Dear Friends, below for your information is an overview of the EPA financial data for the period through June 2016.
Schedule 1 is the Church Giving Report. This report shows the amount of money that EPA has billed all of our churches and the amount of money that it has received from all of our churches. The report is divided into three sections: Apportioned Funds (funds that support United Methodist Ministries), Billed Funds (funds that pay for church and clergy benefits and insurance), and Health Savings (funds that pay for specific clergy and lay health benefits). (A description of each individual fund can be found by clicking the link to the Budget Narrative documents.)
Overall, EPA will bill $17.2 million to its churches in 2016, $10.6 million for benefits and insurance, and $6.6 million for Conference and Denomination ministries. Of this amount, the EPA churches have paid $7.1 million to the Conference through June 2016, 41% of the total amount due for the year. The Connectional Ministries Fund received $1.4 million, or 39% of the annual billed amount. On a straight-line basis, we would hope to receive 50% of the annual amount over a six-month period in order to reach our annual target. The gap between CMF funds billed and CMF funds received stayed level at an 11 percentage point margin in June (50% – 39%) as it was in May (42% – 31%). This means that the Conference kept pace with its budget for collecting funds in June that support its local EPA ministries.
In the Billed Funds area, contributions toward Retired Clergy and Health Obligations and Property and Liability Insurance were each short by approximately $200,000. (in line with May), and clergy Group Insurance (medical) was short by $100 thousand (an improvement versus $120 thousand in May). These shortfalls create additional financial strain on the Conference’s ability to pay for these clergy and church benefits in a timely manner.
The shortfall in collecting these funds is a serious financial issue. When the collections do not meet the amount needed to pay for these coverages, the Conference must use cash resources from other sources or draw on its reserves to make these payments. A drop in giving at this level puts pressure on the Conference’s financial management plans. This in turn is pushing the EPA leadership to consider measures such as increasing remittance charges, cutting programs, or reducing districts in order to pay for the insurance and benefits we have in place for the churches, clergy and laity.
At year-end 2015, the Conference had to ask the EPA Board of Pensions for an “advance” on its $325,000 December 2016 contribution to make sure that the Conference could meet its December 2015 pension payments to the General Board. The Conference has also gone to the Board of Trustees and the Council on Finance and Administration to ask for a withdrawal of approximately $253,000 in reserves to help pay for clergy and church benefits and insurance. In June, 188 churches have paid 50% (the current amount due) or more toward their remittance statements so far in 2016, UP from 180 at the end of May, but still below the 220 figure EPA reached in April. WE are also down to 30 churches that have paid $0 toward their remittances through June 2016, down from 35 at the end of April.
A shout-out from the Treasurer to Gradyville (SE) who is the most recent church to join the ranks of “Blue Ribbon” churches that have paid 100% of their total remittances due for all of 2016 by June 2016. Montgomery Square (EA) has 70% of their total 2016 remittance bills paid, and Weatherly: Centenary (NE) and Barry: Salem (NW) are coming on strong with 60% paid through June 2016.
In 2015, 275 churches in the Conference paid 100% of their remittances. But this means that approximately 140 churches did not pay their full amount of their remittances. A list of all churches with the percentage of their 2015 remittance payments was published in the Spring issue of the NewSpirit Digest. Some churches are facing challenges and are working diligently with their District Superintendent and financial staff to create plans for the success and sustainability of their ministry. We wholly support these efforts and want to work with our membership to help these efforts succeed. Please continue the regular dialogue with your District leadership and use the Conference programs and resources to support your ministry.
Schedule 2A and Schedule 2B show the EPA Ministry Budget for 2016. In 2016, EPA has a Connectional Ministries Fund budget of $3.2 million to invest in our Conference ministry programs. As noted above, EPA churches have contributed $1.4 million for CMF in 2016, $11 thousand below its year-to-date estimated contribution rate BUT $93 thousand above the amount collected through June in 2015. The ministries spent $1.3 million, which was $332 thousand below the expense budget, and was $175 thousand below the amount that the Conference collected, giving the Conference a positive cash flow. All five areas covered by CMF were under budget as of the June 30 report date, BUT the expenses for Annual Conference have not been booked yet while registrations have been booked. So, to adjust for this to give a more realistic picture of the June 30, financials, the Trustees and Admin expense line will increase expenses by approximately $210,000; reducing its positive year-to-date variance to approximately $11,000; and pushing the Net Connectional Ministry Operating Result through June 2016 to approximately negative $36,000. Again, this is a reporting issue, due to the timing of expenses versus receipt of revenue, Trustees and Admin is well within its annual budget allowance and we expect that it will finish its year within its budget parameters.
You may note that in the second column of this schedule, 2015 Actual Results, we are showing a surplus of $329,575 and 0 contribution to Resolution 2012-21 Pre-’82 Pension. This is because we are working on completing the 2015 annual audit to confirm the figure, and will then transfer this amount to the Pre-’82 account with the approval of the Conference Council on Finance and Administration.
The top section of Schedule 3 shows the Conference Reserves as of June 30, 2016. Stable investment markets kept the balances in the Conference Reserve close to $499 thousand at 6/30/2016 and the Board of Trustees Reserves at $234 thousand.
The next section shows the 2016 data for our work on Resolution 2012-21 and the Pre-82 Pension liability. The most recent valuation from the GBOPHB (as of January 1, 2015) shows that EPA’s unfunded Pre-’82 pension liability is $6.9 million. This is a significant improvement
from an unfunded status of $16.2 million in 2011 and $23.2 million in 1996. The EPA churches and members should be very proud of the way that it has addressed this obligation and taken action to mitigate it. That said, there is more work to do.
As of June 30, 2016, the Conference Budget Surplus investment account had a balance of $1.280 million, up $4 thousand from April 30, 2016. This is real money that the Conference has contributed into the account from expense cuts in its finance and administrative areas. Proceeds from Church Sales have come in below target with a total amount realized of only $275 thousand, up $1 thousand from April 30, 2016. The Fulfilling Our Covenant Campaign has been successful, with a total of $2.871 million collected and $371 thousand returned to church campaigns. But we still need to collect on a substantial amount of the $3.9 million in outstanding pledges to successfully complete the campaign in 2016. We look forward to working with you to make this happen.
In conclusion, we have regained some ground in June as collections for the month met budget targets, maintaining the cash flow gaps from the end of May. It’s also important to remember; the Billed Funds that the Conference is paying for are church property insurance, clergy medical insurance and retirement benefits that are purchased on behalf of all EPA churches. The pressure on the Conference’s financial management activities is causing EPA leadership to look at options for increasing collections, increasing bills, and reducing expenditures while fulfilling our mission to create more disciples of Jesus Christ. Thank you for your faithful support and continued efforts to succeed in our mission.
Jim Cruickshank, EPA Conference Treasurer