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75th Anniversary National Staff Miutes
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Second Marine Division Association National Staff Meeting
Wednesday, February 3, 2016
Jacksonville Country Club, Jacksonville, NC


The Meeting was called to order by President Ron Himsworth at 1500.

Invocation: Provided by the Chaplain Rich Strait

The Pledge  of Allegiance: was led by Marty McNulty. 

Roll Call: The Adjutant, James Cuneo, called the roll of the National Staff. 

Present:  President, Ron Himsworth, 1st Vice-President John Deitle, 2nd Vice-President Nick Naumov (via phone), Adjutant James Cuneo and Staff Judge Advocate Mastin Robeson

Absent: Sergeant –at- Arms Bob Williams Excused, Past President Mike Piserchia, Surgeon General Dr. V. Matthew Rao.

Also present: were Executive Director Bret Roy, Treasurer JC Hardee , Memorial Scholarship Chairman Marty McNulty, Scholarship Board of Trustees Dick Van Horne,  Public Relations David Earley, Chaplain Richard Strait, Chuck Van Horne and Doug Dameron Senior VP of Capitol Securities.

A motion was made by Nick Naumov, seconded by Mastin Robeson, to approve the minutes of the National Staff Meeting held at the Comfort Inn of Jacksonville, NC on 1/29/15.  The motion was approved unanimously.

Treasurer’s Report

From the Treasurer: Please refer to your folder Doug Dameron will go over in detail. Look at 2015 Review Page. The Down Jones average was down, only five stocks showed positive growth. We are conservative. Interest rates when up 1/4%. Oil prices at a year low. Doug will go over the 2011 tactical ideas. Doug and I meet face to face once a quarter so this is not all done electronically. Basically we are going to get rid of some funds that are not making anything for us now. Energy company and oil stocks, this is a good time to buy into now. I will let him explain. Look at the summery last page. Even though the total value off our funds went down we still made some money. There was some growth in individual funds and we are projected to make money in 2016. The projected incomes at the bottom are best guess, but pretty accurate. I want you to look at the slide that shows the money we have taken out of our funds to pay scholarships and operate. The projection is $64,652 that is a projection so remember that when we get to that slide.

From Doug Dameron: It has been a disappointing year and a half actually for value conservative investors. Predominately the people I work with are retirees. The prudent thing to do is focus on income. Right now the 10 year treasury is at 1.8%. Previous we used to roll CD’s which worked great for many years because CD’s were paying 5-7% low and behold those investments started getting called. Because unlike ban CD they were longer term CDs. Banks could refinance at lower rates so they could pull those away and reissue at lower rates lie house refinancing. That’s what bans were doing so we had to find an alternative way to keep bans growing. Over the last several years things have been fine. We have averaged with the index or slightly above. For that last year typical investors have been feeling the pain. The Fab 5 stocks blew away every investment, half make no money, I suggest googling them. Amazon.com is having bad sales figures and is opening stores. Google and Apple how do they make money? Apple had a bad 4th Qtr down 4.1%.

Current asset allocation it is important we don’t put all our eggs in one basket. We’re managing for the future of the funds, this isn’t a year to year program we are looking 15 years down the road in sustaining scholarships and operating costs. We are about 35% in bonds and we put a little of that cash to work to put into the market now that it has pulled back a little bit. The opportunity is here as the time to buy. Bonds represent about 35%, cash about 5% non US stocks 12%. Other investments are closed in funds that do covered call strategies it is very small and US Stocks is about 40% so nothing is really over weight.

The graph show performance of all 3 accounts together and each individually account behind it. The Net Contributions are negative that means those are funds that came out to pay scholarships or fund the operating expenses for the association. So as a whole is down about 5% the Dow Jones average is down 3.74%. Things that have hindered us were investments we eliminated when the opportune time was right and the chances of making the money back were slim. Some of those were paying higher than normal dividends which is good but came a little too aggressive for the fund.

The second page gives you what the Endowment Fund has done. The time frame from January to February (1 month) the Dow Jones average was down 5.6%. Now the Endowment Fund was down 1.4%, so we outperformed the down swing working very well. We actually out performed by 400 plus basis points.

Question from Dick VanHorne: On the Endowment fund you show a net contribution of minus $10K what is that? Answer from JC: That was interest we earned from the Endowment Fund we transferred to the Scholarship Fund to pay scholarships. From Doug: Just a portion to offset the scholarship fund. There is not enough money to sustain the funding I believe by design.

The third page is the Life Fund with similar performance. The value stock was down by 12% and we were down by 6% I feel pretty good about that.  If you look at the Dow Jones average down by 5.6% this account was over that by 3.58% even though it was down we out preformed the index. That is important for this panic time frame we have had. The Scholarship Fund is the Star Performer. Of course it is the smallest account there is about $134k in there. The net contributions are the scholarships being written. It has done really well compared to the index but for the last month it has outperformed the Dow Jones index by 5%.

The bottom line is to me it is hard to stay focused on the long term when we have had a year plus of negative return for value orientated investors. So I wanted to give you food for thought, the first chart tells a big story. The SMP Index from 2009 to Dec 2015 this is where $10k is then and where it is now. I would argue we are in a dip. Keep in mind this is a longer term focus. The biggest issue is the oil price issue. If oil stays where it is Saudi Arabia will be at default. Eventually they are going to pull back production supply is going diminish demand is going to go up and oil prices will start trickling up. The third chart stock market returns after significant oil prices declines. It gives you four different time frames when oil took a big hit. And it gives you the net years SMP 500 return after oil took the hit. I would argue we are poised for a nice market. Eventually oil will turn around and so will the standard index. Where going to see some good returns and more than make up from what we dragged last year.

Look at Bull and Bear chart, notice how short the bear periods are compared to the bull. We are in the business of managing risk this kind off puts things into perspective. It is interesting how the blue is more than the red. So stocks make money more often than lose money so it is a good thing to try and stay longer term focused.

From JC: Look at the Life Fund, there were three times we took money from the Life Fund and put them into the Operating Fund last year for $67k. Remember the projected income was about $64.6k so that means we break about even. I don’t think we can keep robbing the Life fund to support the Operating Fund. Operating account paying the Follow Me, Salaries and office supplies the cost of doing business. Understand doing this does not affect the scholarships. I just want us to be aware we need to do something different. The life fund the way we are doing business today.

Question from James Cuneo: Is there any reason we cannot create a fourth account and put money in there to operate off the interest? Response from Doug bottom line is we manage expectations and returns. I don’t think there is an investment we can make to sustain the account and the normal withdraw needed. From James: Bottom line is we need to work on where to cut the excess expenses.

From Ron, Bret and I have been working on that we’ve cut an admin person that was being paid $20k a year plus a $2k a year in bonus pay. So that is $22k were saving. Other things are office space that cost us a ton of money. We don’t really want to get rid of the office as it gives us a lot off ins but we have to carry liability insurance, we have to pay $100-$125 a month ffor someone to open up our bank statement for someone to verify that it is being done. Plus paying $300 to have our account audited. We are paying a organization $190 to write one pay check a month.

Question from Mastin: How much would it change the bottom line if we digitized everything? Including being virtually on base not physically. From Ron, Bret and I are working that right now. What will we save by doing that from Mastin? From Ron, if we add these up going across the board roughly $18k on base then you add the $22k for the admin assistant, so you’re about $40k right there in savings a year.

From Ron: When we look at the Follow me going digital is about the same price so Bret and I are going to re-look at this issue. We will send it out to everyone saying here is what we need to operate and this is what we have to have for the year. Then with our regular day to day operations, we are paying $800 a year for a land line phone. From Mastin: we want our clientele to be the net generation and we need to understand that before we make conscious intelligent decisions. Some where we need to put on paper what it means to go the digital route and there needs to be market research on what the different in reach will be? From Ron: Bret manages our Facebook page and gets more hits and memberships of that than anything. We have had 3 people walk in our room in the Library and they (Library) want us out of that space offering us space in the Division Training Building. Even If we just get the Division Training room part time your right we got to move to the new age. Question from Mastin: Is there an organization like us in one of the services that is successful? From John: Yes sir the Screaming Eagles that people that landed on D Day, Pearl Harbor Survivors. From Ron: Not really most organizations are falling apart or folding. 1st and 3rd MARDIV is scaling down. Getting with the younger generation to find out hope to re-energize is key. All provided input on discussion: There are more Platoon and Company size get together like our Destroyers Chapter that are more IT Smart and are getting things done. We are getting some of the young ones. We just need to bridge the gap between young and old.

A motion was made by James Cuneo, seconded by Nick Naumov, to approve the Treasurer’s Report.

 

Further Discussion on Treasurer’s Report: From Mastin, Was there a recommended change in our Treasury Report? From Doug Dameron, yes sir look at the 2016 Tactical Ideas shorter term changes we took a couple funds that were lagers. What we decided was to buy three oil stocks. BP may cut dividend a bit but it will come back. JP Morgan Galasso Smith Klen is a Pharmaceutical company they pay a 6% yield and SPY. The SPY is the SP 500 Index.  We took a little bit of the cash pared aside and put it too work in the Index ETF itself very low cost yields about 2%.

Question from Dick VanHorne: Bret what is the annual budget of the SMDA to run the office not including scholarships? From Bret: About $100k From Dick VanHorn: and with scholarships about $140K. No way to have a net profit of $140 now. The summary sheet portfolio value today is $1,137,000.00 the reunion last September the number value in the minuets was $1,190,000.00 and one more step back to 2014 reunion the total value was $1,363,000.00 we took a hit from Aug 2015 isn’t much proportionately. Of all that money we can legally thru the bylaws support the operation of the office is the Life Fund. You have an irrevocable trust in the Endowment Fund that can only pay interest to the Scholarship Fund and Expenses of the Endowment Fund which are manageable. Scholarship fund can only pay for Scholarships. So the only thing left is the Life Fund and that is the number dwindling down. So even if we wanted to set up a special account there is no way to get the money to place into it for operations.

From Bret: there was a proposal two years ago to use or make an amendment as an annex to the bylaws proposed by Bill Steel to use money from the Endowment Fund, non-physical dollars, but only monies earned in interest from time to time to offset operating expenses that you’re not just using the interest off the Life Fund? From Dick Vanhorn: that is right they wanted to add to the scholarship fund to add two sources that interest could pay to. That got tabled and may need to be revisited. From John: How much money does that interest from the Endowment Fund do we get? From Doug: Estimated for this coming year is about $39k which is what we are paying in scholarships this year. Yes from Dick you have to change the bylaws to do this. From JC: in my 2 years we have only used interest from the Endowment Fund for the Scholarship Fund one time. Not sure when it was ever done before. We have rolled interest back in and reinvested. Scholarships are paid from the Scholarship Fund and Scholarship Processing Expenses are also paid out of this account. from Dick We are not moving money from the Endowment Fund to get into the Scholarship Fund but haven’t needed to. Extreme case if we spend down all accounts but the Endowment Fund we can do anything but cash in. Each year it would get smaller and smaller. From JC: As the Treasure look everywhere you can to cut the cost of operating. Right now we are doing the best we can.

 

The final amounts of each account are below from the Treasure’s Report.

Endowment Fund = $777,834, Life Fund = $225,727 and Scholarship Fund = $134,366.

 

The motion was restated to approve the Treasurer’s Report, voted on and approved unanimously.

 

Memorial Scholarship Fund Report                                                               

From Marty McNulty: There were 43 full year scholarships approved and one tentative because of paper work was late. 38 checks were issued for the first semester. And one returned for a drop out. Two students received letters as their GPA was too low. One warning letter on GPA was sent. 2015 we reduced from $1200 a year to $1000 a year. So 500 for fall and 500 for spring. In the coming years we might have to cap the number of students or raise the GPA to 3.0. When we return we will be sending out renewal letters to all returning students.

 

The total amount spent on scholarships for the 2015-2016 scholastic year was 38 checks X $500 = $19,000.00

 

From: Dick VanHorne my duties are to receive request for applications. So far I have sent out 35 applications. From Nick Naumov: I agree we should raise the GPA to 3.0. from Marty Ones now would need to be grandfathered.

 

Question from James: If you had ways to cut expenses what would they be? From All Postage, reduce Scholarships, Raise GPA. Hard copy management, we have to be careful due to tax return and personal info on applications. We need to keep scholarships at least $500 per semester. From JC we have never written the number of checks we expect. From James so a cap and GPA increase is probably the best way to help cut expenses? From Marty I think we can cap at 50 this year. From all discussion there is no GPA from High School used to apply the first time around. No high school transcripts are required in the initial application. From Marty only believes his expenses are no more than $700 a year.

 

Executive Director’s Report

Screen Captures from the website shows the below numbers

Life Members: 2976

Associate Life Members: 354

Annual Members: 357

2016 Reported Deaths:  3686 paid and active This plus the (625) gives you the total records

Current Membership stands at 4,406 Records (625) memberships have lapsed

After 90 days they have a grace period then dropped. After a year I would suggest dropping them from the records.

 

Question from James: Bret when someone expires does this data base inform them? Yes it sends one 30 and 10 days from expiration.

 

Currently membership rate that only consist of annual members  and does not include any of the 625 is at 86% All figures based from 1 Jan 16 to today 3 Feb 16.

Doesn’t include 2015.

 

In 2015 we had 398 new members all of 2015 and we only had 137 membership renewals for our annual membership.

 

Last year I paid money to put envelopes in the Follow Me and passed the word that we were paying printing and postage annually about $3800 twice a year to send out sweepstakes, membership dues and life member donation letters every year. The was marked for donation  or membership renewal at a cost saving of $3200 that one time. I only got 127 people to submit for renewal.  This year I went back to the old way and spent the $4000 for printing and postage this year in one month we 226 renewals as opposed to 137. These older folks are expecting the mail annually for dues and donations. We should be making $28-30k a year in annual memberships. We should continue the old way until it phases out.

 

The pie chart represents all memberships which shows 89.8% of our members are Life Time Members. 10.2% are annual members, this is where the funds come from. The only way we bring in money is annual dues, up charging members for events or donations thru the General Fund. The Store is a bad idea and not making any money due to buying a large amount of supply to keep in on hand.

 

The Profit Loss Statement shows Pursing Brokerage $68,681 and $67k was money transferred to the operating account to pay the bills. The $1800 was money that was taken to pay for 99 Tax Forms for the Scholarship and Endowment funds. All tax forms were paid from the appropriate fund. This $68K is listed as income and it is not. It is money that we already earned and was transferred to the Life Fund. So in order to balance out you need to subtract that at the end of the year. It looks like we had a net income of $6234 which is not correct.

 

To digitize everything I post the Follow Me every time and it is out there before you receive the hard copy. It has the possibility to do away with close to $40k of expenses and  hidden cost. We still have to pay a designer for the Follow Me. From Dick the 4 issues cost $40k a year? If you had one issue instead of 4 what would it cost? About $10k from Bret.

 

From Ron: We are looking at two Follow Me’s a year after the Birthday and Reunion to carry the details for the next registration. It would be important to have details for future events ready. From James: Do you email a copy out? From Bret: only to the overseas members. From James: ask how you prefer your Follow me via email or mail on registration to cut cost. From Bret: a problem is we don’t have everyone’s email address. From Ron: We are trying to push the email for the older members we are using bogus emails but are continuing to push emails. From Bret: The Follow Me is only available thru you logging in to your account to keep it from being a free read. From Mastin: having it out there as a free read could it be advertisement? From Ron: Yes but we can do for advertising we can open it for three months to try advertisement.

 

President’s Report

 

President Himsworth passed info on the current birthday and events for the week with the CMC and SMMC arriving. Discussed the cost difference in holding events on base and out in town, cost of bussing for events. There were food donations for the event. There were many donations from food, to trucks, to flowers and we still made all the Generals pay for their meals. The city wants to be involved next years to assist. The Marine Corps is getting stricter on travel and donations. Protocol has tightened the reigns. Reunion venue we need to start looking for ways to accommodate the VIP.

 

Next subject is the reunion are we going to do one this year. Pensacola, Cleveland, Pensacola and Orlando were offered. After further discussion and discussing cutting some expenses Ron suggested putting the reunion on hold for 1 year due to cutting staff and lowering expenses. We talked about combining to get more people together once a year in the spring time during Tarawa day.  We don’t have the Chapter support as we used to. If we do a reunion we as a staff are going to have to work it. My envision would be to do another day, hold the National Assembly and have a pig picking or fish fry with the troops. We would still do the Battle Color Rededication Banquet, Memorial Serviced but all in one event. We cut things this year to make it more enjoyable as the Division is tapped out from events. If we combined for one year we would save money.

 

From Mastin: I see four options for events?

1.     Cancel the reunion

2.     Combine the reunion with the Birthday

3.     Combine the reunion, birthday and Tarawa Day together

4.     We bite the bullet and do a reunion

From Ron: yes these are the options. But understand if we do anything we all are working it.

From John: the Bylaws say we have to have a National Meeting once a year.

From Ron: we can do a meeting but we are going to run things into the ground if we don’t do something due to expenses. The Marine Corps used to do some of the work, now we have to do it. The days of using troops are gone. We don’t have the volunteers. James asked if we can hold a meeting as a webinar if we don’t do a reunion? We can conduct business as needed. The bylaws do not say we can’t do this type of business. Mastin suggested doing votes by email if need be by submitting an agenda, nominating would need two series someone will have to tally and record there are options.

From Ron: if we do have a reunion we are going to operate in the red again. From Mastin, yes donations, advertising, comradely, and yes scholarships and giving back to the next generation is why we bring value. The problem is the fund raising is so we compete against each other. What is our purpose of fund raising?  Scholarships or reunions? The problem is we can’t afford all this unless we have corporate sponsors. From JC: if we don’t do something different we are going to be forced to stop scholarship as there won’t be enough money. From Dick: The purpose of the SMDA is commemorating the heritage of the 2D MARDIV, Patriotism, Loyalty an Esprit de Corps. From Chuck VanHorn: from attending the defense show in Quantico, we discovered we don’t have a policy to solicit funds and didn’t know how to approach large companies. We need to provide guidance in the form of bylaws changes, develop a policy for advertisement, requesting funds and showing them as a sponsor.

 

From Ron: We need to raise our dues, bring our active duty to at least $30-$40 or run $40 across the board for all memberships.

 

From Chuck Van Horn: Since you’re the Executive Director then who is the President and how is that official? From Ron: Bill Steele called and said I would have to step down, appoint a temporary President and it can’t be John. It has to be someone else to appoint me as the Exec Dir Ron has to submit letter to the board, who has to accept it, then the board makes me the Executive Director.

 

A motion was made by James Cuneo, seconded by Mastin Robeson, to drop the Follow Me Magazine from 4 to 2 issues per year

 

Further Discussion from Mastin, if this doesn’t work we can always undo a year or two from now. We are trying to save the association by taking a bold step to see if it makes a difference. The issues will remain flexible and delivered in a timely manner to cover the reunion and anniversary.

 

Voted on and approved unanimously.

 

A motion was made by Mastin Robeson, seconded by John Deitle, that the motions we are making are a 24 month test to determine whether this achieves grater relevance and greater solvents therefor greater longevity, motion was voted on and approved unanimously.

 

A motion was made by Mastin Robeson, seconded by John Deitle, to raise the Annual Membership Dues to $30 a year, motion was voted on and approved unanimously.

 

Further Discussion was made to give time for a last ditch recruiting effort at lower rates to 1 June 2016. This gives time for advertisement in the Follow Me and internet. Everyone goes to $30 per year. Mastin request amending his motion rising to $40 per year based off JC’s response with the spending habits of troops and most not really blinking an eye at the amount these days. 

 

An Amended motion was made by Mastin Robeson, seconded by John Deitle, to raise the Annual Membership Dues to $40 a year with a start date of 1 June 2016, motion was voted on and approved unanimously.

 

Mastin states we do a financial brief at the assembly to discuss to the membership the decisions we need to make to keep financially afloat before going bankrupt.

 

Ron request Mastin to go over minutes before publishing and Ron will create an article for all to understand that this is a financial basis.

 

A motion was made by James Cuneo, seconded by Mastin Robeson, to cancel the reunion for 2016 only, to become financial stable, The motion was voted  on and approved unanimously.

 

Further discussion: David Earley needs more time for Cleveland planning for hotel rates. Cost rates, rooms, busing. From Mastin is the biggest shock having no reunion what is the numbers 50-60 not 4000 members.  From Ron we really need just one year so we can figure out where we are financially. From Mastin is there a way to do a National Meeting without the reunion. All discussed, yes we can hold a reunion without the National Assembly. We need to see about going with the original intent of pushing reunions back into the local regional units for planning and execution. We are basing this off one year sabbatical. 1st and 3rd DIV use Armed Forces Reunion Inc. so the staff doesn’t have to do anything. It does cost the individual more though. AFR is a third party travel agent. Cost would be absorbed by the membership for the 50 people. This has to be an announcement in the Follow Me and internet where it can be seen easily. We are modernizing our business practices.

 

The motion to cancel the reunion was re-instated, voted on and approved.

 

Reports of Other Elected Officers

 

1st Vice-President John Deitle:  Are we reapplying for CFC next year? Yes. I would like to do a CFC for the Endowment Fund. I am going to push for corporate sponsorship.

 

2d Vice President: Nick Naumov No Report

 

Sergeant-at-Arms: Robert Williams No Report and Excused

 

  

From the President:

 

From Ron Himsworth on Staffing as Executive Director: I will give SMDA a minimum of 2 years at $35k I will get and admin for $12k part time and use only as needed.

 

A motion was made by James Cuneo, seconded by Mastin Robeson, Directing the President to nominate the current President Ron Himsworth as the Executive Director under Article II Section 7 to appoint himself as the Executive Director.  The motion was voted on and approved unanimously.

 

From Ron with the Approval of the National Staff I will take the Position.

 

Further Discussion:  From Mastin, Does everyone agree with wording? All reply yes. Mastin interjects writing the Board appoints Ron Himsworth in accordance with Bylaws Article II Section 7. From Ron every time we change officers was cost the SMDA money for changing paperwork. Discussion of bylaws updating was needed and agreed that all officers should red them and provide input accordingly.

Adjournment

With no further business, Ron Himsworth moved that the meeting be adjourned.  The motion was seconded by James Cuneo and unanimously approved.  The National Staff meeting was adjourned at 1915 hours.

 Respectfully submitted,

James B. Cuneo
Adjutant
(386) 983-2810

msgt0313@yahoo.com

 

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