Public Meeting Notice Michigan Health Endowment …...330MarshallStreet,Lansing,MI48912• 517-374-0031 • Mhealthfund.com Public Meeting Notice Michigan Health Endowment Fund Annual

330 Marshall Street, Lansing, MI 48912 • 517-374-0031 • Mhealthfund.com

Public Meeting Notice Michigan Health Endowment Fund

Annual Board Meeting Monday, January 25, 2016

2:30 p.m. Radisson Hotel

111 N. Grand Avenue Lansing, MI 48933

Board of Directors Rob Fowler, Chairman

Lynn Alexander Timothy Damschroder

Susan Jandernoa Cindy Estrada James Murray

Keith Pretty

Marge Robinson Michael Williams

Chief Executive Officer Paul Hillegonds

Michigan Health Endowment Fund Board Meeting

January 25, 2016

Radisson Hotel Lansing, Meeting Rooms 2 & 3

111 N. Grand Avenue, Lansing, Michigan 48933

The mission of the Michigan Health Endowment Fund is to improve the health of

Michigan residents and reduce the cost of health care with special emphasis on the health

and wellness of children and seniors.

2:30 p.m. – 2:35 p.m. Opening: Rob Fowler

Call to order of Board Meeting

Roll call

Review of agenda, page 2

Review of December 16, 2015 minutes, pages 3-6

2:35 p.m. – 2:40 p.m. Public Comment

Public Comment: Five-minute limitation for a single representative

of an organization; three minutes for individuals representing

themselves

2:40 p.m. – 2:45 p.m. CEO Report: Paul Hillegonds

2:45 p.m. – 2:55 p.m. Election of Officers: Rob Fowler

Chair

Vice Chair

Treasurer

Secretary

2:55 p.m. – 3:00 p.m. CFO Report: Terry Gardner

Report, pages 7-10

3:00 p.m. – 3:05 p.m. Audit Committee: Keith Pretty

3:05 p.m. – 3:10 p.m. Investment Committee: Tim Damschroder

Recommendation to hire investment consultant, page 11

3:10 p.m. – 3:15 p.m. Executive and Compensation Committee: Rob Fowler

Resolution to approve Medigap reserves, page 12

3:15 p.m. –3:20 p.m. New Business: Rob Fowler

Resolution to approve 403b Plan, page 13

3:20 p.m. Adjourn

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Michigan Health Endowment Fund Board Meeting

Monday, December 16, 2015 Lansing Center, 333 East Michigan Avenue, Lansing, MI 48933

Meeting Minutes

Call to order The board meeting of the Michigan Health Endowment Fund was called to order at 2:00 p.m. by Chairman Robert Fowler.

Roll call A quorum was determined based on the presence of the following Board Members:

Board Members present: Rob Fowler Lynn Alexander Tim Damschroder Sue Jandernoa Keith Pretty Michael Williams (arrived at 1:40)

Participating by phone: Cindy Estrada

Absent: James Murray Marge Robinson

Others present: Paul Hillegonds Terry Gardner Julie Skubik Laurie Solotorow Duane Tarnacki

Approval of agenda: Chairman Fowler asked if there were any comments regarding the agenda, which was approved without objection.

Review and approval of the minutes from the previous meetings: Board Member Damschroder moved to approve the minutes from the September 21, 2015, Board Meeting. Board Member Jandernoa seconded. Motion passed six to zero.

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Public Comment: There was no public comment.

CEO Report: Mr. Hillegonds thanked Chairman Fowler, Board Members, staff and TPI for their participation in the strategic planning session. Mr. Hillegonds reported on the following topics: strategic planning process, 2015 grant programs, health philanthropy scan, Flint water crisis, Medigap status, and means test proposed by DIFS as part of the Fund’s Medigap obligation.

Audit Committee: Committee Chair Pretty reported that the audit report has been finalized and is posted to the MHEF website. The initial tax return for the Fund was timely filed with the IRS. Planning has begun for the audit of the Fund’s 2015 financial statements, which is currently scheduled for January 2016.

Investment Committee: Committee Chair Damschroder reported that the Investment Committee is searching for an investment consultant. The committee has evaluated 14 investment consulting firms’ responses to the RFP. The three finalists made a presentation to the Investment Committee on December 16, 2015 prior to the Board Meeting. The committee expects to present the final candidate for approval at the January 25, 2016 Board Meeting.

Governance Committee: General Counsel Duane Tarnacki presented the amended and restated Policy Manual reflecting all the changes approved at the September 21, 2015 Board Meeting.

Executive and Compensation Committee: Chairman Fowler asked Mr. Gardner to describe the budget process and major activities contained within the budget. The following motion was made by Mr. Damschroder and seconded by Ms. Alexander.

RESOLVED, that the budget for 2016, as presented to the Board, be, and it hereby is, ratified, adopted and approved.

The vote passed by a vote of seven to zero.

The next item was a resolution to set the 2015 endowment and Fund reserve allocation. Mr. Damschroder made the following motion and seconded by Mr. Williams.

WHEREAS, the Fund’s Spending and Endowment Fund Policy allows the Fund to expend a portion of the money contributed to it in an amount up to the Maximum Spending Allowance which for year 2 is 80%;

WHEREAS, the Fund received total contributions in 2015 of $50 million; and

WHEREAS, the Act requires that $10 million be allocated to the Endowment Fund for purposes of meeting and complying with the Act’s Accumulated Principal Goal.

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NOW, THEREFORE, BE IT:

RESOLVED, that $10 million be allocated to the Fund’s Endowment Fund; and

RESOLVED, that the Board has reviewed the amounts spent for the year to date and the Fund has not spent and it is not anticipated to spend, the Maximum Spending Allowance for 2015, therefore, the Board hereby allocates to the “Spendable Account” the remaining amount of the Maximum Spending Allowance for 2015 to be made available for spending in the balance of the current year and future years, and such amount allocated to the Spendable Account for 2015 may be designated to specific programs at the January 2016 Annual Board Meeting or thereafter.

The vote passed seven to zero.

Mr. Fowler gave an overview on the status of the strategic planning process.

Grantmaking Committee: Committee chair Jandernoa reported that 33 applications were submitted by community foundations throughout the state and an application submitted by the Michigan Association of Community Mental Health Boards. The following 25 community foundation projects were recommended for approval by the committee: Allegan, Ann Arbor, Barry, Battle Creek, Bay Area, Berrien County, Charlevoix, Dickinson, Fremont, Grand Haven, Grand Rapids, Grand Traverse, Huron County, Jackson, Kalamazoo, Lapeer, M&M (UP), Marquette, Midland, Monroe, Mt. Pleasant, Muskegon, Roscommon, Saginaw and Upper Peninsula.

Chairman Fowler asked all Board Members to identify any potential grants where her/she might have a conflict of interest. Mr. Hillegonds reminded the Board that he serves on the Board of Trustees of the Community Foundation for Southeast Michigan. Ms. Alexander stated that her employer, Presbyterian Villages of Michigan, may be a sub-recipient of the grant to the Community Foundation for Southeast Michigan and wished to abstain.

Mr. Pretty moved to approve the grants to the 25 community foundations (excluding the Community Foundation for Southeast Michigan) and Mr. Williams seconded. The vote passed seven to zero.

Mr. Damschroder moved to approve the grant application from the Community Foundation for Southeast Michigan and Mr. Pretty seconded. Ms. Alexander abstained. The vote passed six to zero.

Ms. Jandernoa introduced Laurie Solotorow to provide committee updates on applications from the following community foundations: Flint, Lenawee, and Northeast Michigan. The Grantmaking Committee recommended these grant applications for approval subject to amendments to the original proposals.

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Mr. Damschroder moved to approve the grant applications from the following community foundations subject to the adjustments and amendments presented: Flint, Lenawee and Northeast Michigan. Mr. Williams seconded. The vote passed seven to zero.

Ms. Solotorow described the status of the Capital Region Community Foundation’s application. The committee has deferred consideration of this application to the March 2016 board meeting for approval.

Ms. Jandernoa reported that the Michigan Association of Community Mental Health Boards has submitted a grant application to implement the Senior Reach program in 12 regions throughout the state. Senior Reach is an evidence-based program designed to link seniors with services specific to mental health needs.

Ms. Alexander moved to approve the application from the Michigan Association of Community Mental Health Boards and Mr. Pretty seconded. The vote passed seven to zero.

Ms. Jandernoa reported that applications for Local Impact grants were due December 1, 2015. Thirty applications were received. These applications will be presented to the Board in March 2016.

Chairman Fowler introduced Phil Knight, Executive Director, Food Bank Council of Michigan. Mr. Knight presented an update on the collaborative partnership that has evolved as a result of the $5 million that was granted to the Food Bank Council in 2014.

New Business: Chairman Fowler asked if there were any new business to consider. There being none, a motion was requested to adjourn the meeting.

Adjournment Board Member Pretty moved to adjourn the meeting. Board Member Damschroder seconded. Motion passed by a vote of seven-zero. Meeting was adjourned at 2:14 pm.

Respectfully submitted,

Julie Skubik Secretary of the meeting

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2015 2014

Current assets

Checking - Chemical Bank $ 6,979,818 $ 8,135,420 Huntington Investments, at FMV 115,271,068 83,431,461 Accrued interest receivable 507,575 339,425 Prepaid expenses 24,718 12,182

Total current assets 122,783,179 91,918,487

Furniture and equipment, net of depreciation 2,780 -

Other assets

Security Deposits 844 -

$ 122,786,803 $ 91,918,487

Current liabilities

Accounts payable $ 71,057 $ 120,012 Other current liabilities 103,600 -

Total current liabilities 174,657 120,012

Other liabilities

Grants payable 24,937,122 30,598,651

Total liabilities 25,111,779 30,718,663

Net assets

Permanently restricted net assets 30,000,000 20,000,000 Temporarily restricted net assets 27,578,587 27,578,587 Unrestricted net assets 13,621,237 13,621,237 Current year Surplus before designation 26,475,200

Total net assets 97,675,024 61,199,824

$ 122,786,803 $ 91,918,487

Michigan Health Endowment Fund

Statement of Financial Position

December 31, 2015 and 2014

Unaudited

ASSETS

LIABILITIES AND NET ASSETS

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2015 2014Revenue

Direct Public Support $ 50,000,000 $ 100,000,000 Investment income 763,399 147,449

Total revenue 50,763,399 100,147,449

Expenses

Program expenses 12,938,571 37,698,651 Grant program support 499,576 1,037,365 Legal and accounting fees 187,856 158,127 Outside contract services 94,452 0 Salaries and benefits 459,524 0 Office related expenses 11,496 225 Insurance expense 21,539 4,061 Office supplies and misc 19,875 3,034 Membership and dues 27,943 24,650 Travel and meetings 27,366 21,513

Total expenses 14,288,199 38,947,625

Other Expense

Transfer to Endowment 10,000,000 47,578,587

Change in net assets $ 26,475,200 $ 13,621,237

Michigan Health Endowment Fund

Statement of Activities

For the twelve months ending December 31, 2015 and 2014

Unaudited

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Description Market Value Percentage

Fidelity MMKT 1,565.44$ 0%

Commercial Paper 40,886,922.00$ 35%

Corporate Bonds 48,076,966.15$ 42%

U.S. Governments 23,557,759.60$ 20%

Government Agency MBS -$ 0%

Asset-Backed Securities 2,747,854.56$ 2%

Total 115,271,067.75$ 100%

0.67%

0.22

Description Maturity Value Percentage

Daily 1,565.44$ 0%

1 - 3 Months 91,945,612.00$ 79%

4 - 6 Months 17,780,758.50$ 15%

7 - 9 Months 4,287,959.00$ 4%

10 - 12 Months 335,249.00$ 0%

12 - 16 Months 304,697.00$ 0%

16+ Months 1,459,182.00$ 1%

Total 116,115,022.94$ 100%

Maturity Schedule

Fixed Income Diversification

Portfolio AnalysisDescription

Weighted Average Yield

Weighted Average Life in Years / Duration

0%

36%

42%

2%

Fixed Income Diversification

Fidelity MMKT

Commercial Paper

Corporate Bonds

U.S. Governments

Government Agency MBS

Asset-Backed Securities

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

100000000

Daily 1 - 3Months

4 - 6Months

7 - 9Months

10 - 12Months

12 - 16Months

16+Months

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Michigan Health Endowment FundStatement of Investments

December 31, 2015Unaudited

Description Credit Rating Maturity Value Market Value Principal Cost $ Gain/Loss

FIDELITY GOVT MMKT AAA 1,565$ 1,565$ 1,565$ -$ 1,565$ 1,565$ 1,565$ -$

FEDL HOME LOAN BK CONS DISC NT AAA 12,000,000$ 11,998,800$ 11,998,163$ 637$ UNITED STATES TREAS BILLS AAA 11,560,000$ 11,558,960$ 11,559,101$ (141)$

23,560,000$ 23,557,760$ 23,557,264$ 495$

SOCIETE GENERALE A1 / P1 1,200,000$ 1,199,568$ 1,199,452$ 116$ HYUNDAI CAPITAL A2 / P2 4,000,000$ 3,997,720$ 3,994,844$ 2,876$

CANADIAN NATIONAL A1 /P1 1,200,000$ 1,199,928$ 1,199,877$ 51$ PPG INDUSTRIES A2 / P2 1,200,000$ 1,199,436$ 1,199,270$ 166$

NISSAN A2 / P2 2,500,000$ 2,499,600$ 2,498,513$ 1,088$ VOLVO A2 / P2 4,000,000$ 3,999,480$ 3,996,733$ 2,747$

CAMPBELL SOUP CO A2 / P2 3,000,000$ 2,998,920$ 2,996,857$ 2,063$ NBCUNIVERSAL A2 / P2 1,200,000$ 1,199,820$ 1,199,593$ 227$

CATHOLIC HLTH INTS A1 / P1 1,200,000$ 1,199,664$ 1,199,456$ 208$ CLOROX A2 / P2 4,000,000$ 3,999,720$ 3,997,472$ 2,248$

THOMSON REUTERS CORP A2 / P2 5,000,000$ 4,999,750$ 4,988,856$ 10,894$ MONSANTO COMPANY A2 / P2 5,000,000$ 4,996,750$ 4,987,393$ 9,357$

BASIN ELECTRIC PWR A1 / P1 1,200,000$ 1,199,724$ 1,199,570$ 154$ ST JUDE MEDICAL A2 / P2 5,000,000$ 4,997,850$ 4,992,860$ 4,990$

AIR LIQUIDE US LLC A1 / P1 1,200,000$ 1,198,992$ 1,198,102$ 890$ 40,900,000$ 40,886,922$ 40,848,847$ 38,075$

MYLAN INC 1.80% Baa3 / BBB- 4,000,000$ 3,997,440$ 4,010,502$ (13,062)$ KEY BANK 5.45% Baa1 / BBB+ 3,000,000$ 3,020,460$ 3,023,970$ (3,510)$

LOCKHEED MARTIN 7.65% Baa1 / A- 5,000,000$ 5,111,000$ 5,113,461$ (2,461)$ FIFTH THIRD 3.625% Baa1 / BBB+ 3,000,000$ 3,005,310$ 3,005,547$ (237)$

HCP INC 3.75% Baa1 / BBB+ 4,250,000$ 4,255,993$ 4,260,188$ (4,196)$ TECO FINANCE 4% Baa1 / BBB 4,000,000$ 4,019,400$ 4,025,270$ (5,870)$

DEUTSCHE TELEKOM 5.75% Baa1 / BBB+ 1,100,000$ 1,110,163$ 1,141,651$ (31,488)$ ALLERGAN INC 5.75% Baa3 / BBB- 4,000,000$ 4,032,440$ 4,048,350$ (15,910)$

CONAGRA FOODS INC 1.30% Baa2 / BBB- 5,000,000$ 5,000,750$ 5,001,748$ (998)$ XEROX CORPORATION 6.40% Baa2 / BBB 2,295,000$ 2,316,137$ 2,321,004$ (4,867)$

DAIMLER FINANCE A3 / A- 3,570,000$ 3,570,143$ 3,570,661$ (519)$ FORD MOTOR CREDIT CO LLC 4.20700% Baa3 / BBB- 4,100,000$ 4,132,841$ 4,137,753$ (4,912)$

DAYTON POWER & LIGHT Baa2 / BBB- 4,000,000$ 4,003,480$ 4,016,634$ (13,154)$ MARATHON PETROLEUM Baa2 / BBB 500,000$ 501,410$ 502,198$ (788)$

47,815,000$ 48,076,966$ 48,178,936$ (101,970)$

BA MTG SECS INC SER 2003-8 CL 2-A-1 BBB / BBB+ 730,578$ 736,542$ 740,853$ (4,311)$ RESIDENTIAL FUNDING SER 04-S4 CL 2A2 A / B+ 182,809$ 183,016$ 184,638$ (1,622)$ RESIDENTIAL FUNDING SER 04-S4 CL 2A3 BBB / B+ 1,305,565$ 1,306,847$ 1,320,253$ (13,406)$

GSR MTG TR 2004-10F SER 2004-10F CL 1A-5 A / A+ 519,432$ 521,449$ 526,738$ (5,289)$ 2,738,384$ 2,747,855$ 2,772,481$ (24,627)$

115,014,949$ 115,271,068$ 115,359,094$ (88,027)$

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MICHIGAN HEALTH ENDOWMENT FUND

RESOLUTION TO APPROVE INVESTMENT CONSULTANT

RESOLVED, that the hiring of Northern Trust as investment consultant, as detailed in their response to the Fund’s Request for Proposal, be, and it hereby is, ratified, adopted and approved.

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MICHIGAN HEALTH ENDOWMENT FUND (the “Fund”)

RESOLUTION TO DESIGNATE RESERVE ACCOUNTS

WHEREAS, at the Fund’s December 16, 2015 Board Meeting the Board allocated to the Fund’s Spendable Account the remaining amount of the Fund’s Maximum Spending Allowance for 2015, and;

WHEREAS, the Board would like to further designate portions of its accumulated Spendable Account as reserves toward specific future programmatic activities.

NOW, THEREFORE, BE IT:

RESOLVED, that $2 million be reserved and designated to the Fund’s 2015 Local Impact Grant program; and

RESOLVED, that $__ million be reserved and designated to the Fund’s Medicare Supplemental Insurance Subsidy (“Medigap”) program; and

RESOLVED, such amounts designated for the abovementioned programs shall be recorded as such in the Fund’s books and records, and shall remain so reserved and designated until the completion of those programs or such earlier time as determined by the Board of Directors.

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BOARD OF DIRECTORS RESOLUTION TO ESTABLISH A PLAN

WHEREAS, the Board of Directors of Michigan Health Endowment Fund (the Employer) has

assembled in a meeting this 25th day of January 2016;

WHEREAS, the Employer has adopted a Safe-Harbor 403(b) Thrift Plan (the Plan) to provide

retirement benefits for employees of the Employer;

WHEREAS, the retirement benefits provided by this Plan are to be funded through a Group

Annuity Contract (the Contract) between the Employer and Mutual of America Life Insurance

Company (the Company);

WHEREAS, the Contract provides that the Company will be compensated for any

administrative and investment services rendered in connection with the Contract and the Plan;

and

WHEREAS, the Company has offered to provide such administrative and investment services

pursuant to an Exclusive Services arrangement which are detailed in the attached Fee Disclosure

and Important Notice.

NOW, THEREFORE, BE IT RESOLVED THAT:

The attached Plan is hereby approved, and the appropriate officers, named below, of the

Employer are authorized and directed to execute the attached Plan Document and enter into

the Contract;

The Employer hereby accepts the Company’s offer to provide administrative and investment

services to the Plan pursuant to the Exclusive Services arrangement which are detailed in the

attached Fee Disclosure and Important Notice; and

Paul Hillegonds, President & CEO, and Terry Gardner, COO & CFO, and their respective

successors in office are hereby authorized and directed to take such further action as may be

necessary, appropriate or advisable to effectuate the foregoing resolutions.

The undersigned, Susan Jandernoa, Secretary of the Board of the Employer, hereby certifies that

the foregoing resolutions were duly adopted by the Board of Directors at the meeting referenced

herein, and that the documents attached are the true copies of the documents referenced in those

resolutions.

_____________________________________

Susan Jandernoa, Secretary of the Board

_____________________________________

Date

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