City Council votes 4-1 to approve draft agreement that would solidify $300,000 per year for Wellness Center funding
By Paul Myers @PaulM_SGN
LINDSAY – Lindsay and the Lindsay Local Hospital District are on the precipice of a new agreement that will pay down Lindsay’s debt on the Wellness Center and help with operational costs.
The Lindsay City Council passed a new draft agreement with the Local Lindsay Hospital District (LLHD), during their Sept. 24 meeting. Most important in the agreement is the LLHD’s $300,000 annual contribution.
According to the draft agreement, the LLHD will provide the city with $300,000 per year for operational expenses including the Wellness Center’s debt service, basic services and programming costs. It accounts for almost two-thirds of the LLHD’s total tax collection which in 2018 was $540,000 last year.
“[The] District’s annual contribution will first be used for annual debt service payment, with any excess being available for programs, services and costs in the Center,” the agreement states.
LLHD’s $300,000 contribution will be a break from the 2007 funding agreement where they agreed to contributed $233,721 for debt service per year, and provided additional funds when asked. Those funds came from an “additional funding” fund established in 2013 when the Wellness Center manager would approach the District nearly every month to help cover operational expenses.
Excluding debt service, since 2007 the District has spent $3,776,863.88 on varying items including exercise equipment, facility repairs, signage, Healthy Kids/Healthy Lindsay diabetes program, McDermont’s Get Up and Move program and other safety/health related expenses. With debt service the District has paid out almost $6.6 million between 2007 and 2019.
The draft agreement still accounts for any additional funds that might be needed, but says that the City will have to come up with revenue or from the general fund to help the Wellness Center first.
“If there are major, unexpected or unforeseen expenses in a fiscal year, then the City may request assistance from the District, and the District shall act in good faith to consider such a request,” the draft agreement states.
Both the City and LLHD will collaborate through a programming committee made up of two members of each governing body and a fifth at large community member. According to the draft agreement the City will provide a quarterly accounting to the District showing the use of he $300,000.
“The District may ask for invoices, receipts and tendered checks in its review of the funds,” the draft agreement states.
This draft agreement is a complete replacement of the two preceding Memorandums of Understanding and funding agreement. Councilwoman Laura Cortes, who has served on the programming committee with councilwoman Rosaena Sanchez to help craft the draft agreement, said that preceding MOUs and Agreements left the roles of the LLHD and City obscure. The draft agreement has cleared up much of the obfuscation.
“We both want what’s best for our residents. We did some talking during our meetings…the council and board will review to make sure it was saying what we agreed on,” Cortes said.
The Lindsay City Council went on to pass the draft agreement 4-1 with councilwoman Yolanda Flores as the lone dissenting vote. Attorney Star Warson, representing LLHD, said the Board will review the agreement at their Oct. 15 meeting. He anticipates the Board will want two additional assurance that the $300,000 would be spent on the Wellness Center, and some other details over how the Wellness Center budget is crafted before the beginning of the fiscal year.
The agreement is a months long endeavor that began this summer when Lindsay passed their budget. Then finance director Bret Harmon said that without additional funding from the LLHD, future operations at the Wellness Center will be jeopardized. The LLHD realizes the need for their funding, and is spelled out in agreement.
“Experience has shown the Center will fail without contributions from the District and professional management by and contributions from the City,” the agreement states.
In June, before the City’s 2019-2020 budget was passed, the councilmembers and staff noted that the LLHD was contemplating cutting additional funding, outside of their debt service. Harmon added in June that the Board has been steadily decreasing their contribution from $112,000 in 2017, to about $70,000 last year and only plan to provide about $60,000 this fiscal year. As a result, both the Lindsay City Council and LLHD Board had convened a joint meeting on June 20.
In light of a new agreement the LLHD Board issued a letter to the Lindsay City Council. Relayed by LLHD attorney Star Warson, during the Council’s Sept. 24 meeting, each director stated there was no intent to arbitrarily discontinue support of the Wellness Center.
The LLHD notes that the hospital district has funded many local programs within its statutory guidelines under the 2007 funding agreement. They have even gone beyond that. According to the LLHD letter, in 2013 an “additional budget” was established to assist the Wellness Center. The LLHD Board noted that before 2013 the Wellness Center manager would go to the Board almost every month asking for help for expenses.
“Each time the manager told how the City had no funds and directed her come to the District,” the letter states.
The LLHD went on to create an annual budget for the Wellness Center in addition to its $233,721 intended for debt service. The LLHD Board says suspicions began to arise in late 2018 when the Wellness Center welcomed a new health care provider as a tenant.
“When asked, [the Wellness Center manager] said there would be roughly $90,000 a year in new income,” the letter stated.
In April of this year the LLHD assumed that the Center would need less additional funding in the 2019-2020 fiscal year, than in previous years. However, the Center insisted that the additional funds were “essential” and may even need to be increased, leading to the June 20 joint meeting.
From the LLHD Board’s point of view, the meeting was a blindside. Public comment took the entire 30 minutes allotted. Speakers implored the LLHD not to pull their funding for the Wellness Center. LLHD Board members say their understanding was to discuss the financials and budget of the Wellness Center.
“It was clear the two sides had very different objectives,” the letter stated. “For [the Board] it was a simple budget discussion that was done every year, but this time with all Councilmembers. For the [City], it was direct combat over a threat.”
The LLHD letter charged that the City had not kept up their $200,000 end of a 2007 funding agreement. The letter stated that the City had not made a contribution to the Wellness Center’s operational expenses in 2015, 2017 and 2018. According to the LLHD letter, Harmon said there were some inaccuracies. More suspicions arose when LLHD Board president Greg McQueen reviewed the Wellness Center related portions of the City’s budget, he saw that debt service for the Wellness Center was $132,300.
Warson pointed out in the LLHD letter that the District contributes $233,721 for debt service per year. The remaining $100,000 is alleged by the Board to have been “silently rolled” into Wellness Center accounts.
“While it may not be wholly objectionable, the secret diversion and re-designation shows the City’s financial practices,” the LLHD letter stated.
The seeming lack of transparency between the two governing bodies left the Board with a dreary state of confidence in the City.
“It is well known there are cash flow and ‘account shifting’ issues with City finances…now it is learned the practice extends to the Wellness Center. While staff has made assurances that all funds stay within the Wellness Center accounts, the confidence level at this point is weak at best,” the LLHD letter states.
The LLHD’s letter affirmed that they would continue to work with the City and “honor its responsibilities for the Wellness Center. It stated as well that the Board recognizes that without the Districts tax dollars, many of the programs and health care related services would not be available.
“In an effort to be transparent and open, the District asks for a more prudent, planned, constructive and open attitude to work together to provide for residents of the District, and in turn, the City,” the letter stated.
Cortes, who voted in favor of the draft agreement during the Council’s Sept. 24 meeting made similar comments about the desire to provide the best services for residents.
“In the end it is about keeping in mind what we want what is best for our residents in our community,” Cortes said.