Morrill Memorial and Harris Library Investment Committee

Minutes of January 20, 2015 Meeting

Present:  Cindy Stableford, Betsy Ruml, John Hawkins, Gretchen Rittenhouse, Marty Frank

Minutes of October 20, 2014 approved.

Marty provided the Library Board report:

1.     No major projects pending

2.     Despite some big expenditures (insulation, new work station), the sales, annual appeal, Friends’ activities, and grants received helped the Library end the year on target financially

3.     Won’t need to ask for additional money from the Town

4.     There will be some changes in Board membership coming up.  The Board is also proposing a By-law change to remove the 6-year limit on service by Harris Trustees.  The change will be posted as required.

5.     Betsy reported that there are $1,258 in unrestricted Harris Library funds among the Town Funds.  She believes that they could be transferred to the Library endowment.  Marty has discussed this with the Town Clerk and will continue to follow up.

Cindy reported for the Friends of the Morrill Library.  They are planning a meeting in February with former Friends to discuss the history and future of the Friends.

Cindy presented the draft Annual Report of the Investment Committee, which was approved.  She will send to Nelly.

The Committee reviewed and approved the year-end Ordway/Steele, Downer and Swan Fund transfers.

The endowment fund balance (after backing out the restricted funds, which already distribute income to the library) is approaching the $250,000 target after which the endowment income could be partially distributed to the library for operations.  The method for calculating the distribution is somewhat complicated, so the committee discussed modifying it along the lines of the formula used by the Trustees of Public Funds, which calls for distribution of 3% of the average of the last 5 years’ assets.  Betsy provided an analysis that showed that this formula would be easier to use but with very similar results to the current method.  It would also simplify the ongoing calculation of distributable income should the library board decide not to distribute endowment income each year.  This method would require a change in the language of the Operating Guidelines; Cindy will draft new language and bring it to the next committee meeting for review and vote.

 Betsy reported on the endowment fund performance:

1.     Overall up 6.2% for the year.

2.     At 65/35 target. However within the equity sector the mid-cap investment % has grown and she recommended that we re-allocate from the mid-cap funds to the large cap funds.

There followed a discussion about moving the entire endowment investments into index funds, rather than using a combination of index funds and actively managed funds.  Index funds are considered a prudent investment approach for small endowments.  Index funds generally require less time and specific expertise from the community volunteers who oversee the library endowment.  The goal of the trades associated with this change would be to maintain our allocation goals between fixed income and equity investments, and for varied investment types within each sector.  The committee voted to approve this change and decided on an appropriate index fund mix.  Betsy and Cindy will carry out the trades.

The meeting was adjourned.  Next meeting is scheduled for Wednesday, May 13 at 8AM at the Library.

Gretchen Rittenhouse

Secretary