The Church Pension Fund & the College for Bishops: questions that need answers

The news last week that the College for Bishops was launching a $15 million capital campaign to assure its future was greeted by an unusually large number of negative comments here on the Café, as well as on our Facebook page. More of that negativity was directed at the bishops than seemed fair to me. I am returning to the issue not to suggest that the bishops are blameless, but to because I think it provides a useful opportunity to examine how decisions get made, money gets spent, and interests get met in our church.


For me the lesson in this has much less to do with the College for Bishops than with the fact that the size of the surplus in the Church Pension Fund, and the difficult economic position of so many of our parishes, makes the position of Church Pension Fund trustee a more pervasively powerful one than I had previously realized.

A few pertinent facts:

1. The Episcopal Church’s pension fund is currently funded at 1.26 of future obligations. The industry average is about .85. Even implying conservative standards, the fund has a significant surplus.

2. Despite the surplus, the trustees of the pension fund elected to cut off funding to the College for Bishops, Fresh Start, a diocesan-based program that helps prepare clergy for new assignments, and the CREDO program for lay employees. The trustees voted to continue funding for the CREDO programs for bishops and clergy.

3. In the wake of that decision to cut funding for these programs, the aforementioned capital campaign was announced to save the College for Bishops, but no similar campaigns have been announced to save the programs for clergy and laity.

There may be good reasons for sitting on a mammoth surplus in the pension fund, while cutting support for programs and continuing to require an 18 percent clergy pension contribution from shrinking, cash-strapped parishes, but it would be nice to know what those reasons are.

There may be a solid reason to ask the church to rally in support of the College for Bishops, while making no mention that other programs serving different audiences have been cut, but, again, it would be nice to know who made the decision to kick off this capital campaign, and whether rallying support for the other programs was considered.

I am not questioning anyone’s intentions here, simply asserting a need for transparency.

One thing seems certain to me: Decisions regarding the pension fund have the power to drive other decisions in the church, and to drive them in ways that don’t, in this instance, seem to serve the interests of the majority of the people in our pews. I am not arguing in favor or against funding for the College for Bishops, Fresh Start and Lay employee CREDO. I am simply saying that keeping the pension surplus at its current level takes a lot of money out of the system. It forces people with programs that might be beneficial to the church to seek funding from lay people who are already stretched thin from making 18 percent pension payments for their clergy. These folks are about to be stretched further by paying contributions to the lay employee pension plan and the mandatory denominational health plan contributions.This does not seem like a sustainable way in which to do business.

Something else to consider: the pension fund trustees control something called the Legacy and Gift Fund, which is not restricted by laws that govern how pension surpluses can be used. The Church Pension Group’s 2010 annual report states that the legacy and gift fund that is not encumbered by donor restrictions but is controlled directly by the trustees now stands at $14.6 million. This fund, which had sustained the College for Bishops, Fresh Start and Lay CREDO, took a hit during the economic downturn, but has rebounded nicely. It would seem that it is still capable of supporting these programs, or being tapped for some other purpose, such as giving parishes a bit of a break on their pension payments.

I’d also be interested in learning what legal restrictions do, or do not, exist on the interest earned by the pension fund’s enormous surplus. As our church continues to consider major structural changes in response to distressing financial realities, this question is going to become increasingly germain.

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5 Comments
  1. Stephenw Kidd

    While I think this is an excellent question, regarding the Pension Fund surplus. I would like to also add one more wrinkle to the question.

    Why is there no mention(anywhere I can find anyway) of utilizing any of these resources for seminarian health insurance. One of the largest single factors in my experience of Seminarian debt is providing health insurance for individuals and families while they pursue theological education.

    Insurance is mandatory to attend seminary, utilizing incredibly expensive Church Pension Fund health plans. But there are no resources to help seminarians cover this cost. I know from my experience and others’ that this single item can create thousands of dollars of debt which clergy then carry into a job market that pays $30-40,000 a year.

    I don’t think anyone is looking for a hand out. But assisting people who make huge sacrifices to serve the church not wrack up huge amounts of career altering, unnecessarily stressful, marriage crushing debt seems like a no-brainer to me. Especially when the fund is so significantly over funded.

    Is there no decision making bod who has any ability to make this huge pot of money at least a little responsive to some of the needs of the Church, its clergy or it’s people?

    Please somebody explain this to me! I sincerely appreciate those who are guarding the pension fund for my retirement, but I think a little help earlier might go a long long way. Thanks!

    -Stephen

  2. Jim, I’m pleased that you’re following up on this story. I know very little about the inner workings of the pension system, but the allocation of funds should not only be fair, but also have the appearance of fairness in these difficult times. Thus far, the story of the fund-raising for the College of Bishops and the Pension Fund sitting on a large surplus is not there yet.

    June Butler

  3. Lois Keen

    I’m clergy, and I have the same questions.

  4. Susan Snook

    I think we need to be careful to distinguish between three types of pension fund assets mentioned in the article:

    (1) overfunded amounts on pension funds, i.e., amounts parishes have paid in excess of the amounts needed to cover future pensions (the article states that this category is overfunded at 126% of the amount required, if I understand it correctly);

    (2) investment earnings on pension fund assets (the article does not detail what these earnings are);

    (3) the Legacy and Gift Fund, about which I know nothing, but which would probably be subject to restrictions based on the intent of the original donors.

    I am not a legal expert on pensions by any means, but I think that category (1) overfunded amounts are subject to stringent regulations on how they can be spent – for things like reduced future contributions, increased future pension payments, retiree health benefits, etc. For me, the relevant question in this category is, why are our cash-strapped parishes still paying 18% if that is more than needed to cover future pensions? There may be a very good reason, which I would like to understand. Could it have something to do with the coming wave of Baby Boomer retirements? And the reduced future contributions expected from our smaller, leaner church?

    I don’t know the details, but I would assume that worthy projects like CREDO are funded out of categories 2 and 3. It makes sense that these categories would have taken a hit in the recent downturn, resulting in a reduction in expenditures. Since the stock market is now up, will CPG be funding these projects again in the future? If not, how will the investment earnings be put to use? Or are investment earnings all committed already?

  5. Louise Fortuna

    I’d really like to know more about this. I am very disappointed to see Fresh Start and Lay CREDO get defunded. I can live with the idea that Lay CREDO was defunded because of legal restrictions. Did the people making the decisions not deem the program worthy enough to be funded? I hope not!

    From what I see, Fresh Start is a great program for the clergy in our diocese. Seeing Fresh Start happen around me almost made me want to go to seminary! =) The positive community that it fosters, the opportunity for mutual support, learning from each other, and having a place for clergy to take their burdens is priceless.

    I’m a lay employee who feels called by God to work for the church. I do not hear the call to become a priest. I feel very fortunate that I got to go to a Lay CREDO last year. It was an amazing program that not only benefited me personally, but also helped me be a better employee. Maybe we can’t measure these benefits enough for funding. I can say with confidence that I was far from the only attendee at my CREDO that received priceless intangible benefits. Our staff was heaven-sent. I felt valued and cared for. I work in a supportive environment, but to have the national Church give me this gift was precious. What I heard in CREDO was the confirmation that I am called to be a lay employee for the church. That it is not only a valid call, but an important one. I felt that in my heart already, but the power of that confirmation was immense. I am saddened at the thought that other current and future lay employees will not get to experience CREDO.

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