Council on Finance & Administration Tennessee Annual Conference: John Pearce
Council on Finance & Administration Team Karen Barrineau John Pearce - President Davis Chappell Terry Hundley - Vice President Paul Purdue - Secretary William McAlilly – Bishop Rashad Bailey Jim Allen – Treasurer Deanna McCulley Phil Jamieson – UM Foundation Jim Hughes Scott Aleridge – District Superintendent Drew Shelley Melinda Britt – Dir. of Connectional Ministries Dale Sims Barbara Pate Lynn Taylor – Retired, former Dir. Missional Alignment Jay Voorhees Shelly Curtis – Asst. Treasurer
Today’s Message • Transparency: No secrets/no surprises – it’s your money • Change: Change is hard, but the pace of change will continue to increase • Apportionments: New model, but collection trend is a concern • Reserves: How is our balance sheet helping us? • Alignment: How do we align our processes with the Memphis Conference? • Connectional Ministry: Collaborative and transparent process for budgets • Direct Bill: First year results and movement along the path to 100% billing • Retirement of Jim Allen and nomination of Larry Davis • Help for local churches • Help for Wesley foundations and other ministries • Health plan improvements
2019 Financial Highlights • 2019 Budget • 2019 Apportionments Received • 2019 Invested Reserves
Tennessee Conference United Methodist Church 2019 Budget Apportioned 89.62% Other Use of Actual Total Category: Amount Budget Income Reserves Cost % of Total Pensions: 800,000 716,960 52,000 2,595,048 3,364,008 18.63% Clergy Health: 4,016,960 3,600,000 455,000 429,932 4,484,932 24.83% General Church: 2,698,231 2,418,155 0 0 2,418,155 13.39% TN Conference Ministries: 6,219,480 5,573,898 1,952,815 267,900 7,794,613 43.16% TOTAL BUDGET 13,734,671 12,309,012 2,459,815 3,292,880 18,061,707
2019 Apportionments Received Number Amount Paid % of Total • Churches Paid 100% • 355 $10,437,236 87.9% • Churches Paid 50%-100% 74 $1,110,316 9.4% • 72 $322,618 2.7% • • Churches Paid 1%-50% 60 $0 • • Churches Paid Zero • 561 $11,870,170 • Total Churches • 86.5% of $13,717,572 Apportioned • $438,842 short of $12,309,012 needed • 2018: 89.3% & $57,863 short
Who Paid Apportionments - 2019 • Brentwood $1,195,705 • (15) $100K-$200K $2,153,946 • Franklin First $ 659,802 • (27) $50K-$100K $1,901,889 • West End $ 455,771 • (31) $25K-$50K $1,053,280 • Murfreesboro $ 350,821 • (418) $1-$25K $2,676,386 • Belmont $ 264,350 • (60) $ZERO • Hendersonville $ 257,611 • Cookeville First $ 243,060 Total Apportionment Giving • Calvary $ 235,848 • (561) $11,870,170 • Hermitage $ 226,784 • Madison Street $ 194,917 Top 10 (34.5%) $4,084,669
Who Did Not Pay Apportionments - 2019 • 15 Churches Underpaid by > $25,000 $600,719 32.2% • 131 Churches Underpaid by < $25,000 $702,262 37.7% • 60 Churches Paid Zero $562,091 30.1% • 204 Churches Underpaid for Total of $1,865,072 • 35 Churches Overpaid by $17,670
Invested Reserves 12/31/19 • Net Assets: 37,893,018 • Invested in Fixed Assets: (7,502,153) • Designated for Pensions: (15,933,744) • Designated for Healthcare: (1,359,240) • Designated for Congregational Devel: (2,449,102) • TN Conf Camping Fund: (1,045,190) • Designated for Conf HQ: (625,634) • Closed Church Fund: (3,263,108) • DS Parsonage Fund: (691,703) • Cabinet Reserve Fund: (1,031,068) • Board of Ordained Ministry: (303,964) • Other: (3,688,112)
2020 Financial Highlights • 2020 Budget • Direct Bill of Health Care and Pension Costs • Rebate of 25% of 2020 Pension Payments to Local Churches • Apportionment Collection Thru August 31 • Paycheck Protection Program Loan • Treasurer Jim Allen Retirement – Nomination of Larry Davis
Tennessee Conference United Methodist Church 2020 Budget Apportioned 89.45% Other Use of Actual Total Category: Amount Budget Income Direct Bill Reserves Cost % of Total Pensions: 265,817 237,773 48,000 722,551 2,167,652 3,175,976 18.15% Clergy Health: 725,548 649,003 495,785 1,584,088 1,584,088 4,312,964 24.64% General Church: 2,729,222 2,441,289 2,441,289 13.95% TN Conference Ministries: 5,920,484 5,295,873 1,981,427 294,268 7,571,568 43.26% TOTAL BUDGET 9,641,070 8,623,938 2,525,212 2,306,639 4,046,008 17,501,797
Direct Bill of Health Care & Pension Benefits • As of July 31, 2020 • 188 churches billed >$1,000 $1,377,768 • 125 churches billed <$1,000 $33,875 • 245 churches billed ZERO $0 • Collected 98.6% • Equitable comp provided help to a few churches • Projected full year billing - $2,419,959
2019: Direct Billing of 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
Direct Bill of Health Care & Pension Benefits • 2020 healthcare cost billed at 50% of cost (about $6,600) • 2021 healthcare cost billed at 75% of cost (about $10,170) • 2020 pension cost billed at 25% of cost • 2021 pension cost billed at 50% of cost
2020 Pension Rebate • In 2019 WesPath provided a “premium holiday” of $591,802 • In 2019 our pension reserves earned a substantial amount in the stock market, more than we expected • The TNAC cabinet expressed to CFA a desire to help our local churches financially because many were struggling during our COVID year • CFA proposed to rebate each church that paid in to the pension plan (25% level) the full amount they paid in 2020. Estimated $704,000 • Pension Committee approved • 313 churches will receive a credit on their billings totaling $704,000
2020 Apportionment Collections • As of August 31, 2020 (8/12 of year) • # of Churches Status Paid amount (Behind)/Ahead • 195 ZERO $0 ($742,733) • 94 8/12 $2,203,257 $0 • 105 Overpaid $746,319 $101,878 • 163 Behind $1,615,617 ($1,221,319) • Totals $4,565,193 ($1,862,174)
2020 Paycheck Protection Program Loan • Jim Allen, with the approval of CFA and trustees successfully applied for a PPP loan for the conference • PPP loans were guaranteed by the SBA and intended to prevent layoffs • On April 21, $938,500 was deposited into TNAC bank account • Based on SBA rules and legislative changes, we expect that 100% of this loan will be forgiven before the end of this calendar year. • In accordance with the SBA rules, TNAC has used this money to fund payroll costs over a 24 week period • Some belongs to the foundation, some was used to help with camping payroll this summer, some was used to create an opportunity to help with equitable comp for churches struggling with payroll.
Retirement of Jim Allen Treasurer of TNAC • Jim Allen has announced he will retire as Treasurer effective Sept 20, 2020 • BOD says, annual conference, on nomination of CFA shall elect a treasurer • Personnel policies provide for CFA & Pension Cmt to determine candidate • In light of plan to unify with Memphis and consolidate our Admin Services/Treasurer’s offices we, with the permission of the Memphis CFA, are nominating Larry Davis, the current Memphis Conference treasurer to serve in the additional role of the Tennessee Conference treasurer until December 31, 2021 • We expect to partner with Memphis Conference to secure a treasurer for TWK Conference effective 1/1/22 during 2021 • See CFA action items to elect Larry Davis as treasurer
2021 Financial Plan Highlights • New Apportionment Formula Based on Revenue as reported on Line 52(t) of annual statistical report with a 20% cap on first year change • 2021 budget regarding districts and campus ministries • New health care plan financial issues • Pension plan financial issues and reserve forecast • Misc. resolutions: • Cabinet reserve fund • Travel reimbursement • Housing Allowances • District superintendent pay • 2021 budget recommendation and approval
2021 New Apportionment Formula • At 2019 AC you approved a new, revenue based apportionment formula that uses line 52(t) of the annual statistical report as the basis for apportionment. We called it Connectional Commitment and it asked local churches to pay 11% of line 52(t). • This was for the new TWK Conference which does not begin until 2022 • CFA is proposing to use this formula for the TNAC in 2021, with a cap of 20%, increase or decrease, versus what was paid in 2020. • 11% in 2021 equals 99.8% of 2020 apportionment • Model is based on 85% of revenue (no capital or endowment income) vs 61% of expenses in prior model, so more consistent application • See CFA action items for this new formula
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