In a spirit of compromise the Porter County Foundation voted unanimously Tuesday afternoon to increase the interest it draws on the investment of the money from the sale of the county hospital from 3.25% to 5% for one year.

That will result in approximately $3 million dollars added to the annual budget.

Some members of the council, such as President Mike Brickner, R-at large, and Vice President Red Stone, R-1st, have been talking for months about tapping deeper into the funds whether with a larger percentage of the interest earned, or pulling out a $25 million chunk of the principal.

The foundation is made up of all members of the Porter County Board of Commissioners and the Porter County Council.

A majority vote is required to change the draw on the interest, but a unanimous vote is required to draw on the principal. Capital Cities, the investment advisory firm that manages the foundation money, gave a favorable report on the cash balance prior to the vote.

Amanda Black, principal and chief investment officer with Capital Cities, told the board the balance was $196.9 million as of Monday. That money is managed using a smoothing approach which was put into state law with a bill sponsored by State Rep. Ed Soliday, R-4th, that allows the county to pull out up to 5% of interest earned using an average over the previous 20 quarters. Prior to the law change the county’s 5% was calculated on one calendar day.

The 2024 draw on interest is just over $6 million. “You have very close to the same amount every year rather than something that’s all over the board that you can’t plan for,” said Porter County Commissioner and Foundation Board President Laura Blaney, D-South, of the benefit of smoothing.

She said she had Capital Cities run an analysis after she started hearing the talk of using more foundation dollars to deal with a multitude of big expenses the county is facing, including road repairs, an impending ambulance contract renewal that’s expected to rise considerably, and improvements to IT and cybersecurity.

“Both LaPorte and Lake County have had issues,” she said of cybersecurity, “and we need to make sure we’re protecting ourselves.”

Black gave the board a recap of the foundation’s history, explaining it has had a more conservative approach than state statute allows since its inception mid-2016. Then she showed simulations comparing the current approach of spending 3.25% of interest, spending 5% of interest, and pulling out $25 million in principal.

With a line chart projecting the next 50 years at 2.5% inflation spending 5% resulted in the lowest projected real spending over time, while the current 3.25% approach resulted in the most, and taking out $25 million but maintaining a 3.25% interest draw fell in the middle of projected real spending.

“A 3.25% spending rate results in steadily increasing spending over time,” Black said. “The higher spending rate, 5%, does the opposite.”

“In my opinion, we need some short-term capital,” said Stone. “This is definitely a Band-Aid. I know it’s a Band-Aid until we have new plans.”

“But no matter what you do, that line is going to be lower in the future,” said Board of Commissioners Vice President Barb Regnitz, R-Center, herself a retired investment consultant.

“Absolutely,” Black agreed.

Stone made the motion to increase the interest draw for one year and Brickner seconded it. Former Council President Jeremy Rivas, D-2nd, pointed out that spending on the county’s roads has doubled in the last three to four years.

“The general fund is not in trouble,” he said. “The sky’s not falling in.”

Rivas said he’d also like to look into the foundation investing in real estate, one of the investment categories viewed as “alternative.” “In the past that had been tabled,” Black said of previous foundation boards.

Stone said the body would need longer than its typical 30-minute quarterly meeting if it were going to delve into alternatives, and Porter County Attorney Scott McClure had words of caution.

“It’s a lot more complicated than we’re used to,” he said. “That’s why when it was presented to us (in recent memory) we said, ‘Thank you.’ We have to be mindful of what we are, what we do, how long we stay.”

Shelley Jones is a freelance reporter for the Post-Tribune.