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Transfer of city funds questioned

True endowments usually untouched

Published: Friday, May 17, 2013 1:15 a.m. CDT
Caption
Bob Sisler

MOUNT CARROLL – An endowment fund is typically considered untouchable. Only its interest income can be spent.

This week, however, the Mount Carroll City Council decided it would spend the principal of its decades-old Oak Hill Cemetery endowment fund. It transferred the money to the cemetery's operations and maintenance fund.

Alderman Bob Sisler voted against the transfer, saying he thought it was improper to touch the principal.

Operators of cemeteries typically set up endowment funds to make sure they have a perpetual source of revenue for maintenance in the form of interest income, especially after all the lots are sold and no more money is coming in.

City officials contended the fund was an endowment in name only. They said they had no documention showing it actually was an endowment.

Until the 1980s, a separate city board oversaw the cemetery. Then the city government took direct control.

"There were no documents to show that the endowment fund was restricted," said Ron Coplan, the city's longtime attorney. "We had inquired and were told there were no strings attached."

Nonetheless, the city kept the endowment as a separate fund, labeling it as such. About $55,000 sat in the fund when the council decided to transfer it. A little more than $14,000 was spent on the cemetery's operations and maintenance last fiscal year.

The cemetery fund is one of several that have undergone scrutiny in recent years. Some people question the city's accounting, pointing to fund balances that have gone up and down for no apparent reason.

Sisler, who last month lost his campaign to be elected mayor, said he considered the decision to transfer the funds a broken promise to the endowment's donors.

The other council members, he said, "told themselves it wasn't an endowment fund."

The International Cemetery and Funeral Association has developed principles for endowment funds. It says such funds are designed to ensure that income always will be available for the continued maintenance and upkeep of cemeteries.

"The cemetery authority should not be permitted to withdraw the principal of the endowment care trust fund, but receives the income earned by the principal to offset maintenance expenses," reads the statement of principles.

Alderman Doug Bergren, who voted to transfer the funds, said the city has made little money from the endowment in recent years.

"When you have $50,000 in a fund that is only getting one-half of 1 percent, what are you going to do with the money? It's a real conundrum," he said. "Was it a true endowment fund when the cemetery board had it? As far back as I can remember, the city has always owned up to its responsibility for ownership of the cemetery."

Bergren knows of no immediate maintenance needs at the cemetery.

He said Sisler has done a good job of watching the city's spending.

"He doesn't like borrowing from one fund to pay the city's daily overhead," Bergren said. "Given the present financial circumstances of a lot of small towns around here and with the state late in its payments to cities, you have to show a bit of flexibility."

Many organizations have endowment funds, including the Catholic diocese in Rockford. The church does not spend the main body of the fund, using only the interest income for such purposes as tuition assistance, said Penny Wiegert, diocese spokeswoman.

"We have multiple endowments," she said. "People leave gifts of money from their estates, property, stocks. They want to put that money away for future use of the church."

In Sterling, Self Help Enterprises, a group that helps people with disabilities, has an endowment fund. As with most such funds, the group keeps the principal intact, spending only the interest income, said Carla Haubrich, Self Help's executive director.

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