Dickinson College
Sustainable Investments Task Force
6/27/13 Meeting Minutes

Task force members in attendance were:  Jim Chambers (Chair, via telephone), Steve Hietsch, Michelle Fisher, Mara Donaldson, Michael Fratantuono, Will Kochtitzky, Adam Laird (via telephone), Neil Leary.

Absent were:  Margaret Lindsay.

Others in attendance were:  Sean Witte (Controller) and Keith Gillespie (Assistant Treasurer), Will Nelligan (Student Senate President, via telephone).

Chair Jim Chambers called the meeting to order at 1:04 PM.

Will Nelligan explained how the Student Senate became involved with the Reinvest Dickinson group. Senate passed a resolution urging the board of trustees to create a task force. They are very pleased the task force came together so quickly. They think the issue should start a serious conversation on campus. They sort of take the official position that it is a question of how we help ensure we live up to our values while at the same time ensure the financial viability of the institution. It began when Reinvest Dickinson asked senate to endorse their proposal toward divestment of the endowment and creating a revolving fund for the monies that were divested. They discussed it in senate meetings, meetings with Reinvest Dickinson and other groups. They were able to come to an agreement on the side to table the idea of a resolution endorsing divestment and rewrite a resolution that endorsed a process of investigation and community engagement. He feels strongly that was the right approach as it lives up to the shared governance model on campus. They took the idea back to Senate meetings. The senators were overwhelmingly supportive. There were a few who were opposed. The opposition was focused on being anti-divestment not anti-investigation of divestment. Otherwise the students they heard from were very supportive of either divestment, investigation of potential divestment or both. Senate is very happy to have a group of peers, faculty and staff sitting around talking about this and that they have representation.

Jim Chambers thanked Will for his report. Will said he and the senate are very willing to help in any way they can. At that point Will disconnected from the call.

Neil Leary was welcomed to the committee since he was absent at the last meeting.

The minutes from the last meeting were reviewed and some questions asked. Mara Donaldson asked for clarification regarding the meetings not being confidential and being able to speak with outside groups who are asking questions about what is happening on this subject. Jim Chambers commented if we said it was a confidential process it would then force a discussion to talk about what we are comfortable talking about with outside groups. It was agreed the committee members should have the same talking points about what is going on with the committee at any point in time. It was decided that at the end of each meeting the committee will agree what the appropriate talking points will be. The minutes were approved with the revisions discussed. Revised minutes will be sent to the committee electronically after the meeting.

Jim Chambers asked everyone to look at the work plan to make sure everyone agrees they captured the revisions that were discussed at the last meeting. He asked for any comments from the committee. It was agreed that the work plan will be used as a strong guideline of the material to be covered. Will Kochtitzky made some very small changes and will distribute the work plan with those changes tracked on the document. Adam Laird commented it seems like a lot of presentations.  He asked how we build structured discussions into the work plan responsibly and efficiently. We want to have dialogue…not pure lectures. The committee needs to have time for discussion after the presentations. Steve Hietsch said we may need to modify the schedule to accommodate that. We will take that into consideration and work through it.

Jim Chambers turned the meeting over to Will Kochtitzky for his presentation. Please see the presentation at this link: https://docs.google.com/file/d/0B06meDYUIMrdOXJYVmtCMDJsZW8/edit?usp=sharing

Will began his presentation with some background on Reinvest Dickinson for the committee. Other topics in his presentation focused on global fossil fuel reserves, global warming, climate change and the human element of it, fossil fuels as an investment, industry prices for oil, gas and coal and divestment in the past. One of the other topics in his presentation focused on other schools in our Investure group that we are able to work with on this topic. Those being: Middlebury College, Barnard College, Smith College, Trinity College and University of Tulsa. He also touched on what Dickinson can do as far as divestment or besides divestment. Will closed his presentation by sharing Reinvest Dickinson's goals for the future.  The following discussion occurred.

A question was asked about the students from other Investure colleges with whom Reinvest Dickinson has been able to work. Will said they are in contact with Middlebury. Some of the students there are very radical. That is not the direction in which Reinvest Dickinson wants to go. Barnard has joined their forces with Columbia University. Reinvest Dickinson is in contact with the students at Smith. They do not know much about the group at Trinity and University of Tulsa. Swarthmore has one of the oldest divestment groups. They have a lot of resources and are a completely student driven group to the best of Will's knowledge. They are very public and outspoken and confrontational. Will reiterated that is not what Reinvest Dickinson is about. As far as he knows there is no one who has the type of group that we have here which includes trustees, staff and students. A question was asked that if the college was able to divest are the items listed as besides divestment still on the table. The point was made that the wording besides divestment versus in addition to divestment is very critical. Mara Donaldson said it is not where we began in terms of thinking about the problem of investing in fossil fuel companies and along with our vision to be consistent with our values. Neil Leary added as a moral and ethical argument that we do not want to be deriving income from investments in companies which are hurting the environment.   However, we are still dependent upon fossil fuels to run the campus, so divestment without independence from fossil fuels can be seen as hypocritical. It is not just one ethical argument. Mara Donaldson said she would prefer to use a different work than besides.  So it does not look like we are throwing the baby out with the bathwater. Mike Fratantuono asked are these alternatives to the ability to effectively divest? Will said he does not think these are alternatives; we can use multiple roads to go down. Adam added the word they may need to use is parallel.  Jim said he would like to see some clarification from the group on this.

Jim Chambers said Reinvest Dickinson's goals #1 & #3 are fundamental to our work plan and what we are trying to achieve. The movie or documentary is more of a tool. He looks at climate change as kind of a given and what are we going to do about it from an investment perspective. Neil Leary agreed that if the task force looks at it that way and takes it as a starting point he is happy with the suggestion to go that way. He added as to what role the ways Reinvest Dickinson plays he is looking at it as a broader educational tool interested in leveraging the task force to enrich discussions and learning on campus. Mara Donaldson said that the fact that we are the only school trying to work on divestment with a task force is important to note.  There may be some very interesting things that will come out of it. Adam Laird mentioned he thought the stocks being over valued is a very interesting point. Neil Leary interjected that this is a very volatile part of the market that we did not understand before. We need to understand it. Steve Hietsch has already sent that information to Investure. Our portfolio is pretty light on fossil fuels. He will send more updated information from Investure to the committee today. They ask we keep the specific investments confidential. It is ok to give the percentages.

The meeting was turned over to Steve Hietsch for his presentation on Finances and Endowment. He talked about the strategic picture as it relates to what we are trying to do here at Dickinson and how it ties in with the endowment and other things in our financial environment.

Finance portion:  We need to find ways to tap into other sources of revenue besides tuition, fees, room & board. Dickinson is somewhere in the middle on the slide titled Disparity of Wealth. Dickinson TFRB charges have more than tripled since 1991. Between 1992 - 2014 the TFRB increase has averaged 5.02 percent while the CPI has increased by an average of 2.46 percent. The college has been trying to stick with a 3.5 percent increase for the TFRB over the past several years. It has been very difficult to do. Another factor is the tuition discount rate which has been increasing which is reflective of peoples more limited ability to pay based upon economic need. 10 percent of financial aid comes from the endowment…90 percent of financial aid is unfunded.  The number of first year full-pay students is going down. There is a lot of competition for talented students. Our first year discount rate is below the national average and we cannot count on it going down in future years.

Endowment portion:  Steve began by reviewing the purpose and origins of the endowment. He explained the difference between the pooled endowment funds (831), non-pooled endowment funds (33) and NACUBO endowments. The 5% endowment spending is set by the board of trustees.  It is based on the 12-quarter average. Under state law spending must be between 2 - 7 percent. The college can only spend the income generated, not the principal of the fund. Various slides show the realized returns for various time frames and compared to other schools, etc.

Summary of key points:

  1. All institutions of higher-education are in a period of greater financial limitations. Net tuition revenue growth has slowed dramatically, with very limited potential for future growth.
  2. Institutions with larger endowments have a distinct advantage, which is magnified in the new environment.
  3. In order to remain competitive Dickinson will need to grow its endowment faster than other institutions.
  4. Endowment performance under Investure has been superior when compared to other institutions, falling in the top 10 percent for higher-education.
  5. Even if we achieved returns at 75th percentile, this would dramatically affect our long-term endowment growth and overall competitiveness.

The following discussion occurred:

Sean Witte explained we expect to realize higher returns than the S&P 500. We are not in this relationship with Investure expecting to earn those returns such as the S&P 500. Will Kochtitzky wondered what our endowment would look like if we did not have the fossil fuels. Steve Hietsch answered we are very light in the fossil fuel industry; around 4.5 percent of our endowment. We are about 6 percent in sustainable companies. Sean explained that basically we cannot sell stocks from one fund manager under Investure. Investure will go over this at the next meeting in July. Sean Witte explained the whole point of Investure is to have purchasing and negotiating power. Jim Chambers added there are a huge number of variables beyond just risk but the important thing with Investure is that this is what they do all the time. It would be a dramatic increase in what we would have to do internally to do this investing ourselves. Mara Donaldson asked when Dickinson started this model with Investure. Sean explained that previously we had some young alumni who were in the industry ("Young Turks") who were used as our investment consultants. They were very successful. He is not sure why the college went to Investure in 2006. Sean said the college petitioned Alice Handy at Investure to take the college on as a client. He suggested we could contact Annette Parker for background information.

Concluding remarks by Jim Chambers included reviewing the July 25 meeting currently scheduled with Investure. The August 29 meeting date will be changed.

Review of the agenda and sharing of information:

Will Kochtitzky agreed it is ok to share the information on his Reinvest Dickinson presentation. They want to have the information out there. Steve Hietsch agreed it is ok to share the information he presented on the finances and endowment. Jim Chambers said he prefers the committee does not send the information out en mass but use the materials that were presented for reference. Or alternatively, refer people to Steve or Will. Steve asked if it would be helpful to attach some narrative comments to each slide. It would give some explanation behind the data and graphs. Jim agreed that would be great if easy to do. He would like to have engaged conversation come from the information being sent out.  Mike Fratantuono asked if we have a website for this task force where the agreed upon information can be posted in one place. It may be the best way to disseminate the information. Steve agreed that would also be a way to start community conversation and engagement. Mike said that will also be a way to know what information is acceptable to share. Jim said we should discuss the website idea at the next meeting.

There being no further business before the task force, the meeting was adjourned at 3:20 PM.

Discussion after meeting adjourned: (Jim Chambers had disconnected)

The rest of the group informally discussed the website having links to the Sustainability Website and the Financial Operations website. Mara feels where it is placed will be a strategic question. The point was made that this is not a president's task force but a board of trustees task force.

Respectfully submitted,
Vicki Rotz