March 2016 EPA Financial Update

Dear Friends, below for your information is an overview of the EPA financial data for the period through March 2016.

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 church and clergy benefits), 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 $17.5 million to its churches in 2016, $10.9 million for benefits and insurance, and $6.6 million for Conference and Denomination ministries. Of this amount, the EPA churches have paid $3.5 million to the Conference through March 2016, nicely ahead of the payment rate for 2015. The Connectional Ministries Fund received $729 thousand, or 19% of the annual billed amount. On a straight-line basis, we would hope to receive a little bit more than 25% of the annual amount over a three month period in order to reach our annual target.  Contributions toward Retired Clergy and Health Obligations and Property and Liability Insurance were each short by approximately $110,000., creating a strain on the Conference’s ability to pay the church-wide obligations 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 current church-wide obligations. Slightly over 200 churches have paid 25% or more toward their remittance statements so far in 2016, while 57 churches have paid $0 toward their remittances through March 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 were 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 2016. In 2016, EPA has 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 have contributed $729 thousand for CMF in 2016, $38 thousand above its year-to-date estimated contribution rate. The ministries spent $697 thousand, which was $122 thousand below the expense budget, and for the first time in 2016, this was $33 thousand below the amount that the churches contributed. Four of the five areas covered by CMF were under budget, including Trustees and Administration. Developing Principled Leaders was over budget by $12 thousand due to the timing of expenses versus its budget. We expect that DPL 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.

Resolution 2012-21 and the Pre-82 Pension liability

Schedule 3 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 March 31, 2016, the Conference Budget Surplus investment account had $1.265 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 $271 thousand. The Fulfilling Our Covenant Campaign has been successful, with a total of $2.77 million collected and $348 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 are off to a slightly better start in 2016 than 2015, as collections across most areas are ahead of 2015, but remain below target. It’s important to remember; the Billed Funds that the Conference is paying for are church 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, 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