Title
Ordinance No. 21-15 amending Ordinance No. 20-92 (2021 Appropriation Ordinance) for a Supplemental Appropriation to the Memorial Health System Enterprise Fund in the amount of $3,912,580 to transfer monies received from the periodic reconciliation with UC Health to the Colorado Springs Health Foundation
Presenter:
Charae McDaniel, Chief Financial Officer
Body
Summary:
The attached ordinance is to increase the 2021 Memorial Health System Enterprise Fund budget and to appropriate monies in the amount of $3,912,580 to transfer monies to the Colorado Springs Health Foundation (CSHF). The source of funds is a transfer from UCH-MHS received by the City in December 2020.
According to the lease, Schedule 3.6.8 Obligations and Liabilities Related to Third-Party Payors, the Parties agreed to reconcile UCH-MHS net actual receivables received and liabilities paid out to the amount accrued in the Memorial Health System financial statements on the effective date of the lease. UCH-MHS and the City have met periodically and agreed to reconciliations.
The net result of the first reconciliation, which was in 2016, was an amount due to the City of approximately $5,264,000. Of the $5,264,000, $298,000 was paid to a contract audit firm that assisted MHS with audits of a number of third-party cost reports that resulted in positive settlements. The balance of $4,966,000 was transferred to the Colorado Springs Health Foundation in 2016.
The net result of the second reconciliation, which was in 2017, was an amount due to the City of approximately $2,581,000. Of the $2,581,000, $35,000 was paid to a contract audit firm that assisted MHS with audits of a number of third-party cost reports that resulted in positive settlements. The balance of $2,546,000 was transferred to the Colorado Springs Health Foundation in 2017.
The net result of the third reconciliation, which was in 2020, was an amount due to the City of $3,912,580. This amount will be transferred to the Colorado Springs Health Foundation in 2021.
As some third-party cost reports remain open, UCH-MHS and the City will again reconcile when those have finally settled.
Background:
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Previous Council Action:
On October 1, 2012, the City of Colorado Springs executed the Memorial Health System (MHS) Operating Lease Agreement and the Integration and Affiliation Agreement by and among the City of Colorado Springs, University of Colorado Health, Poudre Valley Health Care, Inc., and UCH-MHS.
City Council authorized and directed that such funds and monies from the lease be placed into an appropriate segregated account and shall be spent only to satisfy obligations specifically provided for in the agreements. Funds remaining after satisfying the obligations shall be transferred directly into the City controlled non-profit foundation, Colorado Springs Health Foundation, as provided for under IRS Sections 501(c)(3) and 509(a) and authorized by City Council and the Mayor pursuant to Resolution No. 89-12.
On September 23, 2014, City Council approved Resolution No. 92-14 approving revisions to the Articles of Incorporation, and Bylaws of the CSHF and approving the investment and grant making policies developed by the Board of Trustees of the CSHF.
On September 23, 2014, the City and the Public Employees’ Retirement Association executed a settlement agreement resolving pending litigation. Escrow funds were released pursuant to this agreement and residual funds were sent to the CSHF on October 3, 2014. City Council approved Resolution No. 99-14 which authorized the transfer of $10 million from the MHS Enterprise Fund to CSHF.
On November 10, 2015, City Council approved Resolution No. 109-15 approving the Memorial Health System/Colorado Springs Health Foundation Funds Management Agreement. The agreement provides greater clarity as to how lease proceeds will be transferred to the CSHF and how the CSHF will invest funds.
On November 25, 2015, City Council approved the original 2016 Budget per Ordinance No. 15-86, which included the appropriation of funds for the Memorial Health System Enterprise Fund.
On April 12, 2016, City Council approved Ordinance No. 16-37 for a supplemental appropriation to the MHS Enterprise Fund in the amount of $5,264,000 to pay costs related to third party payor audits and the transfer monies to the CSHF.
On May 23, 2017, City Council approved Ordinance No. 17-43 for a supplemental appropriation to the MHS Enterprise Fund in the amount of $2,581,000 to pay costs related to third party payor audits and the transfer monies to the CSHF.
Financial Implications:
The City received a transfer of approximately $3,912,580 from UCH-MHS in 2020. This amount will be transferred to the Colorado Springs Health Foundation in 2021. The City maintains the Funds Administration Target for the Memorial Health System Enterprise of $2,500,000.
City Council Appointed Board/Commission/Committee Recommendation:
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Stakeholder Process:
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Alternatives:
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Recommended Action
Proposed Motion:
Move approval of the Ordinance Amending Ordinance No. 20-92 (2021 Appropriation Ordinance) for a Supplemental Appropriation to the Memorial Health System Enterprise Fund in the amount of $3,912,580 to transfer monies received from the periodic reconciliation with UC Health to the Colorado Springs Health Foundation
Summary of Ordinance Language
Supplemental Appropriation to Memorial Health System Enterprise Fund in the Amount of $3,912,580 to transfer monies received from the periodic reconciliation with UC Health to the Colorado Springs Health Foundation