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LRB-1853/1
EAW:amn
2017 - 2018 LEGISLATURE
May 16, 2017 - Introduced by Representatives Kooyenga, Rohrkaste, Billings,
Duchow, Hutton, Katsma, Kulp, Murphy, Ripp, Subeck and Tittl,
cosponsored by Senators Marklein, Harsdorf, Olsen and Stroebel. Referred
to Committee on Government Accountability and Oversight.
AB327,1,9 1An Act to repeal 46.036 (5m) (b) 2., 49.34 (5m) (b) 2., 49.34 (5m) (b) 3., 49.343
2(6) (a) 2. and 49.343 (6) (b); to consolidate, renumber and amend 49.343 (6)
3(a) (intro.) and 1.; to amend 46.036 (4) (c), 46.036 (5m) (b) 1., 46.036 (5m) (e),
446.036 (5m) (em), 49.34 (4) (c), 49.34 (5m) (b) 1., 49.34 (5m) (em), 49.343 (5) (c),
549.343 (6) (c) and (d) and 301.08 (2) (e); and to create 46.036 (5m) (b) 3., 46.036
6(5m) (b) 4., 49.34 (5m) (b) 4., 49.34 (5m) (b) 5., 301.08 (2) (em) and 301.08 (2) (em)
77. of the statutes; relating to: surplus retention limitations for providers of
8rate-based services purchased by certain state and county departments and
9requiring the exercise of rule-making authority.
Analysis by the Legislative Reference Bureau
This bill makes certain changes with respect to the retention and disposition
of surpluses generated by a provider of rate-based client services purchased by the
Department of Children and Families, the Department of Corrections, the
Department of Health Services, or a county department of human services, social
services, community programs, or developmental disabilities services (county
department).
Current law permits a nonprofit, nonstock corporation that contracts with DCF,
DOC, DHS, or a county department to provide rate-based client services (provider)

to retain up to 5 percent of the contract amount from any surplus revenues received
under the contract. Current law permits a provider to use those retained funds only
to cover a deficit between revenue and allowable costs incurred in any preceding or
future contract period for the same rate-based service that generated the surplus or
to address the programmatic needs of clients served by that service.
This bill provides that a contract for a rate-based service must allow a provider
to retain from a surplus up to 5 percent of the revenue received under the contract
until a different percentage is determined by DCF, DOC, or DHS by rule. Any total
annual surplus exceeding the amount the provider is allowed to retain under the bill
must be refunded upon written request of the purchasers of the rate-based service.
The bill also eliminates the restrictions on the expenditure of the surplus funds
retained by the provider.
Under current law, if the provider accumulates funds from more than one
contract period in an amount greater than 10 percent of all current contracts, the
provider must, at the request of a purchaser, refund the purchaser's proportional
share of that excess. The provider must then use any of that excess that is not
refunded to a purchaser to reduce the provider's unit rate per client service in the
next contract period. In addition, current law provides that if a provider has held an
accumulated reserve of 10 percent or more of the amount of all current contracts for
that rate-based service for four consecutive contract periods, the provider must
apply 50 percent of those accumulated funds to reducing its unit rate per client
service in the next contract period. This bill eliminates those 10 percent accumulated
surplus retention limits.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB327,1 1Section 1. 46.036 (4) (c) of the statutes is amended to read:
AB327,2,52 46.036 (4) (c) Unless waived by the department, biennially, or annually if
3required under federal law, provide the purchaser with a certified financial and
4compliance audit report if the care and services purchased exceed $25,000 $100,000.
5The audit shall follow standards that the department prescribes.
AB327,2 6Section 2. 46.036 (5m) (b) 1. of the statutes is amended to read:
AB327,3,107 46.036 (5m) (b) 1. Subject to subd. 2. and pars. (e) and (em), if If revenue under
8a contract for the provision of a rate-based service exceeds allowable costs incurred

1in the contract period, the contract shall allow the provider may to retain from the
2surplus generated by that rate-based service up to 5 percent of the revenue received
3under the contract. A provider that retains a surplus under this subdivision shall
4use that retained surplus to cover a deficit between revenue and allowable costs
5incurred in any preceding or future contract period for the same rate-based service
6that generated the surplus or to address the programmatic needs of clients served
7by the same rate-based service that generated the surplus
unless a uniform rate is
8established by rule under subd. 4., in which case the contract shall allow the provider
9to retain the uniform percentage rate established by the rule. The retained surplus
10is the property of the provider
.
AB327,3 11Section 3. 46.036 (5m) (b) 2. of the statutes is repealed.
AB327,4 12Section 4. 46.036 (5m) (b) 3. of the statutes is created to read:
AB327,3,2313 46.036 (5m) (b) 3. If on December 31 of any year the provider's accumulated
14surplus from all contract periods ending during that year for a rate-based service
15exceeds the allowable retention rate under subd. 1., the provider shall provide
16written notice of that excess to all purchasers of the rate-based service. Upon the
17written request of such a purchaser received no later than 6 months after the date
18of the notice, the provider shall refund the purchaser's proportional share of that
19excess. If the department determines based on an audit or fiscal review that the
20amount of the excess identified by the provider was incorrect, the department may
21seek to recover funds after the 6-month period has expired. The department shall
22commence any audit or fiscal review under this subdivision within 6 years after the
23end of the contract period.
AB327,5 24Section 5. 46.036 (5m) (b) 4. of the statutes is created to read:
AB327,4,3
146.036 (5m) (b) 4. The department, in consultation with the department of
2children and families and the department of corrections, shall promulgate rules to
3implement this subsection including all of the following:
AB327,4,84 a. Requiring that contracts for rate-based services under this subsection allow
5a provider to retain from any surplus revenue up to 5 percent of the total revenue
6received under the contract, or a different percentage rate determined by the
7department. The percentage rate established under this subdivision shall apply
8uniformly to all rate-based service contracts under this subsection.
AB327,4,109 b. Establishing a procedure for reviewing rate-based service contracts to
10determine whether a contract complies with the provisions of this subsection.
AB327,6 11Section 6. 46.036 (5m) (e) of the statutes is amended to read:
AB327,4,2312 46.036 (5m) (e) Notwithstanding par. (b) 1. and 2., the department or a county
13department under s. 46.215, 46.22, 46.23, 51.42, or 51.437 that purchases care and
14services from an inpatient alcohol and other drug abuse treatment program that is
15not affiliated with a hospital and that is licensed as a community-based residential
16facility, may allocate to the program an amount that is equal to the amount of
17revenues received by the program that are in excess of the allowable costs incurred
18in the period of a contract between the program and the department or the county
19department for purchase of care and services under this section. The department or
20the county department may make the allocation under this paragraph only if the
21funds so allocated do not reduce any amount of unencumbered state aid to the
22department or the county department that otherwise would lapse to the general
23fund.
AB327,7 24Section 7. 46.036 (5m) (em) of the statutes is amended to read:
AB327,5,7
146.036 (5m) (em) Notwithstanding pars. (b) 1. and 2. and (e), a county
2department under s. 46.215, 51.42, or 51.437 providing client services in a county
3having a population of 500,000 or more or a nonstock, nonprofit corporation
4providing client services in such a county may not retain a surplus under par. (b) 1.,
5accumulate funds under par. (b) 2.,
or allocate an amount under par. (e) from
6revenues that are used to meet the maintenance-of-effort requirement under the
7federal temporary assistance for needy families program under 42 USC 601 to 619.
AB327,8 8Section 8. 49.34 (4) (c) of the statutes is amended to read:
AB327,5,129 49.34 (4) (c) Unless waived by the department, biennially, or annually if
10required under federal law, provide the purchaser with a certified financial and
11compliance audit report if the care and services purchased exceed $25,000 $100,000.
12The audit shall follow standards that the department prescribes.
AB327,9 13Section 9. 49.34 (5m) (b) 1. of the statutes is amended to read:
AB327,6,314 49.34 (5m) (b) 1. Subject to subds. 2. and 3. and par. (em), if If revenue under
15a contract for the provision of a rate-based service exceeds allowable costs incurred
16in the contract period, the contract shall allow the provider may to retain from the
17surplus generated by that rate-based service up to 5 percent of the contract amount.
18A provider that retains a surplus under this subdivision shall use that retained
19surplus to cover a deficit between revenue and allowable costs incurred in any
20preceding or future contract period for the same rate-based service that generated
21the surplus or to address the programmatic needs of clients served by the same
22rate-based service that generated the surplus. This subdivision does not apply to
23a child welfare agency that is authorized under s. 48.61 (7) to license foster homes,
24a group home, as defined in s. 48.02 (7), or a residential care center for children and
25youth, as defined in s. 48.02 (15d)
revenue received under the contract unless a

1uniform rate is established by rule under subd. 5., in which case the contract shall
2allow the provider to retain the uniform percentage rate established by the rule. The
3retained surplus is the property of the provider
.
AB327,10 4Section 10. 49.34 (5m) (b) 2. of the statutes is repealed.
AB327,11 5Section 11. 49.34 (5m) (b) 3. of the statutes is repealed.
AB327,12 6Section 12. 49.34 (5m) (b) 4. of the statutes is created to read:
AB327,6,177 49.34 (5m) (b) 4. If on December 31 of any year the provider's accumulated
8surplus from all contract periods ending during that year for a rate-based service
9exceeds the allowable retention rate under subd. 1., the provider shall provide
10written notice of that excess to all purchasers of the rate-based service. Upon the
11written request of such a purchaser received no later than 6 months after the date
12of the notice, the provider shall refund the purchaser's proportional share of that
13excess. If the department determines based on an audit or fiscal review that the
14amount of the excess identified by the provider was incorrect, the department may
15seek to recover funds after the 6-month period has expired. The department shall
16commence any audit or fiscal review under this subdivision within 6 years after the
17end of the contract period.
AB327,13 18Section 13. 49.34 (5m) (b) 5. of the statutes is created to read:
AB327,6,2119 49.34 (5m) (b) 5. The department, in consultation with the department of
20health services and the department of corrections, shall promulgate rules to
21implement this subsection including all of the following:
AB327,7,222 a. Requiring that contracts for rate-based services under this subsection allow
23a provider to retain from any surplus revenue up to 5 percent of the total revenue
24received under the contract, or a different percentage rate determined by the

1department. The percentage rate established under this subdivision shall apply
2uniformly to all rate-based service contracts under this subsection.
AB327,7,43 b. Establishing a procedure for reviewing rate-based service contracts to
4determine whether a contract complies with the provisions of this subsection.
AB327,14 5Section 14. 49.34 (5m) (em) of the statutes is amended to read:
AB327,7,126 49.34 (5m) (em) Notwithstanding par. (b) 1. and 2., a county department under
7s. 46.215, 51.42, or 51.437 providing client services in a county having a population
8of 750,000 or more or a nonstock, nonprofit corporation providing client services in
9such a county may not retain a surplus generated by a rate-based service or
10accumulate funds from more than one contract period for a rate-based service from
11revenues that are used to meet the maintenance-of-effort requirement under the
12federal temporary assistance for needy families program under 42 USC 601 to 619.
AB327,15 13Section 15. 49.343 (5) (c) of the statutes is amended to read:
AB327,7,1514 49.343 (5) (c) The identification of the measurements specified in sub. (6) (a)
15and the development of the payment levels specified in sub. (6) (a).
AB327,16 16Section 16. 49.343 (6) (a) (intro.) and 1. of the statutes are consolidated,
17renumbered 49.343 (6) (a) and amended to read:
AB327,7,2318 49.343 (6) (a) For purposes of implementing a performance-based contracting
19system, the department, in cooperation with the advisory committee created under
20sub. (5), shall do all of the following: 1. Identify identify measurements by which to
21evaluate the performance of providers in meeting both the goals for the children
22placed in their care and the goals for the out-of-home care system in this state and
23adjust, as needed, those measurements.
AB327,17 24Section 17. 49.343 (6) (a) 2. of the statutes is repealed.
AB327,18 25Section 18. 49.343 (6) (b) of the statutes is repealed.
AB327,19
1Section 19. 49.343 (6) (c) and (d) of the statutes are amended to read:
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