El Camino's accounting was questioned by a Civil Grand Jury Report issued last summer that, while praising the hospital's successful operation, had major concerns when the hospital "intermingled" funds from the tax district and for-profit operations "...to the extent that that one cannot delineate how taxpayer contributions are spent."
And that is the same concern raised by the Local Agency Formation Commission (LAFCO), a county agency that oversees all special districts and has recently been empowered by legislation passed last year to be able to dissolve a special district without a vote of the people.
"If we find that there's a district that isn't needed anymore, we may move for dissolution of that district," said Abe-Koga, a City Council member who also sits on the LAFCO board.
Last week El Camino spokeswoman Chris Ernst disputed that the new law gives the commission the power to dissolve a hospital district without a vote, but members of Assemblyman Rich Gordon's staff, who did not want to be named, told the Voice that there is no question that hospital districts are covered by the legislation and LAFCO staff members said they are planning to look into it further this week.
A factor prominently mentioned in the Grand Jury report was El Camino's purchase of the Los Gatos hospital in 2009, an out-of-district acquisition that cost nearly $100 million. The report said, "There is so little detail and transparency to the audit or to the detailed budget provided that the Grand Jury was unable to see where funds were derived for the purchase of the Community Hospital of Los Gatos in 2009..."
In commenting on the report when it was issued last June, Ernst both defended the hospital's bookkeeping practices, but said the hospital also will give "...due consideration to the findings and recommendations in the report."
Now it will be up to the LAFCO board of directors to decide whether to move toward dissolving the district, or allowing it to squeak by. The agency has taken the unusual step of auditing the district as part of its regular service review that is due in May, which could recommend dissolution of the district.
We believe it would be a mistake to snuff out the district. Certainly the hospital must improve its accounting practices to assure LAFCO and the public that all income from taxpayers is tracked and allocated to non-profit practices. In addition, to meet another criticism of the Grand Jury, the hospital needs to make sure one person or entity has full responsibility for how and where the tax funds are spent. There should be absolutely no intermingling of tax funds and those earned in other ways by the hospital.
However, if LAFCO decides that the hospital district should be dissolved, we urge its members to put the question on the ballot, so taxpayers, not a little-known board of only five members, can make the ultimate decision that could mean the loss of millions of dollars to nonprofit agencies that serve our communities. In this case, the punishment is out of line for the easily correctible bookkeeping errors by El Camino.
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