In 2009 General Convention passed two resolutions which will dramatically impact our churches and church-related institu

2. In 2009 General Convention passed two resolutions which will dramatically impact our churches and church-related institutions. This presentation will briefly review some of the key provisions of these resolutions and the response of the Diocese of Central Florida.

3. Revisions to Canon I.8 A138 Establishing a Mandatory Lay Employee Pension System A177 Denominational Health Plan After a year long study and debate the Diocesan Board passed 3 resolutions on April 21, 2011 establishing policy for the Diocese of Central Florida in reference to these Canonical changes. Much of this will be outlined in this presentation. For a detailed analysis please consult the actual policies which will be distributed in printed format.

4. There are at least 3 valid approaches to these resolutions: • Approach them as a justice issue. The matter of parity between lay and clergy employees certainly speaks to this. • Approach them as a matter of stewardship. The economic impact of these resolutions is not insignificant. • Approach them as a way to value our lay employees and respect the contributions that they make by providing them with a pension and health insurance.

5. As Christians and also as fiduciaries, Vestry members of congregations and Board members of church related institutions may feel in a real bind. Some may be tempted to find ways to avoid the mandate. The hope is however, that we can struggle together to find ways to hold all 3 approaches in tension.

6. Lay Pensions

7. Lay Pensions Since 1993 Episcopal Lay Employers have been expected to provide pensions to many lay employees. By January 1, 2013 Canon I.8 will require that all lay employees working 1,000 hours or more a year will be provided with a pension. The lay employee pension system shall be designed and administered by the Trustees and officers of The Church Pension Fund; the investment managers of the system shall initially include, but not necessarily be limited to, The Church Pension Fund and, in the case of a defined contribution plan offered to school employees, TIAA-CREF

8. Benefits shall (initially) include a defined benefit plan OR a defined contribution plan Defined Benefit Plan minimumcontribution = 9% Existing defined benefit plans will be permitted to continue as long as their plan design delivers pension benefits not less than the pension benefits required by General Convention Resolution A138

9. Defined Contribution Plan minimum contribution = 5 % base + up to 4% matching OR 9% with no match For budget purposes it would be prudent for congregations and institutions to use 9% The deadline for enrollment is December 31, 2012

10. DIOCESAN POLICY effective no later than January 1, 2013 “In reference to General Convention Resolution A138 adopted by the 76th General Convention of The Episcopal Church and with Title I, Canon 8 of the Episcopal Church, the Diocese of Central Florida requires all Parishes, Missions or other ecclesiastical organizations or bodies subject to the authority of the Church, to adopt a lay employee pension system for employees who work a minimum of 1,000 hours annually”

11. Health Insurance

12. Denominational Health Plan By January 1, 2013 Canon I.8 will require that all lay employees working a minimum of 1,500 hours annually participate in The Denominational Health Plan which shall provide equal access to health care benefits for eligible clergy and eligible lay employees The Denominational Health Plan shall provide benefits through The Episcopal Church Medical Trust, which shall be the sole plan sponsor for such benefits

13. Each diocese has the right to make decisions as to plan design options offered by the plan administrator, minimum cost-sharing guidelines for parity between clergy and lay employees, domestic partner benefits and the participation of schools, day care facilities and other diocesan institutions Schools and other church related institutions may be in a separate class regardless of how they are incorporated or how employees are paid It is possible to opt out only if an employee has other coverage through through other approved sources (i.e. spouse’s employer’s plan, former employer’s plan, Tri-Care, etc.).

14. DIOCESAN POLICY effective no later than January 1, 2013 “In reference to General Convention Resolution A177 adopted by the 76th General Convention of The Episcopal Church and with Title I, Canon 8 of the Episcopal Church, the Diocese of Central Florida and all its congregations are required (except as noted below) to obtain medical insurance coverage for their employees through the Denominational Health Plan designed and administered by the Trustees and officers of The Church Pension Fund with benefits provided through The Episcopal Church Medical Trust for all qualified employees (those employees who work 1500 hours or more per year)”.

15. Key issue: • Parity between Lay and Clerical Employees The minimum requirement in terms of the Denominational Health Plan starting January 1, 2013 is single coverage for everyone who qualifies (i.e. those employees who work 1500 hours or more per year)

16. What about the existing Letter of Agreement with the clergy and congregation? From the “standard” Letter of Agreement The Vestry shall pay the following benefits: (a) Church Pension Fund assessment as required by canons which is 18% of the Rector's annual compensation package. (b) Health (and Dental) Insurance, equivalent to or better than the group plan provided through the Diocese. (c) Group Life and Accidental Death and Dismemberment Insurance through the Diocese, or equivalent to or better than the group plan provided through the Diocese. (d) Workers' Compensation Insurance, as required by Florida State Law.

17. Clergy Compensation

18. Clergy Compensation The Diocesan Board has also committed to make an adjustment to the 2013 Compensation Guideline for full time clergy. This adjustment will mean that that base compensation will include an offset for medical insurance at whatever level is currently offered. This offset will be at 85% of the difference between the single level of coverage and the employee plus one and family level of coverage, as applicable. This percentage is in recognition of the fact that this increase would cost the congregation 18% in additional pension premiums).

19. For example the guideline will include a note such as: • In order to arrive at the diocesan minimum for a full time clergy person add the following: • Clergy needing coverage Plus 1 5,410 • Clergy needing family coverage 12,112

20. What about the financial impact on congregations? At the adjustment of 85% there is no additional cost to the congregation for clergy The impact in terms of lay employees will depend upon each unique staffing level

21. Let’s look at two examples of cost neutrality (using actual data from 2010) comparing two years with equal compensation and costs: one year (2012) to another (2013) Actual dollar figures are for comparison only and do not represent the actual Compensation Guidelines for 2012 and 2013

22. Diocese of Central Florida: A177 DHP Implementation – Health Ins Compensation Adjustment Comparison: Clergy Package with Emp + 1 Level Health Ins Before & After DHP Father Ingqvist’s Package – 2012 Father Ingqvist’s Package – 2013 This slide shows 2010 rates SE Tax Offset Calculations: Gross SE Earnings – 7.65 % * 15.3% * ½ $54,950 – 4,204 = 50,746*.153 = 7,764 * ½ = 3,882 EXPENSE NEUTRAL • * RE: The health insurance adjustment: • it would vary depending on the level (employee + 1 or family) of insurance needed by the clergyperson (this example shows Employee +1 level); • it should be deducted PRE-TAX from the clergyperson’s paycheck and will be used to pay a portion of the group health insurance bill coming to the parish; • This will necessitate that the parish adopt and the clergyperson sign up for the Diocesan Section 125 Plan (aka Cafeteria Plan) which costs $6 per person per month; • since it would be deducted PRE-TAX the SE Tax Offset is showing no difference.

23. Diocese of Central Florida: A177 DHP Implementation – Health Ins Compensation Adjustment Comparison: Clergy Package with Family Level Health Ins Before & After DHP Father Ingqvist’s Package – 2012 Father Ingqvist’s Package – 2013 This slide shows 2010 rates SE Tax Offset Calculations: Gross SE Earnings – 7.65 % * 15.3% * ½ $54,950 – 4,204 = 50,746*.153 = 7,764 * ½ = 3,882 EXPENSE NEUTRAL • *RE: The health insurance adjustment: • it would vary depending on the level (employee + 1 or family) of insurance needed by the clergyperson (this example shows Family level); • it should be deducted PRE-TAX from the clergyperson’s paycheck and will be used to pay a portion of the group health insurance bill coming to the parish; • This will necessitate that the parish adopt and the clergyperson sign up for the Diocesan Section 125 Plan (aka Cafeteria Plan) which costs $6 per person per month; • since it would be deducted PRE-TAX the SE Tax Offset is showing no difference.

24. Benefit Registration System through the Church Pension Fund mid 2011 The deadline for Implementation is January 1, 2013