Despite the long-standing ELCIC policy of publishing congregational petitions in the official convention Book of Reports (“BOR”), for delegate perusal prior to convention, Bishop “Susan Johnson” and the ELCIC National Church Council (“NCC”) have decided to “reverse that policy”. Their decision therefore also affects the attached petition, submitted by Peace Lutheran Church, Innisfail, AB. The petition is titled,Resolution Regarding Congregations Leaving the ELCIC. The petition concerns changing the ELCIC policy of commencing lawsuits against former congregations.
The policy of the ELCIC to commence legal action against departing congregations is not in accordance with orthodox Christian doctrine, historical ELCIC policy or simple logic. The attached petition analyzes the flawed logic employed by the ELCIC in its attempt to force congregations to pay for liabilities incurred by ELCIC decision-making bodies. Since the ELCIC has no conflict of interest policy, many members of the ELCIC decision-making bodies were permitted to vote on policies in which they had a direct or indirect financial interest. The decisions made by past ELCIC decision-making bodies have resulted in liabilities that the ELCIC is now attempting to collect from departing congregations.
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Resolution Regarding Congregations Leaving the ELCIC
Motion:
That this convention direct the National Church Council of the ELCIC to recognize that, if a congregation chooses to sever its relationship with the ELCIC in accordance with the ELCIC Constitution – Article VI, Section 10 and of the Administrative Bylaws – Part II, Section 5, the congregation has no claim on any assets of the ELCIC or its subsidiaries and no responsibility for any liabilities of the ELCIC or its subsidiaries.
Rationale:
ELCIC current policy is to demand payments for ELCIC pension liabilities from congregations choosing to leave the ELCIC. For instance, the ELCIC recently filed a lawsuit against St. Peter’s Lutheran Church, Cochrane, Alberta. This is despite there being no provision in the ELCIC Constitution, ELCIC Corporate By-Laws or in the ELCIC Administrative Bylaws recognizing the right of the ELCIC to make any financial claims on a congregation deciding to leave the ELCIC. (See the ELCIC Constitution – Article VI, Section 10 and Administrative Bylaws – Part II, Section 5, included in Appendix A below).
If there were provisions supporting this policy it would follow the congregation should be able to sue the ELCIC for a share of the net assets of the ELCIC.
Further, the administration of a pension plan for pastors and other church workers is one of the responsibilities of the ELCIC specified in both the Constitution – Article XVII and Administrative Bylaws – Part XV, Section 1 (see Appendix B). The ELCIC’s financial statements indicate the following in Note 12 of the December 31, 2004 audited financial statements (emphasis added):
“ELCIC was formerly the Administrator of the Pension Plan. Under governing pension legislation, the Administrator of the Pension Plan is ultimately liable for any unfunded liabilities or solvency deficiencies which may arise under the retired life component of the Pension Plan as determined by actuarial valuation.
As at December 31, 2004, the liability of ELCIC, if any, as a result of its previous role as Administrator of the Pension Plan cannot be determined, and the extent of such liability, if any, cannot be estimated. In the 2003 fiscal year, ELCIC committed funding of $ 2,000,000 towards the unfunded liability.”
If the liability for the unfunded pension liability is the responsibility of the ELCIC (as stated in the ELCIC audited financial statements) the ELCIC cannot logically or morally commence a lawsuit for unfunded pension liabilities against a congregation leaving the ELCIC.
Also, in Note 5 of the December 31, 2007 financial statements of the ELCIC pension plan it states during that year the ELCIC contributed an additional $ 550,000 to the unfunded pension liability. If congregations (and specifically congregations leaving the ELCIC) are liable for the unfunded pension liability, the question must be asked; under what authority did the ELCIC National Church Council (“NCC”) transfer ELCIC funds amounting to $ 2,000,000 in 2003 and $ 550,000 in 2007, to the pension plan for the benefit of pastors? Not through communication with the congregations.
If the ELCIC is not liable for the pension plan deficiency, how can NCC ethically fulfill their legal duty to protect the assets of the ELCIC if they transfer millions of dollars of ELCIC funds to a pension plan that benefits pastors?
In November, 2007, the NCC provided the Superintendent of Pensions with a $ 5,000,000 irrevocable letter of credit. It is difficult to review this transaction, since the NCC has kept the minutes of this meeting in camera, unavailable to non-ELCIC officials. This letter of credit likely required the ELCIC to pledge at least $ 5,000,000 in ELCIC liquid assets (e.g. marketable securities) to a financial institution which provided the Superintendent of Pensions with the letter of credit. This means that the NCC has taken ELCIC assets and pledged them to the Superintendent of Pensions for the benefit of the pastors’ pension fund. It is likely the Superintendent has complete discretion regarding exercising his right to the $ 5,000,000. Should he demand payment on the letter of credit, the ELCIC would lose an additional $ 5,000,000 of assets to the pension plan.
If the legal responsibility for the pension plan rests with the congregations and not the ELCIC, why would the NCC pledge $ 5,000,000 of ELCIC assets to support the unfunded pension liability?
It is therefore disingenuous, illogical and unethical for the NCC to commence a lawsuit against a congregation for the unfunded pension liability, while simultaneously transferring millions of dollars of ELCIC assets to the pension plan.
The ELCIC should adopt a consistent policy of recognizing that the pension liability is the legal and ethical responsibility of the ELCIC. All ELCIC assets are available to satisfy the pension liability. Congregations who choose to leave the ELCIC, have no claim on any ELCIC assets and should not be held responsible for any ELCIC liabilities.
The B.C. Synod is currently engaged in a lawsuit against a former congregation (BC Synod Book of Reports (BOR) Note 10, Page D35). Page D37 of the BOR reveals that in 2007, the B.C. Synod spent $ 48,683 on professional fees and insurance compared to a budget amount of $ 10,000. In 2007, total Regular Synod Mission support from all 55 congregations in the synod amounted to $ 446,162 (BOR Page D24). The synod spent over 10% of total revenue on professional fees and insurance. It appears likely that the significant increase in professional fees is related to the B.C. Synod’s legal action against Christ the King Lutheran Church, Surrey, B.C., a former congregation.
This illustrates the high cost of commencing legal action against departing congregations. The ELCIC currently has limited resources to fulfill its mandated responsibilities. The expenditure of tens of thousands of dollars on legal fees to pursue lawsuits against departing congregations is not responsible stewardship of the resources that have been entrusted to the ELCIC for the glory of God.
Appendix A
ELCIC Constitution – Article VI – Congregations
Section 10. A congregation, which desires to sever its relationship with this church, shall make written application to its synod for a proper release. The synod shall grant such request following the process set out in the administrative bylaws of this church.
ELCIC Administrative Bylaws – Part II – Congregations
Section 5. A congregation desiring to sever its relationship with this church shall require a two-thirds majority vote at any legally called and conducted meeting. Such a decision shall not be effective until at least ninety days after the bishop of the synod has been notified and until the initial action has been ratified by a two-thirds majority vote at a subsequent legally called and conducted meeting.
Appendix B
ELCIC Constitution – Article XVII – Benefit and Pension Plans
Section 1. The administrative bylaws shall provide for the participation by ordained ministers and lay employees of this church, its synods, congregations, agencies, institutions, and other recognized organizations in a pension plan and in a group benefits plan. The administrative bylaws may establish rules providing for the participation of such employers and employees in such plans on a compulsory basis, and may determine the methods to be adopted by the participants in such plans in order to provide for the proper administration of such plans.
Section 2. The convention may review any such benefit or pension plan and may make recommendations to the administrator of such plan or to the National Church Council on any proposed amendments to such plan, and may from time to time provide advice and direction to the administrator with respect to any proposed amendment to such plan.
ELCIC Administrative Bylaws – Part XV – Benefit and Pension Plans
Section 1. Each synod, congregation, agency, institution, and other recognized organization associated with this church shall cooperate with the National Church Council to ensure that the following pension and benefit plans are available for their respective employees:
a. A contributory pension plan constructed on the money-purchase principle, in which the accumulated contributions attributed to each member’s account are fully vested;
b. A group benefits plan that would provide death benefits, disability benefits, and such other benefits as may be determined by the committee or board appointed to administer the group benefits plan; and
c. Vested right of members and beneficiaries of the pension plan established for ordained ministers of this church and lay employees shall not be abrogated by any action of this church.
