Introduction to Public Hospital District Governance February 14, 2002 Association of Washington Public Hospital Districts

Presenters Taya Briley, RN, JD Director, Legal Services and Health Policy, Association of Washington Public Hospital Districts Brad Berg Partner, Foster Pepper and Shefelman

Goals of the Web Cast  Define hospital district  Describe hospital districts and benefits of being a hospital district  Consider aspects of running a hospital district  Review pertinent areas of the law

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

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  Definition of “other health care service” is broad RCW (2)

Nature and Limits of Governmental Powers  Broad powers — from a number of different statutes — that are strictly construed  Limited to express powers — or those necessarily implied  Engagement in prohibited activities renders action void

Hospital District Powers and Duties : Sources & Restrictions  Revised Code of Washington (RCW) Enabling Statute Ch RCW Enabling Statute Ch RCW Other RCWs Other RCWs  State Constitution  Case Law  Attorney General Opinions  Other Statutes and Regulations

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

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

Statutory Role of Commissioners  The board is responsible for establishing hospital district policy with respect to the powers of a hospital district in RCW  Board adopts general policies necessary to achieve these ends and delegates day-to-day operations to administrator

Statutory Role of Administrators  Appointment, removal and compensation of superintendents is governed by RCW  Superintendent powers and duties are set forth in RCW and  Superintendent shall have control of administrative functions of the district

Other Persons : Hospital District Auditor and Treasurer  Treasurer — default is county treasurer, but commissioners may designate an alternative  District auditor — appointed by resolution of the board and serves as auditor of the district

Medical Staff  Relationship to district governed by medical staff bylaws  Because hospital district is a local government, due process requirements apply to denial of privileges

Hospital District Employees  Working for a hospital district is much like working for private hospitals  National Labor Relations Act does not apply but Public Employee Relations Commission rules do  Hospital district employees are not allowed to strike

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

Conflicts of Interest: Municipal Officer  Elected and appointed officers of a municipality, and their deputies: commissioners commissioners administrators administrators treasurers treasurers auditors auditors others, depending on the capacity in which they are acting others, depending on the capacity in which they are acting

 Exceptions certain contracts are exceptions to the rule certain contracts are exceptions to the rule  Remote Interests some interests are so remote they are not beneficial interests some interests are so remote they are not beneficial interests  Penalties void contract, $ 500 penalty, civil/criminal liability void contract, $ 500 penalty, civil/criminal liability Conflicts of Interest

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

Open Public Meetings Act : Exemptions  Commissioners may convene in “executive session” for certain reasons set out in RCW and RCW  Executive session must be announced at a regular or special meeting

Regular, Special and Emergency Meetings  Regular Meeting time established by hospital district bylaws or by resolution time established by hospital district bylaws or by resolution no agenda required no agenda required  Special Meeting notify proper parties notify proper parties 24 hour notice 24 hour notice agenda required agenda required  Emergency Meeting true emergencies only true emergencies only

Open Public Meetings Act : Penalties for Violation  Action taken in violation of the act is void  $100 penalty for KNOWING violations of the act  District may have to pay attorney fees

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

Sources of Funds  Tax Levies  Borrowed Funds  Patient Revenue

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 Maximum levy rate limitation is $0.75 per $1000 assessed value “Competition” with other local governments “Competition” with other local governments Levy lid is established by limit factors Levy lid is established by limit factors Impact of I-747 Impact of I-747 Future initiatives may also change law Future initiatives may also change law

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

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

Taxing Power : Supermajority & Validation Example  In last general election 10,000 votes were cast  Scenario A — 3,000 VOTES CAST: To validate 60% of 40% of 10,000 needed 2,400 yes votes required  Scenario B — 5,000 VOTES CAST: To validate 60% of 5,000 needed 3,000 yes votes required

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

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

Borrowed Funds: Bonds  Limited Tax General Obligation (LTGO) Bond payable solely from district’s regular property tax levy payable solely from district’s regular property tax levy  Unlimited Tax General Obligation (UTGO) Bond payable from special levy in excess of district’s regular levy payable from special levy in excess of district’s regular levy  Revenue Bonds payable from special fund payable from special fund

Borrowed Funds : Conditional Sales Contracts  Permits purchase of real or personal property on an installment basis  Property being purchased serves as security for financing

Borrowed Funds: Warrants  Revenue Warrants paid out of special fund paid out of special fund  Tax Anticipation Warrants payable from first tax monies available from levy of taxes on property in district payable from first tax monies available from levy of taxes on property in district  General Warrants treasurer disburses funds on warrants issued by hospital district auditor and approved by commissioners treasurer disburses funds on warrants issued by hospital district auditor and approved by commissioners

Patient Revenue  Receipt of patient revenue is much like other hospitals  Charity Care and Article VIII, Section 7 of the Washington Constitution

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

Responding to Records Requests  Hospital districts must respond to a request within 5 business days: provide the record, OR provide the record, OR give estimation on amount of time needed to provide the record, OR give estimation on amount of time needed to provide the record, OR deny the request deny the request  Penalties

Resources

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