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The Proposed Methodist Separation Protocol and the Independent Church

Written by Daniel P. Dalton on February 9, 2020 Category: Church Property Disputes/Denominational Splits

The draft Separation Protocol legislation has been introduced confirming the Separation Protocol introduced by the sixteen leaders of the United Methodist Church representing the five affinity groups within the denomination.

As noted previously, the goal of the Separation Protocol was finding a way for an amicable parting of local Methodist Churches who could no longer live within the denomination. However, the focus of the legislation is moving local churches into one of the perhaps three new Methodist related denominations: a newly formed Traditional denomination, a likely newly formed Progressive denomination and a catch all denomination that is the remnants of the United Methodist Church.

It is very important for local churches who wish to become independent and are considering waiting until after General Conference to leave the denomination to review the proposed legislation and make a determination if they should leave now or wait given their current status and the state law in which they are incorporated. This is a church by church, state law by state law determination and one that should be given thoughtful consideration by leadership teams evaluating the issue.

Provisions that are generally fair to the newly formed independent church

  1. State law. The disaffiliation terms must comply with state law – if they do not, state law prevails. Sec. 17.  This means that the local church must review the state non-profit corporations act enacted within the state in which they are incorporated to make sure that the steps they are taking are in compliance with state law. This is an incredibly important first step to take when walking through the process of disaffiliation. Make sure the steps that you are taking are in compliance with state law.
  2. Timing. The local church must vote to end the connectional relationship on or before December 31, 2024, or they will remain in the United Methodist Church. See, Sec. 12 (b)
  3. Notice. Notice of the disaffiliation meeting must include the stated purpose of the meeting – to disaffiliate – and the recommendation of the Church Council, along with a disaffiliation agreement. Sec. 12(c)(3)(C). The local church must submit a request to the District Superintendent, who, will call a vote within 30 days for a Church Conference on the sole issue of disaffiliation. Sec. 12(c)(1). The Church Conference must occur within 120 days of the notice from the District Superintendent, Sec.12 (c)(3(a)) and the vote to disaffiliate must be approved by two thirds of the members attending the meeting. Sec.12(c)(2).
  4. Completion. The disaffiliation agreement must be completed within six months after the vote to disaffiliate. A twelve month extension is available if the parties are negotiating in good faith – but all disaffiliation agreements must be completed by June 30, 2025. If not, the local church remains part of the annual conference. Sec. 12 (s)
  5. Intellectual Property. The cross and flame and all words that say United Methodist must be removed from all branding and signage within six months of leaving the denomination. See, Sec. 12(l).
  6. Loan repayment. The Annual Conference may require the local church that is withdrawing to pay off all loans to the annual conference and “shall pay,” previously owed and documented unpaid portions related to health insurance premiums, pension premiums, or property insurance payments secured through the annual conference. 12 (j)
  7. Transfer of Property. Real and personal property will transfer to the local church who desires to be independent without additional compensation than set forth within a standard disaffiliation package and the terms and conditions of the local annual conference. 12 (h).
  8. Tax exemption. Once leaving the denomination, the local church must secure its own exemption from the Internal Revenue Service and can no longer rely on the group exemption. Sec. 12 (m).
  9. Wespath. The local church can stay with Wespath after it leaves the denomination. Sec. 12(p)
  10. Release. After the disaffiliation agreement is executed by all parties and the annual conference approves the local church leaving, the annual conference will release the real and personal property to the local Church. Sec. 12 (u).
  11. Payment Plan Available. The local church can enter into a payment plan up to 10 years to pay the annual conference to leave the denomination if the annual conference consents to the term of years. Sec.12(o)

Provisions that are difficult to accept for the Independent Church

  1. Notice.  Notice of the meeting must be giving to the “full professing membership,” (meaning everyone who is a member, even those who longer attend), by “all means necessary, including electronic communication,” to the professing members. Sec. 12(c)(3)(b). Notice to all “professing members,” means all of the people that the local church has been reporting as members for decades, who have not darkened the doorstep in years, must be provided notice of the meeting.  This is an enormous and time consuming task.  This means both electronic mail and U.S post is required. Compliance with state law on the notice provisions for the disaffiliation meeting is essential in this regard.
  2. Debt. If the local church has any mortgage debt or loans with third parties, they must either pay them off or have the lender consent to the withdrawal from the annual conference to pay the debt. Sec. 12(k). This means that the local church must either pay off loans to the conference, if they have them, or to local banks prior to disaffiliation. The local church can negotiate new terms and conditions of loan, noting that it is not part of the denomination or conference. Any time a loan agreement is amended, the bank can change the rate and terms on the loan without much negotiating leverage from the local church. The risk is that the cost of the loans, and terms, may be costlier for the local church to make the change, even though the local church has been solely servicing the debt.
  3. Pension. The local church withdrawing will be responsible for making the withdrawal liability payment as set forth in section 1504.23 of the Book of Discipline. 12 (i)  The problem with this is that Wespath will only provide the local church with a number, not the basis for the number. In conferences that are 100% funded for pensions, for example, the annual conference will still add a pension liability to the withdrawal. Thus, the local church is then stuck with paying the amount noted by Wespath, even in conferences that have fully funded pension plans.
  4. Terms and conditions. The General Council on Finance and Administration will develop on its own standard terms of disaffiliation. Sec. 12 (e) It is clear that the standard terms and conditions will be created by the agency with no input or consideration by the local churches who desire to be independent.
  5. Binding on successors. The disaffiliation agreement is binding on the local church that leaves and the any new church that is incorporated out of the former local church. Sec. 12 (r) This means if the local church uses the protocol and another local church is formed out of it – at any time in the future – they are subject to the terms and conditions of the disaffiliation agreement.

Provisions that are not acceptable to the Independent Church 

  1. Payment of 24 months apportionments. In order to leave the denomination, the local church will be required to pay twenty four (24) months of apportionments as determined by the Annual Conference. Sec. 12 (G). Therefore, payment is established by the conference and required based simply on the fact that at one time, the local church decided to part of the United Methodist denomination, even if the denomination – and the conference – did little or nothing to support the local church.
  2. Additional terms by the Annual Conference.  The terms and conditions of disaffiliation “shall be established by the board of trustees of each conference.” This means that each conference makes the decision on what a local church must be required to do and pay for the privilege of leaving the United Methodist denomination, presumably with no input from local churches. Sec. 12 (d). Therefore, in addition to the 24 months of apportionment payment and pension liability payments, the annual conference will add in additional cost, terms and conditions that is solely desires. This will result in the same issues that gave rise to litigation within the Presbyterian Church-USA denomination as there was no uniformity and no fairness in many Presbyteries who crafted their own separation policies. Some terms were gracious, the majority were extremely punitive to the local church. Therefore, litigation resulted as it was cheaper to litigate a claim than to use the formula of the local Presbyteries. There is somewhat of a limitation in the legislation as the additional terms of the annual conference cannot, “. . . impose obstacles or barriers to disaffiliation, and do not impose additional financial burdens than those,” already stated in the protocol legislation. Sec. 12. (f)  This provision is ambiguous at best and the interpretation of what is punitive or not remains with the annual conference.
  3. Indemnity forever.  The local church must indemnify and defend the annual conference from “any claim, action, cause of action that may exist or arise in the future.” Sec. 12 (q) And the local church must procure insurance to indemnify and defend the annual conference from any future claim naming the United Methodist Church as an additional insured. Id.  Therefore, if anything at any time occurs between now and end of time which results in the annual conference being sued, for any reason, the annual conference can assert a claim of indemnity against the local church requiring it to defend and pay for the claim. And, the local church maintain insurance forever for any claim against the conference. At the same time, no claims can be made by the local church against any property of the annual conference or United Methodist Church during the disaffiliation process. Sec. 12(n); Sec. 15. This is an incredibly unfair and illogical provision and violates state law in several jurisdictions.
  4. Annual Conference approval. The annual conference must approve the disaffiliation of the local church – though it is not required to do so – by a majority vote of those present and voting. Sec. 12 (t) Therefore, even if the local church and the annual conference trustees agree on the terms of leaving the denomination, the delegates to the annual conference can vote to reject the local church leaving the denomination. Accordingly, if your local church has significant assets and pays a large proportion of the annual conferences budget, the likelihood of the annual conference voting to allow the local church to leave the denomination may be slim – at best.

Most people reading this article have made the decision to leave the United Methodist Church denomination. If the separation protocol legislation passes and the local church does nothing, it will be part of what remains of the denomination. Similarly, if the local church wishes to join the new traditional denomination, and the presumed progressive denomination, the separation protocol has a path for it to follow that will require some work but will be a relatively smooth path out.

However, if the local church is – like the vast majority of churches who we have spoken too –wishes to leave the Methodist denomination and become independent, significant thought must be given as to how to proceed and whether it should support this legislation or work towards amending it at General Conference.

Each Church is unique and each state has state laws that need to be considered when working through this process. The cost are uncertain – as they will be developed by the annual conference, the General Conference on Finance and Administration and Wespath – and the terms are onerous – indemnification forever and no recourse against the conference.

There are alternatives that you may wish to consider. To learn more, please contact Daniel Dalton at Dalton & Tomich PLC to help guide you through this proposal and alternatives that may be available to you based on your local church and the state in which it is located.

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