This is a follow up to our original post about our experiences with the Lake County Board of Developmental Disabilities, also known as Deepwood. We cannot praise them enough for the wonderful job that they are doing for the children and adults with special needs.
However, in this article we would like to report on their financial history and projections through 2025.
We started down this path when we learned from the Lake County Finance Director that the Board of DD had over $48 million in their cash reserves. Regardless of the local political sub-division, any reasonable person would have to agree that is a lot of money. Since the Board of DD receives property taxes voted on by the taxpayers, we decided to do some research.
We submitted a records request for three years worth of financial statements to see if we could glean anything from the numbers. When we review the financial statements of any non-profit or governmental agency, we are always looking of excessive spending, accumulation of cash, and any anomalies that require additional questions.
Here is their statement of revenue and expenditures for the twelve months ended 12/31/18. LCBDD Revenue and Exp 12-31-18
To make it a little easier for the reader, we prepared a summary of the last three years’ financial results and the cash balances as given to us by the County’s very capable Finance Director. LCBDD Financial Statement Summary
You will see that for the last three years their revenue has exceeded their expenditures by well over $3 million per year. and that their cash reserves increased by $10.6 million (28.2%) since 2015.
We went back to the Finance Director and asked for details on the four cash fund balances that they have. Here is that report: LCBDD Cash Balances By Fund By Year
Here is what the numbers are saying:
1. The DD Stabilization fund $6.3 million is authorized by the Ohio Revised Code and is meant to help in times of severe financial crisis when funding may be reduced for whatever reason.
2. The minor $10,800 in the residential fund is to assist with issues in their adult residential program.
3. The $5.9 million in the Capital Fund is meant for any financial needs for any new buildings or improvements to existing structures.
4. The $36 million in the Development Disability fund is unencumbered, meaning not designated for any particular use.
We drilled down on the unencumbered $36 million, and tried to determine what were their plans for that amount. Why, you may ask, would we seem so heartless and ask this fine organization what they plan to do with the taxpayers’ money? The answer is rather simple, if ANY organization that is receiving funding from property taxes and is accumulating cash without a valid explanation, then we believe that money should be returned to the taxpayers.
There are financial needs all over the County, and it makes no sense to keep extracting money from the taxpayers if a governmental agency or “non-profit” is continually reporting excess revenue over expenditures.
We met with the Executive Director and two of her staff, and they provided us with the following financial projections from 2019 through 2025.
Financial Projections 2019 – 2025
Please note that they are projecting increasing losses through 2025. However, by 2025 they will still have over $25 million in their cash balances, of which $6.3 million is allowed by the ORC.
Their explanation for the needed fund reserves is because of “Medicaid Waivers”. What are they? There is a program for day/employment services and community living residential programs for adults that was funded by the Federal government (60%) and the State of Ohio (40%). The State of Ohio, as they seem to do with many programs they start, have not kept up with the need for the services, so consequently the County Boards of DD have had to step in and pay the 40%.
The State of Ohio and the County Boards of DD reached an agreement to allow the enrollment of new people into the program if the County paid the State’s portion of the 40%. What has that agreement meant? “This agreement allows County Boards to serve emergency situations and reduce waiting lists when paying 40% of the cost rather than 100%”.
So that is our understanding of the situation. We do not plan, at this time, to go to the Lake County Budget Commission and ask them to reduce the property tax funding for the Lake County Board of Developmental Disabilities. We will be back next year to determine if the projection of a $1.9 million loss, after 3 consecutive years of profit of over $3 million, is accurate.
We ask that taxpayers weigh in on this issue by making constructive comments that can be shared with everyone.