Monday, January 04, 2010

Unhappy new year at Augsburg Fortress

(After an extended holiday absence, it’s time get blogging again.)

Obviously the ELCA is sailing through rough waters these days (like many denominations, it should be noted). Survival can’t be the only objective in this phase of its journey, however; there have to be other standards as well. Unfortunately, this morning’s disturbing story out of Minneapolis (from Pretty Good Lutherans) would indicate the bottom line is in danger of trumping everything else.

Past and present employees of Augsburg Fortress, the ELCA’s publishing house, were informed in a New Year’s letter that their pension program was being terminated. Plan participants, including retirees, will receive a final lump sum payment in March. The amount will be significantly less than benefits accrued under the plan.

Looking at the details laid out in the letter, the plan has apparently been a mess for years. Underfunded pension plans are a common story these days in many failing corporations and for state employees and teachers. States, of course, can fall back on taxes. Private companies participate in a federal program which takes over retirement plans when a company goes bankrupt (this happened to my father decades ago).

As the letter states, however, Augsburg Fortress has a federally exempted “church plan” which is not guaranteed by the Pension Benefit Guaranty Corporation. The letter also says that the ELCA has judged that it has “no obligations or fiduciary duties with respect to the Augsburg Fortress plan.” Frankly, this just smells.

Augsburg Fortress used its church-related status to avoid participating in the federal pension guarantee program (and the fees that went with it). Now the ELCA falls back on AF’s organizational independence to claim it has no legal obligation to bailout its faltering benefit plan. This is simply legal casuistry, letting AF weave in and out of its church relationship as ELCA lawyers find it most advantageous. Or are we to believe that Augsburg Fortress has somehow become a denomination in its own right?

Thus far there has been no comment from ELCA officialdom. While the lawyers believe the denomination has no legal responsibility (though I really wonder if there isn’t some actionable fraud here), it will be very interesting to see how they explain that the church also has no moral obligation to Augsburg Fortress employees in this default.

Augsburg Fortress exists for one reason only: to serve the publishing needs of the ELCA. With the ELCA’s declining fortunes, AF has also struggled and its survival is certainly in doubt. In the meantime, if the ELCA believes AF is performing a vital service for the church, then it needs to step up to the plate and provide whatever resources are necessary to keep it functioning. This would certainly include treating its employees fairly and not playing games with their lives and their futures.

This is a shameful turn of events. Before we adopt any more social statements, or the bishops publish any more letters of conscience, perhaps a churchwide study of Luke 6:42 would be in order. Unfortunately, and especially with the bungled lay-offs at ELCA churchwide last November, there is every reason to believe there are more of these hi-jinks to come.

A footnote: I just saw that at the bottom of the Augsburg Fortress website it states, "We are the ministry of publishing within the Evangelical Lutheran Church in America" (emphasis added).


Anonymous said...

My wife has worked at Augsburg Fortress for over thirty years. Her defined benefit plan was the cornerstone of our retirement planning. Now, in our mid fifties how do we possibly accumulate enough to retire at anything close to normal retirement age. But, we are not the worst off by any means. There are many retirees who depended solely, beyond social security, on this retirement benefit. Shame on you Augsburg!

Doug said...

Very, very sorry to hear this. And I would add, shame on the ELCA. Somehow, I don't think we've heard the end of this story, however. In any case, I wish you the best in this time of shock, anger, disappointment and uncertainty. Thanks for sharing your experience.

Beth Wright said...

Thanks for covering this story, Doug. For those interested in learning more, including protesting to the board of trustees, please join our public Facebook group, Augsburg Fortress Pension—Speak Up!

Beth Wright said...

We're getting major media coverage! Minnesota Public Radio will be reporting on this story on Thursday, January 7, around 7:20 am. For Twin Cities residents, that's 91.1 FM. For anyone online, that's

Doug said...

Glad to hear it Beth. Needless to say this is getting a lot of attention within the ELCA, as well. I don't know what the outcome of this will be but I think it is finally awakening people to the reality that fundamental change is coming to the church. Business as usual (both literally and metaphorically) just isn't going to cut it anymore. Perhaps this will be the ELCA's wakeup call to the need for a whole new direction for this church. Talk all the theology you want, but it takes a financial crisis to really get people's attention.