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County Boards of Health
 
Entity Determination in Accordance with GASB Statement 14
 
Prepared by Georgia Department of Audits and Accounts
 

Entity:  County Boards of Health

A County Board of Health should be reported as a discretely presented component unit in the county's financial statements because the entity is legally separate, the primary government appoints a voting majority of the entity's board, the primary government is able to impose its will on the entity, the entity does not provide services entirely or almost entirely to the primary government, and in most case, the entity and the primary government do not have boards that are substantively the same.

Basis for Conclusion

1.  Is the entity legally separate?
 
An organization has separate legal standing if it is created as a body corporate or a body corporate and politic, or if it otherwise possesses the corporate powers that would distinguish it as being legally separate from the primary government.  Generally, corporate powers give an organization the capacity to have a name; the right to sue and be sued in its own name without recourse to a state or local governmental unit; and the right to buy, sell, lease, and mortgage property in its own name.
 
County boards of health have their own name.  They also have been sued in their own name, although a review of cases does not give a clear indication as to whether the county was monetarily liable for judgements against the board.  Georgia statutes are silent with regard to buying, selling, leasing and mortgaging real property.  However, the county boards of health do have the authority to contract for goods and services in their own name.  Although the language of the statute creating county boards of health is somewhat vague, evidence seems to indicate that they are legally separate.

CONCLUSION:

 County Boards of Health are legally separate.
 
2.  Does the primary government appoint a voting majority of the entity's board?
 
If a primary government appoints a simple majority of the organization's governing board, it usually has a voting majority unless financial decisions require the approval of more than a simple majority.  The primary government's appointment authority should be substantive.   In most instances, legal provisions for appointment of an organization's officials also provide for continuing appointment authority.  However, in the absence of continuing appointment authority, the ability of a primary government to unilaterally abolish an organization also provides the basis for ongoing accountability.
 
Since the county board of health statute does not require approval of more than a simple majority for financial decisions, counties appoint a voting majority of the board’s governing body.  The seven member county board is composed of the following:
 
The chief executive officer of the governing authority of the county; Three members appointed by the governing authority of the county; The chief executive officer of the governing authority of the county's largest municipality; One member appointed by the governing authority of the county's largest municipality; The county superintendent of schools.

CONCLUSION:

 County appoints a voting majority of the entity's board.
 
3.  Is the primary government able to impose its will on the entity?
 
A primary government has the ability to impose its will on an organization if it can significantly influence the programs, projects, activities, or level of services performed or provided by the organization.  The existence of any one of the following conditions clearly indicates that a primary government has the ability to impose its will on an organization:
a.  the ability to remove appointed members of the organization's governing board at will;
b.  the ability to modify or approve the budget of the organization;
c.  the ability to modify or approve rate or fee changes affecting revenues;
d.  the ability to veto, overrule, or modify the decisions (other than those in b and c) of the organization's governing body;
e.  the ability to appoint, hire, reassign, or dismiss those persons responsible for the day-to-day operations (management) of the organization.
The county board of health statute addresses the financing of expenses by requiring that “(t)he expenditures anticipated, after applying credits, shall be certified by the county board of health, with a copy of the budget, to the taxing authority of the county, which may fix and levy a tax rate sufficient to raise such amount ... providing the taxing authority of the county deems the budgetreasonable.  If, however, the taxing authority of the county shall deem the budget unreasonable, it shall promptly return the budget to the county board of health with its objections attached thereto for the purpose of resubmission.”  In addition, state law authorizes the county governing authority to approve environmental health service fees.

CONCLUSION:

 County is able to impose its will on the entity.
 
Based on the above conclusions, current statutes and the entity determination criteria of GASB Statement 14, county boards of health should be reported as component units of the county governments in most instances.  State law contains provisions for counties of a defined population size which would result in a different conclusion when applying the GASB criteria.  The remaining issue concerns whether to report the board of health as a blended component unit or by discrete presentation in the county’s financial statements.  GASB 14 indicates that a component unit should be included in the reporting entity financial statements using the blending method when:
*  the component unit’s governing body is substantively the same as the governing body of the primary government;
*  the component unit provides services entirely, or almost entirely to the primary government or otherwise exclusively, or almost exclusively, benefits the primary government even though it does not provide the services directly to it.
County boards of health are typically composed of different members than the members of the county board of commissioners.  Services of the county health department are provided to the citizenry of the county, rather than to the county government.  Therefore, it would be appropriate to present the county boards of health as discretely presented component units within the financial report of their respective counties.