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April 15, 2016
Service Provider Boards: Consider implications of New PDD Contract Dear Board Chair, The Calgary Service Provider Council of agencies funded by PDD has significant concerns with the new PDD contract template. Service Provider representatives who are also members of Alberta Council of Disability Services (ACDS) are working with ACDS to convey concerns to the Ministry of Human Services. As well, ACDS has obtained legal counsel from John McGee in Edmonton. We are providing you with our most significant concerns as we believe the liabilities and financial risks in this contract warrant Board attention before Service Providers sign this contract dated to commence July 1st. Most notably, the restricted and defined use of administration expenses, the misrepresentation of ‘surplus’, the constraints around hiring and firing, and the lack of a dispute resolution mechanism all impede our ability to responsibly support clients and employ staff, or to maintain a collaborative and productive relationship with our Government counterparts. Over the past several years, much work has been done at the regional and provincial levels to bring the contract to a place where Service Providers are able to manage their organizations while delivering excellent services and supports to individuals with disabilities and their families. This contract not only ‘undoes’ all that work, it puts Service Provider organizations at risk. It is recommended that Boards: ♦ add the new PDD contract to their next Board meeting agendas; ♦ take actions such as writing to the Ministry of Human Services, to PDD and meet with your MLA; ♦ request that the existing PDD contract template be implemented as it is a reasonable, tri-partite agreement that more fairly represents and protects the interests of Service Providers and their employees, individuals (and/or families and guardians) and the funder (Alberta Government); and ♦ act before the end of April, or the sector risks running out of time for a workable solution, such as returning to the existing contract template.
Please take the time to read the concerns that follow and note a number of links provided for additional information and contacts to support your governance responsibilities and the actions you may wish to take. On behalf of the Calgary Service Provider Council,
Erin Waite, Chair Agency Director, Connections Counselling and Consulting Foundation erinw@connectionscounselling.ab.ca 403 209 1100
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RESTRICTED AND DEFINED EXPENDITURES
Fee for Service contracts define total dollars for an outlined criteria of service. Contractors (Service Providers) then use the contracted dollars as necessary to meet the criteria. This exists in the current contract between Service Providers and the Alberta Government. This also exists in the new contracts for Child and Youth Services (Child and Youth Services Block Funding and Family Support for Children with Disabilities (FSCD) Agreements. However, the terms outlined in the new PDD Contract are more rigid and do not allow the same flexibility in use of contract dollars to deliver the services. NOTE: For all contracts, current and new, full financial reporting takes place, providing the Alberta Government with the monitoring and control of funds. REFERENCES CURRENT PDD CONTRACT
CFS NEW CONTRACT
18. Provided the Service Provider Schedule B: is delivering the Services in 1. Pricing: Identified Service or accordance with the Agreement, Deliverable and the Fixed Price the Service Provider may reallocate Expenses: funds within and between the (a) The Contractor’s pricing as Administration Expenditures, Direct specified above is inclusive of all Service Costs and the Service expenses and as such the Delivery Expenditures without prior Province will not be obliged to pay Minister approval. any expenses incurred by the Contractor in the performance of the Services.
CFS NEW BLOCK FUNDING AND FSCD AGREEMENT 3.3 The Contractor may allocate expenditures within and between existing Schedule B expenditure categories (Service Delivery, Program costs, Facility costs, Vehicle costs, Administration, and Capital Assets), with the exception of: i. to/from the Capital Assets section ii. if the annual cumulative reallocation exceeds 20% of the original budget for the expenditure category of which the funds are being transferred to.
NEW PDD CONTRACT: With the new contract, the listing of eligible/ineligible administration items puts restrictions on a Service Provider’s ability to manage operations. It significantly limits effective management of budget and service delivery. For example, restrictions in IT equipment contradict the Government’s requirements of Service Providers for reporting. Similarly, listing eligible items by brand name is unduly restrictive and impractical, if that brand goes off market or is priced higher than equivalent items. (eg. iPhones are eligible) Annual audits and detailed invoicing are required of Service Providers providing oversight for government. The addition of a detailed list of eligible expenses does not improve controls. Impact • Service Providers, already dealing with challenges given no increase in Service Delivery and Administration funding since April 2014, will face additional burdens with these restrictions • Discrepancy created in operations for Service Providers with multiple contracts, as these Expenditure requirements and eligible/ineligible lists are not a part of other HS Contracts
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SURPLUS Costs, including service delivery and administration, vary from month to month and are subject to unanticipated situations (i.e. resources needed in crises). Service Providers use Service Delivery and Administration allocations to cover deficits, or where possible, towards innovation in service delivery – there is no ‘surplus’ or ‘extra’ funds. For the past two years, PDD has consistently asked Service Providers to take in additional clients, approving service dollars but without adding to service delivery and administration. This is not sustainable. Service Providers have long advocated for the spirit of Fee for Service, to receive the contracted dollars and have the autonomy to allocate as needed to provide the contracted services, without restrictions and micromanagement. This new contract template goes in the opposite direction, and is not consistent with other contracts within Human Services. “It is important that institutional funders, individual donors, and other community leaders understand the need for small and midsized nonprofit organizations to build and sensibly use their unrestricted net assets to create an operating reserve that achieves financial sustainability.” White Paper: Nonprofit Operating Reserves Initiative Workgroup REFERENCES New Contract Template – AB Human Services website FAQ Q9 Response: “If a Contractor is projecting a surplus during the term of its contract, and would like to use the excess funds to build capacity, support innovation or otherwise improve the quality of services, it may contact the Province with a proposal to renegotiate the contract. If the contract is not renegotiated, surplus funds finds will be returned to the Province at the end of the contract.” Impact • Operating reserves are a foundational financial concept that link to the sustainability of non profit and for profit organizations alike. As developmental disabilities are lifelong, agencies providing supports must focus on sustainability to ensure client safety and service continuity. • The contract allows the government to cancel at any time with 90 days notice. Agencies with long-term staff will have severance obligations that exceed 90 days and carrying reserves is the only way to cover that liability. • The government publishes statements about valuing long-term staff and expertise but the 90-day cancellation combined with no reserves results in an inability to retain long-term staff. • Increased administrative work for Service Providers with the reporting of service delivery and administration allocation usage, additional work to prepare proposals for strategic use of ‘surplus’ dollars • Delayed implementation of capacity building, innovation and improved services strategies with the wait time to have proposals ‘approved’. Reliance on Government decision discourages these initiatives. • Increased restrictions and mandated return of ‘surplus’ will make service delivery unsustainable for most Service Providers. • Government ability to assess surplus from previous fiscal years extends financial risk and potential for clawback of monies for up to 18 months later. DISPUTE RESOLUTION The language of this contract (examples noted previously) signifies to Service Providers an imbalance of authority vs. responsibility. Decision-making for funding allocations, risk management, and service delivery rest with the Government, without sufficient knowledge of individuals and the intricacies of service delivery. Making decisions based on limited knowledge and indirect experience could have major ramifications for Service Providers, their employees, the delivery of services, and most important, the individuals receiving service. The lack of a dispute resolution in this contract eliminates an agency’s ability to contest decisions made by Government “sole discretion” and can affect delivery of services, Agency operations and finances. Impact • If Service Providers, for legal, moral or ethical reasons, disagree with a decision made by the Government, their only recourse is to cease operations.
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CONTRACTOR vs. EMPLOYEE As contracted organizations that must meet all standards of companies (either non profit or private, for profit), we are confused by clauses within the contract that appear to convey an employer-employee relationship. This requires careful consideration of the implications for agencies and for the government. Most important, for agencies, it will challenge quality and responsiveness to depend on direct input from people further removed from the individuals, rather than the people who know individuals well and have specialized expertise and training. REFERENCE NEW PDD CONTRACT: New Contract Clause 17. RELATIONSHIP OF PARTIES: “The relationship of the Contractor to the Province in performing the Services under this Contract is that of an independent contractor, and nothing in this Contract is to be construed as creating an agency, partnership, joint venture or employment relationship between the Contractor and the Province.” Clauses with “Employee” Implication • 3.1 “… and follow any directions from the Province regarding the performance of the Services.” • 3.5 “Acknowledge and agree that the Province may provide reasonable directions to the Contractor…” • 4.4 a) “… develop and carry out an action plan approved by the Province to re-establish compliance with the Standards;” • 10.2 a) “remove any employee, volunteer, subcontractor or agent of the Contractor engaged in providing the Services upon the written request of the Providence within the time limit indicated in such request; “ • 10.2 b) “only replace such removed employee, volunteer, subcontractor or agent of the Contractor upon getting the prior written approval of the Province…” 14.3 “Should the Contractor receive an access request under the FOIP Act, the Contractor shall not respond to it, but shall immediately forward the access request to the Province for further handling.” Impact • • •
Employee direction coming from funder is inappropriate. Decisions on supports and services need to be made as close as possible to the individual – by the people who know the individual best – not further away by those with no relationship. Service Providers, already dealing with challenges given no increase in Service Delivery and Administration funding since April 2014, face additional burdens with these restrictions. Discrepancy created in operations for Service Providers with multiple contracts, as these Expenditure requirements and eligible/ineligible lists are not a part of other HS Contracts
LINKS AND REFERENCES Sabir, Irfan, Honourable Minister of Human Services 224 Legislature Building 10800 – 97 Avenue Edmonton, AB T5K 2B6
Phone: 780 643-6210 E-mail: hs.ministeris@gov.ab.ca
Dr. Alex Hillyard Phone: 403 297-5010 Regional Director E-mail: alex.hillyard@gov.ab.ca Calgary Region Disability Services th th 6 flr,1520 – 4 Street SW Calgary, AB T2R 1H5
Morhart, David Phone: 780 427-6448 Deputy Minister E-mail: david.morhart@gov.ab.ca Office of the Deputy Minister Human Services th 12 flr. Sterling Place 9940 – 106 Street Edmonton, AB T5K 2N2
Letters can also be emailed to: hs.cap@gov.ab.ca
Contract Alignment Project, Human Services: www.humanservices.alberta.ca/department/contract-alignment-project.html Contract Templates: www.humanservices.alberta.ca/department/contract-templates.html
Please copy any correspondence to Calgary Service Provider Council via erinw@connectionscounselling.ab.ca
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