The UCG elders at the Cincinnati conference approved expenditures of $11,985,000.
(A copy of this approved budget, as well as a report of proceedings of that
conference, was reprinted in the Dec. 18, 1995, issue of New Beginnings,
the member newsletter of the UCG.)
In the Dec. 9, 1996, issue of New Beginnings, UCG treasurer Steve
Andrews issued a report for the first eight months, through Nov. 30, 1996.
His report, although not contrasted to the approved budget, showed that
the home office has deviated dramatically from its constitutionally approved
budget.
The release of these figures prompted a flood of questions from UCG elders
and other members about the home office's handling of tithes and offerings.
Among those with questions is Ron Weinland, pastor of the UCG's Toledo,
Ohio, and Detroit, Mich., congregations. Mr. Weinland sent a 4,000-word letter dated Dec. 27, 1996, to the majority of all members of the general
conference (those who are part of the organization's electronic-mail network).
In his letter Mr. Weinland said he was beginning to have "concerns
about the [home office's] stewardship of the finances."
He appealed to fellow elders to openly consider the points he raised rather
than to automatically dismiss him as a troublemaker. He wrote that "Pollyanna
attitudes of blind faith begin to see any questioning of direction, administration,
etc., as threatening or divisive."
Mr. Weinland said that more than 20 percent of the UCG's paid elders had
encouragingly responded to his first letter, indicating that they shared
many of the concerns raised in his letter.
On Jan. 28 the home office distributed to elders via cc:Mail, the UCG's
electronic-mail network, a report to the general conference of elders from
the council's budget committee and letters from both Mr. Hulme and Mr. Dick.
Mr. Dick extended an "apology" for the council's part in the "creation
of this [financial] problem."
Mr. Hulme "apologized" for his failure to "communicate clearly"
what he was trying to accomplish.
In addition to these E-mail transmissions, home office employee Gerald
Seelig contacted elders via E-mail to say that a budget/analysis comparison
for the fiscal year through December would be mailed to all elders Jan.
30.
Mr. Seelig wrote: "We are not able to send this document [the budget/analysis]
via cc:Mail, because it is done on an Excel spreadsheet and most of the
ministry cannot import this type of document."
It is not correct to say cc:Mail lacks the ability to handle attached Excel
files, and Mr. Seelig did not offer the budget/analysis comparisons electronically
to those elders who do have Excel software.
$5 million in reserves planned
At the time of the Cincinnati conference, elders were given a financial
report showing that the UCG had "cash or cash equivalents" of
just under $2.8 million as of Oct. 31, 1995, the most recent reporting period
before that conference. The general-conference-approved budget called for
the UCG to have an estimated $2 million in reserves by the start of its
1996-97 fiscal year, April 1, 1996.
Throughout the next current fiscal year, the budget called for the home
office to add an additional $3 million to reserves.
The plan was to build reserves that could be used to preach the gospel.
The home office, with the blessing of the council of elders, declined to
provide In Transition with a balance sheet this newspaper had requested,
which would indicate cash on hand at the beginning of the fiscal year, April
1, 1996, but UCG insiders tell In Transition that the fiscal year
will end with reserves at only a fraction of the $5 million budgeted.
The council's Jan. 29 report to elders revealed that reserves as of the
start of the current year were $1,032,000, more than $1 million short of
estimates.
In Transition, in an effort to report on the financial situation,
has created with the help of several people with extensive business experience,
including certified public accountants and UCG elders, an analysis of the
financial state of the church.
The In Transition-prepared document builds on UCG data. A "statement
of activities," presented by Mr. Andrews, in New Beginnings
gave some figures for the first eight months of the fiscal year but did
not compare the figures to the approved budget, nor did Mr. Andrews' document
project income and expenses through the end of the year. (See related chart,
page 9.)
The CPAs who consulted with In Transition said Mr. Andrews' report
was difficult to analyze and lacked key information to properly determine
where the organization stood financially.
(An IT staffer personally delivered a working draft of the In
Transition-prepared analysis to Mr. Hulme and Mr. Andrews Tuesday, Jan.
14. As of press time Jan. 30 neither man had responded other than to initially
say the analysis was in error.)
Which expenses are up?
Although the UCG-published report shows that expenditures in virtually all
categories, except evangelism, are significantly over budget, one of the
largest areas is salaries, wages and benefits, projected at almost $8 million,
or about half the UCG's budget. This figure does not include about $800,000
in additional health-care benefits for employees and retirees.
According to the Dec. 9 New Beginnings, the UCG has 206 employees.
With health-care benefits included, In Transition estimates that
the average UCG employee costs the home office more than $42,000 per year.
When the current budget was approved, the home office had 22 employees.
The budget called for the addition of two employees. By December 1996 the
home office ranks had swelled to 34 full-time on-site employees, eight on
call plus another seven "remote" employees who work from their
homes or other offices.
Some UCG elders, especially those interested in seeing the home office relocate
outside of Southern California, note that by almost doubling its staff Mr.
Hulme and Mr. Andrews may have made it prohibitively expensive to relocate
the home office because of the expense of moving that many employees.
Some noted that repeated delays in efforts to find a new home-office location
have undermined the desires of many elders at the original Indianapolis
conference that the office relocate before a large staff could be hired
and become entrenched in Southern California.
Still other elders say the estimated costs for moving the home office are
ridiculously overstated and include bonuses for all involved. (See In
Transition, June 24.)
We're new at this
One of the justifications mentioned by those who defend the budget excesses
is that the council of elders is new to governance and fiscal responsibility,
therefore no one should expect the church to hit its financial targets.
But an elder in the Midwest disagrees. "I hope they're not going to
use the 'Oops, we're new at this' defense," he told In Transition
recently.
Rather, the elder said, Mr. Hulme and Mr. Andrews are experienced administrators.
Mr. Andrews, a CPA and lawyer, before being hired by the UCG as its treasurer,
was for years the chief financial officer for the Worldwide Church of God.
Several UCG elders say they consider Mr. Andrews to be extremely bright
and the most talented and able financial officer the WCG ever had.
"Steve was involved from the beginning with the planning of the UCG,
even before and during the Indianapolis conference," the elder continued.
"He obviously had access to and firsthand knowledge of all the WCG
historical data. Church budgeting was certainly not new to him.
"To suggest that Mr. Andrews and his staff of long-time former WCG
employees, with their vast knowledge, is an inexperienced group is simply
a false characterization."
Another defense: Didn't you want us to help others?
In question-and-answer sessions with East Texas members the weekend of Jan.
11, UCG council members Peter Nathan, Bob Dick (chairman) and Mr. Hulme
were among those who defended the blown budget. The rationale was that the
home office saw a need and met it. Would anyone want them not to help the
brethren? (See "UCG Council Fields Big Sandy Brethren's Questions")
In an interview with In Transition Jan. 14, council member Jim Franks said all money spent was spent to "help people."
"We spent much more for the conference of elders in Cincinnati that
we thought," he said, "and $500,000 more for third-tithe assistance
than we budgeted for. And overseas subsidies were underestimated by about
$500,000. Would you have us simply say no [to requests]?"
But others say using that line of reasoning is to miss the point.
"That logic is a smoke screen," a Texas elder said in a Jan. 24
telephone interview with an In Transition staffer. "The issue
is not that they spent the money to help brethren. The point is the home
office's attitude and approach. They just did it.
"Mr. Hulme should have gone to the council and explained that he couldn't
live within the budget. The council could then have gone to the general
conference and asked it to approve a new budget. The bylaws clearly state
that if a new budget is not approved the old one stays in effect.
"Mr. Hulme has plainly and simply violated the constitution and bylaws.
This situation needs to be openly dealt with."
The UCG constitution and bylaws agree with the points made by those elders.
Article 10.6 of the bylaws states, regarding the annual budget: "This
budget must balance projected income and expenditures and shall then be
presented to the General Conference for its ratification. If not ratified,
the Council [of Elders] shall submit a revised budget for ratification as
soon as practicable and, pending a ratified budget, the corporation shall
operate under the constraints of the previously ratified annual budget."
Observers point out that the only general-conference-ratified budget is
the one passed at Cincinnati, thus home-office administrators have violated
church bylaws by not operating under the constraints of that budget.
They also point out that, even if the 12-member council of elders approved
additional expenses not spelled out in that approved budget, they did so,
according to this provision, with no legal or constitutional authority.
"We have not only a financial crisis, but also a constitutional crisis,"
said one paid elder who lives in the western United States. "What are
the rest of us to do when those charged with administering the constitution
and bylaws-namely the corporate officers and council members-act in violation
of that very constitution and bylaws? As it now stands, it appears that
none of the council will be replaced for another year.
"They can solve the situation with the corporate officers, but will
they solve their own problems? The code of ethics they agreed to requires
that they adhere to our constitution and bylaws, and if any are not willing
to do that they should do the honorable thing and resign so they can be
replaced with elders who will."
Another elder of more than 30 years' service noted that while "it's
nice" that the home office wants to help people but "when you
say yes to one expenditure you automatically are saying no to another."
"For example, when the home office chose to say 'yes' to regional ministerial
conferences, they were saying 'no' to the general conference, at least to
the length of it and the total money available for travel and lodging.
Different philosophy
Top UCG insiders, who spoke with In Transition only on the condition
that their names not be used, said that, regardless of the details of specific
budget excesses, a core issue is that Mr. Hulme apparently sees himself
as a pastor general in the mold of Herbert W. Armstrong rather than a president
who reports to the UCG's 12-man council of elders.
Several UCG elders say that permitting Mr. Hulme to act in such a unilateral
way is a concept that some segments of the UCG membership and elders would
welcome.
"We grew up in an organization where we were accustomed to one-man
rule with no accountability," a minister with more than 25 years' service,
who is highly placed in the UCG, said recently. "That's what Mr. Hulme
is used to, and it's not unexpected that he would approach his job that
way. I assume he has felt free to spend as he sees fit in his judgment.
I'm sure he's very sincere and believes he's doing the right thing. I doubt
he saw any need to inform the council about the budget problems, much less
to go back to the general conference for approval.
"Mr. Hulme has a strong sense that God is directly leading him. I think
he sees himself as assuming the mantle of Mr. Armstrong. I don't believe
any of his actions are malicious. He just thinks he's right and that God
is blessing him."
Several influential UCG elders told In Transition that the UCG council
should at least publicly censure Mr. Hulme for his failure to respect the
budget. Others said they felt both Mr. Hulme and Mr. Andrews should resign
as a result of their mismanagement of the finances.
A highly placed source told IT emphatically that if the council were
voting for a president today, it would not select Mr. Hulme. "He would
not get eight [of the 12 council members] votes [needed to approve his appointment].
"What I have a problem with is the spending with abandon. I'm more
concerned with the attitude behind the spending rather than the numbers
themselves."
Not a few unpaid UCG elders and other members with extensive business experience
told In Transition that both Mr. Hulme and Mr. Andrews would probably
have been fired for poor stewardship if they had handled stockholders' funds
in the business world as they have managed the funds of the UCG.
Most elders would not talk on the record, however. Several said they would
hold off on commenting to give the council of elders time to deal with the
problems.
"The council needs to do more of its work in the open so that the general
conference can have confidence in it," a former WCG-headquarters employee
and now an elder in the UCG told In Transition. "We need the council
to act responsibly, not circle the wagons and protect their own. I'm afraid
that if we [UCG elders] push them [the council members] that's precisely
what they'll do. We need to encourage the council to take charge and do
the right thing."
To be fair, UCG insiders knowledgeable of the council's actions see signs
that the council is beginning to take charge. The council's finance committee
established at its Boston, Mass., meeting last November drafted several
resolutions governing administration of church finances. These were approved
by the council at its meeting in Tyler, Texas, Jan. 8-14.
The resolutions include requiring council approval for adding employees
not already in the budget and any programs not included in the strategic
or operating plan (both of which are yet to be approved) as well as requiring
more-specific monthly reports by the treasurer and a separate report for
the executive office.
Members of the finance committee, council members Dennis Luker, Burk McNair,
Peter Nathan (chairman) and advisers Les McCullough and Tom Kirkpatrick,
met with home-office staffers Jan. 22 in Arcadia for budget discussions.
The other committee member, Leon Walker, was absent because of a death in
the family.
One sources told IT that most of the committee's time was spent editing
multiple drafts of its report.
Is there an agenda?
Some highly placed sources speculate that a possible reason that Mr. Hulme
and Mr. Andrews spent with such abandon is that they were not afraid to
provoke a cash-flow crisis.
One such person said: "I can see two reasons the home office could
conceive of a benefit should there be a crisis with cash. First, it could
make it easier to stay in Southern California by forcing elders to choose
between funding a move or, for example, funding international versions of
The Good News magazine [the UCG's bimonthly magazine].
"Second, a cash crisis could pave the way for asking the local congregations
to bail out the home office. Mr. Andrews is very aware of the more than
$1 million sitting in the bank accounts of local congregations earmarked
for building programs or other purposes."
In at least one UCG congregation that has a six-figure building fund, Mr.
Andrews gave a sermon pointedly addressing the needs of brethren in the
third world. Several members said after the sermon that, although they strongly
support the need for an international work, they also saw a need to have
a building in which they could meet regularly.
Unfortunately, they said, they perceived Mr. Andrews' message about needs
in the international areas as a code for "send all your money to Arcadia."
Cash-flow problems on the horizon?
In recent weeks several UCG elders told In Transition they see signs
of an impending budget crisis within the UCG.
Mr. Weinland, in his letter to United elders who subscribe to the church's
E-mail service, wrote that the ministry is being told it is facing a "cash-flow
crunch" and that the "problem is exacerbated by the fact that
[the UCG has to meet] three [every-other-week] payrolls in the month of
January and the fact that the Holy Days come later than normal."
In Transition has learned that salaries of paid elders have been
reduced by 9 percent, with the full accumulated amount of the cut to be
restored prior to the Feast of Tabernacles. The 9-percent figure is linked
to second, or festival, tithe.
(The WCG historically gave paid elders a 9 percent bonus in lieu of having
them save a festival tithe. In more recent years the WCG added 9 percent-a
tithe minus a tithe to cover festival administration-to each minister's
gross that was intended to be used for the minister to set aside a tithe.
Until last month the UCG had adopted the more-recent WCG policy of having
the minister save his tithe. See the March 25, 1996, In Transition,"Churches Decline to Discuss Ministerial Compensation")
Paid elders in United were recently told that in effect their second tithe
is being held for them and will be given to them before the Feast.
This decision, however, has been characterized by some as the home office
"borrowing from second tithe," a practice historically condemned
by the WCG.
Mr. Franks said that it was not proper to characterize the decision as "borrowing
from second tithe." Mr. Franks said that ministerial salaries were
already subsidized by 9 percent from the festival fund.
One UCG elder not quoted earlier said that, although he initially had some
doctrinal concerns about the decision to withhold the wages, he has also
now come to see the problem as "yet another example of a cavalier and
presumptuous management style" used by the home office.
Another sign of financial stress comes from a recent letter from Chairman
Dick to elders (mentioned earlier) initially proposing that the annual conference
be cut to one day and that all elders, with the exception of a few international
representatives, pay their own way to and from the conference and pay for
their rooms and meals while there.
The conference is now scheduled to begin on a Saturday evening and end on
a Monday evening.
The last general conference cost the UCG $950,000. The church paid all costs
for elders and their wives to attend from around the world.
The UCG's approved 1996-97 budget included $588,000 to fund this year's
conference, but Mr. Dick made no mention of this budget item in his letter.
Mr. Dick's letter also noted that the UCG's current financial commitments
will consume an estimated $14,124,000 of its $14,800,000 annual income,
not including any media or promotional efforts to expand circulation of
The Good News or even maintain it at its current level.
Also not included in the estimated expenses listed in the letter were any
additional printed materials previously discussed by the UCG (booklets,
a correspondence course, educational materials for youth), foreign-language
editions of The Good News and booklets other than Spanish, any media
efforts at preaching the gospel, a 1998 general conference of elders and
funds to relocate the home office.
Presumably all of these expenses would have to come from the $676,000 left
over once the committed expenses are subtracted from the estimated $14.8
million annual income.
"I was stunned when I added up those numbers," said one elder
who also wished to remain anonymous. "Those financial commitments are
stated as fact when no such budget authorizing that level of expenses has
been submitted or approved by the general conference as called for in our
constitution and bylaws.
"The sad thing about it is that the decisions made by some have painted
us into a corner. By hiring so many people ostensibly to help in preaching
the gospel, we have actually spent whatever funds we had to begin preaching
the gospel.
"Not only that, but those expenses seem to be committed for years into
the future. We have not only compromised our ability to proclaim a message
now but for years into the future, unless those expenses can be brought
under control and drastically cut.
"Even if all the noncommitted funds were spent to preach the gospel,
only about 5 to 6 percent of UCG expenses will be spent on what Jesus Christ
told us to do: take this message to the world."
The scope of the concerns
In preparation for this and other articles about the UCG in this issue,
In Transition staff members have directly communicated with scores
of elders (including members of the council of elders) and other members
of the UCG. Most did not want to speak on the record.
Off the record, they spoke passionately about the challenges facing the
UCG in general, but they focused on the issue of financial stewardship,
noting that Mr. Hulme has become a lightning rod.
Mr. Hulme, several pastors told In Transition, characterizes criticisms
of the home office as "reflecting only 2 percent of the members and
ministers" and thereby dismisses requests for fuller disclosure and
discussion.
A pastor serving on the West Coast said: "It's ridiculous to say only
2 percent have questions. Virtually every elder in my region [of the United
States] is concerned."
Another elder told In Transition Jan. 26 that in the previous week
he had heard from four paid field ministers who independently expressed
grave reservations about the church's financial situation and the home office's
management of financial and other matters.
"Unfortunately," he noted, "most elders and members don't
really pay attention to the financial reports and have no idea of the seriousness
of the situation. They are, and want to be, trusting of the home office
and the council, but it's obvious that the trust has been and is being abused."
Two other pastors, not previously quoted, said they would like to talk on
the record but that the home office had made it plain to them that those
who questioned the office's practices would find themselves at a disadvantage
when it came to salary reviews and transfers to more desirable regions of
the country.
In virtually every case, those who spoke with us who had concerns and criticism
remained supportive of the UCG and still saw it as their choice of the WCG
offshoots. They repeatedly told In Transition that their motivation
in talking about the church's problems was to help fix the problems, not
be divisive.
As one elder put it, "we need to make sure we don't repeat [WCG] history.
We need to address our problems and move forward, no matter how painful
it may be." |
