Faced with the possibility of an impending split in the denomination, United Methodists are rightly worried about the financial impact of the newly proposed Protocol for Reconciliation and Grace Through Separation. Giving to the denomination’s general apportionments fell immediately after the special St. Louis General Conference last February. A number of annual conferences are struggling to meet their budgets. The General Council on Finance and Administration has proposed an 18 percent cut to the quadrennial budget for 2021-24.
Many clergy, particularly retired clergy, are worried about their pension. Just as some employees and former employees of major corporations that have hit financial problems have lost part or all of their pensions, what would happen to UM clergy pensions if the denomination separates?
The good news is that all the proposed plans of separation have made provision for continuing clergy pensions at the current level. Wespath has developed plans and legislative language that would allow clergy in any new Methodist denomination to continue participating in the clergy pension program. Earned benefits would continue at the same level as previously expected. Unfunded pension liabilities would be allocated between the post-separation United Methodist Church and the new Methodist denomination(s), with no payments for these liabilities required.
The only exception to the continuation of pensions at the current level would be for congregations and clergy who go independent and do not align with a new Methodist denomination. In that case, clergy pension amounts would be converted to a cash balance, and they would lose the ability to see further growth in some parts of their pension program. And congregations that go independent would have to make a pension withdrawal payment that has been averaging between three and six times their annual apportionment. The incentive really is to align with a new Methodist denomination, rather than going independent.
(Retired clergy health benefits are set separately by each annual conference. Annual conferences of the post-separation United Methodist Church and the new Methodist denomination(s) will need to determine what health benefits they will give to retirees.)
Financial Support for New Methodist Denominations
One of the aspects of the newly proposed Protocol agreement for separation that appears unfair is the allocation of $25 million to a new traditionalist Methodist denomination that forms and $2 million to any other new Methodist denominations that might form. Progressives complain that a denomination they believe unjustly discriminates against LGBTQ people should not receive any money upon separation. Traditionalists believe that the amount of money is just a drop in the bucket compared to the total assets of the general church.
It is important to note that the Protocol agreement is the only proposal that came to any agreement about the amount of funding for the new Methodist denomination(s). The Indianapolis Plan team was unable to agree on this point and individuals submitted different proposals for how much money should be allocated. The UMC Next Generation Plan has no specific amount to be given to new denominations, but stipulates that General Conference budget a suitable amount to help with transition expenses. There is little confidence that General Conference can easily reach agreement on an amount of money without it turning into a major point of conflict. The fact that it is already agreed to in the Protocol makes it much easier to come to an agreement at General Conference. (A bird in the hand is worth two in the bush.)
Where did the $25 million come from? Here is how that calculation was arrived at. (Figures are taken from the General Council on Finance and Administration website – gcfa.org.)
Total assets held by the general church and its agencies amounts to over $1.536 billion dollars. But about half of that amount, over $753 million, is owed to others as liabilities. That leaves net assets of about $783 million. Of that amount, about $204 million is in buildings, property, and other fixed assets. Donor restricted assets total about $460 million. That leaves about $120 million in unrestricted assets that would be available for any kind of division of assets. (It proved unrealistic to expect to share in the proceeds of any buildings or property that might never be sold, and the mediation group did not want to cause the sale of buildings or properties. The legal complications that would be involved in trying to divide restricted assets proved to be too much to overcome, taking those assets off the table.)
The negotiation resulted in one-third of the $120 million being allocated for the new Methodist denomination(s), about $40 million. $2 million was set aside for potential other denominations that might form, while $38 million was set aside for a traditionalist denomination. Traditionalists agreed to forego one-third of their share ($13 million) to give it to fund ethnic ministry plans and Africa University. (The post-separation United Methodist Church agreed to set aside double that amount for the same purpose, $26 million, leading to a total of $39 million for ethnic ministry and Africa University. This represents continuing the current level of funding over the next eight years.) The goal with the ethnic minority funding is to ensure that some of the most vulnerable populations in our church are not harmed by the separation.
The $25 million that is left will be paid to the new traditionalist Methodist denomination over the four years 2021-24 in equal installments. It can come from apportionments paid to the post-separation United Methodist Church during that time, drawn from UM reserves, or come from other sources.
The General Council on Finance and Administration is looking at the possible impact on apportionments of a separation. It is undeniable that a significant loss of members and churches from the post-separation United Methodist Church would cause a decline in funding available to the general church agencies and programs. Since it is hard to forecast how many churches might separate, it is difficult for GCFA to budget for apportionments for the next quadrennium. The post-separation United Methodist Church will need to make adjustments to programs and denominational structure in order to account for reduced financial resources available.
By contrast, the new Methodist denomination(s) forming from this separation will be able to start with low overhead. For example, in its draft Book of Doctrines and Discipline, The Wesleyan Covenant Association envisions fewer and smaller agencies, capitalizing on partnerships with existing ministries. This would allow the denomination to care for essential functions, while preserving the ability to respond nimbly to changing needs of congregations and cultural circumstances. In addition, such denominational agencies will see their primary focus as resourcing local churches for mission and ministry. They should add value for the local church, not be a drain on its financial resources. The result should be dramatically lower apportionments in a new traditionalist Methodist denomination, with more money available for mission and ministry at the local level and beyond.
Is It Fair?
Talking about money is difficult. Money is often a symbol of our values, hopes, dreams, beliefs, and power. All of these non-monetary issues are drawn into discussions about money, particularly at fraught times in the life of a family or a church. Many traditionalist observers have voiced concerns that the amount of funding given to the new denomination upon separation is not commensurate with the resources that contemporary traditionalists and prior generations have contributed to the church over the decades. As legitimate as these concerns may be, the negotiated settlement was conceived in good faith based on the calculations and limitations shared above.
More importantly, this separation will test the faith of all of us – those who remain and those who separate. Do we really believe that “God owns the cattle on a thousand hills?” Do we trust God to supply our needs, both at the congregational and the denominational level? We will have a great opportunity over the next few years to step out in faith and trust the One who made us, who redeemed us, and who provides and cares for us.