DOC

December 18, 1998

By Rhonda Harris,2014-05-15 23:39
13 views 0
December 18, 1998

    December 20, 2004

The Board of Trustees

    Spindletop MHMR Services

    PO Box 3846

    Beaumont, Texas 77704-3846

Gentlemen and Mesdames:

    We are pleased to submit herewith the comprehensive annual financial report of Spindletop MHMR Services (hereinafter referred to as the Center) for the fiscal year ended August 31, 2004. This report is required by the Commissioner of the Texas Department of Mental Health and Mental Retardation (TDMHMR) and is prepared by the Center’s Financial Services Department using guidelines issued by TDMHMR. Presentation of objects

    of revenue and expenditure are set forth in our contract with TDMHMR. In the implementation of H.B. 2292, Organization of the Health and Human Services, effective September1, 2004, the powers, duties, programs and activities of TDMHMR were transferred to two successor agencies: the Department of State Health Services (DSHS) relating to mental health services and the Department of Aging and Disability Services relating to mental retardation services.

    Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Center. We believe said data are accurate in all material respects; that they present fairly the financial position and results of operations of the Center as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain an understanding of the Center’s financial activity have been included.

Purpose of the Center

    The Center is a public agency which provides mental health, mental retardation, early childhood intervention, and substance abuse treatment services for residents in Jefferson, Orange, Chambers and Hardin counties. These services are designed for persons who can be treated effectively in their own community and do not require long-term institutional care. To fulfill this objective, the Center seeks to: provide a full range of community alternatives for treatment, offer effective services to formerly institutionalized clients, and establish screening procedures to facilitate appropriate state hospital admissions.

Governing Body

    The Center was established as a result of the Texas Mental Health and Mental Retardation Act of 1965. This Act provided for the creation of local boards of trustees to develop and implement community-based mental health and mental retardation services. The Commissioners Courts of Jefferson, Orange and Chambers Counties established the Center on August 3, 1973. At that time, the Center was known as the MHMR of Southeast Texas until May 1990 when the name changed to Life Resource.

    Hardin County was added as a sponsoring agency on April 13, 1992. On September 1, 2000, Beaumont State Center and the Hardin County Mental Retardation Program, previously operated by the Burke Center in Lufkin, merged with Life Resource to become Spindletop MHMR Services. As of August 31, 2004, the end of its fiscal year, the Board was composed of nine citizens who were appointed to serve two-year terms of office by the four Commissioners Courts.

    The Center submits reports regularly to its sponsoring agencies. The reports include copies of the approved annual budget, personnel salary schedule, audited financial statements, and a management letter. 2

    Members of the Center’s Board of Trustees receive no salary or payment for their work on the Board, except for reimbursement of travel expenses.

Economic and Political Milieu

Spindletop MHMR Services serves an area that is significantly influenced economically by the City of

    Beaumont and Jefferson County. This geographic area has a diverse employment base heavily dominated by

    the state and federal correctional system, the petrochemical industry, a regional medical center, and a public

    university. The local unemployment rate of Jefferson County was 8.7% as of August 2004, a slight reduction

    from the 9.0% of the previous year. Residential and commercial construction which enjoyed an upsurge last

    year tapered down in FY 2004. Fortunately, the employment slack was picked up by a reinvigorated retail

    industry. Recruitment of skilled individuals for professional and paraprofessional positions in the healthcare

    field continues to be a challenge since the Center is frequently unable to compete with the salaries offered by

    the correctional system and the petrochemical industry.

Spindletop MHMR Services is designated as the Mental Health Authority and the Mental Retardation

    Authority for its 4-county service area by TDMHMR. It also certified the Center as a community mental

    health center and designated it as a single portal for admission to state hospitals. The Center is licensed by the

    following state agencies: (1) Texas Commission on Alcohol and Drug Abuse, as a provider of substance abuse

    services; (2) Texas Department of Health, as a crisis stabilization unit administrator; (3) Texas Department of

    Mental Health & Mental Retardation as a Home and Community Services provider; and (4) Texas Department

    of Mental Health & Mental Retardation as an Intermediate Care Facility/Mental Retardation provider. The

    Center is accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).

TDMHMR serves as the Center’s cognizant agency for purposes of the single audit.

Financial Report

The comprehensive annual financial report consists of four sections: introductory, financial, statistical and

    single audit. The introductory section includes this transmittal letter, the Certificate of Achievement for

    Excellence in Financial Reporting, the Center’s organizational chart and a list of principal officials. The financial section includes management discussion and analysis, the government-wide financial statements,

    general-purpose financial statements and the combining and individual fund financial statements and schedules,

    as well as the auditors’ report on the financial statements and schedules, and required supplemental

    information. The statistical section includes selected financial and demographic information, generally

    presented on a multi-year basis. The single audit section includes information related to the annual single audit.

Particular attention is called to the section entitled Management Discussion and Analysis. It provides an

    objective and easily readable analysis of the Center’s financial activities based on currently known facts.

The Center is required to undergo an annual single audit in accordance with the provisions of the Single Audit

    Act of 1984 (as amended) and U.S. Office of Management and Budget Circular A-133, “Audits of States,

    3

Local Governments, and Nonprofit Organization.” Information related to this single audit includes the

    Schedule of Federal and State Awards, Findings and Questioned Costs, and the auditors’ reports on the internal

    control structure and compliance with applicable laws and regulations.

Fiscal Year

    The Center’s fiscal year starts on September 1 of each year and ends on August 31 of the following year, consistent with the fiscal year observed by the State of Texas government.

    Accounting Systems and Budgetary Controls

The management of the Center is responsible for establishing and maintaining an internal control structure

    designed to ensure that the assets of the Center are protected from loss, theft or misuse and to ensure that

    adequate accounting data is compiled to allow for the preparation of financial statements in conformity with

    generally accepted accounting principles. The internal control structure is designed to provide reasonable, but

    not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that (1)

    the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and

    benefits requires estimates and judgments by management.

As a recipient of federal, state and local financial assistance, the Center is also responsible for ensuring that an

    adequate internal control structure is in place to ensure compliance with applicable laws and regulations. This

    internal control structure is subject to periodic evaluation by management.

In addition, the Center maintains budgetary controls. The objective of these budgetary controls is to ensure

    compliance with legal provisions embodied in the annual appropriated budget approved by the Center's

    governing body. Activities of the General Fund are included in the annual appropriated budget. The level of

    budgetary control or the level at which expenditures cannot legally exceed the appropriated amount is

    established at the fund level. Budgetary control is maintained by account at the cost center level through

    monthly budget-to-actual variance reports.

General Center Functions

The following schedule presents a summary of General Fund revenues for the fiscal year ended August 31,

    2004 and the amount and percentage of increases and decreases in relation to prior year revenues:

    IncreasePercent

     Percent(Decrease)Increase

    Revenue Amount of Totalfrom 2003(Decrease)

    County/City $ 357,787 1.20% $ 3,000 0.85%

    Patient Fees & Insurance 237,867 0.79% (31,683)-11.75%

    Investment Income 138,287 0.46% 5,699 4.30%

    Miscellaneous 2,781,311 9.29% (96,573)-3.36%

    Medicare & Medicaid 9,515,153 31.80% 1,416,335 17.49%

    General Revenue 10,551,745 35.26% (3,325,718)-23.96%

    Children’s MH Plan 431,827 1.44% 1,769 0.41%

    In-Home & Family Support 17,141 0.06% (91,305)-84.19%

    New Generation Medications 549,017 1.83% (23,725)-4.14%

    State Revenues 2,945,512 9.84% 59,585 2.06%

    Federal Block Grants 1,120,783 3.75% 38,073 3.52%

    Federal Pass-Through 1,279,112 4.27% (235,011)-15.52%

    Totals$ 100.00%(2,279,554)29,925,541$ -7.08%4

     The areas of significant increase in revenue as compared to fiscal year 2003 are miscellaneous revenue and

    revenue generated from Medicaid and Medicare. Miscellaneous revenue increased as a result of an increase in

receipts of public assistance and sample medications. Medicaid revenues registered a substantial increase due

    to the refinancing of consumers from General Revenue- Mental Retardation dollars to the Home and

    Community-based Services (HCS) Medicaid waiver program. Conversely and for the same reason, general

    revenue reflected a decrease.

Investment income for fiscal year 2004 totaled $138,287 and is higher than the earnings for the previous year

    of $132,588. The increase of interest rates during the later part of the fiscal year contributed to this slight

    improvement.

    General Fund Balance

The fund balance of the General Fund rose by $534,567 or 8% during fiscal year 2004. This is before a prior

    year adjustment which decreased this fund balance by $656,952 and is further discussed in the Notes to the

    Financial Statements. All told, the fund balance as of August 31, 2004 was $6,555,193 which is equivalent to

    81 days of expenditure.

    Cash Management

Cash temporarily idle during the year was invested in money market funds, interest-bearing demand deposit

    accounts, certificates of deposit, mutual funds, US treasury reserves and government reserves. At August 31,

    2004, the Center had $3,337,855 invested in TEXPOOL, a state-sponsored, AAA-rated local government

    investment pool which is sponsored by the Texas Comptroller of Public Accounts and operated under the

    supervision of the Texas Treasury Safekeeping Trust Company. This pool is managed by the Lehman Brothers

    and Federated Investors. In addition, the Center had $34,149 invested in a money market account, $742,207 in

    mutual funds, $195,000 in certificates of deposits, and $262,399 in Federal Agency Discount Notes.

    Furthermore, the Center had $997,357 invested in long-term investments. The available balance in the primary

    depository money market account is swept each evening and invested in overnight U. S. treasury reserves.

    The amount invested at August 31, 2004 was $1,081,195.

State statutes authorize the Center to invest in obligations of the United States or its agencies, direct obligations

    of the State of Texas or the United States or its agencies, prime domestic bankers acceptances, commercial

    paper, SEC-registered no-load money market mutual funds, other obligations which are unconditionally

    guaranteed or insured by the State of Texas or the United States or its agencies and instrumentalities, and

    obligations of states, agencies, countries, cities and other political subdivisions having been rated as to

    investment quality by a nationally recognized investment rating firm and having received a rating of not less

    than A or its equivalent, certificates of deposit, and fully collateralized repurchase agreements. The Center’s

    demand deposits were secured at August 31, 2004, by the Federal Deposit Insurance Corporation and by

    pledged securities held by the Center’s agent in the Center’s name.

Agency Fund

The Agency Fund includes assets totaling $150,907 held for clients use from Social Security where the Center

    serves as payee. Additionally, the fund also holds monies collected during fund raising activities in the

    amount of $16,242. The total assets of the Agency Fund is therefore $167,149 as of August 31, 2004.

Pension Fund

The Board approved the adoption of a Section 401(a) pension fund effective September 1, 1990, which was

    approved by the Internal Revenue Service. On August 31, 2004, the Pension Fund has a balance of $3,970,294

    funded by matching contributions made by eligible employees who contribute at least 3.0% of their gross

    salary to the fund.

    Independent Audit

    5

TDMHMR requires an annual audit of the accounting books, financial records, and transactions of the Center

    by an independent Certified Public Accountant. This requirement includes “single audit” procedures for compliance with general revenue (state appropriated funding) and federal and state grant requirements. The

    Center’s financial statements were audited by Wathen, DeShong & Juncker L.L.P., a firm of licensed certified

    public accountants. The goal of the independent audit was to provide reasonable assurance that the financial

    statements of the Center for the fiscal year ended August 31, 2004 are free of material misstatement. The

    independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the

    financial statements; assessing the accounting principles used and significant estimates made by management;

    and evaluating the overall financial statement presentation. The independent auditor concluded, based upon

    the audit, that there was a reasonable basis for rendering an unqualified opinion that Spindletop MHMR

    Services’ financial statements for the fiscal year ended August 31, 2004, are fairly presented in conformity

    with generally accepted accounting principles (GAAP). The independent auditor’s report is attached as the

    first component of the financial section of this report.

Risk Management

The Center participates in a comprehensive self-funded insurance pool managed by the Texas Council Risk

    Management Fund covering workers’ compensation, liability coverage, property, and vehicle physical damage with an aggressive loss control program. Coverage includes maximum amounts eligible to be paid by the pool

    as discussed in the Notes to the Financial Statements.

    Awards and Accomplishments

The Government Finance Officers’ Association of the United States and Canada (GFOA) awarded a Certificate

    of Achievement for Excellence in Financial Reporting to Spindletop MHMR Services for its Comprehensive

    Annual Financial Report (CAFR) for the fiscal year ended August 31, 2003 as shown on page 7. In order to

    be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently

    organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal

    requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current

    comprehensive annual financial report continues to meet the Certificate of Achievement Program’s

    requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

Acknowledgements

This report could not have been prepared without the competence and dedication of the entire staff of the

    Center’s Financial Services Department. We express our appreciation to all the members of the said

    department for their invaluable contribution to this effort. We also thank the members of the Center’s Board of

    Trustees for their keen interest and unwavering support in planning and monitoring the financial operations of

    the Center reflecting their deep commitment to their community, especially those who are mentally impaired.

Respectively submitted,

_____________________________ _______________________________

    N. Charles Harris, Ph.D. Alex V. Lim, CPA, MBA Chief Executive Officer Chief Financial Officer

    6

Report this document

For any questions or suggestions please email
cust-service@docsford.com