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Maniilaq CEO reaches out for federal IHS funds up front

July 25th, 2014 | By Jillian Rogers Print this article   Email this article  

After a few months on the job, Maniilaq Association CEO Tim Schuerch said the organization is more financially stable now than it was when he started.

However, delays in federal funding are causing headaches when it comes to running the facilities and hiring healthcare workers.

Last week Schuerch took Maniilaq's plight to the House Natural Resources Subcommittee on Indian and Alaska Native Affairs, chaired by Congressman Don Young, to urge them to pass a bill that would provide Indian Health Service funding in advance.

"We depend on federal funds quite a bit and each year, when congress can't agree on an appropriation bill, they'll go on continuing resolutions until they can come to an agreement," Schuerch said.

Meanwhile, those delays affect a large percent of Maniilaq's income, he said.

Maniilaq gets about $40 million each year from the Indian Health Service, about half of the association's $88 million operating budget.

"If congress passed an appropriations bill before Oct. 1, then the money would quickly get processed and we would receive our IHS funding, almost all of it, up front," Schuerch said.

When that happens, the money is invested and Maniilaq earns interest on the sum.

"If we don't get all of the money up front, we are not able to make that interest income and that hurts us financially," he said.

Schuerch also shared with the congress that if Maniilaq doesn't know when funding will come, it produces a significant cashflow problem, which can affect day-to-day operations. In the past, when funding has been delayed, Maniilaq has turned to financial institutions for loans.

"But if you go talk to a bank, and you're taking out a line of credit or a bridge loan to pay for operating costs, they want to know when you're going to pay it back," Schuerch said. "And we don't have a good answer because we just don't know when congress is going to agree on an appropriations bill."

As such, the bank considers the loan high risk and charges a higher interest rate.

"Over time, that can chew away at the financial stability of a company," said Schuerch, adding that Maniilaq has taken out loans in the past while waiting for congress.

But, the CEO assured that Maniilaq is stable and continuing to get stronger.

Earlier this year, the association received a $25 million contract support settlement, which the board decided to invest. The contract settlement money came after a number of tribal organizations were shorted agreed-upon money from the federal government for indirect costs in past years.

The investment plan included taking $10 million and paying down existing debt, while another $10 million went into a 90-day operating reserve, and the final $5 million went into a capital reserve account for critical maintenance.

"The $25 million is not bonus money or extra money, it's money that Maniilaq had been legally entitled to in prior years."

In addition to the $25 million, the association has tightened its belt in many different aspects across the region, Schuerch said.

"We are on track to break even this year," Schuerch said, adding that the organization was about $4 million in the red last year.

"The board was very concerned about that, and if we keep operating in the red, we're not going to be sustainable. But with the efforts of managers controlling costs in their particular department, we are on track to break even — even if you don't include the $25 million."

Maniilaq Association provides health, tribal and social services to about 8,000 people in the Northwest region.

 

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