IN THE DISTRICT COURT OF SHAWNEE COUNTY, KANSAS
SEVENTH DIVISION
INTERHAB, INC.; KANSAS ELKS TRAINING )
CENTER FOR THE HANDICAPPED, INC.; )
TRAINING AND EVALUATION CENTER OF )
HUTCHINSON, INC.; TOPEKA ASSOCIATION )
FOR RETARDED CITIZENS, INC.; SHELTERED )
LIVING, INC.; and, TRI-VALLEY DEVELOPMENTAL )
SERVICES, INC., )
)
Plaintiffs, )
) Case No.: 02 C 1335
vs. )
)
JANET SCHALANSKY, in her official capacity )
as Secretary of the Department of Social and )
Rehabilitation Services of the State of Kansas; )
THE DEPARTMENT OF SOCIAL AND )
REHABILITATION SERVICES OF THE )
STATE OF KANSAS; THE STATE OF KANSAS; )
GOV. BILL GRAVES, in his official capacity as the Governor )
of the State of Kansas; DUANE A. GOOSSEN, in )
his official capacity as the Director of the Budget for the State )
of Kansas; JOYCE H. GLASSCOCK, in her official capacity as )
the Secretary of the Kansas Department of Administration; )
DALE BRUNTON in his official capacity as the Director of )
Accounts and Reports, Kansas Department of Administration, )
)
Defendants. )
)
MEMORANDUM OPINION AND ENTRY OF JUDGMENT
NATURE OF THE CASE/ISSUES PRESENTED:
This case comes to the Court upon several different theories of claim, including breach of contract, mandamus, injunction, a 18 U.S.C. 1983 civil rights claim, and on constitutional grounds. Notwithstanding, the only issue presently before the Court is preliminary injunctive relief in the form of a temporary restraining order (TRO). Plaintiffs first seek to restrain implementation of budget cuts made to the Defendant state agency, the Department of Social and Rehabilitation Services (SRS), accomplished through the allotment procedure established by K.S.A 75-3722 et seq. Secondly, in the alternative and to stop the agency’s implementation of the budget cut to the Defendant SRS, the Plaintiffs seek a TRO to restrain and prevent the Secretary of the SRS, Janet Schalansky in her official capacity, from implementing budget reductions in her own agency which reductions have resulted in a diminishment of the funds available to Plaintiffs to provide services to the developmentally disabled as envisioned by the Developmental Disabilities Reform Act (DDRA), K.S.A 39-1801 et seq.
This Court held evidentiary hearings over the course of two days. The Court issued an oral ruling denying the TRO sought in reference to implementation of the state allotment system (Amended Petition, Count VII) as alleged against the Governor, then Bill Graves, the Secretary of Administration, then Joyce Glasscock, the State Budget Director, Duane A. Goosen, and the State Director of Accounts and Reports, Dale Brunton. The Court also found both Count VII and Count VIII, the latter claiming damages to Plaintiffs incurred as a result of implementation of the allotment system, failed to state a claim against these Defendants as a matter of Plaintiffs’ standing. The Court then directed briefing of the issues raised and oral argument concerning the remaining Defendants, the SRS Secretary, the SRS Department, and the State of Kansas on behalf of which these agencies were purportedly acting. The Court has now reviewed the briefs, heard the oral arguments, and otherwise considered the facts presented. The Court’s present ruling will be on these remaining issues as they relate to the TRO and will encompass the Court’s written findings in regard to the oral ruling denying the TRO requested against the Governor and the Department of Administration Defendants and dismissing Counts VII and VIII against the latter Defendants.
The Defendants here also have written motions pending to dismiss Plaintiffs’ claims in its petition and Count VIII of Plaintiffs’ amended petition. The Court will not directly determine Defendants’ motions to dismiss in this proceeding nor issues of standing, except in the case of Plaintiffs’ request for a TRO and damages against the defendant state officials responsible for implementing the K.S.A. 75-3722 et seq. allotment. Thus, only Plaintiffs’ Count VII TRO claim will be determined on its merits against the remaining Defendants on the facts and arguments now existing.
THE ACT OF INVOKING AND IMPLEMENTING THE STATE ALLOTMENT SYSTEM
On November 25, 2002, then Secretary of Administration, Joyce Glasscock, on advice of the State Budget Director, Duane Goossen, put into effect the State’s allotment system provided for by K.S.A 75-3722 et seq.
K.S.A 75-3722 provides:
“An allotment system will be applicable to the expenditure of the resources of any state agency, under rules and regulations established as provided in K.S.A. 75-3706, only if in the opinion of the secretary of administration on the advice of the director of the budget, the use of an allotment plan is necessary or beneficial to the state. In making this determination the secretary of administration shall take into consideration all pertinent factors including (1) available resources, (2) current spending rates, (3) work loads, (4) new activities, especially any proposed activities not covered in the agency's request to the governor and the legislature for appropriations, (5) the minimum current needs of each agency, (6) requests for deficiency appropriations in prior fiscal years, (7) unexpended and unencumbered balances, and (8) revenue collection rates and prospects.
Whenever for any fiscal year it appears that the resources of the general fund or any special revenue fund are likely to be insufficient to cover the appropriations made against such general fund or special revenue fund, the secretary of administration, on the advice of the director of the budget, shall, in such manner as he or she may determine, inaugurate the allotment system so as to assure that expenditures for any particular fiscal year will not exceed the available resources of the general fund or any special revenue fund for that fiscal year. The allotment system shall not apply to the legislature or to the courts or their officers and employees. Agencies affected by decisions of the secretary of administration under this section shall be notified in writing at least thirty (30) days before such decisions may become effective and any affected agency may, by written request addressed to the governor within ten (10) days after such notice, ask for a review of the decision by the finance council. The finance council shall hear appeals and render a decision within twenty (20) days after the governor receives requests for such hearings.”
See also, K.A.R. 1-61-1 et seq.
Pursuant to the Secretary’s decision, every state agency had its budget reduced by 3.9%, except the Board of Indigent Defense Services. Furthermore, the directive ordered that general fund monies intended for K-12 education not be reduced. Morever, the order went on to direct that certain funds transfers to local governments not be made. The Board of Indigent Defense Services was exempted because it had already committed and exhausted its 2003 fiscal year budget. (July l, 2002-June 30, 2003).
Plaintiffs principally claim that the manner of the implementation of the allotment system was arbitrary, capricious and unreasonable by its exemption of K-12 general fund appropriations; that Plaintiffs budget entitlements, as were subsequently effected by the Secretary of SRS’s response to the 3.9% allotment reduction in trimming her budget to meet the loss of the $26.6 million in anticipated appropriated revenues, were immune from cuts through the allotment system; and that the respective agency appeals process was a sham and also short circuited, such that a cut in one of Plaintiffs’ claimed entitlements, as exampled by a check issued December 23, 2002, was improper (Defendants’ Exhibit 6).
The clear and seminal undisputed fact is that notwithstanding the legislative appropriations made for fiscal 2003 from the state general fund, which were based on projected revenues at the time of the 2002 legislative session, there would, in fact, not be sufficient revenues incoming to meet and fulfill the appropriations made. The amount of the shortfall at the time of instituting the allotment system was officially estimated to be $255.1 million to the state general fund. The budget shortfall was not agency specific as is contemplated under paragraph 1 of K.S.A 75-3722, but rather was systemic to the state general fund as a whole. There is no question but that the circumstance identified and underlying employment of the allotment system as stated in paragraph 2 of K.S.A 75-3722 existed, that is, a finding that anticipated revenues for the fiscal year would be less than the appropriations made from the general fund and that absent the invocation of the allotment system, the State as a whole was faced with expending funds it did not have, an offense to the Kansas Constitution, Art. ll, §§ 6-8. Further, without acting to cap agency expenditure authority promptly, knowledge of the shortfall could permit some agencies to expedite and advance expenditures from the common pool of the general fund, much like horses run to water, leaving the trough dry for the slow of foot. Accordingly, if the allotment system created by K.S.A 75-3722 et seq., is otherwise legally sound, the preconditions for its implementation were clearly present.
Plaintiffs claim that the SRS’s appeal of the allotment reduction for its agency, as provided for by K.S.A 75-3722, was a sham in the sense that although the Secretary of SRS timely appealed, Governor Graves had more or less told agencies - in advance - not to waste their time as appeals to him would not be successful. Subsequently, the Secretary of SRS was advised orally that her appeal had been denied. This advisement was delivered prior to December 19, 2002. Thereafter, by checks dated December 23, 2002, the State distributed payments of “state aid” grant funds to some Plaintiffs (Defendants’ Exhibit 6) that Plaintiffs claim reflected the cuts made by the Secretary of SRS. Plaintiffs claim this reduction in funds was ineffective because the 30 day appeal process noted by K.S.A 75-3722 had not yet expired.
This portion of the statute states:
“Agencies affected by decisions of the secretary of administration under this section shall be notified in writing at least thirty (30) days before such decisions may become effective and any affected agency may, by written request addressed to the governor within ten (10) days after such notice, ask for a review of the decision by the finance council. The finance council shall hear appeals and render a decision within twenty (20) days after the governor receives requests for such hearings.”
The Court finds that the thirty day period of time set forth only provides the opportunity for the appeal process to be completed, but it does not mandate that the full complete time be used. The Secretary of Administration notified state agencies of the implementation of the allotment system by memorandum of November 26, 2002 (Defendants’ Exhibit 2A). Ms. Schalansky testified that she was formally notified on December 2, 2002. She formally appealed on December 12, 2002 (Plaintiffs’ Exhibit 1). The Governor had acted promptly (before December 19, 2002) on the SRS appeal. When the Governor acted, the process envisioned was thus complete with all appropriate decision makers having exercised their authority.
Notwithstanding the Plaintiffs’ claim that the checks dated December 23, 2002, reflecting reduced “state aid” payments were premature, being within the thirty day window of K.S.A 75-3722, the payments alluded to as premature, being for “state aid” grant payments, were not due until mid-January at the earliest. K.S.A. 65-4413-4415. Accordingly, and notwithstanding the Court’s finding that the thirty day window was procedural and not substantive, these payments were nevertheless due well after the period of the alleged thirty day appeal period and the Plaintiff recipients were also notified of the reductions thirty days in advance of the date such payments were due. (Plaintiffs’ Exhibit 7). Thus, to make a reduced payment early that could have been made when due later is not subject to any valid legal objection. The payment was made early, in fact, to accommodate some Plaintiffs in order to avoid cash flow problems.
Lastly, the claim that the Governor had intimated and implied that appeals would not be sustained does nothing to vitiate the decision made. The state agencies effected, and SRS in particular, had the opportunity to advise why it was thought the budget reduction(s) should not be made. Here, the Secretary detailed what programs she proposed to cut to meet the allotment reduction as part of her appeal documents. The Governor’s denial of the appeal was made after he had been fully informed of its consequence by the agency. K.S.A 75-3722 demands no more. The Governor’s decision was not a quasi-judicial decision nor one subject to judicial or due process protections, but rather one of purely gubernatorial prerogative which was duly exercised.
At one time this decision was made by another governmental body - the State Finance Council - a then legislator dominated body - which was independent of the Governor. However, it was this very independence from the executive, legislatively created in the face of the Governor’s constitutional executive authority, which caused the Kansas Supreme Court to declare the finance council’s authority under this statute unconstitutional as in violation of the separation of powers doctrine. State, ex. rel., v. Bennett, 219 Kan. 285, 295-298 (1976). Consequently, the powers granted to implement the allotment system devolved upon the Governor, Id., at 301. The statute has not been changed since.
Accordingly, Plaintiffs challenge to the exercise of authority under K.S.A 75-3722 cannot be sustained as a matter of procedure or substance. The only complaint that could possibly be made is that this power was exercised too discriminatingly, by example, exempting K-12 education finding, rather than by ordering across the board budget reductions. While the Court can concede that this kind of discriminating judgment exercised under paragraph 2 of the statute partakes of discretion bordering on legislative judgment, the Court is particularly satisfied that this argument, in conjunction with the Plaintiffs’ arguments against the allotment system generally, is an argument that Plaintiffs simply have no standing to make.
Plaintiffs, in the first instance, are, in essence, asking the Court to oust the Governor and the Department of Administration officials named as Defendants from the exercise of this authority under the allotment statute. If the Governor and these officials acted wrongfully, the persons offended are the citizens of Kansas as a whole. These Plaintiffs have no interest greater than any citizen in asking that their public officials perform rightly and constitutionally in accordance with law. The implementation of the allotment system and its consequences affected the public interest generally. Further, it was not the Governor nor the Department of Administration officials who decided what program budget reductions were to be made within the SRS’s remaining budget itself. Ms. Schalansky, its Secretary, made these latter decisions. Thus, Plaintiffs are one step removed from the interest they seek to assert, there being no direct legal cause and effect between the implementation of the allotment system and the actual loss of the budgeted funds anticipated for programs for which Plaintiffs have direct interest.
As such, Plaintiffs have no standing and, if the claim itself is viable, only the Kansas Attorney General would have standing to question the proper and constitutional exercise of the purely public act of implementing the allotment system. Compare, Bobbett v. State, 10 Kan. *9, *14-*15. (1872).
Accordingly, Plaintiffs’ claim against the Governor and the named Department of Administration officials in Count VII should be dismissed as well as Plaintiffs’ Count VIII claim for damages as a result of such actions.
THE SECRETARY OF THE SRS, THE PLAINTIFFS, AND THE KANSAS DEVELOPMENTAL DISABILITIES REFORM ACT:
The ultimate beneficiaries of the Plaintiff providers’ services, as diminished by the budget reductions made by the Secretary of the SRS, are the developmentally disabled. A “developmental disability” is defined by K.S.A 39-1803(f):
“(f) ‘Developmental disability’ means:
(1) Mental retardation; or
(2) a severe, chronic disability, which:
(A) Is attributable to a mental or physical impairment, a combination of mental and physical impairments or a condition which has received a dual diagnosis of mental retardation and mental illness;
(B) is manifest before 22 years of age;
(C) is likely to continue indefinitely;
(D) results, in the case of a person five years of age or older, in a substantial limitation in three or more of the following areas of major life functioning: self-care, receptive and expressive language development and use, learning and adapting, mobility, self-direction, capacity for independent living and economic self-sufficiency;
(E) reflects a need for a combination and sequence of special interdisciplinary or generic care, treatment or other services which are lifelong, or extended in duration and are individually planned and coordinated; and
(F) does not include individuals who are solely and severely emotionally disturbed or seriously or persistently mentally ill or have disabilities solely as a result of the infirmities of aging.
. . .
(h) ‘Mental retardation’ means substantial limitations in present functioning that is manifested during the period from birth to age 18 years and is characterized by significantly subaverage intellectual functioning existing concurrently with deficits in adaptive behavior including related limitations in two or more of the following applicable adaptive skill areas: communication, self-care, home living, social skills, community use, self-direction, health and safety, functional academics, leisure and work.
. . .”
The purpose of the Kansas Developmental Disabilities Reform Act is set forth by K.S.A 39-1802:
“It is the policy of this state to assist persons who have a developmental disability to have:
(a) Services and supports which allow persons opportunities of choice to increase their independence and productivity and integration and inclusion into the community;
(b) access to a range of services and supports appropriate to such persons; and
(c) the same dignity and respect as persons who do not have a developmental disability.“
K.S.A 39-1804(a) establishes the character of services to be provides as follows:
“(a) Except as otherwise specifically provided in this act and subject to appropriations of federal and state funds, the secretary, after consultation with representatives of community developmental disability organizations, community service providers, families and consumer advocates, shall implement and administer the provisions of the developmental disabilities reform act in accordance with the following policies. Persons with developmental disabilities shall:
(1) Be provided assistance to obtain food, housing, clothing and medical care; protection from abuse, neglect and exploitation; and a range of services and supports which assist in the determination of individual needs; and
(2) receive assistance in determining their needs; be provided information about all service options available to meet those needs; have coordination of services delivered; be assisted and supported in living with their families, or independently; be assisted in finding transportation to support access to the community; and receive individually planned habilitation, education, training, employment and recreation subject to supports and services available in the community of their choice.
(b) To accomplish the policies set forth in subsection (a), the secretary, subject to the provisions of appropriation acts, shall annually propose and implement a plan including, but not limited to, financing thereof which shall: (1) Provide for an organized network of community services for persons with developmental disabilities; (2) maximize the availability of federal resources to supplement state and local funding for such systems; and (3) reduce reliance on separate, segregated settings in institutions or the community for persons with developmental disabilities.
(c) The secretary shall report to the legislature the number of persons with developmental disabilities eligible to receive community services and shall make a progress report on the implementation of the annual plans and the progress made to accomplish a comprehensive community services system for persons with developmental disabilities.
(d) The secretary shall prepare and submit budget estimates for the department of social and rehabilitation services to the division of the budget and the legislature and shall establish and implement policies and procedures within the programs and activities of the department so that funds for state-level programs and activities for persons who are developmentally disabled are allocated between services delivered in institutions and community services.
(e) Subject to the provisions of this act and appropriation acts, the secretary shall administer and disburse funds to each community developmental disability organization for the coordination and provision of community services.
(f) The secretary shall establish procedures and systems to evaluate the results and outcomes of the implementation of this act to assure the attainment of maximum quality and efficient delivery of community services.“
All the Plaintiffs, except Interhab, Inc., are either a “community service provider” (CSP) or a “community developmental disability organization” (CDDO), or both. These organization are defined by K.S.A 39-1803(c) and (d), respectively:
“(c) ‘Community services’ means services
provided to meet the needs of persons with
developmental disabilities relating to work, living in the community, and individualized supports and services.
(d) ‘Community development disability organization’ means any community mental retardation facility that is organized pursuant to K.S.A. 19-4001 through 19-4015 and amendments thereto.”
K.S.A 39-1805 provides, as relevant here, the powers and duties of a CDDO:
“In addition to any other power and duty prescribed by law, and subject to appropriations, a community developmental disability organization shall have the power and duty to:
(a) Directly or by subcontract, serve as a single point of application or referral for services, and assist all persons with a developmental disability to have access to and an opportunity to participate in community services, except in those circumstances in which the secretary determines, subject to an immediate hearing before the district court located in the county in which the person with a developmental disability resides, participation in community services is not the appropriate placement for such person because such person is presently likely to cause harm to self or others;
(b) provide either directly or by subcontract, services to persons with a developmental disability, including, but not limited to, eligibility determination; explanation of available services and service providers; case management services, if requested; assistance in establishing new providers, if requested; and advocacy for participation in community services;
(c) organize a council of community members, consumers or their family members or guardians, and community service providers, composed of a majority of consumers or their family members or guardians who shall meet not less than quarterly to address systems issues, including, but not limited to, planning and implementation of services; and develop and implement a method by which consumer complaints, interagency and other intrasystem disputes are resolved;
(d) provide, directly or by subcontract, information about affiliate and referral services to persons with a developmental disability whose particular needs can be met in the community or through government; and
(e) ensure that affiliates have the option to review referrals and waiting lists on a periodic basis to contact potential consumers with information concerning their services.”
To administer and implement the polices and objectives of the DDRA, noted above, the Secretary of SRS is directed by K.S.A 39-1806 as follows:
“To carry out the provisions of this act, the secretary shall establish after consultation with representatives of community developmental disability organizations and affiliates thereof, and families and consumer advocates:
(a) A system of adequate and reasonable funding or reimbursement for the delivery of community services that:
(1) For persons moving from institutions into the community, directs funding to follow in an amount not less than that which is required to reimburse community service providers for services as set forth in such person's plan for transfer from the institution to community services including expenses of relocation and initiation of services;
(2) consolidates federal and state funding sources;
(3) requires an independent, professional review of the rate structures on a biennial basis resulting in a recommendation to the legislature regarding rate adjustments. Such recommendation shall be adequate to support: (A) A system of employee compensation competitive with local conditions; (B) training and technical support to attract and retain qualified employees; (C) a quality assurance process which is responsive to consumers' needs and which maintains the standards of quality service; (D) risk management and insurance costs; and (E) program management and coordination responsibilities;
(b) a system of quality assurance based on standards set out in rules and regulations adopted by the secretary which insures effective service delivery, fiscal accountability and networking cooperation and which allows community service providers to present evidence of attainment of national accreditation or compliance with state or federal laws or rules and regulations, or both, to indicate compliance with such standards; and
(c) a system of contracting that:
(1) Authorizes open and equitable negotiation between contracting parties or their designated agent or agents;
(2) authorizes mediation by an independent entity chosen by the parties to the contract in the event of contract disputes and if mediation is not completed prior to the end of any existing contract, authorizes an extension of time of such existing contract or entering into a temporary contract;
(3) requires achievement and maintenance of community services standards by community service providers;
(4) includes compensation for community services which meet the individualized needs of persons with developmental disabilities for community services; and
(5) requires community developmental disability organizations to contract with those affiliates from whom a person with a developmental disability chooses services.”
THE SECRETARY OF THE SRS’S REACTION TO THE GUBERNATORIAL ALLOTMENT DECISION AND THE FUNDING REDUCTIONS IMPOSED BY HER THAT EFFECT PLAINTIFFS’ INTERESTS:
As a result of the allotment decision made by the Secretary of Administration on the advice of the State Budget Director and confirmed by Governor Graves, Ms. Schalansky, the Secretary of SRS, effected a broad range of budgeted fund reductions. As she testified, these reductions were distasteful. She made the decisions as to which agency programs were to be reduced by asking the budget officer and division heads of her agency to submit proposed reductions. She then went through these with her leadership team taking into account the degree of effect on people or programs, a prior budget reduction allotment accruing in August, 2002, and the timeline in which budget cuts could be effected in terms of the need for changes in regulations or contract requirements to implement the budget or program changes. She then held public hearings regarding the proposed reductions.
The programs and the cuts effected, showing both the state general fund (SGF) reduction and the reduction in terms of all funds (AF), that would occur as a result of Ms. Schalansky’s decisions is shown in Plaintiffs’ Exhibits 1 and 4. Reductions effecting Plaintiffs’ program interests directly are noted by an
“X” as shown on Plaintiffs’ Exhibit 4 following:
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Of the cuts in funds made overall to the Department programs as shown in Plaintiffs’ Exhibit l, the categories directly effecting Plaintiffs total 12.665% of the total lapsed expenditure authority of the agency ($3,372,176 ÷ $26,624,775) whereas the budgeted funds reduction to the Department overall was 3.9%.
THE LEGAL EFFICACY OF PLAINTIFFS’ CHALLENGES TO THE SECRETARY’S REDUCTION IN FUNDS AVAILABLE TO THEM PREVIOUSLY:
Plaintiffs principally state their claims in this lawsuit to be premised on what they claim is a mandate under the DDRA requiring “adequate and reasonable” funding or reimbursement for services provided through, or by, Plaintiffs under the DDRA. The cited language appears in subsection (a) of K.S.A 39-1806, supra.
However, examination of this statutory language, when set against an analysis of the Act as a whole, demonstrates that it is substantially suspect as a mandate or as an immutable standard, the violation of which is remediable by temporary injunctive relief even if the facts might ultimately establish funding inadequacy or unreasonableness. This conclusion is derived from several considerations, not the least of which is the statutory context in which the phrase “adequate and reasonable funding” is found.
Subparagraph (a) of K.S.A 39-1806, in which the expression is used, has subparts. Subpart (1) states as follows as premised by the phrase “adequate and reasonable funding. . . that”:
“(1) For persons moving from institutions into the community, directs funding to follow in an amount not less than that which is required to reimburse community service providers for services as set forth in such person's plan for transfer from the institution to community services including expenses of relocation and initiation of services;”
A simple reading the text demonstrates that the directive for funding is limited to assuring that CDDOs and CSPs are reimbursed for services for a developmentally disabled person coming from an institutionalized setting to community based services in an “amount not less than required” to implement the plan for that particular individual’s transfer from the institutionalized setting. To date here, there is simply no evidence that such services are not being reimbursed adequately for such plan care or for that matter that the reduction in funding effected by the Secretary materially affects such category of individuals transitioning from institutionalized care into the community.
Further, as the evidence indicated, there are many Medicaid services that a CSP may perform in addition to those available under the HCBS/MR/DD waiver. In addition, there is nothing in the evidence to suggest that CSPs are limited to servicing Medicaid clients only. In fact, CDDOs, which in effect are the planners, organizers, and gatekeepers of community mental retardation and development disability services in their respective areas, identify and locate services and may contract with CSPs for needed services, reimbursable from SRS through the CDDOs. The terms of these CDDO/CSP contracts are not before the Court. CSPs can also apply for direct Medicaid reimbursement from SRS, again through a contract with the agency. These latter contracts are not before the Court. The DDRA requires those eligible for development disability services to have a plan and to be able to choose their own CSP providers among those qualified in their service areas. There are no persons with developmental disabilities named as Plaintiffs here, particularly ones that have been denied services in contravention of their individual plans.
In addition to SRS funding or reimbursements for services to Medicaid eligible consumers, private pay services are available to persons not Medicaid eligible. No evidence identifies this category of revenue resources or any restrictions thereon, except as to those Medicaid eligible which are restricted to the Medicaid rate as full payment. K.A.R. 30-5-59(e).
Additionally CDDOs pre-existed the DDRA. These entities find their genesis under K.S.A 19-4001 et seq. since they are definitionally defined as “any community mental retardation facility”, K.S.A. 39-1803(d). CDDOs, in essence, are county or multi-county entities or in some cases county commissions (K.S.A. (1999) 19-4002a; K.S.A 19-4002b) which either manage or perform such duties themselves or have outsourced such services to non-profit entities such as Plaintiffs TECH and Comcare (K.S.A. 19-4001). These entities have therefore a local tax base (K.S.A. 19-4004) and also can establish a schedule of charges for those financially able to pay (K.S.A. 19-4005; K.S.A 19-4007). The example concerning TECH on Defendant’s Exhibit 7 shows its array of funding sources by amount.
In addition to these sources of funding, the State of Kansas itself provides funding for all K.S.A 19-4001 et seq. entities by K.S.A 65-4411 et seq. However, such grants, while specifying the standards and formula for the amounts to be disbursed, contain a proviso for limiting grants pro rata when sufficient funds “have not been appropriated or are not available” (K.S.A 65-4413(c)) (emphasis added), but nevertheless are entitled to minimum grant amounts, but even these minimum grants are subject to appropriations (K.S.A 65-4414). Apparently, any underpayment of grant amounts due (for any reason) can be made within 60 days after the end of the fiscal year. (K.S.A. (2001) 65-4415(e)). While this form of state aid to mental retardation facilities was reduced by $l,996,500 as shown on “page 2" of Plaintiffs’ Exhibit 4, supra, its disbursement (and later recoupment, if any) is governed by K.S.A. 65-4413-4415 above and are funds that are not necessarily intended for persons eligible for the HCBS/MR/DD waiver services. Thus, these funds seemingly would not impact the directive of K.S.A 39-1806(a)(1). However, no evidence is adduced that such funds could not be arranged to be so used. These funds are shown in Plaintiffs’ Exhibit 7 and Defendants’ Exhibit 7 under the category of “state aid”.
Similarly, funds available to the CDDOs from the state general fund that have not been cut are a category of funds intended to assist CDDOs in providing services to persons who, again, are not eligible for, or have not sought, a HCBS MR/DD waiver (Testimony of R. Schultz; Plaintiffs’ Exhibit 7 and Defendants’ Exhibit 7 (Columns 1-3)). Nevertheless, this category of funding was not reduced by the Secretary.
Another category of funds advanced to CDDOs is identified as “CDDO Administration” on Plaintiffs’ Exhibit 7 and by the example on Defendants’ Exhibit 7. As testified to by Mr. Schultz, these are funds that are advanced by the SRS to compensate and assist CDDOs for their delegated administrative tasks under the Medicaid system, which funds can be used to match federal funds which is permitted for costs identified to managing the Medicaid HCBS portion of the system. Thus, these funds can be seen as only indirectly tied to any K.S.A 39-1806(a)(1) obligations and, as testified by Mr. Schultz, local tax funds available to the CDDOs, not otherwise used for federal match, could be shifted by CDDOs to this category, thus preserving the federal funds potentially lost by the state funds reduction.
Further, certain pass through funds available to the CDDOs which would go to Community Service providers were reduced by 5% as is reflected in Plaintiffs’ Exhibit 7 and by the example of TECH in Defendants’ Exhibit 7 under the heading of “DD waiver allocation”. Further, the rate reductions themselves, by example, are shown as an attachment to Plaintiffs’ Exhibit 7. Morever, the decrease in the “DD waiver allocation” moneys is probably effected also by the cut in services for family support of $398,900 under the HCBS MR/DD waiver (Plaintiffs’ Exhibit 7 and Defendants’ Exhibit 7) which will be effectuated by the reduced cap on passthrough “DD waiver allocation” expenditures for this character of service by reducing its availability. Whether it effects the K.S.A 39-1806(a)(1) character of clientele is unknown, however, “family support services” are a substitute service and such services vis a vis a person with a developmental disability who was Medicaid eligible would not be eliminated altogether. However, that person’s family would be expected to fill the service gap.
Lastly, the expenditures identified under the category of “DD waiver allocation” in Plaintiffs’ Exhibit 7 and by example in Defendants’ Exhibit 7, whereby MR/DD waiver service rates were cut by 5% for a total state general fund (SGF) savings of $976,776, effects CSPs for Medicaid services performed. In terms of K.S.A 39-1806(a)(1) clientele, there should be, as a result, no impact as long as CSPs provide the services. The effect on CDDOs would come by way of the “CDDO administration” funds since a reduction in funds provided for “DD waiver” Medicaid services decreases, on a percentage basis, administrative costs which would in turn support a match for federal funds. Similarly, the cut in family support services would impact in the same manner.
The above is the Court’s understanding from the limited evidence presented that identified the budgeted reductions and their impact on CDDOs and CSPs providing MR/DD waiver services and the effect of the reduction, if any, on any K.S.A 39-1806(a)(1) individuals.
The Court recognizes, of course, that this is not to say that many other of the cuts made, such as in audio or visual services or other services will not impact persons who are, or who may also be, developmentally disabled or will not impact some CSPs who provide additional Medicaid services. However, the diminishment in these services fall without the lynchpin standard of the “adequate and reasonable funding” claim of Plaintiffs arising out of K.S.A 39-1806(a). The Court does not understand these latter noted funding reductions, other than the fact of harm to its target clientele from the overall reductions to this agency, to be an underlying basis of its petition claims. Accordingly, these latter costs are limited for evidentiary consideration and are tangential to its claim of underfunding that accrues as a result of the Defendants claimed non-adherence to the DDRA.
Aside from subsection l of K.S.A 39-1806(a), subsections 2 and 3, as stated following, are also premised by the phrase “adequate and reasonable funding . . . that:”
“(2) consolidates federal and state funding sources;
(3) requires an independent, professional review of the rate structures on a biennial basis resulting in a recommendation to the legislature regarding rate adjustments. Such recommendation shall be adequate to support: (A) A system of employee compensation competitive with local conditions; (B) training and technical support to attract and retain qualified employees; (C) a quality assurance process which is responsive to consumers' needs and which maintains the standards of quality service; (D) risk management and insurance costs; and (E) program management and coordination responsibilities;”
There has been no evidence that the Court can discern of any failure of the Secretary in regard to subsection 2's directive to devise a system that consolidates federal and state funding sources. The testimony is that the financing system is designed to secure maximum match of federal dollars. Notwithstanding the fact earlier noted that a reduction in the MR/DD waiver services will necessarily effect funds available for federal match under the “CDDO administration” category, nevertheless, “the system” is not at fault or ill-devised. The Court could not conclude on the evidence presented that a failure to spend more to get more violates the K.S.A 39-1806(a)(2) directive. Here, the testimony is that flexibility exists for CDDOs to prevent the loss of federal funds notwithstanding state funding cuts since CDDOs have the flexibility to use any unmatched local funds to meet the federal match permitted for Medicaid administration tasks.
Plaintiffs presented evidence that the claimed under budgeting/funding is such that their staffing fails to meet the need for quality assurance (K.S.A. 39-1806(a)(3)(c)) in that overtime is often required to offset lack of full-time staffing. This lack of adequate staffing effects at least one Plaintiff, Comcare’s, ability to have onsite staffing at some group living settings, thus potentially increasing risk to those clients/consumers. However, at best, the evidence surrounding this staffing shortfall is incomplete in terms of its ability to establish cause and effect or to lay this blame exclusively on funding shortfalls or to enable the Court to exclude a consideration that other circumstances in a particular facility’s operation, perhaps in terms of allocation of resources, is not a substantially contributing factor. As such, while the staffing patterns discussed by the witnesses raise legitimate concerns of systemic well being and may underpin their overall claim of an agency failure under subsection 3, such evidence currently fails to rise to a level warranting injunctive relief because of the lack of substantive, rather than merely anecdotal, evidence of cause and effect. The same may be said of the example used by Ms. Maxey of TECH concerning exceeding the optimum residency requirements for group housing because of the needs of one individual and the expense of alternative solutions.
Further, and of importance here, the text of subsection 3 merely addresses the establishment of a system that has some independent analytical input into funding need when proposed budgets are recommended to the legislature. Unlike subsection (1) concerning individuals transitioning from an institutionalized setting, subsection 3 cannot be taken to establish an actual funding mandate, but rather only a procedure in aid of establishing independently derived adequate funding recommendations which realistically encompass the objectives expressed by the statute. As such, and certainly by the evidence, a breach of the subsection 3 directive can not be a substantive basis for the injunctive relief sought at this stage of the proceedings.
Accordingly, subsections (1)-(3) of K.S.A 39-1806(a), as noted, being the only language within the whole of the act containing the predicate of “adequate and reasonable finding or reimbursement” fails textually, and as a matter of the evidence at this juncture of the proceedings, to warrant the temporary stay relief requested since there has been no substantive showing of a probability of success on the merits of their claim relevant to the remedy now sought.
An earlier federal act, 42 U.S.C. § 6000 et seq., concerning the developmentally disabled, often amended and since repealed (42 U.S.C.S. 15001 et seq. and 42 U.S.C.S. 15091), had been held to be principally a statute aimed at establishing goals and to operate as a funding guide, rather than a mandatory entitlement statute (Pennhurst State School Hosp. v. Halderman, 451 U.S. 1, 67 L. Ed. 2d 694 (1981)). The recent subsequent federal statutes noted concerning programs for the developmentally disabled (42 U.S.C.S. 15001 et seq.; 42 U.S.C.S. 15091 et seq.) appear equally directory only. The State DDRA, with its caveats of funding availability, appears highly comparable in statutory design. For Plaintiffs to claim that the DDRA establishes entitlements beyond the funding established for its program directives ignores the plethora of statutory language which couches its objectives and directives to the executive branch with caveats of funding availability, e.g., K.S.A. 39-1804(a) (“subject to appropriations of federal and state funds”); K.S.A 39-1804(b) (“subject to the provisions of appropriation acts”); K.S.A 39-1804(e) (“Subject to . . . appropriation acts”); K.S.A 39-1805 (“and subject to appropriations”).
Further, the DDRA itself recognizes that all persons meeting eligibility criteria for assistance may not be helped, e.g., K.S.A 39-1805(e) (“ensure that affiliates have the option to review referrals and waiting lists on a periodic basis to contact potential customers with information concurring their services”); K.A.R. 30-64-30 (waiting lists).
Even if the above language was insufficient to persuade that the Act’s intent was not to encompass any firm entitlements, the provisions of K.S.A 39-1809 seemingly close the door to the arguments advanced. (“Nothing in this act shall create any entitlement to services.”)
Lastly, any claim of Plaintiffs that they have obligations under the DDRA beyond that assumed by contract is foreclosed by K.S.A 39-1808 (“Nothing in this act shall authorize the Secretary to require a community service provider to make any expenditures not in compliance with agreements. . .”). Thus, it is fair as a conclusion to say that while the Plaintiff organizations, once undertaking service to their clientele necessarily have to perform the services up to standards or face consequences (K.S.A. 39-1807), they are not required to perform services without a contractual obligation to do so, or in other words, without the dollar consideration intended for performance under their agreements.
Another consideration is that 42 U.S.C.S. 1396a (a)(3) mandates a remedy for the denial of Medicaid services to recipients be encompassed in a participating state’s plan and there is no showing that such a remedy does not exist or is inadequate under the Kansas plan. While, as noted, no named Plaintiff is a developmentally disabled person and no succinct allegations are made of a deprivation to any such person individually, CDDO Plaintiffs, as claimed advocates for such persons (K.S.A. 39-1805; K.A.R. 30-64-24), fail to show how this remedy is ineffective for such persons. Plaintiffs, as advocates, could have no standing greater than the group or individual advocated for.
Further, as noted by Pennhurst State School Hosp. V. Halderman, id., a comparable federal developmental disabilities act created no entitlements.
As to their own standing, Medicaid providers appear to have lost the standing to sue on their own behalf under federal Medicaid statutes after repeal of the Boren amendment. Compare, Burlington, et al v. Atkins, 227 F. Supp. 2d. 593, 596 (2002).
Thus, the failure to discount the effectiveness of administrative remedies under the Medicaid system for the developmentally disabled or to establish a clear federal legal anchor for addressing a denial, or imminent denial, of intended federal benefits undermines Plaintiffs’ arguments for temporary relief here. This is not to say a remedy might not exist (Lewis v. New Mexico Department of Health, 261 F.3d 970 (10th Cir. 2001)), but only that the remedy currently sought of a TRO for perceived long term systemic funding deficiencies - before motions to dismiss have been ruled upon or before the breath of the issues, if any, are developed by discovery - demonstrates no immediacy that would warrant the extraordinary remedy sought.
Nevertheless, and overall, whether Plaintiffs have standing to address the several issues raised or whether dismissal is appropriate is not being determined here. However, Plaintiffs do have a burden to show both the absence of other remedies adequate to the issue and the viability of their remedy sought as factors in assessing the propriety of issuing a TRO. Wichita Wire, Inc. V. Lenox, 11 Kan. App. 2d 459 (1986).
These considerations, as a consequence, effectively direct the issues raised by Plaintiffs, in terms of their TRO request, back to a consideration of the terms of their agreements with the Secretary and the Secretary’s ability to limit performance under the agreements either by lack of available funds, by her power to control or defer services to be performed under the agreements, or independent of the agreements such as setting Medicaid reimbursement rates.
Here a representative agreement between SRS and the Plaintiff TECH was admitted as Defendants’ Ex. 5. Section XI thereof provides:
“XI. ALTERATIONS TO THIS AGREEMENT
A. Alternations
Any alternations to this agreement will
only be valid when they have been
reduced to writing, duly signed and
attached to the original of this agree-
ment. This agreement must be subject to renegotiation upon changes in federal or state laws or regulations or formally approved SRS policies to conform to any changes caused by amendments or revisions to those laws or regulations. All other proposed alterations to this agreement, except as outlined in sections XI.B. and XI.C. below, must be introduced at an HCP/CDDO Meeting and, have a mutually-agreed-upon effective date.
B. Reduction in Funding
The State of Kansas’ current financial situation does not make it possible for SRS to make firm, unalterable financial commitments. In the event SRS determines lack of funding requires a modification of this agreement, SRS reserves the right to renegotiate terms and conditions of the agreement with the contractor. The contractor agrees to cooperate with SRS in renegotiating this agreement should SRS determine that such modification is necessary to manage the resources available to SRS.
In the event SRS is subject to a formal funding reduction or allotment, SRS reserves the right to alter or adjust the payment amounts or terms of this agreement to meet funding reductions or allotments by sending a written notice of such alterations or adjustments to the contractor 30 days before such alterations or adjustments become effective. Should the contractor believe there is a need to modify other terms or conditions of the agreement, SRS will, in good faith, negotiate regarding the terms of the agreement.
C. In the event SRS determines that
expenditures in the community developmental disabilities service system will exceed the funds appropriated to the system, then SRS will take actions, in consultation with the Statewide Funding Committee, to remedy the overspending. Notice of any adjustments will be given to the CDDO thirty (30) days in advance of effective date of the adjustment(s). Should either party to this agreement believe there is a need to modify other terms or conditions of the agreement, both parties to this agreement will, in good faith, negotiate regarding the terms of the agreement.”
First, this section of the contract makes it clear that their agreement is modifiable as to the services contemplated based on the funds anticipated therefore. It is to be noted that lack of funds, includes an allotment reduction (XI ¶B). Importantly, as well, the key to operation of this latter provision is a loss of funds available to SRS as a whole since the proviso does not limit reference to only funds available to the DDRA programs or state aid under K.S.A. 65-4411 et seq.
Secondly, if spending under the control of CDDOs directly, or as a gatekeeper, looks like it will exceed funds available, then SRS, after consultation, can step in and alter the agreement, negotiating any collateral consequences (XI, ¶ C).
Accordingly, however strongly and sincerely Plaintiffs urge that the premises of the DDRA have not been met in fact, it is clear that the statutory program objectives there stated and the contracts advanced for their implementation as entered into by the CDDO Plaintiffs with the Secretary firmly secure reservations as to their promissory fulfilment based both on funds available and discretionary decisions that can be made by the Secretary. Thus, reasonably, the only inquiry should be whether funding for their fulfilment is present and available or the Secretary was not empowered to act to reduce services or compensation therefore as she did.
Here Plaintiffs cannot dispute, as the Court found earlier, that the allotment process put into effect by others in state government reduced the pool of anticipated funds available to the Department of SRS and that such allotment system was initiated, in fact, based upon a legitimate anticipated shortfall in revenues available to the state general fund. Thus, when viewing these myriad of statutes and the contractual agreement, the phrase “subject to appropriations” or its equivalent must also include the legal fact that appropriations made are subject to reduction by the allotment system and accordingly can be limited to less that the amount of funds originally appropriated.
This circumstance requires analysis of Plaintiffs’ claim that, notwithstanding, moneys available to the agency overall would still nevertheless be available in whole, or in greater part, for the programs at issue had the Secretary not cut them in response to the gubernatorial allotment decision. This presents a challenge to the Secretary’s power of choice in responding to the allotment. While the allotment reduction to the agency overall was 3.9% of anticipated and appropriated revenues, it is true that the specific programs directly impacting the named Plaintiffs’ interests were reduced approximately 12.6%. Thus, in effecting her choices, Ms. Schalansky decreed a greater burden fall to Plaintiffs’ budget interests than others. However, an analysis of what the Secretary did fails to reflect any legal impediment to her choices and each of her choices seemingly, in fact, can be justified as within her authority, even absent the revenue shortfall. In other words, an argument that the shortfall should have been, at best, a pro rata reduction to all programs funded in her agency equally fails analysis.
First, the legislature never line-itemed, that is, specifically identified the dollar amount in any appropriation act, or otherwise restricted her spending authority as to a specific dollar amount in any appropriation act as to any program here at issue, except as to K.S.A 65-4411 et seq. “state aid” (L. 2002, Ch. 204, §95(a): “mental health and retardation services aid and assistance”). However see, L. 2002, Ch. 197, §1(d). Thus, there is no appropriated pool of specific dollars identified for which Plaintiffs can claim entitlement under the force of law and thus claim insulation from Ms. Schalansky’s choice for budget reduction. In fact, as Plaintiffs themselves point out, the legislature has given the Secretary of SRS authority to move items within her proposed budget from one category to another (L. 2002, Ch. 204, §95 (d)). This belies any argument that any legislative spending authority granted the Secretary represents, on its own, a legislative spending mandate that would be free from reduction by the Secretary. Seemingly, if she can move money one direction she can move it another unless constrained by other law or contract.
Secondly, the Department of SRS can control access to HCBS waiver services since the Secretary has the power to set policy generally (K.S.A. 39-708c(b)) and HCBS service priorities specifically, (K.S.A 39-7, 100 (3)). Further, the Secretary may consider budgeting constraints in determining payments and services (K.S.A. 39-708(x)(1)). Thus, rates of reimbursement set when greater funds were available might reasonably be subject to review when funding changed, if there is no restriction, contractual or otherwise, on this authority. But see, L. 2002, Ch. 197, §1 (d). Further, the right to payment for a service can be denied if the service exceeds the limitations defined by the program’s policies. See, K.A.R. 30-5-70(c)(1), incorporated by K.A.R. 30-5-304 for HCBS services. Further, the SRS also maintains approval authority over individualized plans for HCBS plans, including funding therefore. K.A.R. 30-5-309(d).
These powers are recognized in the contract between individual Plaintiff CDDOs and the SRS (Defendants’ Exhibit 5, at XI, supra). A period for notice of a policy change is provided in the agreement (Id., Sec. VII (6); Appendix A, pg. 2.) If such changes are effected, Plaintiff CDDOs by both contract (Defendants’ Exhibit 5, at VII (A)(2) and (H)) and by statute (K.S.A. 39-1808) are not required to provide or arrange for the disapproved or withdrawn service.
These identified considerations effect consideration of the Secretary’s reductions in the family support services under the HCBS MR/DD waiver through her power to establish priorities of service generally and, as well, to react to budgetary constraints placed on her agency as whole. Such considerations also effect the 5% reduction in rates paid under the HCBS MR/DD waiver under her K.S.A 39-7086(x) authority to set rates. Community service providers are required to accept these rates for Medicaid services (K.A.R. 30-5-59(e)). The specific rates are not incorporated in the agreement and, in fact, are “non-negotiable.” Plaintiffs here have not presented either argument or evidence that such rate schedule remaining is unlawful or was not properly procedurally accomplished, either in accordance with law, by the terms of their contracts with the SRS, or factually such that the rate remaining is not itself “adequate and reasonable.”
Further, as noted earlier, the “state aid” portion of the CDDO money advanced under K.S.A 65-4111 et seq.
also contains independent statutory authority that recognizes that funds anticipated for these grants, but which is not forthcoming, can effect the total actual dollar funding allotment itself and, in any manner, by K.S.A. 65-4415, payment of grant funds can be deferred.
WHETHER A TEMPORARY RESTRAINING ORDER IS WARRANTED:
The four factors to be examined in an application for a temporary injunction or a temporary restraining order are (1) whether the Plaintiff has, at the least, a substantial likelihood, that is, a reasonable probability, of success on the merits; (2) whether the Plaintiff has an adequate remedy at law or probably will be irreparably harmed in the absence of injunctive relief; (3) whether the injury threatened to Plaintiffs outweigh the harm an injunction may inflict on the Defendant(s); and (4) whether the granting of an injunction will disserve the public interest. The burden of proof is on the party seeking the injunctive relief. Proof of all four criteria is required. A failure on one defeats the remedy. A preliminary injunction or temporary restraining order, being an extreme and extraordinary remedy, should be cautiously employed and if issued limited to the need shown by the facts. Further the preliminary injunction or temporary restraining order should not usurp the trial function of the lawsuit. Wichita Wire, Inc. v. Lenox, id.
Here, as can be discerned from the previous discussions, success on the merits of Plaintiffs’ claims in terms of a roll back of the reductions or a discontinuance of their effect in the future does not, at this juncture of the evidence or on the arguments advanced, appear probable. The Plaintiffs have principally relied on one provision of the DDRA act as the premise for a temporary restraining order and there is a lack of evidence to demonstrate the Act’s pronouncements have been violated in terms of the recent expenditure reductions ordered by the Secretary. Further, there is a complete lack of evidence to indicate that the Secretary’s actions taken in terms of implementation of the budget reductions, such as the decrease in Medicaid reimbursement rates for HCBS/MR/DD waiver services, were unlawfully accomplished, or in fact, by result, now reflect a rate that would be violative of either some firm governing standard or their contracts with the SRS. Thus, the failure to meet the seminal threshold of likely success disables other considerations that might make appropriate the issuance of temporary injunctive relief.
However, in terms of the remaining factors identified in Wichita Wire, Inc. v. Lenox, id., it may acknowledged that - regardless of the reasons advanced - the diminishment of assistance to persons with developmental disabilities, or their families, who are without adequate financial resources of their own, is fundamentally not in accord with our nation’s or our state’s underlying social contract with, or duties, to such persons. To disrupt the ability of persons - for whom life has dealt a bad hand through no fault of their own - to control their own destiny and maintain the human dignity that self-sufficiency brings is, per se, harmful and hurtful. However, even with this said, merely to review the programs impacted by the overall SRS budget shortfall demonstrates the similar and essential needs represented by all the clientele of the Department of SRS (Plaintiffs’ Exhibit 4). Thus, cuts in any of such services appear potentially hurtful. While Plaintiffs suggest agency personnel should be called upon for greater sacrifice, such a call overlooks the skills and dedication required to administer complicated social programs wisely and efficiently. But given the fact of the disabling revenue shortfall, obviously some choices had to be made by Secretary Schalansky.
There is certainly no evidence Ms. Schalansky acted arbitrarily, capriciously, or unreasonably in her choices of program reductions. In fact, an analysis of the program cuts in the area of Plaintiffs’ interest demonstrate that she appears to have exercised discriminating judgments, judgments that while harmful by their very nature and subject matter, nevertheless, still attempted to maintain a safety net for the delivery of necessary services by effecting them in program areas where some flexibility exists for others involved to fill-in or temper the effect of the shortfall in state funds on the programs administered.
By example, the 5% reduction in rates, while effecting CSPs directly and CDDOs indirectly by the dollars allocated to “CDDO administration,” such reductions did not directly eliminate or directly reduce services to the developmentally disabled themselves.
The budget reductions implemented for family support services, while impacting the families of those with developmental disabilities, nevertheless, did not wholly eliminate services to the developmentally disabled, but rather increased the burden of family care givers. This decision worked a substitution of services rather than a complete abandonment of services altogether.
Further, while certainly these budget cuts flow to the bottom line of CSPs and CDDOs, other sources of revenue, both from their local tax bases and private funds remain a possible source of supplementation for lost state funds. Further the compensation agreements between CSPs with CDDOs may be available for adjustment, including increases in rates for private pays.
The diminishment of state aid grants impact funds available to CDDOs, but such funds are intended for clientele whose disabilities or needs are, at least facially, less severe than those falling within the definition of developmentally disabled. Again, other sources of funds may afford a basis to supplement these lost state funds.
Further, shifting the burden of the state budgeted funds loss to CDDOs and other local providers provide the opportunity for these organizations to exercise their front-line management skills, expertise, and experience whereby they may, within the ambit of funds available to them, be able to moderate the impact by undertaking organizational or contract changes. The Court recognizes that the overall impact to the group represented by Plaintiffs in terms of funds available, particularly in light of their overall claim of being shortchanged initially, is not insignificant. However, a significant component of Secretary Shalansky’s decisions is to place the difficult choices necessitated by the diminishment of funds from the State in the hands of those with significant expertise whose proximity to their clientele presents a further opportunity to better distribute the hardship fairly.
Plaintiffs’ request for a temporary restraining order attempts to shift the burden of determining what is best for an admittedly bad situation to the Court and Plaintiffs. Simply here, Plaintiffs have demonstrated no cogent reason - legal or factual - for the Court to invade the discretionary choices of the Secretary exercised in the areas of her expertise. Further, on the evidence, the Court could not conclude that its interference would not do more harm than good to the public interest if it issued a temporary restraining order. Further, Plaintiffs’ loss of revenues flowing from reimbursement rate reductions is a monetary loss than can be recouped if error is subsequently demonstrated. Such loss is clearly not irremediable.
Accordingly, and consistent with the above discussion, the Court finds that there is an insufficient factual or legal basis shown for this Court to intervene in the pending dispute at this time and that the issuance of a temporary retraining order might likely cause more harm than good. Accordingly, the Court concludes it is best to allow the effect of the budget realities to proceed as implemented and for this case to proceed in its ordinary course.
As the next order of business, Plaintiffs are directed to file responses to Defendants’ motions to dismiss.
ENTRY OF JUDGEMENT
For the reasons above expressed, Plaintiffs’ requests for temporary restraining orders as to either the initial allotment decisions of the Governor and Department of Administration officials or the Secretary of Social and Rehabilitation Services and her Department in terms of her agency’s implementation of the allotment reductions are denied.
Plaintiffs’ claims in Count VII and Count VIII against the Governor and the Department of Administration Officials are dismissed with prejudice.
This entry of judgment shall constitute the Court’s entry of judgment when filed with the Clerk of this Court and no further journal entry is required.
IT IS SO ORDERED, this ______ day of February, 2003.
_________________________
Franklin R. Theis
Judge of the District Court
Division Seven