TCA Endowment Fund may move to Lenawee Community Foundation

Tecumseh City Council was presented with a proposal to move the endowment for Tecumseh Center for the Arts (TCA) from Old National Bank to Lenawee Community Foundation (LCF) during a study session prior to the regular city council meeting Monday. Council instructed Tecumseh City Manager Kevin Welch to place a resolution on council’s next meeting agenda to consider the move. “This is certainly a better approach than what we are doing today,” Welch said.The endowment provides interest earnings that support TCA operations. Currently, the funds are at Old National Bank in a bond portfolio, though the investment of the funds are restricted by Public Act 20, which restricts funds into low risk, low return investments. Welch proposed moving the funds from Old National Bank to LCF and let LCF manage and invest the funds in its portfolio. “Obviously, [they’re] more risky investments,” Welch said. Welch noted in his memo to council that the investment strategy would be “referred to as a “Total Return” approach,” with funds invested in 60 percent equities and 40 percent fixed investments. The TCA would then have a planned draw of 4.5 percent of the 16-quarter rolling average. Welch added in his report that if this approach had been taken in 2008, TCA could have drawn about $53,000 a year and increased the endowment’s principal by $217,000, totaling $376,000 in withdrawals compared to the $252,000 TCA saw during the same period of time. The original endowment was $1 million. As of June 30, 2014, the endowment was valued at $1,141,000. The endowment, at one time, was valued at a high of $1.25 million. Last year, interest earnings were approximately $27,000. TCA also pulled approximately $100,000 from the endowment’s principal. Welch added that the donor of the endowment, who has to agree to move the funds, thinks the move is a good idea. “The sooner we do it, the sooner we get the benefit of it,” said Welch. The proposition to move the funds was presented 10 years ago, said Welch, but the approval of the move did not happen. Welch added that if the city did not like the returns after moving the funds to LCF, they could be moved back to how the funds are currently invested, as the proposed contract with LCF is currently worded. In other business during its regular meeting, council: • Approved Communities in Schools of the Tecumseh Area to sell beer and wine at the AJ Smith Recreation Center during its annual fundraising event on March 14• Approved “Acres of Fun 5K Run” special event scheduled for May 9• Was informed that Tecumseh Police Officer Bill Warner was retiring from the force to begin a career at Raisin Township

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