ELCA Fiscal Crisis continues into 2010

[Steve Ames]

FOR THE THREE MONTHS ENDING APRIL 30, 2010
The churchwide organization of the Evangelical Lutheran Church in America had … for the three-month period ended April 30, 2010, an unfavorable variance of $0.5 million from April 30, 2009 and unfavorable to the period budget by $0.1 million. A timing variance in fraternal grant support of $1.0 million was the primary factor in the larger deficit for the first quarter.
Receipts totaled $15.7 million for the three-month period compared with $18.5 million the previous year, a decrease of $2.9 million or 15.6 percent. Expenses related to the current operating fund amounted to $17.8 million, a decrease of $2.4 million or 11.9 percent from April 30, 2009. Revenue in the period was unfavorable to the budget by $1.6 million or 9.3 percent. Expenses were below the authorized unit spending plans by $1.4 million or 7.5 percent.
Income from congregations through synods in the form of Mission Support income for the first quarter 2010 was $13.0 million, a decrease of $1.9 million or 12.5 percent. Mission Support income was unfavorable to the revised budget by $0.5 million or 3.5 percent. …
The first quarter 2010 decline in Mission Support income in 56 of the 65 synods compared to first quarter 2009 remittances merits careful attention. The annual Mission Support budget for 2010 was reduced by $4.6 million or 7.7% from the amount received in 2009. The decline of 12.5% in the first quarter 2010 compared to the same period in 2009 exceeds the rate anticipated in the budget proposal and is unfavorable to budget by 3.5%. In 35 synods, mission support at the end of April is unfavorable to the same period in 2009 by greater than ten percent.
An under-spending plan of 5% has been implemented as a short-term means to address the financial situation. Additional contingency planning is ongoing and continues to be critical for the churchwide organization.
http://www.elca.org/Who-We-Are/Our-Three-Expressions/Churchwide-Organization/Office-of-the-Treasurer/Financial-Reports/Current-Year-Financial-Reports.aspx

What does this mean?
For the first quarter of 2010 the ELCA show a $2.9 million decrease in Revenue -- $1.9 million in congregational support through the synods and $1.0 million in a delay in fraternal grant support.   Revenue was $1.6 million below the budget.

As a short-term means to address this, expenses were reduced by $2.4 million compared with 2009 spending and $1.4 million below spending authorization with the largest reductions compared with authorized spending being:
General Treasury – net income of $170,000 / expense reduction of $490,000
Includes insurance premiums for the churchwide organization, congregations, and affiliated organizations, such as fidelity bonding, property and liability, travel and accident, board and officer liability, and worker’s compensation and employer’s liability coverage, annualized funding for a central personal computer purchasing program, and expenses incurred during the time of disposition of real property donated to this church.

Global Mission – expense reduction of  $300,000
The Global Mission unit (GM) is responsible for the mission of the ELCA in more than 90 countries outside the United States, and includes ministries that enable this church to deepen and extend its global, ecumenical, and inter-religious relationships.

Vocation and Education – expense reduction of $210,000

Offices of Presiding Bishop, Treasurer and Secretary – expense reduction of $175,000


The General Treasury net income perhaps is from the sale of assets or refund of insurance premiums.

Income from synods was reduced by 56 of 65 synods with 35 reducing remittances by more than 10%.  The Synod Mission Support link includes a chart on its final page which appear to show a decline from August 2009 annualized support of just under $64 million to April 2010 annualized support of just under $58 million or 10 percent.  If this trend holds in 2010 with Mission Support decreasing by 10 percent then annualized Revenue would fall by an additional $5 million.


The Treasurer's comment about additional contingency planning may mean budget cuts for the remainder of 2010 and a significant reduction in the 2011 fiscal year budget.  Also one would not expect General Treasury to continue showing income rather than expense.  Subsequent quarters in 2010 may prove more difficult in generating similar under-spending as was in the first quarter.


Should one attribute all of this to continuing fallout of the new ELCA sexuality position?  Or are there other causes which should serve as a warning to other church bodies as they look at their respective budgets? – such as budget issues at the congregational and synod levels as the cause for a decrease in the pass-thru to the church-wide organization.  If congregations gave directly to the church-wide organization rather than the pass-thru going through the synods, would this budget issue be resolved?

Thank you in advance for your comments.

[Timotheus Verinus]

As I noted on the Synod financial thread LCMS/RMD showed a 2.5% decrease in revenue for the same period. If we allow this as a "due to the economy" number, I see no other message except, 15.6%-2.5% = 13.1% directly attributable to 2009 CWA actions. Further, I know at least one congregation that said they had not decreased benevolences yet by April, that is in process now of likely leaving. Add to this that the member hemorage seems to continue unabated, ( we picked up 2 folks that just walked in the door last month) and the fallout of "< 66% leave >33% stay" votes (congregational implosions) have not all reacted in financial ways yet. Any congregation that loses more than 20% of their giving units is not likely to be able to give even if they wished to.

In summary 13% downturn is likely the best case scenario and over 15-20% would not be unexpected, directly attributable to CWA. I wish I could say that an actual snowballing implosion was not possible or at least not likely. I'm not sure that's true. The Synod assemblies are winding up, and that discernment period is just starting (I know of one congregation in SC that just joined OLSC and pulled benevolences effective after April.)

At some point the financial condition of the LCMC/NALC or LCMS/TAALC/AFLC etc. may appear more stable than the ELCA to those at the individual ministry , congregational levels? (Mission planters, missionaries, chaplains etc.)

TV

[Steve Ames]

Vice-President–Finance—Treasurer Tom Kuchta provided a report of the Synod’s finances as it approaches the end of the fiscal year. He noted improvement in the Synod’s deficit situation in the April financial report, with such improvements expected to result in a year-end positive variance of $1 million. After responding to questions regarding the internal borrowing that the Synod does to avoid costly outside borrowing, …
MINUTES --  BOARD OF DIRECTORS -- May 20-21, 2010
http://www.lcms.org/graphics/assets/media/Board_Of_Directors/1005%20Board%20Minutes.pdf

Internal borrowing from restricted funds as the LCMS is now doing possibly suggests a severe financial problem which cannot be addressed by under-spending as the ELCA is doing.  Such internal borrowing created a financial mess for the WELS which led to some organizational changes, folks questioning the proper use of their gifts and perhaps contributed to the election of the current synod president.

Of course, things could be worse as was the case with the AALC closing its seminary and church-wide offices in Minnesota and relocating a skeleton staff to Concordia Seminary in Fort Wayne where the AALC has no local congregations.  Here in Texas the AALC congregations either dissolved or were absorbed into the LCMS.

TVerinus: At some point the financial condition of the LCMC/NALC or LCMS/TAALC/AFLC etc. may appear more stable than the ELCA to those at the individual ministry , congregational levels?
Is your proper title now Pastor Awtrey?  Possibly, you may have a point here yet there is also enough to question this.  However, this was not the point for which I started this thread.  The LCMS has over the last few years reduced its financial disclosures on its website and your AALC in the last months has discontinued any financial disclosure in its ‘Evangel.”  So for my financial comparison purposes the ELCA appears to be the one left.

TVerinus: LCMS/RMD showed a 2.5% decrease in revenue for the same period. If we allow this as a "due to the economy" number, I see no other message except, 15.6%-2.5% = 13.1% directly attributable to 2009 CWA actions.
Perhaps if you were speaking of the LCMS as a whole you possibly could have a useful starting point but a single district is not all that helpful.

Certainly the ELCA is being impacted by both the national economy and congregations leaving the ELCA.  It would be interesting to know when the ELCA begins to see any improvement in financial support as a result of the economic recovery the Obama administration proudly claims credit.

The ELCA church-wide organization is facing a financial crisis.  Sure, ELCA congregations leaving contribute to this.  Can one say the same level of financial challenges generally face the individual ELCA synods or are they just simple shifting any reduction in contributions to the church-wide organization?  From some of the comments on this forum the ELCA synods have also been reducing their spending.

I would appreciate anyone sharing their thoughts on whether any of the reduction in financial support to the ELCA church-wide organization is the result of people voting with their wallets against some of the church-wide organization efforts other than those directly related to the new sexuality position?  If so, which efforts?  Or are people perhaps looking for a smaller church-wide organization and a greater emphasis on congregational programs?  If so, which congregational programs are receiving greater emphasis?

Pastor Awtrey, thank you for starting the conversation and I welcome any corrections you may have on my reaction to your post.

[Timotheus Verinus]

I agree with much of what you say Steve. Still anyway I read the LCMS reports, pulling out KFUO etc. I do not see a decrease worse than 2.5%. This includes the fact, that at least RMD, has seen some generous mission giving, that exceeded the goals. To the AALC thoughts I have had side observations with LCMC types as they seek to form and grow, and relayed the history of trying to keep three balls (opinions) in the air, and its ultimate destination. The recent restructuring has been quite positive IMO. ALTS has quite effective programs, and we have men at CTS. I'll report coming out of convention, this week. The lessons for LCMC and NALC I think is that it is quite difficult to gather together three(or more) theologies and loosely connect them, however minor those differences may seem.

I think I am going to stick with a net decrease of 2.5% from "the economy," until we see something more tangible.

TV

[Steve Ames]

ELCA NEWS SERVICE
June 21, 2010

ELCA Leaders to Revise 2010 Churchwide Budget, to Create Restructuring Plan
10-170-JB

     CHICAGO (ELCA) -- Leaders of the Evangelical Lutheran Church in America (ELCA) will prepare a revised 2010 budget and spending plan for consideration in August, and they will create a plan to restructure the churchwide organization in 2011 in response to continuing declines in income, said the Rev. M. Wyvetta Bullock, ELCA executive for administration, in a June 21 e-mail to churchwide staff.
     Bullock wrote that the churchwide organization's Administrative Team, the Cabinet of Executives, ELCA Church Council, the ELCA Conference of Bishops and other partners will work with the presiding bishop and staff on the restructuring plan.
     In her message to staff, Bullock wrote that she wanted "to inform you of challenges we are facing related to the work of the churchwide organization as we move forward in mission with decreased financial resources.  I also want to let you know how we plan to respond to those changes."
        "As of the end of May, mission support income continues to decline," Bullock wrote. "You may recall that mission support represents approximately 80 percent of our churchwide organization's general operating budget." Mission support is income sent by congregations through synods to the churchwide organization.
     "We anticipate preparing a revised 2010 budget and spending plan for action by the ELCA Church Council at its August meeting.  The reduced budget plan will incorporate the underspending plan already implemented earlier this year," she wrote.  The council will meet by conference call Aug. 4, she said.
     "As we plan for 2011, given the depth of the changes necessary, we will be creating a plan to restructure the churchwide organization to align our work with anticipated income," Bullock wrote.
      "Over the past 12-18 months we have faced significant changes in the churchwide organization.  We are also mindful that challenges are being faced by synods, congregations, institutions, agencies and ecumenical partners.  I continue to be thankful for your partnership and commitment to serve this church.  Our prayers for one another and this church are needed as we walk together in the days ahead," she added.
     She explained that the reasons for the income declines include a 30-year trend in declining revenues, the struggling U.S. economy and declines in congregational income due to the 2009 ELCA Churchwide Assembly's decisions on human sexuality.
     Christina Jackson-Skelton, ELCA treasurer, said in an April 30 report that declines in mission support income in 56 of the ELCA's 65 synods, compared to the first quarter of 2009, "merits careful attention."
     "The annual mission support budget for 2010 was reduced by $4.6 million or 7.7 percent from the amount received in 2009," Jackson-Skelton's report said. "The decline of 12.5 percent in the first quarter 2010 compared to the same period in 2009 exceeds the rate anticipated in the budget proposal and is unfavorable to budget by 3.5 percent."
     Jackson-Skelton added that in 35 synods, mission support at the end of April was down by more than 10 percent compared to the same period in 2009.
     The churchwide organization began its 2010 fiscal year with a current fund spending authorization of $69.3 million, including $55.1 million in mission support funds.
http://www.elca.org/Who-We-Are/Our-Three-Expressions/Churchwide-Organization/Communication-Services/News/Releases.aspx?a=4556

[Dadoo]

ELCA NEWS SERVICE
June 21, 2010

ELCA Leaders to Revise 2010 Churchwide Budget, to Create Restructuring Plan
10-170-JB

     CHICAGO (ELCA) -- Leaders of the Evangelical Lutheran Church in America (ELCA) will prepare a revised 2010 budget and spending plan for consideration in August, and they will create a plan to restructure the churchwide organization in 2011 in response to continuing declines in income, said the Rev. M. Wyvetta Bullock, ELCA executive for administration, in a June 21 e-mail to churchwide staff.
     Bullock wrote that the churchwide organization's Administrative Team, the Cabinet of Executives, ELCA Church Council, the ELCA Conference of Bishops and other partners will work with the presiding bishop and staff on the restructuring plan.
     In her message to staff, Bullock wrote that she wanted "to inform you of challenges we are facing related to the work of the churchwide organization as we move forward in mission with decreased financial resources.  I also want to let you know how we plan to respond to those changes."
        "As of the end of May, mission support income continues to decline," Bullock wrote. "You may recall that mission support represents approximately 80 percent of our churchwide organization's general operating budget." Mission support is income sent by congregations through synods to the churchwide organization.
     "We anticipate preparing a revised 2010 budget and spending plan for action by the ELCA Church Council at its August meeting.  The reduced budget plan will incorporate the underspending plan already implemented earlier this year," she wrote.  The council will meet by conference call Aug. 4, she said.
     "As we plan for 2011, given the depth of the changes necessary, we will be creating a plan to restructure the churchwide organization to align our work with anticipated income," Bullock wrote.
      "Over the past 12-18 months we have faced significant changes in the churchwide organization.  We are also mindful that challenges are being faced by synods, congregations, institutions, agencies and ecumenical partners.  I continue to be thankful for your partnership and commitment to serve this church.  Our prayers for one another and this church are needed as we walk together in the days ahead," she added.
     She explained that the reasons for the income declines include a 30-year trend in declining revenues, the struggling U.S. economy and declines in congregational income due to the 2009 ELCA Churchwide Assembly's decisions on human sexuality.
     Christina Jackson-Skelton, ELCA treasurer, said in an April 30 report that declines in mission support income in 56 of the ELCA's 65 synods, compared to the first quarter of 2009, "merits careful attention."
     "The annual mission support budget for 2010 was reduced by $4.6 million or 7.7 percent from the amount received in 2009," Jackson-Skelton's report said. "The decline of 12.5 percent in the first quarter 2010 compared to the same period in 2009 exceeds the rate anticipated in the budget proposal and is unfavorable to budget by 3.5 percent."
     Jackson-Skelton added that in 35 synods, mission support at the end of April was down by more than 10 percent compared to the same period in 2009.
     The churchwide organization began its 2010 fiscal year with a current fund spending authorization of $69.3 million, including $55.1 million in mission support funds.
http://www.elca.org/Who-We-Are/Our-Three-Expressions/Churchwide-Organization/Communication-Services/News/Releases.aspx?a=4556

The fact that might need to be looked at was voiced by our synod treasurer last month: The ELCA's funding structure was based on some assumptions. Those were that all congregations would contribute 10- 15% of their income to the synod and the synods would contribute 50% of their income to national. That system has really never worked. It also relied on math that assumed that national in all its expressions would get its sustenance from the synod checkbooks. But almost immediately, direct solicitation from national offices, organizations, institutions, and causes developed. Also, and most importantly, the local contribution rate is on average 5-8% (if it is different in Arizona, fine, I don't care Brian). 

The current disturbance in the system is laying open a fundamental problem in how ELCA hoped to fund church. Interim solutions will be proposed by people who have made the flawed system run somehow. The real solution is radical restructuring. That would require creative thinking which in turn requires that all schemes and plans and private ambitions that the various men and women in power hold in their hearts be given up.

It could happen . . .

[Marshall_Hahn]

This should be no surprise to anyone - notice there is a dawning recognition that this is a "continuing decline."  They are starting to realize in the churchwide offices (or starting to admit) that they have not seen the worst yet.  Notice that 56 of 65 synods have seen declining mission support.  Wasn't it just a short time ago, when Secretary Swartling was touting the fact that what? some 30 or so synods had not had any congregations leave?  Now all but 9 are seeing declining mission support, and most of those showing significant decline of over 10% - about 35% in our synod so far.  Swartling has been quoted as saying that fewer congregations have left than he had anticipated, but that the income has dropped more than expected.  I expect that the loss of congregations will soon catch up with the loss of income.  It is rather difficult to leave the ELCA, and it is a long, involved process - which is as it should be.  But it is relatively simple to cut back on mission support - redirecting congregational funds to specific ministries, or, if your congregation will not do this, redirecting one's own individual offerings.  And that is what has been happening, all across the ELCA, except in a few synods.  (I wonder where they might be?)  There is also a magnified effect at the churchwide offices.  As mission support declines at the synod level, synods are faced with a choice - cut back on staff and programming at the synod level, or maintain local staffing and underfund the percentage sent to the churchwide expression.  Many synods are choosing the latter.  This means that while the drop in mission support to the synod may be 10%, the drop in the amount sent to the churchwide expression may be twice that.  As BTO would tell you, you j-j-j-just ain't seen n-n-n-n-nothin' yet.

Marshall Hahn

[SmithL]

This should be no surprise to anyone - notice there is a dawning recognition that this is a "continuing decline."  They are starting to realize in the churchwide offices (or starting to admit) that they have not seen the worst yet.   ...   Swartling has been quoted as saying that fewer congregations have left than he had anticipated, but that the income has dropped more than expected.  I expect that the loss of congregations will soon catch up with the loss of income.
Marshall Hahn

I suspect a lot of congregations are waiting for the North American Lutheran Church to become operational before they begin the process of leaving the ELCA.

[George Erdner]

This should be no surprise to anyone - notice there is a dawning recognition that this is a "continuing decline."  They are starting to realize in the churchwide offices (or starting to admit) that they have not seen the worst yet.   ...   Swartling has been quoted as saying that fewer congregations have left than he had anticipated, but that the income has dropped more than expected.  I expect that the loss of congregations will soon catch up with the loss of income.
Marshall Hahn

I suspect a lot of congregations are waiting for the North American Lutheran Church to become operational before they begin the process of leaving the ELCA.

I suspect that you suspect correctly.

[Revbert]

Related to the ELCA presser on restructuring...


Has anyone kept a scorecard of the number of reorganizations of the ELCA, especially the Chicago office, since +Mark was installed as the presiding bishop?

Seriously, I have lost count.  At least 4, isn't it?

Are these reorganizations, or rearranging the deck chairs?

The worst part is the human cost. I know many good folks who have lost jobs because of the restructuring activities over the past decade. 

[Steven Tibbetts]

Has anyone kept a scorecard of the number of reorganizations of the ELCA, especially the Chicago office, since +Mark was installed as the presiding bishop?

I think we're in the midst of ++Hanson's third attempt to re-structure the whole churchwide expression.  The first went over like a lead balloon because he and Miller (?) neglected to consult with anyone first. 

He appeared sufficiently chastened at the 2005 CWA over that, by which time consultation had been happening and essentially the same plan was approved with some minor adjustments.  That's when "Division," "Department," and "Commission" nomenclature became "unit," the Commission for Women disappeared, and everything within the churcwide expression that the Presiding Bishop was personally interested in became part of the Office of the Presiding Bishop. 

Then there's the one he started talking about last year at the Church Council meeting between the Panic of 2008 and Council's viewing of the proposed Social Statement on Human Sexuality.

Of course, there's all the "little" shuffling around that keeps happening in the wake of income declines...

spt+

[LutherMan]

Pewsitters are savvier in this century.  Hanson, Kieschnick, Schroeder and all leaders had better pay attention. 
Some of us pewsitters are supporting favorite missions instead of being loyal givers to our respective Lutheran church bodies/synods/districts.
Door offerings are diminishing.

[Eileen Smith]

I agree - pew sitters are savvy and we have much information at our fingertips.  It's too hard to say, "What happens in Minneapolis stays in Minneapolis" as some pastors out here (NY/NJ) have chosen to do.  We can hit the internet and read of the celebration to take place in two weeks as part of LCNA's assembly - but once you bring in ELCA staff to preach, well - it does become a bit more of an official ELCA event.  Just browsing the internet allows the many pride celebrations in Lutheran churches this weekend.  Both NY and NJ saw yet more resolutions on sexuality - to "enhance" (for lack of better word) the August decisions. 

For some of us who were very disappointed in the August decisions yet have chosen to remain quiet in the congregation so that ministry can come first, who have chosen not to withhold offerings so that ministry can come first - it seems a bit like salt in the wound.  As well, many of us - pew sitters and clergy alike - are really growing weary of what, at times, appears to be a one-agenda church. 

[Dave Benke]

Several comments -
first the ELCA budget crisis is more than just the economy and includes significat dissatisfaction
second the economic downturn in my opinion is exacerbated by a growing and substantial number in all denominations including Lutheran of parishes that were already at subsistence level financially and are now pretty much completely unable to attempt anything fiscal other than survive.  Among Lutherans I'd say that's at least a quarter of the parishes.  Utilities and personnel costs are 125% of their budgets.  Meaning they can't pay those. 
Today's Times includes an item indicating that this is not a recession but a long-term depression such as the one in the late 1800s.  If so, any number of parishes are going to go out of business not only for financial reasons but because their ability to attract any new members or even harbor their own is pretty much over. 
Yes, people can read, and can vote with their pocketbooks.  But structurally, there are significant problems in thousands of parishes that are most likely not solvable, and that will affect the health and strength of middle and national judicatories. 
For all the beat-down on it in the MIssouri Synod, the Transforming Congregations Network attempts to get at the problem of institutional decline from a spiritual perspective, and should be taken seriously, even if it must be "amended" to offload non-Lutheran overlay.

Dave Benke

[Maryland Brian]

Yes, people can read, and can vote with their pocketbooks.  But structurally, there are significant problems in thousands of parishes that are most likely not solvable, and that will affect the health and strength of middle and national judicatories.  

Dave Benke

Agree completely.  And the maddening thing was watching it roll out this way despite all sorts of warnings transformational pastors were raising during the last couple of decades.   For many of our congregations it's probably too late.  They haven't the resources to retool, especially after they've missed at least two generations and are now into their third.  Finally, at least in the ELCA, as the large, prevailing congregations continue their march to the doors, the expertise needed to be effective in these times goes with them.

So yes - you've pretty much nailed it.