The Rise and Fall of the Ohio Region, chapter 10
"a little cloud no bigger than a person's hand"
So, in 2004, the Rev. Dr. William Edwards was called to become “Regional Pastor and President,” with a new “Vision and Values” statement, a mostly emptied out staff complement, a plan to move the regional office out of Elyria with no clear idea of to where, a capital campaign winding down, and a regional bottom line that was leaking red ink.
To get to Bill Edwards and his thirteen years as regional pastor and president, I have to loop back to Suzanne Webb’s interim period, and the question of regional trust funds. Because one of the biggest fiascos at the heart of our disorienting journey into self-understanding in the Christian Church in Ohio is that in 2004 we had over $2,200,000 in our regionally controlled investment accounts, and by 2018 we barely had $200,000 there, against minimum trust obligations that were nearly three times that amount. These are the much discussed and poorly understood category “Permanently Reserved Net Assets,” or in today’s regional fiscals called “Net Assets with Donor Restrictions,” the principal amounts not to be expended from trust amounts or bequests the region has received, from which we can use the proceeds, or “revenues” . . . when we have revenues.
But yes, we seem have taken a couple of million dollars out of the stock market, and . . . well, we spent it. Without . . . quite . . . meaning to. Sort of. Let’s just say that Ohio is certainly not the wealthiest region in the Disciples of Christ anymore, and a stouter heart than mine could say that’s good for our collective soul. I’m willing to agree, if we can all come to consensus about where it went – and I think we can.
So, jumping back both to 2002 and to a personal viewpoint as well: I was asked in that year to chair a special commission to review Camp Christian. Its usage, its availability, its relative profitability, and how we could use it more effectively and to a more positive financial outcome. Basically, to look at registrations and costs and scheduling and come up with a way to help camp cover its own costs.
I had returned to Ohio in 1999 after six years in West Virginia; I had directed CYF conferences there, and now was directing Partnership Camps at Templed Hills and was deeply involved at the time with the UCC Outdoor Ministries, and had extensive background with camp operations through the Boy Scouts of America. So I believe I was seen as a knowledgeable but usefully neutral party to try to pry apart the traditions and more problematically the expectations the region had for Camp Christian, particularly those around off-season camp use by congregations in the nine months of the year from September to May. We were asked as a regional board task force to look at off-season use more than at anything dramatic to do with the summer camp & conference program -- but we were told we were welcome to make some suggestions there, too, if it all fit together. I was confident of my knowledge of the economics of camp operations, of Camp Christian, and about church committee functioning.
In this case, I was quite wrong. Not about camp ops, which were pretty much what I thought (let’s just say inefficiencies were abundant, mostly because of user expectations more than staff shortcomings), nor was I much confused about Camp Christian, which honestly is a pretty simple facility compared to your average Scout reservation of hundreds of acres and year-round intensive programming.
But I was wrong about how this commission would function. It was, far and away, the most unpleasant experience I’ve ever had in church life, and that’s saying something. I could settle some scores here and take a few hunks out of particular people’s hides, but let’s just say I learned that when it comes to Camp Christian, people can justify a remarkable amount of bad behavior and verbal unpleasantness in the name of “saving camp as we know it.”
What was specifically puzzling, though (since I’d met self-righteous and rude people before), was a repeated claim about “camp permanent funds” that were nowhere in evidence on regional financial reports, at least the ones we had access to. This seemed like at least one point I could clear up as chair, and went to the regional offices in Elyria to get an answer about.
And drove back home, baffled. I got a mix of double-talk, shuffled papers, and clearly a very limited look into of regional accounting. It added up to “it’s all very complicated, but it doesn’t matter, because they’re wrong, and here’s why, trust us.” And honestly, while I was (and am) not happy about how I was being treated by angry commission members and observers (most of whom spoke more than most of the nervous commission members), I had the distinct impression that they had a point. There should have been a fund, an account, a “permanently restricted” line item somewhere. And no one could show it, or any of them to me. They could, that is, but would not. And the regional leadership told me that was really outside of our responsibility, and we should stick to revamping the reservation system and fee structure.
Which, as a commission, we did not. We simply didn’t have enough information to make recommendations, let alone come to specific conclusions. The last two meetings dissolved in such acrimony I ruled, as chair, that we should report no consensus, and that was the only matter our short-lived commission found consensus on. So I went to the next meeting of the Regional Board, which was (as I recall) in June of 2004 at Broad Street Christian Church in Columbus. I went in and made my report that we were unable to come to any useful agreement, and added my own suggestions on how a second attempt might do better. It appeared everyone in the room had a pretty good idea of how it had gone, and I received thanks and a clear note of sympathy, with the added comment that I was welcome to stay a bit and join everyone for lunch in about an hour, which I said I would.
And walked out of the room where the board was meeting, to run into Bill Edwards. I’d last talked to him in Charlotte where he was running around as Assistant General Minister and President managing the merry chaos that is a General Assembly; I knew him from 1985 when he had finished at Christian Theological Seminary in Indianapolis and I was just starting.
“Hey, Bill, what brings you here?” I asked. “They’re doing a final interview for me as your new regional minister,” Bill replied, and after a quick handshake he entered the room I had just left. A half hour later, a happy roomful came out and we all had lunch, where I shook his hand again, this time to welcome him as the newly approved regional leader for Ohio.
I throw all that in for a couple of reasons. One is to show how it was that I had a number of hints at that early date that finances were not good, in multiple areas, for Ohio and with the Disciples. In fact, I had heard Bill Edwards himself tell me in Charlotte, the year before, that he had wanted to scale down earlier some of the reservation counts and was pushed to keep them higher, and then was quite frustrated that people were blaming him for losses on the final accounting because of those unmet costs. “Any fool could tell our numbers for this area were going to be lower than in the Midwest,” he said. And in that same year, 2003, Cindy Dougherty and senior leaders in the Disciples’ National Benevolent Association had brought a road-show of happy talk to Ohio that made an appearance in, yes, Broad Street Christian Church, to tell clergy that “all was well, just a few bumps in the road” – on the road to a record-setting bankruptcy filing by a non-profit in 2004, along with an attempt to liquidate & close Cleveland Christian Home which had long been a point of pride for Ohio Disciples. All of this contributed to an anxious and uncertain atmosphere around regional church finances, even if indirectly. “Disciple” magazine had ceased publication in 2002, with “DisciplesWorld” struggling along, year by year, in its wake (and it, too, would ultimately close shop in 2009).
Let’s just say that the atmosphere was unsettled. “Keep the Fire Burning,” our regional capital campaign, had ended, sort of, while payments were being made by churches and individuals over a three year period, but the overall outcomes were . . . well, I know that I was confused as a participating parish pastor. Did we meet goals? Did it go well? The usual answer was “in some ways yes, in some ways no.” And regional giving was under greater pressure than ever, something I now see in our more transparent era through significant transfers from “Keep the Fire Burning” receipts back into the regional budget for calendar years 2003, 2004, and I think one last shot in the arm in 2006. In 2008 we had the best “unadjusted year” we’d had since before 2000, both in terms of direct giving to regional work by congregations and individuals, and in match between income and outgo (a net negative of just over $26,000).
In other words, as best as I can figure out from rather muddled financial records, giving was struggling before Bill arrived, actually had some good years after he got here, and then after 2008 the income to the region plunged. Was this in part due to the fractious campaign season that year which culminated in the election of Barack Obama in November? Or was it triggered by the invitation to the 2008 Regional Assembly of Rev. Jeremiah Wright, which was cancelled just before the October event, giving partisans on either extreme something to be unhappy about?
In the standard phrase, “mistakes were made.” How we made them as a region, and where our assumptions and expectations around leadership helped magnify those errors in judgment and communication, is the subject of our next installment. For now, I can quickly sum up where “all our money went” in the Ohio region.
When I was asked to convene a special task force in 2017 to investigate certain complaints filed against the Regional Pastor and President, and offer to the RCC an assessment given his retirement before any action could be taken on the complaints relevant to his service in office, one of the four major categories in question was regarding the financial status of the region as a whole. On behalf of the task force, I dove into making sense of our minutes and resolutions and fiscal reports back into 1999 down to the present day; that work left me with a residual role after the special investigate task force report was presented to the RCC and approved with some amendments, that of “regional records researcher” since our records were . . . let’s say muddled. And I knew by the end of 2017 as well as anyone where to find what.
The thing that jumped out most clearly to me in all that muddled-ness was that from 2004, when our regional fiscals were first reliably accessible in electronic form, between 2006 and 2016, on average the total regional income was less than the total regional expenditures some $250,000 a year. And more years than not, it was very close to exactly that figure; in every year, new budgets were approved with various parties, staff & leadership, stating that things would get better next year. They did not. Starting in 2008, the regional auditor said we were in danger of becoming “not a going concern,” a statement by a CPA equivalent to “there’s a fire in the attic” shouted from the front hallway before running out the door.
And if you multiply that $250,000 in openly stated deficit spending times ten years, you end up with $2,500,000 spent more than came in, which is between the trust accounts and the regional checkbook what was missing, plus another $300,000 plus which came out of the “Net Assets” also called the “regional checkbooks” or carried accounts for various programs which assumed they had money in the bank through the region, but which the region had spent and “owed” to those activities or programs . . . an unhealthy practice which was specifically something the auditor noted we had effectively started doing in 2014 in his report the next year to the RCC.
Where did all the money go? We spent it, according to the budgets as planned and approved each year. A deposit & withdrawal review completed by the end of 2017 (something about an eighth of the cost of a “forensic audit”) showed precisely two incorrect transactions from the previous fourteen years, both of which were quickly accounted for as bookkeeping errors.
Again, where did all the money go? We spent it.
I'm going to repost this from a reply I made to a discussion on the Facebook post, linking to the Substack entry here; it's about the suggestion that our problems have been due to "the Ohio way" including a preference for our own perhaps peculiar ways of accounting -- which is not my read of the documents I have had access to or possess copies of. Anyhow, my full reply was:
With respect, the problems [of Ohio bookkeeping] are not ones of anyone's unique or esoteric accounting. It's about doing with money what we say we're doing. If we say we're putting 3% of remittances towards a particular mission or purpose, and we put a set figure with three zeros at the end for ten years in a row towards that program or recipient group, we're not doing what we say we're doing. If we say 10% of a campaign goes to something, but then put a sum designated by a working group or board to that as the final accounting is worked out, the CPA is not the problem. And continuity isn't the problem, it's the puzzle: if the board turned over every year, I'd understand how no one noticed the annual deficit figure if the senior executives (president and treasurer) don't highlight it, but if you have the same people on the board or later council for many years, and each year the year end report shows a higher expense total than income . . . that's not an accounting problem. If every year a budget is approved with the administrative note in the minutes "we expect giving to increase next year," if there are people serving more than three years at a stretch, then it's the board/council members's responsibility to say "hold on, why do we think that?" and "how many years have we said that in a row and it hasn't?" That's what a board is for. In 2016, they started doing so explicitly, and the edifice crumbled quickly . . . to reveal in 2017 it was gone. So to sum up: were the annual deficits hidden? I would agree they were neither highlighted nor emphasized, but again, that's what a board is for. And in the Wells CPA audit documents year on year, the "not a going concern" caution was stated annually for many years. Should the president and treasurer have said more loudly and clearly "make me cut this budget more?" Not sure that's entirely fair. And I think there was hope, if poorly supported hope, that *next* year would be better . . . and if you've been reading, there's one strand of my analysis: we spent too many years thinking it would get better next year, because of the "weight" of 1945-1985 with giving increasing nearly without a break each year, then ten years of up and down though mostly down (yet we treated the ups as normal and the downs as exceptions, because of that forty year steady increase behind us). By 1995, there was clear evidence in our numbers -- members, baptisms, worship attendance, registrations, and yes, giving -- that the trend was heading down. Why we resisted looking at it closely is how we got to the deep instability of 2002-2008 I'm describing now (Disciple Magazine, NBA/Cleveland Christian Home, revamped BMF to DMF, capital campaign concerns), which allowed us to run the ship up on the rocks of the massive 2008-2009 stock market crash, which turned a large but sustainable 4-5% draw on invested funds overnight into a 7-10% draw without changing the amount withdrawn annually. And if you keep drawing at that rate, you find an endless pot of trust funds quickly drops to empty . . . or at least in 10 years it does.
Okay. I've already been asked what I meant by "inefficiencies were abundant" regarding camp. Happy to clarify, sort of. What I mean is that it quickly became apparent that congregations could hold a weekend, and drop it on a week's notice, with no money down and no penalty for changing plans. Congregations also expected the entire camp to be empty even if they just had a dozen or two in the Monroe Lodge; definitely anyone using the lodge expected to be the only occupants, even if they had eight paying guests. The process for reserving camp in the September to May so-called "off season" was . . . odd, and also apparently not open to adjustment. And about half a dozen churches had control of some key dates, but they paid at most for the per head guests they brought to camp. In general, my impression (and this WAS twenty years ago) has been that when in doubt, churches paid the least possible amount so if people left early, the fees went down, but in general they held and controlled dates and site use and had maximal expectations for support. Suggestions that the reservation system be revised and amended towards a more cost-conscious set-up were not well received, even though the evidence was clear that formerly forty person weekends were more often dozen paying guest weekends, etc., and that we were turning down possible rentals for large outside groups in order to keep the date open for unconfirmed recurring retreats. Much of this changed over the next ten years, and I at least like to think we started to push that door open, but we certainly did not go through it in 2003.