Public Hearing

April 21, 2003

San Diego State Building

1350 Front Street, Room B-109

San Diego, California



Industrial Welfare Commission




CAREY LEFFLER, Hearing Reporter



Proceedings 4

RONALD E. SALDA, Hall Family Homes 4


Adjournment 15

Certificate of Transcriber 16



(Time noted: 10:00 a.m.)

COMMISSIONER ROSE: Today is January (sic) 21st. We're in San Diego. And the time is ten o'clock in the morning. And it's proposed amendments to Wage Order 5, public housekeeping industry, Section 3, "Hours and Days of Work." It's to add Section 3(A)(2)(e), to read as follows:

"Section (A)(2) above shall apply to employees of 24-hour non-medical out-of-home licensed residential facilities of 6 beds or fewer for the developmentally disabled, elderly, and mentally ill adults.

"This section, 3(A)(2)(e), shall sunset on July 1, 2005."

There's two speakers.

Mr. Salda, if you'd like to speak first, come up.

Either one. If you'd come up here, there's a microphone.

Commissioner Rose is the only commissioner here, and staff.

Go ahead.

MR. SALDA: My name is Ron Salda. I'm with Hall Family Home, a residential facility in Orange County.

Our position on this is that we believe that the time spent from ten o'clock in the evening until six o'clock in the morning, those hours, which is the 8 hours, we'd prefer not to have them apply to overtime, simply because, first of all, the individuals who are there are people who normally are sleeping. Even though we need people who are in attendance, it's simply for safety of the homes.

And, number two, we as providers need some relief from the state. We've got insurance going up. Our liability insurance has gone up by a factor of three. Our gasoline has gone up. Our food has gone up. You name it, it keeps going up -- the wage we're paying people. We need some relief someplace, and this is a place that we can get some support.

And, quite frankly, the state has got its own fiscal crisis. So for us to come down here and say, "Well, we'd like to have an increase in costs to support the homes," that's not going to work, really, now. So the short-term help would be to take the 8 hours and make sure that that does not apply to overtime.

And that's my position.


MR. SALDA: I have nothing more to say.

COMMISSIONER ROSE: I have a couple questions for you.

MR. SALDA: Certainly.

COMMISSIONER ROSE: First of all, what is your pay scale, roughly?

MR. SALDA: We start people who come in about $7 an hour.


MR. SALDA: And it goes up from $7 to $10 an hour, depending upon the qualifications and the skills that the people possess.

COMMISSIONER ROSE: Okay. How many people are in the facility that you're in?

MR. SALDA: We have a six-bed facility, and we employ approximately ten to twelve people.



COMMISSIONER ROSE: Is that because of the level of care that you offer?

MR. SALDA: The level of care. We -- they're all 4(i) homes.


MR. SALDA: 4(i).


MR. SALDA: That means that any time other than when there is not -- not at the facility, we need three staff people. And the requirement is during sleepover we need two people. So --

COMMISSIONER ROSE: And that's mandated by the state?

MR. SALDA: Yeah. Yeah. So -- and that's Title

-- Title 17 and Title 22. We're really Title 17.


MR. SALDA: So we -- that's where we're looking for a little bit of relief.


MR. SALDA: At this point, anything would help.

COMMISSIONER ROSE: Okay. Now, I don't know what people are requiring the 4(i). Do you get SSI, or are -- they're on SSI?

MR. SALDA: Yes. Yes, they do.

COMMISSIONER ROSE: And -- what is it? -- SRP?


MR. SALDA: SS -- SSI and S -- what are the --

MR. BRADSHAW: SSI and SSA and the state fund their own rates.

MR. SALDA: Yeah.

COMMISSIONER ROSE: Okay. Now, on the state funding, how much does the state allow per individual?

MR. SALDA: I'll give you approximately. It's approximately $4,900 a month per individual. That's -- again, is a Level 4(i).

COMMISSIONER ROSE: That's for the 4(i).

MR. SALDA: Right.


MR. SALDA: And if you take a look at those numbers, it's really interesting. But if you take a 4 -- a Level 4 home, our revenue is about $19,000 a month. And of that $19,000, approximately $10,000 to $12,000 of that is used on payroll, which is state taxes, federal taxes, and payment of employees. And we pay -- anybody over 40 hours, they get overtime. We follow the guidelines, right to a T.

COMMISSIONER ROSE: And it's my understanding that the state fund is going to go up again.

MR. SALDA: State fund is -- the workmen's comp?

COMMISSIONER ROSE: Workmen's comp.

MR. SALDA: Yes, it is. That is going up. And part of that issue with workmen's comp -- and we've talked to state fund, they're saying, "Well, we just simply lumped you into a category. You may not belong there, but we don't know where else to put you. So, therefore, you pay the rate." It's -- I believe it's .145. That's approximately.

And we have not had a claim against state fund since we -- since we've been in business. They don't want to hear about that. We got a rebate back two years ago when I had a -- had an audit, with the auditor in Santa Ana. And we got a rebate back of $2,000. To this day, I have not seen it, because our numbers were not correct. Wait a minute -- I didn't do the audit. Your man at state fund did the audit. I finally said, "I've got better things to do with my time than fight that battle." But we've got to have workmen's comp. Where does it stop?

And again, I've said it once and I'll say it one more time: our liability insurance, we are required to have it. Both the regional centers have to be named on it, and we must have that insurance. And if we don't have the insurance, we're shut down. And insurance in the last two years has gone up by a factor of three times. For three homes today, we're paying about $14,000 a year, with no claims. Where does it stop?

Part of the problem too in the State of California, a majority of liability companies don't want to do business in California.


MR. SALDA: And need I say anything else?

COMMISSIONER ROSE: I understand that.

Okay, fine. Thank you.

One more question. What is the industry doing to take care of the situation in the next two years? If this is only going to -- if this is going to sunset July 1st of 2005, that gives you two years.

MR. SALDA: It's almost to a point where care providers, we're on our own. The regional center says, "Don't talk to us about your problems; we have our problems of funding." And you know where the state is. I mean, they've got their own fiscal crisis. So we're running around trying to figure out where we're going with the problem. And one of the issues in our environment is that because of providers, we're so fractionated, we're about -- we're really not banded together.

COMMISSIONER ROSE: All right. Thank you very much.

MR. SALDA: Thank you.

COMMISSIONER ROSE: I appreciate it.

MR. SALDA: Thank you for the hearing too.


Mr. Bradshaw.

MR. BRADSHAW: My name is Boyd Bradshaw. I'm a residential provider in Orange County. I run two adult residential care facilities and two children's homes. I actually have a unique opportunity to sort of compare and contrast the group home regulations. You guys just recently granted a waiver for them.

COMMISSIONER ROSE: That's correct.

MR. BRADSHAW: And now we're looking at the adult residential side of it.

I'm also the president of RESPAC, which is a residential providers association based in Orange County. And there are a lot of major issues that we're trying to address that this has a direct impact on.

For adult residential facilities, I think it's important to look at the cost structure issues associated with it. You granted a waiver to group homes. And if you look at the cost structure between group homes and adult homes, adult homes, ironically enough, should have been granted the waiver prior to group homes, because group homes, on a dollar-to-dollar basis for service, get funded at much higher rates. Adult residential facilities are required to provide similar, if not exactly the same, services, but the funding differential is much more substantial.

He's talking about adult residential facilities, Level 4(i), getting $4,900. It's actually up to $4,979 a month. Well, children's homes, which would be considered to be a Level 14 for a SED home, they receive anywhere from $6,500 to $7,200 a month for the same type of service in the same locale. So, we're providing a level of service that's comparable, but at a much lesser rate.

The previous speaker did talk about some factors with regards to his particular payroll. My payroll is very similar, except we're running including indirect costs. Seventy cents out of every dollar earned right now is going to direct and indirect costs of my employees, including benefits. All of my employees do have health care. The average wage right now is roughly $8 an hour. Each one of my facilities employs anywhere between ten and fourteen people because we're required to have such high staffing levels.

At this point in time, I'm in the position as a residential provider that I'm having to reassess my ability to provide health insurance because I have just been notified that my liability insurance for four programs, which last year was $7,000, this year is $20,000. And as you're aware, there has not been any cost adjustment from the state for those services or for these issues.

Workers' compensation, we have never had a claim in workers' comp in the five years my agency has been in business, and yet our workers' comp has jumped by 320 percent in 22 months. Liability insurance, I've already indicated to you the cost factors. These factors are going up at an astronomical rate.

My goal is simple. I am only as good -- I mean, I only have one tool in my business: my only tool is my employees. It's as simple as that. That's all I can do. The quality of my homes, the quality of my service, the quality of care is all based on my employees. But, unfortunately, cost factors associated with the lack of funding within the system and issues such as the labor law issues is having such a significant impact I'm having to turn around and make sacrifices to myself and to my employees to survive. And the end result is the same: employees get less, and the individuals we serve get less, because everybody is, at the bottom line, not receiving any benefit.

When I have to pay a person to be in a facility overnight, which, by the way, it's important to note that in Orange County, community care licensing, which oversees group homes also, dictates that, for children's homes, the staff need to be awake. In adult residential facilities, they don't need to be awake. So, for my children's homes, I do have awake staff, and they're paid accordingly, and they're also paid overtime because it's hard to just do an 8-hour shift. So we usually do 10- to 12-hour shifts with appropriate overtime.

But when I have to make a transition into my adult residential facilities with that same type of model, we end up finding the major cost factors have a huge impact. And what I've ended up having to do is I've ended up having to lay off two or three of my part-time employees, simply because, with my payroll already at literally 70 percent of every gross dollar earned, I don't have the luxury of being able to flex people in an out, because we start looking at things such as worker comp issues and the definition of part-time versus full-time employees with regards to medical insurance, with regards to a lot of different factors such as that.

It's a huge issue. And I think when we look at the comparative nature of the businesses, between adult residential facilities and the children's homes, I think you can realize that if the children's homes meet this qualification, without question the adult homes should be in the same position.

COMMISSIONER ROSE: Okay. What levels are the adult facilities?

MR. BRADSHAW: I have two adult Level 4(f) homes and two children's Level 4(i) homes.

COMMISSIONER ROSE: Level f. And you get approximately how much for those?

MR. BRADSHAW: Those are approximately $4,000 a month, and then the 4(i)'s are approximately $4,900.

COMMISSIONER ROSE: Okay. That's all I have.

Thank you for taking the time to come here. And we'll -- that's all the questions I have. I appreciate your time. Thank you.

And we'll be meeting on Thursday to finalize this, hopefully.

Thank you, Ron.

MR. SALDA: Thank you.

COMMISSIONER ROSE: We appreciate it.

There being nobody else present to speak, I'll adjourn the meeting at 10:14 -- 15.

(Thereupon, at 10:15 a.m., the public hearing was adjourned.)




I, Cynthia M. Judy, a duly designated transcriber, do hereby declare and certify under penalty of perjury under the laws of the State of California that I transcribed the tape recorded at the Public Hearing of the Industrial Welfare Commission, held on April 21, 2003, in San Diego, California, and that the foregoing pages constitute a true, accurate, and complete transcription of the aforementioned tape, to the best of my ability.

Dated: April 24, 2003 ______________________________