John's Blog - Valley Hi Rebate

As you may know, the McHenry County Board is considering what to do with a reserve fund surplus at the County operated Valley Hi Nursing Home.  Options under consideration include a one-time rebate to selected property taxpayers.

To evaluate the merits of this proposal, some historical background is needed.  The County Board of Supervisors originally authorized the purchase of property for a County nursing home in 1884.  Since that date the County has operated a nursing home facility primarily for indigent residents and those who exhausted their financial resources in old age.  In the late 90's Vally Hi operations were exceeding budgeted funds by $1 to $1.5 million annually, putting immense fiscal pressure on the County's General Fund.  Reasons for the budget meltdown ranged from increasing medical costs to maintaining the capital infrastructure of three older deteriorating buildings which then comprised Valley Hi.  Clearly, things could not continue on this financial course.

In 2002, a referendum was held under the leadership of then County Board Chairman Mike Tryon.  The referendum did two things. First, if asked voters if they wanted the County to continue operating a nursing home and, if so, requested funds to build a new facility.  Secondly, if asked for operating funds to insure that future operations would remain stable and not result in disastrous raids on the County's operating reserves.

The referendum was approved and the new Valley Hi opened for occupancy in 2007.  By all accounts, with new management in place, the operations of Valley Hi have been a resounding success, proof that government can do things right.  The argument now put forth is that a surplus of operating reserves should be rebated to selected property taxpayers.

The issue of excessive operating reserves should first be addressed.  Sound accounting principles dictate a 3 to 4 month operating reserve.   Policies and procedures should be established to require annual review of reserve amounts to avoid excess surpluses in the future.  This oversight should fall under the preview of the County's Audit and Finance Committee.  These policies must be put in place to assist the current and future County Boards so they will not face the current dilemma.

Lastly, what to do the the current surplus?  Once these funds are made available for rebates, they will be gone forever.  Various figures have been discussed, but a qualifying homeowner who applies for the rebate may receive an estimated $200, definitely a welcome amount for any family's budget.  

However, those in charge of the fiscal heath of Valley Hi appear to be penalized for having successfully managed, maintained, and operated what is one of the County's greatest community asset.  We are living longer then we did back in 1884.  Think of you own Mom and Dad, and how far their saving will go once they can no longer live independently.  Think of you own plans and finances, how long would you be able to care for yourself and you relatives as we keep living longer?  Seems penny-wise and pound-foolish to disburse a one time rebate instead of investing it to insure that Valley Hi is there for you and your family in the future.

Why not invest the surplus in a capital improvements fund to safeguard the future of the building?  Remember the original problem back in the 90's?  Older inadequately maintained buildings, wind up costing big buck and can end up jeopardizing continued operations.  Let's forgo a one-time rebate now but rather invest the surplus to secure the future of a community asset.