Introduction

Recently, Oregon Conference administrators hosted town hall meetings throughout the conference to connect with members, share information about the financial state of the conference, and field questions and concerns from constituents. Led by interim president Don Livesay, administrators shared information clarifying some factors that led to the current financial situation, provided a current report of financial position, and shared a strategic plan confirmed by the Oregon Conference Executive Committee that will realign the conference to meet the challenges presented by the 2025 budget proposal, continuing to serve the needs of local church communities while significantly streamlining conference office operations. This comprehensive (long!) report reviews information shared at town hall meetings.

How We Got Here

It has already been a painful journey in the year 2024. In spring, 30 pastors were laid off and 90% of church districts were impacted by the changes to the pastoral workforce. We recognize the pain this has caused, including increased loads on local leaders, getting to know new pastors, and adapting to life sharing a pastor with other churches. In addition, 7 full-time positions were reduced in the conference office to create more efficiencies. As part of our efforts to address the $5.8 million budget deficit, we also implemented a 3% reduction in the subsidy of teacher contracts. We recognize that this change, while sounding small, made a tremendous negative impact on schools, transferring a part of the financial burden from the conference budget to the local church, and to the families of students. In addition, we made the difficult decision to freeze compensation for all Oregon Conference employees. We know each of these decisions created stress within our conference community. Each decision, though challenging, was essential to navigating through our financial situation.

Factors Contributing to the Need for Change in the Oregon Conference

Significant Decrease in Working Capital

Our available working capital has seen a substantial decline from June 2019 to August 2024. Working Capital is a basic assessment of the financial strength of an organization. Measured in months, this figure gives an idea of how long an organization can continue to operate if all sources of funding dried up. The North American Division (NAD) recommendation for working capital is 6 months.

In June 2019, working capital was just over half of the NAD recommendation: 3.34. Working capital dropped precipitously in the 2nd half of 2019, leading to a round of layoffs in early 2020. The graph tracks the working capital trend line, with occasional spikes due to extra giving and/or “extraordinary tithe.” Oregon Conference has been the beneficiary of extraordinary tithe, or “extraordinary blessings,” as Don Livesay stated, over many years. It’s “extraordinary” because it comes in larger than typical amounts and at unknown intervals. As the Oregon Conference looks forward, some simple but important strategies will be implemented to utilize extraordinary tithe for special focus areas such as outreach, education and rebuilding of reserves to safe operating levels. This downward trend has led to increasing instability, and to the need to request a short-term loan from the NPUC revolving fund to cover cash needs throughout the year.

Increase in Staffing Levels and Expenses

A conference budget is approximately 80% personnel expense. This means that the main budget management tool available to administrators is to adapt staffing levels. In early 2020, the graph shows response by administration to reduce staffing levels to meet the challenge of falling working capital. The efforts succeeded in stalling the decline of available capital until 2022 when increasing staffing levels were a pertinent factor as working capital precipitously declined.  

Some less-controllable expenses have been significant increases in health care expenses and property and liability insurance expenses. These rising costs have also impacted the financial health of the conference and increased our financial burden.

Our Current Financial Position

As of September 2024, our financial position reflects the ongoing challenges we face. The current financial highlights provide a clear picture of our situation:

Tithe

Through September, regular tithe is up 1.8% over 2023 year to date. This slight growth in support of the mission of the church is a significant blessing. Of note: tithes returned have slowly increased over the course of 2024. Thank you to every faithful member who is contributing to the mission of the Seventh-day Adventist Church through tithe and offerings. Looking at the five-year trend, regular tithe has remained steady but has not grown enough to keep up with the rate of inflation.

Abbreviated Statement of Changes in Net Assets

Through September 30, 2024, the change in net assets statement shows a loss of over $6 million year-to-date. While this number is concerning, it’s helpful to note that a conference’s tithe fluctuates regularly throughout the year. Expenses are higher in the summer. Tithes are higher in the fall. The budget process planned for the conference to lose $3.3 million in January-September this year. With a few budget categories well over budget, the current loss is $6.199 million dollars. The treasury team expects that this loss will reduce through November and December of this year, resulting in a projected loss of around $2.8 million for 2024.  The most significant factors in missing our 2024 budget so far are the increase in pastor personnel expense and insurance. In spring, administrators offered a resignation/retirement incentive to pastors to voluntarily move out of conference or retire from ministry. While appropriate in its heart toward affected employees, the compensation program cost the Oregon Conference over $800,000. The other major item causing the conference to be over budget in 2024 is the increase to our property and liability insurances.

Number of Days Cash on Hand

One measure of an organization’s ability to readily pay its bills is cash on hand. As the graphic shows, the number of days cash on hand has fluctuated significantly from 2020 to 2024. In 2020, we had 24.3 days cash on hand, which increased to 49.13 days in 2021. However, this number dropped drastically to 14.12 days in 2022, further declining to 1.7 days in 2023, before slightly improving to 5.58 days in 2024. It’s important to note that the number for 2024 is inflated by the fact that we are borrowing money from the NPUC revolving fund to maintain operations. Without the loan’s availability, our current Days of Cash on Hand would be a negative number.

End of Year Debt Load

As we continue to navigate financial difficulty, we anticipate ending 2024 with approximately $3.8 million in debt. Approximately $1.2 million of this number stems from the conference’s portion of insurance premiums that remain unpaid. We’re grateful to Adventist Risk Management for keeping all our properties and operations insured, while we make arrangements to get current on our premiums. As we enter 2025, the Executive Committee intends to utilize any extraordinary blessings to make balloon payments on this $3.8 million loan to reduce it as quickly as possible.

Stabilizing Operations Through the Summer

When leadership transitions occurred in late May with the resignation of the former president, administrators, led by VP for Administration Kara Johnsson, quietly worked to stabilize operations, focusing on three priorities:

• Giving the treasury team needed resources to continue their work.
• Communicating regularly with pastors and office staff.
• Beginning financial analysis in preparation for an early draft of the 2025 budget.

In July, the early analysis projected a possible $2-3 million deficit in the 2025 budget. Administration began preparing communication and tentative strategic plans to meet the challenges of the 2025 budget. With the projected arrival of a new president in September, public communication and strategic implementation paused in anticipation of new leadership. When the presidential search extended longer than initially projected, Johnsson requested an interim president who would come with the authority to make the necessary strategic changes to prevent even more significant financial challenges going into 2025. In addition, Johnsson requested the executive committee to appoint a budget steering committee, comprised of 3 executive committee members, 1 pastor, 1 principal, the assistant to the president, and all officers. This committee was tasked with assessing the draft budget and making recommendations for strategic changes that would provide for a balanced budget in 2025.

Budget Steering Committee: Looking Forward to 2025 and Beyond

At the outset, the budget steering committee had a draft budget with a $4.45 million deficit: almost too overwhelming to think about, considering what the conference has already been through.

Because so much of conference budgets are applied toward personnel expense, there are few other places to cut a budget besides reducing staff. In this case, a $4.45 million deficit would translate into approximately 45 staff reductions. However, the danger of early budget forecasting is that budget assumptions are quite fluid. In October, early budget assumptions were re-calculated, resulting in closing the deficit to just under $3 million. Still requiring drastic reductions in employment positions.

Thinking Beyond the Next Year

The committee soon realized that the challenges of the upcoming budget required a different kind of thinking. There’s simply not enough fat to trim, not enough edges to downsize, to meet the significant remaining deficit. As costs of employment go up, the church is facing a crisis point where ministry as we know it becomes much more difficult to sustain. With the impact of recent reductions on the local church, the committee was hesitant to further impact the pastoral workforce. The conversation led to a more foundational question: What is the key non-negotiable outcome of church activity? What is our ONE BIG THING:

Our One Big Thing: People Connecting with God in Community Through the Local Church

When all church activity is summarized, it is not to strengthen the building, build the most enviable programs, or create the most significant social impact. The ONE BIG THING is that we are called to lead people to connect with God, in community, in the church. People means all people. Those in the pews, and those across the street. Those who know the Three Angels’ Messages by heart, and those who have never heard of Jesus. At the heart of the gospel is individuals who are connected to God through faith. The church’s role is to facilitate their journey with God in community with other believers. This is our ONE BIG THING that guides decisions and resources.

Our Most Valuable Assets: Emotionally Healthy, High Functioning Pastors, Teachers, and Lay Leaders

People connecting with God is a long-term process that happens day by day, week by week, and on even longer schedules. In our Adventist Christian faith, we call that journey toward faithfulness to God, discipleship. And the most influential people in discipleship journey are those that are in the community over the long-term: pastors, teachers and lay leaders. While conference office employees have important roles in serving the broader church, their impact on the ONE BIG THING is small, compared to the daily investments of pastors, teachers and lay leaders.

If emotionally healthy, high-functioning pastors, teachers and lay leaders are our most valuable “asset” in our strategic plan, how best can the conference organize other resources to support our most valuable assets?

Supporting our Most Valuable Assets – Resourcing and Coaching Local Leaders

Effectively supporting and maximizing resources to apply in the local church means significantly reorganizing the conference office team. Instead of over 15 ministry departments, the office would be consolidated to 6: Pastoral Ministries, Church Ministries, Hispanic Ministries, Regional Ministries, Big Lake Youth Camp, Education.

Church Ministries – Resourcing and Networking Churches and Ministries

The Adventist way is that when there is a problem, we solve it with a department. That department is complete with a director, a travel budget, a program budget and even an assistant. Historically, department directors have developed many resources for use in the local church. Today, resources are not hard to find. But resourcing is a different story. The vision calls out that the Church Ministries department would be tasked with connecting with lay leaders, facilitating networking, curating existing resources, and supporting churches through cohort journeys or other experiences. But Church Ministries starts with a question: What are your needs?

Pastoral Ministries

Our pastoral ministries department will focus on pastors. Leadership development, emotional health, and professional development to help pastors be the best that they can be. In addition, they will administer evangelism funding and oversee church-planting processes.

Hispanic Ministries

Our Hispanic ministries department has been accomplishing highly impactful ministry with a lean team for a long time. We look forward to learning from our Hispanic leaders as the Oregon Conference strategic model shifts.

Regional Ministries

In Oregon Conference, the Lead Pastor of the Sharon Church is also the Regional Ministries director. Regional Ministries supports four churches in the Portland area and connects with black churches and leaders across the NAD.

Big Lake Youth Camp

Big Lake continues to be a gem, and one of the pre-eminent Adventist youth camps in North America. The staff consistently facilitate amazing experiences at BLYC through all four seasons. We are blessed to have an excellent partnership with the US Forest Service which has recently allowed some further plans for developing BLYC.

Education

The Education Department supports emotionally healthy, high-functioning teachers while making sure that each of our Adventist schools is the best that it can be. While the department streamlines and loses a vacant employed position, it is of vital importance as it supports our schools.

Securing the Foundations of Ministry

A few other departments are required for a conference office to operate: when employees are involved, there’s need for payroll and HR services; when organizations are involved, there’s need for various insurances; administration and communication  departments exist to help keep people on the same page as we pursue the mission of the Seventh-day Adventist Church together.

Each year, the Oregon Conference also benefits from the estate gifts cultivated by a well-run trust services department from 10, 20, or 50 years ago. We continue to pay it forward to the next generation by maintaining a strong Trust Department where a new generation of people can make legacy gifts to continue the ministry of the Oregon Conference.

The Results

As a result of this conference office re-organization, 15 employment positions have been removed from the budget, making sure that as many pastors as possible remain serving churches. By God’s grace, the departments will serve churches with greater efficiency, while making a meaningful difference in supporting our most valuable assets: pastors, teachers, and lay leaders.

Call to Action: Crowd-Funding Camp Meeting 2025

We are excited to announce that the Pavilion for the 2025 Camp Meeting is nearly complete. However, to ensure the success of this event, we need your support. Our goal is to raise $450,000 by March 31, 2025, through crowdfunding. We invite you to donate and be a part of this beloved integral event that brings our community together. Your contributions will help us achieve our goal and provide an enriching experience for all attendees.

To donate, please visit www.ORAD.us/ORgiving and contribute to the Camp Meeting 2025 fund. Your generosity and support are greatly appreciated.

Conclusion

The financial journey of the Oregon Conference has been challenging, but through careful strategic planning and the collective effort of our community, we are confident that God will lead us through these obstacles. By understanding how we got here, recognizing our current financial position, and embracing our strategic plan for the future, we can work together to secure a sustainable and thriving conference.

Thank you for your continued support and dedication to the Oregon Conference. As we learn from these painful experiences and pull together as a family in Christ, we look forward to continuing to live out the mission of Christ in our community.