Chief Financial Officer Jeff Knodel led a discussion on Central Health’s five-year budget forecast—from fiscal years 2016-17 through 2020-21—at a May 25 board of managers meeting. Knodel said the forecast is a tool to help the board and Central Health staff members create a budget each year. The forecast can change depending on property values and the unemployment rate, he said.
President and CEO Patricia Young Brown said the need for Central Health services is growing. The public entity provides health care and services to uninsured and low-income residents of Travis County. Last year, she said, Central Health served more than 100,000 patients.
“We continue to serve more and more people,” she said.
Central Health has the lowest tax rate of the six major hospital districts in Texas, Knodel said. The current tax rate is $0.117781 per $100 of property value. The tax rate was lowered from $0.1264 per $100 of property value in FY 2014-15. Despite the rate drop, increased property values meant homeowners paid slightly more than the previous year.
Rising property rates will likely add to Central Health revenue in the coming five years, Knodel said.
He said if Central Health assumes a tax rate of 4.5 percent over the effective tax rate—or the rate that would create the same amount of revenue year over year—it can retain its reserve funds into 2021.
The entity adopted a tax rate of 4.5 percent over the effective tax rate in the previous fiscal year. In FY 2015, a homeowner with an assessed home value of $200,000—or $160,000 with the homestead exemption—paid a tax bill of about $202, Knodel said. If that assessed home value increased by 10 percent this year, in FY 2016, the homeowner would see a tax bill of $207 with a tax rate 4.5 percent over the effective tax rate, he said.
2017 predictions
Rent collected from the Seton Healthcare Family for the University Medical Center Brackenridge campus will decrease from $32 million a year to $20 million in 2017. Lease revenues will decrease again in 2018 to $9 million a year, as Seton will continue to lease only some space, rather than the entire campus, Knodel said.
He said intergovernmental transfers are the largest part of Central Health’s budget. Programs such as the delivery system reform incentive payment program, or DSRIP, allow Central Health to invest in care for Medicaid beneficiaries and be compensated for that investment by the federal government. For example, Knodel said, if Central Health invests $1, it might see $1.40 in return.
Central Health funds 33 DSRIP projects, he said.
Knodel said he expects Central Health to spend $141.6 million in intergovernmental transfers in 2017 and increase that amount steadily to $150.5 million in 2021.
Other annual expenses include the expansion of services and payments to fund Community Care Collaborative—a nonprofit created by Central Health and Seton to act as a safety net for uninsured and underinsured patients in Travis County.
Salaries, wages and health benefits for Central Health employees are also expected to increase, Knodel said.
He said the entity will likely spend $207 million in 2017, and expenditures will steadily increase over the next five years.
Public hearings on the budget are scheduled for Aug. 31 and Sept. 7. The board will likely adopt a budget in September, and then take it to the Travis County Commissioners Court for approval.
