Horror:Lutheran School Finances

For centuries Lutheran school around the world have been blessed by the outstanding commitment, skills, and sacrifices of their administrators. Each year their task becomes more complicated. Today’s Lutheran school administrator and especially also the preschool administrators need to manage not only academic excellence and Christian distinctiveness but also public relations, buildings, heightened parental expectation, ever changing regulations, public health issues-and finances. And when it comes to finances some meet the challenge exceedingly well. Other cannot cope and end up with horror stories

The Lutheran preschool director from New Jersey was in tears as she spoke with me on the phone She had consistently withheld all FICA (Social security, income tax etc.) payment from her staff. However she had never sent in those funds to the appropriate government agencies She had needed the funds just to keep her much loved school functioning. The day of reckoning came when she heard from the IRS. First, she cleared out her own personal bank account in an effort to keep her school alive. That was not enough. She knew she had to report the situation to her Church officers, When they would find out, she was sure she would be fired. She reported, was fired and the school was closed

The national offices of the Lutheran Church asked me to pay a visit to the Lutheran school in St. Thomas in the Virgin Islands. Something down there didn’t seem to be going well. I was happy to investigate. After all this school is one of the oldest Lutheran schools in the Western Hemisphere. I was pleased with what I found, good teaching-learning. The top citizens of that island were sending their children to this school. The principal was new. Finally I asked him if there were any significant problems. He hastened to explain. “You see, “ he said I have been withholding FICA payments but have not sent them in to the USA Government to which we are accountable for them and now I have received word from them of our delinquency. I don’t even have the money for the base amount, much less for the deferred interest penalties.” .I asked him if his school board had a plan to deal with this. He replied, “Oh, no. I haven’t told them yet. There is a meeting with them tonight and I was hoping you would tell them this story and give us directions for solving this problem.” At the end of the term the school closed.

But the saddest of these horror stories took place in New York. The school was large and excellent. Teachers ,pupils and families were all cared for. Learning was taking place. Self-esteem was being built. So I was startled to get a telephone call shortly after midnight. One of their best teachers (a single mother ) was calling. She was calling from her hospital bed-and she was devastated by two terrible pieces of news she had just received, First she had been diagnosed with a fatal disease with a very short life expectancy. Secondly, the hospital finance department had called to tell her that her medical insurance was not in effect because the school had not submitted the monthly premiums. As she was trying to cope with this , another though flashed in to her mind . “I wonder if the school has sent in the pension and retirement fees they had deducted from her monthly salary.These were critical for the survival of her daughter. She said she knew it was after midnight but she wondered if I could do any thing about at once and come to the hospital to give her some hope.

To my (and her dismay ) we learned that , in fact , the school had sent in neither health premiums nor retirement deductions for over a year !

I grieved deeply at her Memorial Service only a short time later.

A bit of good news in the midst of it. I contacted our wonderfully caring and competent attorney Howard lapel and he got right on the case. Together with his associate they got the Internal revenue Service to drop all interest and penalty charges and arranged for time payment of the balance. And the Lutheran Church at the national level came through in a very compassionate way to assist with the medical bill and survivor benefits.

The lesson has been relearned; when finances are not handled appropriately the results create incredible horror stories.