Budget Discussion Meeting- July 12, 2022

Budget Discussion Meeting- July 12, 2022

SPECIAL MEETING- FY 22-23 Budget Discussion
Indian River County Hospital District Conference Room/ Zoom
July 12 2022
1:00 PM

TRUSTEES: Marybeth Cunningham Barbara Bodnar
Karen Deigl Allen Jones
Ann Marie McCrystal Kerry Bartlett

STAFF: Jennifer Frederick Kate Voss
Dawn Carboni Ann Marie Suriano

ZOOM: Jennifer Peshke, Esq. Elizabeth Appleton
Samantha Messina Dan Bach
Sabby Hightower

ATTENDEES: Pat Knipper Lundy Fields
Ed Love Paul Westcott

Convene Meeting – Marybeth Cunningham, Chairwoman

Mrs. Cunningham convened the budget presentation meeting of the IRCHD Board of Trustees at 1:00 PM by welcoming those participating via Zoom and in person. She stated that she is disappointed that only two Trustees completed the Agency Funding Request Summary worksheet that was prepared by Ms. Frederick and sent out to the Trustees. She explained that staff works diligently to provide the Trustees with comprehensive summaries and documents relative to the budget, which is the most important work of the Trustees each year, and that the Trustees should review and complete the items sent to them before they are discussed at upcoming meetings.

Funded Agency Review Correspondence – Jennifer Peshke, Esq.

Mrs. Peshke indicated that the District received a response from Phoenix Rising on July 11th, in response to her correspondence dated July 5th, which notified them of their continued breach of their current funding agreement, subsequent to the District’s staff visit on June 21st to cure the breach. In the response letter from Phoenix Rising, they requested that the District provide reimbursement for the patients that they have already served in May and June, and give them until August 19th to cure any remaining breach. Currently, the District board voted in June to immediately suspend funding, pending the outcome of the third visit to Phoenix Rising and their efforts to cure the breach. Ms. Carboni addressed the board and stated that her biggest concern with the organization is lack of a financial accounting staff. She explained that there is not a CFO, controller, or staff accountant who oversees their financial matters. Additionally, they were provided the pre audit questionnaire in February, which outlined what would be required to be produced in the Audit process. They were also given two months to prepare for their Audit which was conduced in April, and were not prepared during that initial visit. Ms. Carboni explained that she provided an additional list with the requested documents and conducted a second site visit and was still not given copies or access to the requested documentation. At both visits a CCO or CFO was not present. At their third and final visit they were given access to more financial and patient records but were still not comfortable with how their operations were conducted. Ms. Deigl reminded the board that there was another issue concerning a pending criminal investigation against Phoenix Rising and asked for clarification on that matter. Ms. Cunningham stated that an investigation was conducted but they decline to prosecute due to the large number of resources it would take to bring the case to trial, however many of the discrepancies found in the Florida Department of Law Enforcements investigation were also discovered in the audit conducted by Ms. Carboni. Therefore, given this information the board must now decide how they would like to proceed with future funding reimbursement to Phoenix Rising. Ms. Cunningham asked if any Trustees were in favor of lifting the current suspension of funding and providing reimbursement for services completed in May and June. The board voted unanimously to not lift the funding suspension or process payment for services rendered in May and June. Next there was the matter of providing Phoenix Rising additional time up to August 19th, to cure the breach. There was Trustee discussion and they felt that the District provided them ample opportunity to provide the requested documents and the amount of time staff and Ms. Peshke have spent is more than that has been dedicated to any other organization who was required to provide the same within the Audit process. Additionally, Mr. Jones referenced correspondence from a CPA firm on behalf of Phoenix Rising, which stated that management had elected to omit the statement of retained earnings and sustainably all the disclosures ordinarily included in financial statements. The Trustees felt that Phoenix Rising is not accountable or transparent in their accounting practices and that the District has a fiduciary responsibility to fund agencies who are fully transparent with how District funds are utilized. Therefore, the Trustees voted unanimously to not to provide additional time to cure the breach and to terminate the current funding agreement. The Trustees agreed that this was an unfortunate situation, and that substance abuse treatment is a needed service within the community, however they have to be certain that the agencies are utilizing tax payer dollars for their intended purpose. Ms. Peshke indicated that she would send written correspondence to Phoenix Rising outlining the outcome of todays meeting.

FY 22-23 Budget Discussion Meeting – Allen Jones, Treasurer & Ann Marie Suriano, Executive Director

Mr. Jones stated that he has prepared a recommendation for the upcoming budget, which he reviewed with the Trustees for their consideration. He is recommending approving the general outline budget as prepared by Ms. Suriano, with a proposed millage of .5774. He explained that this effectively returns excess reserves of $1.7 million to the taxpayers and will leave $4.25 million in operating and healthcare contingencies if needed. Additionally, investments of $2,550,000 could be used in the future, if appraised values drop as much as 12% back to last year’s $20.6 billion level, without requiring the District to raise the millage rate while maintaining program expenditures at $13.4 million. This is assuming Trustees applied the investment reserves to make up for the loss of ad valorem tax revenue. Alternatively, he explained that the millage could be raised and leave the investment reserves unchanged at $2.55 million, or the District could release some of the reserves to keep a millage increase lower than it would have been. He further stated that 12% is the largest one year drop in the history of appraised values as referenced in the millage rate chart prepared by Ms. Suriano. Lastly, he explained that budget outlined assumes every agency gets precisely what they have requested for funding. However, if there are items in the present proposed budget that ultimately are not approved for expenditure, he suggests returning those funds not approved to investments i.e. reserves, providing the District more flexibility in the future.

Ms. Suriano addressed the board and stated that she recently attended the State of the County luncheon which provides an update concerning things that are happening in the county. At the meeting Jason Brown provided an overview of the county’s budget and explained that there was a 13% increase in the gross taxable value and approximately $500,000 in new construction. Therefore, the county is maintaining its current millage rate into next fiscal year. There were some funding requests from local organization which had increased, but they did not choose to honor those requests fully.

Next, Ms. Suriano led group discussion regarding the FY 22-23 agency funding requests. She explained that Ms. Frederick prepared a scale to reflect each request and the board reviewed the same and had lengthy discussions surrounding each request. It was decided that they would like additional information from some of the agencies pertaining to specific items in their funding request or have the agency come back in front of the board to address further questions. It was also decided that next month instead of holding a chairman’s meeting, a special meeting would be held to specifically address the follow up questions the Trustees had concerning the funding requests. Ms. Suriano stated that she would update the budget to reflect the Trustees declining to fund Phoenix Rising and Miss B’s Learning Center and place those funds into the reserves. Lastly, it was discussed that this tentative budget will be approved at next weeks regular monthly meeting.

Public Comment & Adjourn

Mrs. Cunningham asked for public comment and there was none. The meeting was adjourned at 2:50 PM.