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  1. 1. 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 David Ross 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 attendance: 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 The Foundation is a little overweight in the bond area and that is where funds will be withdrawn to meet the funding of the grant proposals.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
  2. 2. 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- month. 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 of funds. 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. 2
  3. 3. 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 office. 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. 3
  4. 4. 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 64127. Meeting adjourned at 10:00 a.m. 4