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.
