August 28, 2019
Proposed Budget Increases Health Care Delivery Spending for Growing Low Income Population
(Austin) – The Central Health Board of Managers voted Wednesday to set the maximum tax rate for Fiscal Year 2020 at 6.9% over the No New Revenue tax rate, which will generate $214.9 million in property taxes to pay for health care services for Travis County residents with low income.
The No New Revenue Rate, previously known as the effective tax rate, is the rate that generates the same amount of tax revenue as the previous year. For a Travis County home with an average taxable homestead value of $347,655, the annual increase would be $23.07, or about $2 a month.
“It’s a balancing act,” said Dr. Guadalupe Zamora, board chair, Central Health. “The demand for health care services increases every year, but so does the cost of living for Travis County taxpayers. Our board was determined to adopt a tax rate that would be fair and effective.”
The tax rate would be 10.5573 cents per $100 of assessed property value, and includes an operating tax rate of 10.4906 cents, and a debt service rate of .0667 cents. The proposed tax rate would support Central Health’s proposed $290.8 million budget, of which $278.1 million pays for health care delivery – a 12.4% increase compared to FY19. Nearly 96% of Central Health’s budget will fund health care delivery for low income Travis County residents, while 4% goes towards administrative costs.
Financial Challenges Ahead
Central Health’s seven-year financial forecast reveals looming challenges. The Delivery System Reform Incentive Payment program (DSRIP) is beginning to wind down, and the financial loss to Central Health will be substantial. Part of the 1115 Medicaid waiver, the DSRIP program was established in 2011 to provide incentives for health care improvements and direct more funding to hospitals serving large numbers of uninsured patients. Over the coming years – in order to maintain current levels of care – Central Health will have to replace approximately $62 million in DSRIP funding that helps pay for local safety net health care. Currently there are no plans by the state or federal government to replace DSRIP.
“When the Delivery System Incentive Reform Payment program eventually goes away, it will have a significant impact on our budget, “said Mike Geeslin, president and CEO of Central Health. ”The board asked our staff to look seven years down the road as we prepared next year’s budget and proposed tax rate. Here’s what we know: our patient population will continue to grow as it has almost every year, we will continue to expand health care services in underserved communities, and we’ll receive fewer federal dollars to pay for local health care.”
At the same time, Geeslin said Central Health must maintain adequate reserves so the healthcare district is prepared to deal with the unexpected.
As the healthcare district for Travis County, the Travis County Commissioners Court has final approval of Central Health’s budget and tax rate, with a vote expected Sept. 24. Central Health will host two public hearings on the tax rate and budget at 5:30 p.m., Sept. 11 and Sept. 18.
- Sept. 11: Public Hearing
- Sept. 18: Second Public Hearing and Central Health Board of Managers adopt budget.
- Sept. 24: Travis County Commissioners approve budget.
- Sept. 25: Central Health Board of Managers adopt tax rate.
- Oct. 1: Travis County Commissioners approve tax rate.
To learn more about the budget visit centralhealth.net/finance/fy-2020-budget.