United Church of God, an International Association
Council of Elders Meeting Report
Tuesday, May 6, 2003 – Cincinnati, Ohio

The General Conference of Elders having been successfully concluded, Council Chairman Clyde Kilough called the first meeting of this Council of Elders session to order shortly after 9 a.m. With a couple of minor, technical edits the minutes of the previous Council meeting were approved. Today’s meeting included reports from the Church’s treasurer, Tom Kirkpatrick, and president, Roy Holladay. Mr. Holladay also led a lengthy discussion on the subject of budget resources for media operations.

Report from the Treasurer

Dr. Kirkpatrick presented the Council with a detailed written summary of the Church’s financial condition. As reported to the General Conference just two days earlier, Dr. Kirkpatrick’s report reflects that the income is on track to finish the fiscal year very close to the 2002-03 budget.

He then informed the Council of the need for a technical adjustment to the 403(b) thrift plan so that part-time employees working less than 20 hours per week can participate in the matching plan. Gerald Seelig, Council Secretary, read the proposed language of a resolution authorizing one or more officers of the Church to send a letter to the plan administrator authorizing the change.

Mr. Kirkpatrick then introduced a proposed change to the use of estate donations. The Council had decided some 3 ½ years ago that estate donations to the Church (unless otherwise designated) be used for retirement purposes. Since then the fund has accumulated approximately $900,000. Mr. Kirkpatrick asked the Council to consider that, starting with the 2004-05 budget, the Church’s discretionary assistance (used primarily for retirement salaries and health benefits) be maintained at its current level of $525,000 per year and that amounts needed above that figure come from the retirement fund (i.e., from estate donations). Mr. Kirkpatrick conservatively estimated that as the retirement fund continues to grow, using a portion of it in this manner would allow the Church to maintain discretionary assistance at the current level for at least eight years and likely much longer than that.

Mr. Kilough remanded the suggestion to the retirement task force, which will be reporting to the Council at its August meetings on a number of retirement and financial matters.

Report from the President

Mr. Holladay discussed a wide range of topics:

• the Spring Holy Days offerings,
• increases in donors and co-workers
• continuing development of the Web site,
• the e-learning Bible study course to be offered on the Web site,
• human resources support at the home office,
• developments for serving the Church in the Portuguese language,
• the church building project in East Texas.
• plans for Youth United magazine,
• progress on completion of the eight mandates given Mr. Holladay by the Council of Elders, and
• a proposal for additional funding for the media operations in the upcoming fiscal year (2003-04).

All reports so far reflect that the Passover and Days of Unleavened Bread were very successful and uplifting. Several Council members traveled to various areas throughout the U.S. and to international locations. When final tabulations are made, Holy Day offerings are expected to be about $700,000, well above the projected estimate of $660,000 and surpassing for the first time the offering on Pentecost, 1995.

As reported during the General Conference of Elders, co-workers and donors continue to increase. There are currently 4,593 donors and 2,022 co-workers on file, an increase of 24% over last year in both cases. They contribute approximately 10% of the Church’s income.

Since the Church’s redesigned Web site came on line a few weeks ago, the average number of visits has grown from approximately 4,000 per day to 5,200 – an increase of 30%. The average amount of time spent at the site has also increased by 42% (from six minutes to eight and one half).

The new e-learning program, based on the Bible Study Course, is nearly complete and may be ready to introduce by early summer. The Bible course modules for the first year’s study have been completed.

To this point, the Church’s human resources functions have been primarily provided outside of the home office through our legal, insurance and payroll representatives. After input from the home office management team, Mr. Holladay has appointed Matt Fenchel to coordinate human resources issues that require attention at the home office. Two years ago the Council approved a human resources policy manual. The human resources handbook, a summary of the policy manual, will soon be ready to distribute to employees. Employees will also have access to the complete manual through a secure Web site.

The Council has already approved the appropriation of $15,000 to the East Texas congregation of United toward the building of a church facility, leaving $35,000 still available for that purpose in the 2002-03 budget. Since no other congregation has requested assistance, the East Texas congregation has formally requested the balance of the funds be contributed toward their effort. After discussions with Richard Pinelli and Mr. Kirkpatrick, Mr. Holladay suggested to the council that they be given those funds if there is no other request and if there is not a greater financial need elsewhere.

Mr. Holladay described a recent visit to Portugal by Jorge de Campos. An elder from Johannesburg, South Africa, Mr. de Campos traveled to Portugal during the Days of Unleavened Bread to visit with his mother. Prior to their trip, Mr. de Campos learned that two people from Portugal had contacted the Church. They subsequently learned that two others were also interested. The de Campos’ stopped by for a “chat” one Sabbath morning at 11 which turned into a nine-hour interactive Bible study. He learned that four adults and their two children have been meeting regularly at one of their homes on the Sabbath, listening to sermon tapes in the Spanish language provided by another Sabbath-keeping group. As a result of their interest, Mr. de Campos hopes to record a sermon each month in the Portuguese language for use in both Portugal and Brazil.

Mr. Holladay reported that, based on the recently approved 2003-04 budget, plans to begin the printed version of Youth United magazine will be implemented. The Us Teens publication, produced by pastor Jim O’Brien and his Cincinnati North congregation, will be merged into Youth United. The first printed issue will be ready in the fall of 2003 and will be printed quarterly.

Mr. Holladay then updated the Council on progress on the “Council Mandates for the President” for 2002-2005:
• The Council-appointed review task force on the “Christ-centered Servant Leadership Program” needs to complete its work so the administration can continue to develop and teach the program throughout the Church.
• Clay Thornton was hired in April, 2003 and is now employed as a video producer and editor.
• In June the management team will discuss initial ideas for the use of commercial television and bring forward its suggestions to the Council in the August or December meetings.
• Preparation is underway for the next round of the Ministerial/Pastoral Training Program late this summer.
• There will be a festival planning team, which will coordinate Feast of Tabernacles planning to help it be as effective and efficient as possible.
• The Ministerial Education Task Force began producing articles for the Ministerial Quarterly in the fall of 2002 and will continue to provide material to help improve the effectiveness of the ministry.
• Steve Myers will coordinate the development of a hymnal supplement, which should be available for use by this year’s Feast of Tabernacles.
• A sermon video by Jim Franks on the subject of modesty has been sent to all pastors.
• A sermon video on the subject of the Sabbath is being prepared.
• Mr. Kilough sent a letter from the Council answering questions about the relationship between the Church and LifeNets.
• A process for annual performance reviews for home office employees is nearly complete.
• The home office is completing the production of a procedures manual to document the various responsibilities and tasks of employees.
• There will be a survey sent to the U.S. employed ministry, similar to one sent out three years ago, asking about various aspects of their duties and interaction with the home office and ministerial services.

The final point of Mr. Holladay’s presentation resulted in a lengthy discussion on the topic of the media operations budget. The discussion continued the rest of the morning and was resumed in the afternoon, following a two-hour executive session.

Mr. Holladay expressed that adequate funding for public proclamation and Good News subscriber development is an ongoing challenge. Our intent was to hold Good News circulation at 500,000 for fiscal year 2002-03. Through the renewal process the number of Good News magazines going into waiting rooms was reduced from 50% of the print run to 4%. However, the renewal rate for waiting rooms was lower than anticipated and the print run will drop below the 500,000 mark. Media operations management proposes that additional funds be added to the budget to bring the subscription level back to 500,000.

Based on the 2003-04 budget it is projected that the anticipated print run for the November/December 2003 issue of The Good News will be 475,000, with individual subscriptions an estimated 365,000. The projected print run for the November/December 2004 issue is 459,610 of which 353,900 will be individual subscribers. And the projected print run for November/December 2005 is 517,000 of which 398,155 are expected to be individual subscribers.

Mr. Holladay asked what can be done since the 2003-04 budget is set. He requested that the Council consider using approximately $287,000 of the cash reserve for media operations in order to increase Good News subscription through advertising, subscriber development (letters to subscribers offering additional literature) and associated costs to cover a higher circulation (such as printing and postage).

Mr. Holladay pointed out that the current practice is to maintain cash in reserve equal to ten weeks of operating expenses. He emphasized that we obviously need to be very prudent in maintaining and using the cash reserve. He stated that this would be a unique, one-time situation which would not be repeated every year. He maintained that this action would not jeopardize the Church’s finances.

Mr. Holladay’s proposal generated many questions and comments from Council members. All agreed that it is essential for the Church to preach the gospel and that we must also prudently use the resources God provides.

• Les McCullough said that he is concerned about additional funds being added to a budget without other sacrifices being made in that budget. He pointed out the importance of staying within the budgetary parameters we establish for ourselves. He also expressed that the Church should not set a wrong precedent by cutting into the reserves; there is never a “just this time.”

• Leon Walker said he is reluctant to make a decision to take money from cash reserves at this point because the U.S. economy is fragile and we don’t know what difficulties we may have in the near future. He suggested that time be taken to study our options and see how the economy turns and that the Council discuss this matter further in the August meetings.

• Joel Meeker pointed out that comparing the end-of-year projections presented in The Good News circulation report, there is an increase from 417,405 at the end of calendar year 2002 to 474,000 at the end of 2003. After a one-year reduction to 459,610 at the end of 2004, the print run is projected to rebound to 517,000 by the end of 2005.

• Aaron Dean and Victor Kubik both pointed out the importance of maintaining a strong Good News circulation since it represents growth and future income to the Church.

• Gary Antion commented that it’s important to put a published product in people’s hands (as opposed to the Internet) so they have something to respond to and will be more likely to make a financial contribution.

• Mr. Kilough stated that the philosophy of keeping ten weeks operating expenses as cash reserve is good, but we don’t know exactly how money much that is. If it turns out that the Church is holding $400,000 more than is necessary, then we have something to talk about. But we can’t use our cash reserves like some people use credit cards – it would be too easy to dip into it again and again until we create a financial problem. The Council does have some discretion here, but needs to be careful to use the reserves very wisely.

• Jim Franks pointed out that that none of the Council members is arguing against preaching the gospel. But, as Mr. Holladay had said earlier in the discussion, the Council has never had a discussion about how much of a cash reserve the Church should hold. He said that the Church had a crisis in 1998 when there were no reserves and survived due to the efforts of the membership and on the backs of pastors who were reduced to half-salary. Having money in the bank is not a sin, but we don’t want to accumulate more than is appropriate. This year the Church will hire three new ministers, but probably will lose five or six to retirement. He stated that he didn’t mind providing funding for media operations, but that the Council must establish policies on how to handle reserves and how much reserve to maintain.

At the end of the discussion Mr. Holladay concluded that the home office management team will collaborate with the Council’s finance committee (Aaron Dean, chairman) to find answers to questions regarding the cash reserves and bring forward a proposed policy regarding cash reserves. Mr. Kilough asked that the report be given to the Council before the August meetings if possible.

Today’s session recessed at 5:35 p.m

Don Henson

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© 2003 United Church of God, an International Association