July 15th, 2004 Minutes (Annual Meeting)

Foundation Minutes- Board Meeting

Call to order- 3:36PM

Roll Call- Tim DeGhelder, Lorna Frahm, Warlene Reed, Mark Rudolph, Joe Krebs, Bill Zollmann (3:38)- Carl Sandstedt, and Bob Houck

Secretary’s report- Tim DeGhelder noted the change in the minutes to reflect the Householder Scholarship recipients.

Motion made by Mark Rudolph to accept the minutes from the May 20, 2004 meeting.

^{Second by Joe Krebs}

^{Motion passed.}

Public comments- none

^{Financial Report- See Year End Financial Statement}

^{Special Report form the Foundation's Financial Advisor- Kent Reynolds}

^{Kent handed out current assets for the foundation.  Kent also went over Investment Strategies:}

1. The portfolio’s target allocation between equity and fixed income (into which we add cash positions, is 65%/35%. Currently, the allocation is approximately 55/45, which puts the portfolio at the maximum permitted variance of 10% from target. We will be rebalancing the account by selling the requisite portion of fixed income investment and reinvesting in equity mutual funds. We will be adding a position in international equity – expected percentage of 5%. The other 5% will be spread across the large cap, mid cap and small cap classes as needed to maintain a balanced portfolio.
2. The existing individual equities held in the portfolio are rated A or B by Northern Trust, our primary source of equity research. Cinergy is an exception to this, as it is not followed by the Northern team. Given the relative strength of these stocks and the uncertainty in the markets created by the war in Iraq and other geo-political issues and the anticipated increase in interest rates by the Federal Reserve (which has begun), we determined that continued holding of the stocks was the best course. We also considered the effect of the costs of selling on the portfolio. We have decided to begin the liquidation process to bring the portfolio in line with our index fund investment approach. Our anticipated course is to first liquidate lower yielding stocks. The proceeds will be reinvested across equity asset classes. The actual yield on these reinvested funds may not improve, but there will be an improvement in diversification, which we believe will result in a lower degree of volatility in the portfolio over the long run. We will not look to maintain any particular industry sector weighting as we begin the liquidation process. However, we will try to avoid establishing significant overweighting in a sector by virtue of which individual stocks are left in the portfolio during the process.
3. Our investment approach is to build a portfolio based on a model consisting of various index funds across equity and fixed income asset classes. In general, we look to rebalance the portfolio back to the target asset allocation percentages on a quarterly basis. The effect is a disciplined strategy of "buying low and selling high". This approach can be approximated, sometimes quite well, through the use of blended funds or fund of funds such as the Vanguard Conservative Growth Lifestyle fund that is already a part of the Foundation’s portfolio. We look to add value to the portfolio beyond that which could be produced by such a "Lifestyle" fund. If we cannot do that to a degree that justifies our fees, we will recommend that the Foundation invest all assets in an appropriate blended fund such as the Vanguard Conservative Growth Lifestyle fund and we will resign.

^{Staff Liaison's comments}

^{Bob Houck noted we completed another Fiscal Year-we are in good shape.  Non-Profit Development Center delivered school supplies to over 100 people.  The center is also fully rented- rent income will be over $30,000 per year.  IRS final tax status is in the works.  This will give us a full public supported charity rating.  Investments were overall very good last year.}

^{Director’s Comments}

^{Carl Sandstedt showed possible land development in Western part of St. Charles County.  This development would give presence to a small, library express type of branch.  The small branch would be in place until tax dollars and technology can support a larger general purpose size branch.  Final design for MK branch is being looked at- cost for the project was projected at 1.5 million to 1.7 million.  The higher number is linked to the rise in steel costs.  The library district would like to be aggressive and use unique naming rights and sponsorships to help offset rising costs.} 

Old Business-

None- First meeting in Fiscal Year 2005

New Business

05-01 Year End Financial Statement (Unaudited) 

Bob Houck presented to the board all incoming and outgoing expenses for the foundation in the FY04 fiscal year.  This presentation included spreadsheet documentation of all holdings and adminstrative costs.

New Business

05-02 Nominations for Officers of the board for FY05

Lorna Frahm recommend the following slate of officers for the FY05 year.

President- Bill Zollmann, Vice-President- Jim Ottomeyer, Treasurer- Mark Rudolph, Secretary- Tim DeGhelder

Motion by Warlene Reed to accept the nomination slate of officers.  

Second by Mark Rudolph

Motions Passed

^05-03

^{Election of Officers for FY05}

^{Motion by Warlene Reed to elect the following officers for the FY05 year.}   

President- Bill Zollmann, Vice-President- Jim Ottomeyer, Treasurer- Mark Rudolph, Secretary- Tim DeGhelder

^{Second by Mark Rudolph,}  

^{Motion passed}

05-04 Change of meeting date in September 2004.

Motion by Joe Krebs for our next meeting to be on September 14th, 2004.

Second by Mark Rudolph

Motion Passed

^{Warlene Reed moved to adjourn. Mark Rudolph seconded. Motion passed.}

^{The meeting adjourned at 4:38 p.m}

Next Meeting set for September 14th at 3:30pm in Foundation Meeting Room. (Administration Building)