LAKELAND
With the Florida Conference struggling to deal with 1999s $1 million budget
deficit and the possibility that 2000s budget will also generate a substantial
shortfall, conference finance is likely to be a hot topic at the Dare to Share Jesus 2000
Florida Annual Conference Event May 30-June 2 in Lakeland.
A large portion of that discussion will focus on how the conference will pay for health
benefits of its retired clergy in the future, according to the Rev. David Dodge, executive
director of the conferences Division of Ministry.
Dodge said the conferences General Conference May 2-12 in Cleveland, Ohio,
considered legislation to require all annual conferences to evaluate their health
insurance funding plans. Currently, the General Board of Pensions has studied the funding
provisions for the 18 conferences in the HealthFlex program, of which the Florida
Conference is a part. That study identified the Florida Conferences projected
liability and the degree to which it is unfunded, Dodge said.
"We are obligated under the current standing rules to provide health insurance and
to make sure that its funded at a certain level," Dodge said. "We have
been doing pay as you gothis years needs paid for with this
years funds."
The problem, Dodge said, is the conferences future obligations are not funded.
Although the conference has forecasted the cost of benefits for current and future
retirees, "we do not have the resources available to us to take care of those future
obligations," he said.
"When the study was presented in September 1998, we had a $54.3 million unfunded
liability," he said. "An update of the study done in November 1999 shows the
unfunded liability increased to nearly $59 million."
One reason for the increase is that health care for people 65 and older is the fastest
inflating sector of health care, according to Dodge. Currently, that industry is
experiencing double-digit cost increases, he said.
To address the issue, the Insurance and Pension Committee of the Division of Ministry
is proposing a three-point initiative to delegates at the annual conference event.
Although the proposal does include some additional costs to retirees and local churches,
Dodge said the conference has a choice to "pay now or pay later."
"We can pay smaller amounts now or pretty soon, in two or three years, were
looking at making some really hard choices about adding significant funds to the budget
for retiree health insurance benefits, or significant premium increases to retirees, or no
funding for retiree health insurance and retirees paying for it on their own," he
said.
The Florida Conference is in a much better position to deal with this liability than
most of the other 18 conferences in the HealthFlex program because of a decision
made at the 1978 Florida Annual Conference Event. At that time, the conference was facing
an unfunded liability in its deferred benefit pension plan. The annual conference
initiated a capital funds campaign to help fund the Ministers Reserve Pension Fund (MRPF).
The initiative raised almost $6 million through local church giving for the MRPF
connectional giving (apportionment) line item. Interest earned on that money through the
strength of the equity and stock markets over the past several years has funded the
liability and given the conference a little more than $18 million in undesignated
earnings.
The Insurance and Pension Committee is asking that attendees at this years annual
conference event approve using some of that $18 million to help fund the conferences
future retiree health benefits liability. Although the money is undesignated, the General
Board of Pensions says annual conference must approve the use of the funds for this
purpose. The plan is to use $600,000 in 2001 and increase the amount 7.9 percent each year
afterward.
The second part of the plan is to allocate a $10 monthly premium to each qualified
retiree enrolled in the plan and an additional $10 monthly premium for each retiree spouse
enrolled. The premiums would begin Jan. 1, 2000.
The third part of the plan is to move the health insurance supplement payment out of
the Conference Services and Administration (CSA) budget into a newly titled apportionment
for pension and benefits programs. Dodge said this move would help both the health
benefits and the rest of the conferences budget.
"When CSA collects at 82 to 84 percent, and that one itemthe
largestmust be paid at 100 percent, it erodes what can be spent on soft things like
the programmatic ministries of the conference," Dodge said.
In addition to changing the category under which health benefits are collected, Dodge
said the committee is also recommending a new line item be added under the apportionment
for pension and benefits programs and an old one be removed.
The new $120,000 line item would be added specifically to fund the unfunded liability.
At the same time, the MRPF, which totaled $56,014 in 1999, would be taken out, since it no
longer needs to be funded, Dodge said. The net would be an approximately $64,000 increase
annually in the conferences connectional giving.
Dodge said the committee has been working on this plan since last annual conference and
its quick implementation is important to its success.
"Retirees and those in the future need to have access to good health care at a
reasonable cost," he said. "If, in one year, it [the unfunded liability] can
increase by $5 million, inactivity means you dont just hold ground, you lose ground.
Its important to have a plan and that it be affected as soon as possible."