Victorian Auditor-General’s report
14 September 2011
 
Individualised Funding for Disability Services 

Audit summary
Disability services in Victoria have been undergoing major reform since the early 1990s. Backed by research showing better outcomes, the human rights movement has been promoting the practice of people with disabilities deciding on and directing their own support services. The Disability Act 2006 and the Victorian State Disability Plan 2002–12 embody the principle that people with disabilities should control their own lives and have access to services that meet their needs. 
One of the most significant ways the Department of Human Services (DHS) has responded is to offer individualised funding. Early examples, begun in the early 1990s were developed into various flexible funding packages that were consolidated in 2008, to create Individual Support Packages (ISP). People with ISPs can manage the funds themselves and choose the services and providers that best suit them. At least 7 800 Victorians have an ISP, accounting for 19 per cent of DHS disability funds.   
The audit objective is to determine the effectiveness of individualised funding for disability services, including whether it:
·	meets client needs including choice and control
·	supports the provision of high quality services
·	supports sector sustainability and capacity.
Conclusions
Victoria is a leader in Australia in reforming disability services, with ISPs playing a prominent role. DHS is empowering people with disabilities by giving them greater control over their funds, services and providers. This promotes the dignity and independence of those in our community with disabilities. 
ISPs are benefiting lives. People can now negotiate attendant care hours around their lifestyle and live independently. People with disabilities, their families and carers, advocacy groups, disability service providers and DHS staff are all enthusiastic about the results of ISPs and their ongoing potential.
These successes, however, highlight the importance of allocating ISPs fairly. Accessing an ISP is unnecessarily complex and people are not treated consistently when applying for and planning their ISP. This is leading to inequitable outcomes, which is exacerbated by the fact that demand for ISPs exceeds supply. 
While implementing the ISP model, DHS has reviewed and improved it. As ISPs are now a feature of the disability services system, DHS can focus on improving the infrastructure that supports them. This means clearer policy and guidelines, better resource allocation, staff training and monitoring, suitable information systems, and developing a customer-focused culture to help people understand and use the system. DHS needs better risk management to support vulnerable people, and greater assurance that funds are spent appropriately. It also needs to support and develop the new marketplace in the disability services sector. 
Current DHS activities and forward planning align with these directions and DHS’s planned full evaluation of ISP outcomes, due March 2013, will drive further improvement.
Findings
Accessing an Individual Support Package
Applying for an ISP is time consuming. The process is hard for people to understand and requires significant administration. A person’s capacity to complete or get help with the application affects its quality and influences the result.
DHS staff assess and prioritise applications inconsistently. They do not always require evidence that the person with a disability directed and consented to the application, or seek an explanation when consent is not provided. These inconsistencies, together with the variable quality of applications, means that acceptance or rejection of the application, and the notional amount of funding and priority status applied, may not actually represent the person’s true need and urgency.  
Demand for ISPs exceeds supply. In March 2011, 1 439 people were waiting for an ISP with the value of their requests totalling $38.6 million, $15.6 million more than new funds for ISPs allocated in 2011–12. As a result, people are waiting an average of 1.45 years for an ISP, although 60 per cent wait less than a year. DHS do not have a system to consistently identify people at risk of crisis while waiting, or support those in crisis. DHS regional offices allocate new ISPs without always considering those most in need.
Using an Individual Support Package
People who have ISPs are experiencing real benefits. They enjoy the flexibility to change their supports and providers as needed. They appreciate the control and consumer power of managing their own funds. People have described ISPs to our audit as ‘life-changing’. This is consistent with findings from DHS’s 2005 evaluation of ‘Support and Choice’ packages, the precursor to ISPs. 
However, people who have ISPs are finding that planning how to best use their ISP is challenging. DHS has internal and contracted staff called facilitators who help people plan what they will buy with their ISP and from where. People with disabilities are not getting consistently good quality facilitation. DHS has contracted some disability service providers to also facilitate, thus creating a conflict of interest. In addition, contracted facilitators do not always get the same training, supervision and monitoring as DHS facilitators. Poor facilitation means a person may not get the full benefit from their ISP. DHS is planning a statewide training program to remedy this.
DHS recognises that some people are vulnerable and may need extra help to plan and use their ISP. However, DHS is not clear about who is responsible for identifying vulnerable people or how to help make their ISP a success.  
The DHS funding administration options allow people to decide the level of control and administration that suits them. While these options give people independence in managing their funds, there are trade-offs. DHS has less assurance that people are spending ISP funds on genuine disability-related needs. DHS’s audit program for direct payments users helps address this, but there is no equivalent for other ISP users, who make up approximately 96 per cent of all ISP users and expend 97 per cent of ISP funds.
Individualised funding and the disability sector
DHS has supported the disability services sector move to individualised funding and services. It has given grants to help the sector adapt, and has targeted good business practices with training and resources. However, analysis of the spread of grants, evaluation findings of one grants program, and feedback from service providers, show that benefits from these activities have not spread through the sector, reducing impact.
DHS quality assurance for disability services is prompting service providers to be more responsive and accountable to their clients. DHS needs to maintain the good results the disability quality framework is achieving as it introduces the single accreditation model across all DHS portfolios. 
Individualised funding requires more sophisticated accounting systems. DHS information systems cannot fully account for and transact individualised funding, resulting in work-around systems, significant manual data entry and errors. As a result, service providers regularly experience long delays and errors in DHS payments. 
By giving funds and control to people with disabilities, DHS has created a marketplace for the disability sector. This has opened access to new providers offering more options, including in areas that previously lacked services. Individualised funding also allows service providers to expand and change in response to demand and the needs of their customers.
However, a market also creates risks. Complex clients or particular geographical areas may miss out on some services. Service providers also report financial pressures, particularly in providing day services. DHS has not researched disability services and unit prices in the context of ISPs. While provider numbers were relatively static over the past decade, shifts have occurred with mergers, closures and new providers altering the sector. DHS has not defined its role in managing the market, but it will need to if it is to maintain equitable access to high-quality disability services.
Recommendations
Number	Recommendation	Page	
	That the Department of Human Services:		
1.	develop a communication and engagement strategy to help people understand, navigate and use the disability service system and their Individual Support Package successfully	13	
2.	improve, through training and guidance, staff consistency and fairness in assessing Individual Support Package applications and allocating them and monitoring performance	13	
3.	investigate the causes of crises and better identify and support people at risk of, or experiencing, crisis	13	
4.	separate Individual Support Package facilitation from service provision, and support it with consistent training, skill requirements and quality monitoring	23	
5.	develop guidance on identifying, and planning with, vulnerable people, and clarify roles and responsibilities	23	
6.	define what is appropriately funded through Individual Support Packages, train staff accordingly and monitor regularly	23	
7.	develop a risk-based audit system for Individual Support Package users for all funding administration options	23	
8.	more broadly engage disability service providers in sector development and share learnings across the sector	34	
9.	develop and implement suitable information technology solutions for recording and tracking individualised funding	34	
10.	investigate any cost impact of individualised funding on service delivery	34	
11.	examine its role in managing the disability services market and use a risk-based approach to monitor the sector.	34	
Submissions and comments received
In addition to progressive engagement during the course of the audit, in accordance with section 16(3) of the Audit Act 1994 a copy of this report, or relevant extracts from the report, was provided to the Department of Human Services with a request for submissions or comments.
Agency views have been considered in reaching our audit conclusions and are represented to the extent relevant and warranted in preparing this report. Their full section 16(3) submissions and comments, however, are included in Appendix A.