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Middletown finance committee accepts audit, flags endowment liquidity for review
Summary
The Middletown Library Finance Committee accepted auditors' clean opinion for FY2024 and agreed to ask investment managers for details on endowment liquidity amid plans for a potential library expansion; trustees also discussed a vacant Broad Street property tied to the project.
The Middletown Library Finance Committee voted unanimously to accept the fiscal 2023 and 2024 financial statements after a presentation from auditors Mark and Chris. Mark told the committee the audit carried a "clean opinion," and that "nothing came to our attention during the audit that would warrant" escalating concerns to the board.
The board heard that total assets rose to about $1,734,000 as of June 30, 2024, up from $1,593,000 the prior year, a change Mark attributed mainly to investment performance. He also pointed to a liquidity and availability note showing roughly $778,000 available for the coming year after backing out donor-restricted funds.
Committee member Robert (Bob) pressed the group on whether the portfolio would provide cash quickly if the library needed endowment funds for a new building. "There are serious concerns about the liquidity of funds within the endowment," he said, urging the committee to ask the investment manager about exposure to less-liquid vehicles such as hedge funds and REITs. Mark recommended taking that question to the investment advisers, saying he had not reviewed the portfolio—reakdown in depth.
Chair Andy noted the practical concern that, in future funding discussions with the city and other donors, "they may point the finger at us and say, hey, you've got an endowment; you should be paying for part of this out of your endowment." Members agreed to request clarification from Essex Financial (the investment manager referenced in the discussion) about liquidity and portfolio composition.
The committee also discussed a vacant building at 139 Broad Street that could be demolished to make way for an expanded library. Mark said the structure appears to be fully depreciated and that removing the building would be largely a balance-sheet reclassification with minimal net effect on the financials; members noted, however, that demolition would eliminate potential rental income and that the State Historic Preservation Office had been consulted about ensuring any addition fits neighborhood character.
The auditors said they would provide final versions of the financial statements by midweek next week. The committee asked staff to transmit the statements to the full board and to place the statements on the next board agenda.
