CLEARWATER - The board of directors of the financially troubled Margaret J. Weston Center have received more bad news. They have been told a mandatory mortgage account required by the Federal Housing Authority is no longer in existence.
Federal regulations require the center to keep enough money in a reserve fund to cover a year's mortgage payment. In the case of the Weston Center, $56,378 should be held back and left untouched unless the FHA grants permission to use it during emergencies.
"The Margaret J. Weston Medical Center is now in violation of its mortgage agreement with the FHA," Executive Director Tony Dunn told a stunned board.
He said he discovered the federal regulation only this week during an on-going audit by the U.S. Inspector General's Office. The reserve mortgage account has not been in existence for some time prior to the installation of the present board.
Originally, the medical center's financial troubles were discovered in a full program review conducted last spring by the Atlanta office of the Department of Health and Human Services. Subsequent to the report, former Center Director Roger Davis, Medical Director Dr. Clarence Flannigan and other staff members resigned, followed by four board members. Eventually, all board members with tenures longer than 90 days were asked to resign.
The current board, in place since June of this year, has been attempting to sort through the center's muddled records to determine the facility's financial status and begin the road back to financial stability.
This latest setback has dealt that effort a severe blow, officials agree.
"The fund primarily is a safety valve," said senior auditor Jeffrey Bullock. "It gives the government assurance the Center can meet any emergency that might come up."
It should not be used for operating funds, but could be used for such things as repairs for storm damages or expansions of the facility.
Mr. Bullock is currently conducting an audit of the center's program for the Investigator General's office to determine if the rural health center should continue operating.
In speedy action during Thursday night's meeting, the board voted to place nearly $15,000 in the reserve fund to begin compliance with the federal regulation. Mr. Dunn plans to meet with FHA officials next week as does Mr. Bullock.
In addition, federal regulations also require the center to set aside 1/12 of the yearly mortgage payment, nearly $5,000 a month for the Weston Center. The facility has $43,343.42 set aside to help meet the mortgage payment due Sept. 1.
Although the center owes $239,000 in outstanding debt, belt tightening steps taken recently are expected to save about $127,000 in operating expenses already budgeted for and can be applied to debt payment, Mr. Dunn said.
Despite the center's problems, Mr. Bullock did have some good news for the board of directors.
"The center looks good as far as medical care is concerned and I have been pleased with the way the staff deals with their patients," Mr. Bullock said.
But he emphasized that his job was to look at the center "in accounting terms to determine if it is a going concern."
He did assure the board that it would be given an opportunity to correct problems as the audit proceeded over an estimated two-month period.
"We respect what you and the Inspector General's office are doing here," board chairman Reginal Barner said, "and we want to work with you to keep this center open."
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