HLTH 5033 Module 5 Financial Report and Board Recommendation Example

Before the Federal Money Ends: A Financial Report and Five Recommendations to a County Board of Health for Fiscal 2027

Student Name

American College of Education

HLTH5033: Financial Management in Public Health

Module 5 Assignment

Instructor Name

November 2, 2026

Summary for the Board

The county health department ended fiscal 2025 with revenue slightly above expenditures, but that result hides a problem arriving in fiscal 2027. Two federal awards that support epidemiology and laboratory capacity end that year, removing about $1.4 million in annual revenue. The county levy has been flat in dollars for three years, and personnel costs, about two-thirds of spending, are projected to rise about 3% a year. If nothing changes, the department faces a gap of about $1.9 million in fiscal 2027, while its unassigned fund balance, the only flexible reserve, is about $1.8 million.

The five actions proposed here would close about half of that gap through new revenue and savings, set out a transition plan for the positions funded by the expiring awards, and protect the department's reserve. None of the recommendations reduces a service the community currently uses, and each can begin within the current fiscal year.

How the Gap Is Built

The projection starts from the fiscal 2025 actual results and changes only what is known or likely. On the revenue side, the expiring federal awards remove $1.4 million, other grants are held flat, the levy is held flat pending the county's budget decision, and fees are held at current rates. On the expenditure side, salaries and benefits rise 3% a year from their fiscal 2025 level of $21.0 million, adding about $1.3 million over two years; the positions supported by the expiring awards are still on the payroll unless the board acts; and other costs rise with inflation. The resulting fiscal 2027 gap of about $1.9 million is not a forecast of what will happen but of what would happen with no decisions, which is the point of presenting it now.

The board should note one further risk not included in the projection: state reimbursements that were paid more than 90 days late during fiscal 2025. If that pattern continues, the department's cash would be strained even before the gap appears.

Recommendation 1: Recover Indirect Costs

Two federal pass-through grants have so far carried no charge for the department's indirect costs, even though federal guidance allows recipients without a negotiated rate to charge a de minimis rate of 15% of modified total direct costs (Guidance for Federal Financial Assistance, 2024). Those grants carry about $930,000 a year in eligible direct costs, so claiming the rate would recover about $139,500 a year for administrative services the department already provides. The department should begin claiming the rate on new budget periods immediately and, over the next year, consider negotiating its own rate, which may be higher once all shared costs are documented.

Recommendation 2: Align Fees With Costs Where a Payer Creates the Work

The cost analysis of the food safety program found that permit fees recover about 75% of its cost and that the gaps are concentrated where a particular business creates extra work: re-inspections after serious violations, which carry no fee; plan reviews, which cost about $388 but bring in $150; and temporary event inspections. Adopting a re-inspection fee of about $95, a tiered plan review fee and a modest increase in temporary event fees would raise about $125,000 a year and bring cost recovery to about 85%. Complaint and outbreak investigations should remain funded by the levy, since they protect the public as a whole. The board should also direct a similar cost review of vital records and clinic fees, which have not been examined in six years.

Recommendation 3: Adopt a Reserve Policy and Rebuild It

Fund balance is reported in five classifications, and only the unassigned portion is available for unexpected needs (Governmental Accounting Standards Board, 2009). The board's informal target of 60 days of expenditures has never been adopted as a written policy, and the department is at about three weeks. The board should adopt a written policy setting a minimum unassigned balance of 45 days and a target of 60, requiring a plan to restore the balance whenever it falls below the minimum, and limiting the use of reserves to one-time needs rather than ongoing costs. Rebuilding toward the minimum would require setting aside about $400,000 a year for three years, funded from the indirect cost recovery and fee revenue in the first two recommendations once the fiscal 2027 transition is complete.

Recommendation 4: Plan the Transition of Grant-Funded Positions

The expiring federal awards support nine positions, including epidemiologists, a laboratory scientist and data analysts who built the department's disease surveillance capacity during the pandemic. Simply ending them would lose capacity the department still needs; simply keeping them would consume the reserve within a year. The department should classify each position as essential, desirable or time-limited, using the core public health functions as the test. For essential positions, it should request that the county levy absorb their cost, supported by evidence of their value. Mays and Smith (2011) found that mortality from preventable causes fell as local public health spending increased, with the largest benefit in communities with the fewest resources, which supports treating core surveillance capacity as an investment. Desirable positions should be held vacant as people leave, and time-limited ones should end with the awards, with staff offered priority for other openings. The worst choice would be the default one: letting the money end and deciding afterward.

Recommendation 5: Stage the Mobile Unit Investment

The capital analysis found that buying a mobile health unit would be the least costly option at high use but the most expensive mistake at low use. Given the reserve position, the department should lease a unit for two years at about $117,900 a year, funded partly by allowable state immunization outreach funds, with an option to buy if the unit proves busy enough, roughly 100 days of service or more each year. This preserves the reserve while testing the service. The lease terms should allow early return with limited penalty if the unit sits idle, and monthly reports on days in service and visits per day should come to the board alongside the budget report, so the purchase decision is made on evidence rather than enthusiasm.

What the Recommendations Achieve

Together, indirect cost recovery and fee alignment add about $265,000 a year. The position transition, ending the two time-limited positions with the awards and holding three desirable ones vacant through attrition, avoids about $700,000 in costs. That leaves roughly $935,000, which includes the four essential positions, for the county either to fund through the levy, recognizing the value of core capacity, or to close by further reductions that would affect services. The department should present the board with both paths at its next meeting, with the service consequences of each spelled out, and should report monthly on budget to actual, cash position and grant reimbursement timing until the transition is complete.

References

Governmental Accounting Standards Board. (2009). Statement No. 54: Fund balance reporting and governmental fund type definitions.

Guidance for Federal Financial Assistance, 89 Fed. Reg. 30046 (2024).

Mays, G. P., & Smith, S. A. (2011). Evidence links increases in public health spending to declines in preventable deaths. Health Affairs, 30(8), 1585-1593. https://doi.org/10.1377/hlthaff.2011.0196