In its first meeting of the year, the Vashon Health Care District Board of Commissioners approved a resolution requesting a loan of up to $1 million from King County to help the district sustain itself until it can start to collect money from islanders’ property taxes.
Approval of a resolution was required by the county’s treasury department if the district wants to apply for an inter-fund loan, subject to the approval of the King County Executive Finance Committee.
In comments made to The Beachcomber after the meeting, one of the board members, Eric Pryne, emphasized the resolution’s passage does not mean the district intends to spend $1 million if it gets that much.
“The $1 million, if approved, would be the upper limit on how much we could borrow from the county,” he wrote in an email. “We may well end up borrowing less, and therefore having to repay less.”
The Health Care District commissioners’ meeting on Jan. 2 marked not only their first meeting of 2020, but the start of the process to obtain funding for a district which, two months ago, didn’t even exist. Islanders overwhelmingly voted in November for a hospital district and with it, elected a five-member board to make decisions on Vashon-Maury Island’s health care services.
The board has been meeting weekly since Dec. 4 — with the exception of holidays — and decided to split its members up into different committees to focus on specific topics essential to getting the district up and running. One of those committees is tasked with finding sources of revenue for the district in its early days.
On Jan. 2, a member of the finance committee, Commissioner Don Wolczko, unveiled the district’s proposed budget for 2020 through April 30, 2021.
“I have gone through a couple of different budgets of other hospital districts and came up with a budget for fiscal year 2020 and then also added another third of a year for the fact that we still won’t have any money in 2021, until May,” Wolczko said during the meeting. “So we’ll just be hemorrhaging until then, hopefully with King County money.”
The proposal includes thousands of dollars in basic expenses to run the district, including office space, legal services, bookkeeping, as well as a salary for a superintendent, who would serve as the chief administrative officer of the district. Commissioners have agreed that an interim superintendent would need to be appointed while the board searches for someone to fill the position permanently.
The proposed budget also includes high- and low-end ranges for what the district might pay a health care provider for services on the island. The island has numerous providers, but none as big as Neighborcare Health, the Seattle-based nonprofit that has maintained a clinic here for more than three years. The organization’s CEO, Michael Erikson, admits Neighborcare has struggled to keep the facility open and that a “sustainable, predictable funding source is likely the only way to ensure primary care services can remain on Vashon into the future” — though the organization never endorsed a hospital district for islanders.
The commissioners estimate for this year, they’ll budget $46,750 to pay the superintendent and then $62,178 beyond 2020. Wolczko told The Beachcomber that the figures for the superintendent he outlined in the proposed budget is for both the interim and permanent one.
Clinical services, meanwhile, would cost between $400,000 to $600,000 in 2020. Administrative expenses would add $82,000. Beyond 2020, clinical services and administrative costs would range from $627,000 to $887,000.
During the meeting, Pryne issued a word of caution for anyone who assumes the proposed budget reflects the actual money that the district will receive.
“By definition, these are best, good-faith estimates at this point,” he said. “I don’t think anyone should assume that we’re going to be spending $46,750 exactly on a superintendent. That’s got to be negotiated.”
Another reason why islanders should not make too much of the proposed budget, Pryne said, is because there are several unknowns, including what the hospital district would pay to support a clinic on the island.
He reiterated that while Neighborcare Health — the island’s biggest primary care provider that has struggled to keep a clinic on the island for years — has not asked for funds from the district.
It’s also not clear, Pryne said, which provider the district will contract with down the road.
“So there are lots of unknowns here,” he said.
The board’s president, Tom Langland, said during the meeting that no local commercial banks or credit unions have the programs to make loans to governmental bodies. The district’s back-up plan, he said involves a large, Seattle-based community bank — though he did not name which one — that is known to carry loans for other hospital districts
“The rate [sic] are higher (approximately 3%), but the terms can extend 10 years, and even longer amortization, if required,” Langland wrote in an email to The Beachcomber. “It’s nice to have that in our pocket, but the county interim financing option works better for our voters if we can get that 5 years term.”
During the meeting, Pryne shared his work on the board’s external relations committee, noting he has met with members of the state’s 34th District — which includes Vashon-Maury Island — to discuss funding opportunities from the Legislature.
“I’ve explained to them that we’re not in a position to deal with capital needs at this point; we need to stabilize operations,” Pryne said.
One of the island’s state representatives to the Legislature, Joe Fitzgibbon, a Democrat, told The Beachcomber the chances of the newly formed hospital district getting funding from the state before the levy goes into effect “would be very challenging for us.”
“We will try … to figure out what we could do there, but the state budget is very tight already,” said Fitzgibbon, who noted lawmakers will not be writing a full two-year budget in an even year; those are only done in odd years.
“I’d say it’s a fairly unlikely prospect that we’re going to be able to get specific dollars for the hospital district,” he said. “But it’s not impossible and we’ll be working with budget writers in both chambers to help them understand the unique situation Vashon is because of that lag time before the levy can be collected.”
Correction: This story was updated to reflect that the interfund loan commissioners requested is good through 2025, not just 2021, when a levy rate on islanders’ property taxes can be set.