy Platform is an open resource to assist nonprofits, elected officials and public policy makers, philanthropic funders and all Connecticut citizens to: • Get Data • Learn • Communicate • Act Workgroup Recommendation: The subcommittee recommends that the workgroup continue to work with the Office of Policy and Management and the Data Collaborative to further identify the data needs and metrics that will assist in assessing the financial health of non-profit providers. 07/10/13

9. Workgroup Charge – Revenue Retention • Consider a surplus retention policy across POS contracts, analyzing the pros and cons of establishing this policy including the cost to the state and the process for ensuring the provision of contracted services. 07/10/13

10. Review of Options Considered Option 1 - 100% Revenue Retention Any nonprofit provider organization with a POS contract shall, in the event that the provider manages the contract efficiently in a way that meet the contractual requirements of the funding department and maintains a surplus at the end of the contract term, the provider shall keep 100% of the surplus. 07/10/13

11. Revenue Retention – Continued Option 2 – Retention of Up to 5% of Contract Value w/$100,000 Cap Any nonprofit provider organization with a POS contract shall, in the event that the provider manages the contract efficiently in a way that meet the contractual requirements of the funding department and maintains a surplus at the end of the contract term, the provider shall keep up the surplus up to 5% of the value of the contract, with a maximum of $100,000/SID. 07/10/13

12. Revenue Retention - Continued Option 3 –Retention of Up to 5% of Contract Value w/$250,000 Cap Any nonprofit provider organization with a POS contract shall, in the event that the provider manages the contract efficiently in a way that meet the contractual requirements of the funding department and maintains a surplus at the end of the contract term, the provider shall keep up the surplus up to 5% of the value of the contract, with a maximum of $250,000/SID. 07/10/13

13. Revenue Retention - Continued Option 4 – 50% Revenue Retention Any nonprofit provider organization with a POS contract shall, in the event that the provider manages the contract efficiently in a way that meet the contractual requirements of the funding department and maintains a surplus at the end of the contract term, the provider shall keep up the surplus up to 50% of that surplus. 07/10/13

14. Revenue Retention - Continued Option 5 – Based on FY14/15 Budget Language For all allowable expenditures made pursuant to a contract subject to cost settlement with DDS by an organization in compliance with performance requirements of such contract, 100%, or an alternative amount as identified by the Commissioner of DDS and approved by the Secretary of OPM, of the difference between actual expenditures incurred and the amount received by the organization from DDS pursuant to such contract shall be reimbursed to the DDS during the fiscal year ending June 30, 2014 and the fiscal year ending June 30, 2015. 07/10/13

15. Revenue Retention – Past 3 Years 07/10/13

16. Notes related to Revenue Retention Chart • DDS – of the $3,891,334 average, providers retained $1,464,452, while the state received back $2,426,882 • DSS data is estimated • Agencies work with providers to do budget revisions for one-time purposes 07/10/13