Decision Number 1146

Digest

The General Conference has set forth very specific and detailed processes by which annual conferences are to determine and set their budgets, including the portion of their budgets that involves general Church apportionments. Upon receiving a statement of the amount that is apportioned to the Annual Conference for the several general funds authorized by the General Conference, the annual conference Council on Finance and Administration shall apportion the full amount to the districts, charges, or churches by whatever method the annual conference may direct, but without reduction. The budget as adopted by the Indiana Conference undermines those processes and is in conflict with ¶ 615 of the 2008 Discipline and with Decision 1054. The bishop's decision of law is reversed.

Statement of Facts

During the 2009 session of the Indiana Annual Conference, which was its first session since the merger of North Indiana and South Indiana Conferences, a lay member presented a request for a bishop's decision of law,

…concerning whether the action of this annual conference has just passed a budget that is correct with regard to 615.1 and 811.4 of the 2008 Book of Discipline.

On motion from the Conference Council on Finance and Administration, the Conference adopted a budget for 2010 and a statement of Conference Financial Policies. The financial policies begin with a general provision that "ALL CHURCHES (included New Church Starts and Merged Congregations) WILL BE ASKED TO TITHE THEIR INCOME TO THE ANNUAL CONFERENCE." Further, the financial policies state that any income from this tithing program which exceeds the projected income would be distributed according to a formula, whereby 50% of the "excess tithe income is to be sent to pay General Church apportionments up to 100%" and the other 50% would be "allocated by the Conference Council on Finance and Administration and reported at the subsequent Annual Conference Session."

The budget, which the Conference Council on Finance and Administration proposed and which the annual conference adopted, was based on data that in 2008 the North Indiana Conference had paid 71.42% of its General Church apportionments and the South Indiana Conference had paid 71.24% of its General Church apportionments. In its budget document, the Conference Council on Finance and Administration stated that the conference was "committed to paying at least 80% of our General Church obligations" in 2010 [emphasis in original].

Present in the record is a copy of the Minutes of the Indiana Annual Conference session in 2009 to show that the motion from the Conference Council on Finance and Administration to adopt "an income/expense budget" was properly presented. Present also in the record is the text of the request for a decision of law. Present also in the record is the text of the Bishop's decision, the relevant portions of which are as follows:

1. The budget passed was identified as an "Expense Budget" based upon the CFA estimate of the percentage of income that might be received in 2010….Adopting such an "Expense Budget" is not a violation of The Discipline, but rather a spending plan based upon estimates of income levels.
2. The Financial Policies … make it clear that any excess of income beyond the "Expense Budget" spending plan will be divided 50/50 between additional payments on the General Church apportionments up to 100% of that obligation and other needs as indicated by the CFA and reported to the next year's annual conference….
3. As long as CFA provides for its allocations to the local churches to pay the General Church apportionments in full, then it is not improper for CFA to also plan for any underpayment by the local churches to meet those obligations. In fact, the CFA plan seems to make 100% payment of General Church apportionments more likely, since any overage of income will be split 50/50 to go toward that purpose, rather than just a percentage of the budget.

Jurisdiction

The Judicial Council has jurisdiction under ¶ 2609 of the 2008 Discipline.

Analysis and Rationale

The law of the church is clear and unambiguous with regard to the authority of the annual conference to modify, adjust, or reduce the apportionments that the General Conference allocates to annual conferences. In ¶ 614.3d, the annual conference may combine apportionments in some ways, but it must be done "without reduction." In ¶ 615.1, the Conference Council on Finance and Administration may be directed by the annual conference to devise and follow a method for apportioning the General Church funds to districts, charges, or churches, but the total amount that is apportioned must be "without reduction." And the full text of ¶ 811.4 reads as follows:

The apportionments for all apportioned general Church funds, as approved by the General Conference, shall not be subject to reduction either by the annual conference or by the charge or local church.

Moreover, this law of the church has been repeatedly reaffirmed by the Judicial Council in its decisions. See Decisions 348, 666, 818, 983. Alternative approaches to budgeting have also been addressed by the Judicial Council. Specifically, the Judicial Council addressed the "tithe" method in Decision 1054. Such "tithe" processes make no provision for payment in full of the general Church apportionments as required by the Discipline. Such "tithe" budgeting puts the local church in control of what it contributes to the Annual Conference budget and ignores the requirement of the Discipline to build budgets which include the items mandated by general Church apportionments. Those amounts may be apportioned to the districts, charges, or churches by whatever method the annual conference may direct, but without reduction.

The financial policies and the so-called "expense budget" adopted by the 2009 Indiana Annual Conference are reductions in the apportioned general Church funds. Approval of a conference budget that reduces denominational apportionments is a violation of church law. The policies of the annual conference and the budgets that are established to implement those policies must conform to church law.

Notwithstanding the Bishop's contention that this was an "expense budget," it is clear that the Conference Council on Finance and Administration used the poor apportionment performance of the two former annual conferences to project income levels, to propose methods for generating income, to move "an income/expense budget," and to propose a formula for distributing income. It is laudable for a conference to seek means for increasing revenue. But creating devices to generate higher revenue for the annual conference that could possibly lead to full payment of apportionments established by the general Church does not relieve the annual conference from fulfilling the church law. Apportionments set by the general Church must be apportioned to the districts, charges, and churches of the conference "without reduction."

Decision

The General Conference has set forth very specific and detailed processes by which annual conferences are to determine and set their budgets, including the portion of their budgets that involves general Church apportionments. Upon receiving a statement of the amount that is apportioned to the Annual Conference for the several general funds authorized by the General Conference, the annual conference Council on Finance and Administration shall apportion the full amount to the districts, charges, or churches by whatever method the annual conference may direct, but without reduction. The budget as adopted by the Indiana Conference undermines those processes and is in conflict with ¶ 615 of the 2008 Discipline and with Decision 1054. The decision of law by the bishop is reversed.