April 1, 1998
News and Opinion
3
Grand Ronde Minors' Trust Letters
Different investments for different ages
A question frequently asked by
members is, "Why did my two chil
dren have different earnings on their
Trust funds?" It is a valid question.
The article below will explain the
Investment Policy for the Minors'
Trust Funds and, hopefully, shed
some light on this question.
Modern Portfolio Theory states that
portfolio returns, over time, will be
directly related to the amount of risk
taken in the portfolio. Different in
vestments (such as large company
stocks, small company stocks, for
eign stocks, real estate, bonds, etc.)
have different levels of risk and dif
ferent levels of return. Diversifica
tion (mixing your investments) is
therefore very important. This is
pretty much common sense. Your
grandmother told you not to put all
your eggs in one basket.
Trustees are instructed to consider
both returns and appropriate risks
when investing a portfolio. That is,
not to just invest for the highest re
turn possible but, to invest for the
highest return with appropriate risk
levels. They must consider what can
happen in a market downturn as well
as what the portfolio may earn. The
single most important questions for
Trustees in determining appropriate
risk levels is time horizon. That is,
how long will it be before the benefi
ciary (minor) will receive the money?
How long until the minor will be al
lowed to withdraw their funds? The
answer to this question, more than
any other, will determine how much
risk a minor's portfolio should carry.
With longer time horizons, more risk
can be taken and greater returns ex
pected. With shorter time horizons,
portfolio safety is a greater concern
because there is less time to recover
from a market downturn. Invest
ments must therefore be more con
servative and expected returns lower.
In the Grand Ronde Minors' Trust,
the Tribal Council, which is the
Trustee, has divided the Tribal minors
population into three different time
horizons or risk tolerance groups.
Ages 0-10, 11-16, and 17-20. The
Council has hired Investment Consult
ants, who use advanced computer
modeling, to determine the appropri
ate portfolio mix for each group.
Ages 0-10 have a long time hori
zon of 10-20 years before they will
withdraw their funds. Therefore,
they can tolerate a higher level of risk
since they have time to overcome any
market downturns. Their portfolio
will contain a higher level of stocks
and higher risk investments. Their
portfolio can be expected to perform
best in up markets and worse in down
markets. Over time, it should show
the highest returns because of the
higher risk.
Ages 11-16 have an intermediate
time horizon of 5-10 year. They do
not have as much time to make up
for any market downturns before
they withdraw their money. Because
of this, they will have a lower risk
level than 0-10, with fewer stocks and
more bonds and interest bearing in
vestments. They will therefore be
expected to earn somewhat less than
0-10 in up markets and do better in
down markets. While their earnings
over time should be good, they
should not be as high as the 0-10
group, who can take more risk.
Ages 17-20 have a relatively short
time horizon of 1-4 years before they
may withdraw their funds. There
fore, they cannot tolerate much risk
in their portfolio. It would not be
prudent to allow this account to drop
substantially in a severe market cor
rection. There is too little time to re
cover before the minors withdraw
their funds. The Council has there
fore stipulated a low degree of risk
with few stocks and mostly bonds.
Because of this, the portfolio should
perform at lower returns than the
other portfolios in up markets and
higher returns in down markets.
For 1997, the portfolio performed
as expected with the 0-10 portfolio
yielding gross returns of 16.47, 11
16 portfolio yielding 13.85, and
17-20 portfolio yielding 9.36.
As each minor grows older, they
and their account balance will be au
tomatically shifted to successively
more conservative portfolios as they
cross the age 11 and age 17 thresh
olds. Getting the program kicked off,
starting in October 1996, has been
quite a chore for both tribal finance
employees and consultants. Identi
fying and locating all minors, getting
their social security numbers and get
ting them in the right accounts was a
big job. With thousands of entries
and transactions there were bound to
be, and were, a few errors. Some
minors were missed, or misidenti
fied, or placed in the wrong group
initially. Most of these hive now
been straightened out with the help
of parents and guardians. The fi
nance department, personnel depart
ment and consultants would like to
thank affected parents and guardians
for their assistance and their patience.
The consultants report that, at this
writing, all accounts are off to a
strong start in 1998.
To the Editor:
I've been wanting to write to ex
press both appreciation and concern.
It has made me very proud to see
how the Tribe has incorporated the
surrounding community's "feelings"
in its expansion, the community has
been consulted and infrastructure
built to negate any stress on commu
nity resources.' I would imagine a lot
of people are currently employed by
the Tribe from the surrounding com
munities. In all of nature there is contraction
and expansion, and I am concerned
that this rapid growth and hiring
should be considered in light of the
time of contraction. There would be
resentment and ill will at loss of jobs,
so I am hoping that all hiring is done
carefully with a long term approach.
Will the Tribe be able to support these
employees in the lean times?
The second issue is energy effi
ciency and conservation. In all the
details for the Casino and hotel and
new Administration Building and
even the shopping center, there has
been no mention of the energy con
science design that we as Native
people must use. The wonderful gift
of my heritage has always made me
feel a special closeness and affinity
with Mother Earth.
Right now oil prices are low, en
ergy in the Pacific Northwest is rela
tively cheap and supply is plentiful.
But, dams wear out, the next crisis in
the Middle East or Indonesia could
happen at any time, and excessive
heating and cooling demands could
be very costly. Drought happens, so
are all the toilets and showers on low
flow? Are there trees planted for
natural cooling in the summer, and
is the building oriented to catch light
in the winter?
Here in Hawaii, the economy is
gloomy. The Asian fiscal crisis is
affecting the tourist trade and the
huge amount of employees on the
city, county, and state payroll are
being laid off the ones with jobs
are being asked to take pay cuts. So
the Tribe's continuing prosperity is
of foremost concern to me, especially
as I see here how poor fiscal plan
ning can result in great hardship for
people.
Please take it slow and carefully,
protecting the resources of Mother
Earth and insuring the health, educa
tion, and welfare of tribal members.
Thanks to all of our leaders for their
wisdom and foresight, so we can
have prosperity now and in the fu
ture. Judith Pettibone
Honolulu, Hawaii
Roll 717
Dear Editor:
I am enclosing a letter to address
my deepest concerns and embarrass
ment of the last General Council
meeting, on March 1, 1998. I am
specifically referring to the abrupt
closure of said meeting and from my
observations, I feel it was an attempt
to avoid discussions regarding the
various issues and concerns that the
tribal members wanted to address.
It is my understanding that our
Constitutional By-Laws defends our
right for freedom of speech in our
Council forum. By accepting your
positions on Council, you agree to
uphold these By-Laws and also agree
to our Indian Bill of Rights.
As the Tribal Council, you have a
clear responsibility to listen to ALL
THOSE WHO GO BEFORE YOU TO
VOICE CONCERNS OR TO SIM
PLY MAKE A STATEMENT. Asa
Council you may not agree with what
issues are raised, but you must give
your full attention to each matter
brought before you. You took these
positions to represent tribal mem
bers, and not self-interests.
It is important today as ever before
to have responsible leadership as well
as one that is fair, honest, and acces
sible to the democratic body it repre
sents. !
As a concerned tribal member and
one who cares very much about his
people and the community, I would
like to call for an apology from the
entire Tribal Council to all the mem
bers for the abrupt and insensitive
closure of the last meeting. I would
like this to go publicly in the Smoke
Signals. I would also like to have a
statement reassuring the tribal mem
bers this action will never happen
again in future Council meetings and
that ALL THOSE WHO WISH TO
SPEAK TO YOU WILL HAVE
THAT CHANCE TO DO SO WITH
OUT DISRESPECT OR OFFENSIVE
BEHAVIOR.
Respectfully,
J. Ken Gregg
Roll 1149
EDITOR'S NOTE:
The March 1 General Council meet
ing was adjourned after Tribal Coun
cil, in accordance with the Tribal
Constitution, called for a vote from
the membership present. A motion
was made by a Council member to
adjourn and the motion was seconded
from the floor. The meeting was ad
journed after a majority show of
hands from the membership.