Blue Mountain Health System will see a savings of approximately $1 million at its hospitals with the backing of Carbon County's credit rating.
During the county commissioners' meeting on Thursday, the board approved two ordinances that will refinance $9,065,000 in hospital debt.
Commissioner William O'Gurek, chairman, explained the action taken was to support Blue Mountain Health System's decision to restructure two series 1999 bonds. The bonds will now be replaced with two series 2012 bonds.
"On behalf of the county, we're more than willing to participate in this process," O'Gurek said, noting that the refinancing gives the county less liability because it was the guarantor for the previous series. "It's a win-win for everybody. But most importantly, I think the opportunity to help a main employer and hospital system that's here serving the needs of the people is really what we are most pleased about."
Currently, the health system pays on average 4.93 percent interest on the bonds. With the new series, it will pay 2.77 percent interest.
Peter Edelman of Stevens & Lee in Reading, who was filling in for Jens Damgaard of the Law offices of Rhoads and Sinon of Harrisburg, the bond counsel for the transaction, said that the hospitals chose to refinance their debt because they wanted to take advantage of lower interest rates.
"This action will provide significant savings to the hospitals," he said.
O'Gurek asked if the new series of bonds will mature at the same rate as the current series, which is scheduled to mature in 2019.
Edelman said they will.
"Maturity will not be extended," he said, adding, "This is a benefit to the county because lowering the interest rate, lowers the county's obligation as well."
Drew Harris, president and CEO of Blue Mountain Health System, explained that the savings the hospitals will now see, which is approximately $100,000 a year due to lower debt service requirements, will be put back into the hospitals through improved equipment to provide the newest technology for the patients; and employee raises and health benefits.
"Every dollar made goes right back into the system and back into the community," he said.
In other matters, the board also approved the following motions:
Ÿ Ratify and submit the annual Emergency Management Performance grant report for the federal fiscal year 2012, listing administrative changes for the Carbon County Emergency Management Agency, resulting in reimbursement of a portion of salaries in the amount of $51,395.
Ÿ Approve subgrant 22813 under the Juvenile Accountability Block Grant with the Pennsylvania Commission on Crime and Delinquency in order to continue to fund the community service work clerk position. The project is from April 1, 2012 to March 31, 2013. The award totals $10,000.
Ÿ Approve a proposal from Susquehanna Group Advisors, Inc. of Harrisburg, for financial consulting services for the 2012 fiscal year at a fee not to exceed $71,000.
Ÿ Adopt agreement 2011-028 which establishes a fund balance policy (Standard 54) as adopted by the Governmental Accounting Standards Board.