Executive Committee Minutes October 2014

Maine Maritime Museum
Minutes of the Meeting of the Executive Committee
October 21, 2014
Present: Terry Gray, Erik Hayward, Jim Joslin (via phone), Marty Lakeman, Dick Lemieux, Skip Orem, Lincoln
Paine, Jack Parker, Cliff Russell
Excused: Geoff Alexander, Steve Caulfield,
Staff: Janice Kauer, Amy Lent, John Settelen, Joy Wiley
Dick Lemieux welcomed everyone to the meeting at 8:30 am and asked the trustees to let him know if they
had any recommendations for a new chair of the Trustee Committee.
1. Minutes of the Previous Meetings (Dick Lemieux for Geoff Alexander)
MOTION: To accept the July 29, 2014 minutes of the Executive Committee.
MOTION SECONDED. DISCUSSION: None. MOTION PASSED UNANIMOUSLY.
2. Executive Director’s Report (Amy Lent) - The BIW tours and the boat cruises have officially ended for the
season. Jason Morin did a phenomenal job working with the BIW tour guides to revise the BIW tours in less
than 3 months’ time. Although the BIW tours started off slowly, the numbers improved as the season
progressed. The BIW tours will probably start off better next season. The cruise boat struggled with
numerous mechanical issues along with failed Coast Guard inspections. Even though there were many
cruise cancellations, the net revenue on the cruises ended up a little better than last year since a better
deal had been negotiated from the previous year. However, with more people taking cruises, the
admission numbers are affected since the net amount on the one hour boat cruise is less than the $15
admission fee. The Lobster Exhibit project is moving along and another meeting with the exhibit designers
will be held tomorrow. At the recent Maine Lobsterman’s Dealers Association meeting, Amy learned
about the RED (Research, Education and Development) Fund which is funded by the lobster license plates.
There is $1 million in the fund to be distributed for these purposes. The dealers encouraged the museum
to apply based on the education piece. The economic impact report was recently updated by Chuck
Lawton for the Economic Development Administration Grant application. The report was also expanded to
include our economic impact on the region. The result was a very positive statement about our impact
saying Maine Maritime Museum is one of the most stable and important economic engines in the
Midcoast region for tourism. Compared to other museums, the museum’s visitors tend to come in larger
parties to the museum, are more likely to stay overnight, are more likely to be from outside Maine, and
tend to spend more money per day than the average for other museums. We will find out about the
status of the grant request in mid-November.
3. Financials (Erik Hayward)
a. September 2014 Financials and Forecast- The 2014 Forecast is the best estimate of where we will end
up for the year. On the support side the total is $339,900 versus a budget of $331,200. Although we
did not make our goal for sponsorships, planned gifts realized helped to close the gap. On the earned
revenue side, Education and Public Programs (which includes the boat cruises and BIW tours) will end
up probably around $260,000 versus a budget of $350,000. The admission numbers are also down
versus budget due to several reasons including the closing of the Holiday Inn and the loss of the
Zwicker. A large portion ($132,000) of the amount in miscellaneous income is from the gain on the
sale of the museum property. Earned revenue total ended up about $10,000 above budget. Total
revenue is about $1.9 million, versus a budget of $1.88 million. On the expense side, there were some
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increases in personnel expenses partly due to staff turnover and health insurance. On the
administration line, expenses exceeded budget mostly due to increases in liability and property
insurance. Utilities expense is well under budget reflecting the energy efficiency upgrades. The total
expenses are $1.89 million and we estimate a net surplus of $16,900 at the end of the year. Without
the sale of the property, we would be looking at a deficit of $100,000. Although BIW trolley tours are
much more profitable than the cruises, we lost about $80,000 with the change in the BIW tours this
year.
b. Plan 2015- John, Amy and the staff were thanked for putting the first draft of the budget together. On
the support side, we are looking at an increase of $20,000 in the budget for support revenue from
$339,900 to $361,000. We are hoping to meet this goal even with the ongoing campaign. We are
pursuing new sponsorships and aim to reach $75,000 next year. On the revenue side we anticipate the
BIW tours will do better and that Education and Public Programs will go back up to $350,000, the
number we had budgeted for 2014. We do not expect to make as much this year with the Mariner’s
Award and the special events line has been lowered to $50,000. The endowment draw is estimated to
be $307,000 which represents 5.7% of our total investments, the same percentage as we drew in 2014.
Total earned income is $1,532,700 and total revenue is just under $1,900,000. On the expense side,
the largest line item is personnel expenses reflecting a 3.2 % increase in health insurance and some
salary adjustments for employees as recommended by the Personnel Committee. Administration costs
are remaining flat to last year. Public Programs is going up since we are expecting more on the revenue
side. We are assuming a similar arrangement for the boat next year although we do not have the boat
lined up yet for next year. Maintenance costs are being held relatively flat and utilities expenses are
expected to go up with electricity rates increasing. All total, we are looking at a net deficit of
$104,800. This would be a bridge year to focus on the campaign and increasing our investments, so
that in the future we could take larger endowment draws. Besides the initial 5.7% endowment draw,
we would need to take an additional draw from investments nearer the end of the year. Although the
budget will be discussed again at the next Executive Committee meeting, there will probably be only a
few changes. A brief discussion followed about the assumptions made and the direction to follow. The
endowment is not large enough to support what needs to take place and the solution is to raise more
money for the endowment. Otherwise it is scaling back expenses and the operations of the museum
to be at the breakeven point. The problem is not going to be solved in a short time frame and the
campaign just started last year. The endowment is larger than it was and continues to grow. It was
also noted that the budget doesn’t reflect any special gifts through planned giving.
c. Capitalization rule- The auditors have requested documentation that defines capitalization for us. The
suggestion was made that the dollar threshold would be capital assets that have a life over a year and
more than $1000 in original cost. Some examples were provided.
MOTION: To institute a capitalization policy that would capitalize all assets (collections are not
considered assets) that have a useful life of greater than one year and an initial cost of more than
$1000.
MOTION SECONDED. DISCUSSION: None. MOTION PASSED UNANIMOUSLY.
4. Investment Update (Jim Joslin)
a. Investment policy discussions/coming RFP-The Investment Committee met with Vigilant last Friday in
Portland. As of September 30, the endowment had a value of $5,882,000 reflecting an increase of
3.4% net over the year to date. As of October 17, the date of the meeting, the value was $5,741,000
which was about break even for the year to date. Vigilant is following our investment policy statement
as it is presently laid out. Cash and fixed income is about 30% of the portfolio. The cash portion of the
account has been reduced to about $100,000. Equities are about 61% and hard assets at about 9.5%.
The return on investments since inception, March 23, 2009 is about 10.5% net. Vigilant is working
within reasonable bounds. They are looking at a 2% maximum total rate of return on the fixed income
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portion and at common stocks to appreciate 5% to 7% compounded. We hope to rewrite the
investment policy statement objective towards the end of the year and make it more understandable.
RFP’s for investment managers will probably go out in late spring. We will also be looking at whether
to change our investment philosophy to reduce our fees. Trustees were encouraged to provide the
names of firms to be considered in the investment management process.
5. Campaign Update (Jack Parker) - The Campaign progress was captured in Amy’s report and we are over
the 50% point. We are looking at people with some sort of affiliation or connection to the museum and to
maritime history and utilizing internal resources as well. Jack Parker and Bill Haggett will be meeting with
Jim Irving in the near future. The fundraising process requires a lot of patience and time. A pledge of
$50,000 was received on Friday for the Lobster Exhibit. Amy and Janice were thanked for doing such a
great job. The boat donation program is another way to bring in income and it will be promoted.
6. Development (Janice Kauer)
a. Annual Appeal- The annual year end appeal is in the works and 24 people are signing notes for us. One
thousand pieces will go out in the next couple of weeks. Another 4000 appeals will be going out
through the mail house. The Community Benefits Report has been sent to the printer. Members often
renew their membership through the response to the annual appeal and send along an annual fund
gift. In general, there is a relatively small pool of contributors, but a generous average gift. Personal
notes help tremendously.
b. Business Partner and Sponsorship Update- Mary Lou and Phineas Sprague Sr. and the Highland Green
are sponsoring the new exhibit “Ocean Bound” that is opening in November. The goal is to find
sponsors for programs, tours, and cruises that we are already doing. Planning for the 2015 Mariner’s
Award is in the early stages. Glenn Michaels, the new Business Relationship Manager, has been
working with Jim Drake, Dana Twombly, Karl Lauenstein, John Frumer and Marty Lakeman to bring in
dollars for the end of this year and to plan a strategy for next year.
7. Public Programs (Marty Lakeman)
a. Tour Boat Update – Sheets were distributed about the cruise boat requirements and the boat cruise
history. In early November, Jason Morin and Marty will be looking at a carrier that was built in Maine
in the 40’s and was redone in the 80’s. Another deck was put on it so it looks like a turn of the century
passenger steam boat. It is 80 feet long and has the capacity to hold 80 passengers which would
provide more options for use. The boat has been on a mooring for the past 6 years and had new
frames and planking in 2006. With all the problems we had with the boat this year, we will be looking
for a new operator next year. Another option will be having our own boat with a viable business plan.
The second sheet shows the boat cruise history and with the exception of the year 2010, a general
growth trend of increasing the number of passengers each year. If we had a perfect year and had not
lost the 40 days this year, we would have been close to 7,000 passengers for the season. Although
there is risk with a larger boat that it would not always be filled to capacity and therefore lose money,
a larger boat would provide other opportunities for increased revenue with charter cruises.
8. Personnel Committee (Terry Gray)
a. Executive Director Performance Evaluation- The materials for the Executive Director’s performance
review for this year were emailed to the Executive Committee. Although the way we asked the
questions for evaluation was changed, the format remained the same. Amy recently sent a revised
work plan to Terry and this will be forwarded to the entire Executive Committee. When the evaluation
was done last year, a few emeritus trustees asked why they were not included in the evaluation
process. Rather than asking all the trustees to do an evaluation this year, just the trustees on the
Executive Committee were asked to complete the evaluation form since they are more actively
involved and better prepared to do the evaluation. The question was raised whether the rest of the
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trustees and the trustee’s emeritus should be told about the evaluation process and be invited to
include comments signed with their name about the Executive Director’s review. The consensus was
to tell all the trustees and trustee emeritus about the process and that they are welcome to submit
comments to Terry.
9. Other or New Business –Although Quartermaster’s Day is Thursday, the Wyoming flags will come down
today due to the weather forecast. Some of the projects on Quartermaster’s Day will be changed to
indoor projects. It was also mentioned that pieces of our Portland Public Library exhibit, “The Faces that
Launched a Thousand Ships”, have been taken down and have not been put back up in another location.
10. Chair’s Report (Dick Lemieux) –Amy and Dick will be meeting with the facilitator on Monday to start the
process for the Strategic Planning Session on December 12. Emails will continue to be sent to the entire
board and to remind them about the date and get feedback on the topics. Discussions have been held
with senior staff about the museum’s areas of strategic concern and they will continue to be involved with
the strategic planning process.
The meeting was adjourned at 10:10 am.
A TRUE RECORD
Respectfully submitted,
Geoff Alexander
Secretary
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