Local Government

McHenry County's Valley Hi capital plan not a plan to spend down reserve, administrator says

WOODSTOCK – An ongoing capital plan for Valley Hi Nursing Home is not a mad race to spend down its large budget surplus, its administrator said.

The nursing home’s list of wants and needs, which now stands at about $5.3 million, has been an ongoing endeavor for well over a year, according to Administrator Tom Annarella.

The list of fixes and upgrades – as well as possible quality-of-life improvements for its 120-plus residents – is a monthly discussion item before the Valley Hi Operating Board, and independent of recent talk on the McHenry County Board about reducing a surplus that could cover three years of operations.

“There is no plan to start spending money for the sake of spending money,” Annarella said.

The Operating Board will vote at its Wednesday evening meeting on one item on that list, a $350,000 plan to replace beds and mattresses.

Residents’ specialized mattresses, designed to prevent bedsores, are eight years old and at the end of their operating span, as are the frames, which are breaking down, according to the resolution.

The one-page list of capital projects includes several million-dollar proposals, including finishing Valley Hi’s gravel basement and pulling fiber optic cable to both the nursing home and the Division of Transportation offices across the street on the corner of Hartland and Nelson roads west of Woodstock. But the list also includes several smaller wants, from $25,000 for new art in the common areas to $15,000 for stocked ponds that would allow residents to fish.

A combination of taxpayer subsidy and good stewardship has resulted in Valley Hi accumulating a surplus that fluctuates between $35 million and $40 million, against Valley Hi’s $13 million annual budget. In some ways, the 128-bed, all-inclusive nursing home has become a victim of its own success.

County Board members, in a last-minute move last year, voted to eliminate the $3 million taxpayer levy for Valley Hi, citing the large cash reserve. 

The home gets revenue from Medicaid, Medicare and some private-pay beds; the levy, which was approved years ago by voter referendum, keeps the home solvent when revenues fall short.

That was the rule for many years – Valley Hi annually bled millions of dollars in red ink, but was made whole by the levy. A series of reforms, including new management and a period in which a private firm was brought in to straighten things out, fixed Valley Hi’s finances, and the home has run in the black since 2011.

As a result, however, the levy has piled up into the present surplus, even though today it is half of the $6 million that was levied a decade ago.

County Board members historically have been divided between those who want the Valley Hi levy reduced as much as possible and its reserve spent down, and those who think deep reductions would be irresponsible given the ongoing state budget crisis, shrinking reimbursements and funding uncertainties with the implementation of the Affordable Care Act.

The levy aside, most of Valley Hi’s beds are for Medicaid patients, with Medicare and private-pay accounting for the rest.

“As long as we continue to lose money every day on Medicaid, eventually you either have to go back to the taxpayers or get out of the business,” Annarella said.

The Operating Board, which itself came out of the reforms, has said that a reserve of $16 million would be sufficient. Because of the tax cap, the County Board will have to reinstate the $3 million levy next fiscal year or lose it, requiring a voter referendum to reinstate it.

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