VALPARAISO | Porter County officials are going to have several options if they choose to put proceeds from the sale of the county hospital into a protected endowment, but only one guarantees money winds up back in the county's coffers and under the control of elected officials.
That option calls for setting up an endowment through the nonprofit Porter County Community Foundation, President Barbara Young said.
Distributions from this sort of endowment would go directly back to the county's general fund, she said. If a private foundation or supporting organization is created, a board would be established, with or without elected officials, to decide how distributions from the money are spent.
Porter County Commissioner President John Evans invited members of the County Council last week to attend an Aug. 6 meeting to discuss the potential of placing the hospital proceeds in a protected endowment and use the distributions to address funding challenges.
The foundation already has made a presentation to county officials, who are sitting on $159 million in principal and $11.6 million in interest from the 2007 sale of the county hospital.
While the current arrangement would require the unanimous support of both boards to dip into the larger principal portion of the hospital funds, Evans triggered concern when he suggested the commissioners potentially could gain exclusive control over the funding by approving a new ordinance.
Evans pitched the idea of an endowment not only to begin putting the hospital money to work for the county, but also because it would fulfill the desire by some to prevent all but the interest earned from the endowment from being spent.
Young confirmed any money placed in an endowment will be permanently protected.
An endowment also would allow a bigger variety and potentially more rewarding investments for the funding, she said. County government is limited in where it can put the money and the current returns are not keeping up with inflation.
The Porter County Community Foundation, which oversees more than 200 different funds on behalf of groups such as the YMCA and the Boys & Girls Club, invests in mutual funds and earned 13.72 percent last year, 8.32 and 2.49 percent annualized over three and five years respectively, and 4.48 percent since its inception. This collective approach helps participants by sharing in the benefits of a larger investment and avoiding repeated costs.
Distributions, which is the amount the county would receive back to spend each year, is kept at 5 percent of the five-year average return on the collected investment, Young said. This approach has allowed a 5 percent return during years when the investment lost money.
The foundation currently handles $32 million in investments, which means the county stands to be its single largest client.
The foundation was established in 1996 through a grant from the Lily Endowment.