CCMSD discusses problematic donation

Does Crook County Medical Services District (CCMSD) have an obligation to pay back money that was donated to shore up its finances during a difficult time? The Board of Trustees were unable to reach a consensus on this issue, which centers around a contribution from the Crook County Hospital Foundation (CCHF) that was made a number of years ago.

The problem, explained Trustee Connie Lindmier, is that the foundation earmarked $345,000 that was collected through public donations for the Hulett Clinic. Today, as the clinic enters construction, she said, the foundation is aiming to raise as much capital as possible to reduce the size of the loan that will be needed to cover the outstanding amount.

However, only $100,000 remains of the earmarked fund. The rest was given to CCMSD during a time of financial hardship; Lindmier stated that she believes some of it was used for payroll.

“We asked to borrow that,” agreed Trustee Sandy Neiman, who was serving on the board at the time. She later confirmed that, at the time the money was accepted, the district was unaware it had been earmarked, stating, “We didn’t know that money was not designated for the hospital.”

Lindmier commented that, “It’s a foundation issue, but it’s also an issue for us,” because donors will likely not be happy to hear that their money was not used for the exact purpose they donated it for.

After clarifying that the money was given not through a promissory note but “an understanding,” Lindmier said that this is a moral and public relations issue, rather than a legal one. Board attorney Kara Ellsbury agreed.

“It could be kind of damaging if we don’t do something to help,” said Lindmier, later adding, “It’s putting the foundation [going] forward in a difficult position.”

However, Chairman Mark Erickson pointed out that the issue is not as cut and dried as it might appear. The district is not to blame for the actions of the foundation, he said, and cannot be held at fault for accepting a donation from a charitable organization.

“I hate to say it but…that’s not the district’s fault,” he comment. His reasoning was that CCMSD was the recipient of a donation and could not have been expected to know or take responsibility for the fact that the money had been earmarked for something else.

He questioned, why would the board have asked if the money was free to be used?

Erickson also noted that, because the money was not given as a loan, it cannot be simply paid back. Especially as a potential renter of the new clinic, he said, it’s unclear whether the district could legally donate money to the foundation.

“I don’t know that we can make a donation,” confirmed Ellsbury. She pointed out various legal sticking points, such as that she is unsure the foundation could show the money had been earmarked because it presides over numerous funds.

Additionally, at the time the donation was made, the foundation existed under the umbrella of the district. That structure has since changed, with the two entities now entirely separate.

To illustrate how this complicates the problem, Erickson presented the scenario of the district deciding it did not want to rent space at the new clinic. The foundation would be within its rights to rent that space to another healthcare entity, he said, and by doing so could actually become CCMSD’s competitor.

Lindmier and Neiman continued to express concern over that relationship between the entities in the future. “To keep up the favorable relationship, what can we do legally?” Neiman asked, while Lindmier expressed a desire to make sure relations are positive because Hulett is as much a part of the district as the rest of the county.

“In a way, that’s all a moot point,” said Lindmier said of the sticking points that had been discussed, stating her belief that this is an issue about repairing public relations and fulfilling moral obligations.

“Is there any way that as a board and as a district we can work with them?” she asked, noting that the foundation has not made any demands on this issue and is not insisting it be paid back.

Ellsbury stated that she would need to research further. Not only was she unsure that it would be legally possible for the district to make a donation towards the clinic, she expressed doubt that the district could purchase something for it such as an x-ray machine, as the district would need to own it, and said the district can’t pay for fixed upgrades without the title to the land.

Ellsbury suggested that the best path forward will be to “sit down and talk it out.” The board agreed with Trustee Ed Ray’s observation that the foundation is an asset and the district’s relationship with the public is important.

In the meantime, CEO Micki Lyons informed the board that a cost report has now been completed to discover what the district will be able to pay to lease space in the clinic, so a meeting can be scheduled with the foundation. That meeting will be used to further explore how the two entities can work together in the future.