By SCOTT MCKIE B.P.
ONE FEATHER STAFF
The EBCI Minors Fund was worth over $329 million as of Sept. 30, 2010 according to information presented during a Tribal Council work session on Monday, Jan. 31 to educate the public about the Fund and investments in general. As of that date, the fund had 4,891 participants with each fund being worth an average of $67,416.47.
Following the downward economic trend, the Fund reported over $57 million in unrealized losses in 2008, but some of that equaled realized losses for the youth who aged out and withdrew their money – some losing tens of thousands in interest monies previously gained.
“It’s hard to explain to those kids that they’re not going to make that money up,” said Rep. Crowe.
Monday’s meeting was facilitated by the EBCI Office of Budget and Finance in conjunction with representatives from the New England Pension Consultants (NEPC), the Tribe’s contracted investment consultants.
Greg Bauer, senior consultant with NEPC, and Rob Norcross, senior analyst with NEPC, presented various components of a presentation entitled
“Investments 101 with NEPC” that took listeners through the ins and outs and definitions associated with investing.
Cindy Chandler, investment analyst with the Office of Budget and Finance, spoke about the processes involved in handling the Fund.
Principal Chief Michell Hicks asked Chandler, “Has there ever been a time when Tribal government has touched the Minors Fund?”
To which Chandler replied, “No, that never happens. Never. I’ve been here six years and its never happened.”
Chandler described the taxes imposed on the Fund as participants withdraw their money. “We withhold 25 percent. These are large accounts. It’s staggering.”
Wolfetown Rep. Mike Parker asked if staggered payments as opposed to one lump sum could be an option to ease the tax burden.
Chandler say that would be a good idea and one the Tribe could look at and Chief Hicks related, “It would save a significant amount of money.”
Karen Kennedy, financial operations director with the Office of Budget and Finance, said that the Fund is currently in conservative investments with low risk but consequently low returns. “We’re very challenged right now finding a product that gives us a positive return. It’s just flat. We’ve lowered our risk and we’ve lowered our gain potential. Folks will not earn what they have in the past because its more conservative.”
One topic covered in the meeting was the interest monies lost by Fund participants several years ago when the market took a plunge. The then-Investment Committee chose not to move the monies from the 17-year-old participants into a low-risk money-management account as stated in the Investment policy.
In July 2009, an independent review was conducted on the situation and concluded that the “committee acted with prudent investor standards in not moving 17yr-old fund.”
That same month, the EBCI Attorney General’s office issued an opinion that those Fund participants should be indemnified for losses due to the money not being moved.
Big Cove Rep. Teresa McCoy said people should be upset the money was not moved. “Everybody on this Council knew that the economy was going south. To me, a law was broken. Someone should be held accountable.”
She said that quarterly reports should be given instead of annual reports to keep the flow of information fresh in everyone’ s hands. “Please communicate a little bit more with the public.”
Kennedy related that $906,000 was taken from the Tribe’s general fund in December 2009, per a resolution by Chief Hicks, to indemnify those that lost money as a result of the situation. He said he is appreciative of the work of the Office of Budget and Finance and the Investment Committee, “We went through a hard time and we indemnified as necessary.”
Kennedy added, “We indemnified them back to the point if they had been moved which included some interest component.”
Kim Peone, Deputy Finance Director and current Investment Committee chairperson, said the Committee will be more stringent in monitoring the Fund and reporting on its status. “We do want to be transparent. We do want to have dialogues with people.”
She added that the Investment Committee and Budget and Finance Office representatives will be going to the various communities in upcoming weeks to help educate the public further on the Fund.
Cherokee County – Snowbird Rep. Diamond Brown Jr. commented, “It’s a gamble that we’re dealing with. It’s an up and down. It’s a give and take. We should be thankful for anything that we get because some tribes don’t get anything.”