wfn.org | LCMS - Lutheran Church-Missouri Synod Budget Cut $9.1 million

[Worldwide Faith News <wfn@igc.org>]

The Lutheran Church--Missouri Synod
Board for Communication Services

LCMSNews -- No. 32
June 13, 2002

Synod budget reflects $9.1 million in cuts

By David L. Mahsman

After facing the need to make what may be the largest budget cut in the 
Synod's history, The Lutheran Church--Missouri Synod Board of Directors 
June 1 adopted a new operating budget that totals $89.6 million.

The budget for the fiscal year that begins July 1 is some $10 million less 
than the budget adopted a year ago.

The Board during its May 29-June 1 meeting in St. Louis cut $9.1 million 
from budget requests submitted by the Synod's program boards, commissions, 
offices and departments.

That means not only that little new work can be initiated, but it likely 
also means elimination of some current work and staff.  Details aren't 
immediately known, however, as each unit still must determine where it will 
adjust its budget to accommodate the spending limits set by the Board of 
Directors.

In a memo to those responsible for the budgets of the various units, Chief 
Administrative Officer Brad Hewitt cited two "key messages" for them from 
this year's budget process:

-- "Unrestricted income" -- funds that come largely from Sunday-morning 
offerings routed through the Synod's 35 districts -- is down $2 
million.  "While there is always a great deal of concern about expenses 
being reduced, the reality is that most of the issue is declining income, 
not out of-control expenses," Hewitt wrote.

The national budget's unrestricted revenue dropped from the $27.5 million 
in the current fiscal-year budget to $25.6 million available for the new 
fiscal year.

-- "We know there is no `fat' in the budget," Hewitt wrote to the unit 
executives.

"When unrestricted income is down $2,000,000, there aren't a lot of good 
alternatives," Hewitt wrote.  "Even so, we did try our best to listen to 
each ministry and discern the best way to allocate funds to accomplish our 
common mission.  We know we are cutting ministry, not waste, at this point."

The new budget does include a $750,000 surplus, funds the Board said are 
needed to begin building up net assets eventually to give the national 
offices some financial breathing room.

Hewitt said that were the national Synod a district, it would rank only 
28th or 29th among the 35 districts in terms of net assets.

When he introduced the budget topic to the Board of Directors May 30, 
Hewitt said that a decades-old trend hasn't changed: Unrestricted income 
continues to decline, so greater dependence is being placed on "restricted" 
revenue -- funds for which use is restricted by the donor.

Twenty years ago, the districts pledged some $26.6 million in unrestricted 
funds for the national budget.  With inflation, the $25.6 million in 
unrestricted revenue for fiscal year 2002-03 would have to exceed $50 
million just to keep even with the purchasing power of the 1982-83 
contribution.

Also down is the amount that is being given in grants to the Synod by the 
Marvin M. Schwan Charitable Foundation, which in recent years has been the 
largest single donor to the Synod's national and international work.  Most 
of that has been restricted -- for specific work -- but the foundation also 
had made unrestricted contributions to the Synod.

Grants to the national Synod from the Schwan Foundation, which depends on 
investments for its revenue, dropped from $8.2 million in 2000 to $5.6 
million in 2001.

Two big stories

The one -- and only -- entirely new project that got funding from the Board 
of Directors is an effort to improve the recruitment and retention of 
professional church workers.  Hewitt said that this is one of "two big 
stories" coming out of the budget process.

The other "big story" is the "difficult financial situation" in which the 
Board for Higher Education/Concordia University System (BHE/CUS) finds 
itself after its budget request was cut by nearly $4 million, Hewitt said.

The recruitment and retention project, titled "Serving with Joy," was given 
$250,000 from the unrestricted budget.  Hewitt called the project "a 
national campaign, not for dollars, but for people."

The project's total budget, including restricted funds, is $1.7 million.

The Board of Directors was told that the project has four "desired outcomes":
-- "Rebuild a lifestyle of recruiting and retention of church workers at 
the congregational level.
-- "Convey the joy of serving our Lord!
-- "Encourage, educate and celebrate with active congregations.
-- "Emphasize the unity between recruiting and retention."

In the other "big story," BHE/CUS received $10.3 million in unrestricted 
funds on a request of $14.2 million.  Last year, the Board budgeted just 
over $11 million from unrestricted funds for BHE/CUS.

Most of the $10.3 in unrestricted funds budgeted for BHE/CUS are earmarked 
by the Board of Directors for specific use: $4.2 million to continue paying 
off debt at the colleges and universities; $2 million to cover tax-free 
bond guarantees; and $278,000 in subsidy for the Synod's two seminaries.

"Higher education already gets 40 percent of the dollars we get from 
congregations," Hewitt said.  "We can't keep giving more of that money, 
because it's not going up.  We wouldn't have anything left for any other 
ministry.

"We've said [through the budget], `There's just no more money for 
subsidizing capital projects and ever-increasing debt,'" Hewitt added.

Asked for comment, BHE Executive Director William Meyer said, "Our 
department will have to consider what aspects of our church's education 
ministry we will be able to support and what aspects we will be forced to cut."

Citing the financial challenges facing synodical higher education and the 
interdependence of the Synod and its agencies -- "When one entity suffers 
financial difficulties, all of Synod is affected" -- the Board of Directors 
called for a joint meeting with BHE/CUS.  Also present would be 
representatives of the Council of Presidents and representatives of 
leadership of the educational institutions.

The purpose of the meeting, said the directors, is "to develop a plan to 
address the immediate, short-term and long-term financial challenges of the 
CUS and to seek ways to take advantage of some of the great opportunities 
available to our higher-education system."

Other units

The other five program-board executives gave their reactions to the new 
budget as well.

-- The Board for Mission Services received $6 million in unrestricted 
funds, down from its request for nearly $7.8 million and from the $6.9 
million it received for the current fiscal year.  With restricted revenue 
added, the mission board's 2002-03 budget will be $32.4 million.

Rev. Robert Roegner, executive director of the mission board, said it seems 
the people of the Synod "are making it clear that they would prefer to 
support the work of LCMS World Mission directly rather than through funding 
passed from the congregations to the districts to the Synod to us."  Still, 
he said, "we rejoice in the mission outreach that is being supported in the 
congregations and districts."

This year's budget cuts will have an impact on mission work, Roegner 
said.  "We are carefully examining our work around the world, identifying 
especially those areas where we will not now be able to begin new work and 
areas where work can be handed over more quickly than we had planned.  We 
will be cutting in such a way that we hold on as much as possible to every 
opportunity to proclaim the Gospel to the maximum number of people.

"When we have to trim the staff, we will try to do it as much as possible 
through attrition," Roegner added. "Trained and dedicated people are our 
most precious resource, and the loss of even one of those is a blow to the 
mission efforts of our Synod."

-- The Board for District and Congregational Services (DCS), which took a 
major cut just two years ago, was cut again this year.  The board requested 
nearly $1.4 million in unrestricted funds and got $1 million.  That's down 
from this year's $1.2 million.

The board's total budget, with restricted income, is $4.4 million.

DCS Executive Director LeRoy Wilke said the cuts will mean some staff 
reduction, "but we are not sure how many or when.  Depending on the areas 
where staff reductions are made, there may be some impact on services 
provided by the board."

At the same time, Wilke said, "I fully understand and appreciate the 
challenges that the Synod's Board of Directors faced with the budget, and 
we are grateful for the Board's decisions with the allocation for District 
and Congregational Services."

-- The Board for Communication Services (BCS) is to receive the same 
$876,000 in unrestricted funds as it received last year.  It had asked for 
just under $1.5 million so that it could initiate some new work.

The Board of Directors also directed specifically that no funds -- not even 
restricted funds offered by a donor for that purpose -- be spent on a 
proposal by Communication Services for re-opening a Synod office in 
Washington, D.C.

The total BCS budget, which includes Synod-owned radio stations KFUO and 
KFUO-FM, is $5.4 million.

"Because personnel and other costs of doing business have gone up while 
sources of additional revenue -- advertising sales, for example -- have 
declined, receiving even the same amount as last year means that 
Communications and Public Affairs will not be able to continue its present 
work at current levels," said Rev. J. Thomas Lapacka, the communication 
board's executive director.  "We are in the process of looking for ways to 
make as little impact as possible on our efforts to communicate with our 
members and to raise the Synod's profile among the American people."

-- The Board for Human Care Ministries (BHCM) asked for $694,999 in 
unrestricted funds -- $250,000 of it to begin a pro-life effort called for 
by last year's Synod convention.  The board received $480,000.  While that 
is more than last year's $408,356, it includes $80,000 that was transferred 
from the Synod president's office to Human Care to help fund a new standing 
committee on Sanctity of Life Ministry.

Human Care's total budget is $11 million, most of it contributions to LCMS 
World Relief, which operates under the BHCM.

Rev. Matthew Harrison, executive director of LCMS World Relief and Human 
Care Ministries, said that "significant increases in health-care costs and 
other operational expenses" means that his board "will have to trim the 
budget in significant ways."

"I must say, as the executive of one of the three major program boards of 
the national church, I sincerely believe there is a very positive side to 
this otherwise painful phase in the national church's life," Harrison 
added, however.

"This budget reality is forcing us at the national office to evaluate 
honestly what we are doing, whether or not it really is important to the 
church at large, and whether or not we should be doing what we are doing," 
he said. "I'm confident that in the end, when we have passed through the 
most intense period of budget challenges, the church will be served better 
in many ways."

-- The Board for Black Ministry Services received $500,000 in unrestricted 
funds from the Board of Directors.  While that's more than the $259,745 
received last year, the increase makes up only a portion of restricted 
funds that no longer are available.  Black Ministry had requested $591,315.

"The Board for Black Ministry Services has to reduce its spending plan by 
$91,315 in order to have a balanced budget," said retired Executive 
Director Bryant E. Clancy Jr., who still is working part-time while a 
successor is sought.

"We will make these reductions and give our best effort to the commitments 
before the Board," Clancy said.  "In spite of these necessary reductions, 
we believe what we stated to the Board, that the Lord will provide a way 
for this ministry to accomplish His purposes."

Commendation

After the Board of Directors adopted the new program budget, it adopted a 
resolution commending the various boards and board executives "for the 
cooperative and gracious manner in which they approached the budget process.

"At a time of great budgeting challenges, the Board of Directors had no 
choice but to make very difficult decisions that lowered amounts budgeted 
to a number of synodical entities," the directors said. "The Christian 
spirit with which the parties dealt with the need to arrive at a balanced 
budget was of tremendous encouragement and help during this difficult process."

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