VALPARAISO — There has been a lot of discussion and debate the past 10 years about how to spend the $148 million in proceeds from the 2007 sale of the former county-owned hospital.
Some have said the proceeds should go to nonprofits, others wanted it to remain with government and others still wanted to see a direct benefit to taxpayers, said Porter County Councilman Dan Whitten, D-at large.
“My vision was — all the above,” he said.
It was from that approach the county council and board of commissioners set in motion an investment plan expected to generate up to $15 million in interest in 2017, according to County Attorney Scott McClure.
Half the money will be reinvested back into the foundation created to protect the money, per enabling legislation, and the remainder made available for the county to spend, he said.
“This was a whirlwind for us,” Whitten said.
The county had been limited by law to investing the money for no longer than six months at a time, he said.
This resulted in the county making only about 1 percent interest on the money, said County Council President Mike Jessen, R-4th, who serves as chairman of the county’s foundation board.
When the county went to create its own foundation, state lawmakers helped out by approving legislation that greatly expanded the county’s investment options, Whitten said.
County government is now able to invest up to 55 percent of the money in equities, McClure said.
This change is paying off with an annual return of 9.83 percent as of the end of November, McClure said.
Planning for leaner years
The county can keep any interest gained on the money of up to 5 percent annually, which this year is expected to amount to $7.5 million, Whiten said. The enabling legislation says anything beyond that amount in earnings must be invested back with the principle in the foundation.
“It feeds the beast,” he said.
The county plans to spend $4.5 million of the interest money next year, McClure said. The budget calls for spending $1.4 million to cover medical costs for inmates at the jail and $1.1 million for contributions to the Porter County Council on Aging, Opportunity Enterprises and the Family & Youth Services Bureau, he said.
Another $905,000 is going toward county government employee health insurance, $885,000 toward E-911 and $125,000 for costs associated with maintaining the foundation, McClure said.
The county is not spending all available interest money each year, he said. The balance is being set aside with the goal of building two or three times what is needed each year to help cover when the investments are not doing so well, he said.
Whitten said he would also like to keep track of how much is invested back into the principle each year as another option for covering costs during leaner years. Tapping into those foundation funds would be tougher, however, since it requires unanimous support of the voting members of the foundation board, which is made up of the seven council members and three commissioners.
There is an incentive for the county to let the principle grow untouched because it means the 5 percent in interest collected each year will become larger, McClure said.
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