BRADENTON, Fla. — The Miami-Dade County Commission today will review a financial crisis that has enveloped the public health system whose flagship is Miami’s Jackson Memorial Hospital.
The board of the Public Health Trust, which governs the health system, is facing a deficit that could be as large as $230 million. It also expects to run out of cash in less than 90 days, according to a memo last week by county manager George Burgess that outlines the current problem and debt owed by the trust.
If the health system runs out of money, “the county will be legally obligated to make the payments necessary to honor the PHT’s labor contracts because we are a party to them,” Burgess wrote, noting that the biweekly cost would be $39 million.
The county would have to cut its budget and deplete its reserves, according to Burgess. “In addition, our bonds would be at grave risk of being immediately downgraded,” he said.
Miami-Dade also has covenanted to replenish any deficiency in the reserve fund on $373.66 million of long-term debt owed by Jackson Memorial, which is secured by a dedicated health care tax that is intercepted by the county to pay debt service. Currently, the reserve fund is fully funded at the required level.
“I’m concerned we may have to take drastic measures to ensure our solvency,” said Commissioner Carlos Gimenez, who has proposed implementing a financial oversight board for the PHT.
Gimenez said the county does not have millions of dollars in reserve to “pick up the slack here,” particularly since it could be liable for paying union employees.
“We have to assure that the trust is operating in a fiscally sound manner or it will have a negative impact in Miami-Dade County as a whole,” he said.
Miami-Dade has experienced its own financial difficulties.
In January, Standard & Poor’s placed a negative outlook on the county’s AA-minus general obligation bond rating, citing a trend of declining reserves coupled with a weakened economic environment that is likely to exert additional pressure on finances. The agency warned that continued use of reserves could result in a downgrade.
Moody’s Investors Service also noted concern about the need to restore budgetary structural balance in a January report, but maintained its Aa3 rating and stable outlook on the GOs.