If you listen to NorCo Exec Lamont McClure or Fiscal Affairs Director Steve Barron, the answer is Yes. But of you ask Council member John Brown, the answer is No. Who's right? We'll find out when the Independent Audit is published in May.
A little bit of knowledge is dangerous. At yesterday's Finance Committee, Brown started with a review of the county's unaudited 4th quarter 2024 financial statement. (This information was supplied to Council, but I have seen no quarterly financial statements posted on the county website for some time. A reader has made this observation as well.)
Is the County Broke? - According to Brown, though the fund balance is about $32.21 million, the county is only free to spend about $3,000. "I have to believe that's a challenging number, to say the least," he remarked, adding that the county is basically broke.
Even I have more money than that.
On its face, Brown's assertion is simply unbelievable, If a claim like that were even close to the mark, Barron and McClure would both have committed seppuku.
Instead of approaching Council with a samurai death poem, Barron basically told Council that the number when the books closed in 2024 is simply an unaudited snapshot before audited adjustments are made. He added that when he was Controller, he say financial statements move as much as $15 million once it is audited. "It is very difficult to draw any conclusions from those numbers," he said.
Gracedale and the Unaudited Quarterly - Brown noted that revenues were down by about $5 million and that operating expenses are down by nearly $25 million and asked for an explanation. "You really can't rely on Gracedale's numbers in this quarterly report, and here's why," responded Barron. "There are lots of receivables that are gotten at the end of the year from the federal government." He went on to say that the county looks at Gracedale over a rolling 18-month period to determine what accounts are receivable and when payment can be expected. "To be clear, Gracedale has the money, we pay all of our bills."
Brown then switched from the unaudited Quarterly to the 2023 Annual Comprehensive Financial Report. That report contains the following language: "Gracedale Nursing Home fund balance decreased $12.9 million in addition to requiring a $15 million Transfer In from the General Fund. This demanding use of funds is primarily due to the use of agency nursing services to cover for major staffing shortages, lower resident census and timing of IGT payments."
Barron explained that the money that went into Gracedale from the general fund was American Rescue Act funding and the allocation was approved by County Council and moved over in phases. The reason for this is because once money is moved to Gracedale, it must stay there as per a Council ordinance. He added that revenues were lower but only because the county was waiting for IGT grant funding.
Brown then switched back to the unaudited quarterly and called it "misleading or inaccurate." He noted that it shows a county transfer into Gracedale of $8.5 Million. Barron responded, "It's not misleading or inaccurate, it's unaudited. ... It's not a real number. ... It is the reason I don't put it on the website anymore because the numbers change so wildly between when that is made and the audit that takes place."
Barron said that Gracedale's biggest challenge is the Medicaid and Medicare reimbursements, which often lag behind the services performed. He said that if the county needed to transfer money into Gracedale, it would come to County Council. He indicated Gracedale should have a "healthy fund balance" at the end of 2025.
Brown made these observations at the end of this discussion. First, he wonders whether the ARP funds approved by Council for Gracedale actually went there. Second, the census at Gracedale is well below the licensed 688 beds. Third, there could be an $8.5 million operating loss at the end of 2024, although he conceded that the audited numbers might paint a different picture. Fourth, he questions how the county will be able to operate Gracedale without an infusion of ARP funds. "We still have to find a way to fund it." Finally, he argues that the Controller should be more involved in auditing Gracedale, especially since the facility accounts for 20% of the county's annual budget. "You would think there would be more focus on it from the Controller's office going forward."
Whatever Brown's motives might be, and they could be political or sincere, these are precisely the kinds of very boring but very important questions a County Council should be asking since it controls the purse strings. I thought Barron gave good and informative answers.
29 comments:
No, he wasn't. He was his usual arrogant and dismissive self. His talking down and insulting Brown in his typical condescending tone he uses. He basically said don't believe the numbers I am giving you. Even the numbers from three years ago. He talks and talks and just reinforces the view he is a bullshoter. In fairness to him he learned it from his boss who decided to attack Mr. Goffredo and accuse him of a lack of integrity. Now that is rich coming from McClure. But hey, they are your boys, and they can do no wrong.
Sounds like Barron was slinging a load of BS but I guess the final audit should show the truth. Of course, you know the old saying- figures lie and liars figure.
Brown’s motivation is to sell Gracedale. He referred to the Home as an “asset” and a “valuable asset” on multiple occasions. He can’t wait to sell it.
John Brown was a terrible County Executive and has done nothing to distinguish himself since being elected to Council. What he's claiming about the budget sounds ridiculous. I look forward to the meeting where actual evidence is presented.
Samurai death poem > term limits
Let me see if I’m following here. John Brown is using meaningless numbers to attempt to portray the County is broke. Didn’t BarronVonFootInMouth say the County had $70,000,000.00 in savings accounts earning interest ?
Barron is no mathlete and McClure is running away from the problems he created. Just like those still wearing ridiculous masks, the county can no longer hide behind CoViD cash. The chickens have come home .... to roost.
This administration is unwilling to present an accurate picture of Gracedale's financial problems. The facility is running massive operating deficits. By hiding quarterly reports and claing an 18 month window, Barron isn't being transparent.
If what Brown is saying is true Steve Barron should resign, and if not McClure should fire him.
i do not understand what barron is saying regarding the numbers are not real because they are unaudited and move wildly because of the changes at the end.
If we have so many changes at the end of a year and the auditors need to make adjustments for corrections of errors or changing of estimates etc, then the interim statements that are presented to council and used in the various committees must also be incorrect and off.
How are you making ongoing decisions if your interims are not good?
This is what local government should be about. Boring questions and thorough answers.
Not giving awards, grandstanding and symbolic votes on moral and national issues.
I commend Brown and Barron for doing their jobs.
Of course Brown's remarks and observations are political. If he was so concerned about Gracedale's staffing and resident counts, as they are key to the financial position of this county function, he would assure payscales were adaquate to stabilize staffing to bring resident count up to full occupancy.
All good questions. I voted to sell Gracedale, but the people spoke and they wanted to keep it. I just don’t think County government should be in the nursing home business. Hopefully they continue to run it as efficiently as possible. It’s always going to be a strain on the county’s budget.
Now we know why the Financial Stabilization fund was drained to the absolute minimum for the 2025 budget.
8:38, I learned a bit from the exchange. I'd agree with Barron's assertion that the unaudited quarterly is just a "snapshot in time" and that it is dangerous to draw conclusions from it. I'd also agree with Brown's assertion that Gracedale's fund balance decreased in 2023 and was probably very low at the end of 2024 but was saved by the American Rescue Plan Act funding. Gracedale was reeling in 2023 from the effects of the covid pandemic, which resulted in mass resignations at nursing homes nationwide and forced the county to reduce census and hire agency nursing. I'd also agree with Barron's assertion that it is rebounding and is both increasing census and reducing reliance on agency nursing. The independent audit is going to be extremely important to see how far the nursing home has come. I'd disagree with Brown's assertion that the county was broke at the end of 2023, which is on its face ridiculous. But I liked the detailed discussion.
The R's on Council are going to attempt to make McClueless look like a financial disaster and he brought it on himself. He announced his intentions to run for congress against a Republican incumbent and he did it a year before he had too. Also you have a Democratic incumbent County Controller who is running for County Executive. Rumors have it that John Brown will be the Director of Administration. This is the background for the next year clown show. You are right Bernie!!!! Council Controls the purse strings and they also control the work of the outside auditor. Simply ask the auditor to include whatever financial matters they feel need clarification and the Outside Auditors will give them the information. Council is paying them to do whatever Council asks and the administration cannot alter their mandates to the Auditors. They pay them not the Administration.
Holy Guacamole Bernardo. I can't wait to see this report.
Goffredo has at a minimum the appearance of a conflict of interest. If a general contractor, is awarding subcontracts to Goffredo’s company on other jobs, at a minimum, he should not be voting on County contracts for that company.
If the numbers being supplied by the Controller are meaningless, how does the County make day to day decisions? In the Corporate world the financial statements are presented to the auditors as a report of the Company. The auditors don't prepare the statements, they audit them, then they comment on the accuracy of the financial statements. What am I missing?
10:43, The numbers do not come from the Controller, but come from Fiscal. They are not meaningless but have limited value as a "snapshot in time." They become meaningful after audit.
You're gonna see the tax cut limits the large amounts of cash on hand and that the fiscal department makes all the right moves. Let's not forget Brown raised taxes and was over taxing countty residents.
Barron is doing what Brown did when he took over, but the difference is McClure and Barron don't over tax the residents. Say what you will, but I have lower taxes, and still have a well run county government. That is all McClure and his cabinet.
Nobody seems to bat an eye at the idea that Lamont's war chest is filled with campaign contributions from labor unions. He fights tooth and nail to keep the RCO in tact because he doesnt want to piss off his biggest donors.
That and the fact that he has picked the highest bidders for Architect / Engineering and Construction Manager instead of the lowest? Something stinks!
I agree- arrogant, dismissive, BS. Barron & McClure have defined the art of BS. I'm no Brown pants fan, but at least he's asking questions.
GAAP anyone.? If you need an audit to tell you where your Financial's are, then you are not using any type of accounting principle that is generally acceptable. Projection's on your Financial's should also give you a picture of where you stand in any given point of time.
To properly look at the nursing home, which is very different than the rest of the County, you would have to convert the accounting of it to pure accrual basis. That’s the only way to look at an operation like that. Like the post indicates, there is a lag between services provided and revenue collected. Accrual Accounting accounts for that and matches Services rendered and expenses. I am sure the same factor occurs over in Lehigh with their nursing home, but I’m not sure how they do their accounting. They, however, managed to keep their nursing home operation out of the negative news over the years. And they don’t appear to beat up the nursing home on their meeting videos. In fact, it looks like a healthier relationship between the home and the council.
STOP IT! You save $30-$50 a year with the mill decrease! LOL
I dislike Brown very much but myself and many others would be happy to left the tax rate alone to provide a surplus that can be saved for “rainy days!” You penny pinchers that are so poor and can’t afford $30 dollars more a year all while sitting on your smart phone, I’ll assume, with a monthly bill of $100-$160 a month minimum to boot… stop the tax madness
Agree with above. Many factors impact Gracedale’s fiscal health. The census and number of beds being used, along with 40% or more of Medicare/medicaid patients/residents,
the cost of outside nurse/ aid salaries, the maintenance/upkeep on the physical building .
The Combined IGT counties less funding with dwindling numbers of county owned homes, and the pending loss of any federal funding assistance.
I wonder if any thought has been given by this council/ administration on how gathering tax break donations from the county residents could be used to reduce potential tax increase when this COUNTY does NOT have a 501C3 financial vehicle to accept such donations?
The only thing John Brown has done on county Council is ensure that he will get an executive pension. County voters are wasting more taxpayer money when they elected him.
We are now down to 11 counties in the nursing home business in PA. IGT could be in jeopardy. There was a Gracedale 501c3 set up by former Councilman Bob Werner. Not sure if it's still active.
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