METROPOLITAN GOVE! LE AND DAVIDSON COUNTY January 28, 2018 Members of Council (On November 28, 2017 | sent a letter to this body that indicated the Department of Finance hed received a request for suzplemental funding from Nashville General Hospital in excess of $19 rillon, The same day, my office submitted to the Hospital Authorily a set of 24 questions folated to that request. We received a partial response from General Hospital on December 18, 2017 and afinal response on January 5, 2018. ‘All correspondence and documentation provided are posted on the Department of Finance website [Aftor reviewing the request submitted by the Hospital Author, subsequent documentation provided by Nashville General Hospital and accounting for the recent announcement regarding the future ofthe facility, [am recommending to the Administration a supplemental aporopriation {otaling $13,231,000. Ths will alow the hospital to maintain current stafing and services ‘through the end of the fiscal year. | want tobe clear that this is very different than previous supplemental appropriations. In FY 2016 and FY 2017, the Metro Council approved supplemental appropriations for the hospital in the amounts of $16 millon and $10 milion respectively. These were paid for out of the undesignated fund balance—the government's equivalent of a savings account. It is our policy to Keep this fund talance at five (5) percent of the overall budget; $26 milion over two years for General Hospital has brought us to this minimum reserve evel Therefore, in order to pay for this supplemental request from General Hospital, | have recommended to the Administration the folowing actions, wlict are Jeliled furl below. impounding of speciic furds, a freeze on hiring and promotions, identification of departmental ‘savings and, as necessary, targeted use of undasignated fund balance. Fist, atthe direction of Mayor Megan Barry, the impoundment of funds will not for the time being, affect Metro employees or existing services provided to the community. Instead, we have targeted our recommencitions to $2,400,000 of proarammatic cuts that—while less than ideal— should be fet minimally Ey the public. Specficaly, | am recommencing that the folowing funds be impounded:1) $50,000 Employee Tuition Reimbursement Pilot Program 2) $350,000 Stomwater Contingency 3) $180,000 Small Business Incentive Fund 4) $150,000 Nashville Construction Readiness Partnership '5) $1,580,000 Housing Incentive Plot Program 8) $150,000 Historic Preservation Grant Program ‘Second, | am recommending that @ minimum of $2 millon be captured through a strict freeze on hing and promotions forall Metro Departments, as well as targeted departmental savings for the remainder of FY 2078, Exemptions from this freeze will be considered on a case-by-case basis, or departmental savings, !have asked the Buaget Office to identi the amount saved by ‘each department in FY 2017 relative to their budget. This will serve as a minimum target for ‘savings in FY 2018. ‘Third, | am recommendirg thatthe remainder ofthe funds necessary for the General Hospital supplemental appropriation come from the undesignated fund balance. Although our goal wil be to minimize this amount (y atleast the $2 milion outined above) the total could be as much as $10,831,000, This would place our undesignated fund balance at 3.85 percent. While that is below our goal of § percent, | can make this recommendation as long as members of council Understand that a prioity of the FY 2019 operating budget must be replenishing the Undesignated fund balance, Members should also be aware that, inthe routine course of business, other Metro departments may have a need for suoplemental appropriations before the end ofthis fiscal year, We are currently assessing this need and our determinations may further impact the reserve fund balance, Therefore we must be proactive in our financial planning effet. Finally, | am recommending that preconsitions be attached to any supplemental funding provided to General Hospital. The details are outined inthe attached legislation, but highlichts Include paying Meharry Medical Colege directly for funds owed by General Hospital as of June 30, 2017; requiring income, cash flow and bank statements, as well as the most recent balance sheets and aging reports on accounts payable/accounts receivable before funds are distributed, and requiing monthly repors tothe Metro Council on all ofthe above {As the Director of Financ it is my responsiblity to oversee the management of our finite pubic resources and to provide you as paliey makers with the information necessary to make informed cisions, While the recommendations | have made to the administration and laid out for you here are not easy, they do protect Metro employees, preserve public services and provide for the continued fiscal stabity of the government ‘Should you have any questions, please feel ree to contact my office directly. Regards, fon upodluact Tala Lomax-O'dneal Director of Finance