Guidance Regarding Financial Reserves
We are specifically concerned about the statement ending the first paragraph:
“Therefore, both applicants for licensure and licensed providers must be able to provide proof, at any time when requested by a representative from the department, that they have sufficient funds for 90 days of operating expenses, whether in cash or a line of credit.”
We agree with the Virginia Network of Private Provider comment that this statement does not reflect the language of the regulation for which this document purports to provide guidance:
12VAC35-105-210 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. The amount needed shall be based on a working budget showing projected revenue and expenses.”
We suggest that the proposed Guidance Document ignores this important phrase—projected revenue, which for non-profit providers is a key factor. As a non-profit, our annual operating budget is based on continuing reliable revenue streams since we cannot afford to maintain 25% of our annual working budget as a surplus or untouched cash reserve while we are simultaneously managing our revenues to meet ongoing and unforeseen needs.
This guidance to sequester funds is an overly restrictive barrier to non-profit agencies, which are partners with DBHDS to meet the needs of citizens with developmental disabilities.
Lynchburg Sheltered Industries also agrees with the comment posted by VNPP that we do not condone providers failing to meet their legal or financial obligations but we are very concerned that a strict application of the rule as interpreted above will cause undue hardship on both large and small providers. We worry that this requirement could even cause some smaller providers to cease operations, at the same time that providers are partnering with DBHDS to increase community services for citizens with developmental disabilities.
Thank you for this opportunity to present our comments.