BGCT cuts spending to bring budget in line with anticipated income

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The BGCT Executive Board and the BGCT Executive Board staff received a report today concerning the current financial situation of the BGCT.

To read the complete report that was sent to the board, click here.

Read more below:

DALLAS – The Baptist General Convention of Texas staff is planning to spend only 90 percent of its 2008 budget in order to bring spending in line with anticipated income, and a report to the BGCT Executive Board indicates initiatives are now in place to help the convention live within its means. 

“Our financial future is bright if the BGCT makes appropriate adjustments to its processes of developing, adopting and managing the annual budget,” said the report from board members Fred Roach and Elizabeth Hanna. “What the BGCT needs more than anything on the financial front is a commitment to living within the resources God provides.”

The initiatives call for closer oversight of the convention’s finances by the Board’s Finance Subcommittee. BGCT Executive Director Randel Everett said the initiatives will be implemented in consultation with the board.

In the short term, however, the Executive Board staff is dealing with the 2008 budget realities. The total budget (Cooperative Program and investments) “anticipates income that is about $5.3 million more than is prudent to now anticipate,” the report says.

“The current economic downturn is an important factor in this situation,” it continues. “The budget for 2008 was developed in mid-year 2007 before meaningful knowledge was available of the economic slowdown that has occurred in the past six months. Therefore, the BGCT’s projection for income was much higher than is presently being realized, particularly as to gains on its investment assets.”

Trimming about $5 million from an approximately $50 million budget will require spending at a 90 percent level. Full details of the necessary cuts have yet to be determined, Everett said.  The Leadership Council, made up of 11 team directors, Interim Associate Executive Director Jan Daehnert and Everett, are in the process of making the decisions.

The BGCT already has shut down its outbound calling effort, which was part of the Service Center, effective March 31, according to Gus Reyes, director of the Congregational Relationships Team. Six Service Center positions were cut. Of those six, one employee left BGCT for another ministry, two employees were reassigned and three were transferred to fill vacant positions.

Everett said some other positions will need to be eliminated in order to reach the 90 percent budget level but not on the scale of layoffs last year.  “It is always difficult when any person loses his or her job,” Randel said, “and the Leadership Council is committed to a minimum reduction of personnel while at the same time identifying and sustaining the priorities of the BGCT, especially the programs that relate directly to the support of the churches.”

The 2008 budget anticipated “higher levels of income than can reasonably be expected,” the report to the board says. “It called for an increase in CP giving of about $3.4 million, or 8.5 percent. Through March 31, 2008, actual CP Texas giving is running at 94.97 percent of budget and 94.22 percent compared to last year’s giving.

“On the investment side, the BGCT projected use of about $6.8 million, which is $1.9 million beyond the level recommended by the Baptist Foundation of Texas for 2008.”

The two together create the $5.3 million gap between updated anticipated receipts and budgeted expenses.

Looking at the recent past, the report says: “The BGCT’s financial condition has undergone serious challenges during the past eight to 10 years as many churches left to start a new convention and as investment resources have been drawn down to sustain existing ministries and to start new ones. The ad hoc committee looked at the investment side of that equation, while recognizing that the CP giving aspect created financial pressures on the use of investment income.”

On Jan. 1, 2001, the BGCT had investment assets, including reserves, of about $150 million, the report says. As of Dec. 31, 2007, those assets were about $124 million, “despite a number of years of healthy investment gains. This came about because of higher than normal usage of such funds and changes in revenue due to the economic downturn during the early part of this period. 

“In the six years prior to 2006, the BGCT had expenditures that averaged 7.1 percent on its investment assets, while investment earnings for this period averaged 2.6 percent,” the report continues. “In the past two years, the average rate of expenditures was 13.4 percent (15.5 percent in 2006 and 11.2 percent in 2007), while investment income for the two years averaged 11.8 percent.”   

The change in investment assets from 2001 to 2007, which was a decrease of $27 million, “means that we will receive less income in the future on these decreased assets. If investment assets were still at the 2001 level and if the 12.5 percent rate of return experienced in the past five years continued into the future, then there would be $3.4 million more available every year for use in BGCT missions and ministries. In other words, such a drawdown of assets negatively impacts our future by millions of dollars per year.

“It should be noted that these expenditure levels were pursued with the best intent of sustaining important ministries to and on behalf of Texas Baptist churches,” the report says. “There was a genuine hope that CP giving would rebound in order to continue these efforts.  That hope, however, has not been realized, at least not to the level that would be required.”

The report also notes that in 2007 the Texas Legislature adopted new regulations “that will help guide organizations in the appropriate use of funds available from endowment.”

Endowment funds have been a “tremendous asset in aiding the BGCT in accomplishing God’s purpose in reaching out in ministry both in Texas and around the world,” the report says. “They have been built up over many years from wills and trusts established by men and women dedicated to maintaining the missions and ministries of the BGCT into perpetuity. They also include convention-mandated and other reserves that add significantly to investment assets.”

The new regulations “recognize that organizations go through periods of economic upswing and downturn. They set forth that to expend more than 7 percent of investment assets in any given year would be imprudent. This should be the benchmark by which the BGCT operates in the future,” the report says.

“It should be noted that the Baptist Foundation of Texas, which manages the majority of BGCT investment funds, have recommended a regular distribution of approximately 5 percent of assets per year,” the report says. Taking both the state regulations and BFT guidelines into consideration, “the BGCT should generally be expending between 5 percent and 7 percent of its investment assets during any given year.”

The BGCT arrived at the current situation “because we sought to sustain and even expand our ministry during a time of financial challenge,” the report continues. “The desire to promote kingdom work exceeded the level of financial resources available at a prudent level.

“In the newly reorganized Board it became evident that the process review and oversight of the budget and financial condition of the convention was inadequate. The subcommittee that reviewed investment spending considered several key principles that should be regularly questioned by the Board and its committees: ‘Are we properly balancing our expenditures with our income and the prudent use of resources generated from our investment assets?’ and ‘Are the funds expended being used in the most effective way to accomplish the mission of the convention?’

“These principles were recommended to the Finance Subcommittee and Administration Support Committee and accepted at the February 2008 board meeting as guidelines to begin implementing as soon as possible.” 

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11 Responses to “BGCT cuts spending to bring budget in line with anticipated income”

  1. Ken Coffee Says:

    Shades of the 1980s. I recall that on June 15 one year at the BGCT, when half our budgets were already spent, the staff was advised that we would spend only 85% of our budgets that year. It made the last seven months a bit lean. I know some will be quite alarmed at this, but I see it as a positive move. The BGCT has always sought to spend only what the churches gave us. Anything else would be irresponsible. Because so many people have bought into the “poor me” economic predictions, the churches and the convention will have to work through some reduced dollars. But, this too will pass. God is good!

  2. David Says:

    Ken:

    Yours is an experienced and valuable POSITIVE statement above regarding today’s financial news from the convention board and staff–thank you very much for it!

    It’s enough of a let-down to know that the present monetary conditions of many of the families and congregations of the BGCT actually are shared now by the convention’s staff without a ton of negative comments and criticisms being added on top.

    I think three other VERY important needs “on the financial front” of the BGCT are: (1) everyone BGCT-affiliated remembering that Christians entered a different economy the moment we each trusted in Christ as Savior, and we can live and think like it; (2) proper biblical stewardship functions wisely–and acts with much faith that, as God’s Great Commandment people regularly obey Him with Great Commission ministries in our communities and the world, the Lord provides for all our needs as He promised (He otherwise being under no obligation at all to underwrite the activities of “Christian clubs”–or churches which will not obey Him for evangelism and discipleship); and, (3) our leaders appropriate for the task holding out a vision of the future and a challenge for the present to come up to the levels–in time and talent and tithes given–that God expects of His people (starting in our own families and churches, with the indirect/direct result being positive gains for our state convention).

    If we are the average convention and congregations in regard to these matters, we will do: TOO LITTLE! If we are the above-average group of believers who will not quit on God or the lost world, we will: LOOK UP, GET UP, AND SPEAK UP delivering the gospel to Texans and encouragement to Texas Baptists!

    Let’s do it today, brothers and sisters.

  3. BGCT cuts spending to bring budget in line with anticipated income « We Are Texas Baptists « Don’t Be Left Behind Says:

    […] Posted in Ethics & Morals tagged Baptist Life at 9:33 am by Debbie Mosley BGCT cuts spending to bring budget in line with anticipated income « We Are Texas Baptists […]

  4. Lee Says:

    Excellent move.

    The next best move would be to ask “Why?” in a sincere and honest way. We know that the tanking economy is responsible for the loss of investment income, that’s just something you wait out, but a 5.8% drop in giving from the previous year, which also reflected a decrease from the year before that, is too much of a decline to blame on the “economy.” Be realistic. There are reasons for this. Before launching a campaign among the churches to “give more,” the BGCT leadership is going to have to “do more” to win back lost trust.

    Frankly, the church I serve re-adjusted the way it gives to the CP because it saw the BGCT reducing the portion that was passed on to the SBC. I do not have to go very far in either direction down the street to find others who have done the same. We now give 66% SBC and 34% BGCT. In spite of the changes that the leadership of the conservative resurgence brought to the SBC (not all of it bad BTW), it is hard to convince people that reduction of the SBC’s percentage isn’t some kind of “punishment” or revenge for the direction they have taken. If the BGCT doesn’t think the SBC’s global missions and theological education is sufficient, and wants to run its own programs in those areas, why not just sever the SBC ties and go it alone, instead of eking out a few percentages of CP giving here and there? Exactly.

    At the convention in October, messengers expressed concern that the missions portion of the BGCT budget had been cut, while the executive director portion had not. Several people spoke out of concern for this, it was not satisfactorily explained, IMHO, but it was pushed through anyway. There is a growing perception that the convention meeting is controlled and manipulated by a small group of individuals who are going to push through their agenda no matter what. Throw in what is seen as general incompetence and waste, and the stuff that keeps coming up from Valleygate, and you have your reason for the 3% slide in giving last year and the 5.8% slide so far this year. Churches increasingly seem not to see giving to the BGCT as the equivalent of reaching a lost Texas and a lost world for Christ. The BGCT must first work on changing those perceptions, not just with cosmetic actions but with some real adjustments.

  5. David Says:

    Perceptions are not always reality. Everyone is invited to attend and participate in the annual meetings of the BGCT. I did so last year in Amarillo; an very small number attended the break-out session where detailed explanation of the budget proposed for this year was provided–and I recall few messengers asking questions during the session when the proposal was approved.

    Rather than suggesting that “many” are disappointed/upset/mad about recent convention matters, might it be better actually to survey the congregations affiliating with the BGCT to learn the state of their thoughts/opinions now? Relatively few people read this blogsite–or any other where BGCT matters are discussed–and the readership of the Baptist Standard also is relatively small (with apologies to Marv and staff). Most congregations affiliated with the BGCT give the convention little thought on any day of the year, the majority of their members probably have never heard the term “Baptist General Convention of Texas” or at least can offer much explanation of what the convention is/does, and my guess would be most ministry staff members of those churches have not lost trust in the convention or its staff. Again, research will settle the matter.

    My opinion: the economy and the average approach of Southern Baptist churches to stewardship issues (very little done or said) is the basis for the present financial concerns reported this week.

  6. Lee Says:

    David,
    I wholeheartedly agree that communication between the BGCT and the churches involves a small group, and needs to be expanded. It is unfortunate that, compared to the total number of active members of churches in the BGCT, there aren’t that many who either read blogs or the Standard. However, I would have to say that the majority of those who are well informed about the BGCT are also those who are in a position to influence their church’s decision making process, including its giving to the BGCT.

    And while theoretically, every church does have the opportunity to send messengers to the convention, that doesn’t always work out in reality. Because of the way it is scheduled, laypeople must either be retired, or make arrangements to take time off from work in order to attend. Then there is the expense of travel to somewhere else, a couple of nights in an overpriced hotel room, so you are looking at somewhere in the neighborhood of $500 or so per messenger, less if a married couple can share a room and travel, multiplied by however many messengers your church is allowed, up to 10, I think, and you’re looking at $5,000 for a church to send its full compliment of messengers. Amarillo was the first time in several years where there was a choice of officers. In spite of that, there was heavy handed control of the budget voting process, perceived by many to be “cut and dried,” and the question called for by a plant in the audience after one messenger complained about the cuts in the missions budget, and another attempted to make a comment about why the cuts didn’t appear to be evenly distributed. A parliamentary maneuver was employed to keep one particular motion from coming to the floor, and to avoid any discussion of it.

    I don’t think we really need to do research. A 5.8% decline in giving in the first four months of the year, on the heels of a year in which the giving declined by 4% is well beyond the scope of “the economy,” especially when the effects of what is going on nationally has not been felt in Texas, where the economy is booming and growing at record rates. The number of churches now affiliated with the other state convention is also a good indicator. It has increased by more than 100 since the BGCT met in Amarillo in October, and those aren’t all new church starts. They now have more than 2,000 affiliated congregations, the vast majority of them formerly affiliated with the BGCT.

    The greatest mistake the administration of the BGCT can make at this time is to bury its head in the sand regarding the level of trust that has been lost in the last five years.

  7. rick davis Says:

    We have planted the wind. We will reap the whirlwind.

    An elder businessman once told me, “In business, never try to stick it to anyone (sanitized version). To do so, you must always take your eyes off your own best interests.”

    We will be years getting this thing back together but the mere passage of time will not make up the gulf. We will have to make some good decisions and consistently support that good decision making.

  8. graceshaker Says:

    i seem to recall at the convention a certain cowboy spoke up and questioned the budget. his was a warning that received thunderous applause.

    and then the budget was passed anyway.

    and now? budget recoil. fantatstic.

    the bgct need not wonder why younger generations have little desire to invest and be a part of the convention. our experiences have given us every reason to eschew all entanglement.

  9. Gerald Bastin Says:

    Simply put, I think the giving is a reflection of the economy to a degree, but more so a reflection of the trust churches on the whole have with the BGCT to spend their money in an effective and efficient manner.

    For years we have been hearing “get out and do missions”, well now many are and discovering they are getting more bang for the buck in results and accountability when they do it themselves. “Why send money to the BGCT when we can do it ourselves?”

    Then I hear about a meet the new Executive Director meeting in Dallas for the DOM’s with hotel stay, baseball game and dinner at the Diamond Club all on the BGCT and I want to scream my bloody head off “Are you kidding me!?!”.

    Budgets are being cut, people are being fired and the BGCT has the unholy unction to wine and dine a group of people they just a few years ago where trying to bypass with Regional Coordinators. I don’t care if someone “outside” the BGCT is paying the bill, it sends the complete wrong message to churches and shows a total lack of sensitivity to those recently fired.

    Tell you what, start with examining the culture in which such a decision could be made and everyone agree that it would be a good idea and you might just stumble on why people and churches are less supportive and more suspicious of the BGCT these days.

  10. David Says:

    Lee:

    Again: research. Saying a thing is so isn’t the same as proving a thing is so.

    My hypotheses: (1) Most pastors of BGCT churches don’t follow BGCT happenings much, and neither do the finance committees of the congregations they serve. In the annual budget discussions of those churches, what the congregation can do financially overall is the topic of debate, and the percentages work out as they do for the BGCT. (2) The convention support of congregations which may have been gained by the SBTC from the BGCT probably totals around $150,000 if those congregations are average in terms of size and undesignated giving. Again, if there’s such a concern: research it, and either put the concerns to rest or advance to solutions to real problems.

    In regard to the statements above regarding administration of the 2007 annual meeting: those sound like serious charges for which I hope you have solid evidence. I sat on the first tier of seats in the colesium and immediately to the right of the rostrum for each session of the meeting; I heard all the reports and any debate, but noticed nothing like what is described above.

    Again, the break-out session for explanation of the proposed budget was moved from the smaller room which was planned for it to the Civic Center Auditorium which seats thousands, in order to accomodate the crowds expected due to the changes proposed, the recent spending issues in the Valley, and finances generally; David Nabors, maybe 10 other people, and myself were the only ones present–but David delivered a full explanation and answered a handful of questions. I don’t know whether or not the usual bloggers here attended that break-out session. And it is expensive to participate in annual meetings of the state convention, but when has it not been?

    By the way, I sat on the row in front of the cowboy who spoke during discussion of the proposed 2008 budget. Next to that cowboy sat one of the convention staff members. I don’t know how either of them voted in regard to the budget, though I suspect that I do, but I appreciate very much the freedom each of us permits the other to vote his conscience before God–and then to support the majority decision even if we are in the minority in terms of the vote results. We are the BODY OF CHRIST, after all, and that’s how it’s supposed to be (God help us as ministers or lay-leaders in our churches when our congregations will NOT function that way!).

    In reality, folks: we HAVE the BGCT we WANT. If we/you WANT a different BGCT, you are going to have to do more than blog about it on the Internet. It’s time to stop complaining and get personally involved with the supposed solutions offered here; that’s the only way to know for certain whether or not the hundreds of other Texas Baptists you’d have to work with directly in order to see the changes suggested are going to let you do that to this–YOURS, MINE, AND OURS–convention.

    Everyone, have a great Sunday doing even more important things than this.

  11. David Says:

    Make that, “. . . we/you are going to have to do more than blog about it on the Internet . . .”

    I mean for my visits to this blogsite to represent my willingness to be an active part of a team implementing real solutions to real needs, not perpetuating negative criticism of people and problems or advancing unproven rumors. I assume the same is true of all other bloggers here, along with the convention staff hosting all of us.

    Again, have a great Sunday!

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