Issue Date August 2005
Annual Report 2004
The year 2004
was a turning point in the history of Hannah House. For the
third year in a row, we ran a significant deficit,
further reducing our reserve fund. It became obvious something
had to give.
Most significant
contributor to the problem was the lower revenue in our
residential program, attributable to a 74.3% occupancy for
the year and a daily per diem rate that did not pay for our
actual costs.
The Occupancy Catch-22
Like a hospital, we are
paid a daily rate by the state (which itself refers clients to
Hannah House) for each bed that is occupied. If we stay at the
state-mandated 95% occupancy, we receive our full funding. If
we fall below that, we get less funding - even though it costs
as much to keep the house open for four clients as it does for six.
At the same time, we have had the same daily per diem reimbursement
rate from the state since 2002. From then to now, costs for
things such as food, gas, heating oil, all types of insurance,
and just about everything else we need to operate have risen.
Faced with these
constraints, our residential program lost almost $55,000 in
2003 - $74,000 in 2004. The viability and
continued availability of our programs was a major focus for
our Board of Directors as we crafted the next year's budget.
We looked at seven different budget proposals, with the goal of
having a break-even budget for 2005. The Board made the
necessary but unpleasant decision to reduce
staffing in the residential and day care programs by 2.5 FTEs and
to base our revenue on 75% occupancy instead of 95%. It was the first time
in my tenure as Director that we have had staffing cuts.
New Strategies for Fund-Raising
There's only so much a
nonprofit agency can do with a slash-and-burn approach to cost
control - especially in an organization such as Hannah House that
has always had a lean budget with no fat to cut...At some point,
the organization has to begin to affect the income side of the
equation if its services are to survive.
Consequently, the Board
has been focusing on new fund-raising strategies, and this became
the genesis, in 2005, for the most successful fund-raising event
in Hannah House history. (Even though this is our 2004 annual
report, we wanted you to see the results of our 2005
artist-decorated
Adirondack chair auction while they're still hot
news.) The Board also
intends to focus more of its energies on the cultivation of major
private donors in the Upper Valley.
The Reimbursement Battle
Speaking of affecting
the income side of the equation, the Board
and administration of Hannah House have taken on an increasingly
active role, in collaboration with other residential services
providers in New Hampshire, in advocating with the state for
just service reimbursement. Our appeal of our per-diem rate for
the State's fiscal year (July 1 to June 30) 2004 continued
throughout the calendar year - and we are still awaiting the
final ruling as of this writing. Along with six other
residential programs, we also appealed our 2005 rates when we
again received notice we would get the same daily rate for
2005 we've had since 2002.
In both appeals,
the Department of Children, Youth, and Families (DCYF) was
found not to have followed its own rate setting process and
regulations and was ordered to re-calculate new rates for 2004
and 2005 based on providers' actual costs. The recalculated
2005 rate was 24% higher than our current rate.
Unfortunately,
getting the State to deliver financially is proving much harder
than getting an administrative ruling in our favor. The state's
position on this matter has always been that, notwithstanding any
administrative or legal appeal to the contrary, New Hampshire
is not required to make payments from revenues it doesn't have.
The meaning of this double-speak is, of course, that there's a
price to be paid for New Hampshire's inadequate tax base, and
places like Hannah House and the vulnerable people it serves
are the ones who are paying it - every day.
- Randy Walker, Executive Director
What It's
All For
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