When the two firms who managed Lowndes County’s hospital trust fund portfolio provided their year-end reports to County Administrator Ralph Billingsley, the information confirmed what Billingsley already knew: For the first time in the five-year history of the investment program, the county will have no dividends to pull from the account.
Each year, the county has the option of withdrawing profits made from the account based on its status as of Dec. 31. For most of the year, it appeared the trust fund investments would provide a healthy profit, as much as $900,000 by mid-year. But a fourth-quarter plunged wiped out those profits, leaving the value of the trust fund roughly $500,000 lower than its corpus (or principle) at the time the county withdrew $1,000,700 for 2017 profits in February.
The county uses the money for capital improvements, such as the recently completed E-911 building.
Billingsley said the corpus of the fund after the withdrawals was set at $32,630,000. As of Dec. 31, 2018, the trust fund’s balance was $32,074,000.
“There’s no way we can make a withdrawal this year,” Billingsley said. “In fact, we would have to earn $556,000 just to get back to where the corpus was earlier this year.”
A miscommunication between Billingsley and board president Harry Sanders suggested the county might still be able to withdraw funds as part of pending legislation to change the valuation date from Dec. 31 to Aug. 31.
Earlier this month, Sanders said the legislation could be retroactive to Aug. 31, 2018, when the funds where $700,000 above the corpus.
Billingsley said that was never part of the request to the Legislature.
“It was never a part of what we were asking for,” he said.
Tuesday, Sanders agreed.
“What we are asking is that they let us change the date so we will have time to have that information before we do our budget in September. As an afterthought, I said it would be nice if they would let us go back retroactively and withdraw some profits, but it’s not part of the legislation.”
Two firms — Renasant Wealth Management and Stephens Capital Management — have been managing the hospital trust fund since 2013, when the Legislature began allowing the county to invest the funds.
Over that five-year period, the county has pulled annual profits ranging for $73,050 in 2016 to $1,009,186 in 2018. Over that span, the county has grown the principle of the fund by $2 million while withdrawing almost $4 million, money earmarked for capital improvement projects.
Not all of the fund is invested in the stock market.
Currently, Stephens Capital has 39 percent of its share of the funds invested in the market and 60 percent in bonds (with 1 percent in cash). Renasant has 48.7 percent in stocks, 41.9 percent in bonds and 9.4 percent in cash.
In February, the two firms will provide an overview on their account and make suggestions for how to invest the funds going forward.
“We really listen to them and do what they recommend,” Billingsley said. “We’re pleased with the job they have done. They’re the experts, not us.”
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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