The Rev. Kendall Waller, treasurer of The United Methodist Church’s Missouri Annual (regional) Conference, addresses the denomination’s Council of Bishops on pension concerns. UMNS photos by Linda Green.

By Linda Green*
May 7, 2009 | BETHESDA, Md. (UMNS)

The United Methodist Church is rich in property and human resources, but its debts and obligations to health care are hurting the denomination’s annual conferences.

“We are starting to have a cash problem and we need a workout plan,” said Barbara Boigegrain, top executive of the United Methodist Board of Pension and Health Benefits in a May 6 “state of the church” finance report to the Council of Bishops.

The church needs to redeploy its resources, but creating a long-term plan calls for more information from annual conferences, she said.

Boigegrain announced the formation of a Sustained Advisory Group from among conference treasurers, benefit officers and other actuarial officers to determine the fiscal health of the denomination’s 62 U.S. annual conferences.

According to Neil Alexander, top executive of the United Methodist Publishing House, church financial experts are working to discern the consequences of the global economic downturn, including the human and social costs.

In Germany, citizens are losing jobs or have shortened work weeks, which are influencing the money they can give to the church, he reported. A church in the Philippines missed a payroll period in April. Unemployment in Zimbabwe is more than 90 percent, and HIV/AIDS ministries have been curtailed.

Stories of economic difficulties in the United States vary from church to church, with downsizing of staff and cutting of ministries but increasing outreach to help the needy in their communities, Alexander said. United Methodist schools and seminaries have endowment losses of nearly 25 percent. “A number of our schools are seriously hurting,” he said.

In addition, job uncertainty is causing psychological, physical and spiritual stress, increasing demands on church professional care and counseling. Pastors are receiving more requests for food, diapers and necessities from members and from those in the community. Older church members are worried about having enough money to see them through the rest of their lives.

Era of austerity

Edward Kelly Jr., chair of the Publishing House’s board of directors, said the country has entered an era of austerity. Tight resources are causing every organization to get more done with less, he said.

When can normalcy be expected to return? “No one knows that either,” he said. “Perhaps in three years, if we are very smart and very lucky. . . . Quite possibly, 10 years. A huge amount of healing must take place.”

The financial situation has placed stress on payment plans and benefits paid to church and agency staff members and clergy, Alexander and Boigregrain said. Pensions are contracting and pension funding in the United States is at an average of 67 percent and funding for clergy pensions has dropped to 93 percent.

Two years ago, for example, the United Methodist Publishing House’s pension plan was fully funded. Today, funding has decreased to 60 percent. “We went from the current plan paying all outgoing costs each year for the last 20 years to needing to come up with $7.5 million that we have never had to come up with before,” Alexander said.

The Publishing House’s shortfall means it will not be able this year to distribute a total of $1 million in “Cokesbury” checks to annual conferences for retired clergy in the United States and in the Central Conferences.

What is needed, Alexander declared, is attentive, non-anxious leaders animated by the gospel, leaders who demonstrate frugality and an ability to curtail spending in dramatic ways.

Conversations already have begun regarding reductions of the assets in the church’s pension program, Boigegrain said. “Over time, we are going to need to collect higher contributions to ensure that we are able to pay all of the benefits that are ultimately payable.”

“Can the church afford the current benefit plan?” Boigegrain asked. “We have no clue.”

Levels of severity

The Rev. Kendall Waller, a financial officer from the Missouri Conference, said the economic downturn has affected annual conferences in different ways. “For some it is no big deal and for others it has different levels of severity,” he said.

Within four years, 22 of the 62 annual conferences “will no longer be able to underwrite the pension program as it is,” he predicted.

The church can either let the crisis “cause us to fail faster,” Boigegrain said, or “start identifying available resources and making decisions to realign them so that we can continue to feed people and sustain church activity where people need it most.”

In addition to the Sustainability Advisory Group, the denomination’s Council on Finance and Administration is analyzing data to determine the fiscal health of local churches and the degree of dependence upon income generated from endowments, grants and equitable compensation.

The agency is participating with other denominations and faith traditions in a 2009 congregational life survey, which examines giving practices, personal finance and spiritual giving practices. According to Moses Kumar, the agency’s top executive, the collected data will provide comparative information on how economic trends are influencing giving from people in the pew.

In May, the agency also is releasing a survey of conference treasurers to determine the financial health of annual conferences and provide a year-to-year comparison of local church apportionment payments.

While there is economic concern, Kumar reported that people also have increased giving. So far, total year-to-date giving increased in 18 annual conferences by $500,000 compared to 2008, but total giving for apportioned funds is down 16.5 percent, or $2.8 million, from 2008.

“Historically giving in the first quarters is highly variable,” he wrote in a handout to the bishops. “Giving may be up or down in one quarter for many reasons and is not a reliable indication of what will happen in the following quarters.”

*Green is a United Methodist News Service news writer based in Nashville, Tenn.

News media contact: Linda Green, (615) 742-5470 or newsdesk@umcom.org.

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Resources

General Board of Pension and Health Benefits

United Methodist Publishing House

General Council on Finance and Administration

Social Principles: The Economic Community