MDD board has control of finances
Kim Jeswald, left, a lifeguard at the Mahoning County Board of Developmental Disabilities, works with student Alphonse Green in the Leonard Kirtz School swimming pool in Austintown. The MDD board recently installed a pool cover that helps to conserve energy costs at the facility, one of the ways the board is seeking to reduce its expenditures.
By WILLIAM K. ALCORN
AUSTINTOWN
Mahoning County Board of Developmental Disabilities has found ways to control costs during tough economic times and achieve a sizable annual carry-over in the process.
The major expenses, and therefore the largest cost-cutting categories, are employee wages and health insurance, workers’ compensation and Medicaid waiver matching funds, said Superintendent Larry Duck.
For instance, the board has reduced its staff from 304 in 2005 to 253 this year without cutting essential client services.
Duck said the reduction was achieved via layoffs, attrition and job restructuring or combining responsibilities. All of the 46 laid-off employees have been offered jobs at the same pay level in their former position or in lesser-paid different positions.
Also, in 2006 the board borrowed $1.1 million for an energy-conservation project guaranteed to pay for itself in reduced energy and maintenance costs over the 10-year life of the loan. Then the board went a step further and paid off the loan in two years, saving $100,000 in interest, Duck added.
The program also works to maximize potential revenue, he said.
For instance, as many Medicaid-eligible clients as possible are moved onto Medicaid-waiver programs creating a new revenue stream of nearly $2 million per year and reducing the draw on levy revenue, Duck explained.
The waiver program helps clients live in the community in lieu of an institution. The board pays 28 percent of the cost of services, and federal funds pay the remaining 72 percent. With nonwaiver clients, the local board absorbs 100 percent of the cost, said Kris Hodge, assistant superintendent and director of community services.
The Medicaid funding takes the place of local levy money and state subsidies that had been paying 100 percent of the cost of services, thereby significantly increasing amount of money available to pay for client services without a tax-levy increase, Hodge said.
Ten years ago, when Duck came to the board, then known as the Board of Mental Retardation and Developmental Disabilities, he introduced the concept of “no-deficit spending” to the agency. That means simply that expenses can’t exceed revenue in any fiscal year.
He also had other ideas for controlling expenditures.
The old way to budget was to project income and expenses based on the previous year and add a percentage for inflation. Now, everything in the annual budget has to be justified, said Marty Picciano, director of financial services. “It curtails a lot of costs,” he said.
Prudent spending has resulted in large carry-overs, $9 million from 2009 to 2010.
Duck said that the $9 million dollars might seem like a large number. However, $6 million of the $9 million is just the cash flow to operate the agency until tax is collected for the year. The other $3 million is set aside for one-time expenses, such as capital improvements and severance pay.
“When people see the carry-over, it’s like a pot of gold. Everyone wants some of it, including employee unions and even management,” Duck said.
“Using last year’s carry-over to fund this year’s budget is fine if you never run out of carry-over. But, when bad economic times come, you can have chaos,” he added.
But, with zero-deficit budgeting in place, the carry-over is untouchable.
The board created a contingency fund for emergencies.
“We try to plan for the worst-possible scenario. For instance, if we had to close the agency, we have set aside $1.6 million to pay employee severance packages,” Picciano said.
The board’s two property- tax levies, totaling 5 mills, generate $17 million to $18 million a year, or about 75 percent of the $23 million operating budget in 2009.
And, though the state subsidies are a disappearing revenue source, the amount can be calculated and is therefore considered predictable, Picciano said.
The other major revenue source is waivers, which the board is attempting to maximize.
For instance, it instituted a “payer-of-last-resort” policy, which requires a client who refuses an offered Medicaid waiver to pay the federal share.
There are 600 people on the waiver waiting list, Hodge said.
“There is no new money coming from the state. Our only option is to find creative ways to maximize resources and cut costs,” Duck said.
The Mahoning County Board of Developmental Disabilities has found ways to control costs during tough economic times and achieve a sizable annual carry-over in the process. Here are some measures the board took to cut costs. The largest cost categories are employee wages and health insurance, workers’ compensation and Medicaid waiver matching funds.
Reduced the number of employees from 304 in 2005 to 253 this year through layoffs, attrition and job restructuring.
Increased the length of the employee work days from seven to eight hours a day with one hour for lunch, creating 7,800 additional work hours per year.
Negotiated employee co-payments on health- insurance premiums and a cap on the employer’s share of the premium.
Created wellness-program initiatives.
Shopped for health- insurance provider resulting in no rate increases the last three years.
Outsourced information technology to the county’s IT staff, which is free; saved $90,000 in 2009.
Centralized purchasing.
Brought Medicaid waiver-program administration back in-house; saved $125,000 a year.
Dropped many telephone lines; saved $24,000 a year.
Got as many Medicaid- eligible clients as possible onto waiver programs, which reduces cost from local and state revenue from 100 percent to about 28 percent. For nonwaiver clients, the local board absorbs 100 percent of the cost.
Source: Mahoning County Board of Developmental Disabilities