Introduction to Public Introduction to Public Hospital District Hospital District GovernanceGovernance

February 14, 2002February 14, 2002

Association of Association of Washington Public Washington Public Hospital DistrictsHospital Districts

PresentersPresenters

Taya Briley, RN, JDTaya Briley, RN, JD

Director, Legal Services and Director, Legal Services and Health Policy, Association of Health Policy, Association of Washington Public Hospital Washington Public Hospital

DistrictsDistricts

Brad Berg Brad Berg

Partner, Foster Pepper and Partner, Foster Pepper and ShefelmanShefelman

Goals of the Web CastGoals of the Web Cast

Define hospital districtDefine hospital district

Describe hospital districts and Describe hospital districts and benefits of being a hospital districtbenefits of being a hospital district

Consider aspects of running a Consider aspects of running a hospital districthospital district

Review pertinent areas of the lawReview pertinent areas of the law

Definition of a Hospital DistrictDefinition of a Hospital District

Community supported governmental Community supported governmental entities that deliver health care to their entities that deliver health care to their communitiescommunities

Creation is authorized by Creation is authorized by Ch. 70.44 RCWCh. 70.44 RCW

Special purpose taxing Special purpose taxing districts districts

Purpose is defined by statutePurpose is defined by statute

Different from other health care entitiesDifferent from other health care entities

Statutory “Purpose” of a Statutory “Purpose” of a Public Hospital DistrictPublic Hospital District

“…“…operate hospital and other operate hospital and other health care facilities…and to health care facilities…and to provide hospital… and other provide hospital… and other health care services for the health care services for the residents of such districts and residents of such districts and other persons.”other persons.” RCW 70.44.003RCW 70.44.003

Definition of Definition of “other health care “other health care service”service” is broad is broad RCW 70.44.007(2)RCW 70.44.007(2)

Nature and Limits of Nature and Limits of Governmental PowersGovernmental Powers

Broad powersBroad powers——from a number of from a number of different statutesdifferent statutes——that are strictly that are strictly construedconstrued

Limited to express powersLimited to express powers——or those necessarily impliedor those necessarily implied

Engagement in prohibited Engagement in prohibited activities renders action voidactivities renders action void

Hospital District Powers and Hospital District Powers and DutiesDuties: : Sources & RestrictionsSources & Restrictions

Revised Code of Washington (RCW)Revised Code of Washington (RCW) Enabling Statute Enabling Statute Ch 70.44 RCWCh 70.44 RCW Other RCWsOther RCWs

State ConstitutionState Constitution

Case LawCase Law

Attorney General OpinionsAttorney General Opinions

Other Statutes and Other Statutes and RegulationsRegulations

Hospital District Benefits from Hospital District Benefits from Local Government StatusLocal Government Status

Immunity from taxation Immunity from taxation (federal)(federal)

Exemption from taxes (state)Exemption from taxes (state) Property taxesProperty taxes Business and occupation taxesBusiness and occupation taxes Retail sales taxRetail sales tax

Power of condemnation and Power of condemnation and eminent domaineminent domain

Ability to taxAbility to tax

Public Hospital District Public Hospital District Governance StructureGovernance Structure

Hospital Districts have a Hospital Districts have a 3, 5 or 7 member board3, 5 or 7 member board

Elected commissioners Elected commissioners appoint an administratorappoint an administrator

Certain duties expressly Certain duties expressly specified in hospital specified in hospital district statutedistrict statute

Statutory Role of CommissionersStatutory Role of Commissioners

The board is responsible for establishing The board is responsible for establishing hospital district policy with respect to the hospital district policy with respect to the powers of a hospital district in powers of a hospital district in RCW RCW 70.44.06070.44.060

Board adopts Board adopts general policies necessary to general policies necessary to achieve these ends and achieve these ends and delegates day-to-day delegates day-to-day operations to administrator operations to administrator

Statutory Role of AdministratorsStatutory Role of Administrators

Appointment, removal and Appointment, removal and compensation of superintendents is compensation of superintendents is governed by governed by RCW 70.44.070RCW 70.44.070

Superintendent powers and duties are Superintendent powers and duties are set forth in set forth in RCW 70.44.080RCW 70.44.080 and and 70.44.09070.44.090

Superintendent shall have control of Superintendent shall have control of administrative functions of the districtadministrative functions of the district

Other PersonsOther Persons: : Hospital District Hospital District Auditor and TreasurerAuditor and Treasurer

TreasurerTreasurer——default is county default is county treasurer, but commissioners may treasurer, but commissioners may designate designate an alternativean alternative

District auditorDistrict auditor——appointed by resolution appointed by resolution of the board and serves of the board and serves as auditor of the districtas auditor of the district

Medical StaffMedical Staff

Relationship to district governed by Relationship to district governed by medical staff bylawsmedical staff bylaws

Because hospital district Because hospital district is a local government, is a local government, due process due process requirements apply to requirements apply to denial of privilegesdenial of privileges

Hospital District EmployeesHospital District Employees

Working for a hospital district is much Working for a hospital district is much like working for private hospitalslike working for private hospitals

National Labor Relations Act National Labor Relations Act does not apply but Public does not apply but Public Employee Relations Employee Relations Commission rules doCommission rules do

Hospital district Hospital district employees are not employees are not allowed to strikeallowed to strike

Conflicts of Interest:Conflicts of Interest:Basic RuleBasic Rule

Municipal officers are prohibited fromMunicipal officers are prohibited from “...being “...being beneficially interested, directly or indirectly, in beneficially interested, directly or indirectly, in any contract which may be made by, through, any contract which may be made by, through, or under the supervision of such officer in whole or under the supervision of such officer in whole or in part, or which may be made for the benefit or in part, or which may be made for the benefit of his or her office, or of his or her office, or accept directly or indirectly accept directly or indirectly any compensation, gratuity any compensation, gratuity or reward in connection with or reward in connection with such contract from any other such contract from any other person beneficially interested therein.”person beneficially interested therein.” RCW 42.23.030RCW 42.23.030

Conflicts of Interest:Conflicts of Interest:Municipal OfficerMunicipal Officer

Elected and appointed officers of a Elected and appointed officers of a municipality, and their deputies: municipality, and their deputies: commissionerscommissioners administratorsadministrators treasurerstreasurers auditorsauditors others, depending on the capacity in others, depending on the capacity in

which they are actingwhich they are acting

ExceptionsExceptions certain contracts are certain contracts are

exceptions to the ruleexceptions to the ruleRemote InterestsRemote Interests

some interests are so some interests are so remote they are not remote they are not beneficial interestsbeneficial interests

PenaltiesPenalties void contract, void contract, $$500 penalty, 500 penalty,

civil/criminal liabilitycivil/criminal liability

Conflicts of InterestConflicts of Interest

MeetingsMeetings::The Open Public Meetings ActThe Open Public Meetings Act

““All meetings of the governing body of a All meetings of the governing body of a public agency shall be open and public public agency shall be open and public and all persons shall be permitted to and all persons shall be permitted to attend any meeting of the governing attend any meeting of the governing body of a public agency, except as body of a public agency, except as otherwise provided in this chapter.”otherwise provided in this chapter.” RCW RCW 42.30.03042.30.030

Open Public Meetings ActOpen Public Meetings Act::ExemptionsExemptions

Commissioners may convene in Commissioners may convene in “executive session”“executive session” for certain for certain reasons set out reasons set out in in RCW 42.17.310RCW 42.17.310 and and RCW 70.44.062RCW 70.44.062

Executive session must Executive session must be announced at a regular be announced at a regular or special meetingor special meeting

Regular, Special and Regular, Special and Emergency MeetingsEmergency Meetings

Regular MeetingRegular Meeting time established by hospital time established by hospital

district bylaws or by resolutiondistrict bylaws or by resolution no agenda requiredno agenda required

Special MeetingSpecial Meeting notify proper partiesnotify proper parties 24 hour notice24 hour notice agenda requiredagenda required

Emergency MeetingEmergency Meeting true emergencies onlytrue emergencies only

Open Public Meetings ActOpen Public Meetings Act::Penalties for ViolationPenalties for Violation

Action taken in violation of the act is Action taken in violation of the act is voidvoid

$100 penalty for KNOWING $100 penalty for KNOWING violations of the actviolations of the act

District may have to pay District may have to pay attorney feesattorney fees

Questions?Questions?Press 1 on Press 1 on Your PhoneYour Phone

Property IssuesProperty Issues

Hospital District Bid LawHospital District Bid Law bidding on construction projects requiredbidding on construction projects required

Eminent DomainEminent Domain condemnation and condemnation and

purchase of private purchase of private land authorizedland authorized

Surplus PropertySurplus Property procedures for sale procedures for sale

or lease of surplus or lease of surplus property must be followedproperty must be followed

Sources of FundsSources of Funds

Tax LeviesTax Levies

Borrowed FundsBorrowed Funds

Patient RevenuePatient Revenue

Taxing PowerTaxing Power::Regular/Maintenance Regular/Maintenance and Operation (M&O) Leviesand Operation (M&O) Levies

Authority to levy property taxes:Authority to levy property taxes: Maximum levy rate limitation is $0.75 per $1000 Maximum levy rate limitation is $0.75 per $1000

assessed valueassessed value ““Competition”Competition” with other local governments with other local governments Levy lid is established by limit factorsLevy lid is established by limit factors Impact Impact

of I-747of I-747 Future initiatives Future initiatives

may also change may also change lawlaw

Taxing PowerTaxing Power::Raising the Levy LidRaising the Levy Lid

Levy lid may be raised Levy lid may be raised if a simple majority of if a simple majority of voters approves voters approves an increasean increase

Taxing PowerTaxing Power::One Year Special LevyOne Year Special Levy

One year levy, in excess of regular levy One year levy, in excess of regular levy

Revenue may be used for any purposeRevenue may be used for any purpose

May be for any amount May be for any amount the voters approvethe voters approve

Supermajority and Supermajority and validation requirements validation requirements must be metmust be met

General or special electionGeneral or special election

Taxing PowerTaxing Power: : Supermajority & Validation ExampleSupermajority & Validation Example

In last general election In last general election 10,000 votes were cast10,000 votes were cast

Scenario A — 3,000 VOTES CAST: Scenario A — 3,000 VOTES CAST: To validate 60% of 40% To validate 60% of 40% of 10,000 needed of 10,000 needed 2,400 yes votes required2,400 yes votes required

Scenario B — 5,000 VOTES CAST: Scenario B — 5,000 VOTES CAST: To validate 60% of 5,000 neededTo validate 60% of 5,000 needed 3,000 yes votes required3,000 yes votes required

Taxing PowerTaxing Power: : Special Levy for Special Levy for Unlimited Tax General Obligation Unlimited Tax General Obligation

(UTGO) Bonds(UTGO) BondsNeeded if levy to pay debt service on Needed if levy to pay debt service on

bonds exceeds the district’s regular levy bonds exceeds the district’s regular levy

Supermajority and validation Supermajority and validation requirementrequirement

Amount levied is whatever is necessary Amount levied is whatever is necessary to pay debt service on bondsto pay debt service on bonds

Bonds issued only for capital purposesBonds issued only for capital purposes

Taxing PowerTaxing Power: : Emergency Medical Services LevyEmergency Medical Services Levy

District authorized to run Emergency Medical District authorized to run Emergency Medical Services (EMS) levy if no other EMS levies Services (EMS) levy if no other EMS levies cover all or part of the district (Exception for cover all or part of the district (Exception for county-wide EMS levy)county-wide EMS levy)

May impose a regular levy May impose a regular levy of up to $0.50 per $1000 of up to $0.50 per $1000 assessed value for 6 years, assessed value for 6 years, 10 years or permanently, 10 years or permanently, based on voter approval based on voter approval

Supermajority and validation requirementSupermajority and validation requirementEMERGENCY

Borrowed Funds:Borrowed Funds:BondsBonds

Limited Tax General Obligation (LTGO) Limited Tax General Obligation (LTGO) BondBond payable solely from district’s payable solely from district’s

regular property tax levyregular property tax levyUnlimited Tax General Unlimited Tax General

Obligation (UTGO) BondObligation (UTGO) Bond payable from special levy in payable from special levy in

excess of district’s regular levyexcess of district’s regular levyRevenue BondsRevenue Bonds

payable from special fundpayable from special fund

Borrowed FundsBorrowed Funds::Conditional Sales ContractsConditional Sales Contracts

Permits purchase of real or Permits purchase of real or personal property on an personal property on an installment basisinstallment basis

Property being purchased Property being purchased serves as security for serves as security for financingfinancing

Borrowed Funds:Borrowed Funds:WarrantsWarrants

Revenue WarrantsRevenue Warrants paid out of special fundpaid out of special fund

Tax Anticipation WarrantsTax Anticipation Warrants payable from first tax monies payable from first tax monies

available from levy of taxes on available from levy of taxes on property in districtproperty in district

General WarrantsGeneral Warrants treasurer disburses funds on treasurer disburses funds on

warrants issued by hospital district warrants issued by hospital district auditor and approved by commissionersauditor and approved by commissioners

Patient RevenuePatient Revenue

Receipt of patient revenue is much Receipt of patient revenue is much like other hospitalslike other hospitals

Charity Care and Article VIII, Section Charity Care and Article VIII, Section 7 of the Washington Constitution7 of the Washington Constitution

Public RecordsPublic RecordsHospital districts must make all public Hospital districts must make all public

records available for public inspection and records available for public inspection and copyingcopying

Some hospital district Some hospital district records are not public records are not public recordsrecords

District should establish District should establish policies for accessing policies for accessing recordsrecords

Responding to Records Responding to Records RequestsRequests

Hospital districts must respond to a Hospital districts must respond to a request within 5 business days:request within 5 business days: provide the record, provide the record, OROR give estimation on give estimation on

amount of time amount of time needed to provide needed to provide the record, the record, OROR

deny the requestdeny the request

PenaltiesPenalties

ResourcesResources

www.awphd.orgwww.awphd.org

Questions?Questions?Press 1 on Press 1 on Your PhoneYour Phone

Thank you forThank you forparticipating!participating!Please fill Please fill out the out the evaluation.evaluation.