Spacer graphic Boston Public Library
Trustees' Finance and Audit Committee
Board of Trustees

June 24 , 2010

 

Minutes of Meeting Thursday, June 24, 2010
Trustees Finance & Audit Committee Trustees Room, Johnson Building

A meeting of the Trustees Finance and Audit Committee was held at the Boston Public Library, Trustees Room, Johnson Building, on Thursday, June 24, 2010 at 8:00 a.m.

Present at the meeting were: Chairman Evelyn Arana-Ortiz; Trustee Zamawa Arenas; Tony Jordan, StoneTurn Group, LLP; Richard DePiano, City of Boston, Treasury Department; Jean Capizzi, City of Boston, Office of Budget Management; Ruth Kowal, Director, Administration & Finance; Sean Nelson, Chief Financial Officer; Ed Maheigan, Budget and Procurement Manager; Chris Klapinsky and Michael Black, New England Pension Consultants, LLC; and Jamie McGlone, Clerk of the Board.

Chairman Evelyn Arana-Oritz presiding.

The Chairman addressed the first item on the order of business pertaining to the review and approval of Minutes for the Trustees Finance and Audit Committee Meeting held on May 6, 2010. Following discussion, on a motion duly made and seconded, the Minutes of the Trustees Finance and Audit Committee Meeting held on May 6, 2010 were approved.

The Chairman reviewed the proposed Schedule of Trustees Finance and Audit Committee Meetings for 2010 and 2011 at 8:00 a.m., Trustees Room, Johnson Building. Following discussion, on a motion duly made and seconded the Schedule of Meetings for 2010-2011 was approved as follows:

    • Thursday, Aug 26, 2010
    • Thursday, Sep 23, 2010
    • Thursday, Oct 28, 2010
    • Thursday, Jan 6, 2011
    • Thursday, Feb 24, 2011
    • Thursday, Mar 24, 2011
    • Thursday, Apr 28, 2011

Sean Nelson reviewed the proposed revisions to the Charge of the Trustees Finance and Audit Committee adopted by the Trustees Finance and Audit Committee on January 8, 2007. Following discussion, on a motion duly made and seconded, the Charge of the Trustees Finance and Audit Committee was approved as follows:

Charge of the Trustees Finance and Audit Committee

Purpose: The purpose of the Finance and Audit Committee of the Board of Trustees of the Public Library of the City of Boston is to assist the Library and the Trustees in decision-making regarding all fiscal matters related to the Library. The Finance and Audit Committee monitors the Library’s financial status by analyzing audit reports and findings, reviewing investment policy, and assisting management on preparing recommendations to the Board of Trustees for approval on contracts and other issues concerning the Library’s financial well-being. The Finance and Audit Committee oversees the integrity of the Library’s financial management system, internal controls, financial reporting, investment portfolio management and performance, and reviews the independent auditor’s qualifications and independence of the annual audit.

Composition:
The Finance and Audit Committee shall include no less than one member of the Board of Trustees of the Public Library of the City of Boston and all Trustees are welcome to serve on any Trustee Committees. The other members shall be appointed by the Chair of the Board and the Library President. The Library President or designee shall serve on the Committee.

Adopted by the Trustees Finance and Audit Committee on June 24, 2010

Chris Klapinsky and Michael Black, New England Pension Consultants, LLC presented an overview of the Investment Market update thru 18 June 2010 and the Trustees of the Public Library of the City of Boston’s Investment Portfolio and Performance for the period ending 31 May 2010. The highlights of the NEPC presentation and discussion are summarized as follows:

  • The current Policy Target is 60% US equities and 40% US fixed income.  The NEPC representatives suggested to adjust this Policy Target to include three different diversifying asset classes: developed non-US equities, Global Asset Allocation (multi-asset class managers), and Absolute Return.  The goal of incorporating these asset classes is to reduce overall portfolio volatility without substantially reducing returns, and to reduce dependence on the equity markets as the main driver of returns.   
  • NEPC representatives noted full implementation of these three asset classes would equate to 20-30% of the Fund not being socially screened.  As such, they noted that the Committee should evaluate if it supports 20-30% of the portfolio operating outside of social screens and that assessment should be made prior to the implementing of the recommended changes.
  • NEPC recommended a multi-step process for adding further diversification to the Fund: Step #1 – add a Global Asset Allocation manager; Step #2 – add an International Equity manager; and Step #3 – add an Absolute Return manager to the portfolio. The City of Boston is currently at Step #3 and the timeline suggested for implementation of Step #1 could take place over the next several months and the other two steps incrementally.
  • The Boston Public Library currently is using a 5% annual payout distribution to follow suit with the City of Boston’s policy over 2 cycle drawdowns to mitigate some of the market volatility and allow the managers to retain the assets longer to garner more capital.
  • Identification of the present costs of the current social restriction screens and the potential gains by removing them in the library’s Investment Policy.
  • The Chairman requested the agenda for the next meeting on August 26, 2010 include a review of the Boston Public Library Investment Policy.

The Chief Financial Officer provided an update on the priorities identified in the Management Letter, June 30, 2009 as discussed at the last meeting including a proposed action plan for special event billings in collaboration with the City of Boston.

Mr. Tony Jordan graciously offered to pursue additional resources for assisting with its resolution and the CFO will report back at the next meeting along with recommendations for Private Events fundraising.

There being no other business, the Trustees Finance and Audit Committee meeting adjourned at 9 a.m.

Respectfully Submitted,

Jamie McGlone
Clerk to the Trustees

Spacer graphic