The Able Trust Executive & Finance Committee Meeting - May 2023

EXECUTIVE & FINANCE Committee Meeting Agenda – May 16, 2023 – 8:30 – 9:30 AM

Virtual Meeting

Zoom Link: : https://us02web.zoom.us/j/88445178273?pwd=bFJ1TlZqYk55UlVQcSszU2YyVksvUT09

Meeting Call-In Number: 1-929-205-6099 Meeting ID: 884 4517 8273 Passcode: 046896

Directors are reminded that all Able Trust Board and Committee meeting are open and publicly noticed. Under Florida Sunshine Law, any meeting of 2 or more Able Trust Directors must be publicly noticed. Directors are prohibited from discussing Able Trust business outside of official meetings of the organization.

Directors are reminded of conflict of interest provisions. In declaring a conflict, please refrain from voting or discussion and declare the following information: 1) Your name and position on the Board, 2) The nature of the conflict, and 3) Who will gain or lose as a result of the conflict.

I. Call to Order and Roll Call

II. Consent Agenda - Action

a. Meeting Agenda

b. February Executive & Finance Committee Minutes

III. Regular Business

a. Financial Reports - Action

i. Profit & Loss Sheet

ii. Balance Sheet

b. FY 2023 – 2024 Draft Budget - Action

c. Investment Policy ESG Prohibition Revision - Action

d. Reauthorization & New Reporting Requirement

e. Collective Impact Project & Industry Specific Trainings/Events

IV. Unfinished Business New Business Public Comment

Next Executive & Finance Committee Meeting: August 1, 2023, 8:30 – 9:30 AM

Adjourn

Laurie Sallarulo, Board Chair

Laurie Sallarulo, Board Chair

Doug Hilliard, Treasurer

Laurie Sallarulo, Board Chair

Laurie Sallarulo, Board Chair

Please Note: Agenda subject to revisions and additions per the discretion of the Chair of the Board of Directors. Notification will be sent of any such revisions or changes.

Members of the Public: Please notify Arnaldo Ramos at Arnaldo@abletrust.org if you wish to make public comment on particular agenda items no later than 1-hour prior to beginning of the meeting.

Florida Endowment Foundation for Vocational Rehabilitation, dba The Able Trust DRAFT Executive & Finance Committee Meeting Minutes

Executive/Finance Committee Meeting – February 7, 2023 – 8:30 AM

Virtual Meeting

Members in Attendance Chip Byers; Doug Hilliard; Mavara Mirza-Agrawal

Members Absent Laurie Sallarulo

Staff & Guests in Attendance Allison Chase, President & CEO; Arnaldo Ramos, Executive Assistant; Scott Hilton, Wells Fargo

Item Action/Discussion

Call to Order and Roll Call Mavara Agrawal called the meeting to order at 8:30am. A quorum was confirmed.

EXECUTIVE COMMITTEE CONSENT AGENDA

a. Meeting Agenda

b. November Executive & Finance Committee Minutes

c. Financial Reports

a. Profit & Loss Sheet

b. Balance Sheet

REGULAR BUSINESS

a. Wells Fargo Investment Update

b. FY24 Spending Rate (6%) and Budget Planning

c. Legislative & FDOE/VR Update

d. OIG Audit Report & Response

e. BOD Retreat

a. VR Workshop

b. Strategic Planning & Fundraising Sessions

c. Project Venture Event

Chip made a motion to accept the consent agenda, seconded by Mavara. The consent agenda was unanimously approved.

Scott Hilton gave an update on our state investment and family endowment accounts. We are continuing to deal with a volatile market, but restructured targets have allowed advisors to move more funds into bonds and alternatives mitigating losses as much as possible. No required action by the committee at this time.

Doug referred committee to spending policy and reminded them that each year we reduce our percentage of investment withdrawal by 1%. The upcoming year will be 6% of assets which is $1,080,000. This is approximately $500k less than the current year. He reported that we are $50k away from our raised revenue goal of $600k this year. Next year, our goal is $900k and will be developing our plan for raising those funds at the BOD retreat. The draft budget for FY24 will be presented at the next committee meeting in May.

Allison provided a legislative update. We have bills sponsors in both houses for a 4-year reauthorization. We are working with our lobbyist and FDOE leadership, and will advise board directors if we need their assistance.

Mavara gave an update on the OIG audit report. We had one finding that we are out of compliance with regard to board evaluation of grant funded projects. We concurred with the finding, and the Grant Committee has reviewed and approved a new process going forward.

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Mavara reviewed the agenda for the BOD retreat Retreat portion of the meeting is Tuesday afternoon, 1:00 – 5:00 where the primary focus on VR alignment & Fundraising HSHT Annual Awards Reception 5:30 – 6:30 – BOD directors will be invited to present awards Dinner 7:00 – 9:00 – working on guest speaker from Council of State Administrators for VR. Our quarterly Business Meeting will immediately following Project Venture on Wednesday, and adjourn no later than 2:00

There was no discussion. PUBLIC COMMENT

UNFINISHED BUSINESS

NEXT MEETING

ADJOURN

No public comment was offered.

May 2, 2023, 8:30 – 9:30 AM

The meeting adjourned at 9:40am.

Respectfully submitted, Laurie Sallarulo, Committee Chair

Anticipating $86,250 in 4th Qtr

Anticipating Remaining funds in 4th Qtr

Anticipating $86,250 in 4th Qtr

Anticipating Remaining funds in 4th Qtr

The Able Trust Budget - Proposed FY2023 - 2024

FLORIDA ENDOWMENT FOUNDATION FOR VOCATIONAL REHABILITATION INVESTMENT POLICY STATEMENT

November 17, 2021

PURPOSE

The Florida Endowment Foundation for Vocational Rehabilitation (dba The Able Trust) is created by the Florida legislature as a direct-support organization of the Division of Vocational Rehabilitation, to encourage public and private support and as a long-term, stable, and growing source of revenue for the purpose of enhancing vocational rehabilitation and employment of Floridians who are disabled. It is the mission of The Able Trust to be a key leader in providing successful employment opportunities for Floridians with disabilities.

SCOPE OF THIS INVESTMENT POLICY

This investment policy has been established by The Able Trust Board of Directors to govern the investment management of the endowment fund created by public and private support. The intent of the Investment Policy Statement is to comply with the requirements of FS 413.615 and the Florida Uniform Management of Institutional Funds Act, FS 617.2104, to ensure prudent management of the assets to serve the best interests of Floridians with disabilities in their pursuit of successful employment.

Exceptions to this policy may only be made when adhering to specific requirements of donor advised funds.

BOARD DIRECTORS’ ROLE

a. The Board of Directors is appointed by the Governor and shall consist of nine members who have an interest in service to persons with disabilities and who:

i. Have skills in foundation work or other fundraising activities, financial consulting, or investment banking or other related experience; or

ii. Have experience in policymaking or management-level positions or have otherwise distinguished themselves in the field of business, industry, or rehabilitation.

b. The Board will determine the Foundation’s risk tolerance and investment horizon.

c. The Board will establish reasonable and consistent investment objectives, policies, and guidelines that will direct the investment of the Foundation’s assets.

d. The Board will prudently appoint, evaluate and remove other service providers, such as investment management consultant(s), investment managers, custodian(s) and other specialist such as attorneys and auditors that it deems necessary for The Able Trust.

e. The Board will review this Investment Policy Statement at least once per year. Changes to this Investment Policy Statement can be made by affirmation of a majority of the Board.

PRESIDENT & CEO ROLE

a. Negotiate compensation arrangements with all service providers; control and account for all investment expenses.

b. Receive, review, and retain reports of the investment consultant(s), and the custodian and other reports on the financial condition of The Able Trust investment funds.

c. Manage and monitor all defined risks in the portfolio with assistance of the Investment Consultant(s).

d. Authorize rebalancing between existing investment managers within the guidelines established by the board based upon recommendations from the consultant(s).

e. Report recommendations and conclusions to the Board.

INVESTMENT MANAGEMENT CONSULTANT(S)

The Investment Management Consultant's role is that of a non-discretionary advisor to The Able Trust. Investment advice concerning the investment management of Fund assets will be offered by the Investment Management Consultant, and will be consistent with the investment objectives, policies, guidelines and constraints as established in this statement. Responsibilities include:

a. Manage the Fund’s assets in compliance with the standards according to Uniform Prudent Management of Institutional Fund’s Act (UPMIFA).

b. Assist in the development and periodic review of investment policy and objectives.

c. Assist in the development and periodic review of asset allocation strategy. Recommend strategic and tactical asset allocation changes within the guidelines of the policy.

d. Review the capital markets in light of the Fund’s investment objectives.

e. Assist in the management and tracking of all defined risks in the portfolio.

f. Implement portfolio rebalancing upon direction of the President and CEO within the guidelines of the policy.

g. Assist in compensation negotiations with investment managers, custodians and other service providers. Assist the President and CEO in the determination, understanding, negotiation and accountability of all Fund investment costs.

h. Conduct investment manager searches, make recommendations, provide “due diligence” or research on Investment Managers.

i. Provide the performance of the total Fund and Investment Manager(s) to assist the Board of Directors with the ability to determine the progress toward the investment objectives.

j. Communicate matters of policy, manager research, and manager performance to the Board of Directors

k. Review Fund investment history, historical capital markets performance and the contents of this investment policy statement with any newly appointed board members.

l. The Investment Management Consultant must operate without any undisclosed conflict of interest.

INVESTMENT MANAGER(S)

Each Investment Manager will have full discretion to make all investment decisions for the assets placed under its jurisdiction and within guidelines of their stated investment methodology. Responsibilities include:

a. Investment managers are required to maintain prudent diversification and manage the risk of their portfolios.

b. Discretionary investment management including decisions to buy, sell, or hold individual securities, and to alter asset allocation within the guidelines of their stated methodology.

c. Report, on a timely basis, quarterly investment performance results.

d. Communicate any major changes to economic outlook, investment strategy, or any other factors that affect implementation of investment process, or the investment objective progress of the Fund's investment management.

e. Inform the Investment Management Consultant regarding any qualitative change to investment management organization: Examples include changes in portfolio management personnel, ownership structure, investment philosophy, etc.

f. Meet with the Investment Management Consultant and/or Board of Directors as needed.

g. The Investment Manager must operate without any undisclosed conflicts of interest.

CUSTODIAN(s)

The custodian(s) will physically (or through agreement with a sub-custodian) maintain possession of securities owned by the Fund, collect dividend and interest payments, redeem maturing securities, and effect receipt and delivery following purchases and sales. The custodian(s) may also perform regular accounting of all assets owned, purchased, or sold, as well as movement of assets into and out of the Fund accounts.

INVESTMENT OBJECTIVE

a. The funds are to be invested with the objective of preserving a long-term, stable, and growing source of revenue. Funds should provide a predictable and growing stream of quarterly distributions in support of successful employment opportunities for Floridians with disabilities.

b. Investments will earn an average annual rate of return over 7 years which exceeds the average rate of inflation (CPI) by 3.5% net of all investment management expenses.

c. For the purpose of making distributions, the Board will refer to FS 413.61;, the contract between the Foundation and the Division of Vocational Rehabilitation; and The Able Trust Grants Policies.

d. As of July 1, 2021, no amount of interest and earnings from the state investment funds may be used for administrative expenses as defined in FS 413.615 Section (8)(j).

INVESTMENT PRINCIPLES

a. Investments will be made solely in the interest of the beneficiaries of the endowment as defined in FS 413.615.

b. The endowment funds will be invested with care, skill, prudence, and diligence.

c. The Able Trust recognizes that some risk is present in all types of securities and investments and recognizes that some risk is necessary to produce long-term investment results that are sufficient to meet investment objectives. However, the investment managers are to make reasonable efforts to control risk and will be evaluated to ensure that all risk assumed is commensurate with the given investment style and objectives.

INVESTMENT POLICIES

a. Asset Allocation Policies

i. The Board recognizes that the strategic allocation of portfolio assets across broadly defined financial asset and sub-asset categories with varying degrees of risk, return, and return correlation will be the most significant determinant of long-term investment returns and asset value stability.

ii. The Board recognizes that actual returns and return volatility may vary from expectations and return objectives across short periods of time.

iii. The investment manager(s) shall make reasonable efforts to preserve the endowment corpus, understanding that losses may occur in individual securities. However, the investment manager(s) shall make reasonable efforts to control risk.

iv. Endowment fund assets will be managed as a balanced portfolio composed of three major components: an equity portion, a fixed income portion, and an alternatives portion. The equity investments will be to maximize the long-term real growth of portfolio assets; the fixed income investments will be to generate current income, provide for a stable periodic return, and provide some protection against a prolonged decline in the market value of portfolio equity investments.; and the alternative funds will be for diversification and downside protection.

v. Cash investments, under normal circumstances, will only be considered as temporary portfolio holdings, and will be used for fund liquidity needs or to facilitate a planned program of dollar-cost averaging into investments in either or both equity and fixed income asset classes.

b. Asset Allocation

i. Assets will, under normal circumstances, be allocated across broad asset and sub-asset classes in accordance with the following guidelines with a fluctuation up to 10 percent:

c. Rebalancing

i. The investment portfolio will be reviewed quarterly and rebalanced, within guidelines, when any asset class is outside the minimum or maximum policy allocation. Rebalancing to Alternative Asset Classes will take into consideration the liquidity of those investment programs. Cash flows into or out of the Fund will be utilized to rebalance the portfolio as close to the strategic asset allocation as possible or toward a tactical allocation provided by the Investment Management Consultant. Tactical allocations must be within the maximum allocation limits provided.

EVALUATION OF PERFORMANCE

a. Performance Guidelines for the Total Fund: The Board will monitor the investment performance against the portfolio stated investment objectives and as set forth below. Performance reports generated by the Investment Consultant(s) will be compiled quarterly and communicated to the Committee for review. Performance measurement will focus on:

i. Comparing the portfolios total net return to CPI +3.5%.

ii. Comparing the portfolios total gross return to blended return of the following indexes.

40% Russell 3000 Index

20% MSCI AC World Ex US net Index

30% Barclays Aggregate Index

10% HFRI FOF Diversified

100% Total

b. Performance Guidelines for Investment Managers hired on behalf of the portfolio will be judged, over the investment horizon, against the following standards:

i. Meet or exceed the market index, or blended market index, selected and agreed upon by the Board that most closely corresponds to the style of investment management

ii. Display an overall level of risk in the portfolio that is consistent with the risk associated with the benchmark specified above. Risk will be measured by the standard deviation of quarterly returns, the portfolio beta, alpha, capture ratios, and other forms of risk management

c. Investment reports shall be provided by the investment consultant(s) on at least a quarterly basis or as more frequently requested by the Board. Quarterly reports will include, at a minimum, portfolio performance, current value of the portfolio, management fees, and any changes in investment philosophy or strategy. Each investment consultant is expected to meet with the Board at least once per year to review the portfolio structure, strategy, and investment performance.

SPENDING POLICY

a. Disbursements from the endowment will be distributed on a quarterly basis and in accordance with FS 413.615 and the stated Investment Objectives.

b. The value of the endowment includes dividends, realized and unrealized gains. This spending plan will be reviewed annually and recommendations for changes shall be considered by the Board.

PROHIBITIONS

The Able Trust Board, investment managers, and investment management consultants are prohibited from using environmental, social, and corporate governance (ESG) as an investment strategy.

ADOPTION

The Board adopted this Investment Policy Statement on the 17th day of November, 2021.

Executive & Finance Committee

May 2023, Agenda Notes

Profit & Loss Sheet

• Remaining Project Revenue (line 11) is expected in the 4th quarter.

• Remaining State Appropriations fund (line 13) expected in the 4th quarter.

• On track to be at or under projected expenditures for the year.

• On track to be at or over projected revenue for the year.

Balance Sheet

• State Endowment Assets up $350k in last quarter

• Total Unrestricted Assets up $320k in last quarter

• Total Managed Funds and Assets up $400k in last quarter

• Total Liability and Equity down 11.6 % in past year compared to national average of 19.4%

• Line 258.100, Accumulated Amortization is new GASB required notation, netting against lease asset

FY2023 – 2024 Draft Budget

• Line 13, Project Based Revenue major increase from VR ArtCIE Federal Grant. TAT acting as subcontract/grant manager

• Line 15, State Appropriations, increased by $450k for full state funding of HSHT

• Line 24, ArtCIE Grant Project includes subcontracts and our expense for grant management

• Line 25, Tampa Collective Impact Grant & industry-specific training projects (example: USF College of Nursing summer immersion experience for HSHT students)

• Line 38, Research/Data Analysis, $60k for new legislative statewide assessment & report

• Line 39, Innovation Grants & Projects now funded under Line 25, Grants & Capacity Building Support

• Line 52, Marketing and Support Materials increase of $13k to consolidate expenses that have been spread across program and more accurately track (i.e. HSHT, Project Venture, DEAM, etc.)

• Line 81, Salaries, 5% across the board increase with small cushion for additional merit increases

Investment Policy Revision

The following statement is added to comply with Governor’s Office and Legislative Mandate:

PROHIBITIONS

The Able Trust Board, investment managers, and investment management consultants are prohibited from using environmental, social, and corporate governance (ESG) as an investment strategy.

Reauthorization & New Legislative Reporting Requirement

• Both houses have voted to extended our reauthorization period through October 1, 2027

• Both houses have adopted language that requires The Able Trust to conduct research on the following:

o Identify the current systems for service delivery to persons with disabilities, including operations, services, coordination of activities, and structures.

o Identify barriers and obstacles in transportation for persons with disabilities living in the home or receiving community-based services for jobs, medical appointments, and peer-to-peer groups.

o Identify workforce issues related to direct support professionals, behavioral or mental health specialists, health care practitioners, and other individuals who assist with the provision of services to persons with disabilities.

o Examine the best practices for uniform and efficient service delivery and the coordination of and transition among systems, including transitioning our of high school.

o Examine federal and state laws and rules that impact or limit supports or services for persons with disabilities.

o Identify systemwide incongruence and inefficiencies in service delivery.

o Identify opportunities for job coaching and community participation supports, including those opportunities for individuals who cannot, or choose not to, enter the community because of underlying issues.

A final report on these elements and recommendations for potential strategies is expected to be presented to the Legislature by December 1, 2023.

Collective Impact Projects & Industry Specific Trainings/Events

• Staff is recommending to the Grant Committee that we reduce the number of collective impact projects for FY2023-2024 from 2 to 1, in the Tampa Bay area. This will allow for more focused testing and resources in Tampa, and more staff time to devote to the new legislative research study/report. The committee will vote next week on a recommendation to the full board on June 1st .

• The remaining $150,000 that would have been allocated for a second collective impact project will be used for industry specific trainings and events to attract high school and college students into in-demand careers. (Example: USF College of Nursing summer 2023 program)