Unreasonable expectations of 12VAC35-105-210 for cash reserves
Community Systems, Inc. has provided licensed residential supports on behalf of DBHDS for more than 25 years. We are deeply concerned with the impact of the language and expectation of regulation 12VAC35-105-210 which states “The provider shall document financial arrangements or a line of credit that are adequate to ensure maintenance of ongoing operations for at least 90 days on an ongoing basis. This amount needed shall be based on a working budget showing projected revenue and expenses.”
The regulation is unclear in it intent, oversight and is open to many interpretations. As a provider of services, it is an unreasonable expectation that a non profit provider maintain a reserve of 90 days of operating capital. The funding provided for the residential support services is inadequate to cover the cost of supports, let alone allow an organization to build a reserve. The expectation that a bank would issue a line of credit equal to 90 days operating cash is unrealistic. A nonprofit with a $10 million annual budget would be lucky to have a $250,000 line of credit approved. The expectation that an agency with a $10 million budget could reserve $2.5 million to cover 90 days of services in funding is not unattainable. As an agency that receives 99% of its funding through DBHDS/CMS we would be expected to keep in the bank $2.5 million in case there are no funds to support the programs for 90 days. That would mean $2.5 million would sit in the bank and not provide supports. That would mean the nonprofit agency would be expected to hold $2.5 million in the bank to cover 90 days of costs should the Commonwealth of Virginia fail to pay the agency for services provided. I would think the solution is not a bank account for the provider, but a regulation that states the Commonwealth of VA would pay its providers.
This regulation will provide a hardship, and in the end, will harm the citizens of VA that need the support and care the nonprofit services provider can provide.12