and the UAW has got to feel a little bit queezy, wondering if the money will hold out.
I imagine that all of the other major heavy industry will follow Dana's lead, which was only made possible by the company entering bankruptcy a couple of years ago. Bankruptcy enabled the company to reorganize its pension and health obligations, which long term, threaten to sink it. One imagines that this will not be necessary for say, Ford, because current employees and retirees are already very nervous that corporations like it (which are getting hammered in the marketplace by Asian imports) are already fighting for their survival. The prospect of having no retirement benefits (but that guaranteed by the federal entity that insures pensions) has made unions more than willing to step up and look for creative solutions to these issues.
I hope the United Methodist Church is taking notes.
This year at Annual Conference, we learned that a little more than $10 million dollars was apportioned out to congregations for 2006. Of that $10 million, about $8.2 million actually ended up getting paid. 82% is actually considered, in our conference, a pretty good payment year. Most years we're in the high to mid 70's. In 2006, a strange of confluence of events - no rise in health insurance premiums (because we had just switched self-managed care providers) and no rise in conference apportionments (because of a recent consolidation of the number of districts from 14 to 8) - enabled churches to get caught up on conference expenses. With a rise in apportionments and the hike the health insurance provider gave us for this year, I'm not anticipating a rising percentage of payment to be a long-term trend.
Anyhow, of the $8.2 million paid, $5.4 million was used for retiree health and pension benefits. Couple that with the most ridiculously high health insurance premiums anywhere (thanks mostly to the high number of retired clergy we're carrying on our plan) - $18,700 for a family plan (yeah, you read that correctly, 18 grand plus for insurance that you can count on not covering hundreds, or even thousands, each and every year) - and you have a conference sinking under its health and pension obligations.
No one has ever said this, but I suspect that what really exacerbates this situation is that while the retirees have been promised free health insurance for life (although, I think now they pay a small portion of their insurance, on some sort of sliding scale), is that UM-clergy have a small window of opportunity (a couple of years just after ordination) where they can opt out of social security. I'm sure thirty or forty years ago, this probably didn't sound like such a bad idea. Financial managers were visited, charts and graphs were consulted, and the return on 15.3% of your income, wisely invested, probably looked like a boon to young preachers whose pre-1982 pension program wasn't all that great.
Only problem is that if you opt out of Social Security, you opt out of Medicare. It'd be interesting, then, to see how many retirees we're carrying not with a Medicare supplement (which is incredibly affordable), but with full coverage. My guess is that it wouldn't take too many of these folks to make a bad situation, worse.
Of course, there is no entity in the UMC that can drop millions and millions of dollars with, say, the General Board of Pensions, to create a trust to cover our retirees. And given the power the retirees have at our Annual Conference meetings (because there are just so many of them), nothing short of bankruptcy would enable this kind of arrangement to be made. But when 2 out of 3 conference dollars just go straight into entitlement spending, and health insurance is climbing so quickly, that in the near future you can see churches paying as much for the insurance as they are the base salary of a pastor, something has to give. After very little thought, here are some half-baked suggestions (mostly unrelated) as to how to alleviate this issue:
- Allow The West Ohio Annual Conference to go broke: (Right now the Bishop is reading this, and already amassing the file that will de-frock me) Ok, I know many of you think I've lost my mind, but here's the thing - we are already robbing "Peter to pay Paul" to keep this crazy system we have going. For example, all DS expenses that used to be paid for out of Columbus, have been passed to the Districts (which levy their own apportionment, which I suspect will, after this reorganization, begin rising faster than conference expenses). We offloaded life insurance premiums that used to be paid for out of Columbus, onto the local church. We provide no travel reimbursements for any conference meetings. We require churches to buy a Conference Journal, when only a short time ago, one copy was sent gratis to each church. The net result is that the service and utility the conference office continues to decline, while almost yearly, local churches have to pick up additional expenses, plus rising apportionments, just so we can keep a balanced conference budget. By allowing the conference to go broke, this would force either the Conference Finance and Administration (CFA) committee or a federal bankruptcy court, to make changes in our cost structure that, right now, would get the bishop decapitated (see, I got your back, boss!). Why force the Bishop to make radical changes in structure that every special interest in our conference will fight tooth and nail, and end up subverting anyway? Let us begin dealing with reality, strategizing how to start getting out of this mess as opposed to simply relying on praying for some miracle to save us or hanging our hat on a massive comeback on the part of our denomination. I mean, it's not that I don't trust God, but do you know how many church buildings in the world are being used for some other purpose. Apparently, God will allow institutions to wind down, and die, even if they don't want to. So let's take that as our cue, and make real changes, now.
- Phase Out Subsidized Health Care for Future Retirees: Considering that our conference treasurer has been modeling how business in West Ohio is conducted as based on the model in North Indiana, I would assume this is coming. North Indiana did this back in 1999, phasing out free, and then subsidized care, so that as of 2004, when you retired from the conference, you could expect to pay for your own Medicare supplement/health insurance. Given the differences in the pre-1982 pension, and the one we have now which, if managed properly (and the Board of Pensions does a great job), is far superior, this doesn't seem unreasonable.
- Require 100% Health Plan participation from all West Ohio Annual Conference Elders: State law in Indiana requires that if you offered health insurance by your employer, you have to take it. The upshot of this for clergy in North Indiana is that instead of those who have a spouse being able to opt out of the insurance program, that they had to remain in, if only on a single policy. This not only makes the pool of people in the plan larger, in minimizes the effect of "adverse selection", as most of the folks who have opted out are more able-bodied than the mass of retirees currently on the plan.
- Provide a yearly financial allotment to retirees, and let them shop for their own Medicare supplement: After Dick Lyndon passed away unexpectedly during my last year of service at Goshen First, our DS, in all of his wisdom, appointed an interim senior pastor, who supposedly was to fill that role until the new senior pastor arrived on "moving day" in mid-June (which, after having lived through the experience, in our case, was an example of poor stewardship on the DS's part... but that's another post). The guy they sent, Norm, while not necessarily the world's greatest interim pastor, is a great guy. After Norm retired as an Elder, he took a job working as a security guard at the auction house in Shipshewana. Because at the time, free or subsidized health care for retirees had been phased out, Norm had the option of either purchasing a Medicare suppliment plan from the conference, or finding his own. And what he discovered was that he could buy a plan that not only served him better, but was more cost effective. My thinking is we let every retiree be provided health insurance this option, and then simply deposit the equivalent of what we would have spent on our own plan, into a Section 125 account set up by the conference, that the retiree could use to buy their own coverage. The amount could then be raised yearly, based upon the cost-of-living index. This too would eliminate costs for those who have no Medicare who we are covering at 100%. While that sounds heartless, as they probably would lose their coverage, our conference staff could work with these people to find ways to work with the state and federal government to find new coverage, probably under Medicade... and they would also serve as a cautionary tale as to what could happen to you if you opted out of Social Security.
- Require churches who hire retired UM-pastors to pick up the cost of their health insurance: This just resulted in ten nasty emails. But hey, let's look at the facts. Right now, you have every incentive in the world to retire as a long-term UM-pastor at 65. Your Medicare supplement is heavily subsidized by the conference. You can draw on your pension and your social security, while still pulling down a small salary from a church. And you are no longer itinerant. On the surface, too, it appears to be cost-effective for a church to hire these pastors, because they don't have to provide housing, pay pension costs, or health insurance premiums. But, fact is, the cost for health care is just being passed on either through ridiculously high premium payments, conference cost-unloading, rising apportionments, and an increasing percentage of conference apportionments going to health care costs. Let this cost be factored in when a person is hired.
- Tie conference apportionment increase/decrease to local church financial performance: Look, right now, outside of the chance that the budget will be voted down, or more likely just modified, at Annual Conference, the strategy the conference is using to determine apportionments isn't tied with the local church's fiscal health. The only response a church has to rising apportionments is just not paying them, of which the only consequence right now the conference can levy, is moving the pastor or removing his/her credentials. Tie apportionments to local church revenue. Make it a flat percentage (I'd suggest 8-11%) of either general fund giving, or total general fund expenditures. That way, when a church does well, so does the conference, and vice-versa. The balance of the conference's energy is already moving toward helping local congregations and planting new churches anyway, this just cements the balance moving toward the local church.
- Freeze all conference expenditures on new church starts, mergers, or church re-starts not derived from either the sale of property or gifts designated for the purpose, for ten years, while giving apportionment breaks to local churches that either start multiple sites or a new church: More nasty emails. I can see people freaking out at this suggestion too. But if you check the Discipline, guess whose responsibility it is for planting new churches? If you said the "Bishop" or the "Conference Office New Church Development", you would be incorrect. The District Superintendent is responsible for new church starts. What's more, the chance of a new church/new site plant succeeding if a local church does it instead of the conference is so much better, it'd blow your mind. This would enable us re-focus conference staff, give short-term incentives for local churches to be entrepreneurial in creating new venues and congregations, and most likely grow apportionment giving faster, over the long term, as local church revenues grow.
- Ask the Lilly Foundation, in conjunction with Eli Lilly, to set up the same kind of fund for retiree health costs with the Board of Pensions, as Dana did with the UAW: We're talking about millions of dollars, which quite frankly, we as a denomination, don't have. Eli Lilly and the Lilly Foundation, though, do. So instead of providing cash for all sorts of things, like clergy sabbaticals and the like, which the Lilly Foundation provides now, instead, why not make a 5-10 year arrangement with this company, which has a long history with the UMC, to take on creating the same kind of trust Dana provided to the UAW, for our retirees? I mean, what greater gift, by golly, could the foundation give a mainline denomination for the cause of Jesus Christ, than the gift of lifting these expenses off our shoulders, long term? And I'm sure, someone would derive not only good PR for the gesture, but a sizable tax deduction. Somebody call the Council of Bishops, cause this might be the only decent idea I've had today.