People’ Church – Operating Budget for 2017-18 year (July 1, 2017 to June 30, 2018)

Frequently asked Questions:

 

1. We heard that the preliminary budget data showed a $34,000 deficit. Is that correct?

Yes.  The first wave of pledge and income projections fell short of what was needed to meet the total required and discretionary spending of the church.  That shortfall was $34,000.

 

2. What options were available to cover that shortfall?

The Finance Committee, Board of Trustees and minister together identified several areas of potential adjustments to close the gap.  Not in any particular order, they were:  (a) use savings, (b) cut committee discretionary budgets further (already down 25% for past 2 years; max benefit of $3800) , (c) eliminate UUA fair share Denominational Support (already at 25% of fair share; max benefit $4700), (d) use a portion of the Fall Supplemental pledge drive, and (e) reduce expenditure for staff (75% of the church budget).

After much discussion, we ultimately decided to use a combination of the above:

(a) we will use 5% of our Palmer Fund (unrestricted savings account) for up to 3 years.  For the 2017-18 year that amount is $15,000.  We will review this practice each year for the three years.  And then after our building is paid off, we will decide whether to make this a structural (ongoing) practice.

(b) we will roll back all increased discretionary committee spending requests to 2016-17 levels – a savings of $11,000

(c) we will decrease spending on staff by $9,000, distributed as follows, in no particular order:  a 4 hour per week reduction in the Database Manager’s position; a 50% reduction in hours for the RE Assistant position; a 100% reduction in hours for the Young Adult Coordinator position; and a 1-week unpaid furlough for the minister and Director of RE

(d) going in the opposite direction, we did allow payments for child care to increase by $1,000 next year

 

3. Why didn’t we use more of our very large savings account to fill in the shortfall?

The Finance Committee has created a goal for next year to more carefully examine our savings balances (unrestricted funds) and emergency Reserve, and review policies for their use and replenishment.  In the meantime, the analyses that we’ve done over the past year and a half have revealed that (a) our current emergency Reserve balance is $11,000, while our policy is that it should be $65,000 (b) in 2013 our Palmer Fund/unrestricted savings dropped to a balance of $34,000 – and it is only the good fortune of receiving 3 major bequests since that year that allowed us to refinish our parking lot and bring the savings balance up to its current level.  That all leads us to the conclusion that we aren’t necessarily as secure financially for the long term as the $289,000 balance would make it appear.  We’ll keep working on it.  Everyone wants to be able to use our ‘wealth’ for intentional enhancements of our programs, but not in a way that jeopardizes our long term financial security.

 

4. How were the monies pledged during the 2016 Fall Supplemental pledge drive used?

In a joint decision of the Finance Committee and Board of Trustees, the $50,000 net collectible pledges were used to (a) fill the $20,000 deficit for the current 2016-17 church year (b) cover the $13,000 estimated unpaid pledges for the current 2016-17 church year and (c) pay back the Reserve $17,000 for past years’ deficits – bringing our Reserve up to $28,000 of the $65,000 policy.

 

5. Cutting staff hours and eliminating jobs just seems like an awful idea.

Yes, emotionally it was an awful decision.  But in the last 18 years of our history, 13 of those years ended up with a deficit.  That means that structurally, we’re doing something that’s out of balance.  We strongly feel that the long term financial health of the church depends on us figuring out what that out-of-balance-ness is.  We cannot keep using savings, as referenced above, to bail us out. Our paid staff positions represent 75% of our budget, and are a long term ongoing expense.  While we trust that adding staff over the years was a way to support our growth and depth, we also feel we needed to acknowledge that the current level of staff is probably out of balance with what we can financially support today.  We’ve waited as long as we can for pledging levels to rise to support it – but they haven’t.

 

6. What is the difference between ‘structural’ (ongoing) financial strategies and ‘stop gap’ (one time) strategies?

Structural strategies take into account both short and long term financial health issues.  An expense incurred, as well as income received, repetitively as a matter of policy constitute an intentional structure of how we do business over time.  Examples of structural strategies include what level of dollars we can support every year for staff; what kinds of income-producing fundraisers can we sustain annually; and a program to market and rent out our building on a regular basis.

Stop-gap strategies involve putting a band aid on a current situation or crisis.  A stop-gap action can be thoughtful and intentional, or it can be used unconsciously because we don’t like the discomfort of making difficult structural changes.  Examples of stop-gap strategies include dipping into savings each time we overspend without a plan to replenish those funds, having an employee take a one-time unpaid furlough, or having a supplemental pledge drive.

Almost always, a combination of the two strategies is what will be needed over time.  The Finance Committee and the Board of Trustees will continue their efforts to identify effective strategies for the realities that we face today as we work to ensure the future financial stability of People’s Church.

 

Additional questions can be directed to one of the following Finance Committee members:  Carolyn Heineman, Sue Glenn, Barb Davis, Allan Hunt, Mark Mitchell and Mary Carroll.

Leave a Reply