By VICKI URBANIK

If Porter County officials one day want to spend down the money from the sale of the county hospital rather than just the interest, they’ll have a big obstacle to overcome.

The Porter County Commissioners on Tuesday gave first-reading approval to three ordinances involving the hospital sale money. One of the ordinances cements the position already taken by several county officials: That except for certain liabilities and an ambulance subsidy, the principal from the hospital sale should be preserved in perpetuity, and county officials should only be allowed to spend the interest earned.

To decide otherwise would take a unanimous vote from all three county commissioners and all seven members of the Porter County Council, according to the ordinance.

North Porter County Commissioner John Evans questioned that requirement, noting that even if a majority of commissioners and council members would one day agree to spend down the principal, it would take just one person to block that decision.

But Commissioner President Robert Harper said the requirement is the only sure way to proceed the money in the long run. He said he’s been at council meetings and has seen how easy it can be for up to $1 million or so to be spent quickly by a 4-3 vote.

Similarly, Council President Dan Whitten said he, too, supports the language calling for a unanimous vote before the principal can be tapped. He said some council members have raised a concern about how easily the money could disappear with just a simple majority vote.

The terms of the county hospital sale already stipulate that the principal must be protected for five years, except to pay “trailing liabilities” of the hospital and the $500,000 county-funded subsidy for ambulance service. The ordinance approved Tuesday addresses what happens after that initial five-year period.

The principal from the hospital sale is now estimated at $140 million, while the interest earnings are projected at roughly $6 million a year.

The ordinances approved Tuesday set up three different funds: One for the principal, one for the interest earned, and one to pay out outstanding liabilities, such as any lingering worker compensation claims or payments resulting from lawsuits.

The ordinances stem from an order from the State Board of Accounts, which faulted Porter County for not setting up specific funds for the hospital proceeds. County Attorney Gwenn Rinkenberger announced in October that the commissioners would need to pass ordinances in order to establish the funds, and that the ordinances probably wouldn’t be ready until this month.

Evans made it clear that at no time was the hospital money handled improperly. He commended all the work that went into the ordinances, saying that the work was not a simple process.

It has still not been decided how the county will spend the interest earned, but it’s expected that the decision will be made sometime after the start of the new year.

On Monday, the Porter County Council agreed to seek proposals from investment firms and banks to manage the proceeds. County officials are still taking public input on what should be done with the hospital proceeds; a survey is available online at www.porterco.org

In a separate matter, the commissioners directed one of the attorneys involved in the hospital sale, Timothy McCeath from Hall Render, to complete the process for receipt of a payment involving Medicaid reimbursement.

The payment will end up at $12.7 million, which will be deposited in the hospital proceeds fund and considered part of the principal. The payment is called the Disproportionate Share Hospital payment that was due to the former county hospital stemming from services provided to Medicaid patients in 2005.

Under the DSH program, the federal government reimburses public hospitals for a portion of the costs for caring for the low-income patients. The payment in question totals just over $20 million, but because a one-third match is required, the net income to Porter County will be $12.7 million.

Porter County will still get DSH payments from 2006 and part of this year. Harper estimated that once those payments are received, the hospital principal fund will grow to around $140 million, possibly $150 million.

Posted 12/5/2007