Sunday, July 31, 2011

Fiduciary Irresponsibility

Forgive what promises to be lousy formatting, but I wanted to post balance sheets below.  I plan to refer back to them over the next few weeks as I explore a couple points (see the last paragraph).  The first column is for 6/30/2003 (which is the first audited year-end balance sheet after the District was formed).  The second column is unaudited and from the Finance Subcommittee package.  Some lines on the originals were consolidated for ease of presentation and comparison, but I can email the originals to anyone or you can just obtain them from the District.

In the Finance Subcommittee, the vote was unanimous to recommend to use the Bank of Alameda Line of Credit with more favorable terms than originally presented to the Board.  If you look at this balance sheet (and the income statements), you would understand that this loan would be crazy except for one thing.  The people of Alameda are on the hook for all liabilities of the District until they are paid off completely.  I don't have the exact letter that Tom Driscoll (District counsel) wrote to the Bank saying as much, but that's the bottom line.

Nine years of incompetent oversight, mismanagement, undue optimism, and a stubborn refusal to face the facts has brought the District to this point.  The blame can be spread across many people;  it certainly includes the present Board majority, but also can be partially laid at the feet of such notable Alamedans as Lena Tam, Rob Bonta, and Mary Ezzy-Ashcraft.  Each dollar of the 12 million in the reduction of net assets over the 8 years encompassed by this picture are an additional unlevied tax on Alamedans.  That 1.5 million per year in losses would work out to an additional $75 to $80 tax per parcel per year (or over $600 per parcel total) that was voted upon only in the sense that the District Board is supposed to represent the voters.

The final point is that for the following reasons, the true financial situation is worse than shown.
1.  Long term debt does not include 4 to 5 million dollars of liabilities that are off balance sheet because they are leases (equipment and real estate).
2.  There is about a 500,000 liability (18 month severance) associated with Deborah Stebbins contract unless she resigns. 
3.  The net assets line includes over 1 million dollars in work in process capitalization that, in my opinion, is impaired since the seismic retrofit is not happening in the forseeable future.
4.  The other receivables line includes the parcel tax for the year coming up (which is why it is balanced with the deferred revenue line in liabilities) and the 760 thousand of IGT funds which CMS is having trouble paying.

Don't be intimidated by people who claim that healthcare accounting is complicated and requires special expertise; nothing in this balance sheet goes beyond the level of basic accounting.  (I should know since I have taught intro to accounting in the past.)


 Alameda Hospital Balance Sheet






6/30/2003 6/30/2011
Current Assets





Cash and short term investments               8,329,777               1,802,225

Accounts Receivable
              7,589,128               7,249,185

Other Receivables


              8,216,998

Third Party Settlement Receivables
                 278,580

Inventories

                 919,658               1,238,762

Other Assets

                 842,807                  262,359
Total Current Assets

           17,681,370            19,048,109







Restricted assets


                 228,300                  483,716







Fixed Assets


              9,045,560               8,321,570







Total Assets


           26,955,230            27,853,395














Current Liabilities





Current Portion of Long Term Debt
                 711,784

Accounts Payable and accrued expenses               2,423,715               7,025,089

Payroll accruals

              2,707,005               4,003,695

Deferred Revenue


              5,725,900

Third Party Settlement Payable                  266,200                  267,474

Other Liabilities

                 340,016                  343,382
Total Current Liabilities

              5,736,936            18,077,324







Long-Term Debt


                 676,787               1,142,109







Net Assets


           20,541,507               8,633,962







Total Liabilities


           26,955,230            27,853,395

No comments:

Post a Comment