Proposed Norma Rowley Student Loan Fund Resolution
Harry Purkhiser
May 25, 2015
At our May 4 board meeting the board voted to place a resolution before the congregation to dissolve the Norma Rowley Student Loan Fund and transfer the assets held in a restricted fund into the unrestricted funds. The background for this decision and the proposed resolution are described below. Please review this material and, if you have questions, please bring them up at the Budget Information session after church on May 31. Or e-mail me here.
Background
In 1975, the Student Aid Fund was created by the Congregation with an original input of $10,000 from church invested funds as a way of assisting students as they pursued a college education. When Norma Rowley (wife of the Rev. Don Rowley) died, a student loan fund was established, then merged with the Student Aid Fund, and renamed in her honor.
By 2007, the committee that administered the fund was no longer active and no new loans were being made. In 2013 the Board of Trustees commissioned Joan Connacher to investigate the status of the fund. In 2014, in her report to the Board of Trustees, Joan reported her efforts to track outstanding loans and reconcile the balance in the restricted Student Loan Fund. She concluded that disbursements and loan repayments were not handled consistently from year to year and administrator to administrator, making an exact reconciliation of the fund impossible. Many times loans were written on the church’s checking account instead of from the restricted Student Loan Fund.
In addition, Joan reports that “The record of repayment of the loans in the past 19 years especially is abysmal. The majority of those granted since 2000 have apparently not been repaid at all with the total owed (to the Church) of $40,332.” Joan recommends discontinuing the attempt to administer the loan fund.
Church Treasurer Mike Wilt states that “In 2007, after I finished collecting the money from the passbook account and any other paybacks to the church, the fund was worth $39,668.66. This included the paybacks that we had received into the church as well as paybacks that had been deposited in the passbook account. At the same time, loans outstanding and currently in default as listed in Joan's report were $48,021. Since then, the fund has been untouched and its value has appreciated to about $60k with the rest of the stock market. I believe that if the money to make the loans had been withdrawn from the fund when they were made, the fund would have been completely empty prior to 2007.”
From the facts we have been able to gather, the Board has drawn two conclusions:
There is no institutional structure in place to operate and maintain the student loan fund in the manner needed to ensure that loans are fairly and properly made, and there is no mechanism for tracking and encouraging repayment of funds loaned. This is a huge administrative burden and is not the role of the Treasurer.
Given that in 2007 the balance of the Norma Rowley Student Loan Fund ($39,6689) was insufficient to cover the outstanding loans ($48,021), the fund appreciation since then rightly belongs to the main unrestricted endowment fund.
To resolve these issues, the Board of Trustees recommends passage of the following resolution.
Resolution
BE IT THEREFORE RESOLVED, that:
- All outstanding loans from the Norma Rowley Student Loan Fund be forgiven and converted to grants, thereby fulfilling the original purpose of the fund to support education expenses, and
- The restricted Norma Rowley Student Loan Fund be dissolved and merged with the unrestricted main endowment funds.
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