Christian Science Church Officials Report Finances
Belt-tightening ahead to meet $70 million balanced budget after TV shutdown, but `no indebtedness'. ANNUAL MEETING 1992
BOSTON — THE First Church of Christ, Scientist in Boston, Mass., has disclosed its full financial position.
The move, unprecedented in the history of the church, was made at the institution's annual meeting here June 8.
The church has a balanced budget in the fiscal year that started May 1. But it faces a tight cash-flow situation.
"It is going to be nip and tuck," said Donald Bowersock, managing treasurer, in an interview. "We can do it. This is not a flaky budget. But we took it right to the edge."
Because of large expenses involved in launching various broadcast activities and other church operations, the Mother Church suffered a net deficit of $178 million in the fiscal years 1985 through 1992. This depleted a large proportion of the church reserves. Highlights of report
Highlights of a report read by Treasurer John Selover and a more-detailed 21-page written report include:
* The net worth of the church as of April 30 was $138.5 million. This included balances of cash and securities in unrestricted funds, restricted funds, and pension reserves of $38 million, plus $101 million in church property, plant, and equipment (excluding the Mother Church itself and Publishing Society building).
* Total investment by the church for capital and for operations of its various television activities reached $259 million. In addition, shutdown costs are now estimated at $68.5 million, up from an estimate of $45 million made in April when the church announced its decision to discontinue these activities.
* For the fiscal year that began May 1, the church will be operating on a budget which balances income and expenses at a $70 million level. Shutdown costs for TV, including severance pay, closing down of offices and contracts, and disposing of capital assets, have been counted as part of expenditures in the previous fiscal year.
* The church operating and capital expenses in fiscal 1991-92 amounted to $215.5 million, including the TV accruals.
Excluding 10 months of TV operating costs of $53 million and the $68.5 million shutdown costs, operating and capital expenditures for the continuing activities of the church were $94 million. These continuing activities include church administration costs, religious periodicals, The Christian Science Monitor, the monthly World Monitor Magazine, and various radio broadcasting operations.
* The church has no indebtedness, with the exception of lease obligations on TV equipment. These amounted to $4.7 million on April 30. However, Mr. Selover said these obligations should be eliminated as the church sells some of the TV equipment.
* The church has restricted funds totaling $104 million. These include the Mother Church Endowment Funds and the Christian Science Monitor Endowment. The $48 million Monitor fund provides an annual income of approximately $3 million, covering partially the newspaper's annual deficit of around $12 million.
Unrestricted funds are a negative $115 million as of April 30. This reflects the church's borrowing of $41.5 million from its pension reserves and $5 million from the Trustees Under the Will of Mary Baker Eddy (the church founder). Further, some $44.2 million of television shutdown costs accrued in fiscal 1992 are being paid out gradually over the current fiscal year. Several other factors fund this accounting deficit.
"Cash is available to meet all our obligations," Selover said.
The decision of the five-person board of directors of the church to disclose its financial position was prompted by reports in the Boston Globe and elsewhere of the church's financial difficulties. Charles Terrell, one of three members of a Finance Committee, which reviews the church's finances, resigned his post May 12, charging that the directors ignored five formal warnings of "impending financial disaster."
In his letter of resignation, Mr. Terrell wrote: "I am grateful you have taken drastic action to stop the disastrous drain on the church's cash position. We have narrowly avoided bankruptcy." Differing viewpoints
In his annual report, Selover said: "Among the membership there are differing points of view about the recent use of church resources: Some are convinced that we should have pressed on using our resources to achieve our enlarged publishing goals; some regret the loss of the new activities; others think we should have stopped long ago ... or not started at all.
"The board," he continued, "feels we pressed on as far as we could, and that to continue in this form was not presently possible."
In an interview, Selover was asked to comment on charges by some church members that the board had not followed an admonition in the church's governing bylaws that "God requires wisdom, economy, and brotherly love to characterize all the proceedings of the members ... ." He replied that "economy is subject to some variety of definition." Further, he noted that the church Manual also calls for the net profits of the Christian Science Publishing Society to be paid over semiannually to the Mother Church, bu t that since 1961 this has not occurred. One of the objectives of the church's television activities was to help fulfill that aspect of that bylaw, he said.
Asked if the money spent on TV was worthwhile, he replied, "Yes, to its degree." It proved, he added, that the church "can produce good quality programming for broadcast." This programming had imitators, was "closely watched," and was a "leavening influence" in the television industry, he said. The Monitor Channel, now broadcasting reruns, is scheduled to cease operations June 28.
In hindsight, he said, "perhaps we had - the phrase used in the trade - is ... `too fast a burn' on things ... In hindsight, one might have chosen a different course, but maybe not."
Selover indicated that after an appropriate time of "reflection, reassessment" the church may produce TV programming again in the form of features, in-depth reports, and news analysis. Meanwhile, the church will keep a "core" capability for producing for TV Christian Science lectures and the Bible lesson read daily by Christian Scientists.
In his talk to church members, Selover said: "The concentration of media and its influence into the hands of a very few economically powerful individuals or corporations needs the yeast of goodness this church has to offer." TV equipment for sale
Most of the television equipment acquired by the church will be sold. Selover said the $13 million transponder to be used in transmitting programs to the cable companies carrying the Monitor Channel will be sold for more than cost to the Discovery Channel. The proceeds of the sale, still being negotiated, will be returned to the Mother Church Endowment Fund.
The accountant in charge of auditing the church's books, Hans Meyer of Ernst and Young, told the annual meeting that "it appears likely our audit will be unqualified" when completed for fiscal year 1992 by the end of June. "Unqualified" means that the auditor has no quarrel with the accuracy of the financial statements made by the church.
Other points made by church officials include:
* Member contributions to the church are up $1 million so far this year over the same period last year.
* The church has spent $105 million in operating and capital costs on its domestic and shortwave radio broadcasting activities since their inception.
* Since 1984, The Christian Science Monitor has accumulated $138.7 million in capital costs and operating losses.
* Church administration costs have averaged $34 million per year since 1984, without significant annual variation.
* Expenditures budgeted for the current fiscal year include $32.5 million in church administration costs, $21.3 million for the Publishing Society (net of revenues), $7.4 million for Herald Broadcasting, capital costs adding up to $3 million, pension funding of $2.4 million, and interest on loans from the pension reserves and the Trustees Under the Will of $3.4 million. These add up to $70 million.
"As the church is able, it intends to repay the principal as well," notes the report from the Treasurer's office.
* The assets of the church's pension reserve total $112 million, consisting of real estate and other tangible assets of $5.5 million, cash and securities of $64 million, and a debt obligation of $41.5 million plus interest loaned to another account of the church.
Mr. Selover said the church would like to rebuild its reserves.