Health Care Foundation of Greater Kansas City
Finance and Investment Committee
Minutes of Meeting
Held Tuesday, June 14, 2005
Location: Pioneer Campus of Penn Valley Community College, 2700 East 18th
Street, Suite 216, Kansas City, Missouri 64127
Committee Members in attendance:
Landon Rowland, Chair
Bishop Steve Jones
Rev. Dr. Nelson L. “Fuzzy” Thompson
Committee Members not in attendance:
Mark Flaherty (notified prior to the meeting of inability to attend)
Rod Minkin (notified prior to the meeting of inability to attend)
Terry Thompson (notified prior to the meeting of inability to attend)
Health Care Foundation of Greater Kansas City Board Members and associates in
Steve Roling, President/CEO
Dan Couch, CFO
Tracy Skidgel, Executive Assistant
Community Advisory Committee (CAC) members in attendance:
James M. Flynn, M.D.
Guests in attendance:
Jim Wright, R.N.
The Chair opened the meeting at 9:05 a.m. by welcoming all persons present,
announcing that the committee meeting had been properly noticed pursuant to the
Missouri Sunshine Law.
Review of May 17, 2005 Minutes – Chairman Rowland called for any additions or
comments to the May 17th Minutes, hearing none Rev. Thompson made a motion to
approve the Minutes as written with the understanding that if a correction became
necessary it would be made. Steve Jones seconded the motion. The motion was
approved by unanimous voice vote.
Review of 05/31/05 Ennis Knupp Flash Report – Dan Couch informed the Committee
that the Flash Report speaks for itself. The Foundation is a little overweight in the bond
area and that is where funds will be withdrawn to meet the funding of the grant
proposals. We will be drawing from the Western Asset Management account. Western
Asset Management is currently 9/10th over our policy. There was a short discussion
regarding rebalancing and Bishop Jones stated that the church’s controller rebalances
every month with their allocation range. Dan Couch stated that we are not rebalancing
the Western account just adjusting. Mr. Couch stated that the policy of the Foundation
is to review rebalancing on a quarterly basis.
Discussion followed regarding money managers – if a particular money manager has
been successful, do you take the overage away from that manager? That is the
acceptable discipline. There was further discussion and David Ross stated that he does
not feel strongly one way or another regarding this issue. Bishop Jones reminded the
Committee that we need to be looking at the long-haul (from inception) not month-to-
Dan Couch directed the Committee to the Insurance Binder the Foundation received
with respect to the “excess employee dishonesty” coverage dated June 9, 2005. This
binder is effective from 05/26/05 to 06/25/05 and is temporary until the policy is in place.
Dan Couch also informed the Committee that he received correspondence from BNY
today regarding the new California Nonprofit Integrity Act of 2004. Governor
Swartzenegger signed into law SB 1262 on September 29, 2004 and it became
effective January 1, 2005. The focus of this new law is twofold: governance of
charitable organizations and fundraising by or on behalf of charitable organizations.
BNY will be moving our custody operations from Los Angeles, California to Syracuse,
New York. Custody records are retained in New York and not maintained in California.
Dan will provide our auditors, House Park & Dobratz, with this information.
Review of Preliminary 05/31/05 Financial Statements – Mr. Couch provided
preliminary financials for the Committee’s review. The net income for May was
approximately $11 Million and our loss-to-date is approximately $1 Million. We
anticipate having the 05/31/05 Financials prepared by Ralph Johnson for the Board
meeting on Thursday, June 16th. With respect to budgeted items, salaries have not
been posted correctly. The year-to-date amount is correct, however, the monthly
amount is not. We are over in the areas of supplies and accounting fees. Our
arrangement with BNY is a minimum of $40,000 annually ($10,000 per quarter);
however, we could possibly pay more in any given year depending upon the movement
Tom Langenberg sent an email stating the $20 Million holdback has been reinvested in
T-bills and is currently yielding 2.92%. Steve Roling has placed a call to Mr.
Langenberg and he is out of the office for the next two-weeks. Mr. Rowland suggested
a quarterly report regarding CHG. Steve will make a report on CHG at the next meeting
and we will invite Tom Langenberg to attend in the near future and provide a quarterly
report. David Ross suggested September would be timely for the CHG quarterly report
and update. Therefore, we will invite Tom Langenberg to attend the September 20 th
Finance & Investment Committee meeting and the October 20th Board meeting. It was
stated that we need to value contingent assets and provide at the September meeting.
It was also suggested that Ron Goldsmith be invited to attend the September 20th
Finance & Investment Committee meeting.
Update on Ariel Fund 12b-1 Recapture – Have discussed with David Keil but have
done nothing at this time. We will be pursuing.
Update on GMO Fund Transfer – We anticipate saving $28,000 of $66,000 but have
not executed as yet – waiting for the final piece of information. It involves selling our
current GMO holdings and acquiring twelve underlying funds and then selling five and
keeping remaining seven, plus adding an additional fund for a total of eight funds in
GMO. This is very complicated and we are waiting on BNY to advise how much they
will charge for the buying and selling of the funds. Dave Keil and Jay Flaherty have
worked very hard to try to work this out and Dan Couch has instructed Dave Keil to
proceed with the transfer.
Also we have received a letter from Ennis Knupp advising us that they are not one of
those listed by the SEC for review regarding potential conflicts of interest.
Discussion of Real Estate Investment Strategies – It was stated that there is a
significant difference between residential and commercial real estate and we should
bring in advisors with expertise in commercial real estate. Mr. Rowland requested we
inquire if Ennis Knupp can get real estate money managers together for the July 19th
Finance & Investment Committee meeting. It was suggested that the committee
interview three managers with the goal of selecting two.
Investing in Local Banks – Some board members have requested we consider
investing additional money in Douglass Bank. Dan Couch described the CDARS
program and informed the committee that he has placed a call to Les Johnson.
Discussion followed regarding the opportunity to invest in the CDARS program and help
a local minority owned business. The rate of return is comparable to T-bills and rates
are negotiable depending on length of investment. The committee requested Dan
Couch and Steve Roling determine what local banks are participating in the CDARS
program, seek the counsel of Dave Keil on this issue, and provide the committee with
an update and preliminary report at the July Finance & Investment Committee meeting.
It was stated that the Foundation’s funds are invested in such a way to provide the best
returns and, if appropriate, this could provide an opportunity to help a minority owned
bank. It was also suggested that we ask Tom Langenberg to pursue and, if possible,
improve the rate of return on moneys currently held-back by CHG. CHG was directed
by the Attorney General to invest in T-bills and we will also need to speak with the AG’s
Dan Couch reminded the Committee that approximately $435 Million has been invested
with various money managers to allow for the maximum return possible. BNY is
currently providing custodial services. The Foundation’s local operating account is with
UMB Bank and any balance over $2,500 is swept nightly to purchase of T-bills. The
average balance is less than $1,000. We also have a petty cash checking account at
Douglass Bank with an average monthly balance of between $4,000 and $5,000. Mr.
Couch reminded the committee that Douglass Bank was given the opportunity to bid for
the operating account and they did not respond.
Other Business –
With respect to CommonFund, the Foundation has removed our offer to invest.
CommonFund has sent a letter requesting us to reconsider and we will revisit next year.
Dates of Importance to Note
• September, 2003 initial Board meeting and committees were formed; and
• June 16, 2004 transfer date of funds from CHG to the Foundation.
The next scheduled Finance & Investment Committee meeting will be July 19, 2005,
from 8:00 a.m. to 12:00 p.m., 2700 East 18th Street, Suite 211, Kansas City, Missouri
Meeting adjourned at 10:00 a.m.