MM&HL Investment Committee minutes 1/10/17
Morrill Memorial and Harris Library Investment Committee
Minutes of January 10, 2017 Meeting
Present: Cindy Stableford, Betsy Ruml, John Hawkins, Gretchen Rittenhouse
Absent: Rachel Kurland
Minutes of May 17, 2016 approved.
Cindy reported for the Friends:
1. The Friends of the Library made a $1,000 annual contribution to the endowment. Cindy reported that the Friends have donated $5,300 to the endowment since 2011.
2. Trustees donated $200.
3. Volunteer update – Bethany Cole and Anni Pretorius have stepped down from the Friends; Kemba Russell and Mary Newman are new members.
4. The Friends have $17,341 in their fund.
5. The Holiday Sale brought in just under $6,000, netting about $4,750.
6. In 2016 the Friends donated approximately $11,500 to the Library: $3,000 from the July book sale, $4,750 from the Holiday Sale and $3,750 from its account to support various Library programs and offerings.
Report from the Chair (Cindy):
1. The change in the Vanguard Money Market account is complete – all funds transferred to VMFXX.
2. Market value up almost $20,000 to $270,758.90 on 12/31/16.
3. Transfers from Restricted Funds: Swan $92.66; Downer $92.66; Ordway/Steel $879.78.
4. Last year the Town identified a $1,000 bequest from the Mattison family that was being held by the Town for the benefit of the Library. These funds were moved to the Ordway/Steele restricted fund. The Committee recommends a change to the Endowment Operating Guidelines that renames this fund the “Ordway/Steele/Mattison Fund” and re-sets the base principal amount from $7,000 to $8,000. Cindy will make the recommendation to the Trustees for review.
5. The Endowment closed the year with an unrestricted balance of $251,694, which is over $250,000 therefore some of the endowment funds may be distributed for use by the Library. Per guidelines, 3% of the 5 year rolling average ($224,287) is available: $6,729. Cindy will inform the Trustees that these funds are available if the Trustees choose to use them.
6. Issue: If the Trustees don’t use the available funds each year, do we have to keep the accumulated amount in cash (or cash equivalent) within the Endowment? John suggested that the Library might be eligible for a Line of Credit that would provide immediate cash to the Trustees and could be paid back as investments were liquidated in a prudent fashion. He will look into the particulars. Cindy will also follow up regarding how the unused distributions must be treated within the overall Endowment balance.
Betsy reviewed the portfolio.
1) The overall balance is up 8.16% from the end of 2015, and up 5.3% from the May meeting. Increases across the board.
2) Currently 67% equity/33% FI. Betsy suggested re-balancing to our target of 65/35 and presented a spreadsheet that would do that, as well as re-balance our investments with several categories and bring our cash position to the targeted $10,000. Proposed actions:
i) Make required sweep from restricted funds to Library operations;
ii) Sell $2,850 NAESX (small cap)
iii) Sell $1,300 VTIAX (int’l)
iv) Buy $3,600 VBTLX (bond)
v) Buy $2,900 VLCAX (large cap)
Approved.
Addendum:
After the meeting, Cindy found an error in the specific trades recommended on the rebalancing spreadsheet that the committee had reviewed. In order to adhere to the committee's desired allocation goal of 65/35, it was necessary to eliminate the purchase of more of the Large Cap Index (VLCAX) and increase the purchase of the Bond Index (VBTLX). In addition, Cindy learned that Vanguard had already converted our Small Cap Index holding from the Investor class (NAESX) to the Admiral class (VSMAX). After consulting with Betsy, the transactions were amended and executed as follows:
1) make required sweep from restricted funds to Library operations
2) Sell $2850 VSMAX (small cap)
3) Sell 1300 VTIAX (int'l)
4) Buy $5650 VBTLX (bond)
3) The committee continued our discussion from the previous meeting re whether to change our 65/35 allocation model to 70/30, which would increase our equity target. Concluded that we remain comfortable with the current allocation plan and do not recommend a change at this time.
The meeting was adjourned. Next meeting is scheduled for Tuesday, May 23, 2017 at 9AM at the Library.
Respectfully Submitted,
Gretchen Rittenhouse
Secretary