Preston says - funded depreciation serves as hospital district's savings account, not secret fund

Hospital district commissioner Joyce Preston offered information about a fund that has been misinterpreted by some residents during the regular board meeting on Aug. 25.

She explained that she had met with Adams County Treasurer Laura Danekas, who provided background information as well as explained various accounting procedures and industry acronyms in regard to the district’s funded depreciation.

“I did research because we’ve had so much disinformation and questions about our ‘secret fund’ that we don’t have. I spent a couple of hours with the county treasurer and found out kind of a background…

I will try and make a summation tonight,” Preston said, referring to the pages and pages of information she was presenting as concisely as possible.

According to Preston, the current hospital district was built in 1952.

“In 1974 we were still one district and that included Othello at that time. In approximately 1985 things really started to change. There was a resolution made in 1985 and it was also given to the county treasurer that at that time monies would be taken out of our funds coming into the facility to start a funded depreciation, also known as a savings account for us.

“Funded depreciation is for big purchases such as equipment and type of emergencies… that is the account I think people are getting confused with the ‘secret account’ or a separate account. There is not another secret account or separate account. That is the funded depreciation account.”

Around the same era, Preston continued, Hospital District No. 1 didn’t dissolve, but it separated.

“Ritzville became a district and Othello was a district. For a while we had three hospital districts – we had hospital No. 1, which comprised of both Othello and Ritzville. We had Hospital District No. 2, which is Ritzville, and Hospital District No. 3, which was Othello… after the financial part of dissolvement was finished, then District No. 1 was dissolved and we ended up with the two districts we have today,” she said.

“Also at that time, we did separate to become two districts. Hospital District No. 2 took out a tax anticipation note. This was a loan, and this was to help us through the time of separating and starting being incorporated. Also during this time, we started the clinic here.

“So that was a lot of added expenses all at one time. (Danekas) said that a tax anticipation note means our district pledged to pay back through our taxes… on the loan we were charged interest and that was paid back as well. That was all going on at the same time.”

She continued to explain. “While having such a good economy, having a great patient load, all that type of financial stability, by March of 1999 we had $2.7 million already into this account that we now have $8 million in. So we already had that established in 1999; that money was already in there.

“The savings account was invested and that’s how we were making money, through investments through the county. Everything was done through the county as it is today. And that’s where we had money coming in from. The levies were used to support the business and the monies that were put in were made through the economy by our patient load. Our infrastructure was very good at that time and that’s how they built that fund up…

“As time went on our CDs matured and some other investments ended. Money was not reinvested, and that was again way before this board’s time because the interest was starting to fail again. For some reason, money was not being used to be invested.”

Later in the meeting, Interim Chief Financial Officer Jennifer Wilbur agreed with Preston. “Funded depreciation is very common in a public hospital district. And as Joyce said, it is our savings account.”