Board approves $81 million budget

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 told Reporter.

He outlined that crisis in a March 19 memo to the Board of Directors (click here for story).

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, $21,480,000 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 $1.34 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 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 at www.lcms.org/?1835.

offer a voluntary early-retirement program for LCMS employees who are at least 62 years old. It consists of a 5 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.

Re-posted Sept. 4, 2009