The LCMS has accumulated debt from its colleges and their expansion as universities as well as from income shortfalls. All of this has happened while giving to national causes (everything from disaster relief to personalize mission support) has done much better. The numbers crunch has been a chief topic of debate for our Synod's Board of Directors and one of the most difficult tasks of our LCMS Chief Financial Officer.
But that task has been made much easier!
By action of The Lutheran Church—Missouri Synod (LCMS) Board of Directors (BOD) at its May 17 meeting in St. Louis, the generations-old “historic debt” of the Concordia University System (CUS) — and of its predecessor, the Board for Higher Education — has been retired. The arrangements to bring an end to the debt, requiring a number of steps over many months, were finalized June 19.What this means is financial relief from the extreme pressure on the budget but what it does NOT mean is that we are now flush with funds or that we are no longer in the midst of a financial crunch. “This is a milestone achievement,” said BOD Chairman Rev. Dr. Michael L. Kumm, “because paying off the historic debt will free up millions of dollars in mission and ministry funds for years to come.
To cover the $13 million outstanding balance — accumulated operating deficits and capital-related debt at the schools — plus a $2 million line of credit extended to Concordia College Alabama in Selma before it closed last year, the BOD used a portion of the income from three sources, all in Asia: (1) the $2.2 million repayment of a startup loan by Concordia International School Hanoi, (2) a $4 million dividend from Concordia International School Shanghai, and (3) a combined $22 million from the sale of three properties in Hong Kong.
From the outset of its discussions on how to use the Asia funds, the BOD has stipulated that none of the sales proceeds would go toward day-to-day operating expenses and budget purposes. Rather, the money first would apply to retiring the CUS debt, with the remaining funds allocated for strategic programs, to be designated by the Board, in consultation with its Audit Committee and the Synod’s Operations Team. With the cloud of debt cleared from the skies, the Synod will save $1.4 million a year in principal and interest payments. This is the first time in living memory that all Synod indebtedness to external entities stands at zero.
“The Board is grateful to all who played a part in bringing this to fruition. It is a very good day for the church — a great blessing from the Lord.” Dr. Kumm is correct in this but nobody in the parish should be sighing with relief and thinking about withholding money from the general Synod coffers. Now more than ever we need to capitalize upon the moment and renew our support for our work in common -- including but not limited to international missions and training church workers and pastors.
“For the first time in many decades, perhaps in a century, the LCMS has no external debt,” said LCMS President Rev. Dr. Matthew C. Harrison. The late Rev. Dr. William F. Meyer chronicled the origin of this debt, much of it during the 1950s, ‘60s and ‘70s when “the majority of [our] colleges migrated from junior-college to senior-college status (Seward and River Forest were the senior colleges that received students from the junior colleges).”
Several financial campaigns were aimed at this problem -- “Forward in Remembrance” (1979) then “Alive in Christ” (1983). But neither campaign was able to compete with the growth of that debt -- reaching $78 million in 1992(about $142 million in today’s dollars). Some help came from other land sales (asset rich in some cases while being cash poor) and Synod kept paying down on the debt until the end of FY2011, when it was $20 million. By 2014, it was $13 million, only to be increased $3 million in a failed attempt to save Concordia, Selma. Another nearly $3 million was spend before Ann Arbor was merged with Mequon in 2012.
Three Hong Kong properties were sold, considered excess when a move was made to Taiwan. “Look,” President Harrison said, “the Synod bought the Hong Kong four-plex [one of the three Hong Kong properties sold] years ago for $800,000. We just sold it for $17 million. That’s a great investment, and paying off debt is good stewardship of the dollars entrusted to us.” All of this without harming our work in Asia and China. Other Hong Kong properties once owned by the LCMS have been deeded over to the Hong Kong Synod.
Good news, indeed! But don't let it go to your head. We need to fund the full mission of Synod. Our headquarters has laid off people and is down to a remnant of its once large numbers of employees. We are about as frugal as we can be while doing what our congregations expect the national church to do. And we should do more. So don't give up or forget the cause. This is great news but now more than ever we need to pull together.