United Church of God, an International Association
Council of Elders Meeting Report
Tuesday, August 12, 2003 – Cincinnati, Ohio

The Council resumed open session after having met in executive session for the entire day on Monday, August 11.

The Council’s first action was to confirm committee assignments for Tony Wasilkoff. By unanimous consent Mr. Wasilkoff was assigned to the Media & Communications, Strategic Planning and Finance and Doctrine committees.

It is a Council requirement for the president and operations managers to provide an annual report at the end of each fiscal year. The president gave an overview of home office efforts and the operations managers reported on the efforts in their respective areas.

Report from the President

Church President, Roy Holladay, provided an overview of home office operations, with additional details given by individual managers in their reports. Mr. Holladay’s outlined a number of subjects including the budget, personnel, home office, public proclamation and ministerial services.

Budget
• Income for the fiscal year of 2002-2003 was just slightly under budget, but expenditures were significantly under budget, allowing the Church to add approximately $432,000 to its reserves.
• A discussion with the Council was initiated on the level of reserves to be maintained and how to use funds in excess of budget.
• The Church’s annual audit is being conducted this week. It is proceeding well and should be completed within the next few days.

Personnel
• Newly hired employees at the home office are serving in the areas of Web site management (Aaron Booth), video production (Clay Thornton) and Internet personal correspondence (Clarissa De Campos). Barbara Antion (prisoner mail) and Mary Pinelli (Ministerial Services) also work part-time, as needed. Three employees were re-classified from part-time to full-time status.
• A restricted Web site for employees has been introduced, providing access to employee documents and policies.

Home office
• A "Welcome" letter is being mailed to newly baptized members and members who join United from other groups.
• A return envelope is being included with literature when it is sent, resulting in contributions and additional requests for literature.
• In the international work, David Baker was assigned as senior pastor working with the Philippine ministry and John Elliott is now the senior pastor for Kenya. Kambani Banda was hired to serve in Kenya. Peter Hawkins was transferred to England.
• The retirement task force, headed by Britt Taylor, has made significant progress. There will be a report to the Council in the December meetings.
• Mr. & Mrs. Holladay plan to visit the Church in Germany in September and will attend the Feast of Tabernacles this year in England.

Public Proclamation
• The Church’s primary Web site (www.ucg.org) was updated.
• The Good News magazine Web site is currently being upgraded. It will be a first-contact site, designed with a focus on the general public. When that effort is completed work will begin on the Church’s other Web sites.
• Guidelines have been established for local congregations to use the Tomorrow and Good News television programs on cable access TV stations in their local areas.
• The Web-based Youth United magazine will become a printed publication called Vertical Thought.
• Total incoming mail from all sources was 368,229 – a decrease of 8 percent compared to fiscal year 2001-2002.
• The new booklet, The Middle East in Bible Prophecy, was offered to 200,000 of our Good News subscribers. There was a strong response and the booklet will have our largest-ever initial print run of 80,000 copies.
• The Good News radio program has generated 7,518 responses.
• The September-October issue of The Good News will have a print run of 460,167 – a decrease of 11 percent from the previous issue. The decrease is due primarily to the low waiting room renewal rate.
• As of July 30, 2003 there are 4,693 donors on file and 2,096 co-workers.

Ministerial Services
• Dennis Luker has joined the Ministerial Services team.
• The first Ministerial Candidate Program Leadership Workshop was offered last August with 18 couples in attendance.
• A sermon by Jim Franks on the subject of modesty was the first in a series of sermons on topics vital to the Church. Next will be a sermon on Sabbath observance.
• The Ministerial Education Task Force starting with the fall, 2002 edition of The Ministerial Quarterly, has begun producing articles on the subjects of counseling and public speaking.
• Steve Myers is coordinating the development of a supplemental hymnal, scheduled to be ready for use at this year’s Feast of Tabernacles.
• In the 2002-2003 fiscal year there were 200 baptisms. In addition there were 2,039 new visits last year – 762 were first-time contacts through our literature who had no previous expose to the Church and 1,277 were associated with other Sabbath-keeping organizations.

Report from the Treasurer

Treasurer, Tom Kirkpatrick, provided the Council with a detailed, full-year report summarizing the Church’s financial status at the end of the 2002-2003 fiscal year. The budget for the year was $18,240,000. Income was slightly under budget at $18,188,000. However, expenditures were under budget allowing the reserves to grow by $432,000.

Expenses for the Council of Elders, home office, Feast of Tabernacles, assistance funds and ministerial services were all under budget. The annual General Conference of Elders meeting expense came in right at the budgeted amount.

Assistance for international areas was slightly over budget due to unanticipated needs. Public proclamation was over budget due to growth of the audio tape program that is a follow-on to the Bible Study Course. And insurance and health care were over budget due to the number of claims.

The Church is still waiting for a decision from the state of Ohio on our request for property tax exemption.

Report from Ministerial Services

Richard Pinelli described the overall condition of the Church as "stable," with slow but steady growth. Last year there were 200 baptisms, of which 50-55 were new contacts who were not previously associated with God’s church. In addition there were 1,277 contacts with members of other Sabbath-keeping groups. However, they typically visit a congregation and don’t attend consistently.

Average Sabbath attendance is 11,200. Average Holy Day attendance last year was 13,200. For the last few years there has been a steady annual increase of about two percent to seven percent.

Last year there were five ministerial new-hires. Four ministers retired and another is scheduled to retire this month.

Cecil Maranville answers approximately 100 letters each month (in addition to the efforts of the internet personal correspondence team). Approximately 35 percent of Mr. Maranville’s correspondence is with prisoners.

Ministerial Services was $312,000 under budget last fiscal year, due in large part to the efforts of pastors to follow guidelines established by the member assistance task force, reduction of subsidy requests and other ministerial expenses.

Efforts of the education program have been ongoing. Several video sermon tapes on the subject of marriage were sent to the congregations. Audio tapes of ABC classes on the General Epistles and the Pentatuch will be available after the Feast of Tabernacles.

The Christ-Centered Servant Leadership program is on hold pending input and direction from the Council.

The Ministerial Candidate Program was very successful in 2002. Last year 18 couples participated. Nine of the men were elders and five were hired into the ministry.

This year’s five-day workshop will take a slightly different approach. There will be 23 couples in attendance. Six of the men are elders. The emphasis will be on developing leadership skills to serve the local congregation. Some of those in attendance may be hired into the ministry over the next several years. As last year, the presentations will be audio taped for use by international areas.

Plans are being made for one-day regional conferences. Due to their work commitments, non-salaried elders are more likely to be able to attend the one-day conferences than the three-day conferences held in the past. The theme of the conference will be leadership. Topics will include mentoring men in the congregation and strengthening the relationship between the pastor and congregation.

The education program has provided the Church with videos on dealing with addictions. More information will be forthcoming on the subjects of pre-marital and baptismal counseling. Non-salaried elders were offered Prepare/Enrich training at the general conference. More seminars will be developed as the resources are available.

The pastoral assessment tools have been used effectively. The congregational surveys will be used again this year and since this will be the second time, they will probably be even more useful than last year.

Report from Media and Communications

Peter Eddington reported that much was accomplished in fiscal year 2002-2003. Almost all the efforts and projects met expectations, though some key areas are not keeping pace with previous years’ results.

Mail
• Total incoming mail from all sources was 368,229 pieces, an 8 percent decrease over 2001-2002, due to decreased promotional advertising because of budgetary limitations.
• Some 309,919 individual pieces of literature were mailed from the home office. In addition, millions of pieces are mailed directly from various printing vendors.
• There is a steady number of new Good News subscription requests from the Internet, Brochure Program, Newsstand Program, TV programs and Good News radio.
Booklets
• This is the United Church of God was introduced in September/October, 2002.
• In June, 2003 The Middle East in Bible Prophecy was sent to the printer, giving the Church a total of 30 titles in print.
• A total of 450,000 booklets were printed in 2002-2003, including the reprint of eleven titles.
• Since United began, the Church has published 2.65 million booklets.

Bible Study Course
• 190,000 copies of the Bible Study Course were reprinted from September 2002 through July 2003. A total of 954,112 total copies of the lessons have been printed.
• As of June 30 there are 10,239 enrolled in the course.
• There is a 33 percent response rate to the offer of a 12-month tape program to BSC graduates. We anticipate 3,000 to 3,500 readers to respond in the coming year. There were 2,653 active participants as of June 30.
• As of July 30, graduates of this second program have responded at a rate of 33.5 percent to four further options:
• A subscription to World News and Prophecy.
• Sermon tapes from the congregation nearest them.
• To be contacted by a pastor.
• To receive the address of the United pastor and congregation nearest them.

Good News radio
• The program has generated a total of 7,518 responses. Some are attending Sabbath services as a result of learning about the Church through the radio program.
• The best weekend so far was March 30, with 135 callers responding to a program titled "The Spirit World." There were 99 calls on May 11 in response to the program, "Death, Then What?".

Good News magazine
• The print run went from 517,423 to 460,167 (a decrease of 11 percent). The decrease is due primarily to low renewals of waiting room subscribers. At present efforts are underway to raise the circulation back to 500,000.
• In the long run, reader demographics will be healthier with a smaller percentage going to waiting rooms. Having more individual subscribers will provide a better opportunity to reach out to those who may be interested in becoming involved in the work of the Church.

Good News print promotions, 2002-2003
• Print promotions in the last year went into 5.5 million homes (13 percent fewer than the previous year) adding 37,815 new subscribers at a cost per response of $2.21. As cards continue to come in, we are close to our goal of 39,500 new subscriptions.
• During 2002-2003, as in previous years, we successfully used "card pack" promotions.
• Plans for 2003-2004 are for 3.7 million cards (a 43 percent decrease compared to two years ago) to be mailed with an estimated 27,650 responses at $1.95 each.

Internet
• On average about 4,500 visited ucg.org per day in July, 2003 for a total of some 140,000. By comparison, in 1998 the site averaged 300 visits per day.
• Internet requests for the GN and other literature totaled 52,665. The average request is for four pieces of literature, so this represents approximately 210,000 booklets and magazines.
• Advertising at Overture.com continues to be very cost effective, providing new subscribers for around $1.75 each. Overture is partnering with most other major search engines on the Internet, so the Church’s keyword listings appear in many places.
• A survey of those who order literature over the Internet indicates that 29 percent found out about United from a friend or family member, 11 percent from another United publication. Interestingly, of those who order through the Web site only 2 percent are United members, while 27 percent found the site through the Good News and 23 percent from a friend or family member.

Re-designed Web site
• The redesigned ucg.org has been active for more than five months and still is receiving positive feedback.
• The average time spent at the Web site is eight to nine minutes.
• Two new features, "Current World News and Trends" and "UCG Commentary" are gaining increased traffic.
• Redesign of the Good News Web site should be complete a month or so after the Feast.
• A new Web site, verticalthought.org, is in its early stages of development.

Internet personal correspondence
• 935 doctrinal messages were answered by the Personal Correspondence E-mail team in 2002-2003, an increase of 33% over the previous year.
• The E-mail team includes 23 pastors who volunteer for one- or two-month shifts.
• The Personal Correspondence messages represent one-tenth of the total number of messages we receive – some 14,000 info@ucg.org and info@gnmagazine.org.

Internet update subscriptions
• 5,545 subscribe to the "ucg.org E-news Weekly Updates"(52% increase over last year).
• 3,065 subscribe to the "UCG Member Updates" (398% increase).
• 958 subscribe to "Youth United Updates" (32% increase)
• 49 subscribe to the "Good News Reader Monthly E-mail Updates." (A recently-introduced letter from the President to GN subscribers.)

Members, Donors and coworkers
• By the end of the 2002-2003 fiscal year, the total number of members, associated and youth increased from 16,000 to 16,500.
• So far this calendar year there have been about 125 baptisms, slightly off last year’s figure of 150.
• The number of coworkers and donors has risen to 2,096 and 4,963 respectively.

Cable access television
• Continues to provide subscribers at a favorable cost per response. For example, Tomorrow (produced in Portland OR) generates about 325 responses per month – typically averaging two calls per showing. The Good News television program (produced in Beloit WI) added a Chicago-area cable access station which generated 25 calls the first telecast.

Subscriber development
• In June, a subscriber development letter was sent to 200,000 Good News subscribers offering The Middle East in Prophecy. So far 27,000 have requested the booklet (14% response rate).
• There is a plan to send four subscriber development letters in the upcoming fiscal year – one will offer the Bible Study Course and each of the others will one of our booklets.

World News and Prophecy
• This publication has seen a 23 percent subscription increase in the last year.
• The goal for this year is to increase non-member subscriptions from 8,000 to 12,000.

United News
• Since many who receive this publication do not attend our Sabbath services, a recent renewal letter was sent which reduced the mailing list by 15 percent.

First contact literature
• Mr. Eddington provided mock-ups of three first-contact pamphlets: Getting out of Debt, Was Christ Born on Christmas? and two different layouts of a brochure titled Sex Outside of Marriage – What’s the Big Deal
• These are low-cost, short, easy-to-read mini-booklets on topics of interest for first-time readers. They may be distributed at news stands, supermarket displays or college campus bookstores.
• Development will continue based on input from the Council.

Resolutions

The Council briefly discussed and passed two resolutions. The first resolution names a new registered agent for the state of North Dakota, since the current registered agent (Paul Leuke) is being transferred to another state. The second was a technical update to the Church’s 403(b) program to so the Church’splan matches the maximum amounts allowed by the IRS. Both resolutions passed unanimously (Doug Horchak is on a Church visit to Ghana so was not present for the vote).

Disability Assistance Policy

Mr. Holladay asked the Church’s attorney, Larry Darden, to read to the Council the proposed policy for disability assistance. The Council was given a copy of the policy for their consideration. Discussion will resume at a later date.

Policy for use of financial reserves

The afternoon was taken up by a discussion of the establishing of a policy for use of financial reserves. Mr. Kilough asked Aaron Dean, chair of the Council’s Strategic Planning and Finance Committee to lead the discussion.

Mr. Dean pointed out that cash reserves and a policy for their use are important for several reasons. They provide for the viability of the Church during financial downturns, including the annual cycle of high and low points of cash flow. Cash reserves allow the Church to take advantage of unforeseen opportunities to enhance the mission of the Church. And to shore up or change programs that are not performing as expected.

Mr. Dean presented several scenarios to illustrate how long a cash reserve would last, based the amount of reserve and various percentages of budgetary shortfall, since it is extremely unlikely that income would completely stop, forcing a total use of reserves with no income. He pointed out that there are many cash reserve options (e.g., a ten-week reserve at the lowest point of cash flow, a six-week reserve based on the lowest point of cash flow, an eight-week running average, etc.) The question is, what does the Council want to establish as Church policy?

A second and related issue concerns the money set aside by the Council as funding for retirement needs ($750,000). The question is whether that money should be counted as part of the cash reserve or left as a separate fund.

Two proposals for cash reserves policy were discussed.

The first proposal is that there be a cash reserve equal to at least ten weeks of a current fiscal year’s operating budget in unencumbered reserves (exclusive of the amounts appropriated for retirement purposes from estate donations) at all times. The low point of reserves each year is in the fall, just before the Holy Day offerings. The indicator of whether we have reached and are maintaining the ten weeks would be the level of reserves at that time of the year. Last year, at that point, reserves stood at 7.7 weeks. Current projections show that in the fall of 2003 the Church will be very close to the 10-week reserve level.

The second proposal is to maintain a reserve of a minimum of eight weeks running average income or six weeks of budgeted annual income. Each of these two targets would be monitored weekly.

The Council agreed to discuss first whether the $750,000 set aside for retirement purposes should be included as part of the cash reserve. Several members (Les McCullough, Leon Walker, Victor Kubik, Joel Meeker, Richard Thompson and Clyde Kilough) expressed a strong opinion that the retirement fund should not be included as part of the cash reserve. Because if it is considered part of the reserve it could be spent for purposes other than retirement. It was also emphasized that the amount set aside is minimal compared to the actual needs for retirement funds in the future.

A "straw poll" was taken of the Council. Ten of the eleven members present indicated that they felt that the retirement fund should not be included as part of the cash reserve. (Doug Horchak was absent; Aaron Dean abstained; he felt that it could still be held as "for retirement use" while being part of a single, larger fund.)

Discussion turned to the question of the amount of cash reserve that should be maintained. While there was some question as to how much cash reserve would be necessary or appropriate, it was clear that all agreed on the importance of aggressively doing the work of preaching the gospel, while using the money wisely and carefully.

Mr. Kilough asked at what point the Church would actually use its reserves and how would that decision be made. Mr. Dean expressed that the Council would have to meet to decide there was a financial need, then determine how to use a portion of the reserves.

Several council members indicated they were uncomfortable with having only a six-week reserve. The point was also made that in our short history we have already had a number of financial crises.

It was suggested that use of a budget surplus be clarified so that expenditures for a particular function (such as media) can be carried over into the next fiscal year. The immediate question is, can additional funds be made available in the current fiscal year for advertising and promotion to increase the circulation of The Good News?

A second "straw poll" was taken, this one asking how many weeks of reserve each member thought was appropriate. Eight of the council preferred that ten weeks of reserves be maintained (Messrs. Kilough, Seiglie, Dick, Thompson, Walker, Meeker, McCullough and Franks). Two members preferred nine weeks reserves (Messrs. Kubik and Wasilkoff). One council member (Aaron Dean) preferred eight weeks of reserves since the retirement fund would not be included in it

Mr. Dean asked if it is necessary to reach that level of reserves this year. Could some of the budget surplus from 2002-2003 targeted for reserves for this year be used in this year’s budget? Mr. Franks suggested that we consider the additional budgetary needs of the media operations after the fall Holy Day offerings when we will know how successful the offerings are and when reserves are typically at their highest levels.

Mr. Kilough directed Mr. Dean to work with Mr. Kirkpatrick to write a resolution to be presented to the Council regarding the appropriate amount of reserves (ten weeks), how the reserve levels should be calculated and how funds in excess of the reserves should be used.

The meeting adjourned at about 4:45 PM.

-Don Henson

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© 2003 United Church of God, an International Association