wfn.org | [LCMSNews] Board adopts $81 million budget

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>6.2.2009		
>	LCMS News	 	
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>THE LUTHERAN CHURCH Missouri Synod  	 	
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	June 2, 2009 .................... LCMSNews -- No. 44

Board adopts $81 million budget amid 'financial crisis' for Synod

>By Joe Isenhower Jr.

The Synod's Board of Directors unanimously adopted a balanced national
Synod operating budget of $81,185,878 for the coming year at its May
14-15 meeting and approved a number of measures to help ease what Dr.
Thomas Kuchta, Synod's vice president-finance/treasurer, terms "a
financial crisis for the corporate Synod."

"I hope this Board doesn't feel comfortable in adopting this balanced
operating budget," Kuchta advised its members.

"The financial crisis is one of a lack of unrestricted revenues," Kuchta
later said.

He outlined that crisis in a March 19 memo to the Board of Directors (
click here <http://www.lcms.org/pages/rpage.asp?NavID=15226>  to read  a
related story, "Kuchta: 'Unrestricted' cuts hamper ministry").

The operating budget for the year starting July 1 is $3.5 million less
than the current board-approved operating budget.

The balanced budget for 2009-10 is based on projected Board-designated
income of $48,281,000 in funds for restricted (or designated) use,
$20,120,000 in unrestricted funds, and $12,785,000 from sales and
services.  It also includes a contingency fund of $359,000.

For the current year's (2008-09) Board-approved budget of $84,690,924,
anticipated restricted revenue was $48,746,954, unrestricted --
$21,480,000, and from sales and services -- $14,463,970.

A budget "overview" prepared for the Board meeting by Kuchta and Charles
Rhodes, executive director of accounting, points to the following:

*	Projections indicate that undesignated 2009-10 revenues for the
Synod will be down by $1.36 million, including a reduction of $430,000
from districts.

*	The projected $3.5 million expenditure reduction, compared with
the current year, is "primarily due to restricted funding."

*	They worked with staff executives of Synod boards, commissions,
and departments to pare their budget requests by approximately $2.5
million.

"During my seven-plus years as Synod treasurer, I have not experienced a
more collegial and collaborative group of executives at the
International Center, in the process of arriving at a proposed balanced
budget," Kuchta told the Board. "With income shortfalls expected, they
are to be commended."

He said that the total impact of reductions made by the unit executives,
as well as from other cost cutting such as the salary and hiring freezes
the Board approved in February, is "about a $4.3 million reduction from
what normal needs would have been."

That process to arrive at the balanced budget for the coming year "was
not without pain, because reductions were significant," Kuchta said,
pointing out two examples -- about $900,000 in reductions for LCMS World
Mission, and reducing subsidies to the Concordia University schools.
Actually, no subsidies will go directly to the 10 CUS schools, although
in this current fiscal year the Synod is replenishing the Risk Endowment
Fund (which guarantees loans the schools receive from financial
institutions) by approximately $1.2 million.

Kuchta also said that he has asked the unit executives to "have budget
adjustments in the area of 15 percent ready to go. It's a contingency
plan, in the event that as the year progresses, we would have to make
further cuts."

"This Board is very grateful for every dollar that comes to the Synod,"
Board Chairman Donald Muchow told its members as he opened the meeting
that would soon deal with the budget. "Donors trust the Synod, and we
honor that trust."

He stressed that the Board's action "must properly delineate what is
critical and what is desired. ... In an economic downturn, there are
opportunities for creative kingdom work."

Then, as the May meeting progressed, the Board acted on a number of
resolutions that dovetail with the 2009-10 budget -- including to:

*	revise restrictions on use of funds from the sale of properties
in Hong Kong earlier this year, allowing LCMS World Mission to offset
its 2008-09 operating deficit of about $2.5 million by borrowing from
that fund.  The Board for Mission Services, in its action requesting the
Board of Directors revision, committed to replenishing the property-sale
fund "in future years" with Fan into Flame funds.

*	direct staff to study the possibility of centralizing certain
services provided at the International Center, "including printing,
communication, and technology, and identify opportunities for
efficiencies via the centralizing of services."

*	"advocate" that the synodwide offering for the 2010 LCMS
convention "be used to address the unrestricted needs of the Synod," and
that Kuchta's March 19 memo to the Board be published in the minutes of
the May meeting.  To read those minutes and Kuchta's memo, go to the
Board's Web page, after June 3, at www.lcms.org/?1835
<http://www.lcms.org/?1835> .

*	offer a voluntary early-retirement program for LCMS employees
who are at least 62 years old. It consists of a 25 percent incentive of
annual salary to be paid semi-monthly over 60 months, as well as
payments to Concordia Plan Services of its Health Plan premiums for
eligible employees who are younger than 65.  This action also stipulates
that "positions vacated" by those who accept the offer "will remain
subject to the hiring freeze" the Board approved at its February
meeting, when it also froze salaries of Synod employees for the coming
year.

*	direct Synod Chief Administrative Officer Ron Schultz to "strive
to hold actual Board of Directors expenditures at a level of 15 percent
below the ... budgeted amount."

In a May 21 memo to all Synod employees, Schultz referred to the Board's
adoption of the operating budget as proposed by Kuchta and Rhodes after
their meetings with the unit executives.

"While we were able to present a balanced budget to the Board, it was
not without significant concessions on the part of the organization and
the units within the corporate Synod," Schultz wrote. "The bottom line
is that a balanced budget does not signify that all is well or back to
normal. The Board of Directors is very cognizant of the ongoing funding
challenges that face the national office and believes that continued
diligence and creativity will be required for the foreseeable future ...
."

The Board of Directors also adopted a capital budget and a convention
budget for the Synod in 2009-10, of $7,780,324 and $2,512,368,
respectively.

Among other actions at its May 14-15 meeting, the Synod Board of
Directors adopted a resolution concerning appointments to the
International Lutheran Society of Wittenberg (ILSW), which oversees
plans being developed for a confessional Lutheran presence in the German
city where the Reformation had its beginnings when Martin Luther posted
his 95 Theses there.

Adopted "resolveds" of that resolution include reaffirmation of Kuchta's
serving on the ILSW supervisory board; appointing Dr. Samuel Nafzger to
that board; and directing those two Synod representatives to also
recommend Kermit (Butch) Almstedt, chairman of the LCMS Board for
Mission Services, as the joint LCMS-Concordia Publishing House
representatives on the supervisory board.

The ILSW resolution also included two amendments -- "By this action, the
Board of Directors does not commit the [LCMS] to further expenses at
this time" for facility renovation; and that the Board receive reports
from the ILSW at its regularly scheduled meetings.

Also approved by the Board of Directors was a request from Concordia
University Wisconsin for approval of refinancing its bonds (amounting to
about $17 million) and "to utilize this bond issue for financing the
[university's] environmental center and science laboratory projects, not
to exceed $21 million in total."

The Board authorized Chairman Muchow to send a letter on its behalf to
Concordia University Texas, congratulating that CUS school on its move
to a new campus in Austin last year, and thanking it for keeping
relocation expenses within 1 percent of estimated costs.

Four men were appointed by the Board to fill vacancies on the Board of
Directors--Concordia Plan Services and Board of Trustees--Concordia
Plans: Rev. Ronald Carnicom of Hackensack, Minn.; Philip Fluegge, Shelby
Township, Mich.; Frederick G. Kraegel, Henrico, Va.; and Mark Schmidtke,
Valparaiso, Ind.

>****************************************

If you have questions or comments about this LCMSNews release, contact
Joe Isenhower Jr. at joe.isenhower@lcms.org
<mailto:joe.isenhower@lcms.org>  or (314) 996-1231, or Paula Schlueter
Ross at paula.ross@lcms.org <mailto:paula.ross@lcms.org>  or (314)
996-1230.

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