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.
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
- stop the tax levy
- replace the Valley Hi board
- 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.