LCMS Convention Workbook St. Louis, Missouri — 2004, Page 106

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106 SYNODICAL REPORTS

* Are KFUO AM and KFUO FM accomplishing an effective radio
ministry?
¢ Should the Synod continue to own international schools?

These are just a sampling of questions that could be raised in
assessing the best usage of Synod assets.

As mentioned previously, external influences have caused our
risk-management costs (insurance, claims, and administration) to
increase significantly. During the past three years, the Synod’s risk-
management costs have increased 45 percent. While some of the
increase relates to new lines of coverage obtained by the Synod,
the Synod found it necessary to place higher deductibles and reten-
tions in force in attempting to minimize the cost increases. (It
should be noted that many U.S. business entities have experienced
increases in excess of 100 percent for this same period.)

Many questions have been raised about the amount of consoli-
dated debt being carried by BHE/CUS and the schools. On Febru-
ary 12, 2004, (the date this report was written) the consolidated
debt is approximately $170,000,000, with the Synod guaranteeing
approximately $100,000,000 of the debt. Although insurance value
(replacement value) is not necessarily indicative of fair-market
value, it should be noted that the school’s properties are insured for
an amount in excess of $1 billion. Therefore, despite this level of
debt, the schools have substantial net worth.

During this triennium, a risk-endowment fund (fund) was es-
tablished by the Synod for the benefit of the schools. The fund is to
be used for the benefit of those schools that are experiencing sig-
nificant financial challenges. In the current fiscal year, $1,850,000
was distributed to Concordia University River Forest from the
fund. The current balance in the fund is approximately $5,000,000.

This triennium has included many fiscal challenges to the
Synod. The Synod has been able to meet these challenges without
incurring debt. However, we have depleted the Synod’s cash and
investment reserves. The Synod continues to have substantial net
worth, but minimal cash and cash equivalents. Therefore, if the
challenges of operating with reduced revenues continue, it will be
necessary to reduce national ministry activities, incur debt, and/or
sell assets in order to achieve a balanced budget.

It has been an honor and a privilege to serve the church during
this last triennium. In serving, I have worked and partnered with
talented and committed brothers and sisters in Christ. It has been a
Joy to begin each day in worship with them and join them in orga-
nized Bible study, asking our Lord’s guidance as we seek to do His
will for His church. If it be the will of the convention, I look for-
ward to continuing my service to Him.

Thomas W. Kuchta, Vice-President—-Finance—Treasurer

R7-04
Board of Directors

Introduction

Article XLF.2. of the Constitution of The Lutheran Church—
Missouri Synod (the Synod) defines the responsibilities of the
Board of Directors (Board) as follows:

“The Board of Directors is the legal representative of the Synod. It
is the custodian of all the property of the Synod, directly or by its dele-
gation of such authority to an agency of the Synod. It shall exercise su-
pervision over all the property and business affairs of the Synod except
in those areas where it has delegated such authority to an agency of the
Synod through the adoption of Bylaws or by other convention action
have assigned specific areas of responsibility to separate corporate or
trusi entities, and as to those the Board of Directors shall have general
oversight responsibility as set forth in the Bylaws.”

During the course of this triennium, the members of the Board
of Directors have been keenly aware of their responsibilities and
have tried to be diligent in the fulfillment of those responsibilities.
Not always has there been agreement among the members of the

2004 Convention Workbook

Board. Not always have some members of the church agreed with
the decisions of the Board. Nevertheless, even in disagreement,
every member of the Board was concerned about doing what he or
she felt was the right thing in the best interest of the church.

Among many other normal responsibilities some of the major
items to which the Board has given attention during the past trien-
nium are discussed below.

Funding of the Synod

It has been known for several years that the undesignated sup-
port for the national Synod from congregational Sunday-morning
offerings through the 35 Districts has not only not kept pace with
inflation and opportunity for ministry, but rather has declined sig-
nificantly. (Details of this are found in the financial reports.) Trying
to determine the cause has been a concern for the members of the
Board, but not as much as trying to determine a solution.

Initially a committee of representatives of the Council of Presi-
dents, the Board of Directors, and the President’s Office met and de-
veloped what has come to be known as “Funding the Mission.” It is a
plan to fund all of the Constitution and Bylaw-required offices and
functions, leaving the majority of other work of the Synod to desig-
nated gifts from donors. To date there has not been great support for
this proposal. The members of the Board believe that two of the main
reasons for the founding of the Synod were not addressed, namely
higher education and missions. Thus, the Board has searched for and
tried to develop another plan. If something can be developed by July,
it will be recommended to the convention.

The Position of the Chief Administrative Officer

In September 2003, Dr. Brad Hewitt tendered his resignation as
Chief Administrative Officer (CAO) in order to assume a leader-
ship position with Thrivent Financial for Lutherans. He served the
Synod for approximately 5 years, during which time his expertise
in administration was a gift to the Synod. Dr. Tom Kuchta currently
serves as the interim CAO.

The Personnel Committee of the Board and the Board itself
have spent many hours trying to determine how this office can be
of most benefit to the Synod and has developed a new job descrip-
tion and statement of qualifications for this position. As of the writ-
ing of this report the search for anew CAO has begun. Since the re-
lationship between national Synod and District Synod is so crucial,
one of the key responsibilities of the new CAO will be to work on
strengthening these relationships.

Legal Opinions

Because many budget decisions of the Board had been chal-
lenged and because the Board will need to make decisions about
funding our ministries, the Board decided to obtain two legal opin-
ions on Missouri not-for-profit corporate law concerning its au-
thority and responsibilities for financial decisions. It should be
noted that the Synod’s Bylaws require the Board to conduct its ac-
tivities according to the laws of the state of Missouri, the Articles of
Incorporation, the Constitution, the Bylaws, and the Synod’s reso-
lutions.

In the opinions, the authority of the Board was discussed in ref-
erence to other areas, in addition to financial matters. As a result
of these opinions, concerns have been expressed by some within
the church as to the extent of the authority resting with the Board.
The Board intends to fully carry out its responsibilities in the best
interest of the Synod. In fact, questions arising from the opinions
have been referred to the Commission on Structure.

Reduction in Force at the International Center

As part of reviewing potential cost-reduction measures, the
Board considered the possibility of relocating the IC operations.
The Board questioned whether other office space could be procured