Fiscal Year 2017 Proposed Budget and Tax RateCentral Health Budget and Finance CommitteeAug. 10, 2016Jeff Knodel, CFOSarah Cook, Director, Integrated Delivery System Strategy and Planning

Fiscal Year 2017 Proposed Tax Rate (4.5% over Effective Rate)

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FY16 FY17 (Proposed)

Average TaxableHomestead Value

$262,874 $285,152

Tax Rate 11.7781¢ 11.0541¢

Tax Bill $309.62 $315.21

Annual Increase = $5.59 (1.8%)

Central Health Property Tax Impact Statement: Fiscal Years 2015-17

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Actual Appreciation

RateHome Value

TaxableHomestead

Value

4.5% Over Effective Tax

RateTax Bill Annual

Inc./(Dec.)

- 200,000 160,000 0.1264 $202 -

- 300,000 240,000 0.1264 $303 -

- 400,000 320,000 0.1264 $404 -

- 500,000 400,000 0.1264 $506 -

9.2% 218,400 174,720 0.117781 $206 $4

8.7% 326,100 260,880 0.117781 $307 $4

8.0% 432,000 345,600 0.117781 $407 $3

7.5% 537,500 430,000 0.117781 $506 $1

9.2% 238,493 190,794 0.110541 * $211 $5

8.7% 354,471 283,577 0.110541 * $313 $6

8.0% 466,560 373,248 0.110541 * $413 $6

7.5% 577,813 462,250 0.110541 * $511 $5

FY15

Bas

elin

eFY

16FY

17

*Estimated

FY17 Key Initiatives

Transformation• Improvement of specialty care• Improvement and expansion of Medical Access Program (MAP)

Stewardship• Delivery System Reform Incentive Payment (DSRIP) operations and

program renewal• Expansion of Affordable Care Act (ACA) subsidy

Partnership• Redevelopment of the Central Health Brackenridge Campus• Central Health promotion, education and outreach

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FY17 Key Initiatives: Specialty Care

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Non-Hospital Locations

Dell Med School Integrated Practice Unit E-Consult Pilot Expand

ServicesOrthopedics

Gastroenterology

Cardiology

Urology

Rheumatology

Endocrinology

Neurology

Ophthalmology

Otolaryngology

Complex Gynecology

Dermatology

Pulmonology

Allergy

Exi

stin

gN

ew in

FY1

7

Medical Access

Program

FY17 Key Initiatives: MAP Redesign

Sliding Fee

Scale

• Health Risk Assessment• No copay for preventive services

• Alternative therapies for pain management

• Group health education• Post-acute care expansion• Palliative care, including hospice• Primary care behavioral health• Substance abuse treatment• Complex care management

Proposed Benefits Pilots

2+ Chronic Conditions

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FY17 Key Initiatives: DSRIP Demonstration Year 6

• Demonstration Year (DY) 6 is continuation of DY5

• Projects must continue in DY6 to maintain funding allocation in DY7 and thereafter

• Project payment in four areas: – Patient encounters– Program evaluation– Sustainability assessment– Care components

• Outcome measures will continue as pay-for-performance and require improvements over DY5 achievement

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FY17 Key Initiatives: Health Coverage Expansion Proposal

9

Fede

ral P

over

ty L

evel

(FPL

)

FY17 Key Initiatives: ACA Health Coverage Expansion Proposal

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FY16 FY17 Proposed Budget

Public Information and outreach 300,000 150,000

Education, enrollment and advocacy 465,000 465,000

Subsidy (A) 980,000 2,130,000

Total 1,745,000 2,745,000

(A) Subsidy includes:• CHAP (FY14)• HAAM/SIMS Partnership (FY15)• SFS 101-150% (New in FY17)

FY17 Key Initiatives:Central Health Brackenridge Campus

FY17 Budget

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Building operations 947,883

Parking operations 369,792

Marketplace planning 330,000

Innovation Zone 200,000

Contingency 200,000

Total 2,047,675

Timeline• RFQ issued by September • Buildings leased by December• RFP issued by January 2017• Hospital moves May 2017

Central Health FY17 Proposed Budget

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Description FY16 Approved Budget FY17 Proposed Budget (7/20/16)

FY17 Proposed Budget (8/10/16)

FY17 Proposed Budget Inc./(Dec.)

Tax Rate 0.117781 0.111516 0.110541 (0.000975)

SourcesProperty taxes 160,705,076 172,905,808 169,806,722 (3,099,086)Seton lease revenue 34,371,988 27,209,925 31,544,675 4,334,750 Interest 400,000 400,000 400,000 -

Tobacco litigation settlement 1,600,000 1,800,000 1,800,000 -Subtotal revenue 197,077,064 202,315,733 203,551,397 1,235,664 Contingency Reserve 98,700,000 36,100,000 36,600,000 500,000 Total Sources 295,777,064 238,415,733 240,151,397 1,735,664

UsesHealth care delivery 286,088,392 227,657,916 229,738,205 2,080,289 Administration 8,262,466 9,271,226 8,926,601 (344,625)Tax collection 1,426,205 1,486,591 1,486,591 0 Total Uses 295,777,064 238,415,733 240,151,397 1,735,664

Reserves (ending balance)Capital - - - -

HMO Risk-based Capital Reserve - - - -Contingency Reserve - - - -Emergency Reserve 28,515,000 29,865,000 29,895,000 30,000 Total Reserves 28,515,000 29,865,000 29,895,000 30,000

Central Health FY17 Proposed BudgetRevisions from 7/20/16 presentation:

Sources

Decrease property tax revenue: $3.1 million• Certified tax roll received; tax rate decrease from 11.1516 cents

to 11.0541 cents

Increase Seton lease revenue: $4.3 million• Uncertainty in timing and amount of lease payments from teaching

hospital move• Contingent lease payment increases from $2.7 million to $3 million

per month

Increase Contingency Reserve: $500,000• Prior Year Service Expansion fund estimate decreased from $1 million

to $500,000

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Central Health FY17 Proposed Budget

Revisions from 7/20/16 presentation:

Uses

Increase health promotion, education and outreach: $500,000

Increase transfer to Emergency Reserve Fund: $30,000

Decrease administration: $344,000• Eliminate proposed Federal/State Policy Director position• Allocate purchasing costs to Community Care Collaborative• Reduce consulting budget

Increase in Contingency Appropriation for structural balance: $1.5 million

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Central Health FY17 Proposed Budget:Health Care Delivery

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Description FY16 Approved Budget FY17 Proposed Budget (7/20/16)

FY17 Proposed Budget (8/10/16)

FY17 Proposed Budget Inc./(Dec.)

Health Care DeliveryIntergovernmental Transfers:

IGT - Private UC 27,900,000 27,900,000 27,900,000 -

IGT - Public UC 28,700,000 25,000,000 25,000,000 -

IGT - Disproportionate Share 23,300,000 32,500,000 32,500,000 -

IGT - CCC DSRIP 28,530,000 29,300,000 29,300,000 -

IGT - Seton DSRIP 25,670,000 26,250,000 26,250,000 -

IGT - St. David's DSRIP 600,000 620,000 620,000 -

Total Intergovernmental Transfers 134,700,000 141,570,000 141,570,000 -

Health Care Services:Member payment to CCC 26,245,166 26,245,166 26,245,166 -

Charity care - Seton 4,251,733 4,251,733 4,251,733 -

Primary care - Planned Parenthood 585,000 585,000 585,000 -

Integrated Care Collaboration (ICC) 617,275 617,275 617,275 -

Health care services expansion 3,300,000 2,000,000 2,000,000 -

Total Health Care Services 34,999,174 33,699,174 33,699,174 -

Health Care Initiatives:UMCB Campus redevelopment - 2,047,675 2,047,675 -

ACA education and enrollment 1,745,000 2,745,000 2,745,000 -Health promotion, education and outreach 353,713 353,713 853,713 500,000

Total Health Care Initiatives 2,098,713 5,146,388 5,146,388 -Total Health Care Services and Initiatives 37,097,887 38,845,562 39,345,562 -

Central Health FY17 Proposed Budget:Health Care Delivery (Continued)

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Description FY16 Approved Budget FY17 Proposed Budget (7/20/16)FY17 Proposed Budget (8/10/16) FY17 Proposed Budget Inc./(Dec.)

Health Care Operations:Salary and fringe benefits 2,976,926 3,763,563 3,763,563 -Legal 25,000 25,000 25,000 -Consulting 334,000 234,000 234,000 -Other professional services 168,471 519,271 519,271 -Marketing and community relations 11,500 23,500 23,500 -Leases, security and maintenance 799,444 894,847 894,847 -Phones, computer equipment and utilities 578,507 703,029 703,029 -Printing, copying, postage and signage 164,344 194,269 194,269 -Travel, training and professional development 35,539 34,339 34,339 -Other operating expenses 196,151 207,369 207,369 -

Total Health Care Operations 5,289,882 6,599,187 6,599,187 -

Reserves, Appropriated Uses and Transfers:

Transfer to capital reserve 3,000,000 1,500,000 1,500,000 -

Transfer to emergency reserve 2,539,279 1,350,000 1,380,000 30,000

Sendero risk-based capital 5,000,000 6,000,000 6,000,000 -

Contingency reserve appropriation 97,092,539 30,420,364 31,970,653 1,550,289

Total Reserves, Appropriated Uses and Transfers 107,631,818 39,270,364 40,850,653 1,580,289

Debt service:Debt service - principal retirement 950,000 975,000 975,000 -Debt service – interest and amortized costs 418,805 397,803 397,803 -

Total Debt Service 1,368,805 1,372,803 1,372,803 -

Total Health Care Delivery 286,088,392 227,657,916 229,738,205 2,080,289

Central Health FY17 Proposed Budget:Administration and Tax Collection

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Description FY16 Approved Budget FY17 Proposed Budget (7/20/16)FY17 Proposed Budget (8/10/16) FY17 Proposed Budget Inc./(Dec.)

AdministrationPersonnel Expenses

Salary and fringe benefits 4,058,822 4,513,442 4,268,817 (244,625)Legal 966,500 1,166,500 1,166,500 -Consulting 1,038,000 1,138,000 1,038,000 (100,000)Investment services (Travis County) 98,351 103,351 103,351

-Benefits and payroll administrative services 282,800 296,940 296,940

-Other professional services 435,300 485,300 485,300 -

Marketing and community relations 131,400 181,400 181,400 -

Leases, security and maintenance 163,842 183,842 183,842 -

Insurance and risk management 125,000 150,000 150,000 -Phones, computer equipment and utilities 139,794 164,794 164,794

-Printing, copying, postage and signage 84,570 99,570 99,570

-Travel, training and professional development 213,737 263,737 263,737

-Other operating expenses 524,350 524,350 524,350 -

Total Administration 8,262,466 9,271,226 8,926,601 (344,625)

Tax CollectionAppraisal district services 880,000 924,000 924,000 -Tax collection expense 546,205 562,591 562,591 -

Total Tax Collection 1,426,205 1,486,591 1,486,591 -Total Uses 295,777,064 238,415,733 240,151,397 1,735,664

4.5% Over Effective Property Tax Rate Year-Over-Year (in millions)

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$0$20$40$60$80

$100$120$140$160$180$200$220$240

FY17 FY18 FY19 FY20 FY21

Total Sources Total Uses Total Reserves Emergency Reserve

FY17 Proposed FY17 FY18 FY19 FY20 FY21

Total Sources 203.5 200.9 196.0 207.5 219.0 230.9Total Uses 208.2 207.3 212.4 212.0 217.4 225.7Total Reserves 61.9 59.6 44.2 40.2 42.6 48.6

Central Health FY17 Proposed Budget OverviewIn FY15 and FY16, Texas Health and Human Services Commission’s intergovernmental transfer (IGT) schedule created significant timing issues for Central Health. As a result, Central Health had to carry forward funding for planned transfers into the next fiscal year. Because of these timing differences, the health care delivery budget in FY15 and FY16 was larger than it would have otherwise been.

In FY17, the timing issues do not exist, thus normalizing the health care delivery budget. Below is a comparison of the past two years and FY17 less the Contingency Reserve, which provides a better comparison of historical health care delivery budget amounts.

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FY15 FY16 FY17 Proposed

Total Health Care Delivery 259.1M 286.1M 229.7M

Less Contingency Reserve 76.5M 97.1M 32M

Net Health Care Delivery 182.6M 189M 197.7M

Budget Timeline• Aug. 17 Central Health Board of Managers

(Adoption of FY17 Central Health proposed budget and notice of tax revenue increase including setting public hearings)

• Aug. 23 Travis County Commissioners Court (FY17 Central Health proposed budget and property tax rate)

• Aug. 31 First public hearing

• Sept. 7 Second public hearing

• Sept. 7 Central Health Budget and Finance Committee (FY17 Central Health budget)

• Sept. 14 Central Health Board of Managers (FY17 Central Health budget)

• Sept. 20 Travis County Commissioners Court (FY17 Central Health proposed budget and property tax rate)

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(512) 978-8000www.centralhealth.net@centralhealthtx