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April 28 2005
In Re: Request from the 2004 General Conference for a Declaratory Decision on the Legality and Constitutionality of Petition 40325 (Calendar Item 1031), as Adopted, Dealing with the General Board of Pension and Health Benefits.
Digest of Case
The Clergy Retirement Security Program (“CRSP”) as adopted by the 2004 General Conference as Petition 40325 (Calendar Item 1031) is constitutional insofar as §§ A1.6(d), A3.4(b), B3.3, A3.4(t) and A4.16 (CRSP) are concerned and may be implemented by the General Board of Pension and Health Benefits on January 1, 2007. Section A5.1(b)(iii) is unconstitutional due to being an improper delegation of the legislative authority of the General Conference.
Statement of Facts
On Thursday Afternoon, May 6, 2004, the General Conference requested a declaratory decision (p. 2215 of the 2004 Daily Christian Advocate) as follows:
Bishop, I move that the Judicial Council be asked for a Declaratory Decision as to the Legality and Constitutionality of Petition # 40325 (Calendar item 1031), as adopted, in light of the broad, new powers that it appears to grant to the General Board of Pension and Health Benefits. (Specifically, in Sections [sic] Section A4.16, Section A5.1(b)(iii), Section A16.(d), Section A3.4(b), Section A3.4(t), and Section B3.3).
Since the Judicial Council did not have the final action of the General Conference pertaining to this referral, nor did it have sufficient time to research and deliver an opinion, this item was referred to the Fall 2004 Judicial Council meeting for consideration.
At its Fall 2004 meeting, the Judicial Council reviewed the issues involved, heard oral arguments from General Secretary Barbara A. Boigegrain, Sarah Hirsen and Dan O’Neill on behalf of the General Board of Pension and Health Benefits (“GBPHB”), and Mr. Grady Knowles, Conference Pension Officer of the California-Nevada Annual Conference. The Council, in Memorandum 1003, deferred action on this item to its Spring 2005 meeting.
GBPHB, under ¶ 1501.1a of the 2000 Book of Discipline, has "the general supervision and administration of the support, relief, and assistance and pensioning of clergy… lay workers … and their families." The Board administers several pension plans for clergy of The United Methodist Church, employees of United Methodist general agencies, and lay employees of United Methodist churches and United Methodist-related institutions.
Following the 1996 General Conference, GBPHB convened the Benefits 2000 Task Force to review all of the plans supporting clergy and lay workers within annual conferences and it developed several foundational principles regarding the provision of benefits. Upon reviewing the principles, the Benefits 2000 Task Force made a number of recommendations to GBPHB including recommending that GBPHB study the feasibility of developing a defined benefit or cash balance pension plan for consideration by the 2000 General Conference. Following the 2000 General Conference, GBPHB convened a second task force, the Benefits 2004 Task Force, to study the U.S. pension needs of The United Methodist Church for the 21st century. The Benefits 2004 Task Force based its work on three principles:
• Retirement security must be a shared responsibility among The United Methodist Church, the government, and the individual;
• The covenantal relationship with itinerating clergy requires a greater degree of benefit security and support than other relationships; and
• Pension benefits should be directly related to years of service.
GBPHB accepted the Benefits 2004 Task Force recommendation to create and present to the 2004 General Conference a new pension plan for clergy. The current pension plan for clergy, the Ministerial Pension Plan (MPP), is primarily a defined contribution pension plan in which contributions are deposited into a separate account for each participant. The proposed CRSP plan was developed with two distinct components – a defined benefit component and a defined contribution component. These two components make up the core or minimum benefits provided to all participating clergy. The CRSP plan, as amended and adopted by the 2004 General Conference, is scheduled to become effective January 1, 2007. MPP benefits through December 31, 2006, and MPP Supplement One (the pre-1982 Plan) benefits for years served prior to 1982, will be preserved by the new CRSP plan. The CRSP is legally an amendment and restatement of the MPP. The CRSP as Petition 40325 (Calendar Item 1031) was adopted by the 2004 General Conference by a 615 to 215 vote thus incorporating CRSP by reference into ¶ 1504.1 of the Discipline.
An oral hearing was held on April 28, 2005, in Arlington, Virginia. Those speaking were Bishops William Morris and Bruce Blake, General Secretary Barbara Boigegrain, Sarah Hirsen, Lisa Schilling, Scott Zapel and Kermit Braswell on behalf of GBPHB, and Grady Knowles, Conference Pension Officer of the California-Nevada Annual Conference.
The Judicial Council has jurisdiction under ¶ 2610 of the 2000 Discipline.
Analysis and Rationale
Review of the 2004 Daily Christian Advocate (p. 2215) minutes for the afternoon session of May 6, 2004, of the General Conference demonstrates that the concerns leading to the request for a declaratory decision include the following:
• Delegation to GBPHB "certain powers and authorities which have specifically been retained by the General Conference in the past;"
• Delegation to GBPHB "independent authority to change the clergy pension program between sessions of the General Conference" either due to changes in law or as the GBPHB deems appropriate;
• Delegation to GBPHB "specific authority at their sole discretion to charge annual conferences for unpaid pension bills of other conferences, with or without their permission;" and
• Delegation to GBPHB "instead of Bishop's (sic) cabinets or even annual conferences, sole authority to determine the eligibility of a clergy person to participate in Section A3.4(t)."
On April 22, 1980, Decision 481 determined that "[t]he proposed Ministerial Pension Plan and Comprehensive Protection Plan are constitutionally valid though some of the present wording and some of the related proposed legislation involve unconstitutional delegation of the legislative authority of the General Conference." This decision reaffirmed that "Par. 15 of the Constitution gives the General Conference full legislative power over all matters distinctly connectional. The enactment of provisions relating to pensions which apply uniformly to all ministers, or to lay employees of constituent units of The United Methodist Church, is a distinctly connectional matter." The General Conference has full constitutional authority to enact the CRSP based on the authority of the General Conference "to create, establish, revise, amend, terminate or continue for such time and in such manner as it deems reasonably necessary the various pension plans of The United Methodist Church." (Decision 481) (Original Italics).
Regarding each specific citation in the CRSP referred to in the written request for this declaratory decision, the following analysis and rationale is provided:
• CRSP §A1.6(d): (n.b.: The motion for a declaratory decision cites §A16.(d) which does not exist in the plan. It is assumed that §A1.6(d) is the proper citation.): This section provides for potential cross-conference subsidization that is based on the nature of United Methodist connectionalism. A series of sections in the MPP (§§5.05b(1), 7.11, 10.03a, A.02, D.01, and F.03a and c) currently recognize that one conference may have to subsidize other conferences in order to provide all benefits due to all beneficiaries and participants. By providing for the connecting and binding of all conferences together to assure the security of clergy pensions, the CRSP provides a significantly better solution than the Federal Pension Benefit Corporation insurance system. Since the CRSP gives no greater authority to the GBPHB than is found in the MPP, which was found constitutional in Decision 481, §A1.6(d) of the CRSP is constitutional.
• CRSP §A3.4(b) and §B3.3: These two sections provide the authority for the GBPHB to determine who is eligible to participate in the plan and receive benefits thereunder and the authority for the GBPHB to require enrollment information on eligible clergy for the core defined benefit plan of the CRSP. Although §A3.4(b) provides for the GBPHB to determine eligibility, it is only able to do so under ¶ 1506 of the Discipline based on the authority of the annual conference to "determine the admissibility and validity of service approved…for pension credit and the payments, disallowances, and deductions thereunder…" (¶ 1506.1); and to "revise, correct, or adjust a clergyperson's record of pension credit as set forth in his or her service record" (¶ 1506.6). GBPHB is required to accept the plan sponsor’s determination of plan member status in applying its eligibility determination under the provisions of CRSP. With this proviso, §A3.4(b) and §B3.3 of CRSP are constitutional.
• CRSP §A3.4(t): This section of CRSP authorizes the Plan Administrator to “do all other acts that the Administrator deems necessary or proper to accomplish and implement its responsibilities under the Program.” In ¶ 1504.5, the Discipline gives the GBPHB the authority to "adopt rules, regulations, and policies for the administration of the relief, assistance, and benefit funds, plans, and programs that the general board administers, in all matters not specifically covered by General Conference legislation or by reasonable implication." Therefore §A3.4(t) of the CRSP is constitutional.
• CRSP §A4.16: This section provides the authority to the GBPHB to add supplements to the Plan to cover special situations not applicable to all participants. Three supplements are included in the CRSP, two of which are found in the current MPP. This authority to add supplements is, however, circumscribed in that these amendments can only be added to the Plan in accordance with the amendment provisions of §A5. Section A5 provides that only the General Conference can amend the CRSP except under certain limited circumstances (see next bullet). Since the authority to add a supplement must come from §A5, §A4.16 does not give to the GBPHB any new authority by itself and thus is constitutional.
• CRSP §A5.1(b)(iii): The CRSP empowers the GBPHB to prospectively or retroactively amend any or all provisions of the plan between sessions of the General Conference or at any other time to take advantage of permissive law or regulations as long as the change does not result in substantial added costs to the conference. Prior decisions of the Judicial Council have held that the delegation of legislative authority to an entity other than the General Conference is impermissible and unconstitutional. The authority to legislate is fully vested in the General Conference and may not be delegated. This principle has been clearly and repeatedly stated. See Decisions 364, 481 and 577.
Decision 481 recognized that changes in federal or state law may make some modifications of pension plans highly desirable or even imperative in the four-year interval between General Conference sessions. We re-affirm that principle as applied to mandatory or required changes. GBPHB has not called any mandatory changes to the attention of the Judicial Council, and there were no desired permissive changes presented to the General Conference. Decision 481 also recognized that there is precedent for the delegation of power to make modifications to the extent necessary to conform to the requirements of secular law. The Board’s reliance on Decision 481 as authority to permit permissive or desired changes in secular law is misplaced. The grant of authority to make permissive or desired changes as contained in the legislation is sweeping and unfettered and is not specifically limited to changes required by secular law as contemplated by Decision 481. Power to make permissive or desired changes in the Plan that are not mandated by federal or state law exceeds constitutional provisions and is an improper delegation of the legislative authority of the General Conference. Thus §A5.1(b)(iii) is unconstitutional.
The Clergy Retirement Security Program (“CRSP”) as adopted by the 2004 General Conference as Petition 40325 (Calendar Item 1031) is constitutional insofar as §§ A16(d), A3.4(b), B3.3, A3.4(t) and A4.16 (CRSP) are concerned and may be implemented by the General Board of Pension and Health Benefits on January 1, 2007. Section A5.1(b)(iii) is unconstitutional due to being an improper delegation of the legislative authority of the General Conference.
Shamwange P. Kyungu was absent. C. Rex Bevins, the first clergy alternate, participated in this decision.
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