ELCA Board of Pensions Trustees Discuss Enron Debacle

MINNEAPOLIS (ELCA) -- At their March 1-3 meeting here, trustees of the Evangelical Lutheran Church in America (ELCA) Board of Pensions discussed how the organization can avoid a situation such as that involving the much-publicized Houston-based Enron. Trustees also talked about the board's relationship with Arthur Andersen, the accounting firm associated with Enron.
Robert H. Rydland, a board vice president and its general counsel, explained current board bylaw provisions and protective clauses that mitigate against such a debacle occurring at the Board of Pensions.
"There shall be no business transactions between the corporation and a trustee during her or his term in office and, except in the case of employment, for a period of one year thereafter," the bylaws specify.
The trustees' audit committee meets both with internal and external auditors separately and has the ability to "ask the hard questions," Rydland said. "Had Enron had such bylaws and followed them, this debacle couldn't have happened," he added.
Board bylaws give the audit committee authority to investigate any matters relative to audits. Additionally, the audit committee "participates directly in decisions affecting the retention and dismissal of the internal audit manager," according to the audit committee charter.
Rydland noted wryly that three of Enron's list of core values (according to its 2000 annual report) are the same as the Board of Pensions'. Enron lists communication, respect, integrity and excellence as its values. The ELCA pension unit's values are integrity, excellence, respect, stewardship and collaboration.
The audit committee met with representatives of the Arthur Andersen Minneapolis office to discuss their positions. The committee recommended, and board trustees approved, that Arthur Andersen complete the current audit and that in August the trustees will decide whether to retain Andersen as the board's external auditor.
"We'll be watching [Andersen] very closely until then," said John Gozola, manager of the board's internal audit process.
"The audit committee found nothing wrong with the audit this year or in past years," said Kenneth G. Bash, Phoenix, chair of the board of trustees. "This is only a public relations issue."
"It's a P.R. issue," said trustee Joseph Swanson, Racine, Wis., adding that it's also an issue of whether the accounting firm can stay in business. "What happens to Arthur Andersen in the future?" he asked.
"There's a third issue," said trustee Jon B. Christianson, Arden Hills, Minn., "and that's ethical." He pointed out that the pension board divested its funds in South Africa because of ethical issues.
Swanson argued, "We're going to have to take this issue up very carefully."
"We don't have enough facts today," agreed trustee Mary S. Ranum, Circle Pines, Minn., "but we will."
The board trustees discussed at length, in small groups and in plenary session, the organization's strategic plan for 2003-2005. They will consider a final plan in August, reviewing a draft in the interim.
The continued rise in health care costs and the aggressive management of those costs emerged often in the discussions.
"I hear strong affirmation for the wellness issue," said John G. Kapanke, president of the Board of Pensions. "I also hear strong affirmation for incentives in our plan for wellness, to try change unhealthy behaviors."
The board has committed to financial support for the ELCA ministerial health and wellness program operated through the Division for Ministry, a program strongly supported by the trustees. One small group wanted to see the board "take the lead" in implementing any initiatives that come from the work of Dr. Gwen W. Halaas, the program director.
The trustees repeatedly stressed education of plan members on all changes to health care coverage and pension options. Several cited the preretirement workshops presented by the board, asking that those be expanded. Communication with members, face to face as well as through use of the board's Web site, is a priority, Kapanke said.
Prior to their strategic plan discussions, Kenneth W. Inskeep, director of the ELCA Department for Research and Evaluation, told the trustees about ELCA trends. Some of those are smaller congregations with fewer worshipers, small congregations losing members and not able to afford a full-time pastor, richer congregations getting richer, and the numbers of congregations and pastors decreasing.
Kapanke reported on the growth of the Special Needs Retirement Fund, a program to provide financial assistance to low-funded retirees. Other retired plan members pledged annual gifts of about $180,000; St. Stephen Lutheran Church, Chicago, donated $120,000 following the congregation's decision to close its doors; and ELCA Presiding Bishop Mark S. Hanson's letter late last year drew $189,409. Active plan members will receive a letter after Easter inviting them to make gifts to the fund.
The trustees meet again July 31-Aug. 2.

*Sonia C. Solomonson is managing editor of The Lutheran, magazine of the
ELCA.

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