And now, a few words about General Convention....

Standing Commission on Liturgy and Music:

Some of these materials reflect what is already happening in our parish, such as “proposed rites honoring creation,” including the designation of the Sunday nearest the Feast of St. Francis for the blessing of animals, and offering rites for “civic occasions” such as Earth Day. Fortunately, they decided not to press ahead with the “Creation Cycle of the Pentecost Season” as an optional replacement for the Revised Common Lectionary materials between Trinity Sunday and the First Sunday of Advent. This had been urged by resolutions at the 2009 convention, and would be very popular in our parish. It would however further distance us from any connection with the Reformed concept of systematic reading of Holy Scripture in public worship.

There was a 2009 resolution to conduct a feasibility study of a replacement for the Hymnal 1982. The Commission has determined that no, there will not at present be a new hymnal. Considering the content of the hymnal supplements beginning with “Wonder, Love and Praise,” it is probably just as well – any new hymnal that our denomination would produce would likely be an embarrassment.

I worry about the resolution to “[set] translation standards that include reflecting 'the idiomatic style and cultural context' of the languages used.” Perhaps they are simply talking about translations of liturgical materials into non-English languages, but I wonder if they are moving toward the official exclusion of the King James Version and the traditional “Rite One” liturgical texts from public worship.


Report of the Church Pension Group:

The continuing decline in the number of active participants in the defined benefit plan (almost entirely clergy), and especially the number of males (down about 15% in six years) is of interest, as is the continuing rise in their average age (now 53.7 years) and the decline in new ordinations, down from 570 in 2005 to 369 in 2011, with average age at ordination of 48.2 years.

In short, there are fewer clergy, they are older, and despite their age they tend to have limited experience in their work because they came to it as a second career. Then again, there are fewer Episcopalians, so the downsizing of the clergy is perhaps a good thing. And the decades of life experience before ordination cannot be discounted – most of these new clergy were active as laypeople in the church for many years, and they doubtless bring insights that would not come from someone who went straight through from college to seminary to ordination in their mid-twenties.

From page four of the report:

As you can see, Fund performance was somewhat disappointing in last fiscal year [ending 3/31/12], falling behind both the passive benchmark and investment objective [of a 4.5% return in excess of inflation]. It should not be a surprise that the Fund would perform differently from the benchmark given our intentional diversification into private equity and real assets, hedge fund strategies, and non-U.S. equities. (my emphasis)

This reflects a danger encountered by pension funds and endowments pretty much everywhere in the developed world. During the 1980's and 1990's, they came to believe that “a 4.5% return in excess of inflation” was not only reasonable, but safely conservative. It could be achieved with a stable balance of equity and bond investments.

But such a portfolio is not likely to get even a nominal 4.5% long-term return these days. The only way to get the returns they consider necessary is to hand large portions of their money over to the hedge funds and their high-frequency algorithms, and expand into other assets, all of them riskier than the old-time investment grade bonds and blue-chip equities. In the charts on page nine, one sees that these “other assets” amount to some $4.8 billion, nearly half of their total assets. This is a much more volatile portfolio than is traditional for a pension fund. In a good year, they might do fine. But in a bad year, they will probably lose a lot of money. I suspect that the Church Pension Group's movement in this direction is typical of the larger pension fund and endowment community.

As is normal with financial statements, the appendices make the most interesting reading. Pages 14 and 15 provide further detail about their alternative investments, such as “Private equity limited partnerships [which] include strategies focused on venture capital, growth equity and buyout transactions across many industry sectors” [one thinks for example of Mitt Romney's Bain Capital Management (my comment)], and “investments in (1) long/short equity hedge funds, which invest primarily in long and short equity securities, (2) credit/distressed debt securities that are generally rated below investment grade [“junk” bonds (my comment)] with managers that invest in debt or debt related securities or claims associated with companies, assets or sellers whose financial conditions are stressed, distressed or in default, and (3) multi-strategy hedge funds that pursue multiple strategies and capture market opportunities.”

Pages 17 and 18 list the assets at fair market value by “levels,” as is the norm in financial statements. Basically, “Level 1” is a reliable fair market price. “Level 2” is not quite such a reliable figure, as it represents assets for which there is not a regular daily market such as the NYSE. “Level 3” is essentially guesswork, most often representing illiquid assets for which a fair market value cannot easily be estimated. All told, only about $1 billion of the $9.4 billion total pension assets reside in Level 1: $3.8 billion are in Level 2, and $4.5 billion in Level 3.

If one believes their numbers (and the large sum in Level 3 is a caveat), the Fund remains in sound condition, well able to pay anticipated retirement benefits (as detailed on pages 21-22). This puts it in a better situation than many corporate and government pension plans. But these figures make me glad that I am not in the defined benefit plan here described; like most of the Church's lay employees (those who have pension coverage, that is), I am in the defined contribution plan, administered by the Fidelity company. That has its own set of issues, but I can confidently say that almost none of my assets in the plan would be classified as “Level 3,” and none of them are in the tender hands of the hedge fund community.

A footnote: Church Publishing (the official publishing arm of the Church) posted a $2.8 million loss for the year ending 3/31/12. This is an improvement over the $7.6 million loss the previous year, but comes to over $10 million in the red over the past two years. I believe that they are dying.