Office review·August 11, 2021

At this informal conference present were Randy Brown, Executive Director; Michael Beeman, Chief Financial Officer; Pam Kaufmann, attorney; Mark Damon, Certified Public Accountant; Jim Stearman, attorney; Don Allen, Licensee Board Member; Ann Hablitzel, Licensee Board Member; Jeff Davis, Licensee Board Member; Stan Leach, Licensee Board Member, Bill Hendrickson, CDSS Financial Consultant, William Young, Financial Analyst; Paramjit Judge, Financial Analyst; Marina Stanic, Licensing Program Manager; Allison Nakatomi, Manager; and Katie Anderson, Assistant Branch Chief. The informal conference process was explained to the Licensee. During the meeting the following was discussed with Licensee: - unsound financial condition - board accountability (Title 22, Division 6, Chapter 8, Article 4. Operating Requirements, 87205 (a)(b) Accountability of Licensee Governing Body - short-term plan to ensure financial obligations are met - assistance from Foundation - bridge funding - sale of the J1 and J2 houses; expect gross proceeds of approximately $1.6 million - duration of compliance plan monitoring - agreement to cease offering Type A contracts - financial goals to break even or show 12 months positive results from operations prior to selling Type A or Type B continuing care contracts - restrictions put in place until short-term plan is met - possibility of updating Corrective Action Plan Continued on LIC 809C The following was agreed upon: - By August 13, 2021 the Licensee will inform the CCLD of the date CFH will receive report from their consultant, Crown Research and the date any updates to the Corrective Action Plan will be submitted. - Board Meeting scheduled for August 24, 2021 will authorize the sales of J1 and J2 Houses - Board Meeting Minutes will be forwarded to CCLD by COB September 3, 2021. - Draft compliance plan agreement will be submitted by the Department to the Licensee by August 20, 2021 and the parties will meet by August 27, 2021 to finalize the compliance plan. - The meeting with Licensee to review and discuss financial data is tentatively scheduled for August 20, 2021. - The repairs to the J1 house will be complete and the house will be ready to be listed for sale by August 31, 2021. The Licensee will inform the Department by COB August 25, 2021 of the date when J2 house repairs will be completed and the house ready to be listed for sale. - In the event that the facility runs out of cash prior to the sale of the home, the Licensee will have bridge financing pre-approved to meet immediate cash needs. The following items are going to be addressed at the meeting with the Licensee scheduled for August 20, 2021: - Projections for the 12-month period must also include Balance Sheet and Statement of Cash Flows projections. - Benchmarks and measurements of the compliance plan - Other Strategies in CAP not addressed in Amendment to Corrective Action Plan: - Peer Consulting - Added Board Expertise - Management Consultant and Attorneys’ cost An exit interview was conducted and a copy of this report issued to the Licensee.