Faith Community Health System Calls for Refinancing Bond Election May 4
Strategic move to save the local healthcare provider $200,000 a year while allowing more nimble operations.
JACKSBORO, Texas (Feb. 12, 2019) – The Faith Community Health System (FCHS) Board of Directors unanimously approved to move forward with a refinancing bond proposition election during a special session held on Feb. 4. The move will allow the district to refinance debt for better terms and save approximately $200,000 a year in debt service payments.
In a strategic move by the FCHS board, the refinancing will provide more flexibility for the district to continue participating in supplemental state and federal programs while continuing to grow. The proposition will allow the district to pay off the existing debt of $22.5 million and have the opportunity to refinance with more favorable terms. Existing debt is down from approximately $30 million over the last five years, with a combination of general obligation and revenue bonds.
According to Lori McBrayer, Chair of the FCHS Board of Directors, this proposition is simply a normal course of business that will not increase taxes for Jack County residents or add additional funds to existing debt.
A shifting of finances
The district will be reducing the current maintenance and operations tax rate by the amount needed to refinance existing debt.
McBrayer says that in a review of the 2012 tax rate proposal presented at numerous meetings with taxpayers, it was projected that of the 0.3150 tax rate we would set, the district would need approximately 0.1550 for debt service. At the time, the tax receipts of the district were estimated at $4.1 million.
It is projected that refinancing will take approximately 14 cents of the existing rate of 0.3127 to pay for the refinanced debt placing that amount into an interest and sinking (or debt service fund). This means that the new maintenance and operations rate will be approximately 0.1727.
David Spiller, general counsel and community member, for FCHS, echoes McBrayer in that this critical move will not cost taxpayers anything and will not change current tax rates.
“This refinancing of the existing debt by the district, and issuing refunding bonds in their place, will allow the district greater flexibility of the terms of the debt and will not increase taxes or add any new money,” Spiller explains. “This is like you refinancing your home mortgage for better terms. It is the fiscally responsible thing to do.”
Not a new process for Jack County
The refinancing bond proposition is not a new process for the hospital district. In 1990 when the district was first formed, Jack County had a debt that the district absorbed. As a result, the district was issued the same type of bonds in 1991 to refinance the debt.
Due to a change in state legislation, the district must now hold an election for the proposition to allow the refinancing of the current existing debt. This is a routine procedure used frequently by school districts, cities, counties, and special districts all over the state.
McBrayer says that the FCHS board moved for the proposition because it is a practical business decision that will positively impact cashflow, allowing the hospital system to continue growing.
Maintaining fiscal strength amid industry turbulence
Nearly 30 percent of counties in Texas are without access to local healthcare. Also, small and community hospitals across the state continue to see a reduction in programs and services to keep their doors open.
In recent years, as two hospitals, within a 30-mile radius, have closed, and another has discontinued obstetrics, FCHS has embarked on supplemental programs to bring outside revenue to the district.
By operating and generating additional revenues, the district has been able to rely on fewer taxes. Over the past eight years, FCHS has participated in 15 federal, state and private supplemental revenue programs that have brought more than $23 million to the district.
Additional positive revenues have also come from outlying rural health clinics FCHS operates in Bowie and Alvord, as well as the four nursing homes licensed through the health system.
“Jack County has seen much growth and success when it comes to being able to provide the healthcare programs and services the local community expects, needs, and deserves,” McBrayer explains.
Refinancing Bond election set for May 4 in Jacksboro
The bond election is scheduled to take place on May 4 at Faith Community Hospital.
McBrayer encourages anyone needing further information to call and meet with hospital administration on the topic.
“What seemed impossible years ago is now a reality,” McBrayer says. “We have faith that Jack County will continue to be a shining example of what can be achieved in rural healthcare when all options are accessed, and leadership continues to make strategic decisions.”
Community Health System
Founded in 1958, Faith Community Health System (FCHS) provides healthcare services for residents of Jack County. Anchored by Faith Community Hospital, the local healthcare provider offers a wealth of medical services, including in-patient care, minor surgeries, obstetrics, a Level IV 24-hour trauma center and advanced radiology services (including CT & MRI scanning), an outpatient lab, physical therapy, social services, minor surgical services, patient education, 3 rural health clinics and more. FCHS now serves patients from a new $28 million, 87,000-square-foot replacement hospital facility and $2 million, 10,000-square-foot wellness center. For additional information, please visit www.fchtexas.com.