Finding Text
United States Department of Agriculture
Federal Financial Assistance Listing #10.766
Community Facilities Loans and Grants Cluster
Special Tests and Provisions
Noncompliance
Criteria: Article IV, Section 6.08 of the Series 2011A bonds Indenture of Trust, requires a debt service coverage ratio of 1.25 to be maintained each fiscal year.
Condition: The Hospital’s operations did not generate sufficient financial results to be meet the 1.25 debt service coverage ratio.
Cause: There was decreased patient volume and corresponding revenue. The Hospital did not qualify for the disproportionate fundings, resulting in a $1,500,000 decrease in federal funding for services provided.
Effect: The decrease in revenue resulted in a negative debt service coverage ratio of .57 which was below the minimum requirement.
Questioned Costs: None reported.
Context: Sampling was not used.
Repeat Finding from Prior Years: No
Recommendation: We recommend that the Hospital comply with the terms of the workout agreement entered on January 24, 2024, to avoid future compliance issues.
Views of Responsible Officials: Management agrees with the finding.