Decision Number 641


October 24, 1990

Legality of Annual Conference Budget Which Includes Funding for Pensionand Benefit Programs and General Church Apportionments in the Same Apportionment with Funding for Conference Administrative and Operating Programs.


The 1991 financial plan of the Yellowstone Conference does not provide separate identification and handling of pension and benefit funds, Equitable Salary Fund, and general church apportionments to the degree required by the Discipline and is, therefore, illegal.

Statement of Facts

The 1990 session of the Yellowstone Annual Conference adopted a budget for 1991 which would be supported by only three apportionment items, designated as Sections I, II, and III. Each section contains a number of budget items, some to be paid as prior claims at 100% and some to be paid at specified lower percentages if, as anticipated, remittances from local churches total less than 100% of apportioned amounts.

The conference voted to petition the Judicial Council for a declaratory decision as to the validity of the action in light of 710, 721, 737, 1607, 1608 and any other applicable paragraphs of the 1988 Discipline.


The Judicial Council has jurisdiction under ¶ 2615. 

Analysis and Rationale

The petition from the Yellowstone Conference for a declaratory decision refers specifically to the inclusion of funding for pension and benefit programs in the same apportionment with funding for conference administrative and operating programs. There is indeed cause for concern because of disciplinary requirements for special accounting and handling for those funds. Examination of the 1991 Yellowstone Conference budget and apportionment program reveals that other funds requiring special handling are also affected and should be included in the Council's consideration.

Some examples of the disciplinary requirements are:

Par. 719: When the apportionments for bishops, district superintendents, conference claimants, and the Equitable Salary Fund for the several districts and charges have been determined, payments made to the same in each pastoral charge shall be exactly proportional to the amount paid on the clergy salary or salaries. (See also 737.4(a) and 925.)

Par. 737.4(b): The treasurer of the pastoral charge shall be primarily responsible for the application of proportional payment, but in the event of the treasurer's failure to apply it, the pastor shall adjust cash salary and payment according to the proper ratio. . .

Par. 715.2(e): The conference treasurer shall remit each month to the treasurer of the General Council on Finance and Administration the amounts received during the month for the General Administration Fund, the Episcopal Fund, the Interdenominational Cooperation Fund, the Black College Fund,... (and) the Ministerial Education Fund.

Par. 737.4: The board (of Pensions) shall compare the records of the amounts paid by each pastoral charge for the support of pastors and for pension and benefit programs, computing the proportional distribution thereof and keeping a permanent record of defaults of the clergy of the conference who have failed to observe the following provisions pertaining to proportional payment, and shall render annually to each clergy who is in default a statement of the amounts in default for that and preceding years.

Par. 737.4(d): On retirement, the amount that a pastor is in default shall
be subject to deduction from the pastor's pension. . .

Par. 737.4(c): The conference statistical tables shall provide separate columns for reporting the amount apportioned to each pastoral charge for pension and benefit purposes and the amount paid thereon.

The above is not an exhaustive catalogue of disciplinary requirements for identification, apportionment, accounting, and handling of funds within the Annual Conference financial system; but it is sufficient to provide a starting point for evaluation of the Yellowstone Conference 1991 financial plan.

Section I of the conference budget lists pension and benefit funds and the District Superintendents' Fund as prior claims, to be paid at 100%. The Episcopal Fund is in Part B, to be paid at 73.5% if funds are available. The Equitable Salary Fund is an Part C, still lower in priority, to be paid at 79.84% if income is sufficient. (It should be noted that there are contingency provisions in case income should exceed the estimated amount; but that would bear on this decision only if every church in the conference paid 100% of apportionments. Such a happy ending cannot be assumed.)

If income is less than 100% of apportioned amounts, administering the budget as approved would require that funds be shifted from low priority items to those higher on the priority list. Under the plan as approved, local churches cannot specify that their remittances shall go to any designated item in the budget.

As a result, the treasurer of a church could not comply with 719 even if that church paid 100% of apportionments, so long as any other church failed to pay 100% of Section I. Some of the money given by the church paying 100% would be subject to shifting to prior claim items, so one could not be certain that proportional payment had been made to the Episcopal Fund, or the Equitable Salary Fund. One could be sure only of the total amount given to the Annual Conference, some of which may have been shifted to items assigned higher priority in the conference budget.

The conference treasurer could not comply with 715.2(e) because it could not be determined how much had been given for the Episcopal Fund, or for many of the other funds named there. It could only be determined how much the Annual Conference had elected to pay to each fund out of the total amount given by local churches.

The Conference Board of Pensions could not comply with 737.4 because in many cases it would not be possible to determine how much a given church actually paid to the pension fund. For the same reason, the editor of the statistical tables could not comply with 737.4(c). Arbitrary distribution formulas would be fallible so long as the status of pensions as a prior claim required shifting of funds from other categories.

Similar problems exist throughout the 1991 budget of the Yellowstone Conference. The financial plan of the conference is illegal in that it does not provide the individual accounting and handling required by the Discipline for general church apportionments, district superintendents, Equitable Salary Fund, and pension and benefit funds. With the exception of the World Service apportionment, which may be combined with Conference benevolences in a certain prescribed way, these funds must be separately identifiable from the time of their remittance by each local church, through the Annual Conference treasury, and to their ultimate use according to the cause for which they were given.


The Discipline sets specific requirements concerning the handling of pension and benefit funds, District Superintendents' Fund, Equitable Salary Fund, and general church apportionments. In order to meet those requirements, the Annual Conference financial plan must apportion and account for each of those funds in a manner that makes it possible to identify them at each point in the process and to handle each one as required. The 1991 financial plan of the Yellowstone Conference does not separate those funds in such a way as to provide that capability, and is, therefore, illegal.

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