OKTIBBEHA COUNTY — While initially poised to receive about $30.5 million in net proceeds from the sale of OCH Regional Medical Center, Oktibbeha supervisors are now expecting to pocket between $55 million and $58 million, though they’re no closer to deciding what to do with it.
County Administrator Wayne Carpenter explained the difference in estimated proceeds could be chalked up to a “cash sweep” of hospital assets.
“The hospital had cash sitting in checking accounts and those types of things,” Carpenter told The Dispatch following the board’s regular meeting Monday. “… That’s where the confusion lies. People look at the net sales price, $55 million. They look at the bonds … and that gets you down to $35 million. Where they get lost is, there’s cash sitting on the books, and all that got swept, and that brought you back up to $55, $58 million.”
That amount is still fluid, Carpenter said, with roughly $3.8 million set aside for potential lawsuits and about $1 million set aside to pay health insurance costs.
“We may not spend all that, so some of that may come back,” he said. “Who knows? We may get this huge lawsuit and have to pay it. There’s still a lot of balls in the air right now.”
However, that change has not impacted supervisors’ debate on how to use the proceeds, with proposals so far ranging from dividing some or all of the money among the five supervisor districts for discretionary projects to investing all the money in an endowment.
To further those discussions, Nick Schorr and Lynn Norris, representatives with Madison-based Government Consultants Inc., advised supervisors on Monday the county could earn about $2.6 million annually in interest if they were to invest $55 million into a 30-year U.S. Treasury Bond, which currently sees a 4.8% rate of return.
“I think if you had an investment firm manage these funds, you may make more than that, you may make less than that,” Schorr told the board. “We just used what was the … easiest route, the 30-year treasury, which is generic for government entities. … There’s a plethora of options the county has.”
District 4 Supervisor Pattie Little said she would like to look at “all of the options” available to the board before making a decision and suggested hiring a firm to vet financial institutions that could potentially invest the funds on behalf of the county.
“I think we need to have … a company that everybody can send in their informational proposals (to) … and then they can say, ‘These people do have enough holdings or enough financial backing to where they’re not going to dissolve,’ or ‘This bank is stable and isn’t going to be bought out by somebody else,’ that has just more knowledge than we do that can help vet some of those people out for us to make sure that this is the safest, best place for it to go, Little told the board.
“Because I do feel like this is a huge opportunity for us,” she added. “It can generate a lot of money for us, and it can generate money that we could use now and in the future.”
Immediate needs
While Little and District 1 Supervisor Ben Carver support placing all proceeds into a trust, District 5 Supervisor Joe Williams and District 2 Supervisor Orlando Trainer both want to use at least some of the funds to address immediate needs.
“The point, I believe, is how do we take advantage of some funds now to take care of some immediate needs,” Williams said. “Do we do that by holding out money? Do we do that by (bonding) some money and then let the interest of that money we invest take care of the bonds?”
“My only concern is fair, equitable distribution,” Trainer said later. “… From the beginning, when I was talking about equally dividing, from my aspect, that gives me some resources to try to address some immediate concerns and also look at some long term concerns too, and not get in the way of what you think is your concern in your district for the people that you represent.”
Board President and District 3 Supervisor Marvell Howard said the board is still in the “information gathering stage” of deciding what to do with the proceeds.
“I think the scenario that (Government Consultants) have given us right now is pretty much the ‘Plain Jane’ vanilla safe option,” he said. “… You could go one way and make a lot more, or stay here and be safe and know what you get, or we could take some risk and possibly not. This right here … We’re looking at a safe, good option with a lot of return, good return. But there’s other options, and I think we’ve got time.”
Howard has not publicly tipped his hand on how he would vote on using some or all the proceeds for immediate needs. He did not make himself available to answer that question after Monday’s meeting, and he did not respond to calls and messages seeking comment by press time.
State law limits counties to conservative investments such as certificates of deposits and government-backed bonds. To invest in higher-yield assets, Oktibbeha County is also seeking local and private legislation.
Earlier this year, the board authorized County Administrator Wayne Carpenter and Board Attorney Rob Roberson to begin developing the language and planning for such legislation. The board must approve and finalize the proposal by January for consideration during the next legislative session. If passed, the trust structure could take effect in June, Roberson previously wrote in a text to The Dispatch.
Howard said he hopes the board is prepared to make a decision by its Jan. 5 meeting.
“I’m hoping by the first meeting in January, we’ll come here and say, OK, this is what we’re ready to do based on our research with our attorney and all the other research that’s out there,” he said.
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