Oktibbeha County supervisors unanimously voted on Monday to create a trust fund for the proceeds of a potential sale of OCH Regional Medical Center.
The move came after a recommendation from Butler Snow attorney Sam Keyes to County Administrator Emily Garrard to create a reserve and trust funded by all or a significant portion of sale proceeds.
“Lowndes County and Coahoma County are examples of counties that did this,” Keyes wrote. “Both boards, according to the representatives I’ve spoken with, are very pleased at the success of this approach. I understand Lafayette County and the City of Oxford (who were joint owners of their hospital) have a similar structure.”
County voters will decide Nov. 7 whether to allow supervisors to sell or lease OCH.
Should a sale go through, supervisors will only be able to use the interest accrued on the principal from the trust fund for county needs. In his email, Keyes advises the county to set guidelines limiting trust expenditures to “very select and limited circumstances.” He advised the county not to put the trust funds in to speculative or risky investments, and to limit projects from trust earnings to only capital projects and “never for operational expenses.”
Board President Orlando Trainer said he’d normally prefer to wait on making such a decision. However, he’d support the move to settle citizen concerns about how OCH sale money would be used.
“If that is a major concern of individuals out there, I’m willing to do what it takes to get this the way it is for the next step,” Trainer said. “I can support that perspective.”
District 1 Supervisor John Montgomery said he thinks the trust was a good move, and that supervisors need to think about what would come after their time on the board, if the sale happens.
“A lot of people, even if you’re for keeping the hospital, they want to see if it did sell, just like a lot of people would like to see that that money would be put to good use and protected from even us, or the future boards,” Montgomery said. “I don’t think anybody’s distrusting of anyone in particular. It’s just they want to see some structure with that money and for it to be used responsibly.”
Success in Lowndes
Lowndes County, which invested $30 million from the 2006 sale of its formerly county-owned hospital to Baptist Memorial Health Care Corporation into a trust fund, has seen success with a trust fund.
Lowndes County Administrator Ralph Billingsley said the county invested the money on Oct. 7, 2013. The county split the money, giving $15 million to Columbus-based Renasant Wealth Management and $15 million to Little Rock, Arkansas-based Stephens Capital Management.
Billingsley said the county, per state legislation, can withdraw up to 3 percent of the trust fund’s total every year as long as that withdrawal doesn’t go into the original $30 million corpus.
In the four years, since, he said, the county has withdrawn $2,915,000 from the trust fund. As of today, the trust fund contains $33,029,000. Lowndes County has, in total, grown the trust fund by $5,944,000 in the four years since investing the money. The growth is a far cry from the bank CDs the county was using before investing, which Billingsley said only generated $51,000 a year.
The money has helped fund major capital projects, such as the recently-completed E-911 center, the county health department and others.
“The nice thing about it is we, in the years as we earn more than three percent, we build the corpus, which belongs to the citizens,” Billingsley said. “We pull the money out for big capital projects. We don’t hire people with or patch roads with it.”
Alex Holloway was formerly a reporter with The Dispatch.
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