Surrounded by stacks of packages in a brightly lit room, Michael Palone gingerly folded a box and taped it shut. His eyes averted, he shuffled to the front of the warehouse to retrieve scissors, skirting by people and tables in his path.

Palone, 26, has mild autism, originally diagnosed as Asperger's syndrome. The condition makes it nearly impossible for him to socialize with others and adjust to the constant changes of a full time job. Instead, he assembles packages with about 40 others at a Union City work center run by The Arc of Alameda County.

The Arc is a national nonprofit with local chapters across the country, including 21 in California, that offer programs and services for people with developmental disabilities. “It means a lot to me," Palone says. "It gets me out of the house, and it helps me interact with people."

Before joining the work activity center, Palone mostly stayed at home, in his room, playing computer games all day. He couldn’t complete simple tasks like doing his laundry without his mother’s help. But since he joined The Arc two years ago, his mother, Rosemary, said that the change in his behavior has been remarkable.

“When I first found out how good the program was for him, it made me cry,” she said. Now Michael voluntarily joins her on trips to the grocery store, sits with the family in the living room and even washes his own clothes without needing a reminder. Plus, his work is paid. He earns about $300 per month, which he uses to buy magic cards or to treat his niece to lunch. “We talk more now than we ever did throughout his entire childhood,” Rosemary Palone says.

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But she fears that her son will return to his former, reclusive ways. Due to a lack of funding and the increasing cost of living in the San Francisco Bay Area, The Arc can no longer shoulder the costs of running the program, and plans to close the work center in a few months. Rosemary Palone worries that Michael -- and other clients like him -- will have nowhere else to go. “If he doesn’t keep going to this program, all of the progress that he’s made over the past two years will just be gone in two weeks,” she said.

Ron Luter (R) is executive director of The Arc of Alameda County. (Melissa Hellmann)

The work activity center is funded through a combination of state and federal money. But Ron Luter, president and CEO of The Arc of Alameda County, says it's not enough to cover costs, and it's hurting the rest of the agency.

“The work activity center is really pulling this facility down,” Luter says. During its heyday, the workshop bustled with activity as the main co-packager for Ghirardelli Chocolate, but it lost the contract and the additional revenue when the company moved its packaging facility to Modesto several years ago. Now packaging machines sit in the room collecting dust and have been out of operation for years.

Although The Arc of Alameda County’s annual budget is $5 million, Luter said that the four centers he heads throughout the East Bay have collectively lost about $1 million over the past three years. To offset the debt, Luter's been running clothing drives and dipping into savings from the sale of two former Arc of Alameda properties, but the pool of extra money will soon run dry, he says.

The Arc of Alameda’s plight echoes that of similar organizations across the state. California was once known as a pioneer for spearheading alternatives to confining people with developmental disabilities in state-run institutions that were notoriously overcrowded and separated patients from their loved ones.

In 1965 the California legislature passed AB 691, a pilot program that created the first regional centers. These agencies were designed to coordinate community-based services so people with developmental disabilities could live independently or with their families. Today there are 21 non-profit regional centers across California that handle case management and program development, among many other services.

But in the wake of The Great Recession, more than $1 billion in state budget cuts has threatened the system. In a grimly-titled report, On the Brink of Collapse, the Association of Regional Center Agencies (ARCA) said California “continues to lose ground” and noted that the state has the lowest funding in the country for individuals with a developmental disability who qualify for services.

In addition, provider rates for organizations have been frozen since 2003, meaning that agencies are running on a rate model that was created over a decade ago. The situation is especially pronounced in the expensive Bay Area, yet provider rates are the same statewide, despite the varied costs of living.

Eileen Richey, executive director of ARCA, says the lack of funding puts Californians with developmental disabilities at continued risk. “All of these challenges now mean that more people have to wait to get into a program,” Richey said. “And everyone throughout the system ends up having to do more with less ... continually worsening the quality of life for people with developmental disabilities and their families.”

Richey added that it’s nearly impossible to find qualified, long-term staff to work at the rate the organizations offer. Constant staff turnover makes providing quality care even more challenging.

"The turnover rate is so high," Luter of The Arc of Alameda says of his dwindling staff. "We’re competing with people for jobs at In-N-Out Burger. Half of the people who work for me have two jobs just to survive." At his work activity center, Luter said that the ratio of clients to staff should be 10 to 1, but it’s currently double that because he can’t afford to pay any more workers.

The work activity center at The Arc of Alameda in Union City is just one of the programs in the Bay Area that will be shutting down over the next few months because of funding issues. Luter also plans on closing his child care program in Hayward, where he said deficits have run between $40,000-$100,000 per year since 2010. The center serves children ages 2-5 with mild to moderate disabilities or developmental delays.

Brentwood Center Closing Monday

A combination of factors forced Barbara Maizie, executive director of Contra Costa ARC, to decide to close the Lynn Center, a program serving children 15 months to 5 years with developmental delays and autism. Monday will be its last day.

Maizie says the low funding levels had already strained her agency. Then the Lynn Center faced relocation when the elementary school housing its program was taken back by the district. Maizie realized that they couldn’t afford the relocation costs and gave up hope.

“There have been many challenges to running this program in the past and we were always able to rise to the occasion," she says, "but the funding has just become so impossible that we can’t any longer.”

The staff and 14 remaining children are bracing for the last day. Caseworkers at the East Bay Regional Center are scrambling to find replacement programs for each of the kids, but there’s a chance that some might not find an appropriate match.

Lynn Center is the fourth closure her agency has seen over the last year, says Ronke Sodipo, director of community services at the Regional Center of the East Bay. The nonprofit agency works with California's Department of Developmental Services to coordinate programs in Alameda and Contra Costa counties for people with developmental disabilities. Out of the 102 clients in the closed programs, she says, up to half have not yet been placed in another center.

Sodipo added that recent changes in labor laws have exacerbated funding issues for the scores of organizations that provide services throughout the East Bay. A new statewide paid sick leave law, the Affordable Care Act requirement that employers with more than 50 full time employees provide health insurance, an increase in overtime pay and the raised minimum wage in Oakland and Emeryville have all created additional costs for the organizations, Sodipo says.

“I don’t know that our service providers would be as severely impacted if their costs were taken into consideration and they were given rate adjustments to absorb some of it,” she said.

Advocating for Change

Seeking to address the losses from years of underfunding, The Lanterman Coalition — an alliance of 20 organizations and businesses including agencies that provide services for those with disabilities and advocacy groups — took action earlier this year and lobbied state legislators for a 10 percent across-the-board funding increase for service providers. The proposal was ultimately removed from the state budget that was signed in June. But Brown then called a "special session" of the Legislature, to address this funding question and other particularly challenging fiscal issues.

A bill proposed by Sen. Ed Hernandez, D-West Covina would impose a $2 per pack tax on cigarettes and provide an annual increase of $230 million for regional centers and service providers. “California’s developmental disability system has been struggling for many years – it’s time that system sees some benefit from California’s economic recovery,” Sen. Hernandez said in an email. “I remain hopeful that we are able to use this special session to provide long overdue relief to the (Department of Developmental Services) community."

Legislators across party lines seem to be in general agreement that provider rates need to increase, but they differ on how much of an increase is needed -- and strategies for funding it. One issue is that agencies serving people with developmental disabilities have not been required to submit a statement of their annual costs to the regional centers in over 10 years.

“That said, it begs the question of: what then is the appropriate rate?” says Mark Newton, a policy analyst from the nonpartisan Legislative Analyst’s Office. “That’s a tough issue in a way, because of a lack of collected and reported cost data that would help address a formulation of an appropriate rate structure.”

Although the legislative special session is still open, Legislators have not met since September 11, and there is no sign they will be reconvening before the end of the year. Hernandez's bill to address rate increases for developmental services sits waiting.

Luter from The Arc of Alameda County is concerned that programs throughout California will continue to go out of business -- and clients will be turned away -- if the special session remains silent over the next few months.

While they wait for the special session to reconvene, advocates are planning a march to the state Capitol on Dec. 10. Luter says he will carry a coffin in the protest, symbolizing what he calls the "death” of the Lanterman Act. “We’re not treating these folks as if they’re part of the fabric of the community,” he says.

"Terrified for My Daughter's Future"

Valerie deChadenedes, 30, of San Francisco, was diagnosed with Rett syndrome when she was 10. It's a rare neurodevelopmental disorder that inhibits brain growth and motor skills. Her story is a warning for others like Michael Palone in Alameda County or the children from Lynn Center if they’re unable to find other services once their programs close.

Valerie deChadenedes (L) with her mother Audrey. (Melissa Hellmann)

DeChadenedes is unable to walk, talk or feed herself and needs assistance for many aspects of her life. But her mother, Audrey, says Valerie does enjoy being social with people her own age. She can put words together into sentences through an eye-tracking communication device mounted on her wheelchair.

After she completed school eight years ago, she spent four years on a wait list before being placed into a program that could serve someone with her needs. She took art classes there and learned to be more self-sufficient.

But five months ago, she was forced to leave the program when it turned out not to be licensed to provide care for medically fragile clients. Her case manager at the Golden Gate Regional Center said that there is no other day program in San Francisco that will be able to address her needs. While it wasn't budget cuts that forced her out, if it's already hard to find services, one wonders how much worse it will get as other programs shut down.

Valerie now spends her days at a self-directed program organized by her mother. “If it weren’t for me, what would happen to Valerie?” Audrey deChadenedes wonders. After she was released from the program, Audrey said that Valerie would continuously say, “I feel lonely,” through her communication device.

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Frustrated by what she considered inertia in the legislature, Audrey deChadenedes started writing weekly letters to Gov. Jerry Brown and keeping a blog called Valerie’s Week in Review, where she details Valerie’s health and the actions she’s taking to find Valerie a new program and an apartment. In her last blog post on Nov. 3, Audrey closed this way: “As great direct-service people quit to make a living wage, as programs close, as things fall apart all around us, I am terrified for my daughter’s future.”

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