1 / 29

Council on Finance & Administration

Council on Finance & Administration. John O Pearce. CFA Meeting Participants Re: 2020 Budget. Jay Voorhees Karen Barrineau Davis Chappell William McAlilly – Bishop Jim Allen – Treasurer Phil Jamieson – U M Foundation Scott Aleridge – District Supt. Melinda Britt – CCOCM

lyarbrough
Download Presentation

Council on Finance & Administration

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Council on Finance & Administration John O Pearce

  2. CFA Meeting Participants Re: 2020 Budget • Jay Voorhees • Karen Barrineau • Davis Chappell • William McAlilly – Bishop • Jim Allen – Treasurer • Phil Jamieson – U M Foundation • Scott Aleridge – District Supt. • Melinda Britt – CCOCM • Lynn Taylor – Dir. Missional Alignment • Shelly Curtis • John Pearce - President • Terry Hundley - Vice President • Paul Purdue - Secretary • Rashad Bailey • Jane Turner • Deanna McCulley • Jim Hughes • Drew Shelley • Dale Sims • Barbara Pate

  3. Today’s Message Transparency: No Secrets/No Surprises 2020 Budget: Are we using the gifts entrusted to us by the local churches wisely to “shape congregations that offer Jesus Christ to a hurting world one neighborhood at a time” Apportionment Receipts: 2018 Results, 2019 Concerns and Contingency Planning Reserves: How is our Balance Sheet helping us? Pensions: Status and WesPath Reports Direct Billing: Clergy Health and Pension Benefits

  4. 2020 Expense Budget Headline 2019 Expense Budget 2020 Proposed Budget Decrease from 2019 % Change ( Details to follow ) • $18,061,707 • $17,501,797 • ($ 559,910) • (3.1%)

  5. Significant Changes 2019 to 2020 Expense Budget • Pensions • Health Plan • General Church • District Superintendents • Equitable Comp • Conference Admin • Connectional Ministries • New Church Development • Board of Ordained Ministry • Higher Education &Campus Ministry • Camping and Retreat • Miriam’s Promise • TOTAL CHANGE • ($188,032) • ($171,968) • $23,134 • $17,818 • $51,000 • ($48,182) • ($56,687) • ($201,590) • $24,600 • ($31,570) • ($1,062) • $23,628 • ($559,911)

  6. How do we pay for all of this? • Use of Reserves: • Direct Bill: • Other Income: • Apportionments: • Total: • 20192020Change • 3,292,880 4,046,008 753,128 • 0 2,306,639 2,306,639 • 2,459,815 2,525,212 65,397 • 12,309,012 8,623,938 (3,685,074) • 18,061,707 17,501,797 (559,910)

  7. 2018 Apportionments Received • Churches Paid 100% • Churches Paid 50%-100% • Churches Paid 1%-50% • Churches Paid Zero • Total Churches NumberAmount Paid % of Total • 390 $11,685,830 90.3% • 57 $845,582 6.5% • 85 $415,303 3.2% • 32 $0 • 564 $12,946,715 • 89.3% of $14,500,254 Apportioned • $57,863 short of $13,004,578 needed

  8. Who Paid Apportionments - 2018 • Brentwood $1,322,939 • Franklin First $ 609,914 • West End $ 439,718 • Murfreesboro $ 361,099 • Belmont $ 280,852 • Hendersonville $ 273,028 • Cookeville First $ 265,894 • Hermitage $ 243,969 • Calvary $ 237,063 • Madison Street $ 230,164 Top 10 Total (33%) $4,264,640 • (16) $100K-$200K $2,276,524 • (28) $50K-$100K $2,171,842 • (40) $25K-$50K $1,354,997 • (438) $1-$25K $2,878,711 Total Apportionment Giving • (564) $12,946,715

  9. Who Did Not Pay Apportionments - 2018 • 15 Churches Underpaid by > $25,000 $646,029 41.0% • 132 Churches Underpaid by < $25,000 $721,913 46.0% • 32 Churches Paid Zero <$25,000 $204,066 13.0% • 179 Churches Underpaid for Total of $1,572,008

  10. 2020 Apportionment Collections • As of April 30, 2019 • Collected $3,176,994 or ($1,395,530) less than 4/12 • 230 Churches have paid ZERO ($1,778,880) • Top 10 Church Variance ($543,559) • Down $699,286 from this time last year (18%)

  11. 2020 Apportionment Contingency Plan • Contingency Plan: • Monitor Monthly and follow up on larger variances • Use additional reserves up to $1,000,000 • CFA use our “Best Judgement” to reduce expenses up to $1,000,000 more • CFA will ask boards, agencies and officers to exercise spending restraints • CFA will carry over to 2020 expense reductions • CFA Contingency Task Force: Dale Sims, Drew Shelley, Terry Hundley, Jim Allen, Melinda Britt, Jim Hughes

  12. Invested Reserves 12/31/18 (Un-audited) • Unrestricted Net Assets: 28,421,666 • Invested in Fixed Assets: (4,451,863) • Designated for Pensions: (15,175,620) • Designated for Healthcare: (2,044,224) • Designated for Congregational Devel: (2,031,034) • TN Conf Camping Fund: (896,410) • Designated for Conf HQ: (620,248) • District New Church Devel: (1,335,426) • DS Parsonage Fund: (652,643) • Other Designated: (494,759) • UNDESIGNATED719,439

  13. TN Conference Pension Plans • TN Conference has three primary pension plans: • Pre-1982 Pension Plan • Ministerial Pension Plan (1982 – 2006 ) • Clergy Retirement Security Program (CRSP) (2007 to present) • At end of 2018 All three plans are “fully funded” according to the actuaries at WesPath Benefits (actually “over funded”) • Pre-1982 Pension Plan 112% • Ministerial Pension Plan 108% • CRSP DB Plan 109% • In addition to these plans, TN Conference has over $15,000,000 of “pension reserves”

  14. Clergy Pensions Five Year ActivityReserve Floor Target = $10,000,000 • Beginning • Earnings • Expense • Other Income • Apportionment • Net Change 12/31/1612/31/1712/31/1812/31/1912/31/20 17,903,676 16,971,995 17,196,158 15,175,620 14,047,772 1,248,647 2,303,100 (296,260) 1,300,000 1,300,000 (3,366,617) (3,242,007) (3,184,769) (3,196,808) (3,175,976) 638,62552,00048,000 1,186,288 1,163,070 821,866 716,960 500,000 (931,682) 224,164 (2,020,538) (1,127,848) (1,327,976) $12,719,796

  15. General Church Apportionments • 2016 Actual $2,379,059 • 2017 Actual $2,369,287 • 2018 Actual $2,405,594 • 2019 Budget $2,418,155 • 2020 Budget $2,441,289

  16. Per Person Cost of Clergy Health Plan 20192020 • Budgeted Expense: 4,484,932 4,312,964 • Estimated Premium Receipts: (470,785) (470,785) • Cost per 290.75 Participants: $13,806 13,215 • $591 per person reduction for 2020 • 51 Participants not-Appointed to local church • 239.75 Participants appointed to a local church

  17. Clergy Health Plan • Our Plan is Self Funded • “We” are the Insurance Company • Stop Loss Policy • Covers Doctor Visits, Hospital, Prescription Drugs, etc.

  18. Clergy Health Plan Issues • For 2020 our actual budgeted cost per participant is $13,215 • 561 churches pay an apportionment for clergy health • 340 churches (61 percent) that pay DO NOT have a clergy that benefits • 54 churches (larger) pay $1,007,089 for other churches’ clergy • 167 churches (mid-size) “under pay” on average $5,558 • How do we help the mid size with this cost? • Are there churches that can’t afford the salary and benefits of a full-time clergy? • What are missional outcomes of our present cost distribution method? • Could churches consolidate in order to fully support the full cost of one clergy? • Can we control our cost better: • Pharmacy • Higher deductible with Health Savings Account • Can we reduce average age of plan from 51 • Should clergy pay some of the premium?

  19. Direct Billing of Clergy Health & Pensions: WHY • Fairness to the 340 smaller churches that pay (twice?) with no participant • Fairness to the 54 larger churches that pay extra • Risk of reliance on collection of Apportionments for Clergy Benefits • Current method is not sustainable in the changing landscape of UMC • Need to more fully understand the increasing cost of Healthcare • Pay for benefits in same manner as salary • Allows Cabinet to understand which churches can fully fund a full elder • TN Conf is one of few remaining conferences to apportion benefits

  20. Direct Billing WHY NOW • Reliance on collectability of apportionments is getting riskier quickly • One less alignment needed in 2021 if we form a new conference • Do this on our terms not as part of a new conference • Use TN Conf reserves to “give back” to TN Conf churches • Potential drop in local church giving units and pledges in 2020 • Shifting to a new model over two or more years will allow churches time to adapt

  21. Direct Billing: HOW • Beginning January 1, 2020 each church’s apportionment will be reduced by the line item for health care and pensions • Each church with an appointed clergy participating in the plans will be billed monthly for the actual cost of their specific clergy • The remainder of the Conference Budget will be apportioned as in the past • For calendar year 2020, the TN Conference will use reserves to fund 50% of the Clergy Health and 75% of the Pension billings • Most churches will see a reduction in their total conference billings for 2020 including apportionment, Health, and Pension • For 2021 CFA expects that each church with a participating clergy will pay 100% of the cost of Health Care and the Conference will continue to subsidize pensions to some extent

  22. Direct Billing: HOW • The costs for clergy participants not appointed to a local church (51) , will continue to be apportioned as in the past. • Transparency is our goal, Pre-Conference District Meetings, video explanation, spreadsheets available by District with each church’s separate line item with the impact for 2020 • New spreadsheet is available that reflects reduced Healthcare costs for 2020 and a column for likely impact in 2021.

  23. CFA Recommended Items For Your Action 1) That the total conference budget for 2020 of $9,641,070 be apportioned to the churches using the method printed in the 2013 Journal p. 109-110. 2) That the approved travel expense for staff and members of councils, boards, committees, and other entities of the conference be reimbursed at the rate set by the entity, not to exceed the maximum mileage amount allowed by the Internal Revenue Service for business travel. 3) That the expenses for at-large members to the 2019 annual conference be reimbursed at a rate not to exceed $150 per day ($300 max), plus mileage at the IRS rate for business travel. 4) That the housing allowance designated for clergy conference staff pursuant to Internal Revenue Code section 107 be approved for 2019-2020 as printed in the Journal. 5) That the base compensation of the district superintendents for 2020 be set at $108,059.

  24. CFA Recommended Items For Your Action • 6) That half the amount of $13,215 ($6,562.50) per clergy for participation in the Conference Clergy Health Benefit Plan shall be directly billed to each church for their appointed participating clergy with the remainder paid from Conference reserves. Billings will be paid or drafted from the church’s account via ACH. • 7) That 25% of the cost to the conference for each clergy participating in the Conference Clergy Pension Plans shall be directly billed to each church to which the clergy is appointed, with the remainder paid from Conference reserves. Billings will be paid or drafted from the church’s account via ACH. The specific amount for Pensions will be calculated for each church after appointments have been made, but no later than October 31, 2019.

  25. Future Concerns 1) We can’t continue paying significant portions of the annual budget with reserves 2) We can’t continue to apportion 100 percent of clergy pension and clergy health plan costs 3) Ongoing capital needs at Beersheba and Cedar Crest 4) Potential reduction of apportionment collections below 90 percent - economic or political or unrest in UMC 5) Potential expected Bear Market’s impact on pension plans and reserves

More Related