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Committee told state hospital repairs will cost about $3.05M; insurance covered $1.8M and additional proceeds appear limited
Summary
DHS told the committee that storm damage repairs at the state hospital will cost about $3,046,000; insurance reimbursed $1.82 million and DHS said additional reimbursement likely will be small (about $97,000), prompting member frustration that earlier expectations of $5 million reimbursement were misplaced.
DHS presented a quarterly report on storm damage at the state hospital: construction was to begin March 3 with a substantial completion date of Oct. 21. The insurance adjuster calculated a cash value of $1,820,000, which DHS received and transferred to DFA. DHS said the actual rehabilitation cost is approximately $3,046,000 and that the insurance payout did not cover the full estimate.
Misty Eubanks (DHS) told the committee the department anticipates possibly receiving an additional approximately $97,000 when contractors reach certain payment milestones, but that insurance would not make the department whole for the full expected $5,000,000 figure some members had recalled. Members, including Senator Hickey, said they had understood earlier meetings to imply full reimbursement and expressed disappointment.
DHS staff explained the shortfall by pointing to the age and condition of the buildings and to depreciation adjustments under the prior insurance policy: older HVAC and building components diminished replacement value in the adjuster’s assessment. Members asked whether the state had sought outside help from the insurance program or its adjuster; DHS said outside adjusters had been consulted but depreciation and replacement‑cost assumptions limited the coverage.
Committee members asked DHS to circulate the reports and adjuster estimates and to confirm whether additional reimbursement was feasible. DHS said it would share the documentation and that, at present, available insurance proceeds plus restricted‑reserve transfers have not fully covered projected rehab costs.
