NEW ALBANY — Floyd County government leaders are faced with a problem most of us wish we had — what to do with $75 million? It's a question that doesn't have an easy answer.
However, members of the Floyd County Council and the three Floyd County Commissioners held the first of several planned workshops Tuesday to discuss the investment options available if and when the proposed sale of Floyd Memorial Hospital and Health Services to Baptist Health is approved. Both bodies, as well as the Floyd Memorial Board of Trustees, are expected to vote on the $150 million sale at 5 p.m. on June 28.
Floyd County will receive $75 million at the closing of the sale, on Sept. 30, and $5.1 million a year over a 10-year period. That is the simple part. Now, what to do with it?
Jim Gutting, an attorney with the Indianapolis law firm of Barnes & Thornburg LLP, outlined different investment options county officials will have including putting some of the money in a non-reverting capital fund, investing the money with the Community Foundation of Southern Indiana, or creating a separate foundation to invest the funds.
Due to state statute, if the money is invested into a permanent endowment through the CFSI, the principal cannot be withdrawn, other than the interest amount earned off that principal, Gutting said.
CFSI Executive Director Linda Speed said she would have to study the statute more before agreeing with Gutting, but she said the foundation's board "is very flexible with how they work with donors, and everything they want to do with that fund."
"The funding group sets up the parameters and if they are valid and legal, they [board] will usually agree with them," she said.
While both bodies want to use interest off the principal each year, which is expected to not exceed 5 percent, they want to protect that principal so it will continue to grow for future generations.
"We don't want to make it too easy to get to the money. If we do that we will have no money and no hospital," Commissioner Mark Seabrook said. "I would hate to see it squandered, which can happen if you leave the principal in the hands of politicians."
One of the parameters would be for the council and commissioners to vote unanimously before being able to spend the principal in the case of an emergency or natural disaster.
Speed said the advantage for the county to invest the funds with the CFSI is that the board of directors are community leaders from both Clark and Floyd counties. There would be an administrative and investment fee charged to the county each year.
Commissioner Chuck Freiberger asked Speed if the community foundation decides where to invest the funds and would county leaders be able to provide input. She said through Fourth Street Performance Partners in Covington, Ky., 70 percent of the funds are invested in equities and 30 percent in fixed incomes.
Freiberger also asked if the new-found wealth "would be a negative" toward the county's tax levy. Gutting said the Indiana Department of Local Government Finance would not use the money to lower the levy.
Should the sale be approved on June 28, which is likely, the two bodies will use the three months prior to closing to decide what to do with the money. Some of the funds will likely be used immediately to balance the budget deficit, make some jail repairs and purchase new road department vehicles.
"This is a once in a lifetime event and we don't want to blow it," Seabrook said.