Amid Church Exits, Work Starts on Record-Low Budget

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Nov. 21, 2022 | UM News

As the number of church disaffiliations rises, United Methodist financial leaders have started preparing what will be the denomination’s lowest budget sent to General Conference in nearly 40 years.

The board of the denomination’s finance agency, the General Council on Financial and Administration, already was preparing to send the lawmaking assembly the lowest budget since the 1990s. On Nov. 18, by an 18-2 vote, the GCFA board approved shrinking the proposed four-year budget even further to a total of about $373.7 million for the years 2025-2028.

The current proposal requires significant cuts to all funds that support denomination-wide ministries — including general agencies and bishops.

The new bottom line marks a reduction of more than a third — more than 38% — from the denomination-wide budget that General Conference approved in 2016. It would be the lowest budget to come before General Conference since 1984, when the denomination had far fewer members on the African continent and had yet to establish Africa University, now supported with denominational funds.

Ultimately, General Conference — now thrice delayed by the COVID-19 pandemic — will have final say on the denomination’s next four-year budget when it meets in spring 2024.

“This is the beginning,” said North Texas Conference Bishop Mike McKee, GCFA board president. “We may revisit. We may not — I want to be clear. But because new data comes in real time, that may drive the conversation one way or the other.”

What happens next?

General-church apportionments support seven denominational funds.

On Nov. 18, the GCFA board made recommendations on the distribution of two — the Episcopal Fund, which supports the bishops, and the General Administration Fund, which supports General Conference, the Judicial Council, Archives and History and the finance agency itself.

Now, it’s up to the Connectional Table, a church leadership body, to recommend allocations among the five other funds.

Under the current budget proposal, the Connectional Table has about $269.9 million to distribute among those five funds. That’s about 42.3% less than allocated to the five funds under the budget approved by the 2016 General Conference.

Both the GCFA board and Connectional Table will vote on the budget allocations in May.

Dave Nuckols, the Connectional Table’s treasurer, told UM News that both the Connectional Table and GCFA board will have their work cut out for them over the next several months to fully understand the impact of these cuts.

“The next budget will reveal what the continuing UMC truly values,” he said. “Both boards and the Council of Bishops will need to consider not just reactive cuts but also creative strategies to right-size smartly and to lead in generous stewardship of what God will provide.”

The board’s vote on the bottom line came after two days of impassioned discussion between the finance agency’s board members and their counterparts on the Connectional Table, a leadership body that coordinates the work of agencies and also helps determine budget allocations. The Connectional Table has responsibility for the stewardship of the denomination’s mission, ministries and resources as determined by General Conference.

The United Methodist leaders all agree steep cuts are needed. However, disagreements remain between the finance agency board and Connectional Table about how best to adjust to shifting financial realities while also supporting ministry at all levels of the church.

At this point, all levels are feeling the effects as the denomination continues to deal with the pandemic fallout and sees a rising number of churches heading for the exits after decades of intensifying debate about LGBTQ inclusion and the launch of the breakaway conservative Global Methodist Church earlier this year.

A United Methodist News review has found that since the 2019 special General Conference approved a disaffiliation procedure, annual conferences have approved the withdrawals of 1,314 churches. Of that total, 487 disaffiliations were approved this past weekend when five annual conferences held simultaneous special sessions.

That disaffiliation tally still represents a small percentage of the more than 30,500 churches in the U.S. Nevertheless, it has financial implications.

In The United Methodist Church, the denomination’s budget is apportioned to annual conferences, church regional bodies that in turn ask for shares of church giving — called apportionments — from local churches. Annual conferences in the U.S. provide the bulk of funding for general church ministries.

UM News, which is part of United Methodist Communications, is supported by U.S. apportionment dollars.  

The formula for determining a U.S. annual conference’s apportionments is its total local church net expenditures multiplied by the General Conference-approved base percentage. Net expenditures are what a church spends after capital expenses, apportionments and benevolent giving. 

Based on surveys of annual conference leaders, the General Council on Finance and Administration staff is projecting that because of church disaffiliations and closures, there will be at least a 21.3% drop in total local church net expenditures by 2025.

Everybody agrees that with fewer local churches, the amount of apportionments requested will go down. Churches that remain in the United Methodist fold will not be on the hook for the apportionments of departing churches.

At the heart of the dispute between the GCFA board and Connectional Table is just how much to shrink the base percentage part of the apportionment formula. The Connectional Table proposed reducing the base percentage by 18%. Meanwhile, the Apportionment Sustainability Task Force, a GCFA-appointed group, recommended a 25% drop — first in 2018 and again this past July. The GCFA board’s 18-2 vote was in favor of the Apportionment Sustainability Task Force’s recommended reduction. 

The Rev. Sheila Ahler, a longtime certified public accountant and now associate pastor at Apex United Methodist Church in Apex, North Carolina, served on the task force and now serves on the GCFA board. She said that the task force first suggested the 25% reduction long before COVID shutdowns and the wave of disaffiliations because the task force wanted to get the agencies to define their core purposes and reduce expenditures. Now deeper cuts are even more crucial, she said.

“We’re trying to set that stage so that we don’t run into a brick wall three to four years from now and all of a sudden say, ‘Wait, there’s no money here,’” she told the board. She also noted her concerns that agencies have been dipping into their reserves.

Newly elected Bishop Kennetha Bigham-Tsai, who most recently served as the Connectional Table’s top executive, noted that agencies have been spending down their reserves at the Connectional Table’s instruction. She pointed to the example of United Methodist Communications, which has been using its reserves in part to support greater collaboration in communications among the agencies and allow agencies to cut their communication costs.

The GCFA board has plans to do an in-depth reserve analysis to see how denomination-wide ministries are managing their rainy-day funds.

In the meantime, Bigham-Tsai and others on the Connectional Table also pointed out that agencies have been reducing their staff in the wake of the Apportionment Sustainability Task Force’s first recommendations in 2018. 

In other actions

The General Council on Finance and Administration board approved the 2023 spending plans for bishops, 10 agencies including GCFA itself and other denomination-wide ministries.

Agencies and other entities never budget with the expectation of receiving 100% of requested apportionments. Most agency spending plans anticipate a 60% to 75% apportionment collection rate. The overall forecast is that agency spending will be down by 13% compared to 2017. There is projected usage of $11 million of reserves in 2023.

The board approved the 2023 spending plan of $21.5 million for the Episcopal Fund.

The GCFA board also approved an effort to increase more conversation among the various entities that deal with the complexities of a multinational denomination.

Read General Council on Finance and Administration press release.

She added that the agencies aren’t just looking at a 25% reduction in budget. "The reduction in the base percentage rate is only one part of the formula," Bigham-Tsai said.

With both factors in the formula are seeing big drops, that means even bigger cutbacks all around.

It’s not only agencies looking at significant belt-tightening but also bishops. The Episcopal Fund that supports the denomination’s bishops has long been in danger of running out of money. In the past year, bishops have taken on expanded workloads to cover for retiring bishops, which has helped shore up the fund. This month, United Methodists have elected 13 new bishops in the U.S., one in Europe and have plans to elect three in the Philippines. That still represents seven fewer than in the current budget.

GCFA has long been preparing a 2025-2028 budget that calls for 71 bishops — 46 in the U.S., four in Europe, three in the Philippines, and five additional bishops to bring the total to 18 in Africa.

But on Nov. 18, the GCFA board approved a 20% reduction to Episcopal Fund spending. Rick King, GCFA’s chief financial officer, said that the drop would potentially lead to the reduction of bishops by more than a third. It also could alter plans to add five more bishops in Africa.

At present, only 10 bishops — five in the U.S. and five in the central conferences of Africa, Europe and the Philippines — face mandatory retirement when the new budget takes effect.

Council of Bishops President Thomas J. Bickerton attended both days of the GCFA board meeting.

“We ought to be responsible enough to have the open conversations with Africa, about whether or not those five bishops can conceivably be elected,” Bickerton told the board. He added that he does not want to be on a collision course with the Book of Discipline, the denomination’s policy book, which has a required minimum number of bishops. In the U.S. that is at least five bishops in each jurisdiction, for a total of 25.

“I hope that we revisit this in real time because all of this is happening with such rapidity, there has been no time for any of us — whether the Council of Bishops or the jurisdictional committees on episcopacy — to really examine how the role and function of the episcopacy is going to have to change.”

The denomination is facing many unknowns, and the finance agency is still collecting data about the global economy, trends in church giving and, most significantly, congregational disaffiliations. A number of annual conferences already have scheduled special sessions in the coming year to vote on disaffiliations.

“Welcome to uncertainty with a capital U,” preached Cynthia A. Bond Hopson at a worship service in the Upper Room Chapel in Nashville, Tennessee, that brought together members of the GCFA board, the Connectional Table, the Council of Bishops and other guests.

The worship service marked the General Council on Finance and Administration board’s first meeting held largely in person since March 2020, just before the pandemic shut things down. The finance agency has since sold its building and moved into the Harry Denman Building, which it shares with the Upper Room Chapel as well as the denomination’s agencies of Discipleship Ministries and Higher Education and Ministry.

Bond Hopson is chief equity officer and assistant general secretary of the United Methodist Board of Higher Education and Ministry. She also has long administered the Black College Fund, one of the funds supported by the denominational budget.

During the worship service where GCFA invited her to preach, she said her fellow United Methodists will need “spiritual depth and courage” to lead in this precarious time. She also said United Methodist leaders need to work together to get on the same page — God’s page.

“When the numbers don't add up but the need is great, will we listen to hear what God is telling us is required?” she asked.

Hahn is assistant news editor for UM News.