Fiscal Note & Local Impact Statement

126 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 Phone: (614) 466-3615

Internet Web Site: http://www.lsc.state.oh.us/

BILL:

S.B. 126

DATE:

February 8, 2006

STATUS:

As Introduced

SPONSOR:

Sen. Wachtmann

LOCAL IMPACT STATEMENT REQUIRED:

No

Minimal cost

 


CONTENTS:

To change the law governing county hospitals

 

State Fiscal Highlights

 

        No direct fiscal effect on the state.

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2006

FY 2007

FUTURE YEARS

County Hospitals

Revenues

Potential gain

Potential gain

Potential gain

Expenditures

Potential minimal increase

Potential minimal increase

Potential minimal increase

Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.

 

        The bill authorizes a board of county hospital trustees to enter into a contract with an employer or other entity whereby the services of any employee of the board or county hospital are rendered to or on behalf of the employer or their entity for a fee paid to the board or county hospital. This provision could result in a gain in revenues for county hospitals. The amount of any gain will be dependent upon whether or not employees or services are actually contracted out and the types of services contracted out, as well as the length of any contract.

        Current law requires the board of county hospital trustees to file an annual report of revenues and expenditures for the fiscal year. The bill, instead, requires the board to have an annual financial audit of the county hospital. It appears that most, if not all, county hospitals currently conduct financial audits. However, if a county hospital does not currently conduct an annual financial audit, the county hospital would incur increased costs.

        Currently, the board of county hospital trustees has control of county hospital property, but there are limitations with respect to real estate or an interest in real estate. The bill eliminates the provisions that specify limitations on the board's control over real property. According to the County Commissioner's Association of Ohio (CCAO), counties may not be able to purchase property and casualty insurance for this property at the reduced county pool rate (county hospitals pay their own insurance premiums). If this occurs, it is possible that county hospitals may have to purchase this insurance on their own at a higher rate.

 


 

 

Detailed Fiscal Analysis

 

Background Information

 

The bill makes changes to the laws governing county hospitals. According to the Ohio Hospital Association, there are currently 13 county hospitals in Ohio. The county hospitals are listed below:

 

 

According to the Ohio County Commissioners Handbook,[1] the number of county hospitals has decreased over the past 20 years, as more counties have leased their facilities to nonprofit entities.

 

Changes to County Hospitals

 

Budget Approval

 

Currently, by the first day of November, the board of county hospital trustees is required by current law to submit its proposed budget for the upcoming fiscal year to the board of county commissioners for approval. The board of county commissioners is required to approve a budget by December 1st. The board of county commissioners may require the board of county hospital trustees to revise the proposed budget. The bill eliminates the deadlines for submission and approval. Instead, the bill requires the board of county hospital trustees to submit its proposed budget not later than 60 days before the end of the fiscal year used by the county hospital. The board of commissioners must review and approve the budget by the first day of that fiscal year. The budget is deemed to have been approved if the board of county commissioners has not approved the budget by the first day of the applicable fiscal year.

 


A majority of county hospitals operate entirely on revenues generated and receive no county general fund moneys or levy moneys.[2] However, according to the CCAO, a couple of counties may have levies or issue bonds for county hospitals. According to the Association, the county would still have some measure of control over whether these levy or bond moneys were granted to county hospitals.

 

Financial Reports

 

Current law requires the board of county hospital trustees to file an annual report of revenues and expenditures for the fiscal year. The bill, instead, requires the board to have an annual financial audit of the county hospital. The board must file a copy of the report with the board of county commissioners. This financial audit requirement could result in additional expenses for county hospitals. However, LSC contacted two hospitals (MetroHealth and Joel Pomerene Hospitals) and it appears that most, if not all, county hospitals currently conduct financial audits. If a county hospital does not conduct a financial audit, the county hospital would incur increased costs.

 

Control Over Real Property

 

Currently, the board of county hospital trustees has control of county hospital property, but there are limitations with respect to real estate or an interest in real estate. The bill eliminates the provisions that specify limitations on the board's control over real property. However, the bill does not expressly state that the board has control over real property. According to CCAO, counties may not be able to purchase property and casualty insurance for this property at the reduced county pool rate (county hospitals pay their own insurance premiums). If this occurs, it is possible that county hospitals may have to purchase this insurance on their own at a higher rate.

 

Purchase, Lease, and Installation of Property

 

Currently, the board of county hospital trustees has complete charge of the selection and installation of all necessary and proper furniture, fixtures, and equipment for the hospital. The bill provides that the board has complete charge of the selection and purchase or lease of all property that is necessary and proper for the hospital, including vehicles. Under the bill, the board's authority to install property applies not only to furniture, fixtures, and equipment, but also to all other property that requires installation. According to the CCAO, this should have little to no impact on counties.

 

Agreements for Acquisition, Operation, or Lease of a County Hospital

 

Unless there is another general hospital operating in the county, current law requires an initial agreement for the acquisition, operation, or lease of a county hospital to be approved by the board of county commissioners and the electors of the county. Specifically, before the agreement may be entered into, the board of county commissioners must review the agreement. If the board finds that the agreement will meet the needs of the county's residents for hospital service, it may adopt a resolution authorizing the agreement. The authorization can become effective only if it is approved by the electors of the county. The bill eliminates the requirement that a county election be held to approve the board's resolution authorizing an initial agreement for acquisition, operation, or lease of a county hospital. With regard to the board's duty to review the agreement, the bill prohibits the board from adopting a resolution authorizing the action proposed in the agreement until all of the following occur:

 

(1)      The board of county hospital trustees of the county hospital to be acquired, operated, or leased adopts a resolution in favor of the agreement;

(2)      The board of county commissioners finds that the agreement reflects the intent of the board of county hospital trustees in its adoption of the resolution in favor of the agreement;

(3)      The board of county commissioners finds that the agreement will meet the needs of the residents of the county for hospital service.

 

According to CCAO, this should have little to no impact on counties. Elections regarding authorizing an initial agreement for acquisition, operation, or lease of a county hospital are seldom held.

 

Other Provisions

 

The bill also makes changes to the law relating to the boards of county hospital trustees and specifies that the board's authority to provide fringe benefits is also applicable to the employees of the county hospital. According to the Ohio Hospital Association, this is currently done and should have no fiscal impact to county hospitals.

 

The bill authorizes a board of county hospital trustees to enter into a contract with an employer or other entity whereby the services of any employee of the board or county hospital are rendered to or on behalf of the employer or their entity for a fee paid to the board or county hospital. This provision could increase revenues for county hospitals. The amount of any increase will be dependent upon whether or not employees or services are actually contracted out and the types of services contracted out, as well as the length of any contract.

 

The bill also makes changes in regards to the board of county hospital trustees. These should have no fiscal impact to county hospitals or county governments.

 

 

LSC fiscal staff: Wendy Risner, Budget Analyst

 

SB0126IN.doc/arc

 



[1] http://www.ccao.org/Handbook/hdbkchap050.pdf.

[2] http://www.ccao.org/Handbook/hdbkchap050.pdf