§ 36-1-14-5 — Foundation and trust for county hospital sale proceeds

Indiana § 36-1-14-5

• Jurisdiction: Indiana
• Title 36: LOCAL GOVERNMENT
• Art. 1: GENERAL PROVISIONS
• Ch. 14: Donations

Text

(a) This section applies only to a county that
meets the following:
(1) The county sells a county hospital before January 1, 2017.
(2) The county council and county executive of the county adopt
ordinances under this section to establish a charitable nonprofit
foundation after June 30, 2018.
(b) As used in this section, "board" means the board of trustees of
a foundation established under subsection (f).
(c) As used in this section, "foundation" means a charitable
nonprofit foundation established under subsection (d).
(d) A county council and a county executive may, by adopting
substantially similar ordinances, establish a charitable nonprofit
foundation to hold some or all of the proceeds of the sale of a county
hospital in trust for the benefit of the county.
(e) Nothing in subsection (d) shall be construed as superseding,
replacing, or modifying any previously adopted ordinance or agreement
that effectuates:
(1) monetary disbursements from the previously executed asset
purchase agreement; and
(2) distributions from the previously executed asset purchase
agreement;
to an Indiana nonprofit corporation.
(f) If a foundation is established under this section, the board of
trustees of the foundation consists of the following five (5) members:
(1) One (1) member of the county council, appointed by the
president of the county council.
(2) One (1) member of the county executive, appointed by the
president of the county executive.
(3) One (1) individual who has at least five (5) years of
experience as a certified public accountant, a financial adviser, a
banker, or an investment manager, appointed by the president of
the county council.
(4) One (1) individual who has at least five (5) years of
experience as a certified public accountant, a financial adviser, a
banker, or an investment manager, appointed by the president of
the county executive.
(5) The county treasurer.
A member who serves on the board under this subsection is not entitled
to compensation for service as a board member. Subject to the approval
of the policy by the county council and the county executive, the board
may establish a policy to reimburse a member of the board for the
member's travel expenses and other expenses actually incurred in
connection with the member's duties.
(g) The county treasurer shall serve as the chairperson of the board.
(h) The board of a foundation established under this section shall
contract with a financial institution eligible to receive public funds of
a political subdivision under IC 5-13-8-1 to assist the board in its
investment program.
(i) The county council and the county executive shall do the
following:
(1) Formulate an investment policy that ensures that money held
by the foundation is invested in accordance with IC 30-2-12.
(2) Establish a policy concerning distributions of income and
principal from the foundation.
A policy concerning distributions of income and principal that is
established under subdivision (2) must specify that, except as provided
in subsection (j)(6), the board may not expend or transfer money from
the principal amount of the donation to the foundation.
(j) The following apply if a foundation is established under this
section:
(1) The county council and the county executive shall determine:
(A) the amount of the proceeds from the sale of the county
hospital that shall be transferred by the county fiscal officer to
the foundation; and
(B) the amount of excess money received by the county from
the annual rate of spending distributed by the foundation that
shall be transferred by the county fiscal officer to the
foundation, if any.
(2) The principal amount of the donation to the foundation
consists of the following:
(A) The amounts transferred to the foundation under
subdivision (1).
(B) Any donations, gifts, or other money received from any
private source.
(C) Any investment income that is:
(i) earned on the principal of the donation; and
(ii) added to the principal of the donation as provided in
subdivision (3).
(3) To the extent that investment income earned on the principal
amount of the donation during a calendar year exceeds five
percent (5%) of the amount of the principal at the beginning of
the calendar year, that excess investment income shall, for
purposes of this section, be added to and be considered a part of
the principal amount of the donation.
(4) The county council and county executive shall establish a
policy to set the annual rate of spending from the foundation. The
rate of spending established by the county council and county
executive may not exceed five percent (5%) of the principal
amount of the donation calculated on January 1 of each year. The
county council and county executive may change the annual rate
of spending by a majority vote of the members of the county
council and a majority vote of the members of the county
executive. Any principal that is disbursed from the foundation to
the county is not subject to the procedures to access the principal
amount of the donation described in subdivision (6).
(5) The county council and county executive may not access the
principal amount of the donation in the first five (5) years from
the date the foundation is established under this section.
Beginning after the fifth year from the date the foundation is
established under this section, the county council and county
executive may access the principal amount of the donation in
accordance with subdivision (6).
(6) This subdivision does not apply to an expenditure or transfer
of money that is part of the principal amount of the donation that
is used to meet the annual rate of spending and does not exceed
the annual rate of spending established under subdivision (4). The
county council and county executive may approve an expenditure
or transfer of any money that is part of the principal amount of the
donation in accordance with the following:
(A) The county council and county executive may access the
lesser of ten percent (10%) of the three (3) year average balance
or two million dollars ($2,000,000) from the principal amount
of the donation as follows:
(i) A vote of five (5) of the seven (7) members of the county
council and a majority vote of the county executive at a joint
meeting of the county council and the county executive must
vote in favor of accessing the principal amount of the
donation.
(ii) A vote under item (i) to access the principal amount of
the donation may occur not more than one (1) time per year.
(iii) The three (3) year average balance is based on the
opening balance of the principal amount of the donation on
the first day of the month of each of the thirty-six (36) months
immediately preceding the joint meeting of the county
council and the county executive described in item (i).
(B) If the county council and county executive wish to access
an amount from the principal amount of the donation that is
more than the amount available under clause (A) but not more
than fifty percent (50%) of the principal amount of the
donation, the board shall proceed as follows:
(i) Five (5) of the seven (7) members of the county council
and a majority vote of the county executive at a joint meeting
of the county council and the county executive must vote in
favor of accessing the principal amount of the donation. The
votes of the county council and the county executive at the
joint meeting must occur on two (2) occasions as provided in
item (ii).
(ii) The votes described in item (i) must occur on two (2)
occasions that are at least one (1) year apart but not more
than two (2) years apart.
(iii) The votes described in item (i) must be based on
identical language in an ordinance that sets forth the
approved use of the funds accessed from the principal amount
of the donation.
If the language in an ordinance under this clause is different
from the language used in the first vote, the process to vote on
accessing the principal amount of the donation must start over.
The process to access the principal amount of the donation
described in this clause may be used only once in any five (5)
year period after the expiration of the five (5) year period in
which the principal amount may not be accessed under
subdivision (5).
(C) To compute the five (5) year period described in clause (B),
the period begins from the date on which the second vote to
access the principal amount of the donation occurs.
(7) The foundation must be audited annually by an independent
third party auditor.
(8) The board must meet at least quarterly to receive a quarterly
compliance and performance update from the investment adviser.
(k) A unit located in a county to which this section applies may
enter into an interlocal agreement under IC 36-1-7 with the county
council, the county executive, and the board to invest funds obtained
by the unit from the sale of a capital asset into the foundation
established under this section. An interlocal agreement entered into
under this subsection must contain the following:
(1) Funds transferred to the foundation from the sale of a capital
asset under this subsection must be held in a separate account
within the foundation and are not subject to the requirements of
accessing principal and income established in this section.
(2) A policy concerning distributions of income and principal
from the unit's account within the foundation.
The department of local government finance may not reduce the actual
or maximum permissible property tax levy under IC 6-1.1-18.5 or any
other law of a unit that enters into an interlocal agreement under this
subsection on account of money transferred into or expended from a
foundation established under this section.
(l) Notwithstanding any provision to the contrary, in order to fulfill
the purposes for which it was created and exists, the board shall
establish one (1) or more separate accounts within the foundation in
which funds under subsection (j)(2) shall be held, all upon request and
direction of the county council and county executive. All of the
provisions and requirements for accessing principal and income under
this section shall also apply to any such separate accounts established
within the foundation under this subsection.
(m) Subject to subsection (j)(5), money from the principal amount
of the donation may be used for any legal or corporate purpose of the
county, including the pledge of money to pay bonds, leases, or other
obligations under IC 5-1-14-4. Money from the principal amount of the
donation that is expended or transferred under subsection (j)(6) may be
used to pay bonds issued by the county. The county council and the
county executive may vote once under subsection (j)(6) to expend or
transfer money from the principal amount of the donation to pay
interest on bonds issued by the county.
(n) The department of local government finance may not reduce the
county's actual or maximum permissible property tax levy under IC 6-1.1-18.5 or any other law on account of money deposited into or
expended from a foundation established under this section.

Legislative History

As added by P.L.183-2018, SEC.1. Amended by P.L.40-2021, SEC.2.