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GCFA Reply to Questions Regarding Excess Funds

Subject: RE: EXcess Funds -Reply  Date: Wed, 29 Apr 1998 12:09:46 -0500
From: General Email <GCFA@gcfa.org>   
To: a member of the Confessing Listserv 

The report of the General Agency Fund Balances does not translate well  into a web page posting.  We have responded to several requests for   the document by returning self-addressed, stamped, #10 envelopes   (business size).  I will gladly send you a copy if you simply provide me   your mailing address. 

 I've attached a copy of a response which has been provided to others   with similar concerns to what you have raised.  I hope that it answers   some of your questions.  I am sharing a copy of your note with Stan   Sager, chair of the Audit and Review Committee of the General Council   on Finance and Administration. 

Steve Zekoff  Assistant General Secretary 

I hope the following answers questions you have raised about the current level  of financial reserves of the United Methodist general agencies, and the  initiatives of the GCFA Audit and Review Committee to formulate a policy to  establish the appropriate level of those reserves in the future. 

The growth of the reserves to their current levels is the result of a complex  set of causes.  Three of those factors may provide some further insight to how  the current situation developed.  First, each agency has been encouraged by  the General Council on Finance and Administration to hold reserves to be drawn  upon during the months when the cash flow from general church apportionments  cannot cover operating expenses.  Without reserves to draw upon, it would be  necessary to obtain short-term, interest bearing loans, which would result in  less dollars available for the mission and ministry of The United Methodist  Church conducted through the general agencies.  Second, extremely favorable  market returns over the past couple years has resulted in significant growth  in some reserves investment portfolios, reflected in the general agency fund  balances report.  A downturn in the market would be reflected in those same  reserves balances.  Third, not all of the reserves reported in the general  agency fund balances report are cash.  Some of the reported amounts are  actually the value of buildings and other tangibles.  The cash reserves  include donor-designated funds, which requires honoring the specified use of  the donor.  Other cash reserves include funds which were previously designated  by the agency's board or body in authority for a use that has not come to  fruition. 

Now that the Church has received the benefit of prudent financial management,  the questions the Audit and Review Committee are addressing include how the  denomination can best be stewards of those assets into the future, and how  apportionments and budget for the '01 - '04 quadrennium should be set in light  of the current reserve levels.  The apportionments for the '97 - '00  quadrennium were set by the 1996 General Conference, which is the only body  which has authority to establish general church apportionments for The United  Methodist Church. 

The General Council on Finance and Administration is dealing with the concerns  raised about the reserve levels, and is seeking to responsibly respond to  them.  The general agencies are being requested to provide the complete  information necessary for the Audit and Review Committee to develop a policy  recommendation on the maximum, minimum and optimal reserves for general  agencies.  The process will take time, and can only be culminated with action  on the next quadrennium's budget by the 2000 General Conference.  Stan Sager,  chair of the Audit and Review Committee, has requested that other United  Methodists provide trust and patience as the Committee follows through on  their responsibility. The issues and concerns being raised are not being  ignored.

Steve Zekoff  Assistant General Secretary