187 (Rev. 01-19) STATE OF MICHIGAN GRETCHEN WHITMER DEPARTMENT OF TREASURY RACHAEL EUBANKS GOVERNOR LANSING STATE TREASURER MICHIGAN EDUCATION TRUST BOARD MEETING February 4, 2021 1:00 p.m. Microsoft Virtual Teams Meeting AGENDA TAB I. Approval of Minutes of December 8, 2020 Board Meeting A II. Public Comment III. Executive Director’s Report B Diane Brewer IV. Financial Issues A. Investment Report by Woodrow Tyler & Nicholas Whitman, C Bureau of Investments B. Actuary Review by Paul Wood & Ken Alberts, GRS D V. Policy and Program Issues A. MET Bylaws – Resolution 2021-1 E VI. Marketing and Public Relations Update F A. Marketing Report by Molly Tipton & Jill Holden of Gud Marketing VII. Next Scheduled Meeting Date – May 13, 2021 Updated: 1/27/2021 Filename: V:\SFSB\MET\Sheri\Board\2021 Board\February 2021\Agenda February 2021.doc P.O. BOX 30198 • LANSING, MICHIGAN 48909 www.setwithmet.com • 517-335-4767 or 800-MET-4-KID Tab A 187 (Rev. 01-19) STATE OF MICHIGAN GRETCHEN WHITMER DEPARTMENT OF TREASURY RACHAEL EUBANKS GOVERNOR LANSING STATE TREASURER MICHIGAN EDUCATION TRUST MINUTES The Michigan Education Trust Board held a regular meeting on December 8, 2020 at 2:00 p.m. as a Virtual Microsoft Teams Meeting. Treasurer Rachael Eubanks called the meeting to order at 2:02 p.m. Members Present: Treasurer Rachael Eubanks, Present, Clinton County, East Lansing, Michigan Robert Bowman, Present, Fairfield County, Fairfield, Connecticut Virinder Moudgil, Present, Oakland County, Southfield, Michigan Cheryl Bartholic, Present, Clinton County, East Lansing, Michigan Ronald Wiser, Present, Kalamazoo County, Kalamazoo, Michigan Dr. Dale Nesbary, Present, Muskegon County, Muskegon, Michigan Ms. Marlin Williams, Present, Wayne County, Detroit, Michigan Members Not Present: Michael Flynn Philomena Mantella I. Approval of Minutes of Wednesday, November 18, 2020 Meeting Treasurer Eubanks presented the minutes of the November 18, 2020 meeting to the Board for approval. Mr. Ronald Wiser, made a motion to approve the minutes, supported by Dr. Virinder Moudgil. The minutes were approved unanimously (7-0). II. Public Comment None III. Financial Issues A. Contract for Marketing and Advertising Services – Resolution 2020-13 Ms. Brewer presented the Resolution for Marketing and Advertising Services. Ms. Brewer stated that a Request for Proposal (RFP) for MET Marketing and Advertising Services was issued by the Department of Technology, Management and Budget (DTMB) on September 21, 2020. Four (4) firms submitted proposals in response to the RFP. P.O. BOX 30198 • LANSING, MICHIGAN 48909 www.setwithmet.com • 517-335-4767 or 800-MET-4-KID Page 2 The Joint Evaluation Committee (JEC) met on November 24, 2020 to review the proposals and make a recommendation to the MET Board. Based on the proposals received, the JEC recommends Gud Marketing to provide marketing and advertising services for MET. The JEC recommends a contract term of three years with two, one- year renewal options at a total cost of $4,275,000 ($1,425,000 annually). The MET Board’s approval of the resolution would authorize DTMB to enter into a three (3) year contract with two, one-year renewal options on behalf of MET with Gud Marketing at a total cost for a three year term of $4,275,000 ($1,425,000 annually). Ms. Brewer recommended that the Board adopt Resolution 2020-13. Dr. Dale Nesbary motioned to approve Resolution 2020-13 and was supported by Dr. Moudgil. The resolution was approved unanimously by a roll call vote, 7-0. IV. Marketing and Public Relations A. Presentation by Jill Holden of Gud Marketing Ms. Jill Holden, Strategic Planning Director at Gud Marketing presented on the activities and results of the 2019-2020 marketing campaign with the overall goal to establish year- round brand awareness and deepen engagement to move people to action during high- enrollment periods. Ms. Holden also provided a brief status of the year-end holiday campaign with a goal to increase awareness leading up to the holidays and promote a year-end tax deduction deadline. Strategies include statewide coverage, reaching families when they are together and targeting online behavior when shopping for gifts. Ms. Holden gave a brief overview of the 2020-2021 communications strategy for the MET program. Ms. Holden stated that they will continue to elevate brand awareness of MET to new and prospective contract holders and leverage high-enrollment periods to drive consideration into action. V. Other Business Treasurer Eubanks asked for a motion to create a Marketing Committee and an Investment/Contract Pricing Committee to discuss and come back to the next Board meeting with their thoughts and recommendations. Mr. Wiser motioned to approve the creation of the committees and was supported by Ms. Cheryl Bartholic. The recommendation was approved unanimously by a roll call vote, 7-0. Treasurer Eubanks discussed updating the MET Bylaws. Ms. Eubanks will be meeting with the staff and the Attorney General to begin the process. Ms. Eubanks mentioned that she will include the committee structures in the process. These updates will be discussed at an upcoming MET Board Meeting. Page 3 Treasurer Eubanks suggested adjournment of the December 8, 2020 MET Board Meeting. Mr. Wiser made a motion to adjourn the December 8, 2020 MET Board Meeting, supported by Dr. Nesbary. The meeting adjourned at 2:46 p.m. Minutes were approved on: ______________________________________________________ _______________________________ _____________________________________ Chairman Executive Director Updated: 1/27/2021 Printed: 1/27/2021 Filename: V:\SFSB\MET\Sheri\Board\2021 Board\February 2021\Final\2 December 8 2020 Board Minutes.doc Tab B MICHIGAN EDUCATION TRUST EXECUTIVE DIRECTOR’S REPORT February 2021 CONTRACT ENROLLMENT • At 1/27/21 – 352 contracts, at 1/27/20 – 322 Contracts (up 9.3%). • At 12/31/20 – 272 Contracts representing $2,770,113 in prepaid tuition (up 15%). • At 12/31/19 226 Contracts, representing $2,406,789 in prepaid tuition. • Additional PAYG Contributions (10/1/2020- 12/31/2020) - $776,557.35. PROGRAM ADMINISTRATION • All MET staff are working remotely. • Telephone answer rates were 98% for November and December. FINANCIAL ISSUES • MET Audit completed with pending review of “significant deficiency.” • MESP and MAP Audits completed with no deficiencies. PUBLIC RELATIONS ACTIVITIES & EVENTS • Staff conducted 21 MET presentations/events October 1, 2020 through December 31, 2020. • Continued Facebook posts had 3,886 followers. • We have about 335 followers on Twitter and 442 followers on Instagram. • Executive Director conducted six radio, television and online news interviews promoting MET among viewers, listeners, and readers across the state. A series of press releases detailed the opening of the new enrollment period, special $100 match offers, virtual enrollment sessions and tax deadline. JOINT MARKETING WITH MICHIGAN EDUCATION SAVINGS PROGRAM (MESP) • IHeart MEDIA/WNIC Radio and digital campaign “Jay’s Holiday Shopping Guide” Holiday gifting focus 11/12/20-12/25/20 • Three consumer webinars FOSTERING FUTURES SCHOLARSHIP TRUST FUND (FFS) • Facebook page for Fostering Futures Scholarship has 319 followers. • Friday, September 17th, 2021 set for the Detroit dinner event at Roostertail. • Staff worked with Gud Marketing staff to hold virtual trivia night December 17, 2020, resulting in $1,075. • Bureau director, Treasury Legislative liaison working on legislative priorities to secure sponsor and renew efforts to expand scholarships to students attending Michigan trade and technical schools as well as renew Fostering Futures Scholarship on the Michigan income tax check off. MICHIGAN EDUCATION SAVINGS PROGRAM (MESP) • As of December 31, MESP had 8,869 new accounts for a total of 278,229 accounts (up 3.3% YOY) representing $6,809,600,761 in assets (up 11.9%). Average account size was $24,659. 1 MI 529 ADVISOR PLAN (MAP) • As of December 31, MAP had 1,797 new accounts for a total of 50,531 accounts (up 3.5% YOY) representing $884,279,067 in assets (up 17.3%). Average account size was $17,500. COLLEGE SAVINGS PLANS NETWORK (CSPN) UPDATE • On December 28, 2020, the Michigan Supreme Court issued its decision affirming the Michigan Court of Appeals decision in Council of Organizations and Others for Education about Parochiad et al v State of Michigan et al. (MSC Docket No. 158751, holding that the state’s appropriations of funds to nonpublic schools to comply with the costs of state mandates relating to health, safety and welfare measures did not violate the Michigan Constitution. In reaching this conclusion, the Michigan Supreme Court considered recent U.S. Supreme Court cases as well as a precedent Michigan Supreme Court case that was decided soon after the voter initiated Proposal C passed, amending Article 8 Section 2 of the Michigan Constitution to prohibit appropriations for nonpublic school educational services (i.e., to support the attendance of any student or the employment of any person at any such nonpublic school. In July 2017, the Legislature amended MCL 388.1752b to appropriate approximately $2.5 million in general funds for the 2017–2018 school year and appropriated funds for subsequent year(s) to reimburse private schools for their compliance with State mandated requirements . During this lawsuit disbursement of the funds was enjoined. Some reports indicate the funds now total approximately $5 million in general funds. The court remanded the case to the court of claims for a determination of the distribution of the funds. In writing for affirmation, the Court noted that MCL 388.1752b allowing reimbursements to nonpublic schools in the State School Aid Act is in accordance with both the religion clauses of the First Amendment of the U.S. Constitution and Article 8 Section 2 as amended by Proposal C in the Michigan Constitution. "Consequently, because Proposal C was only understood to prohibit appropriations for nonpublic school educational services, such health and welfare measures as auxiliary services fell outside the scope of Proposal C," ….