When the Mississippi Legislature opens its 2019 session on Jan. 8, constituents will ask their legislators for a variety of things, both big and small.
And then there is a request by the Lowndes County Board of Supervisors, who will be asking the Legislature to turn back the hands of time.
At stake is as much of $700,000 in hospital trust funds the county could withdraw if the Legislature approves the supervisors’ request to change the valuation date of the fund from Dec. 31 to Aug. 31.
By law, the county can withdraw up to 3 percent of profits from trust investments based on the value of the fund when the stock market closes on Dec. 31 each year. In the five years since the Legislature allowed the county to invest the hospital fund in the market, the county has withdrawn almost $4 million in profits.
But a fourth-quarter slump led to the worst year for the market in a decade, turning what had looked like a healthy profit for the fund into no profit at all, said board president Harry Sanders.
The Dow closed Monday at 23,062, almost 3,000 points lower than it closed on Aug. 31.
County Administrator Ralph Billingsley said the value of the trust fund has slipped from $32,630,000 last Dec. 31 to $31,432,000 as a result of the year-end slump.
“If we had been able to withdraw the money at the end of August, we would have been able to pull out about $700,000,” Billingsley said. “Obviously, that’s not the case now.”
Supervisors had already intended to ask legislators to change the valuation date to Aug. 31 of each year starting this year. But now they are hoping the move can be retroactive to 2018.
“It doesn’t look like we’ll be able to take anything out at all going by the closing on Monday,” Sanders said. “But I say that with one condition. If we can get the Legislature to change the valuation date, we’d be able to base everything on the value of the trust fund on Aug. 31.”
Rep. Jeff Smith said the Legislature rarely enacts laws that are retroactive, but that doesn’t mean it can’t be done.
“In my years in the Legislature, we’ve probably done only about 20 bills that were retroactive,” Smith said. “… We have done it in the past if there’s a good reason. Unless somebody has a problem with it, and I don’t think that would be the case, I’d say making this retroactive is something that could be done.”
The board’s efforts to change the valuation date of the trust fund preceded the market slump.
At its Oct. 1 meeting, the board approved a proposal to ask the Legislature to change the valuation date to Aug. 31.
“Our reason for wanting to change the date was so that we wouldn’t be guessing about it when we did our budget,” Sanders said. “Right now, we have to speculate about what the value of the fund will be when we put together our budget in September. By changing the date to Aug. 31, we would know exactly what we had in the trust fund before we approve the budget on Sept. 15.”
The county’s fiscal year starts on Oct. 1.
Billingsley said that he and Chief Financial Officer Lloyd Price had estimated the profits of the trust fund be $1 million when they submitted their budget recommendation for the fiscal year in September.
“That doesn’t mean that we spent that $1 million. That was just what we estimated we would have available for capital projects, which is what that money is used for,” Billingsley said. “This isn’t a budget shortfall because we didn’t spend it.”
“We have everything covered on what we’ve borrowed for the year,” Sanders added. “But going forward, I don’t know if we can expect to get the kind of money we’ve been getting from the trust fund. At least by changing the date to Aug. 31, we’ll know exactly what we’re dealing with. We’ll be able to budget what we have, not what we think we’re going to have.”
Sanders pointed out that the majority of the trust fund is not invested in the market. Just short of $14 million, or 42.8 percent, while the rest is in bonds and cash.
Not only can the county draw profits and interest from the funds, it can also borrow against the principal.
“It may be that at our next (Trust meeting), we move even more of that to bonds or cash,” Sanders said. “We all know that the stock market wouldn’t go on like it has for the past several years, so we’ll adjust for that if we need to.”
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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