Church Officials Say Employee Pension Fund Is Sound
OFFICIALS of The First Church of Christ, Scientist, in Boston this week denied published reports that borrowing from the church's employee pension fund has put that fund at risk.Skip to next paragraph
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A series of reports in the Boston Globe and elsewhere has cited figures from unidentified sources critical of the church's leadership who claim that borrowing to support the church's television news operation has reduced the fund's value to $60 million. Critics said this amount was below that needed for the fund to be actuarially sound.
In a memorandum to church employees that was released to the press, Christian Science Church Treasurer Donald Bowersock said the articles "contained assertions and innuendos which are improper and not correct.... A guiding principle for managing all of our funds is that we would never depart from the specific terms of the fund and would never do anything that would harm employees or those who have retired and depend on their retirement income."
Mr. Bowersock noted that the employee pension fund, created in the late 1970s, had reached a market value of $136 million by March 1989, "in excess of funding requirements needed to meet all past liabilities to retirees and current employees as well as all future liabilities for current employees...." He recalled that $15 million of the surplus had been moved to The Mother Church's general fund at that time. By March 1991, the market value of the fund was $132 million, more than needed, and $25 million o f the surplus was moved to the general fund.
On Jan. 1, 1992, the board borrowed $11.5 million from the pension fund with interest to be paid at the prime rate plus 1 percent, Bowersock wrote. On Feb. 1, the Christian Science Board of Directors borrowed an additional $10 million; on Feb. 28 another $20 million was borrowed to repay The Christian Science Monitor's endowment fund. Both borrowings included interest provisions of prime rate plus 1 percent.
"The value of the pension fund has not declined as a result of the borrowings, and on Jan. 31 ... the market value was $115 million," Bowersock said. "Interest is accruing; therefore, the short-term performance is not seriously affected."
Bowersock confirmed that the directors last September borrowed $20 million from the Monitor endowment fund, which annually covers about 25 percent of the newspaper's deficit. The borrowing was in accordance with the fund's provisions and a legal opinion from the law firm of Hemenway and Barnes, the treasurer said. It provided for repayment with interest at the prime rate, and the fund was repaid in full Feb. 28.
The memorandum also confirmed that the directors, who constitute the trustees under the will of church founder Mary Baker Eddy, in September borrowed $5 million from the fund provided by the will with the provision that interest would be paid at the prime rate.
In a related statement, Netty Douglas, manager of the Christian Science Publishing Society, and John Hoagland Jr., chairman of Monitor Television Inc., said about $250 million had been spent on the church's expansion into television, not $500 million as critics had suggested. They said the expenditures represent "major assets on the church's books." They also denied a report that the operating costs of the Monitor Channel were $8 million per month, asserting that even if religious production is included,
"the total is closer to half this estimate."
"We are actively developing additional revenue sources to support the start-up phase of the channel," the two said.
In a cover memorandum signed by Chairman Harvey Wood, the directors told employees that "our resolve is unwavering."