Jarndyce vs. Jarndyce and Short-Term Solutions to Long-Term Problems

Reading the proposed budget for The Episcopal Church for the next triennium, I am reminded of the classic Dickens novel, Bleak House.  The plot centers around a loosely connected family named the Jarndyces.  Long ago, some ancestor died and left a valuable estate, and since then, various branches of the family have been caught up in the legal case Jarndyce vs. Jarndyce, questioning which of them is the rightful heir.  The plot meanders through labyrinthine Dickensian twists, until at last, the lawsuit ends.  Not by determining an answer, though – by using up the entire estate in legal fees.  Once the last hour has been billed, there is no more property to bicker over, and the lawsuit dies. 

Well, you could say The Episcopal Church is caught up in a never-ending labyrinth of plot twists, and meanwhile, our resources are being eaten up by administrative costs.  In a world that is rapidly changing, in which hierarchical institutions are being flattened, and new forms of church are bubbling up, our churchwide structure is caught up in a top-heavy model of ministry that simply eats up money.  I don’t believe God will let this church die – but let’s don’t let it get that close.  Let’s think about mission.

It may seem mundane to talk about mission in terms of a budget.  But the way we allocate our treasure shows where our hearts will be.  So let’s talk about allocation of financial resources at the churchwide level. First, we need to accept as the unvarnished truth the fact that our church is declining precipitously in attendance and finances, while aging significantly in comparison to the population.  We have neglected evangelism and forming new disciples, especially among the younger generations.  As a result, if we do not take some significant and strategic actions now, our church will continue its graceful decline, right into oblivion.  Jarndyce vs. Jarndyce!  

At the same time, as I noted here, Administration and Governance Costs together comprise 65% of the money that dioceses and others send to the national church structure, at least in Executive Council’s proposed budget.  Not exactly an inspiring statement of mission!    Just take one look at the category of costs called “Finance.”  Out of a total triennial budget of $104 million, Finance Costs are $15 million, over 14%.  Of that amount, $8.7 million is payment of principal and interest on the debt, most of which finances the Manhattan office building known as “815,” which houses a portion of our administrative offices.  It costs another $7.3 million just to run the Treasurer’s and Controller’s Offices.   At the same time, program offices like Christian Formation (that is, all youth and campus ministries, and all formation offices), which currently cost much less than the finance offices, have been eliminated. 

It’s like the dioceses are sending money to 815 so they can spend the money counting the money. 

This is an unsustainable situation.  It’s Jarndyce vs. Jarndyce.  Let’s talk about solutions.

Short-Term Solutions

According to Ron Haifetz' theory of leadership (for a brief explanation, see the Ron Haifetz videos posted on the HoD website), problems can be divided into technical problems (those we know how to fix within our current structures) and adaptive challenges (those that require a complete reorientation at all levels of an organization).  In the short time left between now and General Convention 2012, I do not believe we have time to meet most of the adaptive challenges in front of The Episcopal Church, though we can begin shifting our priorities.  We DO have time for some technical solutions to the problems in this proposed budget.  


But what is reasonable to achieve with technical budget fixes?  In the short term, it would be a mistake to try to solve adaptive challenges with technical fixes.  This is what will happen if we try to make major reorganizational decisions by budget-cutting. 

How do we know this would be a huge mistake?  That’s exactly what we did in 2009!  Without foresight, vision, or strategic planning, huge budget cuts were made that caused numerous churchwide employees to lose their jobs, and numerous programs (many of which had just been legislated into existence at the very same convention) to be shut down. 

Why are we thinking about doing the same thing again?

All right, I won’t scratch my head and ask what’s been going on the last three years.  I won’t ask why we haven’t done some proactive planning.  I won’t ask why we’re falling into exactly the same trap now.

Here’s what I want to ask:  isn’t there a better way to do this?

Yes, there is.  And I think the process falls into two stages.

Short Term: avoid making major shifts.  The Christian Formation office was cut under the rationale that such things are better done at the local level.  I don’t agree, because I think it is tremendously short-sighted for a church that is suffering from failure to form new disciples (especially among the young), and from aging demographics, to cut youth and college programming.  Strategic vision for the future would require increased, not decreased, resources for youth/young adult ministries, at all levels.  True, this is a ministry that is essentially done at the local level - but we can't simply remove all its churchwide supports and expect it to thrive on its own without strategic work to make sure other structures are in place to support it.    

But that’s my argument; you can disagree.  Here’s the point: if we cut Christian Formation in this budget, we are making a huge long-term decision based on narrow short-term thinking.    

Short-term, it is perfectly possible to balance this budget without cutting Christian Formation.  We can do this through our existing legislative structures, by advocating through PB&F public hearings, or even proposing an alternative budget.  To understand how a technical fix to this budget might work, you need to understand some basic accounting issues with the way this budget was put together.  Sorry about the accounting stuff, but here goes:

> This budget looks balanced, but it is actually a deficit budget of $1,250,000.  This is because Executive Council used money from the Endowment ($3,766,000) to fund a new Development Office – but the cost of the Development Office was incorrectly listed.  See line 366 of the budget: only $2,516,300 of costs are listed.  As a result, in effect, this budget uses Endowment Income designated for the Development Office to fund operating expenses – bad move.  $1,250,000 needs to be cut.

> On the other hand, there is one large and rather strange adding error.  The total for line 689 is overstated by $1,412,770.  I asked Chief Operating Officer Stacy Sauls and Treasurer Kurt Barnes for an explanation of this discrepancy (and I thank them for their careful attention to my question).  It seems that in the rush of approving the budget, Executive Council first deleted 10% from this area and then may have decided to add it back in - but the details are not clear and no one really seems to know.  Absent an explanation, we have an opportunity for painless budget-cutting: whatever this unexplained figure represents, no one has complained about its absence.  Let's cut it from the budget.    

> Once the above items are corrected, the remainder of the budget can be balanced by freezing most administrative costs (not increasing them as this budget proposes to do, for God’s sake: this budget actually proposes a 3% per year raise for Church Center employees, in a time of falling revenues when many or most local church employee salaries are frozen).  By freezing most administrative costs, we can restore most of the costs of Christian Formation, the Board of Examining Chaplains, and Jubilee Ministries.  This is all possible because Executive Council has already done some significant budget-cutting, including cuts to funding for CCABs, which seems reasonable.  Here are sample figures for one way this might work (though I do not have access to  all the details underlying the proposed budget figures; PB&F does, I hope, and would be able to refine these figures):

Proposed Increases / (Decreases) to Expense:
PB Office Staff Costs	($364,000)
Bishop Europe	($50,000)
General Board of Examining Chaplains	$150,000
House of Deputies Staff Costs	($212,000)
Office of Gen Conv Staff Costs	($335,000)
Archives Staff Costs	($300,000)
Chief Operating Officer Staff Costs	($180,000)
Controller Staff Costs	($420,000)
Treasurer Staff Costs	($119,000)
Facilities Management	($200,000)
Human Resources Staff Costs	($270,000)
Mission Technology Staff Costs	($150,000)
Correct Error Development Office	$1,250,000
Restore Jubilee Ministries	$650,000
Restore Christian Formation	$2,500,000
Anglican Communion Staff Costs	($200,000)
Correct Error Grants Covenants Approp	($1,412,770)
Office of Government Relations	($650,000)
Net Increases / (Decreases)	($312,770)

All we have done here is kept major churchwide programs in place.  Significant cost-cutting between the last triennium and this triennium in some areas has been accomplished, because that cost-cutting was already in the proposed budget.  Comparing my changes (above) to the proposed budget,  we have not cut any further administrative expenses – we have just refused to increase them.  That’s reasonable, in a time of budget-cutting!  There’s even a little money left over.

By making these changes, we avoid making long-term decisions based on short-term budget shortfalls.  We don't try to apply a technical Band-aid to an adaptive challenge.  We give ourselves time to make long-term plans in the next triennium.  And, if it is really true that some of these ministries would be better done on the diocesan or local level, well, we give those networks time to formulate plans for how to get that done. 

Right now, if we cut youth and campus ministries, there is no local, diocesan, or provincial structure in place to take over those functions.  That is a recipe for disaster.  Especially while we increase administrative costs.  The proposed budget would simply suck more money away from mission into administration: the Episcopal version of Jarndyce vs. Jarndyce. 

Once we have made these short-term technical fixes, we have time to think about the adaptive challenges ahead of us.  That will be the subject of my next post: Long-Term Thinking.