Council questions $9.9 million transfer to Gracedale Nursing Home after audit

Northampton County Council members pressed county finance staff on July 9 after the county—s annual consolidated financial report showed a $9.9 million general-fund transfer to Gracedale Nursing Home to cover operating shortfalls.

The transfer appeared in the audited financial statements after earlier unaudited reports showed an $8.55 million movement into the Gracedale fund; later audit notes increased the total to $9.9 million. Council members said the transfer did not come before council and asked how the county—s unassigned general-fund balance was used to cover the shortfall.

The concern centers on process and budget authority: council members said budget control resides with council and that material transfers ordinarily should be presented in a budget amendment. "It did not come before county council, and there should be accountability for it," a council member said during the finance committee meeting. The council member asked for steps to hold administration and accounting staff accountable for moving funds without council approval.

County staff described accounting and timing factors that contributed to the way the transfer was recorded. County finance staff told the committee Gracedale has unusually long receivables (staff said Gracedale is carrying about 10 months of receivables), which complicates budgeting under modified-accrual accounting. Staff also said a prior-period adjustment, an accounting mechanism, has been used in past years to address timing differences and was applied in this instance.

The county—s finance representative said the transfer was funded from the general fund unassigned balance and that the administration has discussed the issue with external auditors and with the county—s lobbyist to address longer-term reimbursement issues tied to Medicaid/Medicare payments and IGT settlements. "I do not like doing it that way," the finance representative said, referring to prior-period adjustments, but added the county received an unqualified audit opinion this year.

Council members said the audit raised further questions about how Gracedale—s operating losses have been managed, pointing to years of operating deficits and declines in fund balance. One council member urged the body to consider an independent review of the ARPA and other funds spent on Gracedale, saying council needs clearer records for decisions on the county budget going forward.

County staff said they will provide council with the federal reports filed with the Treasury, and that additional information on receivables and budget movements will be made available to the council and committees for further review.

The finance committee did not take a vote on a remedy at the July 9 meeting; members requested additional documents and said the matter would be discussed in upcoming committee sessions.