Minutes of June 12-13 Metropolitan Council meeting posted

Orthodox Church in America Metropolitan Council Meeting June 12-13, 2007

JUNE 12, 2007

Following an agenda distributed by the OCA secretary:

  1. OPENING PRAYER. At 10:00 a.m., His Beatitude, Metropolitan Herman, led a Service of Prayer in the Chancery’s St. Sergius of Radonezh Chapel, Oyster Bay Cove, NY.
  2. ROLL CALL. Present: Chairman: His Beatitude, Metropolitan Herman. Officers of the Church: The Very Rev. Paul Kucynda, secretary and acting treasurer. Representatives elected by the All-American Council: The Very Rev. Theodore Boback, the Very Rev. Gregory Safchuk, Eleana Silk, Dr. Faith Skordinski, Dr. Alice Woog. Diocesan Representatives: Albanian Archdiocese, L. William Peters; Archdiocese of Canada, the Very Rev. John Tkachuk, Richard Schneider; Diocese of Eastern Pennsylvania, the Very Rev. John Onofrey, Peter Bohlender; Diocese of the Midwest, the Very Rev. Vladimir Berzonsky, Dr. Richard West; Diocese of New England, the Very Rev. Mark Sherman, Deacon John Zarras; Diocese of the South, the Very Rev. Philip Reese, George Popovich; Diocese of Washington and New York, the Very Rev. George Hasenecz; Diocese of the West, the Very Rev. Matthew Tate, Mary Caetta; Diocese of Western Pennsylvania, the Very Rev. John Reeves, Gregory Nescott. Absent: Member Elected by the All-American Council, the Very Rev. Constantine White; Diocese of Alaska, Archmandrite Isadore (Brittain), Minadora Jacobs; Albanian Archdiocese, the Very Rev. Sergei Bouteneff; Diocese of Washington and New York, Robert Kornafel.. Following the roll call, Dr. Woog questioned Mr. Nescott’s presence, citing her understanding that His Beatitude, Metropolitan Herman, had removed Mr. Nescott from the Metropolitan Council. His Beatitude replied that he had not removed Mr. Nescott, rather, Mr. Nescott’s bishop had done so, and his bishop had also restored him to the Council. Guests: Present for indicated portions of the meeting: the Very Rev. Alexander Garklavs, chancellor appointee (entire meeting); Mr. Robert Taylor, CPA, and Ms. Valerie Jones, CPA (Financial Report); the Rev. Jonathan Ivanoff (Computer Upgrade Project), the Very Rev. Paul Suda, (OCA Audit Committee), the Very Rev. Eugene Vansuch (FOS/Development), Al Wetmore (Organizational Task Force), Carol Wetmore (recorder).
  3. MINUTES of March 2007 Metropolitan Council Meeting. Mr. Nescott pointed out a missing phrase from the Special Committee section; Recorder will delete confusing and apparently erroneous notations of early member departures. Fr. Onofrey moved to accept the minutes as amended; Mr. Bohlender seconded; motion passed unanimously.
  4. ADDRESS OF METROPOLITAN HERMAN. His Beatitude’s delivered a message, which was later provided in written form to all Council members and posted on the OCA website. [The complete text of the is may be found at http://www.oca.org/news.asp?ID=1258&SID=19 on the OCA web site.]
  5. FINANCIAL REPORT AND OCA AUDIT COMMITTEE REPORT. Fr. Paul Suda, chairman of the OCA audit committee reported orally and in writing on review of January?March 2007 transactions. In summary, he noted: the Chancery presently has no credit card, so no credit card transactions were reviewed; allocations to expense categories were appropriate for expense reimbursements; transportation expenses were properly documented; and all but “a few” transactions had proper receipt documentation. He presented six recommendations, one of which, he reported, was already accomplished:
    1. that a response be prepared to the audit report completed by Lambrides, Lamos, and Moulthrop, LLP, in September 2006;
    2. that a quarterly budget review be completed by a CPA to “confirm the new administration is following best practices” (accomplished);
    3. that the OCA audit committee chair serve on the MC audit committee;
    4. that specific documentation practices be put in place for travel expenses;
    5. that no expenses be reimbursed without receipt unless approved “by the appropriate party with a reason for the exception”; and
    6. that the new financial software by used to identify ways to enhance audit capabilities.

    Robert Taylor, CPA, from Lambrides, Lamos, Moulthrop, LLP, presented a draft audit of OCA funds for the year ending December 31, 2006. He reviewed the salient features of the draft report and, while noting two significant outstanding issues, said the financial statements present fairly, in all material respects, the financial position of the Church as of December 31, 2006, and the changes in its net assets and its cash flows for the year, in conformity with accounting principles generally accepted in the United States of America. The two open issues are the ownership of certain Alaskan lands and the inadequacy of accounting records regarding the use of temporarily restricted net assets for the years prior to 2006. He answered questions from the Council, as did his associate, Valerie Jones, concerning details of the report. He recommended that the Church hire a fully qualified full-time accountant. In response to questions regarding restricted funds, he recommended ?due diligence’ to determine utilization of funds in the absence of adequate documentation. He cited his intention to conference with the audit committee(s) and other principals regularly in the future, to interact and make recommendations.

    The Council adjourned for lunch from 12:55 - 1:55 p.m.

     

  6. 6. RE-ORGANIZATIONAL TASK FORCE/SEARCH COMMITTEE REPORT. Peter Bohlender reported for the Task Force that Fr. Garklavs will assume the position of chancellor on July 1, and the Rev. Andrew Jarmus will report on August 1 as director of ministries and communications. Both have accepted salaries within the ranges approved in November 2006 and benefits consistent with those presently in effect. Regarding the treasurer position, Mr. Bohlender reported that the previously approved candidate, Kevin Kovalczyk, declined the position. A second candidate underwent interview but ultimately declined, based on inability to relocate. The Task Force recommends seeking to recruit a full-time accountant and a part-time treasurer (who must be an OCA member in good standing). Reporting for the Secretary Selection Team, Dn. John Zarras presented Paul Bodnar as the recommended candidate. He outlined Mr. Bodnar’s background and qualifications as well as the objective process used to review all applicants. Mr. Bohlender outlined other personnel changes within the Chancery, including two separations. He reported that a severance policy was in effect whereby employees received one week’s pay for each year’s service, as well as health benefits during the severance pay period. He sketched future Task Force plans, including policy development and continued support to the transition officer. He asked the Council to recommend Mr. Bodnar to the Holy Synod and to endorse recruiting a part-time treasurer and a full-time accountant. In discussion, Council members suggested it would be more appropriate to hire a full-time treasurer than a part-time treasurer. Fr. Reeves moved to ask the Task Force to continue to seek a full-time treasurer with emphasis on accounting skills. Fr. Reese seconded. Motion passed on a vote of 11 to 10. Dn. Zarras moved to recommend Paul Bodnar to the Holy Synod; Fr. Sherman seconded; the motion passed unanimously. [A summary of the Task Force report is posted at http://www.oca.org/news.asp?ID=1266&SID=19 on the OCA web site.]

  7. 7. OCA BEST PRACTICES/CONFORMITY TO NY STATE LAW REPORT. Peter Bohlender moved, and Fr. Reese seconded, that the subject be taken off the table; the motion passed unanimously. Fr. Reeves made a motion, seconded by Mr. Nescott, to divide the question and take each section separately. The motion passed with 11 for and 6 against. The Council as a body then reviewed each section of the Best Practices document in detail, with Mary Caetta recording changes to be incorporated overnight and presented to the Council on the morning of June 13.

    Section I Establish Clear and Decisive Governance: Motion to accept as amended: Fr. Tkachuk, second, Fr. Safchuk, approved unanimously.

    Section II Adopt Ethics and Conflict of Interest Policies: Motion to accept as amended: Dn. Zarras, second, Fr. Onofrey, approved on a vote of 20 to 1.

    Section III Design and Implement Appropriate Financial Controls: Motion to accept as amended: Mr. Bohlender, second, Dn. Zarras, approved on a vote of 20 to 1.

    Section IV Conduct Regular Independent Financial Audits: Motion to accept as amended: Dr. West, second, Dn. Zarras, approved unanimously.

    Section V Ensure Transparency of Financial Data and Performance: Motion to accept as amended: Dr. Woog, second, Fr. Safchuk, approved unanimously.

    Section VI Maintain Knowledge on Emerging Non-Profit Issues: Motion to accept as amended: Mr. Bohlender, second, Dn. Zarras.

    In discussion Council members debated the concept of a “principles” versus a “procedures” document. They concluded the Best Practices policy is a principles document, which the Church needs. It also needs clear understanding of those principles and enforcement as well as punishment for non-compliance. The motion passed unanimously.

    Ethics Policy: Motion to accept as amended (chiefly to establish an ethics committee) by Fr. Reeves, seconded by Mr. Schneider.

    Conflict of Interest Policy: Motion to accept as amended: Dn. Zarras, second, Mr. Popovich, approved unanimously.

    Whistleblower Policy: Comments made that each section should be able to stand alone. Changes proposed to effect that end. Motion to table until tomorrow morning by Mr. Nescott, second by Fr. Tate, passed unanimously.

    Donor Bill of Rights: Motion to accept by Fr. Sherman, second, Dn. Zarras, approved unanimously.

    Document Retention Policy: Motion to accept as amended: Fr. Reese, second, Mr. Nescott, approved unanimously.

    The Council adjourned for the day at 6:20pm.

JUNE 13, 2007

The Metropolitan Council session opened with prayer at 9:00 a.m.

ROLL CALL. Unchanged from June 12, except for addition of member elected by the All-American Council, the Very Rev. Constantine White.

  1. OCA BEST PRACTICES/CONFORMITY TO NY STATE LAW REPORT [continued]. Ms. Caetta presented and reviewed the edited version of the document resulting from the Council’s efforts on June 12. She suggested a review one year hence. She emphasized that this is a living document and will need regular review and revision. In discussion the Council agreed to rename the MC audit committee the internal audit committee throughout the document. Fr. Reeves moved to approve the Whistleblower Policy as amended; Dr. Woog seconded, and the motion passed unanimously. Further changes in terminology and format were discussed, agreed upon, and recorded by Ms. Caetta. Fr. Sherman moved to accept the whole document; Mr. Popovich seconded, and the motion passed unanimously.
  2. INVESTIGATION COMMITTEE REPORT. Fr. Berzonsky orally reported actions of the committee. He reported on the committee’s process and said they perceived insufficient cooperation from Proskauer Rose in providing records. He said plans for further investigation were cut short by the suspension of their activities. Discussion followed regarding bills from and payments to Proskauer Rose as well as processes to assure all bills are fully substantiated before payment. Fr. Kucynda stated that Attorney Alexandra Makosky is presently scrutinizing all current open bills from Proskauer Rose prior to payment. Fr. Sherman presented a resolution: “As also previously authorized and directed by the Metropolitan Council and the Holy Synod, the Special Commission is directed to continue, without delay, its investigation of financial malfeasance affecting the Church, without any hindrance or limit, and to reports its findings and recommendations no less often than monthly to the Metropolitan Council and Holy Synod. Such reports shall include, once available, the identification of what has happened and recommendations as to any possible means of the recovery of Church assets lost or misappropriated. All parties having relevant information, including any legal counsel representing the Church, are authorized and directed to cooperate fully with the Special Commission in such investigation.” Mr. Popovich seconded. Mr. Nescott asked if all Special Commission recommendations went to the Holy Synod and were approved. His Beatitude replied that he would need to check on the recommendation about releasing the report, but the other recommendations were accepted. His Beatitude said he does not object to the motion because the suspension of the Special Commission has been misinterpreted. We appointed the Special Commission to bring a close to the investigation into the Proskauer Rose findings. The commission’s activities were stopped temporarily when they went into a whole new direction, because of numerous other concerns. The Council discussed the benefit of passing the motion and agreed the objective is to prevent recurrence of the malfeasance, not to engage in muckraking, which is contrary to canon law. On the other hand, a good outcome of the investigation would be to support Best Practices. Mr. Nescott made the point that the Special Commission should be operating now, pursuant to the charter passed by the Council in March. It is a conflict of interest for His Beatitude to suspend the Special Commission since he held the office of treasurer, as did Fr. Kucynda. Dn. Zarras made the point that the Church has no general counsel, no attorney specifically charged to represent the Church’s interests. Ms. Caetta, as chair of the internal audit committee, expressed her interest in continuing the Special Commission in the interest of finding out “why things went wrong.” She added that the Commission’s report needs to be to the Metropolitan Council, not to the Metropolitan alone, in order for the results to be followed up by the internal audit committee. Dr. West presented a written message from the Diocese of the Midwest, where there is dissatisfaction with the Honesdale loan, the removal of Mr. Nescott from the Council, and the discontinuation of the Special Commission. There is a perception of lack of communication and lack of transparency. He characterized his written message as a “compromise.” Discussion followed about assumptions made in the absence of facts, angry priests, and refusal to listen to messages from Council members. Fr. Sherman amended his motion to add “including possible IRS implications,” after “what has happened.” Mr. Popovich, who had seconded the motion, agreed with the amendment. The motion passed by a vote of 20 to 1. The Council adjourned for lunch from 12:30 - 1:30 p.m.
  3. LEGAL MATTERS. Pursuant to earlier discussions, Fr. Kucynda presented a report on Proskauer Rose billing, which has totaled $350,679.18, the largest portion of which resulted from their investigation into financial malfeasance. Outstanding bills from Proskauer Rose are subject to some negotiation. He emphasized that all payments made to Proskauer Rose to date, as well as the repayment of a $50,000 no-interest loan accepted from a member of the Church for initial funding of the investigation, have been made exclusively from 2006 general funds. Dr. Woog moved that, through the Metropolitan’s office, contacts be made to five attorneys qualified and willing to work with the OCA as general counsel, for the purpose of obtaining their bids. Dr. Skordinski seconded and the motion passed unanimously. Dn. Zarras reported his investigation into the loss of one Special Committee report. Since his investigation, all 44 copies of the report are under lock and key except those in the hands of Special Committee members. The Council discussed and affirmed the need to acquire fireproof file cabinets or to obtain the services of an off-site archival company. The secretary of the Church holds this responsibility, as well as responsibility for putting in place a security plan. Fr. Kucynda presented an advisory paper concerning IRS implications of excess benefits. The Council noted various aspects of the report and confirmed that the Church has taken numerous good faith steps with regard to this matter and must continue to do so. Fr. Kucynda reported the sale of Martin Drive property is complete. The sale price of $600,000. netted the Church $540,817.10. The net profits are being transmitted directly to Honesdale Bank to reduce the $1.7 million loan.
  4. FIFTEENTH ALL-AMERICAN COUNCIL. The Council reviewed a memorandum from the Very Rev. Myron Manzuk, council manager. He has made arrangements with a convention planner and is starting meetings with him. The Council discussed the pros and cons of St. Tikhon’s Monastery as a Council site.
  5. INTERNAL AUDIT COMMITTEE REPORT. Ms. Caetta presented a written report with five recommendations. She will rethink her committee role in view of the Best Practices document adopted at this session.
  6. ETHICS COMMITTEE. The Council elected three ethics committee members. Dr. Skordinski nominated Mr. Peters and Fr. Sherman; Fr. Tate nominated Mr. Nescott. Fr. Reeves moved to close nominations; Fr. Boback seconded; motion passed unanimously. Committee members are directed to select a chair from among their members.
  7. COMPUTER UPGRADE REPORT. Fr. Ivanoff provided a written and oral report. Accounting System and Information Systems Upgrade. A major milestone was the production of an income/expense financial report for the first quarter of 2007 via the new financial software system. The Chancery will switch over to an upgraded server this week. Remaining tasks include additional training for affected personnel, planned for the next two months. Target date for full implementation of the Blackbaud software is the third quarter, affected in part by difficulties in recruiting a treasurer/accountant.
  8. FOS/DEVELOPMENT REPORT. Fr. Vansuch, director of development and stewardship, summarized his written report and discussed recent activities. Income is on target with 2007 budget projections: $25,680 in donations to date, with an additional $21,000 coming to FOS since April.
  9. FINANCE COMMITTEE REPORT. Fr. Tate reported Church expenditures vs. budget. Generally, assessments are on target with budgeted income. Expenditures for legal expenses warrant a budget increase to $190,000. Additional Metropolitan Council expenses this year also indicate need for a $25,000 increase in that line item. Making those changes, and all else being equal, will create a $100,000 deficit at the end of the year. Fr. Reeves moved to make the cited budget changes and also to reimburse Dr. Skordinski for her reasonable travel expenses incident to the ongoing Church Court activities; Mr. Popovich seconded; the motion passed unanimously.
  10. CHARITY COMMITTEE REPORT. Fr. Reeves summarized his written report. On a motion by Fr. Tate, seconded by Mr. Popovich, the Council unanimously approved distributing $90,000 in 9/11 Funds to the New York Disaster Interfaith Service (NYDIS). Mr. Bohlender moved to approve $67,000 to be directed to Bibles for Russia, with the understanding that the Finance Committee will work out the mechanics. Fr. Sherman seconded, and the motion passed unanimously.
  11. INVESTMENT COMMITTEE REPORT. Mr. Popovich presented a written report for committee chairman Fr. Reese, showing funding in OCA investment accounts. He said that the fourth and final team member, Charles Webb, has been added and that the committee will now begin to meet and work as a team.
  12. DATE FOR NEXT MEETING. Fr. Kucynda announced the meeting dates: October 16-17, 2007.

Adjournment: Fr. Reeves moved to adjourn; Fr. Tate seconded. The motion carried. The meeting closed with the singing of “It Is Truly Meet” at 3.35pm.

Respectfully Submitted,

Carol Wetmore

7/6/2007