The Monday morning business session of the North American Division Year-end Meetings began with an explanation from General Counsel Karnik Doukmetzian on how a new NAD president will be chosen.
On Friday during his President’s Report, NAD President Daniel R. Jackson announced his plans to retire next year in time for a new president to be chosen at GC Session 2020 in Indianapolis. On Sunday afternoon, delegate Debborah Jackson (no relation to President Jackson) raised concerns from the floor about who gets to pick Jackson’s replacement. It quickly became clear that she was not the only one with questions on the process.
We have not done a very good job of educating our people on how the church is structured and the interplay between conferences, unions, divisions, and the GC, said Jackson on Monday morning before inviting Doukmetzian up for a quick outline of the process.
Doukmetzian explained that the Seventh-day Adventist Church is a representative government. Local churches form the constituencies of the conferences, and send delegates to conference sessions. Local conferences form the constituencies of unions, and send delegates to union sessions. The constituency of the General Conference is comprised of the unions. (The divisions, as entities of the GC, do not have their own constituencies.)
There are 157 individuals from the North American unions who serve as delegates at GC Session, out of a total of “2,700 or 2,800,” said Doukmetzian. The number from North America is small because the formula is based on membership, and the NAD comprises 6% of world church membership. In addition to these 157 delegates, the NAD also has 21 representatives on the GC Executive Committee who are members ex officio. So, the total representation from the North American Division is 208 delegates.
Of that delegation, explained Doukmetzian, a certain percentage (about 10% or 21 individuals) is allowed to be on the General Conference Nominating Committee, which is the group that elects the GC and Division leadership. There are approximately 350 individuals total on the Nominating Committee.
While the NAD representation on the Nominating Committee is small, the GC Bylaws state that in order to expedite the work of the Nominating Committee, the individuals from each division will be allowed a reasonable amount of time to meet and consider the personnel needs of their respective divisions, and then make recommendations to the full committee. So, at GC Session, the 21 NAD representatives will caucus and bring forward their recommendations to the rest of the Nominating Committee for the leadership positions in their area, including the name of a new NAD president. The Nominating Committee will discuss and then present those names to the full body of GC Session delegates for vote.
After Doukmetzian’s presentation, Randy Robinson, NAD Treasurer, delivered his Report. Robinson explained that the NAD has slowly been rebuilding its operating fund to the recommended level after taking money out of the fund in 2017 to purchase the NAD headquarters debt-free. The NAD had previously been renting space from the General Conference, and the purchase of its own building is a cost savings to the division. The NAD dipped down to 78% of recommended working capital in 2017, but is back up to 84.47% ($59.4 million) currently and expects to be at 100% in the next few years.
The NAD 2018 tithe stood at approximately $1.1 billion, which was a significant jump from 2017, and every one of the nine unions saw an increase in tithe from 2017 to 2018. Robinson said they credit the Sabbath School quarter about Stewardship for this dramatic increase. When it comes to the year-to-date numbers for 2019, tithe is down by about 1% which is not unexpected considering the unusually high numbers in 2018. Two of the nine unions have seen a percentage gain in tithe this year (the Lake Union and the Southern Union).
Income from all sources is less than budgeted levels by about $6.5 million, while net tithe income is less than budget by about $2.2 million. However, expenses have remained under budget by about three-quarters of a million dollars, and total cash and investments are ahead of last year by about $6.5 million. The division has about 185 days of cash liquidity, with the ideal being between 180 and 210 days.
Robyn Kajiura, associate director for the General Conference Auditing Service, then went over the auditor’s report. GCAS has delivered a standard report for the NAD. GCAS audits world church entities, and has 319 clients within the NAD, the biggest piece of that portfolio being the educational institutions, and the second largest being the conferences and unions. Of those 319 entities, 84.6% had reports either completed (78.7%) or in progress (5.9%), and of those, 83.2% received a standard/clean report, 12.4% received a qualified report, and 4.5% received a disclaimer. Zero percent received an adverse report. Kajiura said the percentage of clean reports is a “positive and encouraging number.”
Last year, 90% of NAD entities received a standard report, and Kajiura said she’d like to see those numbers again, but 83.2% is very good and better than the NAD’s average over the last 10 years, and better than the world church’s average. The most frequent core policy violations include conflict of interest statements not being signed by all designated individuals, insufficient monthly financial statements submitted to governing committees and administration, audit committee missing or improperly constituted, asset allocation study or investment policy not completed, or salary/benefits not according to remuneration scale. It’s easy to minimize these issues, said Kajiura, but they are important.
When the floor opened for questions, Elizabeth Talbot, field secretary and director of Jesus 101 Biblical Institute, asked if the financial non-compliance just discussed falls under the 2018 compliance document voted at Annual Council, and if it does, who would be the target for shaming or public reprimand within the non-compliant entities. Would it be the treasurer or the president of the organization? Robinson said the division treasurers have been in conversation with GC Treasurer Juan Prestol-Puesan, and they have been asked to speak with the union treasurers to encourage them to clean up the non-compliance. “[This] is important. To get a non-standard policy report or a non-standard audit report is not acceptable,” said Robinson, and it’s important that work is done to get that standard up. “Now, how that relates to the document,” he continued, “I will let other people decide that.” Jackson added that there would be no point in having auditors if it wasn’t their sincere desire to have accountability. But, “we are not entertaining, nor is the General Conference entertaining, the application of the three-fold disciplinary tract to our finance departments across this division. Nor is the General Conference applying it to the organizations around the world.” As far as the NAD is concerned, it will not be following any sort of shaming/reprimand model of discipline. We are “warning” behind the scenes, but “we will never reprimand anyone publicly,” concluded Jackson.
Delegate Leidamae Muse asked about the costs of auditing. As the principal of an Adventist school in Alberta, she oversees two audits each year, an internal audit conducted by GCAS which costs about $28,000, and an external audit which costs $6,000. How can we get those costs down, keeping in mind the tithe payers who pay for internal audits, she asked.
Robinson thanked Muse for her comments and said as recently as two days ago, the NAD, along with GCAS, has been evaluating the costs of audits. “We are in immediate conversation about that issue.” Ron Carlson, Kansas-Nebraska Conference president, then brought up the fact that the GC pays for a large portion of the audits for all of the other divisions, while the NAD has to pay for its own audits. Carlson asked if this will be part of the larger financial discussion happening with the GC related to parity across divisions. “I hope we’re finding ways to reach parity on all of these issues which are very significant financial items,” said Carlson. Robinson said yes, this is one of the items they are negotiating with the GC.
Jackson then asked Robinson how much the NAD pays for auditing services each year. Robinson responded that the NAD pays half (a little under $4.5 million) of the cost of auditing the North American entities, and then they bill out the other half to the unions to cover. The unions then make the decision on how to allocate that cost within their respective fields, whether absorbing the cost at the union level or passing some portions on to the conferences. It varies from union to union, said Robinson.
The financial discussions continued through the morning session, and after lunch the delegates reconvened to hear a dozen or so small reports from various departments, including Christian Record Services, Voice of Prophecy, It is Written, Women’s Ministries, Religious Liberty, Stewardship, and more.
Gordon Bietz, retired Southern Adventist University president and NAD associate director of Education, delivered a report on NAD higher education. One year ago, Bietz and his team coordinated the Adventist Higher Education Summit with leadership from all of the NAD colleges and universities. The Summit concluded with a voted declaration to address the challenges the institutions are facing and plan a way forward together.
Read an exclusive interview with Dr. Gordon Bietz on this collaborative endeavor, and listen to Spectrum’s Adventist Voices podcast episodes with higher education leadership including Dr. Dick Osborn and President Andrea Luxton.
Bietz took the delegates through a brief summary of the declaration, discussed the various meetings that have taken place since then with leadership, shared a research-based case statement (included below) and outlined a proposed timeline of events for this next year titled “An Innovation Journey” (also included below). Bietz stated he is committed to the Chicago Declaration moving “in a direction” and not just being a shelf document. Several challenges stand in the way, however, including continued enrollment decline, lack of accessibility to the religious affiliation of high school students due to a change in how the PSAT/SAT records this information, and the drop-off in births in 2008 which will mean a significant decrease in college-age young adults by 2026, and the continued closures of small, non-profit, religiously affiliated institutions due to increasing costs.
“Our troubles… are upon us, and we need to work together to see if we can resolve those,” said Bietz, who moved that “the North American Division Executive Committee affirm the general pathway outlined in ‘An Innovation Journey — Timeline Toward Consensus on Collaboration and the Strengthening of SDA Higher Education’ and bring a report to the NAD Year-end Meeting of 2020.” The motion was approved with 116 yes, four no, and one abstention.
Case Statement: The Future of Adventist Higher Education: Evidence that demands action
Timeline Toward Consensus on Collaboration and the Strengthening of Adventist Higher Education
The NADYEM19 meetings are being live-streamed and are available on the NAD’s website here: https://www.nadadventist.org/news/2019-nad-year-end-meeting-news-and-video-coverage as well as on the NAD’s Facebook page here: https://www.facebook.com/NADAdventist/
Alisa Williams is managing editor of SpectrumMagazine.org
Image: General Counsel Karnik Doukmetzian. Photo courtesy of the NAD on Flickr.
Editor's Note (UPDATE: November 5, 2019 at 5:15 p.m.): An earlier version of this article erroneously stated that expenses have remained under budget by about a quarter of a million dollars. The correct amount is three-quarters of a million. We apologize for the error.
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