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October 25 2001
In Re: Request from the North Georgia Annual Conference for a Declaratory Decision on the Legality of the Provision of a New Insurance Program Adopted by the Annual Conference.
Digest of Case
The North Georgia Annual Conference is not in compliance with procedures outlined by ¶¶ 611.2. and 612 .1(d) of the Discipline regarding the preparation and presentation of budgetary and clergy compensatory items to the annual conference. The North Georgia Annual Conference is required to develop a funding plan for its health insurance program, which provides for health coverage that does not use clergy benefits to pay unfunded Retirees' Medicare Supplement Insurance Benefits Plan liability. The North Georgia Flexible Benefits Plan is null and void. This matter is remanded to the North Georgia Annual Conference and any subsequent plan is to be submitted to the Judicial Council for review and approval prior to implementation.
Statement of Facts
On October 17, 2000, at a special session, the North Georgia Annual Conference adopted a new and mandatory health insurance plan, which is called the "North Georgia Flexible Benefits Plan." The purpose of this plan is to meet the health insurance needs of all full-time clergy, persons serving at least three-fourths time, students under appointment, approved candidates for ministry who are students and are employed in local churches or other conference agencies and full-time lay employees of annual conference agencies and local churches. The plan features a provision for a scaled and monthly payment charge to all clergy through payroll withholding or salary deduction. This serves as a portion of the medical insurance premium to what is called the Clergy Personal Contribution Plan for the benefit of the Retirees' Medicare Supplement Fund. The plan finances insurance benefits for current conference members as well as retirees and the unfunded liability of the Retirees' Medicare Supplemental Insurance Benefits Plan.
On June 14, 2001, at the regular session of the North Georgia Annual Conference, members of the annual conference sought a declaratory decision from the Judicial Council in order to answer one question: "Is the Health Insurance Program of the North Georgia Annual Conference in compliance with the provisions of the Book of Discipline?"
Sally Curtis AsKew recused herself and did not participate in any of the proceedings related to this decision.
The Judicial Council had jurisdiction under the provisions of ¶ 2610 of the 2000 Discipline.
Analysis and Rationale
Par. 604.13 of the 2000 Discipline authorizes an annual conference to adopt a conference-wide plan for the compensation of pastors. This provision authorizes the annual conference to establish the method for setting and funding salaries and other beneficial elements of clergy compensation. In Decisions 213, 252, 461 and 792, the Judicial Council addressed the issue of clergy compensation. In Decision 213, the Judicial Council established that “the authority to fix the salary and other compensation of the pastor rests solely with the Quarterly Conference.” Decision 213 also established that the annual conference has the authority to set its own procedures but in doing so must not invade the authority granted to the charge conference by the Constitution or legislation of the General Conference. Par. 246.12 of the Discipline establishes that the charge conference engages in a consultative process with the district superintendent in setting the compensation of the pastor or other staff appointed by the bishop. In Decision 252, the Judicial Council determined that an annual conference could not place a limitation on a charge conference with respect to a travel expense reimbursement allowance. In Decision 461, the Judicial Council established that an annual conference did not have the authority to fix or pay the salaries of the ministers of local charges. In Decision 792, we affirmed the charge conference as the connecting link between the local church and the general church. This is a constitutional link, which is created under ¶ 15. It states: “the General Conference . . . shall have full legislative power over all matters distinctively connectional . . . . Under Section 3 of ¶ 15 the General Conference is specifically given power to . . . define and fix the powers and duties of Charge Conference. . . .” Decision 792 struck down an alternative annual conference salary compensation program, which violated the authority given to charge conferences.
This background specifically relates to the particular features of the Flexible Benefits Insurance Plan of the North Georgia Annual Conference. The first feature for consideration is the mandatory requirement that all full-time clergy, serving under episcopal appointment in the local church or as an annual conference employee, participate in the program. In addition to the mandatory category participation the plan also provides for voluntary and optional participation. In Decision 674, the Judicial Council determined that “the General Conference possessed the authority to adopt a health care plan which mandates participation by various members of the Annual . . . Conferences and others employed by United Methodist salary-paying units.” It is logical then, that the provisions of ¶ 15.3 and ¶ 604.13 give the annual conference the authority to establish a mandatory health insurance program for full-time clergy. (See also Decision 866, where the Judicial Council determined that the Wisconsin Annual Conference was authorized to implement a mandatory conference-wide property and casualty insurance plan). It should be noted, however, that the North Georgia Flexible Benefit Plan does allow persons to opt out of coverage. Furthermore, there is no disciplinary authority for making any health insurance program compulsory for the spouses of clergy or their dependents.
Another issue raised with respect to the North Georgia Health Insurance Program is the funding recommendation for the Retirees’ Medicare Supplemental Insurance Benefits Plan. The purpose of this payment plan is to provide for health insurance coverage in addition to reducing the conference’s unfunded liability for Retirees' Supplemental Insurance Benefits Plan. In Decision 614, the Judicial Council held that “funds . . . held and invested by the Insurance Committee of the Little Rock Annual Conference are funds intended to be utilized as benefits to the employees . . . .” The North Georgia payment plan would violate this provision because the funds are being used to finance unfunded liability for Retirees’ Medicare Supplemental Insurance Benefits Plan. The annual conference would be utilizing employee benefits in order to address an unfunded liability. This act goes beyond the intended scope of ¶ 604.13 of the Discipline. Persons required to participate in the North Georgia Health Plan should not bear this burden. In Decision 743, the Judicial Council determined that "(h)ealth care insurance premiums for a full-time diaconal minister must be paid by the employing agency. An Annual Conference may provide health care insurance for retired diaconal ministers.” Inasmuch as health care benefits are part of the compensatory consideration of clergy, this is solely a benefit for the individual clergy person. The annual conference must then bear the burden of providing for the unfunded liability because this provision does not directly relate to an individual clergy person’s compensation.
With respect to the funding proposal of the Retirees' Medicare Supplement Insurance Benefits Plan, there are problems. Par. 611.2 requires the annual conference council on finance and administration “(t)o receive consider, report and make recommendations to the conference regarding… (b) funding considerations related to any proposal that may come before the annual conference. . . .”
In Memorandum 521, the Judicial Council determined that “it is finally the responsibility of the Council on Finance and Administration to present the budget recommendations to the Annual Conference.” The North Georgia Plan was developed by a Task Force which included the chairman and vice chairman of the board of pensions, the chairman and vice chairman of the conference council on finance and administration and the conference treasurer. Memorandum 521 affirms the role of the conference council on finance and administration to make recommendations to the annual conference. This responsibility cannot be delegated to a task force and should be inclusive of the entire conference council on finance and board of pensions inasmuch as this step is required under the provisions of ¶ 612.1(d). There is no question that the Retirees' Medicare Supplement Insurance Benefits Plan provision is indeed a pension benefit inasmuch as it is provided upon retirement.
The North Georgia Annual Conference is not in compliance with procedures outlined by ¶¶ 611.2 and 612.1(d) of the Discipline regarding the preparation and presentation of budgetary and clergy compensatory items to the annual conference. The North Georgia Annual Conference is required to develop a funding plan for its health insurance program, which provides for health coverage that does not use clergy benefits to pay unfunded Retirees' Medicare Supplemental Insurance Benefits Plan liability. The North Georgia Flexible Benefits Plan is null and void. This matter is remanded to the North Georgia Annual Conference and any subsequent plan is to be submitted to the Judicial Council for review and approval prior to implementation.
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