Fund discussed at Parsons Council
Robert Burns, executive director of the Tucker Community Foundation, spoke to Parsons City Council members Tuesday evening about growth and distribution of the William M. Harman Fund.
The Harman Fund was established by Louise Frances Harman, in conjunction with the TCF, to provide funds for the city of Parsons. According to TCF documents, the fund has, over time, been invested by the TCF and Citizens Bank of West Virginia, and the principle value of the fund has grown.
Burns spoke about that increased growth and the new way funds will be distributed to City Council. He said a new payout formula, which includes net income and capital gains, will allow council to receive a greater return on the investment of the fund.
Burns said the Harman Fund has grown from approximately $12.7 million in 2003 to a present value of approximately $16.5 million. Net income – income received from investment assets like stocks and bonds was allotted to council each year for distribution at the council’s discretion.
This manner of payouts resulted in net income totals ranging from a low of $60,000 in 2003 to a high in 2008 of $477,277, according to TCF documents. The principle value of the fund increased and dropped over the past 10 years and therefore the distribution to council was scattered and unpredictable.
To remedy this fluctuation, Burns said, TCF is beginning a new manner of payouts that will result in a steady 1 percent of the principle being distributed each year.
TCF documents said capital gains now are allowed to be included in payouts to council – in accordance with the Uniform Management of Institutional Funds Act, a state law enacted in 2009. This increases the amount of net income that can be distributed and subsequently will allow TCF to reinvest in the principle amount, allowing the real dollar value to match inflation.
Now, Burns said, instead of paying out the entire net income amount to council, TCF will grant council with 5 percent of the principle, take 1 percent for TCF fees and will use 2 to 3 percent to offset inflation.
This is possible, Burns said, because the newly allowed usage of capital gains has urged TCF to ask Citizens Bank to use the invested funds to create a return of at least 8 or 9 percent. In addition, a three-year rolling average of investment returns will be used to determine the payout available to council and available to combat inflation.
The board may receive less than 5 percent, depending on the three-year average, Burns said, but no more than that value. He said the goal is to allow smooth payouts so council members can expect what monies they can distribute to city entities each year.
Overall, TCF documents said the payout to City Council is expected to reach approximately $800,000 annually. This figure is over $300,000 more than the all-time high distribution in 2008.
The change in this process does not mesh exactly with original civil action taken by Harman and the city of Parsons in 1993, instructing the TCF to handle a portion of Harman’s estate by passing on the entire net income of the principle to City Council.
Upon the recommendation of council’s legal counsel, attorney Pat Nichols, Council members said they will address this issue at the next council meeting and will vote to accept or deny the change in the distribution process.
In other news, council members voted to allow the Parsons Volunteer Fire Department to use Walnut Street and Second Street for the annual Fireman’s Homecoming Fair from May 5 to 12.
Fireman Kevin White spoke about the issue during Tuesday’s meeting.
“Fundraisers like this are the life of the Fire Department,” he said.
He expressed his gratitude to council members and thanked them for the allowance of Parsons’ streets for the event.
Parsons City Administrator Jason Myers also updated board members on his work with the National Flood Insurance Program’s Community Rating System. The CRS is a program that NFIP officials use to rate cities for the allowance of reductions in flood insurance rates.
Officials from the NFIP recently returned their CRS rating for Parsons, Myers said. They awarded the city with a rating of 8, which is enough to allow residents up to a 10 percent discount on flood insurance rates.
Myers said he was unhappy with the rating. He said he is trying to appeal the judgment.
“(As a city) we are doing the best we can do,” Myers said. “We don’t have the staff to do any better.”
He said he is confident that city officials are doing their best to meet and exceed flood control standards and that their efforts should be taken into greater account.
Contact Casey Houser by email at email@example.com.