LCMS Convention Workbook St. Louis, Missouri — 2010, Page 72

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72

SYNOD REPORTS

R4-03

Vice-President–Finance—Treasurer/Chief
Financial Officer
The Vice-President–Finance—Treasurer of The Lutheran
Church—Missouri Synod serves as the Chief Financial Officer (CFO)
in administrating the financial affairs of the Synod. The duties of the
CFO are carried out in accordance with the rules and regulations
adopted by the Synod and as directed by the Board of Directors of
the Synod. I believe all my activities have been consistent with this
requirement.
When reading this report, it is important to understand the distinction between Synod and corporate Synod. Bylaw 1.2.1 (t) of
the Handbook indicates that the term Synod “[r]efers collectively
to the association of self-governing Lutheran congregations and all
its agencies on the national and district levels.” This means that, in
addition to congregations, Synod includes corporate Synod, 35 districts, 10 colleges and universities, 2 seminaries, Worker Benefit
Plans, and 5 synodwide corporate entities. The synodwide corporate entities are Concordia Historical Institute (CHI), Concordia
Publishing House (CPH), The Lutheran Church Extension Fund—
Missouri Synod (LCEF), The Lutheran Church—Missouri Synod
Foundation (Foundation) and Concordia University System (CUS).
Corporate Synod, on the other hand, is defined in Bylaw 1.2.1 (d)
of the Handbook as “The Lutheran Church—Missouri Synod, the
Missouri nonprofit corporation, including the departments operating under the supervision of the Board of Directors of the Synod and
the program boards and commissions of the Synod.”
This report does not include any comments on the financial condition of the individual congregations of the Synod, as this information
is not available. However, it is estimated that total annual congregational receipts approximate $1.34 billion, of which $120 million are
used for the work of the church at large.
The operating budget of Synod, excluding congregations, for the
year ended June 30, 2010, is summarized as follows:

Corporate Synod
Districts
Seminaries
Colleges & Universities
Synodwide Corporate Entities
Total Budget Operating Revenues

Budgeted 2010
Operating Revenues
$ 81,145,000
89,719,000
29,828,000
304,440,000
128,035,000
$633,167,000

The Synod has substantial unrestricted assets. Unrestricted net
assets may be defined as the accumulated operating profits. At June
30, 2008, the unrestricted net assets were as follows:

Corporate Synod
Districts
Seminaries
Colleges & Universities
Synodwide Corporate Entities
Total Unrestricted Net Assets

Unrestricted Net
Assets at June 30, 2008
$
142,000
89,666,000
28,260,000
175,435,000
220,496,000
$513,999,000

The relationship of unrestricted net assets to annual operating
revenues indicates a strong financial condition existing in the Synod.
Another indicator of the financial strength of the Synod is the
relationship of capital debt to the value of capital assets. A summary
of capital debt at June 30, 2008, is as follows:

Corporate Synod
Districts
Seminaries
CUS, Colleges & Universities
CPH
LCEF
Foundation
CHI
Total Capital Debt

Capital Debt
$
–
27,233,000
6,432,000
210,546,000
–
–
1,259,000
–
$245,470,000

The insurable value of the capital assets (excluding land) exceeds
$1.8 billion. This value and the amount of unrestricted net assets demonstrate that Synod is in an extremely favorable debt position.
The permanent endowments of the seminaries, colleges and universities are $208 million. These endowments continue to grow.
While the financial condition of the Synod is strong, some districts,
a college, two universities, and the two seminaries are experiencing
current operating losses. Corrective plans have been implemented
that hopefully will result in the elimination of the losses. It should be
noted that one of the universities has experienced operating losses in
ten of the past eleven years.
The financial position of corporate Synod is not as sound as the
rest of Synod. Corporate Synod continues to experience decreases in
unrestricted revenues (primarily receipts from districts). In 2001, corporate Synod received $28 million of unrestricted revenue.
In the 2010 budget, unrestricted revenues are estimated to be $20.1
million. In this budget, district pledges are $638,437 lower than the
previous year. Also, LCEF has eliminated distributions to corporate
Synod, and CPH has reduced its annual distribution. Restricted gifts
now comprise 75 percent of the annual budget of approximately $81
million.
The trend of continuous decreases in unrestricted revenues is a significant problem to the Synod. Currently, approximately $9.0 million
of unrestricted revenues are budgeted for non-discretionary functions
of the Synod. This leaves $11 million available for allocation to program boards and commissions.
The decrease in unrestricted revenues has negatively affected
the mission and ministry functions of corporate Synod. Initiatives
have been undertaken to mitigate the continuing reduced revenues.
Since 2002, staff levels have been reduced by 25 percent. Operational
reviews were performed, and reengineering is occurring in the technology and human resource functions. Outsourcing opportunities are
being considered. There were no salary increases or bonuses in the
current fiscal year. A hiring freeze was established on July 1, 2009.
An early retirement program adopted in the current fiscal year will
annually reduce compensation by $750,000.
The audited financial statements of corporate Synod as of June
30, 2009 reflect an unrestricted net assets deficit of ($5.56) million if
land and fixed assets are excluded. As corporate Synod has no longterm debt, nor has it borrowed on its line of credit with LCEF during
the current triennium, the deficit has depleted previous years’ accumulated profits.
As the next triennium begins, it is likely that corporate Synod
will continue to experience decreasing unrestricted revenues. Further,
there are insignificant opportunities for general and administrative
efficiency gains. Therefore, it is clear that fewer dollars will be available to the ministries.
My message to the Synod has been consistent during my tenure as
Vice-President–Finance—Treasurer. Simply stated, “We will need to
make significant reductions in expenditures for the ministries.” The

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