Budget Report:
Decline in Fair Share giving squeezes ministry where it hurts
By Annette Bender
Last year, the Rev. Cecil McFarland expected $15,000 from Holston Conference to help pay the salaries of prison chaplains in Virginia. The Virginia Conference gave him $153,000. From Holston, McFarland received $8,300.
Last fall, the Rev. Randy Pasqua expected $4,500 from Holston's Outreach-Advocacy Team to pay scholarships for needy children attending summer camp. Pasqua didn't get the $4,500 – nor did he receive an additional $53,500 that was to come from Holston's 2002 budget to support conference camping.
In Crystal Salyers' last academic year, she received $6,000 from Holston's ministerial education fund to help pay for her tuition at Duke Divinity School. This year, Salyers has received $3,000. Her congregation at Mt. Zion UMC in Morristown District is helping to fund some of the shortfall.
All over the conference, groups and individuals are feeling the effects of the economic downturn and a decline in giving to Fair Share apportionments. The budget crunch is not exclusive to Holston Conference, according to Treasurer Ron Matthew "but in reality it's an across the board problem for all nonprofit organizations."
At the end of 2002, Holston churches paid 88.56 percent of their Fair Share apportionments, compared to 90.21 percent in 2001 and 91.06 percent in 2000. The decline in giving amounted to a $1.76 million shortfall in the $15.1 million budget, according to Matthews.
Holston's experience resembles the pattern of giving throughout the denomination, according to United Methodist News Service. In the same way that local churches pay apportioned funds to the annual conference, the annual conference pays apportionments to the general church. In 2001, United Methodist conferences paid 88.5 percent of the amount asked for in 2002, compared to 90.1 percent in 2001.
Other denominations are also reporting funding shortfalls. The Lutheran Church Missouri Synod, the nation's ninth largest denomination, ran $3 million short, laid off 30 percent of its missions department, and called home 20 missionaries at the end of 2002, according to a recent news report.
How did we get here?
Until last year, Holston Conference typically received an average 90 percent of Fair Share apportionments from local churches, Matthews said. In September 2002, conference leaders froze spending except for salaries and other essential expenses when it became clear 2002 wouldn't be a typical year. Not only were Holston churches giving less to apportionments in 2002, but the economic downturn had wiped away interest income from Holston Conference deposits.
"The strong economy of our recent past generated additional income from our deposits, which were used to help offset the deficit in receipts," said Matthews, referring to Fair Share apportionments from local churches that are not paid in full. "Earnings have currently dried up and we have lost our cushion. The gravy bowl is empty."
Along with bigger shortfalls in Fair Share giving during 2002, conference finance leaders also faced dried-up earnings from the Treasury Reserve Fund that previously had been accumulating under the guidance of the Council on Finance and Administration (CFA), Matthews said.
When Holston experienced a $1.76 million budget shortfall at the end of 2002 – an amount that would have been higher if spending cuts had not been made in September – finance leaders were forced to dip into the Treasury Reserve Fund to make ends meet, Matthews said. Treasury Reserve Fund figures could not be provided in time for publication, according to the treasurer's office.
The point is, says Matthews, the Treasury Reserve Fund is for "dire financial emergencies." The current balance is already below the recommended minimum fund balance, which is 10 percent of the conference's annual operating budget, he said.
Cuts in ministry
A former accountant, the Rev. Beverly Robinette planned to wait until later in 2002 to distribute most of the Outreach-Advocacy Team's then annual budget of $47,500.
"I felt that was good accounting practice, to wait until the money was available," explains the Outreach-Advocacy chair.
But when the conference suspended spending in September, the Outreach-Advocacy Team was left without funds.
"What I had to do was inform these ministries there was no money for them in 2002," Robinette said.
For Holston minister Cecil McFarland, who serves as director of the Virginia Chaplaincy Service, the shortfall from Holston's budget crunch was noticeable. The nonprofit organization depends on Virginia Conference and Holston Conference as well as other denominations to pay salaries of chaplains in state-run prisons and juvenile correction centers. Three of the 30 chaplains are Holston ministers.
"When I appear before the Virginia Conference, I have to apologize for my own conference," McFarland said. "Virginia has always given us what they promised. That's just the facts." McFarland said the shortfall would not prevent him from paying chaplains, however.
"We are not going to reduce our services, but we have hired a grant writer for six months and hope to hire a development director."
For Holston Camping Director Randy Pasqua, the $58,000 shortfall in the conference camping budget resulting from the spending freeze was paid through an endowment fund. "We had to use some of the principle, and we'll have to raise money to replace it," he said.
Many ministries get hit hard by budget shortfalls because they are designated as "non prior claim" items, according to conference leaders. Items in the budget designated as "prior claim" – staff salaries, utilities, insurance premiums, etc. – must be paid at 100 percent, leaving even less for non-prior claim items.
Consequently, ministry team leaders were informed last year that they would receive only 40 percent of their original budgets, and have since revised their 2003 budgets at about 40 percent of what was originally planned.
For example, the Outreach-Advocacy Team has marked $1,600 for camping scholarships for needy kids in 2003, instead of $4,500. Virginia Chaplaincy Services will receive $6,000 from Holston in 2003, instead of $16,000. Reductions have also been made in new church development, youth ministry, and ministerial education funds, among other areas. "Most of these cuts will occur in the Discipleship Team part of the budget, which includes all six conference ministry teams," member Larry Martin said recently. "Too many painful cuts were made to list here."
Jean Henderson, Discipleship Team chair, said that decisions were made based on asking the question, "How does this ministry assist Christ in winning souls, in making disciples, and in making Christ's presence real to those who need his touch?"
"The results were conclusive that the priority set by Annual Conference in 2000 was still at the top of our list," said Henderson, referring to the Discipleship Team's restructuring of the budget based on the conference priority, "By All Means Win Some."
Financial Future
Conference leaders hope for some financial relief in 2004, when $3 million included in the current budget will no longer be needed due to receipts from the Legacy of Commitment pensions campaign. Last year, the campaign helped raise $8 million to fund a liability for pre-1982 pastors' pensions.
However, skyrocketing health insurance rates and a potential wartime economy are complicating Holston's financial outlook, Matthews said.
"Unless the economy really changes, we're expecting another tight year," he said. "But the Discipleship Team has made adjustments in their budget that is allowing us to deal with the financial situation more realistically."
Conference leaders were encouraged at the end of January 2003 when Fair Share giving rose .5 percent over giving in January 2002. "That's a good start," Matthews said.
Bishop Ray Chamberlain has also appointed a Task Force on Giving, headed by Matthews. The task force's mission is to "educate and motivate people in the theology of giving," he said. "The focus is not on Fair Share apportionments but giving as God has given to them."
The task force will prepare a four year plan and present it to the 2003 Annual Conference for voting approval, Matthews said.
But ministry leaders emphasize that it will take local churches paying 100 percent of their Fair Share apportionments to save some of the ministries that have been reduced or eliminated.
"The good news is that no one has been laid off and that is cause for celebration," Martin said recently. "The bad news is that if Fair Share contributions do not increase by at least one percent by May 2003, contributions to conference colleges will be suspended ... Unless every church is willing to give its Fair Share in 2003, we will be doing fewer ministries with less money."
"I don't think people understand how conference money is spent, and how it affects them," Robinette said. "The conference budget is way up there – it doesn't touch them until they hear how many new churches didn't get started last year, or how many children didn't have a scholarship to camp.
"We need to speak the truth," she said. "This is what's happening, guys. If you don't pay your Fair Share, this is what's happening."
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