Inter-Departmental Correspondence

Department of Hospital and Clinics



May 16, 2002


June 4, 2002



Honorable Board of Supervisors


Nancy Steiger, Chief Executive Officer, Hospital and Clinics



Credit Limit and Appropriation Transfer Request



    1. Adopt a Resolution authorizing an increase of the upper limit of cash loan advances from $40 M to $60 M to the Hospital and Community Health Clinics Enterprise Funds and wavier of interest charges through year-end closing activities for the fiscal year ending June 30, 2002.

    2. Approve an Appropriate Transfer Request accepting unanticipated Revenue ($1,000,000) and increasing the appropriation limit in Services and Supplies ($1,000,000).



Intergovernmental Revenue accounts for 40% of the Hospital and Clinics Enterprise Funds budget for FY 2001-02. As a result of delayed receipts from the State and Federal agencies including SB855 Disproportionate Share Hospital (DSH), SB1732 construction-related state reimbursement, Federally Qualified Health Center (FQHC) and Medi-Cal revenue, the Hospital and Clinics currently have a negative cash balance of approximately $33.3 M.


Discussion / Fiscal Impact

Current projections indicate that an increase of the cash limit is necessary to $60 M. The California Association of Public Hospitals (CAPH), recently notified members that the State will disburse only half of the SB855 payments before the close of the fiscal year. Discussions are continuing with the State regarding reimbursement under SB1732, however, actual date for receipt of funds is still unknown. It is further anticipated that due to the budget constraints at the State level, other intergovernmental revenues will continue to be delayed. Unfortunately, the extent of these delays is unknown and it may be possible that the entire line of credit may not be needed. However, to insure an efficient year-end close an estimate of $60 M is being requested at this time. Approving the increase in the cash limit will allow the Enterprise Funds to continue to meet financial obligations to carry out the care of the medically indigent while waiting for reimbursement from the State and Federal governments. Anticipated interest lost to the General Fund, if line of credit is used to the full extent, calculated at 3.58% on the increased amount for four months, is approximately $238,700.

AB 430, augmenting funding for long term care facilities was signed by the governor on August 10, 2001. The Hospital is anticipated to receive $1.7 M, of which $700,000 was used towards prior year negative fund balance adjustments, leaving $ 1 M available for current year operational expenses. The ATR accepts these funds and increases appropriations in Services and Supplies to cover contract physician and nurse registry expenses.


Vision Alignment

This agreement keeps the commitment to Ensure Basic Health and Safety for All and goal number 8: Help vulnerable people - the aged, disabled, mentally ill, at-risk youth and others - achieve a better life. The increased cash limit and acceptance of the ATR will allow the business operations of the Hospital and Clinics to continue without interruption.