News Release -- 2006

BBT Board hears mixed status report regarding Brethren Medical Plan, explores ways to offset high expenses

May 17, 2006, Elgin, Ill.

The Annual Conference Brethren Medical Plan Study committee has asked Brethren Benefit Trust to help identify potential new sources of funding for the Church of the Brethren Medical Plan. Thus, at its spring meetings, held April 21-23 at the General Offices in Elgin, BBT Board members and staff spent some focused time brainstorming possible ways to offset the ever-escalating costs of medical insurance.

Several ideas were offered as starting points, and then attendees broke into small groups to consider the merits of those ideas and possible alternatives. Board members and staff struggled with how to increase participation and decrease expenses as medical costs continue to increase well beyond inflation and as the average age of Plan participants continues to rise.

The Board received reports that indicate signs of promise. After losing $1.4 million in 2003 and 2004, the Brethren Medical Plan posted a modest net gain in 2005, with more premiums being received than claims being paid. The Board also heard at least one possibility for how BBT might be able to expand its customer base. However, Board members also heard the report that membership in 2005 declined from 819 to 746 (not including spouses and dependents). This decline included 30 active employees and 43 retirees. Moreover, only two of the 23 districts now have at least 75 percent participation in the Plan, which means if a 75 percent participation requirement were to be implemented at this time, most Brethren pastors and church staffs would be excluded from the Plan.

Given the 2005 Annual Conference resolution that called on congregations and church agencies to support the Plan during the study period, this decline was a disappointment and is reason for continued concern.

All of the ideas — including hopes and concerns — discussed during this brainstorming time were forwarded to the Annual Conference Brethren Medical Plan Study Committee, along with an offer by staff to meet further with committee members. The Committee, in a report from early this year, signalled that the denomination needs the Plan to continue serving pastors and church staff members. It said the proposed 75 percent participation requirement, which BBT announced in August 2004 but has tabled at least until the conclusion of the Annual Conference study period, needs to be re-evaluated.

The Committee also said it needs more than one year to examine the long-term viability of the Brethren Medical Plan, and so it will seek an extension to its original mandated timeline at this summer’s Annual Conference. Standing Committee delegates are scheduled to consider the Brethren Medical Plan business item at 4:10 p.m., Thursday, June 29. A hearing on the Brethren Medical Plan is scheduled for 9 p.m., Saturday, July 1. The Medical Plan is scheduled to be discussed by Annual Conference delegates at 3:40 p.m., Monday, July 3.

Other BBT business at Annual Conference
Board members heard that a number of BBT-related items will be considered this year at Annual Conference on Monday, July 3, in addition to the Brethren Medical Plan. BBT has requested that Conference delegates amend BBT’s Articles of Organization to slightly change representation on the BBT Board and how two Board members are elected. BBT also is the focal point of a resolution from Pacific Southwest District asking that “Brethren Benefit Trust divest itself from ownership of Caterpillar Corporation and any other company that sells products that are used routinely as weapons of destruction or death in Israel and Palestine. Furthermore, we encourage all other Church of the Brethren agencies and individuals to review their own investments and take appropriate action. We also ask for exploration as to whether such funds could be reinvested in companies doing business that enhances the quality of life for both Israelis and Palestinians.”

BBT will also present its annual business report to Conference delegates, the 2005 financials, and proposed new Board members. BBT will also lead the annual memorial tribute to pastors and national church leaders.

Two new hardship withdrawals approved for Pension Plan members
The Board added two new provisions to the guidelines for hardship withdrawals from the Pension Plan — payments for burial and funeral expenses for the participant’s deceased parent, spouse, children, or dependents; and expenses for the repair of damage to the participant’s principal residence. The four other hardship provisions include uninsured medical expenses incurred by the participant or the participant’s spouse or dependents; costs directly related to the purchase of a principal residence (excluding mortgage payments); the payment of tuition and related educational fees for 12 months of post-secondary education for the participant or the participant’s spouse, children, or dependents; and payments necessary to prevent eviction from a principal residence.

Board makes three decisions regarding investments
BBT’s relationship with Calvert Social Investment Foundation was affirmed for Calvert to continue serving as manager of BBT’s Community Development Investment Fund (CDIF). This investment choice for Brethren Foundation clients and Brethren Pension Plan members makes funds available for inner-city micro loans. In the three years of the CDIF’s existence, Brethren investments have led to the building or rehabilitation of 70 affordable homes, the financing of 140 microloans (250 jobs) or 20 small business loans (112 jobs), and the financing of 25 community facilities.

A new bond manager, Agincourt Capital Management, was affirmed by the Board to invest one half of BBT’s Bond and Bond Core funds. Agincourt replaces West AM, which new owners decided will no longer offer fixed income investment services. Agincourt joins Income, Research & Management, BBT’s other fixed-income manager that has responsibility for this investment class. In the Bond Fund, Agincourt has authority to make use of high-yield bonds when conditions make that investment desirable. The Bond Core Fund concentrates on corporate debt and U.S. government agency securities. Brethren Foundation clients can choose to invest in either fund; however, these funds are blended into a single investment option for Pension Plan members. Agincourt will assume its BBT responsibilities on June 1.

The Board also approved redefining the investment strategy for the “core” portion of the Domestic Stock Fund and the Domestic Stock Index Fund. The portfolio will continue to adhere to a core style, but will be actively managed as of June 1. Historically, the core portfolio has been an “index” fund, managed to track the performance of the Standard and Poor’s 500 Index. As an actively managed fund, the portfolio will hold fewer securities and should produce higher returns over time. The core portfolio will continue to form one third of the Domestic Stock Fund. Brethren Foundation clients will be able to choose this as an individual investment choice; Pension Plan members who choose the Stock Fund will automatically have a portion of their funds invested in this style.

In other actions —

• The Board established six percent as the annuity interest rate on contributions made after July 1, 2003. This rate is reviewed each year and raised or lowered as needed to keep in line with annuity rates of the Church Benefits Association membership.
• The BBT Board elected Nevin Dulabaum, BBT’s director of Communications, to the CoBCU board. BBT, which appoints seven members to the CoBCU board, has only one slot open this year. Dulabaum, who has been on the board for more than six years and currently serves as vice chair, will begin serving a new three-year term when his appointment is received by the CoBCU board in July.
• The Board received two screening lists as part of its socially responsible investing ministry: the top 25 defense contractors and companies that make more than 10 percent of their gross sales from defense contracts. BBT’s investment policy prohibits it from investing in companies that are on either list. These lists are available by writing to newsletters_bbt@brethren.org.
• The Board, at its annual employee recognition banquet, honored four current or former employees Marilyn Ziegler, who retired from BBT in December after nearly 25 years on staff; Pat Papay, who was cited for 10 years with BBT; and Jeff Garber, who resigned in March, for his 10 years of service.

The BBT Board’s next meeting will be on Tuesday, July 4, in Des Moines, Iowa.