Another Observer Wonders Why Valley Hi Nursing Home Surplus So High

A contribution from another person who has looked at the McHenry County Nursing Home’s financial statements and finds them grossly excessive:

Valley Hi is pretty much running at break even, which is what government enterprises should do.

Valley Hi, located near the unincorporated town of Hartland.

Valley Hi, located near the unincorporated town of Hartland.

It has revenues of around $10.5 million per year and expenses of about the same.

Yet on top of that they are levying $5 million a year in property taxes, money that clearly is NOT needed and in an amount equal to 50% of their annual expenses.

And they’ve been doing this for years, building up a cash kitty of $36 million.

It’s outrageous.

The County Board has been asleep at the switch.

Can you imagine any other unit of government levying property taxes equal to 50% of annual expenditures completely unnecessarily and getting away with it?

The County should

  1. stop the tax levy
  2. replace the Valley Hi board
  3. rebate the taxes.

Literally: rebate the taxes.

Put in a negative levy for Valley Hi and net that against the County’s levy to reduce the total levy by $30 million.

Which leads directly to the second question, how much cash should they keep?

There is an objective method for figuring this out: look at daily cash flow and determine their worst day.

Absent that information, look at the balance sheet and note that receivables equal $2.5 million, or about 90 days of expenses, and that annual cash flow receipts equal annual cash expenditures at about $10 million per year.

Therefore the best objective evidence indicates they only need to keep $2.5 million.

Double that for the sake of “conservatism”, and they should be sitting on $5 million in cash.

No government needs 350% of annual expenditures.

No government needs 100%.

Let’s be clear: even if Illinois is slow in paying, Valley Hi has clearly been getting paid steadily, and low volatility means low need for cash.


Leave a Reply

Your email address will not be published. Required fields are marked *