2015 Year-end Financial Update

Dear Friends, below for your information is an overview of the EPA financial data for 2015.

Church Giving Report

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 EPA church and clergy benefits), and Health Savings (funds that pay for specific EPA 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 billed $18.1 million to its churches in 2015, $11.6 million for benefits and insurance, and $6.5 million for Conference and Denomination ministries. Of this amount, the EPA churches paid $16 million to the Conference, leaving the Conference $2.1 million short of the amount billed. The Connectional Ministries Fund only received $3.156 million, limiting the funds available to pay for EPA ministries and the operation of the District Offices. This represents an 84.6% collection rate, the lowest rate that I can find in EPA’s recent history. Contributions toward Retired Clergy and Health Obligations was short by $337,100 and collections toward Property and Liability Insurance and Clergy Group Insurance were each short by over $200,000.

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.

In 2015, 275 churches in the Conference paid 100% of their remittances. But this means that approximately 150 churches did not pay their full amount of their remittances. A list of all churches with the percentage of their 2015 remittance payments will be 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.

EPA Ministry Budget

Schedule 2 shows the EPA Ministry Budget for 2015. In 2015, EPA had a Connectional Ministries Fund budget of $3.2 million to collect from churches and invest in our Conference ministry programs. As noted above, EPA churches only contributed $3.156 million for CMF in 2015, leaving the EPA Ministries Fund $43,382 below its budget. Fortunately, the ministries only spent $2.8 million, which was $247,089 below their expense budget. All areas covered by CMF were under budget, including Trustees and Administration. This means that EPA has a positive net operating result of $329,575.

Schedule 3 shows total CMF collections from 2008 through 2015. It is very concerning to see that CMF collections have dropped by 13% from $3.6 million in 2008 to $3.156 million in 2015. And even though we had record giving to CMF of $555,889 in December 2015, this was not enough to make up for 5 months during the year when we collected less than $200,000 in each month. It’s important to remember that CMF pays for all of the Connectional Ministries and District Superintendent budgets.

Resolution 2012-21 and the Pre-82 Pension liability

Schedule 4 shows the year-end 2015 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 December 31, 2015, the Conference Budget Surplus investment account had $1.256 million. This is real money that the Conference has contributed into an 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 $270 thousand. The Fulfilling Our Covenant Campaign has been successful, with a total of $2.6 million collected and $320 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, 2015 was a challenging year for the EPA Conference. Collections across all areas were below historical levels. It’s important to remember, the programs that the Conference is paying for are churches property insurance, clergy medical and retirement benefits, and the Connectional Ministry programs that are managed across the EPA UMC. The pressure on the Conference’s financial management activities is causing EPA leadership to look at options for increasing collections 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