Jefferson Memorial Foundation Board Meets
The Jefferson Memorial Foundation Board met on Monday, February 25, 2013 to discuss and take action regarding $12.4 million dollars in funds that the Foundation is charged with investing and distributing. Following a Call to Order by Board Chairman Fain and approval of the minutes, the Chairman informed the Board that action was needed to guarantee the security of Foundation funds, due to limitations in insuring the funds in their current investment. Recently, the Foundation temporarily placed the funds with Regions Bank, however the amount of investment exceeds the coverage limit for insurance. Questions regarding the designation of the funds as public or private have, thus far, remained unanswered despite a request for a ruling from the Attorney General. The situation that is before the Foundation is unique and there is no legal precedent for the Attorney General to base a ruling. Because this is a precedent setting issue, Foundation Board Members have received no official ruling on the issue of whether the $12.4 million in funds should be considered public or private funds and that determination is vital to investment avenues available to the Board. Options for private funds are not as restrictive as public funds and have the possibility of yielding a higher return, however there are some investment opportunities for public funds that have been performing well. Until the funds are designated as public or private, the Board cannot make a strategic investment and the funds are in a relative holding pattern. Upon a motion from Board Member Moser and 2nd from Board Member Long, the Board approved making a request to the Jefferson County Commission and the Jefferson City Council to make available up to $50,000 for the retention of an attorney and other costs associated with pursuing a legal decision on the designation of the funds and financial guidance on the investment there of. The Foundation Board will most likely file in court to receive a ruling on the designation of the funds.
Chairman Fain stated that there are very limited insured short term options for the funds due to an insurance cap of $250,000. He said that the most viable option that he could identify was to invest the funds, short term, in certificate of deposit account registry service (CDARS), which would place the funds in one bank that would then spread the funds out to participating financial institutions in amounts that would not exceed the insurance maximum. Though the investment would be sound in such an account, the return is minimal compared to other investments, however until a public or private determination is made there is no way to conclude which investments are available to the Foundation. Two local banks that participate in the certificate of deposit account registry service, FSG and First Tennessee, had identical 4 month return rates (.05%). FSG had a higher rate for longer, short term investments should an extension be required. Upon a motion from Board Member Pettit and 2nd from Moser, the Foundation Board approved the movement of $12.4 million in Foundation funds from Regions Bank to FSG Bank CDARS for the term of 4 weeks. Jefferson County Finance Director Helton stated that he will request that the Mayor of Jefferson County call a special meeting to deal with the request for operational funds. Jefferson City Mayor Potts stated that Jefferson City Council will address the request at the next meeting.