If it becomes a nonprofit, Memorial Health System cannot be sold unless voters agree. Any proceeds from a sale or lease of the nonprofit would be returned to the city.
That’s part of the ballot language agreed to by a joint city council-Memorial Board of Trustees task force today. The full council will vote on the ballot language Jan. 25, and voters will get their chance April 4.
The language prevents Memorial’s administration from selling the hospital without a vote of Colorado Springs residents.
The ballot issue says Memorial will become a nonprofit system, independent of city control. It will continue providing charity care to local residents and all assets will be transferred to the nonprofit organization.
The ballot language also said that “all past, present and future debts and liabilities of Memorial Health System” will be assumed by the new nonprofit, and that it will keep its name. Basically, that means the current debt will have to be refinanced. It releases the city from all financial and legal liabilities related to the health care system.
If the ballot initiative passes, Memorial will create a new community foundation, focused on wellness and prevention, and will fund it with an initial $5 million investment. It will also make annual payments to the foundation, but the amount of those payments were not specified.
Mayor Lionel Rivera said the agreement was the first step in getting the issue before the voters.
“We’ll have to tweak the language a little bit,” he said. “We want to make sure – without making it too long – they know exactly what they’re voting on.”
The mayor said that other issues, such as Memorial’s retirement plan, are addressed in a different document, an agreement between Memorial and the city that will also need voter approval.
“Basically, under state law, Memorial employees can’t stay in PERA (Public Employees Retirement Association),” he said. “Memorial will have to create a defined benefit plan, making sure that employees aren’t adversely affected.”
The agreement says some employees – those very close to retirement – might be able to stay in PERA, Rivera said. But others will receive their contributions back, in order to roll them into the new plan, such as a 401(k). Memorial will have to pay a lump sum to PERA as well, though that number isn’t yet known.
“Their actuaries have been working on the amount for some months now,” Rivera said. “That money will cover employees who are fully vested in PERA.”
PERA spokeswoman Katie Kaufmanis said she was unaware whether a figure had been reached yet by actuaries. However, in an email, she said the hospital might be responsible for more than a single lump sum payment. If there is a shortfall in the amount of reserves needed to fully fund benefits of existing recipients, Memorial will have to pay more money at the time the shortfall occurs, she said.
Moving the retirement plan is complicated. It depends on how long an employee has paid into PERA and how long they have until they reach retirement age.
Employees with fewer than five years in PERA must be transferred to the new plan. An employee with more than five years can apply for a retirement benefit, if eligible, or elect to leave the account with PERA and become a vested inactive member, she said.