Lowndes County supervisors are keeping a careful eye on the stock market after a volatile October threatens to wipe out the profits gained earlier this year in the county’s $32.5-million hospital trust fund.
“If the market ended in December where it is as of today, we wouldn’t be able to draw out any money,” Board President Harry Sanders said Friday. “I wouldn’t say I’m worried, but I am concerned. A lot can happen between now and Dec. 31.”
Since 2014, when state laws were changed to allow the county to invest the hospital money in the market, the county has withdrawn $3,923,706 in profits while increasing the trust fund’s value by $2 million as the stock market continued its record bull market.
The recent turmoil in the market suggests this year may be a different story, however.
“As of the close of the market yesterday, the fund was about $600,000 below the corpus (the fund’s principal),” County Administrator Ralph Billingsley said Friday.
On Wednesday, the market fell by 608 points as the Dow lost 7.1 percent of its value and the S&P was down 8.9 percent for the month of October, almost wiping out gains for the entire year. A 300-point rally Thursday pushed the market back into a profit, but the market opened 300 points lower Friday morning, again threatening to wipe out the year’s gains.
Since 2014, the county has used profits from the hospital trust fund for capital improvements such as a new E-911 center and several community centers.
This year, the board earmarked two more projects that would be funded by the hospital trust fund profits. The board will execute the contract for the $840,000 purchase of land for a sports complex on Friday. The board will also execute the contract for the $190,000 purchase of the Lipscomb property adjacent to the courthouse that it intends to use for increased parking.
The county will pay $100,000 per year on the sports complex property while paying the entire amount in a lump sum for the Lipscomb property.
“Right now, we have $300,000 in our capital improvement account, so if we aren’t able to draw out any profits from the hospital fund, we’ll have exhausted that account,” Billingsley said.
In September, the supervisors raised property taxes by 2 mills to balance its Fiscal Year 2019 budget.
“The bottom line is if things don’t change, things are going to be pretty tight,” Billingsley said.
By law, supervisors must use the market value of Dec. 31 each year to determine how much money can be withdrawn from the trust fund profits, which is capped at 3 percent and cannot take money from the corpus.
For the supervisors, it’s something they’ve seen before.
In 2016, a fourth-quarter plunge in the market meant the county could withdraw just $73,050 in profits from the trust funds for the year.
Overall, though, the returns have been very good, with the county withdrawing anywhere from $924,000 in 2014 to a high of $1,009,186 this February.
Aware of the volatility of the market, supervisors will ask the Legislature to change the valuation date from Dec. 31 to Aug. 31 each year so they can better calculate those profits as they prepare their budget each year, which is completed in September before the start of the fiscal year on Oct. 1.
Sanders said it’s pointless to worry too much about the status of the trust fund right now.
“I think once we get past the midterms, everything will sort itself out,” Sanders said. “… The economy is in good shape.”
The supervisors will hold a Hospital Trust Fund Trustees meeting on Wednesday morning, following the supervisors’ regular board meeting.
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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