Finding Text
2025.004 Funding of Debt Reserve Account Condition: The Hospital’s loan agreements with the U.S. Department of Agriculture (“USDA”) require certain debt service reserve accounts to be established and then funded to a specific level based on annual deposits. Criteria: Pursuant to the “workout agreement” between the Hospital and USDA from reestablishing a loan amortization and required payments, dated in 2022, at the point when the Hospital resumed principal and interest payments on a routine basis, the Hospital was also to start funding a debt reserve account which was previously established and withdrawn from, with approval, in a prior year. The Hospital is to fund 10% of the annual principal and interest payments required on the USDA related debt over a ten year period, or until the deposits plus accrued interest reach the annual required principal and interest payments. Effect: As a result of not funding the required payments when principal and interest payments on the debt resumed, the Hospital is not in compliance with a certain requirement of the loan and workout agreements.Recommendation: We recommend, when possible, the Hospital resumes monthly funding and monitor the balance of the debt reserve account in the future, as well as make-up any missing required deposits to this fund. Corrective Action Plan: The Hospital is currently reviewing its financial situation and plans to resume deposits to the reserve account in the future