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Recommendation for Funding by xrm18253

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									Funding Recommendation
For DD Comprehensive Services




   The measure of a society is how it treats its
   most vulnerable citizens.
                   Services for Oregon’s Most Vulnerable
                   Turnover of DD Direct Care Employers
                           Citizens are in Crisis!


Nearly 3,000 people with Developmental Disabilities (DD) living in Oregon
communities must have twenty-four hour support. These supports were formerly
provided in state institutions (e.g. Fairview), which have closed.



                 Crisis Indicators in Community DD Provider System

Workforce
         Employee turnover is above 60% and rising.
         Unfilled jobs – Many positions go unfilled due to a lack of qualified applicants.
         Employee benefits are significantly reduced.
         Demoralized employees – stagnant salaries, turnover, and reduced benefits
         contribute to employee dissatisfaction.


Organizational
         20% of Oregon’s DD Organizations have closed since 1991.
         Growing annual operating losses have depleted organizations’ reserves.
         Organizations have a weakened infrastructure, as maintenance is deferred
         and capital purchases are curtailed.


The Future
         State must significantly increase support of community providers or many will
         collapse. If the community system fails, in part or completely, the state will be
         forced to find alternatives that are either substantially more expensive, or
         poorer quality, or both.
                  Enclosures


Funding Recommendation

Attachments:
      A      Turnover of DD Direct Care Employees
      B 1 Direct Care Employee Cost vs. DHS and State Rates
      B 2 Conditions Common to People with MRDD
      C 1 MHDDSD Rate Study, Appendix H page 1
      C 2 MHDDSD Rate Study, Appendix I page 2
      D      Changing Community Cost Factors for Payroll and Non-Payroll Expenses
      E      Current Average Rates for DD Comprehensive Services


Supporting Documentation:
     F      Community Providers Finances in Downward Trend
     G      Community Programs can no longer bridge the funding gap for State.
     H      Minimum Wage Gap
     I      Oregon DD COLA’s and Industry Losses
     J      Community Leverage Benefits State


Background Information:
      Legislative Action Team Members
      ORA Board of Directors
                   Funding Recommendation
                   for DD Comprehensive Services

12/1/05

Recommendation: An increase of approximately $60 million in State General
Funds to increase rates for current DD Comprehensive Services is needed
for the 2007-09 biennium.
Further, cost of living increases must be included in every biennial budget.
Without such adjustments, community nonprofits will continue to be in
crisis.

Rationale: Rising employee turnover and staff vacancies (Attachment A) clearly
indicate that community nonprofits providing 24-hour care to individuals with
developmental disabilities are in a serious, and worsening, crisis. Without a
substantial increase in rates, many organizations may be forced to turn the care
of these individuals back to the state, at a cost far greater than the increase
recommended here (Attachment B).
A comprehensive rate assessment study was done in 1989-91 under the
leadership of the Oregon Mental Health and Developmental Disabilities Division.
That study recommended sustainable comprehensive funding rates that included
adequate salaries, benefits, and administrative overhead sufficient to deliver 24-
hour supports (Attachment C1 and Attachment C2).
Due to the passage of Measure 5 in 1991, which severely curtailed public
revenue, the recommendation was never acted upon. The only increases to
community rates have been sporadic cost-of-living increases and a direct-care
employee compensation adjustment resulting from the closure of Fairview.
These have done little to keep pace with true community costs (Attachment D).
In today's dollars, the study's recommendation amounts to an increase of
approximately $60 million in General Fund.
This amount and the Federal Match it brings is essential to overcome years of
DD system underfunding and to stabilize comprehensive services for people with
developmental disabilities.
Without such an increase, some of Oregon's most vulnerable citizens are in
jeopardy. We can no longer guarantee the safety and quality of community
services for these individuals at present rates for services.
                   Funding Recommendation Continued



The MHDDSD Rate Study of 1991 recommended a Direct-Care Wage of
$7.50, an OPE of 32%, and non-payroll costs of 16.75% (Attachment C1).
Adjusted for inflationary factors since 1991, below is a comparison of that
rate with the current state rates.

Wages & Benefits
Current DHS funded Wage and OPE                     $11.53 ($9.01 x 1.28 ope)

Adjusted Study Wage and OPE                         $15.95 ($11.65 x 1.37 ope)

Difference between DHS rate and Recommended Rate          $ 4.42/hr

Approximate FTE in DD Comprehensive Services              7,000

Total Wage & Benefit Increase for Biennium                $128,710,400


All Other Expenses
The Consumer Price Index has increased 46% since 1991. The Study
recommends 16.75% above the compensation rate for all non-payroll costs
(note: This is more than administration costs – it includes all costs above
compensation). In 1991, this amounted to $1000 per month per person
served. Adjusted for changing cost factors since 1991, this amount is
$1,460 per month per person served.

DHS has funded Cost of Living Increases since 1991 of 30.2% (compounded).
Currently DHS funds approximately $1,302/mo versus the recommended amount of
$1,460. The difference of $158 per month per person served is $9,480,000 over the
biennium for 2500 individuals in DD Comprehensive Care.

Total All Other Expense Increase for Biennium                     $9,480,000

TOTAL FUNDING REQUEST
The above documentation creates a combined need of approximately $138
million for the 2007-2009 biennium. The General Fund portion of this
increase is approximately $60 million.
                    Turnover DD Direct Care Employees
                  Turnover of of DD Direct Care Employers


Over 6,000 DD Direct Care Employees show a 22% increase in turnover over the
past six months, averaging 65% for the 2005 year!

     80%

     70%

     60%

     50%
                                                           65% average turnover
     40%                                                   for 12 months
     30%

     20%

     10%

      0%
            Oct    Nov Dec     Jan    Feb    Mar    Apr   May    Jun     Jul   Aug   Sep

                       ANNUAL DD TURNOVER for 12 MONTHS
                    Data from SPD 10/26/05 DD Direct Care Turnover Reports



Negative Impact of High Turnover
Relationships: Direct care employees provide complete physical support to many
individuals. Frequent turnover is devastating to an individual’s sense of safety and
security in these relationships.

Service Quality: Studies agree that high turnover inevitably results in poorer quality of
services and a greater likelihood of health and safety problems with these vulnerable
individuals.

Replacement Costs: These are conservatively estimated at $4,000 for each
employee. Community providers now must hire over 3,000 people per year, at a total
annual cost to them exceeding $12 million.

Overtime and Vacancy Costs: Skyrocketing overtime costs and front-line supervisor
burn-out are significant factors increased by direct care turnover.


                                       Attachment A
                      Direct Care Employee Cost
                      vs. DHS and State Rates

There are over 6,000 DD direct care employees in Oregon.
On average, community organizations pay about two dollars more per hour than
they receive from DHS, at a total cost of over 20 million dollars each year.

Community organizations cannot continue to supplement state rates to this
degree. Without additional support, they will fail.



                                 (DHS data)
                                 Average                   (eff 4/1/06)
                                 Community pays            DHS Model                  State-Operated
                                 to its employees          Budget                    (state employees)
                                                                      (based on info from SPD)
Wages to Employee                $ 9.60                    $ 9.07                        $12.27

Total Paid Time Off
(for all reasons)                $ 1.10                    $ 1.09                        $ 1.66
                                  (29 days)                 (12% “posting”)              (35 days)


TOTAL WAGES:                     $10.70                    $10.16                        $13.93

Social Security/Medicare (7.65%): $ 0.82                   $ 0.78                        $ 1.07

Unemployment Insurance (2.5%): $ 0.27                      $ 0.25                        $ 0.35

Workers Compensation (3%)         $ 0.32                   $ 0.30                        $ 0.42
Medical Insurance:                $ 2.46                   $ 1.51                        $ 4.45
                                 These costs have          (remainder of                 (assume this is for
                                 risen dramatically        28% OPE, which                 “flexible benefits”)
                                 and our benefits have     is insufficient for a
  .                              dropped considerably.     health plan)


PERS:                            no contribution           no contribution               $ 1.91
TOTAL TAXES & BENEFITS           $ 3.87                    $ 2.84                        $ 8.20

TOTAL COMPENSATION:           Community’s Cost           DHS Rate Paid             State-Op Service
                                $14.57                    $13.00                         $22.13


ASSUMPTION: This data is based on a typical full-time direct care staff person
employed at nonprofit community organization (information aggregated from over 2,000
community positions).




                                     Attachment B - 1
                        Conditions Common
                        to People with MRDD

These medical and mental health issues require skilled direct care supports in addition
to the daily assistance required due to conditions resulting from MRDD.

Medical Conditions:                                       Prader Willi syndrome, requires home
 Individuals who are deaf and or legally                  modifications and staff supervision, a
 blind                                                    person with this diagnosis does not know
 Allergies with complications of                          when they are full and will continue to eat
 anaphylactic shock (bee stings and                       to the point of becoming ill
 administering epi pen)                                   Risk of aspiration, requires special food
 Alzheimer’s/Dementia                                     preparation and monitoring while eating
 Aneurisms and strokes                                    Sexually transmitted diseases
 Asthma, requiring a nebulizer and inhaler                Skin care – eczema, psoriasis, heat, and
 Autism/HAADD                                             sun sensitivity and Cellulites
 Cancer                                                   Sleep apnea
 Celiacs - a food allergy to wheat gluten,                Seizure disorders (status epilepticus - life
 staff need to be constantly vigilant in                  threatening seizure disorder with an order
 purchasing and preparing foods                           to administer medication either oral or
 Cerebral palsey                                          suppository)
 Chronic hypothermia                                      Terminal Illness with hospice care in
 Chronic obstructive pulmonary disorder                   home
 (COPD)                                                  Mental Health:
 Congestive heart failure                                 Bipolar disorder
 Constipation issues, which have required                 Anxiety disorder
 hospitalizations and require ongoing close               PTSD (post traumatic stress disorder)
 monitoring                                               Personality disorders
 Diabetes, requires monitoring of blood                   Psychotic disorders (i.e. Schizophrenia
 sugar and general health as it relates to                and Schizoaffective Disorder)
 kidney function, vision, and foot care                   Depression with suicide threat or (SIB)
 Gagging disorder                                         self-injurious behavior
 Gastro-intestinal tube (g-Tube) used to                  Obsessive compulsive disorder (OCD)
 feed individuals who can no longer                       Adjustment disorder
 swallow food safely                                      Impulse control disorder (intermittent
 Glass eye care                                           explosive control and aggressive
 Hypertension                                             behavior)
 Intermittent catheter (staff are trained to              Sleep disorders
 insert a catheter for urination)                         Sexual disorders (pedophilia)
 Oxygen                                                   Drug & alcohol issues
 Pacemaker                                                Parole/Probation
 Pica - a disorder where an individual                    PSRB (psychiatric security review board)
 needs to be watched closely along with                   Spent varying lengths of time at the State
 constant monitoring of the environment to                Hospital under commitment orders
 prevent eating inedible objects

Not all individuals require 24-hour supervision and many spend time in the community without staff.
Sometimes this results in individuals bringing home or being followed by people that are unsafe, impaired,
or prey upon less capable people. We also deal with people in these situations being sexually
permissive, contracting sexually transmitted diseases, becoming pregnant, shoplifting, and other
interactions resulting in police involvement.

                                            Attachment B - 2
                             Changing Community Cost Factors for
                             Payroll and Non-Payroll Expenses


1991-2005 - Average civilian wages increased 55%

1991-2005 - Average civilian benefits increased 82.5%
        (using average quarterly reported increases from Bureau of Labor Statistics)

1991-2005 - The Consumer Price Index (CPI) has increased 46%

1991-2005 - The State of Oregon has funded COLA's of 30.2% (compounded)




                                  CPI Applied To Wages and Benefits
                                  Recommended in 1991 Rate Study

                      $    7.50                                              $   2.40
91-92         3.38%   $    7.75                          91-92       5.65%   $   2.54
92-93         2.73%   $    7.96                          92-93       5.35%   $   2.67
93-94         3.00%   $    8.20                          93-94       4.35%   $   2.79
94-95         2.93%   $    8.44      Community           94-95       3.18%   $   2.88   Community
95-96         3.00%   $    8.70      Provider            95-96       2.03%   $   2.93   Providers
96-97         3.25%   $    8.98      Costs are           96-97       1.95%   $   2.99   spend
97-98         3.70%   $    9.31      $11.65/hour         97-98       2.15%   $   3.06   $4.30/hour
98-99         3.65%   $    9.65      to stay ahead       98-99       2.50%   $   3.13   on benefits
99-00         3.70%   $   10.01      of minimum          99-00       4.08%   $   3.26   just to stay
00-01         3.83%   $   10.39      wages AND           00-01       4.85%   $   3.42   competitive
01-02         3.58%   $   10.76      to stay             01-02       5.05%   $   3.59   with other
02-03         2.93%   $   11.08      competitive.        02-03       5.58%   $   3.79   employers.
03-04         2.70%   $   11.38                          03-04       6.73%   $   4.05
04-05         2.40%   $   11.65                          04-05       6.18%   $   4.30




                                                 Attachment D
                       Current Average Rates for
                       DD Comprehensive Services


Monthly service element rates for people served by SPD.
Information from SPD as of 6/29/05



  SE               SE Name               AVG. Rate      High Rate     Low Rate       Median
   50   Residential                      $    5,129     $    14,958   $     802      $ 4,494
   51   Supported Living                 $    3,579     $    13,077   $     606      $ 2,563
   54   Vocational Services              $    1,024     $     4,913   $     180      $    927
  142   Children’s Residential           $    9,246     $    11,619   $   7,338      $ 9,214
  143   Children’s Proctor/Foster Care   $    5,112     $     6,053   $   3,702      $ 5,182

DD Wage increase revised for Senate.xls;Summary                       Last Revised 6/29/05




This information was presented to the 2005 legislature in June by Seniors and People
with Disabilities.

It provides average monthly rates for all of the Comprehensive Service Elements for
community developmental disability services.

For further information on this data, see James Toews, Assistant DHS Director.




                                         Attachment E
                        Community Providers Finances
                        in Downward Trend



    $400,000

                                                                                            Crisis Response
                $225,376                                                   $234,061

    $200,000




      $0$0
                                                                                                            ($60,442)
                                 ($85,097)                  ($25,842)

    -$200,000




    -$400,000




                                                                                                            ($585,711)
    -$600,000
                7/1/00-6/30/01          7/1/01-6/30/02    7/1/02-6/30/03   7/1/03-6/30/04        7/1/04-6/30/05     7/1/05-6/30/06 (est)




    -$800,000
                                              NET INCOME - LOSSES
       Data from organizations receiving about 60% of Comprehensive DD funds and averaging $6 million in revenue.




Crisis Response: After two years of net losses, organizations responded by making
numerous unsustainable cuts in compensation, property management, equipment
maintenance and acquisition, administration, development, personnel management;
many also eliminated positions related to safety, service quality, community access,
and staff training.

Operational losses: Net losses have increased due to no cost of living allowance, the
changing needs of individuals served, and cost increases outside of organizational
control (energy, insurance, etc.). These exceed amounts that can be reasonably
expected to be offset through fundraising and grants.

Key Community Providers: Organizations are re-evaluating their willingness and
ability to develop and maintain DD Services. Without funding improvement, many will
be forced to refuse services to some individuals.




                                                         Attachment F
                                       Community Programs can no longer
                                       bridge the funding gap for the State.

Resources are diminishing.

Government requirements are increasing.

Consumer needs are increasing.

Consumer census is increasing.



     80, 000, 000
                                     Actual MR/DD contract - No CPI (annually)
     78, 000, 000
                                                                                                                                      7 7 , 0 2 1, 7 18
                                     MR/DD contract with CPI (applied annually)
     76, 000, 000


                                                                                                               7 3 , 2 7 1, 6 3 6
     74, 000, 000




     72, 000, 000
                                                                                          70,225,931
                                                                    6 9 , 2 19 , 9 7 6
     70, 000, 000


                                            67,230,282
     68, 000, 000
                                                                                                                                      6 8 , 4 16 , 16 3

     66, 000, 000

                     63,660,073                                                                                66,386,775
     64, 000, 000
                                                                    6 5 , 5 0 5 , 6 11
                                            6 4 , 8 3 1, 5 16                             65,090,682

                     63,660,073
     62, 000, 000




     60, 000, 000

                      7/ 1/ 00-6/ 30/ 01     7/ 1/ 01-6/ 30/ 02      7/ 1/ 02-6/ 30/ 03   7/ 1/ 03-6/ 30/ 04    7/ 1/ 04-6/ 30/ 05   7/ 1/ 05-6/ 30/ 06 (es t )




                                                                  CONTRACT REVENUE
                    Composite data from Community Providers representing 60% of the DD system.




Community organizations are using reserves for day-to-day operations.

Staff compensation is not commensurate with duties, expectations, and requirements,
nor competitive with other jobs.

Provider employees shoulder the losses caused by inadequate state funding. Over
80% of program revenues are spent in compensation. This means that the only real
cost reductions are in this category.




                                                                        Attachment G
                   Minimum Wage Gap


State minimum wage began an open ended climb in 1999, narrowing the gap
between State funded wages for community providers and minimum wage.


     $10.00

                                                                                     $1.50
       $8.00           $3

       $6.00

       $4.00

       $2.00

       $0.00
                  99        00      01        02          03       04        05        06

                                     Min Wage            State Set Wage

                         Minimum Wage as % of State Set Wage For
                        Direct Care Employees in DD 24 Hour Services

The Direct Care work force pool is                       Losing our competitive edge
diminishing.                                            with Minimum Wage, 1999-2006

Demands of Direct Care workers in                  OREGON        STATE     Min Wage
community programs require high levels             MIN WAGE      HRLY RATE As % of State
of technical skill, maturity, and judgment.        $ 6.00       $   9.01             67%
                                                   $ 6.50       $   9.01             72%
Potential employees choosing jobs based            $ 6.50       $   9.01             72%
on wages lean towards less stressful jobs.         $ 6.50       $   9.01             72%
                                                   $ 6.90       $   9.01             77%
With the Fairview closure plan in 1998-99,         $ 7.05       $   9.01             78%
                                                   $ 7.25       $   9.01             80%
the State intended to fund direct care
                                                   $ 7.50       $   9.01             83%
workers as paraprofessionals, and
established a wage that was 50% higher                   We used to pay $3/hr more than
than minimum wage. No COLAs and                         Minimum Wage. Now we only pay
open-ended increases in minimum wage                      $1.50 above minimum wage.
have seriously eroded this intention.




                                         Attachment H
                 Oregon DD COLA’s and Industry Losses


Erratic and insufficient COLA’s have crippled the comprehensive system,
exacerbating the impact of numerous financial setbacks.


Year    COLA
                     Other Industry Impact

                      1995 – Health insurance costs and other nonpayroll costs
                              begin dramatic climb.


                       1999 – Oregon minimum wage begins annual increase
                              narrowing gap with DHS allowed wage.


                        2003 – Loss of workers compensation rebate to
                               comprehensive system means a loss of over $7
                                million a year.


                         2004 – Energy costs dramatically increase.


                           2005 – State employees with comparable jobs
                                   receive 9% compensation boost.


                              2005 – Express payment system affects cash
                                      flow.

                                 2005 – Oregon’s recovering economy
                                        increases competition for labor.

                                    2005 – Nonpayroll costs for US workers
                                           increased by 82.5% since 1991.




                                   Attachment I
                     Community Leverage Benefits State



Community DD Organizations are serving 7000 adults with developmental disabilities.
These services are:
      In place
      Effective
      Valued components of Oregon communities.


                                            FACTS

   Hundreds of millions in assets are owned by community DD Providers throughout
   Oregon, including commercial buildings, homes, vehicles, equipment, technology,
   inventory, and a vast array of other hard and soft goods developed by communities,
   private entities, grantors, state, local, and federal government.

   Community Programs raise $8-10 million annually in grants and cash donations.
   These funds typically are restricted from use for ongoing operations.

   Between $15 and $17 million in public supports are saved as a result of people
   with disabilities being employed on public contracts held by Qualified Rehabilitation
   Facilities, according to a recent study of Oregon’s State Use Program.

   Public Contracts under the Products for the Disabled Law now total about $55
   million per year, providing work that is restricted to qualified rehabilitation nonprofits
   that provide goods and services to public agencies in Oregon and employ people
   with disabilities.

   One thousand community volunteers serve on Community DD Provider Boards
   and in other capacities. Arising from these Boards, community employees, family
   members, consumers, and business partners is a stakeholder base of many
   thousands.

   The DD Community Provider Stakeholder Network is comprised of a broad base
   of Families, Local Businesses, Community and Faith Based Leaders, County
   Commissions, City Councils, State Legislators, and Congressional Members.

   Community DD Organizations are more cost effective than State Operated
   Services. Even when their employees received fair wage and benefits, the cost will
   remain substantially less that the cost of state employees.




                                      Attachment J
                     Legislative Action Team


2005-2007 Members List:
Jeanne Farr, Albertina Kerr Centers   503-255-4205
     jeannf@albertinakerr.org
Joanne Furhman, PCL 503-838-2403
      Joanne@pclpartnership.org
Roger Hassenpflug, Living Opportunities Inc 541-772-1503
      ceo@lopp.org
Caryl Knudsen, Edwards Center Inc 503-642-1581
       edwardsctr@verizon.net
Norm Koller, Community Access Services Inc 503-533-4373
     norm@cas-dd.org
Zee Koza, New Day Enterprises Inc 541-963-2348
      zee@uwtc.net
Jan Kral, Shangri-La Corporation 503-581-1732
      jkral@shangrilacorp.org
Tim Kral, Oregon Rehabilitation Association 503-585-3337
      tkral@oregonrehabilitation.org
Jim Ormand, Pathway Enterprises, Inc 541-488-1536
      admin@pathway-inc.org
Fred Renter, Independent Environments, Inc 541-338-0138
      ieifredrenter@comcast.net

Tim Rocak, Garten Services Inc 503-581-4472
      trocak@garten.org
Pat Sleeman, Alternative Services Inc 503-977-2262
       Patat-asi@qwest.net
Cindy Stockton, Riverside Training Centers 503-397-1922
      Cindy.Stockton@riversidecenters.com
Kelly Thran, Good Shepherd Communities 503-225-1640
       kthran@gscommunities.org
Darrel Wilson, Opportunity Foundation of Central Oregon 541-548-2611
       dwilson@ofco.org
                        2005 – 2006
                        ORA Board of Directors

PRESIDENT
Dennis Moore, Executive Director
Galt Foundation                                                              TEL-503/361-1277
3220 State St, Ste 110                                                       FAX-503/364-8590
Salem, OR 97301                                                e-mail: dennis@galtfoundation.org

SECRETARY/TREASURER
James Ormand, President & CEO
Pathway Enterprises Inc. (PEI)                                               TEL-541/488-1536
722 Jefferson Avenue                                                         FAX-541/488-5948
Ashland, OR 97520-3702                                           e-mail: admin@pathway-inc.org

LEGISLATIVE CHAIR
Jeanne Farr, Executive Director
Albertina Kerr Centers                                                       TEL-503/255-4205
722 NE 162nd Ave.                                                            FAX-503/255-5095
Portland, OR 97230                                             e-mail: jeannef@albertinakerr.org

MARKETING & EMPLOYMENT CHAIR
Roy Soards
Cascadia Behavior Healthcare – Wellspring Services                           TEL-503/238-0769
2130 SW Fifth, Suite 210
Baker City OR 97814                                               e-mail: roys@cascadiabhc.org

RESIDENTIAL CHAIR
Deb Lindsey, Residential Director
Partnerships in Community Living                                              TEL-503/838-2403
P.O. Box 129                                                                  FAX-503/838-5815
Monmouth, OR 97361                                            e-mail: deblindsey52@hotmail.com

TRAINING CHAIR
Cindy Stockton, Executive Director
Riverside Training Center                                                     TEL-503/397-1922
P.O. Box D                                                                    FAX-503/397-1527
St. Helens, OR 97051                                 e-mail: cindy.stockton@riversidecenters.com

VOCATIONAL CHAIR
Tom Wysuph, Executive Director
EASTCO Diversified Services                                               TEL-503/667-0613
P.O. Box 470                                                              FAX-503/667-0631
Gresham, OR 97030-0102                         e-mail: twysuph1@eastcodiversifiedservices.com

MEMBER-AT-LARGE
Margie Paulson, ERN Director
Shangri-La Corporation                                                       TEL-503/581-1732
4080 Reed Rd. SE, Ste. 150                                                   FAX-503/581-5638
Salem, OR 97302                                                e-mail: margie@shangrilacorp.org

MEMBER-AT-LARGE
Christina deCristo, Executive Director
Oregon Supported Living Program                                              TEL-541/343-4196
44 West Broadway, Ste. 500                                                   FAX-541/343-0652
Eugene, OR 97401                                                     e-mail: cdecristo@oslp.org

								
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