Drop in endowment income forces cuts at sem

Faced with a $4 million operating deficit and a decrease in income next fiscal year, Concordia Seminary, St. Louis, is offering early retirement incentives, delaying some maintenance, freezing salaries, and tightening program budgets.

“I am not happy with this unexpected situation,” said seminary President Dale Meyer, who met with faculty and staff on March 11 to explain decisions by the seminary Board of Regents.  “By taking these actions at this time, the regents are seeking to avoid accumulating debt and other consequences down the road that could jeopardize the seminary’s mission,” he added.

Meeting Feb. 13 and by telephone Feb. 26, the regents passed resolutions to cope with conditions resulting from the current economic downturn.  That downturn is the main reason for the spending cuts: as the stock market dropped, the seminary received little or no income from its endowment funds and anticipates little endowment income in the next fiscal year beginning July 1. 

Among their actions, the regents authorized a 20 percent cut in payroll expenses.  The seminary is offering a voluntary early retirement incentive to faculty and staff who are age 55 or older and have worked at the seminary for at least five years. Faculty and staff will have time to consider the offer, which includes some assistance for health insurance for individuals and dependents.

“We want to take the best care of our people under the circumstances,” Meyer said.  “We regret that cuts are necessary, but we remain confident that God can bring good from this situation.  For now, however, the Lord is allowing us to be painfully refined.”

Meyer said some retired faculty may serve in a limited capacity through adjunct teaching or other activities.  “Because those who retire can continue to teach, we are confident that the seminary will retain its reputation for having an exceptional faculty and staff.”

The early retirement offer is the first step in reducing personnel expenses, and other personnel reductions are likely. In a January conference call, the regents voted to freeze salaries for all faculty and staff, cease some maintenance projects, and slow replacement of electronic equipment. The board also accepted reductions in pay volunteered by the seminary president and vice presidents for academic affairs, financial planning and administration, and seminary advancement.

The regents considered tuition increases, deficit spending, and cutting into the body of its endowment fund, according to board Chairman James Ralls. He said the board determined those options could diminish the seminary’s ability to follow its strategic plan for the future.

According to the seminary, 58 percent if its expenses are covered through gifts from donors; 32 percent from tuition, fees, rent, room, and board payments; 8 percent by endowment earnings; and 2 percent from the national budget of The Lutheran Church–Missouri Synod.

The seminary is nearing the final year of its “How Will They Hear?” campaign. Expressing thanks for the gifts of friends and supporters, Meyer commented, “We pray the campaign is successful, despite the current economic conditions, so that the seminary can regain a strong financial position for the important work it is called to do.”

The campaign has reached nearly $62 million toward its $77 million goal in gifts and pledges. While the seminary has received cash gifts, other donations were made in pledges and deferred agreements. Other campaign funds are designated specifically for endowments, scholarships or financial aid, and facility improvements.

Posted April 6, 2009

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