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