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Decision No. 953

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October 24 2002
In Re: Review of Bishop’s Decision of Law in the West Virginia Annual Conference Related to the Use by the West Virginia Conference Board of Pensions of Funds Invested with the General Board of Pension and Health Benefits.

Digest of Case

Consideration and deliberation of Question 1 on the decision of law of Bishop S. Clifton Ives concerning the use by the West Virginia Annual Conference Board of Pension of funds invested with the General Board of Pension and Health Benefits is continued to the spring 2003 session of the Judicial Council. In the interim, the bishop is directed to provide to the Council any and all documents that establish the account in question held by the General Board of Pension and Health Benefits, copies of the 2002 conference journal and any other documents that distinguishes the conference’s deposit account and the pre-1982 restricted account relative to the transfer of funds to pay health care claims. The bishop made a parliamentary ruling on Question 2. The Judicial Council has no jurisdiction to consider parliamentary rulings. The Judicial Council retains jurisdiction on Question 1. During the regular 2002 session of the West Virginia Annual Conference, two retired clergy members of the conference submitted questions of law in writing to Bishop S. Clifton Ives. The questions related to the transfer and use by the conference board of pensions of funds invested with the General Board of Pension and Health Benefits. In order to pay health claim liabilities of the conference, funds were transferred from an account held by the General Board of Pension and Health Benefits. The clergy members submitting the questions of law claim the funds transferred were from the conference’s Past Services Funding Account and could not be used to pay conference health care claims. They further questioned the authority to retroactively approve the transfer. Background information leading to the questions of law was obtained from notes to the auditor’s report of the conference’s accounts. The note is as follows for the year ending December 31, 2000. NOTE 5a. INTER FUND BORROWING TO PAY HEALTH CARE CLAIMS The General Board of Pensions administers for The West Virginia Annual Conference a special fund to pay the defined benefits of those participants who rendered service to the Conference prior to 1982. The G.B.O.P.’s actuary has determined that, because Conference investments had performed so well, the year 2000 contribution to this special fund could be reduced by $300,000 and still have plenty of assets to pay all benefits to all participants. According to the G.B.O.P actuary the ability to pay all benefits to all participants is true even though there have been subsequent changes in market conditions. Based on this actuarial information the Conference Treasurer borrowed 300,000 of the planed[sic] pension payment to pay an additional $300,000 of health claims in December of 2000. This inter fund borrowing is reflected in the accompanying Statement of Assets, Liabilities and Fund Balances as of December 31, 2000. For the year ending December 31, 2001 the notes are as follows: The General Board of Pensions administers for The West Virginia Annual Conference a special fund to pay the defined benefits of those participants who rendered service to the Conference prior to 1982. The G.B.O.P.’s actuary has determined that, because Conference investments had performed so well, the year 2000 contribution to this special fund could be reduced by $300,000 and still have plenty of assets to pay all benefits to all participants. According to the G.B.O.P actuary the ability to pay all benefits to all participants is true even though there have been subsequent changes in market conditions. Based on this actuarial information the Conference Treasure borrowed 300,000 of the planed [sic] pension payment to pay an additional $300,000 of health claims in December 2000. This inter fund borrowing is reflected in the accompanying Statement of Assets, Liabilities and Fund Balances as of December 31, 2000. During the year the West Virginia Annual Conference approved the transfer of the $300,000. During the year ending December 31, 2001 the Board of Pensions-Pensions Funds, Inc. approved the transfer of $200,000,000 from the General Board of Pensions account through which the West Virginia Annual Conference makes deposits and payments. This account has in the past, been used as a reserve for the “Past Service Funding Account” described in note 3 above. These funds were used to pay outstanding health insurance claims. During the 2002 annual conference session the conference board of pensions made a motion for approval of the Funding Plan for Supplement One to the Ministerial Pension Plan which included the transfer of funds that had previously been made. The motion passed, and the plan was approved. Thereafter, the retired clergy members asked the bishop for a decision of law on two questions. 1. In the light of the provisions of The Discipline and the Judicial Decisions sited, [sic] did the Board of Pensions have the authority to transfer these funds? Did the conference have the authority to approve the 2000 transfer after the fact? In answering question 1, the bishop said: “ Yes, the Conference Board of Pensions under the authority granted to it in ¶ 1507.3 acted within the authority granted to it by The Book of Discipline.” The bishop answered question 2, “Yes”, noting it was a parliamentary question.

Statement of Facts

Jurisdiction The Judicial Council has jurisdiction pursuant to ¶ 2609.6 of the 2000 Discipline with respect to Question 1. The Judicial Council does not have jurisdiction on Question 2 which was a parliamentary ruling. Analysis and Rationale The bishop is not affirmed on question 1. The record before the Judicial Council is inconsistent and incomplete. The Council continues consideration and deliberation on question 1 until the spring 2003 session. The threshold question for the Council is whether the funds at issue are designated pre-1982 pension funds or funds from a voluntary account established by the conference. The clergy members claim the funds transferred were those that had been designated to retire the pre-1982 pension obligations of the conference. Indeed, the auditor’s notes say the transferred funds came from the special fund administered by the General Board of Pensions for the conference “to pay the defined benefits of those participants who rendered service to the conference prior to 1982.” The auditor’s notes go on to describe the actuarial computations performed in order to determine the impact the transfer would have on the conference’s ability to meet its pre-1982 obligations. “Based on the actuarial information [the auditor says] the Conference Treasurer borrowed [from] the planned pension payment to pay…health claims.” The importance of this determination is clear. Paragraph 1506.8 of the 2000 Discipline says pre-1982 pension funds are “protected for the exclusive purpose of retiring…pre-1982 pension obligations.” The provision says in pertinent part: On or before July 15, 2002, each annual conference shall develop, adopt and implement a formal funding plan for retiring its pre-1982 pension obligations. This funding plan must result in the retirement of its pre-1982 obligations on or before December 31, 2021. The funding plan shall identify any funds which have been designated by the annual conference and protected for the exclusive purpose of retiring its pre-1982 pension obligations. Further, the Judicial Council has ruled that no loan may be obtained from such funds. See Decision 145. If these were pre-1982 pension funds they have an exclusive and restricted use and could not be used to clear conference health care claims. The bishop in his ruling of law says the funds came from the annual conference deposit account. He further says that the auditor’s “[m]ention of ‘planned pension payment’…refers to the Annual Conference deposit account with the General Board of Pensions.” The clergy members counter that page 239 of the 2002 Conference Journal defines deposit account as “the checking account maintained by the General Board of Pensions through which the West Virginia Annual Conference Pension Plan makes deposits and payments. This account is the reserve for the Past Service Funding account listed below.” The 2002 conference journal is not included in the records to the Judicial Council. The record before the Council is inconsistent and incomplete. Therefore, it is inconclusive and the decision of law cannot be affirmed.

Decision

Consideration and deliberation on Question 1 of the decision of law of Bishop S. Clifton Ives concerning the use by the West Virginia Annual Conference Board of Pension of funds invested with the General Board of Pension and Health Benefits is continued to the spring 2003 session of the Judicial Council. In the interim, the bishop is directed to provide to the Council any and all documents that establish the account in question held by the General Board of Pension and Health Benefits, copies of the 2002 conference journal and any other documents that distinguishes the conference’s deposit account and the pre-1982 restricted account relative to the transfer of funds to pay health care claims. The bishop made a parliamentary ruling on Question 2. The Judicial Council has no jurisdiction to consider parliamentary rulings. The Judicial Council retains jurisdiction on Question 1.

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