WELS Budget Fiasco - The Gurgel-Mueller Years

Verbatim from the Kuske Report:

1. From 1996 to 2003 over $30 million of non-recurring funds were spent
2. Off-budget, almost $1.7 million in non-recurring funds was assigned to missions in Russia and Bulgaria. Off-budget means that it does not appear on the reports of the Operating Fund (See Appendix A).
3. The $22 million in the WELS Gift Fund (a.k.a. Gift Trust Fund) had been considered a “rainy day fund.” It was spent down to nothing by 2002. (See Appendix A for details)
4. In May of 2003 it was reported that $8.1 million (Later reports said $7 million) had been borrowed against trust funds and that there was a $1.5 million shortfall in the current fiscal year. The money borrowed against trust funds was scheduled for repayment, but repayments have been delayed.
5. One example of starting on-going programs with non-recurring funds is the addition of 19 world missionaries during this period. (See Appendices A and D.)
· By 2002 the consequences of the imprudence of using non-recurring dollars to fund on-going programs was very evident. A prescription for the serious problems that follow: More commitments, less income!
1. The “rainy day” fund was no longer available, when the cyclical economic downturn in late 2000 (exacerbated by 9/11) had adversely affected the WELS and the country. Further, after 2002 the Schwann Fund was not contributing the sizable gifts it had been sending to WELS. Restarted several years later.
2. The non-recurring funds that had accumulated over the year had been gaining interest that was used to support the budget. For each $20 million removed from the non-recurring funds $1,000,000 (or more) income in some form needed to be obtained. But the reality was that CMO offerings weren’t even keeping up with inflation. (See Appendix G.)
· The consequences of the imprudent use of non-recurring income resulted in budget cuts on the order of 25% to 30% starting in 2003. Use of non-recurring funds, both directly and indirectly, continued to the present and another $30,000,000 was disbursed, producing a total expenditure beyond income of $60,000,000. (See above)
1. More work of the Synod was moved off-budget (e.g. evangelism and youth ministry, which are now funded by the Revolving Funds) so that the non-recurring income and its income were reduced even more.
2. The world missionary corps was reduced by 17, but there were still more world missionaries in 2003 than in 1995. (Appendix D)
· The Board for Ministerial Education (BME) bore a disproportionately large proportion of the cutbacks.