SALISBURY – Officials in Wicomico County this week approved a $489,000 loan to keep a county-owned nursing home operating through the remainder of the fiscal year.
On Tuesday, the Wicomico County Council voted to approve a loan in the amount of $489,320 to the Wicomico Nursing Home. The loan will provide for projected operating expenses at the facility through June 30, 2019.
Last month, representatives with the Wicomico Nursing Home – a county enterprise fund – came before the council seeking an operating loan after it was learned that low occupancy, personnel costs and write offs of bad debt had contributed to financial woes at the facility.
Jim Crisp of Gross, Mendelsohn and Associates told the council, for example, that he expected the nursing home to write off $36,000 in bad debt in the current fiscal year and noted that the facility would need a census of roughly 80 residents and $170,000 in salary cuts to break even.
“It’s a 102-bed facility,” he said at the time. “When the facility was closer to 90 residents on average, we were making a lot of money. Now we are averaging between 71 patients to 75. When we are down that low, based on the current infrastructure and the personnel, we are actually losing money.”
Back on the agenda for discussion and possible action this week, Director of Administration Wayne Strausburg said the county was suggesting a no-interest loan to the nursing home and that the money would come from the county’s general fund balance.
“It’s really the county loaning money to itself,” he said. “We considered an interest rate, but if it’s intergovernmental lending of funds I personally didn’t think that accumulation of interest made sense.”
Strausburg also outlined how the nursing home would repay the county.
“In terms of the repayment, I thought it was best to structure that as a demand loan,” he said, “so that at a point in time when the county, the executive and the county council, felt that it should or could be repaid, we would call the loan.”
Council President John Cannon questioned how the loan would be reflected in the budget process.
“How does this show up in next year’s budget?” he asked.
Strausburg noted that the loan wouldn’t show up in the budget, but rather in the balance sheet.
“It would be recorded in the balance sheet as an accounts receivable for the general fund and accounts payable by the nursing home,” he said. “Had we charged interest, we would have had to show the interest costs in the nursing home’s budget.”
Cannon also questioned how the public would know money was taken from the fund balance.
“It might be misleading for them to think our reserves are one number when, in actuality, we have more reserves that are on loan,” he said.
Strausburg said he could mention the loan in the county’s budget.
“We can footnote it in the budget that would lead someone to the balance sheet,” he said.
With no further discussion, the county voted unanimously to approve a loan in the amount of $489,320 to the Wicomico Nursing Home.
While the loan is expected to sustain the enterprise fund through fiscal year 2019, officials last month agreed to further explore the future of the county-owned facility.