This is what the other shoe sounds like…

You’re in bed in that dreamy space between wakefulness and sleep. And then you hear something. You start…but stay motionless. Then, after not hearing the sound again, you drift off to sleep. Waiting for the other shoe to drop is uncomfortable when it doesn’t happen.

The first shoe: it’s been nearly three years since the collapse of ABC District and its Church Extension Fund and its DIL investment fund – January 5, 2015. Thousands of people lost millions of dollars to a debacle of mismanagement and misinformation. No one, not even the people who were in charge  say they know what happened. If they do know, they’re heeding legal advice and staying mum. And the church really is all about staying silent isn’t it? Of course not, that’s stupid – not withstanding the fact that it’s where Lutheran Church Canada’s leaders have lead us. LCC’s leadership has been, and continues to be, dumb to sin. Saint Paul was jailed FOR the gospel. LCC leaders are hoping to avoid jail by avoiding the gospel. The truth hurts boys.

>ker-thud<

The other shoe: each of LCC’s three districts gave Synod notice that – as a result of the CEF collapse in ABC District – Synod needed to restructure in order to avoid any future catastrophes. Synod hired a consultant (Rev. Les Stahlke) to work with CCMS (Committee for Constitutional Matters and Structure) to come up with a new structure of LCC. Two years later and the board of directors rejected the new plan. But LCC never fails, it doubles down. And the consultant on the restructuring project is none too pleased. In fact, Rev. Les Stahlke has written a letter, sent to all convention delegates, charging Synod of being in violation of its bylaws. This is serious.

Rev. Stahlke raises a major point on governance. CCMS as a Synodical committee isn’t answerable to Synod’s board of directors. CCMS is answerable to convention in order to maintain independence from the whims of administration. CCMS should have presented the plan to convention for a vote. Sure, the plan stood a good chance of being rejected by delegates, but that’s our process. Instead, what Rev. Stahlke is charging – and what appears to have happened (and yes, I missed it too) – is that the Synod Board of Directors usurped the authority of convention. This is worrying.

It’s bad enough that there has been zero transparency regarding the collapse of ABC District and its operations, and just as importantly, Synod’s oversight of Districts. Now we have a Synodical Board that appears to have overstepped its reach.

What happened is this: three district conventions told Synod to restructure itself. Synod handed off the responsibility to CCMS (rightly). CCMS then has to answer to convention since it’s not accountable to the president or the board of directors. But the Board of Directors has inserted itself between the committee and convention. Convention gives CCMS its authority, not the board. CCMS is parallel to the Board of Directors, and isn’t answerable to it. Naturally, this puts LCC in a state of constitutional crisis.

Crisis #1: authority of convention appears to have been usurped by the Board of Directors, which can only ever be advisory to CCMS

Crisis #2: No one in administration, or on the board noticed that the Board of Directors action was out of order (and not being a constitutional expert, I won’t pass definitive judgement, but a read of the constitution and bylaws makes a pretty compelling case for Rev. Stahlke).

Maybe Rev. Stahlke wants to mend what he preceives as a tarnished reputation. Fair enough. And what better way to restore your reputation as a constitutional expert than by showing your client that they’re in violtation of their own constitution and bylaws. The irony tastes like more (to be honest, I could do without a little less irony in LCC).

This is where things get wacky. Let’s ask the Lutheran question, “What does this mean?” If Rev. Stahlke is right it means CCMS can present its restructuring proposal to convention as planned. Synod should investigate the issue, but who should investigate? CCMS would normally investigate, and make a ruling, but the constitution committee can’t exactly judge itself…or can it?

My church can concoct a deeper, darker, morass than your church, any day.

Convention has to attend to this issue. Look, if LCC has an interest in procedural honestly it has to act. It’ll take balls of steel and gall of pure acid to ignore this charge. Ignoring the complaint is fraught with risk. It takes just one delegate to stand up say, “Point of precedence, there is a concern by a member of Synod that Synod itself is in violation of the bylaws bringing this proposal to the table. This matter must be investigated and resolved before we can accept any report from synod.” Then what…ignore a very serious charge? Nope. Just a few words from one small voice is going to detail the best laid machinations. If Synod were wise, it would convene an independent panel and resolve the issue before convention.

READ: Rev. Les Stahlke’s Letter to Delegates (PDF)

In less than one month, delegates are going to meet in Kitchener to decide what LCC looks like moving into the future. There’s been no public review (because in LCC consultation is a one-way street) a serious error) – and the leading consultant on the entire project says the process is, effectively, illegal according to our own rules of governance.

That’s what the other shoe dropping sounds like.

Andreas Schwabe

Andreas Schwabe is editor and publisher of SolaGratia.ca, and an Edmonton-based multimedia & communication strategist and producer. His focus for SolaGratia is on administration, governance, and issues of faith. For clients, he writes or produces just about anything.

22 thoughts on “This is what the other shoe sounds like…

  1. ANO

    After the BOD was taken to task for issuing an incomplete report, it issued a supplemental report, and in that BOD report it clearly stated that CCMS reports to Convention, not the BOD.

    This means the BOD’s last-minute meddling in the restructuring process isn’t even supported by their own minutes.

    • Michael Schutz

      The more I look at this (and again, admittedly we don’t have all the information), the more I’m questioning whether there was actual meddling. As you’ve said elsewhere, things are tangled, and so I’m trying to keep issues as separate as is appropriate. There’s no question the Board needed to give that more detailed report. But in terms of the specific issue of the restructuring process, if the Board proposed the Working Group to the CCMS and the CCMS unanimously accepted that (supplement, G.4) that’s a quite different claim than we heard. So, IMO, in the midst of everything, I think a closer look is needed in evaluating the claims of the process. We have now in the public record the CCMS resolution of early July, Rev. Stahlke’s letter, and now the workbook supplement. Far from comprehensive, but better than what we had a few weeks ago.

  2. In the past when I’ve asked district officers where the funding for budget shortfalls came from, the reply is consistently, “other sources.” When asked directly if CEF or DIL were part of those other sources the reply was reiterated: “other sources.”

    You’ve identified the next fiscal crisis: the synod pension fund. Its underfunded, and likely will collapse simply because there will be too many retired pensions being drawn on while fewer and fewer congregations pay into the find because they can’t afford pastors. How long till that happens requires firm numbers to make an estimate.

    • sm

      This information for the ABC District is from the CRA site. Like you, I also asked where District was getting money to pay for salaries and operating expenses in the years of shortfall and no response was given.

      2014
      Total Revenue 4,098,812
      Total Expenses 6,222,618

      2013
      Total Revenue 4,848,886
      Total Expenses 8,934,416

      2012
      Total Revenue 8,768,037
      Total Expenses 8,250,943

      2011
      Total Revenue 7,688,479
      Total Expenses 8,786,136

      A recent affidavit by Cam, showed the pension liabilities for District staff. Names are concealed now but the top three pension deficits for ABC District Defined Benefits are Donald Schiemann (pension liability of 841k solvency deficit of 227k as at Dec 31, 2014 ), Bill Ney (pension liability 692k deficit of 187k as at Dec 31, 2014) and Glen Schaeffer (pension liability of 324k deficit of 87.7k) followed by Harold Ruf. The defined benefits (no matter how investments perform or how much is contributed, a set pension and benefit amount is given) of our senior Pastors is predictably going to be the next financial disaster in LCC unless things change.

      LCC was first in the courtroom with its lawyer (before any depositors were represented) to put forward the unsecured pension claim for the 26 District employees (TWENTY SIX) that were receiving wages and benefits. That’s pretty telling of the leadership we’ve seen. Hundreds of thousands of dollars were undoubtedly spent in lawyer fees to reach a settlement that essentially takes an additional 164K from what could have been available to pay back secured depositors (whose funds have probably been paying salaries and operating expenses for District)

      These things: Were CEF funds used to pay salaries and operational costs, why weren’t people laid off and deficit spending addressed and the transparency and sustainability of the Pension Fund should all be topics of conversation at the convention. Unfortunately, LCC would rather not talk openly about these things and the general populace of LCC laity seems not to care as complacency on the matter is rather encouraged. If this stuff happened in any other profession, people would rightly lose their jobs… not receive standing ovations, have their names up for nominations and continue to receive fat pensions.

      • Rev. Robert Clifford

        If it’s okay for CEF depositors to be repaid 17 cents on the dollar from their retirement & life savings, then it’s okay to repay the pastor’s Defined Benefit pension 17 cents on the dollar from what they were expecting to live on for retirement.

        • ANO

          Rev C – I’d change that to the “pastors involved in CEF” as a lot of innocent people would be hurt if they got 17% of their expected retirement income.

      • ANO

        Further to @sm’s point – where was Synod when all these shortfalls were happening? Having a District run that big of a deficit is a huge red light that had to be addressed, and the SP / Synod BOD was where that particular buck was supposed to stop.

        • Rev. Robert Clifford

          But if District audited financial statements were not being released & there was no financial disclosure in District Convention Workbooks, then who would know?

          When I receive multiple follow up phone calls & emails from the Synod office to follow up on our little congregations’ unsubmitted statistical reports, I wanted to ask, “Was Synod similarly diligent in following up with the ABC District when audited Financial Statements were not released from 2012 on?”

          • ANO

            Financial types would interpret the lack of audited financial statements as tantamount to yelling “we’re in deep doo-doo.” They’d tell the SP / BOD who would then do something about it, even if that something was reporting it to Synod in Convention (per the handbook).

            Re: stat reports – sounds like they were “straining gnats only to swallow a camel.”

          • sm

            How much financial disclosure from ABC District is found in the current workbook? I see no mention of budget and no accounting given of how much money has been spent on restructuring. Financial statements to a certain standard should be a requirement in the Convention Workbooks, no exception.

          • ANO

            @sm – I think the logic is – if you ignore something long enough it becomes “old news” and can be ignored.

  3. ANO

    I’ve looked at the 2014 Synodical handbook, and page 25-26 states the CCMS functions are:

    2.103 Functions
    In the area of constitutional matters the Commission shall–
    a. examine all reports and overtures to the Synod asking for amendments to the Statutory Bylaws, the Constitution, and these Bylaws, or which in any manner affect the Act, Statutory Bylaws, Constitution, or these Bylaws, to determine their agreement in content and language with the Act, Statutory Bylaws, Constitution and these Bylaws;
    b. be represented at the meetings of the floor committees considering constitutional matters at the Convention;
    c. revise the synodical Handbook immediately after each Convention to bring it into harmony with the resolutions or changes adopted by the Convention;
    d. interpret the Synod’s Statutory Bylaws, Constitution, these Bylaws, and resolutions upon the written request of a member of Lutheran Church-Canada, official, board, commission, or agency of the Synod. Such a request may be accompanied by a request for an appearance before the Commission. An opinion rendered by the Commission shall be binding on the question decided unless and until it is overruled by a Convention;
    e. maintain a complete file of succeeding Handbooks so that a comparison can be made between current regulations and those immediately preceding;
    f. maintain a file of the articles of incorporation and bylaws and regulations of all districts of the Synod; examine in advance the articles of incorporation and the bylaws or regulations of every district and all proposed amendments of such documents to ascertain whether they are in harmony with the Act, Statutory Bylaws, Constitution, Synodical Bylaws, and resolutions of the Synod. A district shall make such amendments to or changes in these documents as may be necessary to conform.

    In the area of structure, the Commission shall:
    a. conduct a continuing review of the organizational structure of the Synod, including its districts and its circuits, and make proposals to succeeding Conventions for improvement;
    b. act as a resource committee to convention floor committees on all proposals to alter the synodical structure;
    c. serve as a resource committee to districts with regard to organizational structure

    The only action they can take that is binding on the Board and Synod is when they render decisions pertaining to questions about interpreting the constitution.

    To be clear – restructuring was not a Synod in Convention action, it was the Synod Board ‘suggesting’ to the 3 Districts that they ask Synod to restructure. All 3 Districts agreed and passed resolutions to that effect. Synod’s Board then handed the job to the CCMS.

    From where I’m seeing things – and I’ll gladly accept correction – because the Board voluntarily took this task on and were not mandated to act by Synod in Convention, they are well within their rights to take the CCMS restructuring recommendations and do whatever they want with it.

    Now if the Synod handbook says otherwise….then it shouldn’t be hard to point to where it says that.

    • I’m just writing a follow-up piece. Don’t be distracted by details. First issue: there’s no relationship between administration and CCMS. They are both arms of convention, reporting to convention, serving different roles.

      To reframe the issue: If the motion to restructure came from a national convention, CCMS would be given the responsibility and Synod administration (including the BoD) would have no role. So why is it acceptable when three District conventions effectively do the same thing?

      CCMS had the task its supposed to have. In this case, for whatever reason, the BoD intervened. I’m actually more of a mind to support Stahlke’s claim – if only so we can just get into the habit of good process.

      Perhaps the Board of Directors should let both the original and new plans be vetted by delegates. Of course, they’ll have around 13 hours to do it. We can’t order coffee in 13 hours.

      • Michael Schutz

        The CCMS complicated things in this matter by committing not to present to the convention any proposal that the Board wouldn’t sanction. While it doesn’t seem that the Board’s actions were altogether proper, the fact that the CCMS agreed to this certainly weakened the CCMS as a distinct entity and opened the door to this type of complication. Being that the CCMS agreed to all the Board’s actions (despite seemingly being hamstrung) and by 2 of the CCMS members, including the chair, participating in the working group, there seems to be an argument to be made that the new proposal is not, strictly speaking, out of bounds, but it is in fact what will be presented by the CCMS and not the Board.

        That said, I agree that far more transparency about what actually happened should be expected of the Board here, and that the process seems to have been deeply broken.

        I think it’s reasonable to expect that we’re not going to get any kind of independent panel. But from reading what’s now been publicly posted, I think it’s going to be worth spending some time analyzing Rev. Stahlke’s letter in comparison with the Board’s July resolution to try and piece some things together, in addition to following up with the Board.

        • ANO

          Les has posted an analysis of the original CCMS plan vs “Plan B” here:
          http://cefinvestors.freeforums.net/attachment/download/54

          • Michael Schutz

            I was initially referring to an analysis of Rev. Stahlke’s statements of what happened in terms of the process compared to the actual resolution. I think this comparison of these documents also deserves a look, but that’s what I was initially referring to. I think it’s also worth considering that we (especially as delegates) have to try and evaluate all of these things as objectively as possible.

          • ANO

            At this point it’s become such a tangled mess that the only safe way forward I can see is to table voting on restructuring of any form, work through the issues the membership, and then hold a special convention just for restructuring. Yes it’ll cost a few $$, and I think in the long run it’ll be cheaper and better than voting in a structure w/out informed buy-in from the membership.

  4. sm

    The task force was not handled much differently by leadership. Remember to begin with, District Board of Directors appointed initial members then asked the Task force to do any further appointing themselves to ensure that the Board was not directing or influencing the Task Force unduly. They wanted to make it absolutely clear that the District Board was not directing their work in any way. Then, on Feb 24, 2017, the ABC District Board of Directors passed a motion to disband the Review Task Force. How could they be allowed to do that?

    http://abcreview.ca/intro

    • They’re allowed to setup and disband as they wish. The real problem was the Review Task Force’s exceedingly diligent work: it revealed more evidence and truth about attitudes and behaviors of governance and management than anyone was comfortable with.

      • sm

        in other words, there is no desire among our leaders to acknowledge sin, repent and change the behaviours and attitudes that were exposed. Better cover it up, continue on and speak no more about it.

        • ANO

          @sm – Have you noticed how fast our leadership sprung into action, identified the miscreants, and then dealt with them once CEF became public?

          • sm

            Well, the leadership which should have been watching over and dealing with this had also been inappropriately dipping into CEF for pension funding (not a capital expense). There is a quote which seems some relevant in all of this: When asked why Congress doesn’t decrease deficit spending, Senator Strom Thurmond explained, “It’s awfully hard to get a hog to butcher itself.”

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