Morrill Memorial and Harris Library Investment Committee

Minutes of January 14, 2020 Meeting

Present:  Cindy Stableford, Betsy Ruml, Gretchen Rittenhouse, John Hawkins, Rachel Kurland

Minutes of the 5/14/19 meeting were approved.

Rachel provided an update report for the Library Trustees:

1.    The Trustees do not need to take a distribution from the endowment this year.  Despite the septic failure and other unexpected building needs, they were able to cover all expenses and still come out ahead for the year.  Town and individual contributions and great Annual Appeal response all combined to cover this year’s extraordinary expenses without having to sell the Library CDs or draw on endowment cash reserves.

2.    Painting is planned for this year but the Library had funds available for this expense.

3.    The Library has been fortunate to receive some large bequests last year and this year.

Cindy reported for the Friends:

1.    The Friends contributed  $1,000 to the endowment in June.

2.    The Holiday Sale was very successful, raising $5500 for the Library.

3.    Won’t meet again until April.

Report from the Chair (Cindy):

1.    All transfers/changes noted in 5/14 report were done.

2.    Cindy presented the draft of the 2019 Annual Report, which the Committee reviewed and approved.  Cindy will send it to Nellie Pennington.

3.    $2,094.73 will be transferred out to the Library as per restricted funds.

4.    Annual distribution to Library:  Although there is $8,081 available to be transferred per our formula, the Trustees indicate that they do not need it in 2020, so it will be added to previously deferred funds.  The total of deferred funds now stands at $29,713.  Per earlier discussion, there is no need to keep the deferred funds separate from the other endowment investments.

5.    Cindy presented an analysis that showed that endowment performance would still be beating inflation even if all distributions had been made.

Betsy reviewed the portfolio.

1)   Re CD rollovers, Cindy will check with Rachel and Cindy Binzen 2 weeks before the due dates to confirm that the funds held in the CDs will not be needed. If that is the case, we will buy new 1-year CDs.

2)  With regard to the restricted funds, Betsy noted that the Trustees of Public Funds have a ruling from the Probate Court that gives them some additional flexibility with regard to the Treasury Securities required by their Restricted Funds – similar to the endowment’s Restricted Fund requirements.  However, since the endowment’s Restricted Funds are small and the requirements minimal, she recommends continuing with our current plan for ease of calculation.

3)  All asset classes were up this year and the portfolio ended the year up approximately 21.5% higher than YE2018.  This is in line with returns seen in other groups.

4)  The asset allocation is 69% equities, 31% FI at this time.  Recommended that we re-balance back to 65/35 as per our target by moving $14,000 from equity to fixed-income investments.  The Committee approved moving $11K from the Large Cap Index (VLCAX) fund and $3K from the Extended Market Index (VEXAX) fund and putting $7K in the Short-Term Investment Grade (VFSTX) fund and $7K in the Total Bond Index (VBTLX) fund.  We will make no adjustments to the cash balance.  Betsy noted that this will let our international % drift up a bit, which she indicates is desirable.

5)  Betsy reviewed the portfolio x-ray analysis.  After the above-mentioned changes, our equity distribution looks similar to last year and she recommends no changes.

John led a discussion of the merits of moving the endowment funds away from fossil fuel investments. (As an aside, he noted that this AM Blackrock announced that they are moving entirely to sustainable investments.) The Church spent considerable time investigating this issue and moved out of fossil fuel investments in July. John proposes he and Kevin Plunkett review the Library Endowment’s investments before our next Committee meeting. They will present a study with potential strategies for reduction in fossil fuel investment, which the Committee will discuss and, perhaps, move forward from.  John and Kevin will keep in mind that the Committee wants to maintain our relatively hands-off investment in index funds.  Rachel indicated that the Library Board would be interested in this analysis.

The meeting was adjourned. Next meeting is scheduled for Tuesday, May 19, 2020 at 9AM at the Library.

Respectfully Submitted,

Gretchen Rittenhouse

Secretary