10-18 Recommendation Pertaining to Budgetary and Financial Concerns of the Church.
Source: Agencies Event:220th General Assembly (2012)
Committee:
[10-18] Mission Coordination
Sponsor:
Presbyterian Mission Agency
Topic:Unassigned Type:General Assembly Full Consideration
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Assembly Action
On Recommendation (Recommendation A.1.), the General Assembly, acted as follows:
Approve
Voice Vote
On Recommendation (Recommendation A.2.), the General Assembly, acted as follows:
Approve
Voice Vote
On Recommendation (Recommendation A.3.), the General Assembly, acted as follows:
Approve
Voice Vote
Final Text:


On Recommendation (Recommendation B.1.), the General Assembly, acted as follows:
Approve
Voice Vote
On Recommendation (Recommendation C.1.), the General Assembly, acted as follows:
Approve
Voice Vote
On Recommendation (Recommendation C.2.), the General Assembly, acted as follows:
Approve as Amended
Voice Vote
Final Text:
To insert a new Recommendation D. to read as follows: [Text to be added or inserted is shown with brackets and with an underline.]:

“[1.         Direct the General Assembly Mission Council not to implement the 218th General Assembly (2008) action regarding cost allocation and recovery with respect to the Theological Education Fund in the 2013–2014 General Assembly Mission Budgets.

“[2.         Direct the Moderator of the 220th General Assembly (2012), in consultation with the Moderator of the 219th General Assembly (2010) and with the Committee on Theological Education (COTE), to appoint a special committee on the funding of theological institutions, with a charge to review the funding relationship of theological institutions to the General Assembly and the church, and to propose any needed changes, including a strengthened funding mechanism for the support of theological institutions by the church. The special committee should make its report to the 221st General Assembly (2014). The special committee should consist of thirteen members, all of whom should be persons who are especially knowledgeable about theological institutions. One member should be the director of COTE, and a second the director of the GAMC Theology, Worship and Education ministry area. The remaining eleven should include two elected members of COTE, five PC(USA) seminary presidents, and a GAMC member. Other members would likewise be persons with knowledge and experience in the field of theological education, one of whom should have expertise in fund-raising. The special committee will hold up to three face-to-face meetings (an initial meeting for two days, and up to two additional one-day meetings). Conference calls and other technological resources would be used for other meetings in order to reduce costs.]”

Committee Recommendation
On Recommendation (Recommendation A.1.), the Mission Coordination Committee, acted as follows:
Approve
[Counted Vote - Committee]
Affirmative:52
Negative:0
Abstaining:0
On Recommendation (Recommendation A.2.), the Mission Coordination Committee, acted as follows:
Approve
[Counted Vote - Committee]
Affirmative:52
Negative:0
Abstaining:0
On Recommendation (Recommendation A.3.), the Mission Coordination Committee, acted as follows:
Approve
[Voice Vote]
Affirmative:0
Negative:0
Abstaining:0
Final Text:

On Recommendation (Recommendation B.1.), the Mission Coordination Committee, acted as follows:
Approve
[Counted Vote - Committee]
Affirmative:51
Negative:0
Abstaining:1
On Recommendation (Recommendation C.1.), the Mission Coordination Committee, acted as follows:
Approve
[Counted Vote - Committee]
Affirmative:51
Negative:0
Abstaining:1
On Recommendation (Recommendation C.2.), the Mission Coordination Committee, acted as follows:
Approve as Amended
[Counted Vote - Committee]
Affirmative:51
Negative:0
Abstaining:1
Final Text:
 To insert a new Recommendation D. to read as follows: [Text to be added or inserted is shown with brackets and with an underline.]:

“[1.         Direct the General Assembly Mission Council not to implement the 218th General Assembly (2008) action regarding cost allocation and recovery with respect to the Theological Education Fund in the 2013–2014 General Assembly Mission Budgets.

“[2.         Direct the Moderator of the 220th General Assembly (2012), in consultation with the Moderator of the 219th General Assembly (2010) and with the Committee on Theological Education (COTE), to appoint a special committee on the funding of theological institutions, with a charge to review the funding relationship of theological institutions to the General Assembly and the church, and to propose any needed changes, including a strengthened funding mechanism for the support of theological institutions by the church. The special committee should make its report to the 221st General Assembly (2014). The special committee should consist of thirteen members, all of whom should be persons who are especially knowledgeable about theological institutions. One member should be the director of COTE, and a second the director of the GAMC Theology, Worship and Education ministry area. The remaining eleven should include two elected members of COTE, five PC(USA) seminary presidents, and a GAMC member. Other members would likewise be persons with knowledge and experience in the field of theological education, one of whom should have expertise in fund-raising. The special committee will hold up to three face-to-face meetings (an initial meeting for two days, and up to two additional one-day meetings). Conference calls and other technological resources would be used for other meetings in order to reduce costs.]”

Recommendation
Recommendation A.1.

Recommendation Pertaining to Budgetary and Financial Concerns of the Church

A.            Relating to Budgets for General Assembly Mission Program

1.     Presbyterian Mission Program—General Assembly Mission Program Receipts and Expenditures Actual Compared to Budget for 2010 and 2011.

The General Assembly Mission Council recommends that the 220th General Assembly (2012) incorporate into the Minutes the report of the General Assembly Mission Program Receipts and Expenditures Actual Compared to Budget for 2010 and 2011.

[The display that is found in gamc-budget-charts-A-1.pdf (see under Additional Resources) is the report of actual revenue and expenditures for the years 2010 and 2011.]

Recommendation A.2.

2.     Presbyterian Mission Program—Revised General Assembly Mission Budget and Program 2012.

The General Assembly Mission Council recommends that the 220th General Assembly (2012) receive the revised report of the 2012 General Assembly Mission Budget and Program in the total amount of $89,091,490.

[The display that is found in gamc-budget-charts-A-2.pdf (see under Additional Resources) is the report of the 2012 General Assembly Mission Budget and Program.]

Recommendation A.3.

3.     Presbyterian Mission Program—General Assembly Mission Budget and Program 2013 and 2014.

The General Assembly Mission Council recommends that the 220th General Assembly (2012) approve the 2013 General Assembly Mission Budget and Program in the total amount of $81,576,103 and the 2014 General Assembly Mission Budget and Program in the total amount of $78,196,031.

[The display that is found in gamc-budget-charts-A-3.pdf (see under Additional Resources) is the report of the 2013 General Assembly Mission Budget and Program and the 2014 General Assembly Mission Budget Program.]

Recommendation B.1.

B.            Relating to Reserved or Committed Funds

1.     Unrestricted and Committed Funds

The General Assembly Mission Council recommends that the 220th General Assembly (2012) receive the report of the Presbyterian Church (U.S.A.), A Corporation, regarding unrestricted and committed funds as of December 31, 2011.

Recommendation C.1.

C.            Relating to Support for General Assembly Mission

1.     John C. Lord and Edmund P. Dwight Funds
The General Assembly Mission Council recommends that the 220th General Assembly (2012) allocate the annual income realized in 2011 and projected for 2012 from the John C. Lord and Edmund P. Dwight Funds in support of the budget for the general mission work of the General Assembly

Recommendation C.2.
2.     Special Offerings 2011

The General Assembly Mission Council recommends that the 220th General Assembly (2012) incorporate into its Minutes the following summary of receipts from Special Offerings for the years 2010 and 2011.

[The charts that are found in gamc-special-offerings-C-2.pdf (see under Additional Resources) show the summary of receipts for Special Offerings for the years 2010 and 2011.]

Rationale
Rationale for Rec. A.1.

The 202nd General Assembly (1990) adopted Policy governing Mission Budgets at the General Assembly Level. That policy provides that:

B.    The General Assembly Council shall:
1.             Report to each General Assembly:

a.     Actual total financial resources used to support the General Assembly Mission Budget and Program and the expenditures during the most recently completed year. (Minutes, 1990, Part I, p. 375)

Rationale for Rec. A.2.

The 202nd General Assembly (1990) adopted Policy governing Mission Budgets at the General Assembly Level. That policy provides that:

B.     The General Assembly Council shall:

1.             report to each General Assembly: …

b.     adjustments, if any, approved by the General Assembly [Mission] Council for the current budget year.

2.             adjust if necessary the General Assembly Mission Budget and Program as adopted by the General Assembly … (Minutes, 1990, Part I, p. 375)

Rationale for Rec. A.3.

The 202nd General Assembly (1990) adopted Policy Governing Mission Budgets at the General Assembly Level. That policy provides that:

B.     The General Assembly Council shall: …

3.             recommend to the General Assembly the General Assembly Mission Budget and Program for the next succeeding budget cycle. Displayed in the recommendation shall be:

a.     all projected financial sources; and

b.     anticipated uses of financial resources in light of mission objectives. (Minutes, 1990, Part I, p. 375)

The General Assembly Mission Council is required by the Constitution to prepare and submit a comprehensive budget to the General Assembly (Book of Order, G-3.0113).

Rationale for Rec. B.1.

The report of the unrestricted funds is divided between uncommitted and committed funds. The display found in gamc-budget-charts-B.pdf (see under Additional Resources) indicates those funds as well as the activity of those funds and the status of the total reserves as of closing December 31, 2011. The 202nd General Assembly (1990) adopted the following policy:

A.    Presbyterian Mission Program Fund

1.             A fund composed of all unrestricted and uncommitted receipts and assets intended for the support of the General Assembly mission program.

2.             Sources to maintain this fund shall include all unified revenue available for the General Assembly Mission Program, including but not limited to:

a.     unified income including receipts from congregations, presbyteries, or individuals;

b.     unrestricted gifts, legacies, bequests
c.     unrestricted investment income;
d.     gift annuity excess reserves;

e.     such nonrecurring income as the General Assembly Council shall direct by general or specific policy statement; and

f.      under expenditure of the unified portion of the General Assembly Mission Budget.

3.             The Uncommitted Funds portion of the Presbyterian Mission Program Fund at year end must be equal to at least 30% of the Unified portion and direct mission support of the General Assembly Mission Budget, which minimum provides for

a.     cash flow needed for mission purposes;
b.     guarantee of the current unified budget. (Minutes, 1990, Part I, p. 377)
Rationale for Rec. C.1.

Current practice is to recommend to each General Assembly the allocation of annual income from these two funds in light of wording in the donors’ wills that requires this annual process.

Portion of the will of Edmund P. Dwight (May 23, 1903):

I will and bequeath to the General Assembly of the Presbyterian Church of America, to be used for the establishment of the Christian Religion, that the light of the gospel may be made to join more perfectly...

Portion of the will of John C. Lord (January 2, 1873):

… to the Trustees of the General Assembly of the Presbyterian Church in the U.S.A., for religious and charitable uses, to be called the John C. Lord Fund, the annual interest of which is to be disposed of and distributed by the said General Assembly at each annual meeting for the furtherance of the Gospel of our Blessed Saviour, at home or abroad, as the Assembly may deem best. …

The applicable provisions of the two wills facilitate the annual income realized from these funds to be used in the General Assembly's General Mission Budget.

Income from these funds in 2011 were $27,597.60 and it is projected that the income from these funds in 2012 will be approximately $24,857.42.

Rationale for Rec. C.2.

Special Offerings enable an important part of the General Assembly Mission Program. In 2010, income from these offerings totaled approximately 18 percent of total income for the mission program of the church and 27 percent of the mission gifts from congregations. In 2011, income from these offerings totaled approximately 23 percent of total income for the mission program of the church and 33 percent of the mission gifts from congregations.

Financial Implication

Item 10-18, COTE Comment, Rec D 2, 2013: $20,360; 2014: $12,655  (per capita - OGA)

(2013)  $266,000  (2014)  $247,000   [GAMC - Unrestricted]

Comment
COTE COMMENT

The Committee on Theological Education (“COTE”) requests that the 220th General Assembly (2012), as it considers the General Assembly Mission Council (“GAMC”) mission budget, amend Item 10-18 by adding the following additional recommendations: [Text to be added is shown with brackets and with an underline.]]

“[D. That the 220th General Assembly (2012) do the following:

“[1.         Direct the General Assembly Mission Council not to implement the 218th General Assembly (2008) action regarding cost allocation and recovery with respect to the Theological Education Fund in the 2013–2014 General Assembly Mission Budgets.

“[2.         Direct the Moderator of the 220th General Assembly (2012), in consultation with the Moderator of the 219th General Assembly (2010) and with the Committee on Theological Education (COTE), toappoint a special committee on the funding of theological institutions, with a charge to review the funding relationship of theological institutions to the General Assembly and the church, and to propose any needed changes, including a strengthened funding mechanism for the support of theological institutions by the church. The special committee should make its report to the 221st General Assembly (2014). The special committee should consist of thirteen members, all of whom should be persons who are especially knowledgeable about theological institutions. One member should be the director of COTE, and a second the director of the GAMC Theology, Worship and Education ministry area. The remaining eleven should include two elected members of COTE, five PC(USA) seminary presidents, and a GAMC member. Other members would likewise be persons with knowledge and experience in the field of theological education, one of whom should have expertise in fund-raising. The special committee will hold up to three face-to-face meetings (an initial meeting for two days, and up to two additional one-day meetings). Conference calls and other technological resources would be used for other meetings in order to reduce costs.]”

Rationale

1.     The 198th General Assembly (1986) established a Committee on Theological Education(COTE) and proposed the creation of a theological education fund (the “Fund”) equal to one percent (1.0 percent) of the dollar figure reported by each congregation of the church be contributed by each congregation as an additional gift as its proportionate share for the education of present and future ministers and educators of the church. The Fund was subsequently created and COTE was charged with administering the Fund and preparing an appropriate formula for disbursements of monies from the Fund to the theological institutions of the Presbyterian Church (U.S.A.). The COTE was also charged with advocating for their financial support.

2.     At some point after its inception, COTE and the General Assembly Council (now the General Assembly Mission Council [herein “GAMC”]) agreed that certain costs of COTE would be borne by the Fund, but that other operating expenses would continue to be funded by the church’s mission budget. The activities of COTE proceeded in that manner. In 2004, when the GAMC began initial implementation of a 5 percent administrative cost allocation, the Fund was exempted from this cost, because the Fund was already covering a significant portion of the costs of the Fund. Since then, the Fund has not been expected to fund nor has it funded the 5 percent shared mission charge since its implementation because the operating expenses funded by the Fund exceeded the 5 percent charge.

3.     The 218th General Assembly (2008) directed

that the system of giving developed by the General Assembly Council fairly and accurately allocate all costs associated with individual projects in the General Assembly mission budget, including the costs associated with the systems necessary for the support, promotion, and accountability of each item; and that the results of this system be communicated to the church as part of the General Assembly Council’s mission interpretation. This transition will be gradually          phased in over a five-year period, beginning in 2009. (Minutes, 2008, Part I, p. 668)

Staff of the GAMC worked diligently to implement the direction of the 218th General Assembly (2008), and at its meeting held May 9–11, 2012, the GAMC considered and adopted proposed budgets for 2013 and 2014, which included a substantially higher shared cost allocation to the Fund.

4.     Implementation of the GAMC’s cost allocation and recovery charge upon the Fund will place an untenable burden on the Fund, which already absorbs the costs of its GAMC staff and direct promotional costs. Furthermore, while important for all Presbyterian seminaries, the Fund is decisive in the case of Johnson C. Smith Seminary, which is heavily dependent on the Fund, and whose very existence is threatened by the reduction of distributable funds that will be caused by the imposition of a cost allocation and recovery charge upon the Fund.

5.     At the same time, contributions to the Fund have declined for more than a decade and that decline is expected to continue. The truth of the matter is that the church, the seminaries, and the denomination have a problem with the Fund as it now exists. In 1986, the church hoped to replace the funding for theological education that was coming from the denomination with funds that would be received from congregations, not as benevolence gifts but as direct investments in the leadership of the church. This has not been the result. In 2010, less than 2 percent of the total budgets of seminaries were funded by the Fund instead of the hoped-for 20 percent when the Fund was established. Only 20 percent of the church’s congregations now contribute to the Fund. It is anticipated that these trends will continue without creative thinking and energetic leadership.

6.     The COTE recognizes that the Fund faces a challenge from declining receipts, independent of cost allocation and recovery, and seeks to involve the General Assembly in (a) taking a new look at the funding relationship between seminaries, the denomination, and its congregations, and (b) considering a different mechanism by which the church provides opportunities for congregations and others to contribute to the funding of theological institutions.

7.     The COTE is pleased to advise that consultations among representatives of COTE and GAMC were held on June 12, 2012, in Louisville, and thereafter, and that the GAMC representatives, including its Executive Director, indicated their concurrence with these comments and their support for both the postponement of the application of the cost allocation and recovery charge to the Fund and the appointment by the Moderator of the special committee. They plan to support COTE’s recommendations at the assembly and its committee(s). The GAMC representatives feel that COTE’s first recommendation looks at the immediate short-term need for 2013–2014, and that the other seeks to address the larger issue of the denomination’s funding relationship to PC(USA) seminaries.

8.     Insofar as expenses of the special committee are concerned, seminaries have agreed to pay all committee-related expenses of their presidents, if selected, including travel costs, and, if a meeting is held on a particular seminary’s campus, the seminary will pay the “on the ground” expenses of all committee members attending the meeting (such as meals and housing, but not transportation). This should reduce the costs of the special committee that would be incurred by the denomination. The limitation to three face-to-face meetings and the use of technology for conference call meetings, where appropriate, should likewise result in lower costs.

NOTE: The COTE has direct access to the General Assembly pursuant to (i) Section 24.045, as referred to in Section 24.128, Recommendation A, of the Report of the Special Committee on Theological Institutions, as adopted by the 198th General Assembly (1986), Minutes, pp. 265–74; and (ii) Section 4 of Part VIII of Appendix 1 of the GAMC Manual of Operations (September, 2011).