I am glad that we now have a plan to eliminate the health fund deficit by 2024. HCPSS and the county government are working together to address this historical health fund deficit. We need execute this elimination plan truthfully. We need make sure we are not adding extra deficit into the current health fund each year. Here are two documents: one from the county executive and one from HCPSS.
Here is the feedback from the county executive Dr. Ball. The county executive has proposed a new plan as following:
Here is the whole letter:
Here is the plan to address HCPSS health fund deficit. The plan takes many years with the effort from the county government and HCPSS. We will discuss this plan with the county council next Monday.
Detailed plan is attached here:
Here is the letter from HoCo BOE to the county executive. HCPSS saved around 15 million dollars last year. The board wanted to ask the county approval to use this 15 million dollars to pay down the existing 39 million health fund deficit.
If HCPSS uses this 15 million dollars for FY 2021 recurring operating budget , HCPSS will have an ever growing deficit in 2022. First, the 39 million health fund deficit will not decrease. Second that 15 million dollars will become a deficit, or 27 million dollars if the 12 million dollars from FY 2019-2020 deficit is included again. Note in FY 2019-2002, HCPSS used a one time balance to fund the recurring budget. Now immediately coming into this FY 2021 budget cycle, we have an existing 12 million deficit already, on top of the 39 million health fund deficit.
This is exactly one of many reasons that we got 50 million dollars health fund deficit before, using one time fund to pay recurring cost. We should not repeat old mistakes again.
Our auditor Cohn Reznick has informed HCPSS that HCPSS CAFR will likely include a “GAAP” departure, which includes a qualified or adverse opinion. This change may impact our county’s AAA bond rating, which means the county may borrow less with higher interest rate in the future.
So HCPSS will work with the county executive and the county council to create a concrete, workable plan to reduce the health fund deficit and avoid another adverse opinion next year. Three parties should be on the same boat for this crisis we are facing now. Otherwise, this will tirgger down and impact many people.
The reason for this adverse opinion is that HCPSS was not able to reduce health fund deficit. Health care claim for FY 2019 were 10.2 million over the budgeted amount of 130.6 millions. Even after some internal fund transfer, the deficit grew from 37 million to 39.2 million. During the FY 2020 budget cycle, a one time 12 million dollars, that was planned and supposed to be used to reduce the heath fund deficit, was used for FY 2020 operating cost such that the auditor failed to see HCPSS to have a plan and execute the plan.
Attached please see the memo BOE audit committee discussed with our auditor.