Introducing a New Case Study Series at JPHMP — Ending Business as Usual: The Kane County Health Department in a Worsening Fiscal Climate
by Lloyd F. Novick, Editor-in-Chief
The Journal of Public Health Management & Practice will be publishing a case in business school format with each of our issues in 2017. The case-series is designed to illustrate significant public health events or interventions that can be used as models for professionals or for teaching purposes. These cases and others will be published in a book Twenty Cases in Public Health Policy and Administration, linked to JPHMP by our publisher Wolters Kluwer Health.
The first of these case studies appears in our most recent issue, published March 2017, “Ending Business as Usual: The Kane County Health Department in a Worsening Fiscal Climate” by Paul L. Kuehnert.
The following is an excerpt, which may not be reproduced without the publisher’s express consent:
In 2007-08, the economic downturn in the United States and Illinois was accelerating and significant cuts were made across multiple areas in the Illinois general fund budget, including cuts to public health programming. In 2008, his first full year as ED, Paul Kuehnert grappled with budget cuts and the layoffs of 15 staff. At that time, he began to realize that it was not likely that the economic situation would improve quickly—and so, after this first round of cuts and layoffs, he began engaging with elected county leaders, other community leaders, and his senior management team to prepare for possible scenarios. Later, he would involve public health colleagues in the region and nationally—to develop alternative approaches for what he thought would be a protracted period of diminishing resources.
Indeed, as 2008 unfolded, the situation worsened for every level of government. In 2009, Kuehnert was able to forestall further layoffs by cutting spending in nonpersonnel areas and instituting a hiring freeze. He had a reserve fund equivalent to approximately 120 days of operation. Ominously, state cuts increased and as the year went on, the state began a practice of late payment of obligations to school districts, municipalities, and counties and then to nonprofit and other private contractors.
All of these issues continued into 2010 as the great recession headed toward peak unemployment and mounting home mortgage foreclosures in Illinois and in Kane. In the spring, the state’s delay in making payments worsened cash flow and cash reserves. The legislature deadlocked over the budget and state agencies communicated that significant budget cuts to nonessential services were likely. The Kane County Board, led by fiscal conservatives, was spending through rainy day reserves and continuing the hiring freeze and non-personnel spending cuts. The board was in no position to offer additional fiscal support to the health department in replacement of state funds. Something had to give.
During this same time period, the resources supporting the KCHD were shrinking as the department lost approximately $1 million in revenue over the 3-year period of 2008-2010 and reduced its workforce by more than 20%, from 154 full-time equivalents to 122, through both layoffs and attrition. At this time, the KCHD obtained nearly half its revenue from state grants and nearly half of those funds came from 1 grant source for case management services to Medicaid. Fully one-third of the KCHD revenue stream was focused on providing direct health care services to approximately 6000 families on an individual basis.
The state of Illinois had a record budget deficit of nearly $13 billion and the state comptroller delayed payments to all of the state contractors, nonprofit service providers, school districts, and local health departments with accounts-receivable averaging 154 days at the end of 2010.
Developing Proactive Approaches to the Fiscal Crisis
Kuehnert began discussing the likelihood of further budget cuts by the state with County Board Chair Karen McConnaughay in May. She urged the development of alternatives and continued discussion. Kuehnert called together the department’s leadership team that included the directors of the various divisions of the KCHD.
Three basic approaches emerged to the anticipated state budget cuts and continued delayed payments.
Lloyd F. Novick, MD, MPH is the Founding Editor and Editor-in-Chief of the Journal of Public Health Management and Practice and Professor Emeritus of the Department of Public Health at the Brody School of Medicine, East Carolina University. Follow him on Twitter. [Full Bio]
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