Introduction to Public Hospital Districts

1. Introduction to Public Hospital Districts April 25, 2002 Association of Washington Public Hospital Districts

2. Goals of the Presentation • Define hospital district • Describe hospital districts and benefits of being a hospital district • Consider aspects of running a hospital district--including tax revenue • Provide an overview of hospital district formation

3. Definition of a Hospital District • Community supported governmental entities that deliver health care to their communities • Creation is authorized by Ch. 70.44 RCW • Special purpose taxing districts • Purpose is defined by statute • Different from other health care entities

4. Statutory “Purpose” of a Public Hospital District • “…operate hospital and other health care facilities…and to provide hospital… and other health care services for the residents of such districts and other persons.”RCW 70.44.003 • Definition of “other health care service” is broad RCW 70.44.007(2)

5. Hospital District Benefits from Local Government Status • Immunity from taxation (federal) • Exemption from taxes (state) • Property taxes • Business and occupation taxes • Retail sales tax • Power of condemnation and eminent domain • Ability to tax

6. Public Hospital District Governance Structure • Hospital Districts have a 3, 5 or 7 member board • Elected commissioners appoint an administrator • Certain duties expressly specified in hospital district statute

7. Other Persons • District Treasurer • District auditor • Medical Staff • Employees

8. Conflicts of Interest:Basic Rule Municipal officers are prohibited from “...being beneficially interested, directly or indirectly, in any contract which may be made by, through, or under the supervision of such officer in whole or in part, or which may be made for the benefit of his or her office, or accept directly or indirectly any compensation, gratuity or reward in connection with such contract from any other person beneficially interested therein.”RCW 42.23.030

9. Meetings:The Open Public Meetings Act “All meetings of the governing body of a public agency shall be open and public and all persons shall be permitted to attend any meeting of the governing body of a public agency, except as otherwise provided in this chapter.”RCW 42.30.030

10. Public Records • Hospital districts must make all public records available for public inspection and copying • Some hospital district records are not public records • District should establish policies for accessing records

11. Property Issues • Hospital District Bid Law • bidding on construction projects required • Eminent Domain • condemnation and purchase of private land authorized • Surplus Property • procedures for sale or lease of surplus property must be followed

12. Sources of Funds • Tax Levies • Borrowed Funds • Patient Revenue

13. Taxing Power:Regular/Maintenance and Operation (M&O) Levies • Authority to levy property taxes: • Maximum levy rate limitation is $0.75 per $1000 assessed value • “Competition” with other local governments • Levy lid is established by limit factors • Impact of I-747 • Future initiatives may also change law

14. Taxing Power:Raising the Levy Lid • Levy lid may be raised if a simple majority of voters approves an increase

15. Taxing Power:One Year Special Levy • One year levy, in excess of regular levy • Revenue may be used for any purpose • May be for any amount the voters approve • Supermajority and validation requirements must be met • General or special election

16. Taxing Power: Special Levy for Unlimited Tax General Obligation (UTGO) Bonds • Needed if levy to pay debt service on bonds exceeds the district’s regular levy • Supermajority and validation requirement • Amount levied is whatever is necessary to pay debt service on bonds • Bonds issued only for capital purposes

17. Taxing Power: Emergency Medical Services Levy • District authorized to run Emergency Medical Services (EMS) levy if no other EMS levies cover all or part of the district (Exception for county-wide EMS levy) • May impose a regular levy of up to $0.50 per $1000 assessed value for 6 years, 10 years or permanently, based on voter approval • Supermajority and validation requirement

18. Hospital District Formation • Governed by Chapter 70.44 RCW • More complicated that creating private entity • Procedure for forming district will depend on how boundaries relate to county boundaries

19. Sample Scenario: Hospital District Within A County • Precinct district boundaries must be maintained • May only be initiated through a public petition process • Hearing process required • County commissioner resolution submits proposal to electorate within the district • Simple majority of those voting must vote “Yes” to create the district

20. Commissioners • Elected from the same ballot that proposes hospital district formation • Terms of inaugural board members are fixed by statute ranging from one to six years • Greater number of votes means longer term in office

21. Commissioner Districts • Not a requirement • Theoretically serve geographic constituencies of the hospital district • May be created at the same time as the hospital district • May be more trouble than they are worth

22. Actions Taken Upon District Formation • Adopt bylaws • Elect president and secretary of board • Determine number of commissioners • Adopt seal • Adopt resolution for commissioner compensation

23. More Actions Taken Upon District Formation • Survey existing health care facilities and services • Adopt plan of improvements • Adopt budget • Appoint superintendent • Designate auditor

24. Resources www.awphd.org

25. Thank you forlistening! Taya Briley, Director, Legal Services and Health Policy (206) 216-2554 tayab@awphd.org