BOT Meeting September 2021
Stowe Free Library
Minutes of Board of Trustees Meeting
September 10th, 2021
Present: K.Spear, S.Gaines, K.Kaufman, A.Colavito, B.Mullin, C.Maison Kastner, C.Weber (Director)
Absent: D. Witmer
Friends’ Report: The book sale yielded $14,000. They need more volunteers in the future. New members are their priority right now. There is no plan to continue In Our Own Backyard events or any other events (programming) for lack of someone taking the reins.
Treasurer’s Report: The Operating Budget contains: $25,491.93, Development Account: $32,061.56 and the Endowment: $1, 297,364.61. John Myhre of Morgan Stanley joined the meeting to discuss the status of our funds. The goal is to let us be in control of what our funds are used for. Stowe Free Library is a municipal entity. Municipal entities are heavily regulated within the financial services industry. A special team handles municipal entities, not-for-profits. It provides fiduciary cover invested in oversight of funds such as ours. Morgan Stanley functions as a contractual fiduciary. They provide a Due Diligence group working behind John’s team as well as a Global Investment group to determine what is the investment environment moving forward. There is no commission charge on Advisor Account.
Equity markets, stock markets were at a high, index funds to cut costs, changes in the bond market part of our investments. Interest rates low for investments. On equity side need to diversify. On bond part susceptible to losses as interest rates rise bond values decline. Some bonds were kept but tried to shorten maturity, raise quality. 60% - 40% distribution between stocks and bonds. (Most durable and sustainable mix.)
Restructured portfolio: Four funds: Assets are up 33% from 6/2020. Not close to dipping into principal in any of our funds. Law: UPMOIFA. Direct Fiduciaries in Vermont. Allows defining income as a reasonable draw—3 ½ to 4 ½%. Example: Montinari Fund was at $740,000 in 6/20, today it is at $920,000. Income is down while value is up.The Union Bank stock has been very volatile.
We need annual recognition of what the income will be for budgeting purposes. Annualized number broken to monthly distribution, can be individual for each fund or just out of largest fund. Fees: .87% advisory fee. 1/12th comes out every month. Fee is now .75%. Internal cost of investments has been reduced. Top four are Vanguard Funds with lower fees. Dividends and interest are swept into our Union Bank account. Start looking at what should be deposited from dividends and interest, or should it be by need? ** Further discussion needed on this subject.
In perpetuity we are charged to sustain these investments. What amount is sustainable for us to use? Our investments are broader than they were. What contributions are in each fund? Union Bank stock (5000 shares) and we need to bring down amount of stock since it is very volatile. What share number do we want? Quarterly goal of dropping amount over two-year period. Diminish to 1000 shares (current price $34). Diminish 500 shares a quarter, slowly diminishing risk. We will give John go ahead to look at going down 500 shares per quarter until we get to 1000 shares. A Motion was made to lower the allocation of Union Bank stock from 5000 to 1000 at 500 share per quarter and reinvest it into another product. Motion was passed.
Finance committee will meet re: what will we need when we stop paying into town budget ($28,000).
Quantify number that is principal on all funds. What number are we going to take annually at our discretion? Will number change every year based on Cindy’s goals?
Christmas talk tabled
Director’s Report: Collection strong. Patrons gone up almost 100 new ones. Curbside and inhouse pick up still active. Circulation up. Add more money to digital collection fund. Friends sponsor more digital stuff (magazines, streaming movies).
Circ. Librarian position is filled. Two postings for tech services/systems + adult services, ILL, circ. Desk (back up). Asst. director/ adult services position posting just went out.
Review Museum Pass Policy: tabled
Review Technology Policy: tabled
Discuss Strategic Plan Progress: tabled
Next Meeting: October 1st, 2021
Adjournment: 9:38 am