Skagway’s publicly owned Dahl Memorial Clinic is at risk of losing federal grant funding that accounted for approximately 46 percent of its FY2016 operational budget. The grant requires that the Clinic Board have final say in matters regarding its budget, administrative personnel and grant writing. However, the municipality is unwilling to give up final authority on these issues, citing liability as a major concern.

At stake is a federal HRSA (Health Resources & Services Administration) grant, which the clinic has used for operational expenses since 2006. In its first year, the grant was worth a little over $400,000, but that number has grown every year since. In 2016 the clinic received $1.3 million from the grant, and the money was used to fund a long list of health services including a seasonal provider, two nurses, a behavioral health specialist, administration personnel, medical assistants, and subsides for free child dental care, among others.

In 2014, HRSA changed grant requirements. Because the clinic is owned by the Municipality of Skagway, the Borough Assembly, under direction from Borough Manager Scott Hahn and Borough Attorney Bob Blasco, is unwilling to comply with HRSA requirements that demand the clinic have final authority over its own budget, administrative personnel and grant writing.

At the January 11 Health, Education, and Welfare Committee Meeting, representatives of the clinic board, the Borough Assembly, Blasco, and Hahn held a telephone conference with HRSA’s Bureau of Primary Health Care Staff. The primary goal of the meeting was to address why HRSA rejected the most current clinic grant application.

HRSA’s Policy Liaison Susan Hagler said that language in the grant application was unacceptable because the clinic board must have final authority to make fiscal and personnel decisions. The language submitted states that decisions made by the clinic board are “Subject to review and approval by the assembly….”

Borough Assemblyman and Clinic Board Liaison Tim Cochran said, “We want the clinic to run the clinic,” and assured HRSA representatives that the municipality wasn’t trying to “strong-arm” the clinic in any way.

Further questions about why the language failed to meet the required criteria prompted Hagler to reiterate, “The municipality may not have final authority over fiscal and personnel policy.”

Clinic Board Member Jeremy Simmons asked whether additional clarification concerning authority would meet grant criteria. Hagler said, “No,” and asked what would happen if there were a disagreement.

Cochran said that the municipality wanted the clinic to run itself, but also wanted the two entities to be “cooperatively compliant.” Hagler reiterated that any collaboration means there is no compliance, meaning there is no way the grant could be approved.

Blasco said that the municipality’s situation was unique because the clinic was owned publicly, but HRSA Project Officer Karen Ingvoldstad said that there were many other clinics “that are exactly as you described.”

Blasco asked if some of the approved grants could be sent to the municipality for review. HRSA Team Lead Jeanine Baez said they weren’t allowed to share documentation but could supply a contact.

Blasco remained adamant that he believed the current language was correct, even though HRSA representatives repeatedly said it was not. HRSA representatives agreed to look at the application yet again in an effort to offer more feedback, and there was some optimism after the meeting that the language of the grant could be tweaked in some way that would lead to its approval. However, there was no clear indication of what that language might be.

The deadline for the grant is March 15, and the assembly could only approve any changes in language after two readings.

Cochran said he thought the municipality was close to finding acceptable language.

Clinic Board Chair Cory Thole has been on the board since its inception. After the telephone conference, he directed comments toward municipal representatives:  “This isn’t us against you. We care about the clinic. We are not going to do anything that puts you at risk.”

Thole’s comments highlighted his personal frustration with the municipality, which he believes is jeopardizing a grant that is essential to the overall health of the community. Thole said he didn’t think the language “added by Blasco” would be accepted by the HRSA grant committee.

“Either we comply and get the money or choose not to comply and lose the grant money,” he said. “(The Clinic Board’s) goal is to help the community. I find it insulting that Blasco and Hahn don’t trust the Clinic Board. Everything we do goes to the assembly and Blasco for approval.”

Thole added that he was unsure what level of liability the municipality would gain by complying with the requiring language, citing the fact that many other publicly owned entities were in compliance.

Hahn said via telephone that most medical facilities were privately owned and that Skagway represented a “rare public model.” He added that the HRSA wants the clinic to operate independently, but that would make the city liable for the clinic.

“The assembly needs final authority on all decisions that could affect finances,” he said.

Hahn was hopeful that HRSA would “see the light on funding,” but said that other options could be explored, including the possibility of an appeal. These options include restructuring the Clinic Board in some way, or further seeking to alter the language of the grant in a way that has not yet been considered.

Thole said the community could even decide to make the clinic independent. By severing the relationship with the municipality, it would then be easy to comply with the demands of the grant.

Still, many of these possible solutions seem like they would take far longer than the March 15 deadline would allow.

If the problem goes unresolved and clinic loses the $1.3 million grant, Hahn said there was no municipal revenue that could be used to offset the shortfall. In FY2016, the municipality funded $275,860 toward clinic operational expenses, which is approximately 10 percent of the total. The municipality also spends $400,000 a year to pay down the bond on the clinic building.

In regards to the many health services funded by the grant, Hahn said the community would ultimately have to ask, “Are these extra programs something we want to support?”

Thole believes that these services are essential to the overall health of the community. “The (municipality) has always had final say on everything we do. This grant will grow as long as we continue to comply like we always have.”