wfn.org | Budget woes continue to plague mission agency

[NewsDesk <NewsDesk@UMCOM.ORG>]

Oct.  25, 2002	   News media contact: Linda Bloom7(212) 870-38037New York
10-71B{492}

STAMFORD, Conn. (UMNS)--Despite severe cuts to staff and programs, the
United Methodist Board of Global Ministries continues to struggle with its
finances.

In his report during the Oct. 21-24 annual meeting, Board Treasurer Stephen
Feerrar summarized the decline in assets and outlined challenges for 2003,
including constraints on cash flow, the need for ongoing cost containment
and the importance of future financial development for program initiatives.

Feerrar acknowledged the difficulty the agency faces with "dwindling assets
and escalating costs" as the needs of the world increase. He said he
struggled with the fact that the denomination gives less than $4 per member
to its international mission agency and seems inclined to reduce that figure
even further.

As he had in his report last spring, Feerrar showed directors how the
downward financial spiral occurred for general board funds, excluding funds
of the Women's Division and Health and Relief division.

Finance committee minutes from the April 2000 board meeting forecast that
the agency's unrestricted funds would be reduced from $128 million to $34.6
million by 2004. In reality, the unrestricted net assets had nearly dropped
to that level by August 2002.

While the spending down of reserves, beginning in the late 1990s, was
intentional, the economic slide was not. "The preservation of our financial
assets was lost to a vicious stock market," Feerrar declared.

He noted that more than $100 million worth of assets have been used to fund
operations and programs since 1998. "While we were applying our assets to
mission, the stock market was taking back the gains it had given us," he
explained.  

The slide has continued as the third quarter of 2002 proved to be the worst
quarter of stock market performance since the Great Depression, according to
the treasurer. At this point, the agency has only $8.5 million in unrealized
capital gains "across all classes of financial investments."

As of Aug. 30, the board had borrowed $9 million from pooled funds. "Our
cash borrowings are fully extended now," Feerrar said. "We are managing on a
very strict cash flow basis."

"Extraordinary increases" in liability and insurance costs also are
impacting cash flow, but relief is expected for the last four calendar
months as more denominational funds become available.

The treasurer advised against further depletion of unrestricted funds and
pointed out that any equity sale would result in realized losses.

The agency has underspent its budget in 2002, especially in program areas,
as a cost containment measure and budget reductions will continue in 2003,
according to Feerrar.

"I expect and pray that we have been through the worst of it," he told
directors.

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United Methodist News Service
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