Lowndes County Board of Supervisors discussed at a Wednesday meeting the possibility of using gains from the county’s $30 million-plus trust fund in case the county experiences a financial shortfall near the end of the year.
If they decide such, supervisors would be diverging from the tradition of designating the money solely for capital improvement projects.
The discussion came about after supervisors, who serve as fund trustees, learned from outgoing County Administrator Ralph Billingsley the use of the funds is at their discretion.
The trust fund was established following the sale of Baptist Memorial Hospital-Golden Triangle in 2006. Supervisors invested all $30 million from the fund into stocks and bonds under state law in 2013 (established specifically for the Lowndes County trust fund) and have witnessed the investment grow for most of the past seven years.
By law, supervisors can withdraw up to 3 percent of the fund balance — evaluated Aug. 31 each year — to “improve the county” as long as the withdrawal doesn’t deplete the corpus, or principal. Following the withdrawal, the rest of the balance becomes the new base amount for next year’s calculation.
Supervisors approved Wednesday an annual withdrawal of $1,119,492, the largest withdrawal to date.
The $1.1 million, Billingsley said, can be used to prevent a fiscal shortfall at the end of the year when county funds begin to dry up and tax collections have yet to arrive.
“We are always tight on funds in November, December,” said Billingsley, who officially retired from his position on Thursday. “This would go toward covering whatever that shortfall is.”
According to a legislation signed into law in 2014, the funds “shall be available for appropriation and spending on designated ‘special’ projects or purposes, as determined by the supervisors.” The use of the withdrawn funds each year is at the supervisors’ discretion, meaning they can use it however they see fit, said Sen. Chuck Younger (R-Columbus) after consulting an attorney for the Senate.
There is no written policy at the county level dictating the investment of that money, Billingsley said. But traditionally, supervisors have always invested the withdrawn profit in capital improvement projects, and he still recommends doing so. The county has roughly $1 million in the bank reserved for capital improvement projects, and the $1.1 million this year would grow that fund.
This year’s withdrawal, Billingsley said, could go toward the debt payments on the county’s $2.6 million horse park complex or the sports complex, on which the county pays a $100,000 note each year for roughly eight years.
Some supervisors told The Dispatch they would support the idea of using the withdrawn funds to fill the year-end financial gap and replenish the capital improvement funds later using tax revenue collected in the spring.
The method, said both John Holliman of District 3 and Leroy Brooks of District 5, would allow the county to borrow money from its own bank account for financial shortfalls without paying any interest.
“Instead of borrowing short-term (loans), we can use that money to get us till January and February after the taxes come in,” Holliman said. “Then we put that money in that fund, and we use it for capital improvements.”
District 4 Supervisor Jeff Smith told The Dispatch he thinks reserving the money for a shortfall would also be a good idea.
“Rather than go borrowing money and pay interest on it, that money could be used until the money comes in from the tax returns and allow us to replenish that money back into its original account,” he said. “It makes sense. … I 100 percent support it.”
District 2 Supervisor Trip Hairston, however, said relying on the withdrawal to fill the shortfall would be “irresponsible.”
“You don’t know what that draw could be,” he said. “We may not have $1 million to draw from. You certainly don’t want to have that as an ongoing budget item of revenue you depend on every year.”
Holliman said he thinks the supervisors will decide on an investment plan by Oct. 15.
District 1 Supervisor Harry Sanders did not return The Dispatch’s inquiry about the matter.
Record withdrawal
The growth in this year’s profits, Billingsley said, is due to a robust stock market during the past year and a solid fund balance from last year.
The fund balance as of Aug. 31 was $37.3 million, which represents a 10.6-percent increase from the $34.8 million last year. With $1.1 million withdrawn — the maximum amount supervisors can withdraw this year — the new corpus will be $36.2 million.
The investment, Billingsley said, is worthwhile.
“We have a real nice gain on the investment,” Billingsley said. “It’s been a game changer for us.”
Over the past seven years, Billingsley said, the funds have generated roughly $12 million in profit. Since 2014, supervisors have withdrawn more than $6 million from the trust fund.
“By growing the fund, we can somewhat keep up with inflation,” he said. “And the buying power on (the funds) we can pull out will still be good.”
In previous years, the county withdrew money from the trust fund to improve county-owned buildings, build a new E911 center and renovate the soccer complex in downtown Columbus, The Dispatch reported.
During Wednesday’s meeting, Sanders asked Billingsley if trustees can withdraw the funds six months after the evaluation date — the longest they can wait — instead of right away.
Billingsley, however, advised against it. Withdrawing the $1.1 million and depositing it in the county’s bank account would guarantee 2.83 percent of interest earnings, he said, but without knowing what the market would look like in six months, leaving the funds invested could be risky.
“None of us can judge what the performance is going to be,” he said.
Supes table public defender pay raise, approves funding for Artesia emergency siren
In other business, supervisors tabled a request from Circuit Court Judge Jim Kitchens for a pay raise for his five public defenders.
The last raise for public defenders was in 2010, when their monthly pay rose from $2,744 to $3,248, according to Kitchens’ notes. They received a “cost of living raise” of $104 a month, along with other county employees, in 2017. Their annual salary now sits at $38,976, an amount not including health insurance and benefits.
Kitchens said the pay raise would be “appropriate,” especially considering the public defenders’ workload and their good performance.
“In the old days, (public defenders) didn’t have to do a lot in the lower courts,” he said. “There’s more responsibility on the … public defenders and retail councils to do preliminary hearings and matters like that.”
Supervisors decided to table the discussion until January, citing concerns that the raise would be an unbudgeted item. The county approved its Fiscal Year 2021 budget Sept. 15.
Pushing the issue until next year is because January is the beginning of a new cycle for services such as Medicare, social security and retirement, Sanders told The Dispatch.
In other business, supervisors unanimously voted to commit to a grant match to fund an emergency siren in Artesia, which the town of roughly 700 people direly needs, said Artesia Mayor Jimmy Sanders.
The siren in town was broken a year and a half ago, Jimmy Sanders told The Dispatch. Whenever a storm rolled in, he said, he relied on calls from Emergency Management Services Director Cindy Lawrence.
“Every time something would start up, she would give us a call and we would try to inform the community,” he said.
The grant, issued by the U.S. Department of Agriculture Rural Development and approved last week, would cover a total cost of up to $26,000, said George Crawford of the Golden Triangle Planning and Development District. The federal government will shoulder 75 percent of the cost, and the county will afford the rest. Jimmy Sanders told The Dispatch the estimated total cost of the siren system is roughly $24,000, which means the county is on the hook for roughly $6,000.
Yue Stella Yu was previously a reporter for The Dispatch.
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