Fiscal Year 2018 Proposed Budget and Property Tax Rate Central Health Board of Managers Aug. 9, 2017 Jeff Knodel, CFO Lisa Owens, Interim Deputy CFO

Central Health FY 2018 Proposed Budget Highlights •  Invest in health care strategies to provide better patient outcomes •  Increase member payment to the Community Care Collaborative •  Central Health Brackenridge Campus redevelopment

•  Capital funding of $4.4 million

•  Emergency Reserve maintains 15% of budgeted eligible expenditures

•  Budget for additional staffing resources

•  Maintain lowest tax rate of any major Texas Hospital District

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How Central Health Leverages Public Funding

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Central Health Funding Disproportionate Share (DSH) $31M

Uncompensated Care (UC) $43M

Charity Care $4.2M

DSRIP $22.8M

Sendero Risk-based Capital $5M

ACA Subsidized Premiums $269K

DSRIP $27.6M

CCC Member Payment $24.6M

Total $158.6M

Community Health Care Impact

Gross Hospital Costs $274.8M

Hospital DSRIP $53.2M

Sendero $86M

CCC $123.7M

Total $537.7M

Hospital Services

Health Coverage

Ambulatory Care

Result: Central Health leverages public dollars to create 3.4 times their original value

5-Year Forecast: 4.5% Over Effective Property Tax Rate (in millions)

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FY18 FY19 FY20 FY21 FY22

4.5%OverEffec7vePropertyTaxRateYOY

TotalSources TotalUses TotalReserves EmergencyReserve

FY 2018 Proposed Tax Rate (4.5% over Effective Rate)

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FY17 FY18 (Proposed)

Average Homestead Value

$285,152 $305,173

Tax Rate 11.0541¢ 10.7385¢

Tax Bill $315.21 $327.71

Annual Increase = $12.50 (3.97%)

Homestead Exemption

Over 65 Homestead Exemption

Disability Homestead Exemption

20%* $5,000 Minimum $80,000 $80,000

*Maximum allowable by state law

Central Health Property Tax Impact Statement: Fiscal Years 2017-2018

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FY 2017 Home Value

FY 2017 Taxable

Homestead Value

FY 2017 Tax Rate*

FY 2017 Tax Bill

Average Home Value Appreciation

FY 2018 Home Value

FY 2018 Taxable Home Value

FY 2018 Tax Rate* (4.5% over effective)

FY 2018 Tax Bill

Annual Increase

Percent Increase

$200,000 $160,000 11.0541¢ $177 9.00% $218,000 $174,400 10.7385¢ $187 $10 5.9%

$300,000 $240,000 11.0541¢ $265 7.60% $322,800 $258,240 10.7385¢ $277 $12 4.5%

$400,000 $320,000 11.0541¢ $354 6.30% $425,200 $340,160 10.7385¢ $365 $12 3.3%

$500,000 $400,000 11.0541¢ $442 6.00% $530,000 $424,000 10.7385¢ $455 $13 3.0%

* 20 percent homestead exemption

Central Health FY 2018 Proposed Budget

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DESCRIPTION FY 2017 APPROVED BUDGET FY 2018 PROPOSED BUDGET

Sources

Property Taxes $169,806,722 $181,839,054 Seton Lease Revenue 31,544,675 10,303,467 Interest 400,000 400,000 Tobacco Litigation Settlement 1,800,000 1,800,000 Subtotal Revenue 203,551,397 194,342,521 Contingency Reserve 36,600,000 57,886,845

Total Sources 240,151,397 252,229,366 Uses

Healthcare Delivery 229,738,205 241,433,090 Administration 8,926,601 9,143,516 Tax Collection 1,486,591 1,652,760

Total Uses 240,151,397 252,229,366 Reserves (ending balance)

Capital - - HMO Risk-based Capital Reserve - - Contingency Reserve - - Emergency Reserve 29,895,000 32,035,084

Total Reserves $29,895,000 $32,035,084

FY 2018 Proposed Budget: Central Health Brackenridge Campus

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Timeline •  Operations transition September 2017 •  RFP in process •  Master developer potentially begins in 2018

Description FY 2018 Proposed Budget

Building operations and management $2,416,906 Campus infrastructure and development 1,943,738 Total $4,360,644

FY 2018 Proposed Budget Capital Reserves

Proposed capital projects highlights for FY 2018:

•  Rosewood-Zaragosa redevelopment—$3,500,000

•  Brackenridge Campus infrastructure—$2,600,000

•  Eastside infrastructure collaboration—$1,500,000

•  Facilities maintenance—$350,000

•  IT equipment—$250,000

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FY 2018 Proposed Budget– Uses/Health Care Delivery/IGTs

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Intergovernmental transfers: FY 2017 Approved Budget

FY 2018 Proposed Budget

IGT - Private UC $27,900,000 $27,900,000

IGT - Public UC 25,000,000 25,000,000

IGT - Disproportionate Share 32,500,000 35,000,000

IGT - CCC DSRIP 29,300,000 29,300,000

IGT - Seton DSRIP 26,250,000 29,000,000

IGT - St. David's DSRIP 620,000 620,000

Total $141,570,000 $146,820,000

FY 2018 Proposed Budget– Uses/Health Care Delivery/Operations

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Description FY17 Approved Budget FY18 Proposed Budget Subtotal Intergovernmental Transfers $141,570,000 $146,820,000

Healthcare Services: Member Payment to CCC 26,245,166 29,245,166 Charity Care - Seton 4,251,733 4,251,733 Primary Care - Planned Parenthood 585,000 731,800 Integrated Care Collaboration (ICC) 617,275 666,657

Service Expansion 2,000,000 2,000,000 Subtotal Healthcare Services 33,699,174 36,895,356

Health Care Initiatives: UMCB Redevelopment and Operations 2,047,675 4,360,644 Health Care Initiatives: Cancer Care, Women’s Health, Workforce Development - 500,000

Subtotal Health Care Initiatives 2,047,675 4,860,644 Operating Expenses:

Salary and fringe benefits 3,763,563 3,773,584 ACA education and enrollment 2,745,000 2,700,000 Health Promotion 353,713 358,713 Legal 25,000 26,200 Consulting 234,000 289,000 Other professional services 519,271 401,085 Marketing & community relations 523,500 557,326 Leases, security & maintenance 894,847 739,876 UT land lease for teaching hospital - 903,467 Phones, computer equipment & utilities 703,029 932,021 Printing, copying, postage & signage 194,269 198,694 Travel, training and professional development 34,339 47,044 Other operating expenses 207,369 234,892

Subtotal Operating Expense 10,197,900 11,161,902 Subtotal Healthcare Delivery IGT, Services,

Initiatives and Operations $187,514,749 $199,737,902

FY 2018 Proposed Budget–Uses/ Health Care Delivery/Reserves and Debt Service

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Description FY 2017 Approved Budget FY 2018 Proposed Budget Subtotal Health Care Delivery (IGT, Services, Initiatives and Operations) $187,514,749 $199,737,902

Reserves, Appropriated Uses and Transfers:

Transfer to capital reserve 1,500,000 4,407,542

Transfer to emergency reserve 1,380,000 2,139,460

Sendero risk-based capital 6,000,000 4,000,000

Contingency reserve appropriation 31,970,653 29,775,391

Subtotal Reserves, Appropriated Uses and Transfers 40,850,653 40,322,393

Debt service:

Debt service - principal retirement 975,000 1,000,000

Debt service - interest & amortized costs 397,803 372,795

Subtotal Debt Service 1,372,803 1,372,795

Total Health Care Delivery $229,738,205 $241,433,090

FY 2018 Proposed Budget– Uses/Administration and Tax Collection

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DESCRIPTION FY 2017 APPROVED BUDGET FY 2018 PROPOSED BUDGET Total Healthcare Delivery $229,738,205 $241,433,090

Administration Operating Expenses

Salary and fringe benefits $4,268,817 $4,413,183 Legal 1,166,500 926,200 Consulting 1,038,000 1,208,800 Investment Services (Travis County) 103,351 105,000

Benefits & Payroll administrative services 296,940 249,920 Other professional services 485,300 483,200 Marketing & Community Relations 181,400 192,400 Leases, security & maintenance 183,842 273,348 Insurance & Risk Management 150,000 157,500 Phones, computer equipment & utilities 164,794 204,930

Printing, copying, postage & signage 99,570 136,560 Travel, training and professional development 263,737 259,625

Other operating expenses 524,350 532,850 Total Administration 8,926,601 9,143,516

Tax Collection Appraisal District Services 924,000 970,200 Tax Collection Expense 562,591 682,560

Subtotal Tax Collection Expense 1,486,591 1,652,760 Total Uses $240,151,397 $252,229,366

Next Steps ü  May 24 — Central Health Board of Managers (5-year forecast) ü  May 30 — Travis County Commissioners Court (FY 2017 update and FY 2018 budget guidelines) ü  June 21 — Central Health Budget and Finance Committee (budget update) ü  June 28 — Central Health Board of Managers (proposed budget) ü  July 19 — Central Health Budget and Finance Committee (FY 2018 CCC proposed budget) ü  July 26 — Central Health Board of Managers (FY 2018 CCC proposed budget and Central Health

budget update) ü  Aug. 9 — Central Health Budget and Finance Committee (FY 2018 Central Health proposed

budget and property tax rate) •  Aug. 16 — Central Health Board of Managers (FY 2018 Central Health proposed budget and

property tax rate) •  Aug. 22 — Travis County Commissioners Court (Central Health proposed budget and property

tax rate) •  Aug. 30 — First public hearing •  Sept. 6 — Second public hearing •  Sept. 13 — Central Health Board of Managers (FY 2018 budget adopted) •  Sept. 19 — Travis County Commissioners Court (FY 2018 Central Health proposed

budget and property tax rate)

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(512) 978-8000 www.centralhealth.net @centralhealthtx