No proof, no payback
CCMSD unable to pay back claimed loan from hospital foundation
December 24, 2020
Without proof of what exactly happened, Crook County Medical Services District can’t legally pay back money it was given by the Crook County Hospital Foundation that was allegedly earmarked for use in Hulett.
The exact details of the “loan” are unclear, but it appears the foundation gave funds to the district several years ago, when it was in a bad financial situation. The money may have been earmarked by donors for a clinic in Hulett and to have been a loan, rather than a donation.
At last month’s regular meeting, Trustees Sandy Neiman and Connie Lindmier brought up the topic of paying back this money. Chairman Mark Erickson and Board Attorney Kara Ellsbury, however, felt there were legal constraints preventing the district from doing so – especially without proof that the money was intended as a loan.
At a special meeting on Friday, Neiman addressed the issue again. She asked board members how the district might help the foundation and somehow pay them back.
This prompted a discussion of the need for documented proof of exactly what happened when the money was handed over.
“According to our last meeting, over $200,000 was given to the hospitals that had been originally earmarked to Hulett. I would like to see where that was ever earmarked for Hulett,” said Erickson.
Early in the conversation, Erickson asked for details as to what projects the foundation has funded over the last few years. Neiman listed new windows, an air conditioning unit and new flooring for the hospital building.
Trustee Trish Habeck pointed out, however, that it states in the board’s minutes that the district received two direct donations from members of the community for the windows in 2015. In her opinion, she said, the foundation needs to show the board exactly where the money came from and how much it was before the conversation can continue.
Sandi Kellogg, representing the foundation, confirmed that records of donations do exist. She was unsure about records of earmarking, however, as she was not associated with the foundation at that time.
One of the foundation’s bank accounts was set up specifically for Hulett. Erickson asked to see account balances and also paperwork that states how much money there was supposed to be for Hulett.
Neiman added that additional proof exists in the form of a letter from the board to the foundation, requesting a specific amount of money. It does not, however, show that the money was earmarked because, “At that time, [the board] had no idea.”
Ellsbury, however, informed the board that there may be little point in securing any other records but a loan agreement. In her legal opinion, whether or not the money was earmarked is a moot point.
The moral argument is different to the legal reality, she explained. Whether the donation was taken from money earmarked for Hulett or not, “We cannot just give them that money.”
She explained that the Constitution prevents a governmental entity from making a loan, donating or giving credit to another organization. In order for the district to pay back the money, the foundation would need to produce a loan agreement or promissory note.
From a legal perspective, Ellsbury said, without a document confirming a loan, the money can’t flow back in that direction. “Unfortunately, you guys’ hands are somewhat tied,” she said.