Malia Kaulukukui-Palisbo, 18, hopes to be a hairdresser once she completes her year-long training at the Hawaii Institute of Hair Design.

Hailey Sorensen, 26, has ambitions to pursue computer animation following coursework in new media arts at Kapiolani Community College.

Both have their tuitions paid by the Division of Vocational Rehabilitation, the state agency charged with administering state and federal funds that help people with disabilities seek and maintain jobs.

But funding for scores of individuals could be delayed in the wake of what DVR, a branch of the Department of Human Services, is calling “some budget issues.”

Cory Lum/Civil Beat

Parents of DVR clients contacted Civil Beat recently to say they were told by state officials that funding for their children’s vocational rehabilitation was going to be cut.

“They said, as of December, they’re not giving her any more money,” said Michelle Kaulukukui-Palisbo, Malia’s mother.

DVR officials said that they’re only anticipating a delay in payments for these services and chalk up the parents’ concerns to “miscommunication with the community.”

“We know that there may be a delay in payments. But, we want to reiterate that we do not anticipate a termination of services,” DHS Director Pankaj Bhanot said in a statement.

Additionally, new applicants for DVR services will now be forced to wait as the result of DVR’s decision last month to enter into a so-called order of selection, implemented when a state determines it can no longer pay for everyone who is eligible for services and funds only those with the most severe disabilities.

The vocational rehabilitation agency issued an internal memo Oct. 1 stating that “resources will not be adequate to meet all of our projected costs in the federal fiscal year 2018 (October 1, 2017-September 30, 2018).”

Waiting List For Services

The need to declare an order of selection is not uncommon among state vocational rehabilitation agencies, but it’s still a last resort that creates a waiting list for people with disabilities who might otherwise be eligible for services.

The decision rankled disability advocates who contend DVR took little action to come up with a better financial plan in light of a new federal law that took effect last year.

“While for years the VR Division has languished in mediocrity, this latest decision represented a new low in how far they have lost their effectiveness,” Louis Erteschik, executive director of the civil and legal rights organization Hawaii Disability Rights Center, wrote in a public comment to the DVR administrator in May, when the center learned of the anticipated step.

In an interview with Civil Beat, Erteschik said state officials have long known that a recent change in how the federal funds are disbursed would impact client services, but did little to prepare for it.

Cory Lum/Civil Beat

What’s still unclear is how the agency’s budget woes will affect people with existing Individualized Plans for Employment — the agreements struck between DVR and clients that outline their employment goals.

Some participants say they’ve been told by DVR counselors their funding is going away in a matter of months, not that it would be delayed.

“I did not get the impression that it was a miscommunication at all. Or that (the stoppage in payments) was temporary,” said Michelle Kaulukukui-Palisbo.

Susan Sorensen, Hailey Sorensen’s mother, said a DVR representative called her earlier this month and said, “‘DVR has run out of money, and we must stop all private provider services associated with her IPE effective immediately.’”

Sorensen said she was told by the case manager she could start paying for Hailey’s services herself or serve as her daughter’s own support aid at school.

“We had to stop services that day,” Sorensen said, citing the expense to pay out of pocket for this assistance. “I had to call the different tutors and providers and make a determination what services we could not do without.”

After she called several state legislators about the situation, Sorensen received a follow-up call this week from DVR saying it had recently come into additional funding and would be able to pay her daughter’s services using those funds.

But she’s uncertain about the long-term outlook.

“It sounds unpredictable to say the least,” she said.

Long-Term Economic Benefits

It’s unclear how many other families received similar notifications from DVR representatives. Each year, DVR serves thousands of clients.

In fiscal year 2016, the agency assisted 8,430 individuals with disabilities across the state. In fiscal year 2017, it operated with a $15.6 million budget, nearly 80 percent of it from the federal government and the rest state money.

Vocational rehabilitation and services for the blind comprise less than 1 percent of the total $3.5 billion in annual DHS costs.

Because DVR helps those with special needs prepare for and find employment, boosting the local economy in the long run, it plays a vital role in the state, advocates say. Assistance might come in the form of tuition payments, financial support for counselors or aids, and payment for supplies or assisted technology.

Cory Lum/Civil Beat

About half of all participants are self-referred, while another third are referred by schools, with about 40 percent having received a high school diploma or GED. The majority of clients have mental or cognitive impairments and most range in age from 20 to 34.

The most common type of jobs sought by clients is in the service industry.

Hailey Sorensen has high functioning autism, according to her mother. She requires the use of a support aid during her classes due to anxiety she suffers from test-taking and presentations.

The home-schooled student is working toward an associate’s degree with the goal of transferring to University of Hawaii Manoa.

“She may have an outburst, she may not realize she’s actually being louder than she is, she may not know she should take a break and remove herself from class so she can decompress,” Susan Sorensen said. “And that’s where the aid comes in.”

Malia Kaulukukui-Palisbo is diagnosed with bipolar disorder. A graduate of Moanalua High, she received school-based behavioral health services as spelled out in her individualized education plan at her former high school.

Success of vocational rehabilitation services is measured by how many job seekers with disabilities meet the employment goals outlined in their Individualized Plan for Employment.

DVR partners with contractors and private vendors to supply services to clients. As of August, the agency awarded $28 million in provider contracts and grant awards from July 1, 2014 through Sept. 30, 2021.

Change In Federal Law

DHS officials insist they’re just falling behind on payments and that the situation is not as dire as some people believe.

DVR has $1.8 million to carry over from FY 2017 for pre-employment services for students and other youths with disabilities and it says it will receive “the full 2018 vocational rehabilitation funding of $16.18 million from the federal and state governments.”

Responding to reports that families were told their funding for services would end, DHS spokeswoman Keopulaulani Reelitz said, “we recognize that our department has disseminated misinformation and apologize for the confusion that has caused.”

She insisted that DVR is “not anticipating elimination of any services” and that the delay in payments only refers to “previously rendered services.”

“We have informed some community stakeholders of delays we are expecting in payments as we correct for some budget issues,” she said.

The agency added that a recent change in federal law requiring states to spend at least 15 percent of federal funding on students with disabilities age 14 to 21 has led to the budget issues.

The Workforce Innovation and Opportunity Act, which was authorized in 2014 but mostly took effect last year, amends part of the federal Rehabilitation Act.

“We recognize that our department has disseminated misinformation and apologize for the confusion that has caused.” — Keopulaulani Reelitz, DHS spokeswoman

According to Reelitz, the “vast majority” of DVR funds in recent years was spent on services for adults with the most significant disabilities, and WIOA “significantly changed vocational rehabilitation spending nationwide.”

But state officials were aware of the pending change in federal law and had ample time to prepare, according to advocates.

Leaders were ill-prepared for implementation of WIOA, according to Erteschik, who said he based that opinion on quarterly meetings the Hawaii Disability Rights Center had with DVR officials.

“We’d been saying, ‘What are you people going to do when WIOA kicks in? What the hell are you going to do when you set aside all this money? You better start planning now for it,’” he told Civil Beat.

“Their response was a blank empty look,” he said. “When it all hit the fan, when the time came to implement WIOA, the only way they could do it was go into the order of selection.”

Erteschik said there has been a long pattern of financial mismanagement and ineffectual leadership at the agency, currently under an interim head after the previous DVR administrator, Albert Perez, retired in September.

DVR’s acting administrator is Susan Foard, a veteran DVR employee who previously served as its assistant administrator. The agency is currently “in active recruitment” to find a permanent administrator, according to Reelitz.

Perez was not the only DVR official who retired this fall: The staff specialist for fiscal and program income responsibilities left as well. That role, too, is being filled by staff “in a temporary capacity,” said Reelitz. Others who have left include a human resources specialist and budget specialist.

Malia Kaulukukui-Palisbo’s tuition at the Hawaii Institute of Hair Design runs $14,000. DVR has already funded the months of September through November, but whether it can fund the remainder of her tuition remains to be seen. If the school can’t pay the rest of the program, it will be very difficult, if not impossible, for Malia to continue her vocational training.

“I don’t want her to quit,” her mother Michelle said. “I’m going to move the earth if I have to so she can stay in, but it’s really going to be a struggle.”