Augsburg Fortress cancels retirement plan
© Pretty Good Lutherans
Hundreds of Augsburg Fortress workers and retirees learned over the weekend that their retirement plan is being canceled, according to documents obtained by Pretty Good Lutherans.
“These decisons and actions break our hearts and we apologize, but they are necessary,” wrote Beth Lewis, president and C.E.O. of the Minneapolis-based company, in a letter to employees and retirees dated New Year’s Eve.
Augsburg Fortress is the publishing house of the Evangelical Lutheran Church in America, the nation’s largest Lutheran denomination. Like most U.S. book publishers, Augsburg Fortress has been struggling financially because of the nation’s economy and because of the impact of digital technology on sales. Over the past year, the company has laid off at least four dozen employees and shut down nine bookstores.
The documents said the retirement plan’s assets totaled $8.6 million and estimated its obligations at $24.2 million. If Augsburg Fortress were to declare bankruptcy and sell its assets, “even this drastic measure would not entirely fund the plan’s shortfall,” the documents said.
“Furthermore, it would be a tragedy for the proclamation of the Gospel and would put almost 200 employees out of work.”
(STORY CONTINUED)
A few of the employees impacted by the retirement plan decision spoke with Pretty Good Lutherans on Sunday, but asked that their names not be used. They said they were distraught by the company’s decision.
Lewis wrote that an estimated 500 individuals are impacted by the termination of the plan, which becomes effective March 5. Monthly benefits to retirees under the plan end March 1. Most plan participants, including retirees, will receive some type a lump sum payment, though not as much as expected.
“Because the plan is severely underfunded, there is not enough money to pay the full benefits that plan participants otherwise would have received … ,” Lewis wrote. The company’s current employees can participate in a 403(b) retirement plan used by many not-for-profits.
Lewis’ letter was accompanied by a four page document titled, “Questions and answers regarding termination of the Augsburg Fortress retirement plan.”
Augsburg Fortress is incorporated as a separate program unit of the ELCA and maintains a separate retirement plan from the denomination. The ELCA was approached for financial support, but “advised us that it has no obligations or fiduciary duties with respect to the Augsburg Fortress plan,” according to the documents.
The ELCA is also struggling financially, and recently laid off 40 employees from its national offices in Chicago.
The Augsburg Fortress retirement plan was not covered by federally backed guarantee provisions, the documents said. Nor was Augsburg Fortress required to make contributions.
“The plan has been underfunded for approximately nine years,” the documents said.
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(Note to readers: Below is a copy of the letter sent out by Augsburg Fortress, as well as the question-and-answer document.)
Dec. 31, 2009
Dear Augsburg Fortress Retirement Plan Recipient:
It is with deep regret that we write to inform you that on December 18, 2009, the Board of Trustees of Augsburg Fortress accepted an administrative committee’s recommendation to terminate the Retirement Plan II for Employees of Augsburg Fortress Publishers, Publishing House of the ELCA (the “plan”) effective March 5, 2010, and to amend the plan prior to termination to provide for more equitable allocation of plan assets among plan participants. This was an extraordinarily difficult decision, reached only after thoroughly exploring other options.
If you are currently receiving retirement benefits from the plan, your monthly benefits will continue through the March 1, 2010 benefit payment. Upon termination of the plan as of March 5, 2010, most plan participants, including current retirees, will receive a lump sum benefit from the plan. The lump sum will be calculated according to the amended terms of the plan as of the date of plan termination. Because the plan is severely underfunded, there is not enough money to pay the full benefits that plan participants otherwise would have received had the plan been fully funded.
Absent plan termination, the money in the plan was projected to be totally distributed as plan benefits to retirees in approximately 5 years, leaving many participants in the plan without any retirement benefits from Augsburg Fortress.
We have decided to amend the plan terms prior to plan termination in order to ensure that the limited amount of money in the plan is spread out equally to participants and beneficiaries upon plan termination. A lump sum distribution upon plan termination under current plan terms provide that all the money in the plan would be used to fund benefits for approimately 175 plan participants who retired prior to March 5, 2007, and their beneficiaries. The plan is so underfunded that even these participants would only receive part of their benefits in a lump sum distribution. The other approximately 325 participants in the plan would receive nothing. Because Augsburg Fortress believes this would be inequitable, the Board of Trustees of Augsburg Fortress has authorized the committee administering the plan to draft a plan amendment that will take effect prior to plan termination and will provide most plan participants some portion of their plan benefits.
We expect the plan amendment to provide that any cost of living increases earned by plan participants on or after January 1, 1996, will be moved to the lowest payment priority category. This means that if part of your benefit resulted from a cost of living increase earned on or after January 1, 1996, your benefit would be reduced by the amount attributable to the cost of living increase and the cost of living amount would not be included in the calculation of the lump sum distribution. We also expect the plan amendment to provide that the limited cash of the plan will be allocated to participants based on years of service, and retiree status. In general, this would mean that those plan participants with greater years of service with Augsburg Fortress, and those currently retired, would receive a larger portion of their plan benefits. We expect to inform you in late January about the exact amount of your lump sum distribution in light of the anticipated plan amendment.
Attached are a series of questions and answers which address concerns you may have about the termination. Please review them carefully and if you have any additional questions or concerns, please add them, in writing, to Sandy Middendorf at Augsburg Fortress Publishers, 100 South Fifth Street, Suite 600, Minneapolis, MN 55402, as soon as possible.
These decisions and actions break our hearts and we apologize, but they are necessary. Know that you are in our hearts, our thoughts and, especially our prayers.
Sincerely,
Beth A. Lewis, President & CEO
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Questions and Answers Regarding Termination of the Augsburg Fortress Retirement Plan
1. Why is the plan being terminated?
A. The plan is severely underfunded, and the payment of benefits will use all of the money available to pay benefits in approximately five years if nothing is done. After thoroughly evaluating options for the plan, we determined that terminating it now will allow for a more equitable distribution of the money in the plan among the greatest number of participants and beneficiaries.
2. How serious is the funding deficiency?
A. As of December 31, 2009, the plan’s retirement benefit obligations totaled approximately $24.2 million and its assets totaled $8.6 million.
3. What other options were considered before deciding to terminate the plan?
A. We considered many other options for the plan, including three that stand out:
Choice number one was to do nothing. If we did nothing, by making the current monthly benefit payments, the plan would run out of money in approximately five years. Fewer than half of the 500 people in the plan would have received some plan benefits, but monthly benefits would stop when the plan ran out of money. If this were to happen, it is projected that over 250 plan participants would receive no benefits at all. This was not a viable option, since it was unfair to a large group of plan participants.
Choice number two was to try to find external funding to put more money into the plan. Augsburg Fortress is not in a position to cover the funding shortfall because of our own ongoing operational challenges resulting from fewer sales to shrinking ELCA congregations and increasing competition from the Internet and publishers outside of the Lutheran tradition. Over the past several months, Augsburg Fortress President and CEO Beth Lewis met with many people who lead organizations that we thought might have the financial means to provide a grant to help sustain the plan’s benefit payments. Unfortunately, as you might imagine in this challenging economy, when many nonprofit organizations are seeking funding for worthy causes, this proved to be impossible.
Choice number three was for Augsburg Fortress to declare bankruptcy and sell off the assets of the company to fund the shortfall. Even this drastic measure would not entirely fund the plans shortfall. Furthermore, it would be a tragedy for the proclamation of the Gospel and would put almost 200 employees out of work. Having worked for Augsburg Fortress yourselves, you are well aware that we are called to create high quality resources for teaching our faith and worshipping God. It is hard to imagine a church body of almost 4,500,000 members not having a publishing ministry to serve the needs of current and future generations.
4. How did the plan become underfunded?
A. The plan has been underfunded for approximately nine years. Nonetheless, it appeared until recently to have enough funding to provide benefit payments to plan participants for many years. However, all of that changed as a result of the dramatic downturn in the financial markets in 2008 and early 2009. The continued payment of plan benefits during the downturn compromised the opportunity for the plan assets to regain sufficient ground to sustain the plan during the ensuing market recovery. Other factors that contributed to the underfunding include lower interest rates and adjustments to mortality tables.
5. What will my lump sump payment be?
A. Most plan participants will receive a lump sum distribution from the plan. However, approximately 77 plan participants whose entire plan benefit is attributable to cost of living increases paid on or after January 1, 1996 will not be entitled to a lump sum distribution or any other benefits from the plan. If you are one of these participants, you have received a letter that describes this in further detail.
For those participants who will reeive a lump sum distribution, we will be providing information regarding the amount of your lump sum payment in late January 2010. The amount of each indiviual’s lump sum distribution will be calculated under the benefit formula of the plan and will generally be based on final average earnings and length of service. We have not made any changes to the plan’s benefit formula.
Once each participants monthly retirement benefit is calculated under the terms of the plan, it will be converted to a lump sum distribution, based on an established interest rate. Because the plan lacks the money to pay full lump sum benefits to all plan participants the plan will be amended to include the methodology used to allocate the cash in the plan. The Board of Trustees has not yet approved the exact allocation methodology based on the above-mentioned principles in mid January, and we will let you know what your lump sum will be as soon as possible after that.
6. What and how were the distribution priorities for the plan amended?
A. Under the plan’s distribution priorities before amendment, most plan participants would receive nothing upon termination of the plan. We recommended to the Board of Trustees certain amendments to the distribution priorities that will enable a majority of plan participants to receive a portion of their accured benefit. We believe this provides a more fair and equitable outcome in these circumstances.
7. How can the plan take away my expected retirement benefit?
A. The plan document states that it will pay your benefit only to the extent that this is enough cash to continue paying the benefits. Since there is not enough cash in the plan to pay all of the retirement benefits for all participants, the plan is only obligated to pay up to the total amount of its assets.
8. Is there any federally backed guarantee for my plan benefits?
A. No. As disclosed in the plan’s documents, it is organized as a “church plan.” As a result, plan participants are not covered by the provisions in the Employee Retirement Income Security Act (ERISA) and the plan’s benefits are not guaranteed by the Pension Benefit Guaranty Corporation.
9. Who administered the plan for Augsburg Fortress?
A. The Administrative Committee for the plan, which consisted of the company’s Chief Executive Officer, Chief Financial Officer and Vice President of Human Resources. The Administrative Committee received advice from the plan’s advisors, which include ING Investment Trust Co., the trustee of the assets, and Sibson Consulting, the plan’s actuaries. The company’s Chief Financial Officer started working at Augsburg Fortress after the plan stopped allowing new participants, so was therefore, never in the plan. The Board of Trustees amended the plan to provide that the Chief Executive Officer is not eligible for a lump sum distribution upon plan termination. This was done at her request to keep this cash in the plan for distribution to the balance of the plan participants getting a lump sum distribution.
10. Why can’t the ELCA churchwide organization make up for the funding deficiency in the plan?
A. We thoroughly explored options for overcoming the funding deficiency, including seeking support from the ELCA churchwide organization. However, the ELCA churchwide organization advised us that it has no obligations or fiduciary duties with respect to the Augsburg Fortress plan. Augsburg Fortress is a separately incorporated program unit of the ELCA and our retirement plan is separate from any plan sponsored by the ELCA.
11. Why didn’t the Administrative Committee for the plan take actions to prevent the funding deficiency in the plan or minimize its consequences?
A. The Administrative Committee, working with outside counsel and the plan’s actuaries, took a number of actions to attempt to sustain the plan. These included freezing benefits accruals and eliminating increases to benefits from future cost-of-living-adjustments.
12. What will the tax implications be of receiving a lump sum distribution from the plan in 2010?
Q. The lump sum distributions will be taxable income to you, unless you timeless complete the paperwork to transfer the distribution directly, or roll the distribution over, to another retirement plan or IRA. You will receive the instruction regarding rollover in January 2010 when you receive the additional information about your lump sum distribution amount. You should consult your personal financial advisors or tax preparers about the expected lump sum distribution as soon as possible. The lump sum distribution will likely have income tax consequences for you if you do not roll it over in a timely manner.
13. When will month distributions from the plan to participants stop?
A. The March 1, 2010 benefit payment will be the last monthly distribution from the plan.
14. Did Augsburg Fortress make all the required contributions to the plan?
A. There are no required plan contributions. The plan states that Augsburg Fortress “shall make such contributions to the Fund from time to time, as it considers advisable.” Nonetheless, Augsburg Fortress made contributions to the plan in evvery year when Augsburg Fortress did not have an operating loss, and even in many years in which it did have an operating loss. For example, this year, Augsburg Fortress made a $900,000 plan contribution despite expected operating losses.
15. Where can I obtain a copy of the most rrecent plan document and plan summary?
A. By written request to Sandy Middendorf at Augsburg Fortress Publishers, 100 South Fifth Street, Suite 600, Minneapolis, MN 55402.
16. How do the current actions impact the decisions made last summer to terminate the Retirement Plan I for Employees of Augsburg Fortress Publishers (plan I) and have Aetna Insurance Company buy annuities to fund the guaranteed benefits in plan I?
A. Current actions have no effect on these prior decisions. If you are receiving a guaranteed benefit from Aetna, you will continue receiving that benefit. Current actions will impact only the nonguaranteed portion of your benefits (all the benefits in plan II), including cost of living adjustments.
17. Are current Augsburg Fortress employees now without a retirement plan?
A. No. Employees are eligible to participate in a defined contribution plan — a 403(b) plan common among not-for-profit organizations.
18. Does Augsburg Fortress match employee contributions to its 403(b) plan?
A. Yes; Augsburg Fortress matches half of each eligible employee’s contribution to the 403(b) plan up to the first 6% of an employee’s eligible compension.
_________________________________________________________
OTHER PRESS AND BLOG COVERAGE
*Beth Lewis, President & C.E.O., Augsburg Fortress
*KSTP-TV ABC (Minn.)
*St. Paul Pioneer Press
*Associated Press
*FOX-TV 11 (Arizona)
*WCCO (Minn.)
*KXMB-TV 12 (N.D.)
*Pastor Justin Johnson (N.Y.)
*Pastor Doug Kings (Ill.)
*Pastor Erma Wolf (S.D.)
*Minnesota Public Radio
*Pastor Chris Duckworth
__________________________________________________
copyright © Pretty Good Lutherans / By Susan Hogan
“Art Work” photo by Renee of Playing With Brushes. Framed photo of “Hanging by a Cross” by Jam 343. Creative Commons licenses.
(Associated Press style is followed regarding the spelling of “canceled.”)
As of this 1/3/10 posting, neither the ELCA News Service nor The Lutheran magazine had reported this story.
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Tags: Augsburg, Books, economy, employees, Fortress, publisher, publishing, retirement, workers
January 4th, 2010 at 6:32 am
It’s hard not to see this a one more step towards AF’s inevitable dissolution. (How about a contest: Which will go first, The Lutheran or Ausgburg Fortress?) And the ELCA’s “not my problem” response, especially in relation to current retirees, shows yet again how pathetically the church treats its own employees. I think that before there are any more social statements or bishops’ letters issued, the ELCA’s hierarchy should engage in an intensive Bible study of Luke 6:42. As so many corporations have shown recently, being aboard a sinking ship is just not a good place to be. It’s probably best to find a lifeboat and row away as fast and as far as you can.
January 4th, 2010 at 7:13 am
Another thought: The Q&A says “the plan’s benefits are not guaranteed by the Pension Benefit Guaranty Corporation” because it was organized as a “church plan” (similar to church’s being able to avoid paying unemployment insurance). Yet the ELCA says it has no “no obligations or fiduciary duties” towards the plan. Does that mean Augsburg Fortress is a church? If not, how did it get away with this?
January 4th, 2010 at 7:30 am
I’ll remember this next time the ELCA publishes a social statement on economic justice. The just thing to do? Liquidate AF and fund as much of the pension obligation as possible. Anything less is self-serving institutional survival at the expense of faithful individuals.
January 4th, 2010 at 8:57 am
Impacted employee sent a note, and gave me permission to share these questions:
“How could they have kept us in the dark about this plan being underfunded for nine years? I mean, ethically, how could anyone do that, much less a church?”
January 4th, 2010 at 9:21 am
(Note from Pretty Good Lutherans: Thanks for the link correction. It has been fixed in the story.)
Two things:
1) The link to the audit report:
http://www.afcanada.com/company/images/Augsburg_Fortress_2004_Audit_Report.pdf
(I note that the link in the story is to a ‘local’ file.)
2) The financial struggles at A-F are painful for everyone – a potential bankruptcy (in point 3) would be a major loss to English-speaking Lutheranism as a whole.
It’s obvious that the ELCA would need some form of publishing arm – if anything else to produce worship resources – but I hope that Ms. Lewis can lead A-F to a path that is sustainable.
I’m not an ‘insider’, but it seems that there has been a struggle to find publications that can really get A-F ‘over a hump’, so to speak – from the Lutheran Voices series to the Book of Faith to the featured books recently by Garrison Keillor or Maya Angelou.
A good question to discuss just might be ‘what do Lutherans these days want to buy and how can we encourage stewardship of Lutheran publishers”? (I note this after a visit to a large ELCA congregation with a ‘bookstore’ in the lobby… and a distinct lack of material by any Lutheran publisher, save for the Wengert edition of the Small Catechism.)
How does the A-F business model compare to models/success/struggles at CPH and Eerdman’s?
January 4th, 2010 at 9:44 am
I will start by saying that I was an AFP employee for almost 10 years and am affected by this change. I will also say that, in spite of everything, I still want the house to succeed if for no other reason than they perform an important part of the ministry of the wider church body. That being said…
THIS IS RIDICULOUS! There are retirees that gave 20, 30, 40+ years of LOYAL service to AFP and the church. These folks who came to work everyday, helped spread the Good News of the church, and went home at night with their mission fulfilled and every expectation that their hard work would be rewarded at the end of a long career.
People who are now wondering if they will have to go find a job when they should be relaxing with family or have the freedom to volunteer or even do nothing. People who cannot go back to work because of health, mobility or age issues. People who may lose the comfort of home and security because of “underfunding” and a church that will not step up to protect the most vulnerable.
I am relatively young and will have 30 some years to fix this mistake. My colleagues and friends, those already retired or close to, are not so fortunate. Even with a lump sum payout (severly reduced from actual accural and more-than-likely taxed at a bonus rate) will do little to sustain them through their twilight years.
I implore the ELCA as a church, as decent human beings, to think about what can be done for the highly impacted retirees. Look a little closer to home this time when considering social and economic justice. This isn’t just a problem of the publishing ministry, it is a problem of the church and should be looked at as such.
January 4th, 2010 at 9:55 am
@ Chad
Eerdmans is not a denominational publisher, but a (general?) publisher of Christian resources that sells to a largely evangelical market. It is not expected to publish denomination-specific material, resources for churches bound to a particular tradition, or to create affordable resources for small churches, as are denominational publishers.
Eerdmans has theological commitments, for sure, but it doesn’t have a commitment to particular congregations or a particular denomination. Eerdmans, along with Group and other non-denominational Christian publishers, is much more market-based than are denominational publishers such as Augsburg Fortress. If something doesn’t sell well, it can cancel the product.
A denominational publishing firm can’t do that as easily … it has a mission of serving a denomination and creating specific resources for that denomination, no matter how well or how poorly that denomination is performing.
January 4th, 2010 at 10:24 am
As a former AFP employee who is not affected by this change, my heart is aching. Part of what makes the recent changes at AFP so painful is that people don’t always see the publishing house as being a part of the church. They often view it as just another company offering resources rather than seeing it as a non-profit ministry of the larger ELCA.
When it comes to Eerdman’s and Concordia, they have had their own setbacks in recent years. Eerdman’s, while having denominational ties, is not obliged to print anything that it doesn’t think will make a profit. Concordia has the benefit of being the pub house of a denomination that thinks it has the only answers. Concordia has continued to have the congregational and pastoral loyalty that AFP has in great part lost.
Please pray for the folks at AFP, including those who made these decisions. I continue to choose to believe that they are trying to faithfully act out their vocation.
January 4th, 2010 at 11:09 am
Susan-
To a certain extent this is already happening. AFP has published curriculum that is tailored for both ELCA and its full communion partners. As an example, go to the Akaloo or VBS websites and it will ask you what denomination you are so that you will be appropriately directed.
January 4th, 2010 at 11:11 am
ELCA may not have a fiduciary responsibility to AFP – but they have a moral obligation to support the people who supported them for years!
The retired AFP staff and those close to retirement, paid their dues with the promise that their retirement was secure. They are now living their lives within the budget those funds provide. Taking that income from them IS going to have major repercussions.
I can just see it now — retired AFP staff on the corner holding signs that say “Just lost my pension from Augsburg Fortress… God bless”
January 4th, 2010 at 12:20 pm
This decision on the part of A-F regarding pension plan is all wrong on at least two levels. Morally: (now water over the dam) nine years on unannounced underfunding
Crisis response plan:
First, retirees and near retirees
1. do not seem to have been included in the decision for “lump sum” pay out
2. those who allowed/sat through/oversaw the underfunding should not be making
decisions about crisis management options.
3. assuming best intentions of those “considering the options,” were/are they
trying to fund at 100%? A more modest (and realistic?) approach to the ELCA
and/or outside funding entities may be a plan that “costs” 10 to 12 million more
than on hand (rather than 24 million) with outside funding and the purchase of
annuities based on the options chosen by retirees and near retirees.
I hope that the ELCA and A-F will continue to talk and serious engage those whose lives will be radically changed by any decisions regarding their pensions.
January 4th, 2010 at 3:12 pm
Thank you very much for being the first to break this story, Susan. I’m a former employee (1998-2004) who was only expecting a small pension payout eventually anyway. Nevertheless, I am disgusted by the treatment of long-term employees who have retired or are close to retirement and are/were depending on their pensions. Many of those folks received very small salaries over the years–not enough for them to put any money aside in an IRA, so the pension and Social Security are all they have. While AFP may well be within its legal rights to shut down the pension plan and pay out a small porportion of what they owe, what it’s doing certainly isn’t ethical.
By the way, just to clarify something about deonominational publishers: AFP receives absolutely no financial subsidies from the ELCA. That is, it’s considered a “nonfunded” ministry. By contrast, denominational publishers like Concordia and Abingdon do receive financial subsidies from their affiliated church bodies. In fact, as far as I know, AFP is the only major denominational publishing house that receives no money from its denomination. And yet it is part of the ELCA constitution, its board of trustees are elected by ELCA voting members, and its mission focuses on the ELCA. This makes for a confused identity, in my opinion–especially based on what I witnessed as an employee for six years, as the company struggled to raise sales, cut costs, determine how to be “market-driven” while still ELCA-focused, and so forth.
But if nothing else, AFP certainly has a moral (dare I say Lutheran?) obligation to its employees who were promised pensions to do what it can to fulfill that obligation. Making small payouts and then walking away from its retirees do not, in my view, fulfill that obligation in any way.
January 4th, 2010 at 3:17 pm
Pastor Doug,
Re: your earlier statement.
I don’t see any reason why The Lutheran magazine must tumble. If it can liberated from publishing with Augsburg Fortress, then it can concentrate on the other things that need to happen.
And, of course, I haven’t heard from anyone who wants the publishing house to tank. What they want is justice for the workers, particularly the retirees.
And they want transparency from the ELCA about these matters.
January 4th, 2010 at 3:46 pm
Sorry if it sounded like I was calling for either of these events. I am just projecting from what I seem to be current trends. As you know, denominational journals are shutting down one after another and AF certainly isn’t the only church publishing house in trouble. I see so much denial about how serious the trouble is for the ELCA (and other denominations) which results in little if any planning for them. (In some ways the ELCA itself is a product of that denial.) As I wrote in my blog, get rid of “survival” as the prime objective. That is probably out of anyone’s hands at this point. Instead, everyone needs “to do the right thing”, put people before institutions, and yes get justice for those who have commited themselves to this endeavor over the years.
January 4th, 2010 at 3:51 pm
Finding a retirement plan running short of assets amid the recent financial crisis is probably not ‘news’ in the classic sense.
However, underfunding that plan for nearly a decade ought to be a criminal offense.
I suspect it will be difficult, if not impossible, for “The Administrative Committee for the plan, which consisted of the company’s Chief Executive Officer, Chief Financial Officer and Vice President of Human Resources” to maintain the confidence of people working below them. Perhaps it is time for the administrative committee to pursue other career opportunities?
January 4th, 2010 at 3:53 pm
The 3 musketeers said, “All for one, and one for all!”
Is it possible to confront financial pain *together*? To decide *together* next steps? Everyone face the situation *together* and figure out what to do?
The ELCA financial distress and the A-F pension underfunding are realities. How would those most directly affected want to respond? I am glad I am not in the presiding bishop’s or the CEO’s shoes so take this offering with a “grain of salt”- but I suggest they gather their community together to seek a new way forward. I believe we all need to learn how to do this. 20 years ago!
Meanwhile, is there anything theo-practical we can do together to support these servants?
January 4th, 2010 at 4:30 pm
I am a former 20-year employee, counting on this pension in another 8-10 years. So much of what has been written is correct — people worked for modest salaries because of their commitment to the church and to Augsburg Fortress’s mission within that church. I have a little time to try to recoup, but there is no way to recover all that has been lost. I just think of those who are already retired, who have no way to go back to work. How will they live?
AF’s action may be legally acceptable, but it is morally reprehensible. I understand the challenges denominational publishers face, but does that negate their responsibility to pension-holders?
Right now, this way, the publishing ministry of the ELCA unjustly continues on the backs of people who were faithful employees. There must be another way.
January 4th, 2010 at 5:28 pm
This nugget is from an ELCA News Service story dated August 17, 2009. The headline reads: ELCA Council Prepares for the 2009 Churchwide Assembly. Here’s the excerpt:
“Received a report from David Swartling, ELCA secretary. He said there is a security plan for the assembly and, as of Aug. 16, no one had requested a permit from the City of Minneapolis for a public demonstration. He said the council’s executive committee met in executive session Aug. 16, and heard a confidential financial report from Beth A. Lewis, president and chief executive officer of Augsburg Fortress, and it addressed legal issues involving the publisher. In a separate executive session, Swartling said the council and the ELCA Conference of Bishops met to discuss plan amendments to ELCA pension and other benefit plans, including legal issues.”
Here’s the full story link: http://tinyurl.com/ycloxma
January 4th, 2010 at 5:33 pm
Here’s another exercise in spin by the ELCA News Service. The story, dated Nov. 7, 2008, reports that Augsburg Fortress is shutting down nine stories and “eliminating 55 positions”
Does “positions” mean “people” — human beings?
The headline, however, plays down the human toll and bad news. It states: “Augsburg Fortress Publishers Announces Changes in Business Model.”
Here’s the story link: http://tinyurl.com/yjvzey6
January 4th, 2010 at 5:40 pm
Susan,
In light of what just happened to AF’s retired workforce, I shudder to think what else was discussed with the Bishops concerning plan amendments, including legal issues.
January 4th, 2010 at 5:50 pm
These are some of the other links that show how the ELCA News Service has reported on Augsburg Fortress:
May 6, 2008: “Sales of Worship Resources to Impact ELCA Publisher in 2008″
http://tinyurl.com/ydlbsvh
Oct. 31, 2007: “Augsburg Fortress Board Acts on ELCA Publisher’s Future”
http://tinyurl.com/ycepxfn
May 7, 2007: “ELCA Publisher Finishes 2006 With Positive Operating Income”
http://tinyurl.com/ydflqth
Oct. 26, 2006: “ELCA Publisher Expects Positive Financial Results for 2006″
http://tinyurl.com/ygkrc59
March 9, 2006: “Beth Lewis Reappointed President and CEO of ELCA Publisher”
http://tinyurl.com/ydqjegy
Feb. 27, 2006: “ELCA Publishing Ministry Exceeds 2005 Sales Goal by $2 million”
http://tinyurl.com/ycmzjtl
January 4th, 2010 at 5:55 pm
Here’s the release the ELCA News Service issued late this afternoon. No voice is given to the workers or retirees. No response given to the Augsburg Fortress claim that the ELCA turned down its request for help.
http://tinyurl.com/yabplqs
January 4th, 2010 at 6:03 pm
The story mentioned it was the Office of the Secretary’s report. Is it possible that David Swartling isn’t as open as Lowell Almen?
January 4th, 2010 at 8:16 pm
As one of those who held a “position” that was eliminated in November 2009, it came as a great surprise. And it is hard to be seen in terms of the position rather than the individual. I was lucky, I have a new employer. And my pension was not through the AFP plan since I am an ordained pastor. Not everyone who has worked for AFP has been as lucky. Please keep these folks in your prayers.
January 4th, 2010 at 8:18 pm
Heidi: Thank you for writing.
January 4th, 2010 at 9:01 pm
Former employee here, though not a participant in the now defunct pension plan.
This makes me very sad, and shakes my confidence in our Church’s institutions. I share many of the moral and ethical concerns posted above about fulfilling, as best as possible, financial obligations to employees. This is not a situation that was created overnight, or even just in this current economic climate, it seems to me.
More importantly, is this just a signpost on the pathway to denominational death for the ELCA (at least, death of the denomination as we know it)? With decline taking place across the ELCA board – attendance figures; congregational giving; AFP sales revenue; staff at Higgins Road, synod offices, seminaries; seminary enrollment and revenue; Thrivent matching gift programs – it makes me wonder if we should get ahead of this curve and radically rebuild and reshape our denominational shop rather than letting it suffer through a somewhat controlled collapse, as we seem to be doing now.
January 4th, 2010 at 9:21 pm
Pretty Good Lutherans!
We all share in the sorrowful news so well-reported here on this site. Bells toll everywhere, and their tunes include many of our names or ministries as well. We may rightly mourn the great losses that will come to the lives of honored AFP retirees, but we must also be prepared to mourn other downturns, other terminations, other tribulations. And in spite of the times of mourning, to find the times of rejoicing as well.
As one who worked with many of the faithful folks at AFP for several decades, I can attest to their high-quality service, their commitment to the ministries they took on, and their overall pluckiness in continuing adversity. More than Stoics, these folks took nearly impossible circumstances and determined to make something useful of what they found. Incredible!
I want to always remember that the leaders and employees of Augsburg have for years operated within a context that continues to chew at their spirits. Saddled with an almost impossible business model bound by the iron of constitutional language, they have for years continued to soldier on, with frequent flashes of brilliance and creativity that gathered our attention and gave us courage. I always found these folks to be a source for hope. They were — and are still — examples of faithfulness that I could never live up to.
As one former colleague, I salute with deep appreciation all whose lifestyles will be severely hurt by this turn of events, and remind them as they reminded me so many times, that their service to the will of God for the world accomplished much. Their lives have not been wasted, nor will their futures be wasted, either!
January 5th, 2010 at 4:19 am
Missouri Synod people: Please stop trying to seize this moment to plug your publishing house on this Web site or carp about the ELCA.
(My note is addressing some of the people whose comments I’ve chosen not to post.)
January 5th, 2010 at 8:58 am
Bob- Thank you for your good words. You have described what I too have experienced over many, many years. (My dad worked for Fortress for 20 years.) These folks have given much, not because they were seeking great rewards but because they were living out their vocation and desired to serve God and the church.
January 5th, 2010 at 9:33 am
Randy:
Re: “However, underfunding that plan for nearly a decade ought to be a criminal offense.”
Completely agreed. There’s some tough questions to be asked: was the plan ‘willingly underfunded’ or was the plan administrator selling a bill of goods?
… and no matter how the ELCA tries to explain the financial/legal issues, this is a pretty horrific PR / humanitarian disaster. We all view A-F as an “ELCA Brand” in one way or another – and we need to do right by those that have served us for so long.
To address the business model:
Re: The headline, however, plays down the human toll and bad news. It states: “Augsburg Fortress Publishers Announces Changes in Business Model.”<
The publishing industry (as we know) is in a pretty tight spot – and A-F’s retail operations were threatening to drain the treasury even faster. A-F has been struggling with the issue of finding not just “the model” for sales, but also in creating products that people want to (/need to) buy. That tag line of “not accepting titles in the consumer line” is a pretty significant shift – and A-F appears to be attempting to market ‘bigger authors’ in that space, like Garrison Keillor’s “Life Among The Lutherans” and a Maya Angelou-themed offering. (Along with the “Book of Faith” effort.)
The one thing I don’t understand about A-F’s model at the moment, particularly with online sales: why does A-F allow a reseller (Amazon) to undercut them on price as drastically as they do? If you compare prices for the same item purchased from A-F versus Amazon, Amazon is constantly $6.00-$7.00 cheaper… and then Amazon offers free shipping on orders over $25. I’ll note that in comparing prices for “The Lutheran Study Bible” Amazon does not offer a discount over the A-F price and Amazon does not offer the value-added editions like the better covers, large print, etc. Perhaps A-F is changing their model with resellers, but there are still quite a few A-F offerings (such as the Keillor book) that sell for at least 30% off the A-F price when purchased through Amazon.
January 5th, 2010 at 10:33 am
There are many affected, and my heart goes out to them all. However, for those that say they worked 20-40 years and expected to be “rewarded” – were you not paid a salary for your labor?
Folks, I advise everyone better wake up to one important fact: The Lord helps those who help themselves. Save your own money. You cannot count on a business or the gov’t to provide for your retirement. It’s your retirement, not theirs.
A business feels no empathy, it exists as an entity to grow wealth. Nothing more, nothing less. A business is not good, it is not evil, it just is.
Why would a business close down and sell its assets to fund a retirement plan that it was under no obligation to commit any dollars to in the first place? You’re under no obligation to sell all your personal assets to fund your lifestyle, but many of you will not sell your homes, clothes, vehicles, etc. You may make some sacrifices (painful ones) to survive, much like AF did.
Your lifestyle is based on want, need, and desire. When a child receives a lesser present than they were expecting, a parent reminds them to be grateful for the gift they received. Do you join them in faulting God, Santa Claus, and the parents for not spending more? No.
Would your anger be better directed toward yourself for not saving enough and being grateful for the money you did receive?
Pray on it, sleep on it, and in the calm of the new day the light will shine brighter. Remember that God is in all things.
January 5th, 2010 at 10:57 am
I’m going to give Beth Lewis the benefit of the doubt here, and say she may have been working on trying to fix this situation since she came. However, I think we might all agree that within the restraints of the economy and the AF business model only so much could be accomplished.
I was thrilled to see The Christian Handbook in a Family Christian bookstore. This seemed to address the cross-marketing that would help the bottom line.
January 5th, 2010 at 12:14 pm
Cold. Cold. Cold.
January 5th, 2010 at 12:52 pm
There are many affected, and my heart goes out to them all. However, for those that say they worked 20-40 years and expected to be “rewarded” – were you not paid a salary for your labor?
Retirement packages in the form of matching and/or pension contributions are included in that number called “total compensation” and are considered to be part of an employee’s salary. (Enough that most plans are insured – with evidently an exception here – as part of the Pension Guaranty Corporation.)
January 5th, 2010 at 1:58 pm
To the individual who send a comment under the name “Observer.”
You make a critical point. But I don’t post anonymous comments. I hope you’ll write back with your name. It’s okay if you’re Missouri Synod. You seem like a swell person.
January 5th, 2010 at 2:32 pm
@Walt
“The Lord helps those who help themselves”? Ouch.
I am troubled by your tone. Do not those who worked and were expecting a pension have a right to gripe? Do not we in the church have a right to be worked up at the church for not standing by its faithful employees? Hindsight is 20/20, but wagging a finger at hurt retirees is not helpful.
January 5th, 2010 at 2:41 pm
For anyone who is interested in this issue, wants to take action, and is on Facebook, please join the public group (just created today, January 5) Augsburg Fortress Pension—Speak Up!
January 5th, 2010 at 3:42 pm
I meant no finger wagging to the hurt retirees – merely a lesson to be learned to anyone still working. I have 30+ years in corp retirement plan management.
The Pension Guarantee Corp is backed a company that is 12 trillion dollars in debt. (see: US Federal Gov’t) Protection here wouldn’t have made this fund solvent, regardless of what you may think.
People must stop micro-viewing their lives and take a macro-viewpoint on what their goals are in life and what truly is important to them.
I sympathize with the retirees that lost their retirement money. I know I would be just as devestated. It would be easy to complain about the “evilness” of AF, ELCA, and the lack of protection under Pension Guaranty. But that would be wrong.
AF was not the first, and will not be the last. No one will take care of you better than you and your Lord. That is what should be gleaned from this – not that the company has a responsibility to care for you in retirement, especially not the gov’t. They do not.
As far as being “worked up:” Yes you have a right to feel hurt and angry. No, you do not have a right to blame AF or the church. If you do, then you lack the true understanding of a business. It’d be like being angry at a book because the ending didn’t turn out the way you’d hoped. The book feels nothing, it has no emotion. It isn’t good, it isn’t evil, it just is.
If the business doesn’t have the money, they don’t have the money. End of story.
Your children expect to receive gifts every year for Christmas, but if you don’t have the money to buy them one, does it make sense to sell your house to pay for one? Should your neighbors be forced (see: taxed) to pay for this? (see: Pension Guaranty Fund)
This is just another Unintended Consequence of the overal problem created by our elected officials. ERISA 1974. The greatest thing you can do for yourself is to shake the liberal idea of dependency.
If hating me as an “evil Capitalist” makes you feel better, then feel free. I fear the matter is beyond your understanding. At least I tried.
Signing off, Walter
January 5th, 2010 at 4:39 pm
Walter,
[I suppose there are likely vast philosophical and political chasms between us, which are not likely to be bridged adequately through internet postings... nevertheless, when I saw your last post I wrote the response below. In short, I don't read what you wrote and think "evil" Capitalist- but I do think you may be "misguided" in your thinking on this matter. The distinction being that I do intend to question your values, intelligence, or ethics (so much "discussion" on the web is unfortunately just people calling others amoral, stupid or immoral in rapid succession). Now, of course, turnabout is fair play and you are free to see me as a misguided socialist.]
You wrote: “No, you do not have a right to blame AF or the church. If you do, then you lack the true understanding of a business. ”
Isn’t the “business” in question Ausburg-Fortress, the publishing house of the ELCA? Who then would bare responsibility? Who profits, directly or indirectly from this decision? Who did the employees work for all that time?
You wrote: “It’d be like being angry at a book because the ending didn’t turn out the way you’d hoped. The book feels nothing, it has no emotion. It isn’t good, it isn’t evil, it just is.”
Except a “business” or a “book” or some other inanimate object didn’t underfund the pension system … people did. People run businesses… people make policy… there is no abstract “business” out there that exists in some amoral vacuum. To wax philosophical about the realities of “business” merely allows the people who make up that business evade all responsibility.
You wrote: “If the business doesn’t have the money, they don’t have the money. End of story.”
I think this is the beginning of the story… Not only the what led up to this needs to be examined, not only what can be done in the future needs to be discussed, but whether we need to automatically accept this given reality needs to be questioned. Rick Warren can raise 2.4 million to make up a budget deficit (a “business” reality, for sure) in a matter of days by sending out an email. What limits the far larger ELCA from doing something similar?
Let me close by saying… honesty, including honoring ones commitments, is a Christian virtue. Care for ones neighbors is a Christian virtue. Economic justice is part of the Christian mission… That’s what is at state here. And no coldly rational analysis… or calls for individual financial autarky… can replace the necessity of honoring the church’s commitments, caring for our neighbors, and insisting that people matter more than ledger calculations!
January 5th, 2010 at 4:46 pm
autarky: “economic independence or self-sufficiency”
January 5th, 2010 at 5:21 pm
I’m stunned and shocked for the loss of this pension plan by the publishing arm of the ELCA. I will pray for those whose lives are impacted. And I will pray that this is not the last word for them or this exit plan of the current AFP leadership.
I have been wondering why AFP didn’t work their pension plan through the ELCA Board of Pensions where ministry leaders and their families are supported by retirement/health/death/disability plans.
As a member of this group for over 25 years, I have had nothing but positive experiences with the openness of the BOP, its mission, efforts and adjustments through the ups and downs of the economy.
Any one know the answer to this question?
January 5th, 2010 at 6:18 pm
Lynne, The Board of Pensions is not in great shape either. Most retirees taking a 9 percent reduction beginning this year. They have done well, but are hurting.
January 5th, 2010 at 6:56 pm
Having written many executive state budgets while serving as the Budget Director for my state’s governor, I can truly say that Walter is correct. At the end of the day, whether of socialist or capitalist notions, Defined Benefit Pension Plans are failing in great numbers all across this nation and as such are being phased out with extreme rapidity.
Why? Without getting too specific, Defined Benefit Pension Plans often guarantee alot in the form of entitlements – guaranteed cost of living adjustments, disability payments, etc. – that strain their sustainability.
Yes, while under a growing population and a strong economy, these plans can and do work. However, at the first severe economic downturn or with a drop off in employee contributors (due to downsizing, offshoring, private contracting, etc.), these retirement structures become severly underfunded.
For these reasons, most companies now look toward Defined Contribution Retirement Plans (401K, 403B) almost exclusively for their new employees. In my opinion, most current Defined Benefit Pension Plans are at best “generational robbery” plans and are at worst “pyramid schemes”.
Regardless, my heart goes out to the AF employees.
January 5th, 2010 at 6:58 pm
A helpful explanation. Thank you, Kevin.
January 5th, 2010 at 7:29 pm
“For these reasons, most companies now look toward Defined Contribution Retirement Plans (401K, 403B) almost exclusively for their new employees.”
And therefore something that was created to supplement traditional pension plans have now come to replace them. 401K’s were not, are not, and will not be designed to accommodate the retirement income needs of most people. *
You can leave off the “generational”… this is just plain robbery. Whatever short-term fiscal sense terminating pensions may make, that does not take away from the extraordinary negligence experienced by so many retirement systems. We need to create a way to insure a secure retirement for people who have worked hard their whole lives.
*http://www.usatoday.com/money/perfi/retirement/2009-10-19-401k-savings-retirement_N.htm
January 5th, 2010 at 7:31 pm
Thank you, Dana!! The reference helps, too.
January 5th, 2010 at 7:34 pm
I’ve worked for a couple of different denominational employers, and in each of these, there was always a certain tension between ministry and business. Do employees have a ministry or do they have a job? And are employers a church putting its ministers to work in the service of God and God’s people, or a business trying to keep the dollars coming in so it can keep going? Or both?
We like to say both, but when the employer’s continued existence is on the line, it’s a business.
I’m glad Kevin above pointed out that many, many other businesses have had to shut down their pension plans in recent years. Churches and church employees aren’t exempt. Alas.
January 5th, 2010 at 7:57 pm
Dana, thanks for your comments. You continue by writing…
“And therefore something that was created to supplement traditional pension plans have now come to replace them. 401K’s were not, are not, and will not be designed to accommodate the retirement income needs of most people. ”
I must respectively differ from your opinion on this. As more and more is being asked of current employees (through their payroll deductions – which of course means less pay) to keep Defined Benefit Pension Plans solvent, I’d guess that many employees, given a chance, would love to shift their balances into 401K/403B plans.
But I do agree with you on one point. Unless the US Gov’t amends its ruling to allow larger levels of yearly contributions into 401K/403B/IRA accounts, they will remain far less effective than they should be in carrying the country’s future retirement load.
Finally, please remember that there is no more magical guarantee of payout with Defined Benefit plans than with Defined Contribution plans. Both can be invested in the same risky or conservative mixture of equities, bonds or cash. This story shows that pensions are just as risky.
January 5th, 2010 at 8:02 pm
Man, this is all so confusing. I don’t know what to think. I can’t imagine how the Augsburg Fortress workers/retirees figure it out.
January 5th, 2010 at 8:55 pm
@Chad
Amazon is a valuable trade client for AFP. The standard markup for a book is 40 percent. When you are both the publisher and the distributor, you make even more money.
Amazon frequently offers products at a discount because they can afford to sell the books at a lower price because of the volume that they sell.
AFP does not offer more than 10 percent discount on the Lutheran Bible and ELW products. If you see either of these products discounted on Amazon they have either made a mistake or are betting that you will buy other books from them as well.
January 5th, 2010 at 9:19 pm
Former AFP employee here. I’m watching the discussion as it goes – not wishing to comment at this point.
But I did want to reply @Chad – AFP doesn’t “allow” Amazon.com to undercut prices. It’s an Amazon.com requirement. If a publisher wants its books to be available through Amazon.com, the publisher agrees to sell them at a discount (as with almost all resellers, like Barnes and Noble, Family Christian, etc.) and Amazon.com is allowed to set the price.
So, it’s a bit of a dilemma. If a publisher allows its books to be sold on Amazon.com, then the books can reach a wider audience and customers can choose how to order, but the publisher’s profits are lower. If a publisher does not offer books to Amazon.com, Barnes and Noble, etc. at a discount (like the new Lutheran Study Bible, etc.) then the resellers sometimes choose not to carry them, and customers don’t have the same access to them.
January 5th, 2010 at 9:40 pm
Again, just to remind folks: Augsburg Fortress is not funded by the ELCA. So AF employees are not church employees. Of course, this doesn’t explain why AF could call its pension plan a “church plan” and therefore avoid fees and federal pension coverage while also avoiding participating in the ELCA plan run by the ELCA Board of Pensions. (The exception to this is pastors whose plans are through the church, but that’s a small number of AF employees.)
January 5th, 2010 at 9:45 pm
Susan, you asked many good questions about the responsibility and accountability of AF management. I can answer one of your questions, about how executives are hired.
The CEO is approved by the board of trustees, like in any nonprofit. (The board is elected by ELCA voting members at the churchwide assemblies.)
Other management is hired through a standard HR process, with the top management reporting directly to the CEO, who thus has final say about hiring.
In other words, AF is like any other business or nonprofit in terms of its hiring practices and hierarchy, at least in the general sense.
The main feature that’s different is that some of the positions require the candidate to be a member of the ELCA (and sometimes a rostered clergy).
January 6th, 2010 at 5:48 am
Readers,
Beth Lewis, C.E.O. of Augsburg Fortress, posted this entry to her blog this morning: http://tinyurl.com/y96bsv4
Her post is mostly a rehash of the letter sent to employees. She also links to the ELCA News Service story, which was told strictly from the institution’s viewpoint.
The lines put in bold on the Lewis blog are striking. For some of the workers and retirees impacted, it feels like Lewis and the decision-makers are asking for a pat on the back. That may not be the intent, but that’s how it’s coming across to some.
One person wrote: “It’s like someone burning down your home and then saying they recovered a few of my sweaters. Rather than giving them all back to me, they’re going to spread them around to everyone who lived there. Fine. That doesn’t make then a hero. They still burned down my house. Come on. Why do Augsburg Fortress leaders keep focusing on themselves? Because they want to save face and keep their jobs.”
January 6th, 2010 at 6:49 am
How did this get “underfunded? Did A-F use this money to cover their operating expenses? And will this happen to ELCA Pastors and other BOP pension participants in the future as the ELCA faces its own financial shortfall??
January 6th, 2010 at 8:41 am
@Heidi/Emmy – thank you for the clarification; it’s helpful to know how the relationship between publisher and reseller works.
January 6th, 2010 at 8:42 am
Walt and Kevin:
I am a former 20-year employee. When I was at Augsburg there was no option on the retirement plan — it was either the defined plan or nothing. Your postings suggest that we should have chosen differently. There was no choice! That pension was indeed part of the compensation we received.
When I left Augsburg, I asked if I could receive a payout of the funds in my pension account, so I could invest it myself, and was told that was impossible. Now, however, it is possible — only at a severely reduced amount!
Furthermore, to suggest that we should have put other money away, that we should not have counted on the plan is heartless 20-20 hindsight. There were many people who worked for minimal pay, who had no additional money to “put away,” but who assumed that as they were faithful to their employer all those years, their employer would be faithful to them, delivering what had been promised. And there was a time when that was true at Augsburg.
The question and answer paper that came with Beth’s letter said that one consideration was filing bankruptcy and sell off the assets, but that would be a “tragedy.” Well, 500 people not receiving their due retirement benefits, some of whom are in their 70s and 80s who will honestly be destitute without it, is a tragedy also. I think the publishing house should meet its obligations. Period.
January 6th, 2010 at 8:47 am
This is to Susan:
I welcome any well-mannered debate. Honest debate founded this country – and is our best bet to save it. Only then can you make logical decisions based on truth and fact.
In order to understand a business you must take the first step and remove all emotion. It is an endearing quality in every Lutheran, the desire to help a neighbor. But in business it has a very limited role, if no place at all.
You ask “who” profits from this? Answer: No one. There is no money, that’s the point. You ask who bares responsibility? Answer: Every employee that worked at AF. Show me language anywhere that says the gov’t or any company is responsible for YOUR retirement. There is none – we are each “responsible” for ourselves and family.
You are correct in that you do have a Socialist viewpoint.
You must understand the FACT: AF had ZERO responsibility to contribute to the fund. (see: ERISA 1974) NONE. There is no “responsibility” for you to question! Except that of the retirees. The fact that they did contribute while runnning in the red this past decade shows the leaders of AF did care about the employees. Might not have been a smart business decision, but there is no better sign of “emotion” and Christian love at a business. At the risk of losing the whole company, I would probably have advised against it.
You can question why the business didn’t return a bigger profit (good luck if you don’t own it); you can question the decision by company leaders not inform retirees earlier of the underfuding (that actually might be the one worthwhile question). Unfortunately common business practice is not to say “the sky is falling” until it actually does. In business, a good year of revenue or high returns in the market could have helped save the fund. It is unfortunate this was not the case.
You ask how Rick Warren can raise millions to save his church and employees? Easy – it’s called DONATIONS. Feel free to start going door-to-door to ask for donations to AF pension fund. What you didn’t see Rick Warren do, was ask the Congress to TAX everyone else to raise this capital, or sue his parishoners, which is basically what YOU are suggesting in your prior post.
You said “whether we need to automatically accept this given reality needs to be questioned.” Reading into your statement, I would assume you mean “run to the gov’t to see if AF can be sued and forced to pay, or if the gov’t would bail AF employees out.”
FACT: Your “gov’t” placed us in this mess. Again, ERISA 1974. Research the facts and find the unintended consequences out for yourself.
Your entire argument is based on opinion and emotion, not fact. This doesn’t make you “stupid” or “foolish” as many times you see posted on internet blog disputes. That you care makes you a Christian. Luckily for you, economic theory is not a religion – so you can question it, explore different choices, and won’t go to hell if you decide to become a Capitalist. The anger you feel is merited, just misdirected. Believe it or not, I once felt the same as you. The truth will set you free.
January 6th, 2010 at 9:26 am
Re: positions filled by clergy
If you’re an ELCA rostered clergy, you can keep your rostered status by working for the ELCA publishing house—I think only in certain kinds of jobs, but I’m not sure about that. I knew rostered clergy who were editors, sales reps., and managers (heads of editorial teams). I know there were positions that required people to be ELCA members; I can’t remember if there are positions that actually require someone to be clergy, but certainly it could help in certain jobs (knowledge of liturgy, worship, church structures, etc.).
January 6th, 2010 at 9:50 am
As a former AFP Clergy employee, I was not required to be ordained, but my experience and education helped me in my job. Because I was alreay ordained, I received a specialized call through the Office of the Secretary of the ELCA and continued to receive my benefits through the Board of Pensions. If I had been a layperson (which most of my colleagues in similar positions were) then I would have been in the AFP plan.
Often in the job postings at AFP you will see a requirement for a level of experience and education that might logically be held by an ordained person. For example, theological training for someone editing theological books for Fortress Press. Ordination would most likely never be a requirement, but it frequently comes with the education and experience being sought.
January 6th, 2010 at 10:14 am
Susan, I agree that a theology degree does not make for a good editor. So what I did not say previously is that a theological degree would be one requirement for a job. AFP also wants people who can write and edit. Those qualities would also be listed in a job posting.
January 6th, 2010 at 10:16 am
Your explanation was helpful. Thanks for taking the time to clarify.
January 6th, 2010 at 10:26 am
lol – I reread my last post and now fear I may offend an ordained editor. To clarify again, a theology degree does not mean that one is automatically a good editor. It is possible to be a good editor and a good theologian and not be ordained. It is possible to be ordained and also be a good editor and good theologian.
January 6th, 2010 at 11:29 am
A friend brought this discussion to my attention today. She apparently attempted to correct the information yesterday but was unsuccessful in having her anonymous comment posted.
First, let me say that this is a terrible tragedy and there should be nobody, anywhere, from any point of view, taking any comfort, joy or otherwise in this news. We can only but imagine the pain this decision caused those who had to make it and those who had to receive the results of the decision.
Second, I would like to correct misinformation posted here. Concordia Publishing House does not receive any subsidy from our national church body, The Lutheran Church—Missouri Synod. We are entirely self-supporting and self-funded. We are appreciative of the fact that we are a full participant in our national church body’s health and retirement program, in addition to which we offer a matching 403(b) program to all our employees.
These are, and will remain, challenging times for denominational publishers.
Our thoughts and prayers are with all who are involved in these decisions and impacted by them. If, in fact, any LCMS persons commenting here have used this occasion to take a shot at the ELCA or AF, I regret that deeply and apologize for it.
Cordially, in Christ,
Rev. Paul T. McCain
Publisher
Concordia Publishing House
Saint Louis, Missouri
January 6th, 2010 at 11:33 am
Thanks, Pastor Paul. I’m glad you were able to step up for your friend. Thanks, too, for clarifying the subsidy issue.
January 6th, 2010 at 12:15 pm
@ Walt
I didn’t say anything about a “government bailout.” Even pensions that are backed by the Pension Guarantee Corp are hardly a government “bailout,” – if you pay for insurance protection, it’s not a “bailout” to make use of it when it is necessary. If my house burns down (God forbid!) then I would not be looking for a “State Farm Bailout” … I’d be looking at the policy I purchased to mitigate unforeseen risk!
You wrote: Easy – it’s called Donations. Feel free to start going door-to-door to ask for donations to AF pension fund.
I say… Exactly… Donations…. if the Publishing House fulfills a vital mission for the ELCA, then there seems nothing wrong with asking donors to support it!
Except… your answer illustrates a massive problem we have in the church: our thinking is stuck in the early 1990′s… no one needs to “go door to door”… that’s not how giving works today, it’s not how Rick Warren raised the millions, and it is not a viable way to help alleviate the church’s financial problems… No ministry of the church should only have the limited options we’ve discussed (bailouts, handouts, lawsuits, bankruptcy, or termination). We have to update our thinking.
It’s 2010… we have seen candidates for public office, even obscure ones, raise millions through small donations on the web. This strategy has helped supplement more traditional forms of giving for charities, and the Saddleback example is just one where it worked for churches. Even the comedian Steven Colbert is able to raise hundreds of thousands of dollars in a matter of days to sponsor Winter Olympic sports teams.
Yet, to my knowledge, the ELCA stays stuck in a “plate and pledge” mentality where (mostly old) people write checks and mail them in (or put them in the offering plate). That’s what we call “stewardship.”
Online communities and networks are not being carefully cultivated… large groups of church members are not being brought together for a common purpose… or in groups sharing a common interest… and we’re stuck with an outdated “business model.” The fact that I can not remember ever getting an email from the ELCA asking for a small ($25) donation to a cause I would support is a problem… it shows that the ELCA is less concerned and connected with me than a multitude of secular charities… and it shows that the ELCA has no mechanism to quickly raise funds in a crisis situation…
So the church stays stuck in the past… leaders lament declines in giving and congregations withholding funds… with out setting up alternative avenues for giving… the church hides behind “fiduciary responsibility” or the lack there of… and people in the church, like me, who would do something to help A-F are left unable and unempowered….
Small donations will not replace traditional forms of giving… and they’re unlikely to be a panacea for large and long-term problems like this… but what if A-F were able to quickly solicit funds from a huge pool of small donors… able to raise enough funds to keep the pension afloat for a few months until the market rebounds or another solution can be found. That seems a whole lot better than what’s being discussed now.
And speaking of being stuck behind the times… why can’t I get an A-F produced Ipod App? Seriously, with all the energy right now in smartphones, netbooks, etc, and I can’t get the Book of Concord, the Lutheran Handbook, or anything else in an easily accessible electronic format? And the publishing house thinks it’s going to survive without massive donations?
January 6th, 2010 at 12:23 pm
Wow what a terrible thing to have happen. I am 35 and can only imagine what this means for retirees.
I guess working hard and being loyal doesn’t count much anymore. Recently I read The Richest Man in Babylon and would strongly recommend it to anyone.
Doesn’t sound like much can be done for those who are losing out. Would the ELCA be willing to pass a plate for those of us willing to donate to those who lost their benefits?
My motto:
Step 1) Work hard…. AND Save!
Step 2) Be generous to those in need – love thy neighbor
My prayers are with you all.
January 6th, 2010 at 12:35 pm
Thanks, Mike. Interesting suggestion.
I just spoke to a worker who said he spent Christmas Day watching “It’s a Wonderful Life.”
Now, he feels like he’s living out the Mr. Potter gets his wish version: “It’s Not such a Wonderful Life.”
Of course, he doesn’t really believe anyone in management wished for this to happen. In fact, he spoke highly of Beth Lewis (as a person), as have others.
January 6th, 2010 at 1:49 pm
For those of you following the media coverage of this story, there should be a piece on Minnesota Public Radio tomorrow (Jan. 7) morning at 7:20 a.m.
For Twin Cities area residents, that’s 91.1 FM. For anyone online, that’s http://minnesota.publicradio.org/features/ (streaming and also archived).
Two of us (a former employee and a retired employee) were interviewed for the piece, and I believe Beth Lewis was also interviewed.
January 6th, 2010 at 1:54 pm
Beth,
Thank you for the information. I’ll be sure to provide a link here, too.
Susan
January 6th, 2010 at 5:07 pm
I think the ideas for an social media driven hat to pass around should and easily could be brought to fruition.
However, one question is: “How much are we trying to raise?” As a young adult, I’ve no experience with pension plans. I understand Contribution plans. What is needed to make sure no one goes without who has faithfully served us through AF?
January 6th, 2010 at 6:33 pm
Former AFP employee here. I think an important word of history and context needs to be added here. What many people forget–and maybe don’t even know–is that AFP and its predecessor organizations have a history of being not just publishers, but printers as well. Indeed, for the majority of its history, Augsburg ran a printing operation at 426 S. Fifth St., and was one of the last publishers of any size to do so.
So what? Well, when you run a printing operation–or, like Fortress in Philly, run parament and garment industries–you also have to negotiate with numerous labor unions. When AFP shut down the printing operation back in the 1990s, one of the biggest issues was working through all the union contracts–union employees made up perhaps the majority of the AFP workforce.
Don’t think for a second that the defunct pension plan wasn’t highly shaped by those labor unions. While I can’t provide absolute proof, the design of the plan has “labor union” written all over it. Those unions were probably a significant factor in the pub house not being part of the church plans; they probably pushed the pub house to this sort of plan in lieu of larger salaries.
Those printing personnel were some of my best friends at the pub house; I’m not writing this to slam labor unions. They’ve done many important things for workers over the years. But these defined benefit pension plans, which are so characteristic of what the old labor union workshops demanded, are not one of them.
So before we bash AFP too hard, or point accusing fingers at the ELCA, let’s remember that this pension plan was created within a specific organizational cultural context that doesn’t exist anymore. That doesn’t mean that mistakes weren’t made afterward, or that what has happened here isn’t awful. I’m a loser in this myself. But the current AFP got left with a terrible legacy, and many people are paying the price for that–including a number of old union workers whose unions ultimately did them no favors.
January 6th, 2010 at 6:53 pm
David,
Thank you for writing and telling us a bit of the printing industry connection.
The key point you made is that you don’t know whether the unions had any connection with the plan. As someone who has worked for newspapers with and without unions, the far better experience was at the unionized shops.
That aside, I don’t hear a lot of bashing. People are speaking out because they care about Augsburg Fortress and the ELCA. They want those organizations to live out the values about social justice that have been instilled into them as church members. If the church can’t or won’t be the church — live out the values it professes — what’s the point of belonging?
Personally, I also think about the way older people are not treated well in our society.
January 6th, 2010 at 7:12 pm
I spoke today with a former employee who worked in the unionized composing room. The unions had their own pension plans. So, don’t blame the unions for Augsburg’s actions. The type of pension plan Augsburg offered was one commonly used and accepted during that time period. The fact that it is not now used does not give AF the right morally to “dump” 500 pensioners.
January 6th, 2010 at 7:14 pm
Thank you!
January 6th, 2010 at 11:38 pm
Karen, thanks for that clarification. That’s actually a bit of a relief to hear, as I think fondly of many of my old printing buddies. More than anything, I wanted to say that the publishing house that created this plan was a very different and complex creature, and that we need to remember that there’s a longer history here than many people know or remember.
I don’t think that the fact that such pension plans are no longer used gives AF a moral right, but that the problems were in some ways built into the plan long ago that lead to today’s moral problems.
I was talking with my partner this evening, however, who works in a think tank that studies philanthropy and nonprofits. He was just editing a paper on another benefits plan that had collapsed. In general, he has seen that most of these defined benefit plans were built around a premise of returns of at least 8.5% per year to as much as 11% or more. But around 2000–about the time that AF says their fund began to be underfunded–those returns began to be around 1% or less. Thus, many not-for-profits have been putting in all the money they are required to put in, or more, and still finding their benefits programs being underfunded according to their long-term obligations.
I’m not trying to let AFP off the hook for its decisions, either now or over the years. But with the window my partner has given me into various not-for-profits of all stripes and their benefit programs, I’ve seen that the picture is a whole lot more complex than easy appeals to social justice and ethics can adequately address.
January 7th, 2010 at 4:55 am
david says: “… the picture is a whole lot more complex than easy appeals to social justice and ethics”
“easy” appeals? really?
January 7th, 2010 at 6:32 am
Dana above mentions that AF should have an iPhone app, which isn’t a bad idea, though they’re caught in the bind most publishers are in where they are both direct sellers and publishers of their own content sold through others. Do give Augsburg some credit. iPhone users can read a number of AF books in Kindle editions – purchased from Amazon which owns Kindle technology – including Lutheran Handbook. For iPhone/iPod Touch users, the Kindle app is free, and Kindle books on iPod Touch aren’t bad. AF has offered a surprising number of books as Kindle editions. But you have to buy them through Amazon.
Like so many businesses stuck between the old and new media technologies (and wondering what’s next – the competing technologies on the market, being shown or rumored these days are interesting but nobody knows which will succeed and therefore where do your invest your very limited resources?), AF is in the middle of vast changes. They have content – good content – and have the challenge of figuring out how to get that to people who need it and will pay for its creation and production.
This is no different from broadcasters, publishers, newspaper publishers, all media – all are trying to find a business model to keep them viable and disseminate their content. That’s just the creation side – the Borders in my neighborhood (probably the “wealthiest” and one would think greatest reading population section of Philadelphia) is closing – its prime location is not enough to keep it financially viable. And the city’s newspapers are in bankruptcy with who knows what final outcome.
Tough times for many, many reasons. Some things systemic, many much, much more related to a vast change that one new media thinker – not remembering if it was Clay Shirky or not – has likened ironically to the Reformation with its long term effects that no one at the time could imagine or expect. Not to take away from the pension issue, but it’s a reflection of something much. much larger.
January 7th, 2010 at 9:12 am
Re: “The type of pension plan Augsburg offered was one commonly used and accepted during that time period.”
More to the point, “Defined Contribution” plans didn’t exist until 1978 or so – and were only gaining widespread use in the 1980s. (Partially as a tool for predicting costs that didn’t rely on stock market fluctuations – and to create a class of ‘silent investors’ unlike the oft-vocal pension fund administrators.)
January 7th, 2010 at 9:58 am
From what I understand from a former colleague, when Augsburg and Fortress merged in the late 1980s, she had the option as a Fortress employee to continue with the Board of Pensions or move to this other plan. She is glad she kept her money where it was.
I suspect that Augsburg employees may have been in the same boat as ALC pastors whose pensions were funded at a lower percentage than their LCA colleagues. At the time of the merger, ALC pension rates went up to a 10% required rate while LCA pastors could remain at 12% but go no lower than 10%. I wonder if the AFP pension plan which we have been discussing wasn’t established at the time of the merger and seemed, then, to be an equitable choice especially for employees formerly paid by Augsburg.
January 7th, 2010 at 11:19 am
this is horrible, awful and complicated. I don’t have anything to add right now — except to thank Susan for providing this space for conversation, and keeping us updated.
January 7th, 2010 at 11:29 am
thanks to the workers for sharing their stories
thanks to all the people who’ve commented and helped us to understand
thanks to all who’ve shared words of support for those impacted
you’ve helped me to understand a bit how a religious community handles its challenges
January 7th, 2010 at 8:49 pm
Susan– You apparently chose not to post my comment. Just for the record I am not an LCMS pastor who wrote just to plug Concordia or bash the ELCA. I am a faithful ELCA pastor who has served this church for many years. I am, admittedly, disappointed in the direction the church has taken over the past decade, and I grieve over the decline of Augsburg Fortress. That they cannot make good on pensions is truly scandalous. Now, that you have chosen not to publish my comment is quite telling. The ELCA policy as of late always seems to be silence, belittle, or ignore the opposition. I’m sorry you have chosen to follow this policy. Anyway, what I have written I have written.
January 7th, 2010 at 8:55 pm
The list of A-F board of Directors appears in the 2009 ELCA Yearbook on p. 17. Are not these the folks responsible for this problem, or at least in its final year or two of festering?
January 8th, 2010 at 8:57 am
As one who was at one time a pension fund trustee I cannot understand why the trustees and administrators ignored their fiduciary responsibility to remedy the underfunding for 9 years. Corrective action taken over time should have allowed the fund to weather the recent economic downturn.
January 8th, 2010 at 9:41 am
Jeff,
That’s the question we’re all struggling with. That’s also why I asked whether any of the trustees are specialists in business and finance. The board appears to have a lot of clergy members and, perhaps, people who work at a business. Does anyone know if there are any specialists? Or does the board pretty much rubber stamp what it’s told by the executives? Boards work in differing ways. Often they don’t play the watchdog role that the public assumes.
Thanks for writing, and bringing the comments back to this critical issue.
Susan
January 8th, 2010 at 12:28 pm
Readers,
Publishers Weekly posted a story today:
http://tinyurl.com/yg6h29j
It’s written by Marcia Z. Nelson, who has been covering religion publishers for years.
January 8th, 2010 at 6:11 pm
Susan,
In the private sector trustees can be held personally responsible for not exercising due diligence. It keeps the trustees on their toes.
Jeff
January 9th, 2010 at 12:17 pm
Again, due to the way the AF Pension fund was setup, there was no “responsbility” for them to contribute anything at all. Zero fiduciary responsibility – so it’s a moot point to keep questioning who is responsible in that instance.
The bigger question to me is why the AF pension was setup as a “church” pension, thereby exluding this reponsibility, yet keeping it separate from ELCA’s responsibility as well.
This loophole created this mess, which during a good economy no one questioned. Recession hits – wham, hundreds of people lost their pensions. I doubt there was malice involved in creating the fund, so my bigger question is why employees weren’t notified that the pension was underfunded the past 9 years, which lies with the BoD.
January 10th, 2010 at 7:04 am
Susan– I believe what I wrote hit the bullseye. The tone might have seemed angry, and in fact it was. I believe this latest debacle involving Augsburg Fortress is simply the latest chapter in an overall tragic story. Yes, the destruction of the church I have loved and have served faithfully makes me very sad and angry. I am sorry if you found that what I wrote “crossed a line.” I don’t think I did. I simply pointed to the main source of the problem–the AF crisis is simply tributary of a much wider problem, and that problem is an ELCA leadership too concerned about socio-political issues to tend to the real needs of the church. –Jack
January 10th, 2010 at 7:10 am
Hi Pastor Jack,
Let me clarify. It wasn’t what you said, but how you expressed yourself in that one post. I’m glad you continue to write.
Kind regards,
Susan