Evangelical Lutheran Church Faces Budget Cuts : Finances: Despite increased donations, the denomination registered a $1.4-million deficit in 1990. Reduced staffing and a loss of programs are expected.

After spending the first three years of its corporate life on a financial roller coaster, the Evangelical Lutheran Church in America is in danger of derailing--unless some drastic steps are taken soon.

And drastic steps are precisely what the 5.3-million-member denomination’s Church Council endorsed again at a meeting this week after top church officials offered a chilling summary of the church’s financial situation--including the news that, for the third year in a row, it faces a substantial budget deficit at a time when all reserve funds have been used up.

Specific details of those steps are being kept under wraps for the moment.

But church executives are being asked to submit, by May 1, plans for staff layoffs, program cutbacks and, in some cases, program eliminations.

The denomination, the nation’s fourth-largest Protestant body, is also undertaking a special nationwide offering in an effort to shore up its shaky finances.

Bishop Herbert Chilstrom, the soft-spoken leader of the church since its founding in 1988, underscored the severity of the situation at the council meeting when he wrote out a personal check for $5,000 to be put directly into church coffers.

In an interview, Chilstrom characterized the denomination’s difficulties as not different in kind from those experienced by virtually all of the other mainline churches in the United States. But the problems, he said, are severe.

“What do we do? We have no choice except to talk about (eliminating) entire programs,” said Chilstrom. “It’s a very heavy thing, a very painful thing.”

Evangelical Lutheran Church Secretary Lowell G. Almen, in prepared remarks delivered to the council, said that news of yet another budget shortfall hit him “like a surprise punch in the stomach by an angry prizefighter.” He warned in no uncertain terms that the time has come to rein in expenditures.

“The candy store of the churchwide organization must close now,” said Almen, an ordained Lutheran minister. “The time has ended when every interest group, every caucus, every concern, every emphasis, every self-proclaimed representative body, every good intention, every noble effort and every great program could demand to get whatever was wanted, as if there were no limits.

“There, of course, always have been limits. Now, however, they are tighter than ever within the past half-century. The candy store is closed because the resources absolutely are no longer here--and in fact they never were--to operate as if the contents of the candy store do not require money.

“The candy store is closed, for we must emphasize once again the deep realization of extremely severe and increasingly constricting fiscal limits.”

The denomination, based in Chicago, was created in 1988 through the merger of three predecessor bodies. Since that time the church has been attempting not only to put its financial house in order but also to establish a workable bureaucratic structure.

Almen said the scope of expectations for the new church created a “double bind” since many assumed the church would continue all the existing programs and add the “new commitments and expectations that came with the formation of the ELCA.”

“It can’t be done,” said Almen.

Church Treasurer George Aker reported that spending in fiscal 1990 totaled $88 million, representing a $1.4-million deficit.

That deficit occurred, he explained, despite an increase in giving from the church’s 65 synodical--or regional--bodies of $712,853 over the previous year. While synodical receipts, the denomination’s major source of income, topped those from 1989, he noted, the $61.8-million total fell short of the church’s $63 million goal.

Aker said the fiscal year ended with a $1.4-million surplus in World Hunger funds--an emergency disaster relief account--but pointed out that those funds are restricted and cannot be used to offset deficits in general spending.

Aker attributed the 1990 deficit in large measure to $1.2 million in post-retirement benefits paid to some former congregations of the Lutheran Church in America, one of the three denominations that merged in 1988 to form the Evangelical Lutheran Church in America.

As if the church’s 1990 fiscal woes were not enough, Aker and Almen both painted rather bleak pictures of its financial future.

Aker pointed out that 18 of the 40 synods that have reported so far say they are reducing estimates of how much they will be able to pass on to the national church in 1991, a reduction in projected receipts that Aker estimated at $1.5 million. And Almen said some synods were expecting what he termed “flat-line” incomes for 1992.

“This struggle looms in gigantic proportions before us. The fiscal landscape of this church has changed dramatically in the past three years,” he said. “The dreadful moment of necessary and radical surgery is upon us.”

One of the ironies of the church’s present situation is that Lutherans in the pews are putting as much as ever into the offering plate on Sunday mornings.

The problem, according to Almen’s analysis, is that expenses and capital improvements at the congregational and synodical levels are increasing dramatically at the same time.

In 1988, Almen noted, average giving per baptized member increased 5.5% over the previous year, while congregational expenses rose 6% and capital improvements went up 5%. That scenario was replayed in 1989, when individual giving rose 7.4% while expenses rose 6.2% and capital improvements went up 10.8%.

Almen also pointed out that operation of the church’s 65 synods cost $5 million more per year than it cost to operate the equivalent bodies in the three predecessor churches.

Several other major factors also have played a role, he said, in creating the fiscal crisis:

* The skyrocketing costs of pension and medical benefits has had a serious effect on local congregations, synods and the churchwide structure.

* Many congregations constructed worship centers and education facilities between 1946 and 1966, and maintenance and repair costs for those structures are now growing.

* Congregations are heavily involved in local benevolence projects that diminish the amount of funding available for synodical and national use.

* Many former American Lutheran Church congregations that forwarded benevolence funds to the churchwide organization and a per-member dues assessment to district offices are now sending only benevolence funds to the national offices--completely dropping the dues portion.