Memorandum Number 752

Review of Progress Made by General Board of Pension and Health Benefits and the North Alabama Conference Toward Resolving the Dispute Over Unfunded Pension Liability Costs.

Statement of Facts

This matter came before the Judicial Council in its last session in a petition from the North Alabama Conference for a declaratory decision to determine the party responsible for payment of unfunded liability under the Conference Ministerial Pension Plan (See Decision 720). At that time we ruled:

The Annual Conference is entitled to rely on the General Board of Pension and Health Benefits both as to its agreement and its actuarial figures. The Judicial Council retains jurisdiction and it remands the matter back to the parties to determine an amount which shall allow the North Alabama Conference to neither gain nor lose by virtue of the error of the General Board of Pension and Health Benefits. The parties are to advise the President of the Judicial Council in writing of the agreement reached by January 1, 1995.

We were advised by letters of March 10, 1995, from the General Board of Pension and Health Benefits of The United Methodist Church and April 3, 1995, from the North Alabama Conference that they were unable to resolve their disagreement.

The General Board feels that consideration should be given to (1) the obligations of the Conference as found in the Discipline and the Ministerial Pension Plan; and (2) the position of the Conference both before and after the misunderstanding.

We regret that no resolution was made in spite of the fact that the General Board of Pension and Health Benefits had admitted that they made an error.

We clearly ruled in Decision 720 that the Annual Conference is entitled to rely on the General Board of Pension and Health Benefits. There was no request for a rehearing on that portion of our decision, and therefore, it is final.

Since Decision 720 on October 29, 1994, the parties have talked, corresponded and negotiated in meetings without reaching full agreement on the matters. The records indicate the following:
a) Both parties find acceptable the offer of the General Board of Pension and Health Benefits to pay North Alabama Conference an amount equal to the external legal counsel fees it has incurred to date in this dispute plus the related travel expenses. North Alabama estimated on December 28, 1994 that amount between $ 15,000 and $ 20,000.

b) Upon reaching acceptable settlement, both parties indicate agreement to cease all judicial action, civil or church, related to this dispute.

c) As of April 1995, the parties do not agree on the amount of interest which the General Board of Pension and Health Benefits is to pay the North Alabama Conference to allow the North Alabama Conference "to neither gain nor lose by virtue of the error of the General Board of Pension and Health Benefits."

We pointed out in our analysis in Decision 720, "The General Board of Pension and Health Benefits is responsible for its own mistakes and cannot punish an Annual Conference for relying on the General Board."

An Annual Conference is entitled to rely on the General Board of Pension and Health Benefits both as to its agreement and its actuarial figures and is not responsible for a belated correction. The General Board of Pension and Health Benefits is responsible for its own mistakes and cannot punish an Annual Conference for relying on the General Board.

The Judicial Council does not have the necessary information for determination of the specific settlement amount. Therefore, the Judicial Council directs both parties to settle this dispute by the following process:
1. Both parties shall sign an agreement for the General Boar of Pension and Health Benefits to reimburse North Alabama Conference for the external legal fees incurred as of April 29, 1995 related to the dispute plus the travel expenses. The specific amount for legal fees and travel expenses shall be verified by record of payment by the North Alabama Conference treasurer and forwarded to the General Board of Pension and Health Benefits for reimbursement to the conference.

2. By June 30, 1995, both parties together are directed to begin the process of binding arbitration with a neutral and mutually agreed upon person as third party mediator on the single issue of the specific amount for settlement of the forfeited interest due to the error of the General Board of Pension and Health Benefits so that the North Alabama Conference shall neither gain nor lose by virtue of this error. Upon completion of the arbitration settlement, an agreement shall be signed by the parties to close this matter. Any expenses for the arbitrator shall be divided equally between General Board of Pension and Health Benefits and North Alabama Conference. In addition, each party shall be responsible for any and all of their expenses during the arbitration process. The Judicial Council retains jurisdiction until this final action is completed and written notice is forwarded by the arbitrator to the President of the Judicial Council.

3. Upon completion of this directed settlement, both parties shall sign an agreement to withdraw any further petition to the Judicial Council and cease all judicial action, civil or church, in this dispute between General Board of Pension and Health Benefits and North Alabama Conference.