Pensions, Property, and the Gospel – Lonnie Chafin

Episode 3

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EPISODE 003: Pastor Molly checks in with Lonnie Chafin who has been Conference Treasurer for the Northern Illinois Conference for over 20 years, drawing on his skill in interpreting financial minutiae in ways that help us see the big picture. In addition to serving as president of the National Association of Annual Conference Treasurers and a member on the Connectional Table, he has been a 4 time General Conference delegate, and a leader in the organizing work of UMCNext and United Methodists. He was a GBGM missionary serving in Hungary and Philadelphia prior to moving to Chicago, where he cares for the world’s greatest dog.

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Discussion Questions

  1. Are there church properties – places or buildings – that have been important in your faith? Describe them.
  2. Describe how church properties you know have been useful in the mission of the church.
  3. Lonnie Chafin describes how decisions in the church are made in community–”not without having some kind of accountability or check-in by the larger interests or people not in their group.” Why might it be of value to make decisions about local church properties in community with others who are NOT a part of that congregation?
  4. What did you learn about the church’s clergy pension, and what that responsibility looks like for us as congregations choose to disaffiliate from the denomination?
  5. If we think of the church’s “assets” not in terms of their cash value, but as ministries and mission, how does that change our conversations when we think about dividing them up with people who leave the denomination?



Molly: I was reading about property in our United Methodist Church Book of Discipline. How our properties are held, not by individual congregations, but the entire denomination which, according to the book of discipline, “reflects the connectional structure of the Church, ensuring that the property will be used solely for purposes consonant with the mission of the entire denomination as set forth in the Discipline. … This is thus a fundamental expression of United Methodism, whereby local churches and other agencies and institutions within the denomination, and are both held accountable to and benefit from their connection with the entire worldwide Church.”

In this moment of uncertainty and change in our United Methodist denomination, as talk of disaffiliations and new denominations swirls in our meeting spaces, I wanted to understand a little bit more about how this talk about property and pension connects to the work of the Gospel.

I am Reverend Molly Vetter, the Senior Pastor at Westwood United Methodist Church in Los Angeles, and it’s my joy to welcome you back for episode 3 of our podcast, Where do we go from here, UMC? In this episode I get to sit down with Lonnie Chafin, the Conference Treasurer of the Northern Illinois Conference of the United Methodist Church. Long active in our denomination, Lonnie has served as an urban missionary, as a community developer, and now for many years is a Conference Treasurer. He’s been a delegate to General Conference, a board member of general agencies, and active in movements for the future of our Church, in hopes that we would be a denomination more fully inclusive of LGBTQ+ persons, and active and faithful and living the Gospel. Lonnie and I sat down to talk through some of these details and I’m grateful to dive in with him now.

Molly: Thank you for being willing to take time today, Lonnie. I know you as a conference treasurer, but I know you have a history in the Church before that. How did you end up in this job, and why is this an interesting place to serve in the church?

Lonnie: I was a Shalom Zone guy back in the day. First, after college, was a Mission Intern and served in Budapest, Hungary, which was hard, because my Cappuccino sometimes was cold. (It was very rough [laughter].) Then Philadelphia, Pennsylvania, and in Philly we did something called Shalom Zones, which I think you Californians might know something about? [laughter] It was a response to the LA Riots.

Molly: Those of us who’ve been around a while, anyway!

Lonnie: Yeah, the salty ones… [laughter]

So the Bishop from Chicago saw our Shalom Zone work, and recruited me to come to Chicago to do Shalom Zones from the conference office, which I thought was exciting. Then the Conference Treasurer resigned, and I went in as interim Conference Treasurer, and I’ve been to it for 20 years.

Molly: It seems like a big jump from urban ministry to treasurer work– Are there connections that are obvious to you, or or is it a jump?

Lonnie: I think it’s a jump! But you know, most of my Shalom Zone work was around economic development and housing development, so I did a lot with making budgets and programmatic results from how money gets managed. I definitely do it with the heart or acumen of a community developer, I will say that.

I mean, it’s more of a “people job” for me, in that I feel like I’m an interpreter of financial stuff into ways in which decision making can be made. So how do I speak about the financial stuff, so proper decisions can be made through all the myriad of groups within the Conference.

Molly: This is fantastic because I feel like we’re in need of some interpretive work in this moment of denominational chaos. And talk of disaffiliations and conversations about property and pension keep coming up.

So I mean for this conversation to be useful to the lay people in my congregation, or others listening in, who may not be as steeped in our Methodist way of doing things, or what’s at stake in these conversations–so I’m hoping we can sort of take a couple of steps back, and you could help explain to me, to the people listening:

Why is property such a big deal in conversations right now, about disaffiliations or starts of new denominations? Why is property an issue, in our Methodist way of doing things?

Lonnie: Well, that’s a powerful question right there.

I think that, you know: churches can feel like homes right. It can be the place you got married, or the place you got baptized, or your child that baptized, or you had some epiphany… They’re designed to have kind of an emotional connection and a connection to kind of the history of the world.

You know, I go to a church that doesn’t have a place–we rent, and we talk about an ability to move around. And it’s surprising to me that people want a home – they’re wanting that kind of landedness. So I think there is an emotional, spiritual kind of attachment to property.

I think that’s on the one hand and on the other hand, the denomination has been built around this kind of… I always say the Methodist polity requires 2 people to make anything happen right,

Molly: No one can go it alone.

Lonnie: No one can go anywhere alone, and no decision can be made by one group. It has to be double checked by another group. There’s an integrity in that, right, that nobody can just kind of drive away into their own interests without having some kind of accountability or check-in by the larger interests or people not in their group and that’s certainly true in the context of church properties, where there’s the local church has some of the ownership rights of a property of the local church. And the conference has some of the ownership rights of the property of the local church.

It’s a shared responsibility between the 2 and partly that’s by this notion of what we intend to be as a Methodist church: We mean to be an open pulpit. We need to a place in which, you know, if the bishop appoints someone to preach somewhere, a church can’t necessarily just shut them out, right? And at the same time there’s ownership responsibilities for the local church to maintain it and keep it up, and all of those kind of things.

So I think the reason this is kind-of a critical thing is there’s been this kind of dual responsibility around property, and some people want to take their property and go out of the United Methodist Church, and the the thing has been setup to kind of balance out those interests and to really kind of not allow that to happen without a double check from someone, not the local church.

Molly: I think that’s so helpful, because it helps us frame our responsibility to the property. It’s so tempting to see it in this sort of blindered view, where I see my scale of life in this place in this community and I think that it’s like I have an entitlement to it.

The church is set up in this intentionally connectional way so that even when it’s the place where I’m on the Board of Trustees, I don’t have–it’s not for me. It’s for something beyond me. That helps. The structure, that complexity helps us prevent ourselves from becoming too narrow in our allegiances or our responsibilities to just the people that we see around us.

Lonnie: I think that’s a lovely way to articulate it, right, that you aren’t given authority over something; the something is in the mission of the whole. And really our decision-making needs to be driven by: How does the mission of the Church get accomplished with this building?

Molly: Okay, So i’d like to also talk about pensions. These are 2 things that keep coming up in conversations. People talk a lot about “unfunded pension liability.” Can you say: what is that?

Lonnie: Okay. So they’re currently about 30,000 retired clergy persons in the United Methodist Church, and there’s about 20,000 active clergy persons in the United Methodist Church.

Molly: What?!? There’s 150% as many retired as there are active. Is that what you just said?

Lonnie: Yeah.

Molly: Okay, Sorry. Go on.

Lonnie: Right. 30,000 retired, about 19,000 active. That surprises you?

Molly: Yeah.

Lonnie: And then, in addition to that, there are some beneficiaries, right? So. They are people who are not counted as active, but they might be on disability, or they might be kind-of pre-retired. So there’s about 2,000 what we call beneficiaries in the active world, and about 8,000 beneficiaries in the retired world.

So we’re talking about 60,000 families. In some cases that’s a clergy person sometimes that’s a couple. Every one of those 60,000 families has received a promise from the local church that we would give them a payment every month as long as they live. So between the date of retirement and the date they die, there will be some check from the retirement fund.

Now a lot of lay people have what’s called 401K’s, which you have an account on, and you can draw money on. But when you run out of money from your 401K, you’re out of money, right? So there’s this whole industry figuring out how to not outlive your money.

For what we’re talking around pension liability, that’s not the case–you can’t outlive the money. There is money for as long as a clergy person is alive, in retirement, and we have at least a 1,000 people who are over the age of a 100.

Molly: Whoa! I didn’t think we lived that long!

Lonnie: Yeah, No: the closest thing to eternal life is to be married to a United Methodist clergy person. [laughing]. They just keep chugging along. God bless them!

And so the question is, if you have 60,000 people who are gonna live until, you know, for 20-30 years, how much money do we need to have in the bank today, to make good on that promise? How much money should we have in the bank today to make good on the promise for people who are currently retired, people who will eventually retire, people who are the beneficiary of retirees?

There’s a lot of complexity in this system, but we need to fund it for sure going forward. There’s no way out of these promises. There’s no way of cutting the benefit for retired clergy. It’s sacrosanct; it has to be done. And so, the question is, are we funded, or are we not funded?

And as you’ve pointed out, there is different ways of counting the assets. Now, if we were a for-profit business, we would count it in a way in which we looked at–we would say, “How much money do you have in the bank today?” We would assume that it would have a return in the market, and the number we would use to assume the market return is the market, right? So, bonds rates, basically. So we use the bond rates–if we bought bonds, that’s a sure way to have enough money to make all these payments in the flow in which you have to make it. If we were a corporation that’s how we would fund it–we would calculate this using the market’s bond rates.

But we’re the church, so we have been using something less than bond rates, and we’ve been using a number that takes on more market risk, is a little more flat, or something.

And so really the difference between the number we’ve been using, and the number we should have been using, is the “unfunded balance.”

And so the way I kind of describe this is (and I’m gonna just throw things out here–you can cut them out, right?)

So the way I describe this is: Every family has a personal savings amount. There’s an amount in your mind, that if I have this much in the savings account, and something comes up, like: I gotta replace the car, or somebody’s lost a job or you know I have unexpected health issues…

Molly: I finally get fed up and I quit…

Lonnie: Right. In your mind, you’re like if I have this much in the savings, account I can get through whatever life might throw at me, right. And oh, but part of that plan includes maybe I drive an Uber, or maybe somebody gets a second job, or we can reduce expenses, or we’ll stop savings in this way, or something like that– like, you kind of adjust your life, and you have a little bit in the account, but you know you can get through.

And so we have been funding our pension program in that way, which says “We need enough in a savings account to get us through what might come; Life might throw something at us in which we have to adjust. An example of that is when the financial crisis happened in 2008. All the conferences had to make special extra contributions, in order to get through that patch, but we got through that patch.

So we’ve been funding kind of at a “family savings” rate.

Now, we all have in mind a different number, and that different number is: If I had this much money in my savings account, i’d never worry about money again. Corporate funding of these things are kind of at that rate. That’s what this higher number is. So what happens is when a church wants to leave the denomination, they’re effectively saying, I never wanna worry about this pension obligation again. And so we’re telling churches that need to leave–that want to leave–that you need to fund your piece of the pension prompt to these 60,000 people at the rate at which you never worry about it again. You’re getting out.

The rest of us who stay are going to fund at this rate: That says if something comes up, we’ll figure it out together and make some changes.

And so really it’s that gap that’s the unfunded piece.

Molly: Is that universal, across the board, or does that vary by annual conferences? The extent to which things have been funded up to this point?

Lonnie: I can show a graph.

Molly: Oh, my gosh, you have graphs??

Lonnie: So. So this is a slide I have from Wespath. I took it from their video, you can see. This is the withdrawal liability, the unfunded amount across the whole denomination. So, that gap between what we have put into the bank or investments, and what we should put in according to this, on this liability calculation. And you can see in February of 2022 it’s about $2 billion –a little over $2 billion. That’s across the denomination. So if we had an additional 2 billion dollars in our accounts, we really wouldn’t have to worry about this liability. It will be funded for, no matter what comes. But you can see how this has changed over time: in August of 2022 it was as high as $5 billion. And again, the total liability is based on bond rates. Bond rates change every day, so every month the liability changes as we go along.

But you can see the denominational rate was $5 billion in August of 2022 when bond rates were really low, and it’s gone down to a little over $2 billion in February of 2022, with bond rates having revived. It’s pretty volatile, but the point would be: I think you could use this number right now.

I’m gonna use this August 2021 number– that’s the date of the report I have for all Conferences. I don’t have it after this, so I’m using this number. But you can compare it to this number. So it’s about 20% drop from these numbers, but this is the most recent.

So this is every conference, and this is what the withdrawal liability is. So, Virginia and Western North Carolina are over a $100 million. Oklahoma Indian Mission and Red Bird Missionary and Alaska are, you know, very small.

Molly: These are small conferences, right? This is not in proportion to the population. This is in total numbers of liability.

Lonnie: Yeah, that’s exactly right. This is total numbers. And really, the size of your liability is basically the number of retired clergy you have. Like, if you have a large clergy pool, you’re going to be on the deep end of this. If you have a narrow, shallower clergy pool, you’re gonna be on the shallow end. So here’s New Mexico. The first Conference that’s not a missionary Conference, they’re about 15 million. But here’s every conference and what their liability was in September 202–you could take today’s number about 20% lighter than this.

But what happens if somebody leaves the denomination? If they leave the denomination and go to a new denomination, what Wespath will do is, they’ll convert their benefit that says “you get a check for as long as you live,” they convert that into an actual dollar amount. They take that dollar amount out of the Conference assets, and they put it into a 401K or 403B, really, for that that departing clergy person. So we don’t have the liability anymore, and the person gets an actuarial, equivalent of the value of that benefit based on what they worked.

Molly: So it ceases to be a variable. It becomes a fixed quantity.

Lonnie: Exactly right, and they’re made you, know some version of, whole.

Molly: So when we talk about a departing congregation calculating its contributions to the Annual Conference… When I hear about sort of like the headlines, people talk about Annual Conferences, trying to like, penalize departing congregations by an excessive fee on them for the cost of departing.

But the “fee” that a church would pay for departing is connected to these 2 items. The value of the property and this pension obligation. Or are there other factors involved?

Lonnie: Yeah, so I think that complaints about–I don’t know a single conference that’s trying to “punish” churches that want to leave. I have to say, I know all the Conference Treasurers. Everybody’s reluctantly accommodating these requests. So I take those complaints to be basically: “It’s not free,” right? And it can’t be free, because each church promised to support these clergy persons right?

I mean, it’s not money to the Conference. It’s money to retired clergy that has to be there. It can’t – there’s no way out of it. So when people complain about the conference being greedy, it’s really not the case. It’s: money is owed to retired clergy from every church in the Conference and that’s an obligation that we owe ethically and morally and legally.

Now conferences, if churches want to leave under 2553, a conference doesn’t have to charge for the property amount. I mean that’s part of the expectation and the request that’s come in, is people will get their building at no cost. Now some conferences are charging something, I would say a third of the conferences are probably charging something.

Molly: Okay, So you Conference Treasurer type people keep saying things like “2553.”

That refers to the paragraph in the Book of Discipline? Is that the process that was approved at General Conference in 2019?

Lonnie: Correct, 2019 General Conference created this 2553 paragraph that itemizes how a church could disaffiliate, and what terms have to be in place for that church to disaffiliate.

Molly: So this is a new and very specific process for how to calculate disaffiliation obligations.

So also just sort of rewind to general conference 2019, which is not one of my favorite places to revisit, I’ll just say. At General Conference the proposals about what to do in this moment of disagreement about our understanding of human sexuality came, and we adopted what we called the “traditionalist plan,” which was a very rigid interpretation and addition of accountability like persecution, I would say, of a gay clergy people, to throw them out of the church. So that’s what the legislative body approved. And then we also approved this plan, so that churches could leave.

In that moment, it seemed like the plan was mostly going to be useful to progressive and inclusive-minded churches that would want to leave, because the rules we adopted were more anti-gay.

Lonnie: Correct.

Molly: But in the season since General Conference in 2019, those rules have not been enforced, and it’s still the very rigid, anti-gay, conservative groups within the church that want to leave. It’s not, as we imagined in that moment, the progressive and inclusive-minded churches that are leaving–at least primarily. There are some churches, congregations that have left but primarily, and with the start of the new “Global Methodist Church,” it’s churches that are not in conflict with those rules in the Book of Discipline leaving. So it’s a different set of people using this policy then, perhaps we imagined when we were approving it.

Lonnie: Oh, it’s rich in irony, the whole thing. I mean, 2553, that paragraph that churches can use to disaffiliate, was presented by the right, like “this is the way you could go.” There’s a quote from one of the leaders of the right saying–of the conservative end of the denomination–saying, “This is how we would want to be treated if we were leaving.” There was resistance from the person progressives in passing it, but now the now the churches who don’t want to be in part in connection with churches that can accommodate gay people are using [disaffiliation by paragraph 2553], but they they don’t like it much.

Molly: I do have one other thing I’d like to talk about, if you’re willing to hang with me for 5 more minutes.

Lonnie: Yeah, of course.

Molly: When the negotiated Protocol was released in January of 2020, it came with monetary amounts. It was a negotiation amongst leaders of progressive and conservative groups within the church, and including Central Conference leaders, and it was sort of like a pathway to separating as denominations, with a payout of $25 million dollars that could go to this group that would become the Global Methodist Church now, and $2 million dollars that could go to progressive denominations that would divide off.

Where does that money come from?

Lonnie: [laughs] Yeah: where does that money come from?! Where does that money come from?

Molly: So you’ve got no good answer? There’s no specifics that have ever been given about where that quantity of money would come from.

What assets does the United Methodist Church have? The global denomination, overall, the global church?

Lonnie: Well again, it’s a very baroque polity. It’s lots of little groups that work in relationship to each other. There is no “The United Methodist Church” with a pool of assets. There’s a General Council on Finance and Administration, and they have some assets. There’s the Board of Discipleship. They have some assets. There’s, you know, all these general agencies have assets. But there’s no kind one owner of everything.

Molly: And it’s not hierarchically arranged, so that whoever’s at the top could say, “Even though we had that in the budget for whatever (say building maintenance), we’re now going to use that for something else. Everything’s earmarked into very specific, and sometimes separately, legally established groups.

Lonnie: And so I know people have asked each of those small groups to contribute something. But as you can imagine there’s a lot of reluctance to do it, I mean: when you receive money to do mission and ministry, and you care deeply about that mission ministry. It’s hard to surrender it to something like a separation agreement. So I’ve not seen a well-articulated, “Here’s where the money comes from.” I’ve heard people in leadership say “We can find it,” or “It’s there,” but nobody’s willing to really put it out there.

Molly: I start to get uneasy because I’m aware that the primary assets of the church are not liquid, and they’re very specific places, and they represent our ministries–and our commitment to living the gospel in a place. They’re things that we’ve inherited from generations before us, that we’ve been given responsibility. So, if you put it all like on a piece of paper, and said, “Here’s all the assets of the Church,” on the one hand, it would look like the Church has so much resource, but: Is that resource that we’re entitled to do whatever we want with? Or is that resource that we’re obligated or responsible for stewarding, faithful to those before us and those after us? Those are really different ways to think about numbers on a page.

Lonnie: For me as a Conference Treasurer, I always think that every dollar that comes in has a prayer attached to it. Like it began in somebody’s plate, and a prayer was given over it in the altar, and we have to have fidelity to that prayer. That’s what we have fidelity to. I’m not one to be casual about that, you know. Giving it to GMC needs to feel like ministry for that to feel right.

Not just buying off a problem.

A lot of annual conferences are seeing petitions that would divide assets among the Conference. So there’s one Conference where I’ve seen as part of their reports, every asset of the conference–a proposal that would…

Molly: They would make a spreadsheet with all the assets of the Conference? And that’s like, a campus ministry location and a summer camp property, and the Conference headquarters, the parsonages that the district superintendents live in, or the Bishop’s house…

Lonnie: The pension reserve, the reserve for whatever else… all the assets of the conference in a list. And then the proposal would be that they’ll take a vote, and if 60% want to go GMC, 60% of the assets would go to the GMC, and 40% of the assets would go would stay with the UMC.

I’ve seen about 3 or 4 conferences with petitions like that this year, and so that’s something to be very alert to. I’ve only seen it in conferences where the GMC has kind of a critical majority, right? So I think it’s in places where they can kind of set the terms.

It can feel fair in that time, but in fact there’s some layers of complexity and things to kind of be responsible for that may not be obvious.

Molly: And maybe the most disturbing aspect of that, to me, is that it reduces the whole of our shared life to monetary values and from what you’ve just described, anyway, I don’t hear any conversation about like, “Who’s going to take responsibility for the ministry to homeless people in downtown wherever,” or “Who’s going to take responsibility for a campus ministry at the University of whatever.” Instead, it has reduced all of those things to assets on a balance sheet, which is a very sort of individualistic and in-this-moment way of thinking about what it means to be the Church, to have responsibility for properties that are not just “cash value.” They house things that are of value.

Do you have any advice or guidance for what members of a local church can do in this moment?

Lonnie: Be Not Anxious.

Molly: And then… shalom will spring up in our communities? We’ll come back full circle.

Lonnie: That’s right! The world shall be a Shalom Zone, and all shall know peace.

Molly: May it be so. Thank you for your time today. I’m really grateful.

Molly: Thank you for being with us for this third episode of Where Do We Go From Here, UMC? These conversations are an attempt to understand more deeply the place where we find ourselves as the United Methodist Church in 2022.

This conversation was designed for the members of my congregation, a local church that’s committed toward living toward full inclusion and celebration of LGBTQ+ persons, and the faithful witness of the gospel in works of love and justice and joy in our shared community life. I hope it’s been helpful to you, and I encourage you to stay tuned in to the conversation.

Join us next week as Episode 4 features Bishop Karen Oliveto, our first openly Lesbian Bishop in the United Methodist Church. Her life witness speak powerfully and beautifully about the work of the Gospel, and I look forward to hearing from her about what more we can do to aid in the cause of the work for justice. I hope you’ll be with us next week. Thanks for joining us today. Blessings.

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Episode 3