Rural California Speaks Out About IOU’s and The Budget Crisis

The state has issued $588 million worth of IOUs in two weeks to local governments, state suppliers and taxpayers expecting refunds with a total of nearly $2.9 billion expected to be issued by the end of this month. This is more, however, than just phenomenal amounts of paper money for California. This delay in resolving the budget crisis affects rural California’s ability to provide needed services to their communities. In a series of interviews with rural health care providers throughout the state, a similarity was noted in the stresses involved in attempting to provide health and social services for their communities. 

California State Rural Health Association (CSRHA) member Jack Johns, CEO of Community Health Systems, Inc (CHSI) in Riverside, shared some of his concerns over the current budget crisis. “Medi-cal is 35% of my income and I’m worried about making payroll and caring for our patients.” He noted that consistent interruptions with the governor and the legislature’s failure to pass a state budget put a constant hardship on small non-profit community clinics that operate with only a 15-day cash flow on hand. He further stated that for-profit and non-profit organizations are struggling to survive and while some may be able to take a line of credit, many others are still recovering from last year’s budget crisis. 

Gail Nickerson of the California Association of Rural Health Clinics in Roseville confirmed the difficulties that community clinics will have making ends meet. One solution she mentioned might be to build relationships with local bankers hoping they will honor the state’s IOU’s. However, in a recent article in the Sacramento Bee, most big banks are not accepting the state’s IOU’s. According to CSRHA member Ben Cordova of Vida Sana Medical Group, Inc., his local Bank of America confirmed that they would not be accepting them. “It’s a tough situation. 85% of our patients are Medi-cal patients. This is an agricultural area. We care for field workers, with no insurance or under-insured. We are a safety-net provider.” The clinic faces a harsh reality if the budget doesn’t get passed soon and provides funding sufficient for their patients’ population. They will have to decrease both hours and services. “Patients come in, and we know they don’t have the ability to pay, (they) bring in a box of apples, strawberries or vegetables…that’s their way to say, don’t close the door on me.”

The budget crisis has put health care providers under the stress of having to make very difficult decisions. Beth Robey, Director of Colusa DHHS who has been in health care for thirty years, said, “I’ve never seen a budget crisis this significant and this dysfunctional.” She described in detail how most health departments have already had to cut programs over the last two years. They had received the state IOU’s and  “We are waiting to see what else has to be cut.” She further stated that in a rural setting with a small staff, making cuts isn’t that simple. “How do you cut 10% of one person?” Beth went on to suggest that this will be a time for creative answers and partnerships trying to address these challenges to health and social services.  With the budget deficit resolution looming, Beth’s final comment seemed apropos, “The devil is in the details,” because we all wait, unable to move forward in our communities and institutions until the budget crisis is resolved.