wfn.org | ELCA Board of Pensions Trustees Discuss Enron Debacle

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ELCA NEWS SERVICE

March 22, 2002

ELCA BOARD OF PENSIONS TRUSTEES DISCUSS ENRON DEBACLE
02-059-SS*

     MINNEAPOLIS (ELCA) -- At their March 1-3 meeting here, trustees of
the Evangelical Lutheran Church in America (ELCA) Board of Pensions
discussed how the organization can avoid a situation such as that
involving the much-publicized Houston-based Enron.  Trustees also talked
about the board's relationship with Arthur Andersen, the accounting firm
associated with Enron.
     Robert H. Rydland, a board vice president and its general counsel,
explained current board bylaw provisions and protective clauses that
mitigate against such a debacle occurring at the Board of Pensions.
     "There shall be no business transactions   between the corporation
and a trustee during her or his term in office and, except in the case
of employment, for a period of one year thereafter," the bylaws specify.
     The trustees' audit committee meets both with internal and
external auditors separately and has the ability to "ask the hard
questions," Rydland said.  "Had Enron had such bylaws and followed them,
this debacle couldn't have happened," he added.
     Board bylaws give the audit committee authority to investigate any
matters relative to audits.  Additionally, the audit committee
"participates directly in decisions affecting the retention and
dismissal of the internal audit manager," according to the audit
committee charter.
     Rydland noted wryly that three of Enron's list of core values
(according to its 2000 annual report) are the same as the Board of
Pensions'.  Enron lists communication, respect, integrity and excellence
as its values.  The ELCA pension unit's values are integrity,
excellence, respect, stewardship and collaboration.
     The audit committee met with representatives of the Arthur
Andersen Minneapolis office to discuss their positions.  The committee
recommended, and board trustees approved, that Arthur Andersen complete
the current audit and that in August the trustees will decide whether to
retain Andersen as the board's external auditor.
     "We'll be watching [Andersen] very closely until then," said John
Gozola, manager of the board's internal audit process.
     "The audit committee found nothing wrong with the audit this year
or in past years," said Kenneth G. Bash, Phoenix, chair of the board of
trustees.  "This is only a public relations issue."
     "It's a P.R. issue," said trustee Joseph Swanson, Racine, Wis.,
adding that it's also an issue of whether the accounting firm can stay
in business.  "What happens to Arthur Andersen in the future?" he asked.
     "There's a third issue," said trustee Jon B. Christianson, Arden
Hills, Minn., "and that's ethical."  He pointed out that the pension
board divested its funds in South Africa because of ethical issues.
     Swanson argued, "We're going to have to take this issue up very
carefully."
     "We don't have enough facts today," agreed trustee Mary S. Ranum,
Circle Pines, Minn., "but we will."
     The board trustees discussed at length, in small groups and in
plenary session, the organization's strategic plan for 2003-2005.  They
will consider a final plan in August, reviewing a draft in the interim.
     The continued rise in health care costs and the aggressive
management of those costs emerged often in the discussions.
     "I hear strong affirmation for the wellness issue," said John G.
Kapanke, president of the Board of Pensions.  "I also hear strong
affirmation for incentives in our plan for wellness, to try change
unhealthy behaviors."
     The board has committed to financial support for the ELCA
ministerial health and wellness program operated through the Division
for Ministry, a program strongly supported by the trustees.  One small
group wanted to see the board "take the lead" in implementing any
initiatives that come from the work of Dr. Gwen W. Halaas, the program
director.
     The trustees repeatedly stressed education of plan members on all
changes to health care coverage and pension options.  Several cited the
preretirement workshops presented by the board, asking that those be
expanded.  Communication with members, face to face as well as through
use of the board's Web site, is a priority, Kapanke said.
     Prior to their strategic plan discussions, Kenneth W. Inskeep,
director of the ELCA Department for Research and Evaluation, told the
trustees about ELCA trends.  Some of those are smaller congregations
with fewer worshipers, small congregations losing members and not able
to afford a full-time pastor, richer congregations getting richer, and
the numbers of congregations and pastors decreasing.
     Kapanke reported on the growth of the Special Needs Retirement
Fund, a program to provide financial assistance to low-funded retirees.
Other retired plan members pledged annual gifts of about $180,000; St.
Stephen Lutheran Church, Chicago, donated $120,000 following the
congregation's decision to close its doors; and ELCA Presiding Bishop
Mark S. Hanson's letter late last year drew $189,409.  Active plan
members will receive a letter after Easter inviting them to make gifts
to the fund.
     The trustees meet again July 31-Aug. 2.

*Sonia C. Solomonson is managing editor of The Lutheran, magazine of the
ELCA.

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