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Decision No. 822

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April 24 1998
In Re: Request from the North Carolina Annual Conference for a Declaratory Decision on Past Service Liability for Pastor’s Pensions and Apportionments

Digest of Case

The 1996 Discipline, in ¶¶ 611 and 612, permits the Annual Conference, on recommendation by the Conference Council on Finance and Administration, to define the method or formulas for approved budgeted amounts. Under the Constitution, the Annual Conference is the basic body with such powers. There is no limitation which prohibits the Annual Conference from establishing a single fund apportioned by a determined method or formula for a separate item to fund the past service liability for pensions. There is no disciplinary prohibition on the adopted method, including a means for full funding of the approved budgeted amount. Par. 611.1(d) notes that support for pension funds is not limited to apportionments. There is no authority in the 1996 Discipline for treating specific items placed in the same category of funding as "prior claims."

Statement of Facts

During the regular business of the afternoon session of June 11, 1997 of the North Carolina Annual Conference a clergy member made a motion, which was approved by the session, to request a declaratory decision by the Judicial Council on the substance of an earlier motion ruled out of order by the bishop. The motion by William W. Sherman, Jr., retired clergy member, requested a decision: ... on the issue of whether the North Carolina Annual Conference can, on the recommendation of the Conference Council on Finance and Administration and adoption by the Annual Conference, apportion the funding of the past service liability for pensions to the local churches as a separate and independent apportionment. Authority for the Conference Council on Finance and Administration to provide this apportionment is found in Paragraphs 611, 612, 1506.9 where the Conference Board of Pensions recommends to the Conference Council on Finance and Administration and the Council on Finance and Administration to the Annual Conference the funds needed for the payment of past service liability for pensions by the Annual Conference. And Under apportionment items in the Annual Conference budget –can any specific items be designated as "prior claims" (be paid in preference to other items in the same category)? The Minutes of the Annual Conference on page 131 indicate that the earlier substitute motion on June 11, 1997 by William W. Sherman, Jr. included separation of item #47 "Past Service Liability-Pensions" from the combined items in the conference budget under Ministerial Support and Administration. Jurisdiction The Judicial Council has jurisdiction under ¶ 2616 of the 1996 Discipline. Analysis and Rationale Par. 637 of the 1996 Discipline gives authorization for the Conference Board of Pensions as an auxiliary of the General Board of Pension and Health Benefits to "...have charge of the interests and work of providing for and contributing to the support, relief, assistance, and pensioning of clergy and their families, other church workers, and lay employees...within the annual conference...." This authorization places no defined method for apportioning funds, but charges the board with making provision for this pension support. However, ¶¶ 611.1(d) and 612 define the means for establishing the method of apportioning the required funds for pension support. Par. 611.1(d) under Clergy Support Budget defines the role of the Conference Council on Finance and Administration, which states: "After consultation with the conference board of pensions, the council shall report to the annual conference the amounts computed by that agency as necessary to meet the needs of pensions and benefits program of the conference. Such amounts need not be derived solely from apportionments." Par. 612 deals with the process for establishing the "method or formulas by which the approved budgeted amounts ...shall be apportioned to the districts, churches, or charges of the conference." The Council on Finance and Administration recommends to the Annual Conference for its action and determination the method or formulas. In ¶ 612.1 the apportioned amounts received from General Council on Finance and Administration for the several general funds come under the Annual Conference adopted method for apportionment to district, churches, charges, but must be apportioned without reduction. The 1996 Discipline, in ¶¶ 611 and 612, permits the Annual Conference, on recommendation by the Conference Council on Finance and Administration, to define the method or formulas for approved budgeted amounts. Under the Constitution, the Annual Conference is the basic body with such powers. There is no limitation which prohibits the Annual Conference from establishing a single fund apportioned by a determined method or formula for a separate item to fund the past service liability for pensions. There is no disciplinary prohibition on the adopted method including a means for full funding of the approved budgeted amount. Par. 611.1(d) notes that support for pension funds is not limited to apportionments. There is no authority in the 1996 Discipline for treating specific items placed in the same category of funding as "prior claims." All items in any category of funding are to be treated in the same manner, and no items should be paid in preference to other items in the same category.

Decision

The 1996 Discipline, in ¶¶ 611and 612, permits the Annual Conference, on recommendation by the Conference Council on Finance and Administration, to define the method or formulas for approved budgeted amounts. Under the Constitution, the Annual Conference is the basic body with such powers. There is no limitation which prohibits the Annual Conference from establishing a single fund apportioned by a determined method or formula for a separate item to fund the past service liability for pensions. There is no disciplinary prohibition on the adopted method, including a means for full funding of the approved budgeted amount. Par. 611.1(d) notes that support for pension funds is not limited to apportionments. There is no authority in the 1996 Discipline for treating specific items placed in the same category of funding as "prior claims." This copy subject to final editing and correction.

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