Maverick County Hospital District Board approves 2013-2014 Audit subject to amendment to Management’s Analysis
By: Jose G. Landa, Copyright 2014, Eagle Pass Business Journal, Inc.
The Maverick County Hospital District Board of Directors approved the local hospital district’s 2013-2014 Audit presented by Weaver and Tidwell, LLP, of San Antonio, Texas, subject to an amendment to be made to Management’s Discussion and Analysis in a split 4-1 vote at their regular monthly meeting held on Tuesday, December 16, 2014, reflecting a significant decrease of District total assets of approximately $1,986,000 in 2014 and another $1,980,000 in 2013, totaling $3,966,000 (Million) during 2014 and 2013.
Agenda Item No. VI-A called for discussion with possible action on Maverick County Hospital District presentation of Audit by Weaver, LLP. A representative of the auditing firm of Weaver, LLP, presented the audit report to the MCHD Board of Directors showing that the local hospital’s district cash and short and long-term investments decreased by approximately $1,437,000 in 2014 and another $1,965,000 in 2013, totaling approximately $3,402,000 (Million) during 2014 and 2013.
The MCHD operating expenses during 2014 were greater than operating revenues by approximately $2,491,000 and another $2,500,000 during 2013, totaling $4,991,000 (Million) during 2014 and 2013. Since the District’s operating expenses do not include the ad valorem property tax revenues, investment income, and upper payment program payments, the District’s net assets decreased approximately $1,867,000 during 2014 and $1,831,000 during 2013, totaling approximately $3,698,000 (Million) during 2014 and 2013.
Weaver, LLP, issued a “clean opinion’ on the MCHD 2013-2014 Audit Report, which is the “best opinion” a governmental entity can obtain.
Board member Ricardo E. Calderon asked the Weaver, LLP, representative how many years can the MCHD’s reserves last at the current rate of decreases or losses reflected by the Audit, and the Auditor replied that the District’s reserves are at approximately $18.5 Million and they could last 12 to 13 years.
Board member Calderon raised concerns regarding Management’s Discussion and Analysis, which is included in the Audit Report but is unofficially not a part of the Audit, statement that “the decrease in cash and investments was mainly due to the District’s expansion of current services which are needed to keep pace with the growing economic development taking place due to the oil and mineral boom taking place in the the South Texas region.” Calderon expressed his deep concern that this statement blaming the oil and gas boom for the significant decrease of the MCHD’s cash and investments during 2013-2014 and expansion of services was “disingenuous and a misrepresentation” of the facts and that he could not approve the 2013-2014 Audit until Management’s Discussion and Analysis was amended and revised to reflect the true causes of the District’s losses or decreases in cash and investments. Calderon stated that Maverick County taxpayers are entitled to have an open and transparent explanation of the reasons why the District experienced such material decreases in its cash and investments during 2014 and 2013.
Board Chairman Joaquin L. Rodriguez concurred with Calderon stating that his understanding is that the oil and gas boom has not had such a significant impact in Maverick County. Chairman Rodriguez asked Calderon if he had done any research on the oil and gas boom impact on Maverick County. Calderon replied “Yes,” stating that a recent conference on the Eagle Ford Shale oil and gas boom impact on Maverick County was held last year in Maverick County and reliable oil and gas research indicators demonstrate contradictory and inconsistent evidence than Management’s statement that the “oil and mineral boom” caused the District’s decrease in cash and investments due to expansion of medical services for oil and gas boom reasons. Calderon noted that oil and gas production within Maverick County has actually decreased during recent years.
Board Vice-Chairman Juan Manuel Farias then asked MCHD Chief Executive Officer Terri Contreras if she had any data regarding the impact of the oil and gas boom requiring the MCHD to expand its services, causing it to sustain the significant decrease of cash and investments. Contreras replied “Yes” and that Management’s statement was meant as a general comment on the population growth, but that she would provide the Board with her data. Contreras added that the increase of auto accidents related to the oil and gas boom has caused MCHD surgeons to handle these cases. Management’s Discussion and Analysis states that the MCHD “in each of the past three years, the District has reported an operating loss. This is consistent with the District’s recent operating history, as the District was created and is operated primarily to serve the indigent residents of Maverick County.” Board Vice-Chairman Farias served as the MCHD Board Chairman during 2013-2014, the period in question in the Audit, as well as during the past three years. CEO Contreras took over the reins of the MCHD on May 7, 2014, towards the tail end of the 2013-2014 fiscal year after her predecessor retired.
The MCHD Board approved to accept the 2013-2014 Audit presented by Weaver, LLP, subject to an amendment of the Management Discussion and Analysis by CEO Contreras to be submitted to the Board at a special meeting to be held on Tuesday, December 23, 2015, at 12 Noon, by a split vote of 4-1 with Board Chairman Rodriguez, Vice-Chairman Farias, Secretary-Treasurer Humberto Duran, and Board member Ronald Hixson in favor while Board member Calderon disfavored approval of the Audit until Management’s Discussion and Analysis is amended and approved by the Board. Calderon stated that Maverick County taxpayers deserve an open and transparent explanation of why the District’s cash and investments significantly decreased during 2013-2014.
