URBANA — Beefing up the anemic finances at the cash-strapped Champaign County Nursing Home enters a new phase later this month when the county hopes to do its first-ever issuance of revenue anticipation notes.
County Treasurer Dan Welch on Friday asked 26 local banks to submit bids by Nov. 30 on the notes that will be borrowed against Medicaid payments owed the county by the state of Illinois. The state now owes the nursing home about $1.5 million in late Medicaid payments.
The first issuance of notes, an event that could occur every quarter, would be for $800,985. A resolution adopted by the county board says the interest rate on the notes should be no more than 5 percent.
The county apparently has never issued revenue anticipation notes before, Welch said.
But the nursing home's financial condition has never been this gloomy. As of Sept. 30, it owed various vendors and providers $3.1 million, mostly because of outstanding payments from the federal and state governments. By Dec. 31, the accounts payable could be as high as $4.4 million, according to Michael Scavotto, the nursing home's manager.
And it's not certain the revenue anticipation notes will help the county. Banks, concerned about the state's condition and ability to repay its debts, may take a pass.
"We don't know for sure yet that we will have banks that will loan us the money," County Administrator Deb Busey told the county board Thursday.
Some county board members, both privately and publicly, again have begun to question whether the nursing home can weather this latest financial storm. Board Republicans, in their caucus before Thursday's meeting, briefly discussed proposing a property tax increase referendum to help the facility.
And Stan James, a Rantoul Republican, said the latest spate of borrowing to prop up the nursing home's finances doesn't make sense because of the state's own precarious condition.
"We have to look at this and say, 'Would any of us, anybody in this room, go out and borrow more money to pay what you already owe, knowing that the entity that you're expecting help from is having a hard time paying their bills?'" James asked.
"I do not, in my heart of hearts, believe that borrowing more money to pay money you already owe is the solution," he added.
But 21 of 27 board members voted to proceed with the revenue anticipation notes.
"What we did last night was a Band-Aid for the short term," Champaign Republican Alan Nudo, who also is a member of the nursing home board of directors, said Friday. "We need to start looking more in-depth."
Scavotto told county board members the new borrowing scheme "is your best option."
"I'm not telling you that it's without risk," he said, "but I am telling you that it's your most realistic option for getting short-term working capital into that facility. I will tell you that other county homes are doing the same thing or they're borrowing from the county. And private homes that don't have deep pockets are looking at working capital loans from larger banks."
Under the current financing plan, the nursing home will issue $850,000 in tax anticipation warrants — money that will be repaid next spring and summer when property tax payments are made — plus $800,985 in revenue anticipation notes, although that sum could eventually grow to more than $2 million.
Another $2.35 million is owed the nursing home by the federal government in so-called "intergovernmental transfers."
On top of that, the county board Thursday night renewed a $333,142 loan the county's general fund made to the nursing home in 2008.
"I don't like this," James told his colleagues at the GOP caucus meeting. "I think we're heading down a bad path with this."