City, county trust funds down
Published 12:00 pm Wednesday, June 22, 2016
By Rob Sigler and Alyssa Schnugg
Lafayette County will not have a distribution this fiscal year from the county’s trust fund, which dropped below the $20 million value at the end of the fiscal year on March 31.
During the annual report presented to the trust fund’s board of trustees Monday by accountant Eddie Aune of the firm of Watkins, Ward & Stafford, the fund, which came about through the sale of the hospital, had an equity of $19,799,409 at the end of March, which was down $1,341,575 from a year ago when it stood at $21,140,984.
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The trust agreement specifies no distribution shall be made if the full fund balance falls below the $20 million deposit of the fund. On March 31, the fund was $200,591 below the $20 million level. The fund, however, has bounced back since that time and currently stands at $20,295,000.
The Lafayette County Board of Supervisors also took two draws over the last year of $565,000 and $550,000 for road improvement projects. That take-out
combined with a volatile stock market where 23 percent of the trust is currently invested and managed by investment firm Green Square Capital.
Supervisors President Jeff Busby said the fund is currently over the $20 million level, but they will examine its earning potential.
“We want it to grow and would like to see it grow 5 to 6 percent a year,” Busby said. “Obviously it did not do that this year and as a board we are going to take a good long hard look to see what is in the best interest of this county going forward.”
He said the state regulates what type of stocks the board is allowed to buy and the trustees have decided to invest in bonds that are low risk.
“We felt this was the best option in keeping the risk at a minimum by buying high-tech stocks and bonds,” Busby said. “We told Green Square to be conservative with the money and that’s what they’ve done. By doing so, you’re not going to make a whole lot of money when the market goes up, but you’re also not going to lose a whole lot when it goes down.”
Busby said the purpose of the fund is to invest in the future of the county.
“When we are able to make a draw, we have put that money towards roads, which helps everybody. That’s over a million dollars that we’ve taken to put to work for the citizens of this county,” Busby said.
Robert Paine, with the Paine Law Group that assists the trustees with the fund, said he could provide numbers for comparable data to see how other investments are performing before the next meeting of the trustees on July 18.
“We knew there was a chance with any investment we may not get a disbursement,” said Supervisor Mike Roberts. “It’s long term and not a get-rich-quick thing.”
The county and city split the $60 million sale of the hospital to Baptist Memorial Hospital. The county invested $20 million and paid off debt with the remaining $10 million.
Oxford fund down also
While Oxford’s $30 million investment of its share of the Baptist funds has yielded a 4.77 return overall since its inception, it hasn’t been a great year for Oxford’s investment fund either.
The fiscal year for the trust fund runs from April 1 to March 31. On Tuesday, Aune presented the Oxford Reserve and Trust Fund Committee with an end-of-the-year report, which showed the value of the fund as of March 31 was $32,786,054.
The investment is managed by Glenmede investment firm out of Pennsylvania. Local accounting firm Watkins, Ward and Stafford compiles the fund data throughout the year and presents the Oxford Board of Aldermen with the final report.
The final report will go before the aldermen for approval in July.
Since its inception, the fund has earned about $5.4 million, including any withdrawals for payments and the annual 3 percent payout to the city of Oxford that goes into the city’s general fund to help fund a variety of projects.
The fund’s long-term goals, set up by the committee, are capital preservation and real growth after inflation, about 2.5 percent, and the annual 3 percent payoff.
“Long story short, the fund didn’t have a good year,” said Mayor Pat Patterson.
The fund saw about $1 million loss from March 31 in 2015 when the fund was valued at $33.7 million; however, Aune said the economy has stabilized a bit since it turned rocky around September 2015.
“It’s better now than it was at the end of March,” Aune told the commission.
In April, Glenmede reported the value of the fund was back up to $33,170,244, calling it a “significant rebound.”