The Health Care Foundation of Greater Kansas City Board of Directors Minutes of Meeting Held Wednesday, October 24, 2018 at 8:00 a.m.

Transcription

1 The Health Care Foundation of Greater Kansas City Board of Directors Minutes of Meeting Held Wednesday, October 24, 2018 at 8:00 a.m. Location: Health Care Foundation of Greater Kansas City (HCF) 2300 Main Street, Suite 304, Jonas Board Room Kansas City, MO Attendance HCF Board Members Present: Wayne Powell, Chair; Mary Ann Arnott; Marshaun Butler; Tom Carignan (telephone); Pat Contreras; Tom Cranshaw; Jim Dockins; Alan Flory (telephone); Chuck Foudree; Spence Heddens; Garland Land; Ann Mesle; Michael O Dell (telephone); Jim Pryde; Kim Riley; Roy Robinson; Julia Simmons; Stephenie Smith; Peg VanWagoner; Donnie Wilson; and Tonia Wright Board Members Unable to Attend: None HCF Associates Present: Alicia Araujo; Keonna Baldwin; Brenda Calvin; Paula Cornwell; Graciela Couchonnal; Karen Dehais; Christena Diven; Andres Dominguez; Karen Guile; Brad Hart; Jessica Hembree; Ross Jensby; Bridget McCandless; Jane Mosley; Shannon Morris; Melanie Patek; and Jennifer Sykes Additional Attendees: Mark Flaherty, Legal Counsel; Victoria McNack, Contractor (telephone) Guests in Attendance: None Call to Order Wayne Powell, Chair, called the meeting to order at 8:05 a.m. Tom Cranshaw made a motion to approve the consent agenda. Chuck Foudree seconded, and the motion was approved by unanimous voice vote. Report of Chairman of the Board 2019 Board Calendar The proposed 2019 board and committee meeting schedule has been considered by each committee. The one recent change is that Administration and Logistics voted to extend their quarterly meetings from 60-minutes to 90-minutes. Chair Powell presented the final board calendar draft for approval. Chuck Foudree made a motion to approve the 2019 board calendar. Marshaun Butler seconded, and the motion was approved by unanimous voice vote. Board Nominee Slate Bridget McCandless presented information regarding the 2018 board nominee slate. The Health Care Foundation received 30 applications for the seven board vacancies beginning in January Between October 2 nd and 3 rd, the Community Advisory Committee Nominating Committee interviewed 25 eligible applicants and voted to recommend a slate of 14 candidates. On October 8 th, the full CAC approved the slate, but since that time, one of the 14 nominees withdrew her name from consideration. At each of their seats, directors had a binder containing the board nominees information. Dr. McCandless highlighted various documents within the binder related to current board representation and individuals represented on the slate. The final interview and election will take place at the December 12 th board meeting. Page 1

2 Due to the volume of interviews and agenda items at the Annual Meeting, Chair Powell requested that directors arrive early to accommodate the full schedule. Report of the Program and Grants Committee 2019 Proposed Grantmaking Budget Marshaun Butler, Chair of the Program and Grants Committee, presented the 2019 grantmaking budget as approved by the committee in September. One notable change in next year s budget is the $600,000 increase in the Healthy Communities budget. In the past, Healthy Communities had the smallest allocation of grant funds and this increased allocation will bring Healthy Communities up closer to Safety Net and Mental Health. Approval of Special Initiatives Graciela Couchonnal presented two Special Initiatives recommended for board approval. Due to Children s Mercy s partnership in one of the initiatives, Chair Butler and Julia Simmons recused themselves from the discussion. MARC, Safety Net Capacity Expansion Initiative (Afterhours) Year 10 The Safety Net Capacity Expansion Initiative (Afterhours) is in its tenth year of funding from the Health Care Foundation to the Mid-America Regional Council (MARC). The requested $312,000 for one-year will fund the Regional Health Care Initiative (Safety Net Collaboration) which assesses the capacity of the safety net system throughout Kansas City to improve access for the uninsured and underserved. Included in this initiative are various clinics with expanded, non-traditional hours of operation to meet the needs of vulnerable populations. Asthma Empowerment Kansas City Year 2 The Asthma Empowerment initiative is a partnership with various nonprofits, schools, and providers to improve asthma education, intervention, and coordination of services for Kansas City Public School children diagnosed with asthma. The Program and Grants Committee recommends that this one-year initiative be funded for $209,325 to support the project s second phase. The target population includes male and female children, ages five through 11, who are Medicaid-eligible and attend Kansas City Public Schools. 30 elementary schools within the KSPS district will participate, 50% of which are charter schools. This initiative includes aspects related to training and technology, asthma treatment, home and school interventions and environment assessments, education and focus groups. The program has the benefit of access to Medicaid claims data for targeted interventions and for data trends over time. At the conclusion of the meeting, Chair Powell announced the approval of the two Special Initiatives and thanked those who recused themselves from the vote (ballot results below). Organization Name Yes No Recuse Abstain 1 Safety Net Capacity Expansion Year Asthma Empowerment KC 19 2 Update on Applicant Defined Grants (ADGs) Chair Butler presented information regarding the September Applicant Defined Grant (ADG) round. HCF received 31 ADG applications. 15 grants were awarded totaling $726,000. The next deadline for ADGs is Wednesday, November 7 th which is the final application acceptance date for Page 2

3 Update on Safety Net RFP The Safety Net team hosted a successful External Reviewer conference earlier this month. Program staff are now conducting due diligence and will present a recommended slate of Safety Net awards at the November Program and Grants Committee meeting. Report of the Finance and Investment Committee Peg VanWagoner, Chair of the Finance and Investment Committee, presented information regarding third quarter investment performance. HCF s net investment value at the end of the third quarter was $77.7 million. Year-to-date, HCF has earned 2.4% on its investment compared to the benchmark of 2.7% The 2.4% return has produced approximately $17 million in net investment income through the first nine months of the year. All asset classes have produced positive investment earnings with the exception of Fixed Income which is down (1.8%). All asset classes remain within their board-approved ranges; Public Equities remain slightly overweight. In terms of net year-to-date returns by asset class, all asset classes are trailing their longer term averages this calendar year to date. Chair VanWagoner noted that the portfolio is strategically diversified to manage downturns in the market. While HCF will not see returns comparable to 2017, the portfolio is doing well given that it s structured to protect against the downside. Chair VanWagoner highlighted two peer group analysis charts for foundations and endowments. On the 5-year risk/return chart, HCF s portfolio is well positioned for higher returns while experiencing reasonable risk. Additionally, HCF sits in the top earning quartiles over the 1 to 10-year periods as compared to the universe of total endowments included in the peer group analysis. Last year, HCF invested $9 million in Securis to take advantage of insurance linked securities (ILS). This was an example of an opportunistic investment following a severe 2017 natural disaster season (e.g. California wild fires). Insurance company reserves were depleted at the end of last year causing premium pricing for re-insurers such as Securis. The expected return on this investment was 14%, but due to the recent hurricanes Michael and Florence this year, the expected real return on the Securis investment was 6.6%. The board will determine in December if another insurance linked investment product is warranted when reinsurance pricing is evaluated for Report of the Governance Committee Tom Cranshaw, Chair of the Governance Committee, reported on the recent board officer interviews that took place in September. The committee is pleased to present the recommended slate of 2019 board officers: Tom Carignan for Chair, Marshaun Butler for Vice Chair, Jim Pryde for Treasurer, and Kim Riley for Secretary. Chair Cranshaw also noted that because two of the nominated officers are also members of the Governance Committee, the directors recused themselves from the vote of the respective position. The board will vote to elect officers at the December 12 th Annual Meeting. Chair Cranshaw thanked board members for completing the annual reflection survey. He briefly discussed the outcomes as presented in the board meeting packet. Additional feedback is welcomed. The board held a brief conversation regarding survey follow-up. Chair Powell requested that anyone with specific concerns speak with HCF leadership or a member of the Executive Committee and the survey will be discussed at a subsequent Executive Committee meeting. Treasurer s Report Chuck Foudree, Treasurer, provided an overview of the third quarter financial statements and financial considerations related to the permanent home. Page 3

4 September 2018 Operations Dashboard HCF is tracking favorable to the operating budget by $1.9 million after nine months. $1.4 million of that positive variance is in the grants/grant support budget, specifically Special Initiatives. This is likely a temporary variance as the allocated grant funds are typically spent according to the annual budget. The other area of positive variance in the operating budget is $500,000 in the salary and wages category. HCF can expect a permanent positive variance of approximately $300,000 due to the following reasons: o HCF s program officer position in the 2018 budget was not hired; o The Learning Officer position was hired four-months later than budgeted; o The Governance position was in the wage budget for 2018, but this position has been a contract position for most of the year. All other expense categories will approximate the approved budget by year-end. Sources and Uses of Cash HCF started the year with $10.8 million in cash, and at the end of September the cash balance was a $2.4 million. Private Equity cash distributions have been a large source of HCF s working capital. The older Private Equity investments have returned $22.2 million against only $13.6 million in additional capital calls for the newer Private Equity investments. HCF has sold $53 million in investments this year which generated about $27 million in realized gains. The proceeds were invested principally in Direct Hedge fund investments as we restructured our portfolio from fund of funds. Proceeds from the sales were also used to reduce HCF s line of credit to zero. Statement of Changes in Net Assets (Profit and Loss Statement) At the end of the third quarter, the 2.7% investment return resulted in $16.8 million net revenue. Through the first nine months, HCF incurred $17.2 million in total expenses. Since expenses have slightly exceeded revenue, HCF is reporting a decrease in net assets of ($359,000). Budgeted net income of $17.3 million with a 6.6% return, but it is doubtful that such a benchmark will be achieved. Last year, HCF s operating income was $51.2 million at this time Proposed Budget Assumptions Mr. Foudree presented the proposed 2019 Budget Assumptions. This document along with the 2019 Numeric Budget are scheduled for approval at the December 12 th Annual Meeting. Directors were encouraged to review the included assumptions and to direct any questions or comments to the finance team or HCF leadership. Reimbursement Resolution of Capital Expenditures Lastly, Mr. Foudree reported that the Finance and Investment Committee is in the process of reviewing various financing options for building the Health Care Foundation s permanent home; the two best options are using cash from the sale of investments or issuing a direct placement of tax-exempt bonds. Both options were assessed at last week s committee meeting. Mr. Foudree thanked Mark Flaherty and Jim Pryde for their leadership and expertise in drafting the resolution presented today. This resolution is non-binding and preserves the option for HCF to reimburse itself for capital expenditures related to building our permanent home. These would be expenditures made with cash prior to Page 4

5 securing permanent tax-exempt bond financing. The resolution declares the intent of the foundation to attribute those purchases to the bond financing arrangement. Once the land is acquired and a better estimate of build costs are known, the Finance and Investment Committee will come back with specific details for board approval. Specifics will include; (1) Recommended size of the bond offering, (2) The terms from interested private placement institutions, (3) The process and responsibilities of direct bond placement, (4) The financial merits of all options presented, etc. Chuck Foudree made a motion to accept the resolution to reimburse the foundation for capital expenses incurred during the permanent home building process. Ann Mesle seconded, and the motion was approved by voice vote with one dissent. Report of the President/CEO Dr. McCandless yielded her time to Jessica Hembree, Policy Officer. Ms. Hembree provided a brief report regarding upcoming in-district meetings which will be held at the end of this month with new legislators. Some board members who live within certain districts may receive an invitation to attend these meetings alongside Tania Hewett, Policy Associate. Closed Session At 9:00 a.m., Tom Cranshaw made a motion to go into closed session for the purpose discussion with legal counsel. Chuck Foudree seconded, and the motion was approved by unanimous roll call voice vote. Roll Call Mary Ann Arnott Yes Marshaun Butler Yes Tom Carignan (telephone) Yes Pat Contreras Yes Tom Cranshaw Yes Jim Dockins Yes Alan Flory (telephone) Yes Chuck Foudree Yes Spence Heddens Yes Garland Land Yes Ann Mesle Yes Michael O Dell (telephone) Yes Wayne Powell Yes Jim Pryde Yes Kim Riley Yes Roy Robinson Yes Julia Simmons Yes Stephenie Smith Yes Peg VanWagoner Yes Donnie Wilson Yes Tonia Wright Yes Return to Open Session At 10:00 a.m., Marshaun Butler made a motion to return to open session. Roy Robinson seconded and the motion was approved by unanimous roll call voice vote. Roll Call Mary Ann Arnott Yes Marshaun Butler Yes Pat Contreras Yes Jim Dockins Yes Alan Flory (telephone) Yes Chuck Foudree Yes Spence Heddens Yes Garland Land Yes Ann Mesle Yes Wayne Powell Yes Jim Pryde Yes Kim Riley Yes Roy Robinson Yes Julia Simmons Yes Stephenie Smith Yes Peg VanWagoner Yes Donnie Wilson Yes Tonia Wright Yes Page 5

6 Approval of Foundation s New Name Chuck Foudree made a motion to approve the renaming of the Health Care Foundation of Greater Kansas City to the Health Forward Foundation to go into effect on November 14, Marshaun Butler seconded, and the motion was approved by unanimous voice vote. Permanent Home Consideration Jim Dockins made the motion to direct HCF staff to pursue a relationship with Van Trust as owner s representative for the proposed building. This sole source exception was due to the previous working relationship during Van Trust s pro bono services in land sourcing, favorable financial consideration with fixed fee arrangement, and the depth and sophistication of the resources that Van Trust brings to the project. It was seconded by Peg VanWagoner and approved by unanimous vote. Adjourn The meeting was adjourned at 10:05 a.m. Minutes prepared by Victoria McNack. Page 6