April 11, 2003

BIRMINGHAM, Ala. - Staff Treasurer Stephen Feerrar had good news and bad news for the financially struggling United Methodist Board of Global Ministries.

With a strong fourth quarter and stringent attention to cost control, expenses came in at $3.5 million below budget in 2002, he told board directors during the agency's April 7-10 spring meeting. His report did not include financial summaries for the Women's Division or Health and Relief unit.

Steady World Service receipts, a 15 percent increase in giving to projects supporting missionaries, and a slight improvement in the board's cash position at the end of the year also were positive signs, he said.

But Feerrar was blunt about upcoming financial challenges, including a further decline in asset values. "As we continue significant cost-containment efforts, ministry becomes more difficult, and staff is stretched thinner and thinner," he reported. "At the same time, significant increases in health and liability insurance costs have taken a bigger bite out of our operating budgets."

Overall revenues of $65.3 million came in at 4 percent below 2001 revenues. Budgeted revenues for 2003 are $61.3 million.

The greatest reduction in board spending in 2002 came in mission personnel, where total costs were reduced $1.4 million. That savings represented effective cost containment and reduction of office staff, the agency said. Cuts in missionary positions did not occur until 2003.

Other savings included a 40 percent reduction in expenditures for institutions and individuals, representing dramatic cuts in grant money.

"We ended 2002 with 55 less GBGM staff positions in New York and numerous programmatic needs unfulfilled in the field," Feerrar said.

The treasurer pointed out that the board's total assets have declined from $265 million to $162 million since 1999. Only $26 million of that amount is for unrestricted use, but designations have been made for $34 million and another $6 million is a prepaid pension asset, leaving a negative balance of $14 million. "Again, this shows the issue of illiquidity as we would have to realize these losses if we were to sell those assets today," he reported.

For the near future, the Board of Global Ministries will continue to "budget conservatively and manage our costs," and hope for a recovery in the capital markets, Feerrar said.

In a separate report, Connie Takamine, Women's Division treasurer, noted that the division's total income had dropped from $30 million in 2001 to $27.9 million in 2002. The division also suffered an 11 percent decrease in the market value of its investments.

"This income outlook is a challenge to the Women's Division, and some dreams may have to be delayed," she said. "But we must not let fear block us from seeking God's mission, and follow our responsibility as followers of Christ."

Revenues for the United Methodist Committee on Relief fell by 33 percent to $47.6 million in 2002, mostly because of a drop in giving to the Advance Special project called "Love in the Midst of Tragedy," a response to the Sept. 11, 2001, terrorist attacks. Net assets stood at $34.6 million at year's end.

But Roland Fernandes, treasurer, noted that despite the shortfall of income, UMCOR controlled its undesignated expenses and added $30,912 to its reserves. "This is the third year in a row that we've added to our reserves," he said.

United Methodist News Service