Report 2012-042 Recommendation 1 Responses

Report 2012-042: Children's Hospital Program: Fund Disbursements Are Appropriate, but Estimates of Cash Needs Have Been Consistently High (Release Date: July 2012)

Recommendation #1 To: Health Facilities Financing Authority, California

To avoid contributing to the State's financial strain, the authority should limit future bond sales to the level of disbursements it reasonably expects to make during the following six-month period.

1-Year Agency Response

Commercial paper (CP) is now issued instead of upfront general obligation (GO) bond funds. This process allows CHFFA to limit CP sales to the level it reasonably expects to make in two months, exceeding the auditor's recommendation.

Bond funds are later issued to cover actual costs.

The first CP ($10.5 million) was issued at the end of June, 2013.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

Since the Authority's 60 day response, the Authority has not requested any additional bond funds and has continued efforts to reduce its existing cash balance by continuing to make disbursements from its existing cash balance. The Authority agrees to limit future bond sales to the level of disbursements it reasonably expects to make during the following six-month period following the sale, or as otherwise directed by the Department of Finance in its twice-yearly cash needs survey.

California State Auditor's Assessment of 6-Month Status: Pending

The California Health Facilities Financing Authority has not provided documentation to support its assessment. As such, we cannot yet assess the authority's implementation of this recommendation.

60-Day Agency Response

The authority indicates it has not requested additional bond funds. (See 2013-406, p. 89)

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2012-042

Agency responses received after June 2013 are posted verbatim.