Uneasy partners: Travis County, Austin in spat over funds

Fight is over $30 million previously in Brackenridge Hospital reserves

The issue of the city's reserve fund—once designated for Brackenridge Hospital—came up again yesterday at Commissioners Court. County Auditor Susan Spataro, in particular, has raised questions about why the city has held onto the balance of the city's enterprise Hospital Fund, rather than transferring that balance to the new Travis County Hospital District.

From the county's point of view, that balance needs to go to the fledgling hospital district. Commissioner Karen Sonleitner pointed out that the county had gone beyond the call of duty, clearing the debt from the community health centers this year and providing a cushion for the upcoming year. The city should come up with at least a 10 percent reserve, she said. "I would encourage the city to do the right thing," Sonleitner said. "I believe they are balancing their budget on the backs of poor people," Sonleitner wrote in an email message to In Fact Daily .

City Manager Toby Futrell said she found such comments “outrageous.”

Spataro is concerned that any new money generated by the countywide tax rate would have to be set aside for a reserve rather than new services. The city's commitment of only $3 million to the hospital district has created a shortfall, Spataro said.

What has been said privately on the county side is that the money that was initially set aside for the health care reserve fund suddenly became a stopgap budget stabilization reserve for the next year. And when the time came to create the district, the money suddenly disappeared.

That's not the way the city sees the picture, however. The city's argument is that it has subsidized Brackenridge Hospital to the tune of $650 million over the last 25 years, including $92 million between 1986 and 1995, when the city signed the Seton lease.

With the sale and lease of hospital assets in 1995, the city was able to pay off $56 million in capital debt, allowing it to transfer the hospital to the district debt-free. The city has contributed an additional $60 million in non-general fund dollars to the hospital.

The bottom line is that city officials consider their duty done regarding Brackenridge Hospital. The balance of money the city received from sale of equipment and supplies to Seton, $43 million, was set aside in an unreserved ending balance in the original Hospital Enterprise Fund. According to a legal opinion from Attorney John Boehm of Fulbright & Jaworski, the city was entitled to use the funds for any general government purpose such as police, fire or libraries.

The City Manager says the city has been fiscally responsible with the Brackenridge Hospital lease, negotiating new terms on the lease that provided less financial exposure to the city and locking Seton into a long-term commitment to charity care in the city.

Futrell said that the money was moved over to the General Fund when the hospital district task force was formed, but that the move was discussed publicly. At the time, it was intended to be an assurance to keep a substantial budget reserve and maintain the city's bond rating. To imply it was anything else would simply distort the facts.

"It was these citizens' General Fund that paid for all of this service," Futrell said of the reserve. "So, for the county to imply that there's some obligation we're not meeting is obscene."

Chief Financial Officer John Stephens agrees that the balance of the hospital enterprise fund was transferred to the undesignated fund balance at the end of FY 2002. The city continues to show the fund because they own it, but nothing obligates the city to only use the funds for health care purposes. Like Austin Energy, proceeds from the hospital enterprise fund can be used to pay for other city expenses once expenditures are paid.

The City of Dallas, also facing a budget crunch, saw its bond rating downgraded because of dips in reserves. Futrell and Stephens saw the shifting of the funds as a way to protect the city's financial interests, rather than some "under the table" transaction.

To Futrell, the taxpayers' vote symbolized a vote for tax equity. County residents are now paying the same rate as city residents for health care services. On the county side, Spataro is concerned that taxpayers clearly voted for the hospital district with the expectation that the new tax rate would yield an additional $7.2 million, and that $7.2 million would be rolled into additional services for the newly created hospital district.

Spataro is calling for an outside audit of both the city and county financial records going back to 2002. Only then will voters be assured that the transfer of assets of both jurisdictions is transparent and that the effective tax rate is correct. Spataro is concerned that the limited funding will create a situation where the audit is impossible to complete.

County Judge Sam Biscoe, hoping to calm the waters a bit, told Spataro that no one expected miracles overnight from the hospital district. Biscoe said he was ready to seek the whole truth on the matter and illuminate the facts of the issue, whatever those facts might be. If the Travis County Hospital District's budget was constrained, Biscoe said, the Commissioners Court would consider underwriting the outside audit of assets.

District managers face tough decision on indigent care

City's stricter guidelines likely to be chosen

One of the first major policy decisions for the Travis County Hospital District's board of managers is likely to mean less, not more, health care benefits for indigent county residents.

The county's Rural Medical Assistance Program and the city's Medical Assistance Program are both payer programs, somewhat akin to a city- and county-backed health maintenance plan for city and county enrollees. When the two programs are combined under one hospital district, about 10,750 enrollees will receive coverage from the MAP program.

The issue for the board of managers, however, is that the enrollment standards and benefits for the city and county MAP are different, pegging the county's health care benefits as far more costly than those offered by the city.

That situation was apparent at Commissioners Court yesterday. Sherri Fleming, interim executive manager for Travis County Health and Human Services, came to the court to ask for an additional $350,000 out of health reserves to cover cost overruns for the RMAP program through the end of the fiscal year. The county already approved an additional $500,000 toward health care services during a work session in late May.

That Travis County is $850,000 over budget on health care expenditures is not a surprise to county commissioners. The county is far more liberal in its benefits for RMAP enrollees: Enrollees are entitled to unlimited prescriptions, as long as clinic doctors write those prescriptions. No co-pay is required on county visits. And the standard of poverty for enrollment is far lower than those set by the city. What this means is that the county allows more people with higher incomes to receive free care than the city does.

As Commissioner Margaret Gomez pointed out to her colleagues, it has always been standard policy to treat everyone in need. So, unlike the city, the county does not cap the number of people who can enroll in the medical assistance program.

That's almost certainly going to come to an end with the creation of the Travis County Hospital District. The hospital district board must come up with a standard set of guidelines for the Medical Assistance Program. The math shows that the hospital district would be running a $19 million deficit if the managers adopted the county guidelines over the city option, making it far more likely the board will adopt more stringent guidelines.

State law will require the board of managers to choose between the two MAP standards, or possibly create MAP standards of their own. Yesterday, county commissioners agreed to leave the decision of MAP standards up to the board of managers. Fleming told the commissioners that shifting from county to city MAP standards at this late date in the fiscal year would not mean significant savings to the county health care budget.

The irony of the decision to roll back MAP benefits is that the hospital district is likely to bear the cost of health care, no matter what level of benefits is set. MAP was created to manage health care for the county's low-income population. In theory, the goal was to get low-income families in to see primary care doctors on a regular basis and decrease emergency room visits that occur when illness becomes a problem for them.

Under federal law, no hospital emergency room can turn away persons seeking emergency care simply because they can't pay the bill. So, whether the cost of health care comes out of MAP or out of emergency room charity care, it most likely will be covered by some form of service from the hospital district or other hospitals that provide charity care in the community.

Any change to MAP standards will require a public hearing and a month's notice, with the logical date in the benefits change being Oct. 1, the beginning of the fiscal year. Planning and Budget Office Executive Manager Christian Smith said the decision on MAP standards would be made as part of the hospital district budget process. The hospital district is scheduled for its first budget presentation before Commissioners Court on Aug. 16. That presentation will include both expenditures and an anticipated tax rate.

Commission sees no choice in plat approval

Govalle neighbors opposition to Smart Housing project comes too late

The Planning Commission struggled with a subdivision plat of a Smart housing project in the Govalle/Johnston Terrace neighborhood last week, approving it over the opposition of about two dozen neighbors who were on hand to disparage the dense development.

Assistant City Attorney Marty Terry told commissioners they had no option but to approve the plat of the Edward Joseph Subdivision if it met all the code guidelines set out by the city. Nothing indicated that the plat failed to meet those requirements. City staff stepped to the microphone to say that the roads and drainage all met city standards.

The vote would have seemed rather straightforward, but the frustration of the Govalle neighborhood was enough to sidetrack the discussion for almost two hours. One resident tearfully told the Planning Commission that "one man's greed is destroying all our dreams," bringing applause from the audience.

Govalle residents threw up every roadblock they could: the notice was difficult to understand and sent out only in English; the land was in the flood plain; the development was too dense; the plan could not meet environmental standards; the subdivision would ruin a quiet rural neighborhood; and the roads could not possibly support the traffic of an additional 100 homes on a 15-acre lot.

The subdivision was given two administrative waivers, one for channel slope and one for street width. The developer, however, had to be able to achieve the same ends on the project. Commissioner Dave Sullivan said neither waiver was a significant issue.

Susana Almanza, a former member of the Planning Commission, called for a two-week delay on the approval of the plat. The commissioners who made a motion for the moratorium— John Michael Cortez and Cid Galindo—were the only ones to support the measure. The remaining six members voted against it. Jerome Newton was absent.

Commissioner Matt Hollon said he was sympathetic to the neighborhood's concerns, as he was himself the leader on a neighborhood plan. But he pointed out that the time for objection had been during the neighborhood planning process when the land was being zoned SF-4A-Neighborhood Plan. That's when the barn door was opened, Hollon said. To talk about a properly platted piece of land being a problem would be like "following the cows into the pasture," He said.

Even Galindo, who made the motion to delay, said he did not expect the plan to change. If it came back to the Planning Commission, it should be approved, he said. The delay would only be to give the neighborhood a chance to better understand the planning process.

Commissioner Cynthia Medlin said she couldn't support postponing the subdivision plat because it would imply the neighborhood could negotiate with the developer. And this plan meets all the standards of the city, she said, as long as the developer follows the subdivision rules.

Developer Evan Williams plans to put 98 small lot single-family residences on the 18 acres, which are located on Bolm Road at Perry Road. Mainstreet Homes is the buyer for the Edward Joseph subdivision, and intends to use it to build affordable housing. The city will waive $200,000 in fees because it meets the city's Smart housing standards.

Daniel Llanes, representing the neighborhood, spoke of the work the neighborhood planning team in Govalle/Johnston Terrace had done to build a community and work with developers coming into the neighborhood. The neighborhood plan took two years to complete, after communication broke down between city staff and neighborhood leaders, he said. More than 600 lots in Govalle were rezoned during the planning process.

The subject at hand, however, was a subdivision plat. Neighbors spoke of joyriding students from Johnston High School, sidewalks littered with debris and an undeveloped lot that was often used as a neighborhood dump. One neighbor spoke of the racial injustice of East Austin zoning, blaming the city for the confusing zoning on the parcel, saying that the zoning was "not an open process."

Sullivan tried to pin down what could be fixed with the process, such as more straightforward language in the announcement or requesting a police substation to handle the increased crime in the neighborhood. Medlin spoke to the neighborhood planning process, and Chair Chris Riley offered online resources to the neighborhood. Hollon said the plan for the proposed neighborhood "really wasn't that bad." The commission vote to approve the plat was unanimous.

Hanging out at City Hall . . . Greg Weaver of Catellus and the company’s attorney, Pete Winstead, were chatting with City Council members and aides yesterday in anticipation of an August 26 date on the City Council agenda. Weaver said there is a mountain of paperwork that must be compiled before the city and the company are ready to finalize an agreement to sell RMMA to Catellus . . . Also noticed . . . Mary Gay Maxwell, Mary Arnold, Mike McHone and others were waiting to give Council Member Daryl Slusher advice on the University Neighborhood Overlay, which is scheduled for a final vote this week . . . Today’s meetings . . . The Environmental Board will meet at 6pm tonight in Room 325 of One Texas Center. The Comprehensive Plan Committee of the Planning Commission will meet at 5:30pm in room 500 of One Texas Center. The Water and Wastewater Commission will meet at 6pm in Waller Creek Plaza, Room 104 . . . The Austin-San Antonio Commuter Rail District meets this Friday in San Antonio at the office, 8700 Tesoro, from 11:00am-1:00pm . . . Report from the minority bar . . . The Hispanic Bar Association of Austin and the Austin Black Lawyers Association presented their 5th annual report card ranking the city's biggest law firms on their hiring of minorities. Those that had staffs that were at least 14 percent Hispanic, African-American or Asian-American received an "A." Figures from the State Bar of Texas show about 14 percent of the lawyers in the state are minorities. Firms receiving a grade of "A" or better were Locke Liddell; Bickerstaff, Heath, Smiley; Andrews Kurth; and Winstead Sechrest. Four firms received an "F": Akin Gump; Scott, Douglass; Graves, Dougherty; and DeBois, Bryant. The bar associations plan to distribute their report to some of the area's larger companies for them to consider as they select firms to serve as outside counsel. "If we can't get these law firms to hire minorities, then their clients are going to do so," said Paul Ruiz with the Hispanic Bar Association. The full report should be posted at http://www.hispanicbaraustin.com/ sometime this week . . . Another honor for Austin civic leader . . . Former Council Member Lowell Lebermann—capping a long list of achievements both civic and political—will be inducted into the Texas Business Hall Of Fame on Thursday, October 28, at the Hyatt Regency Hill Country Resort in San Antonio. For more information, contact the TBHF at 713-993-9433.