April 2016 Financial Update

Dear Friends, below for your information is an overview of the EPA financial data for the period through April 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 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 $17.3 million to its churches in 2016, $10.1 million for benefits and insurance, and $6.6 million for Conference and Denomination ministries. Of this amount, the EPA churches have paid $4.7 million to the Conference through April 2016, about $125 thousand behind the payment rate for 2015. The Connectional Ministries Fund received $969 thousand, or 26% of the annual billed amount. On a straight-line basis, we would hope to receive a little bit more than 33% of the annual amount over a four 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 $150,000., 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. Nearly 220 churches have paid 33% or more toward their remittance statements so far in 2016, up from just below 200 at the end of March, while 41 churches have paid $0 toward their remittances through April 2016, down from 57 at the end of March.

A shout-out from the Treasurer to Temple (CE), Prospectville: First Korean of Philadelphia (EA), and Cumbola (NW) for paying 100%, 87.5%, and 55.8% of their 2016 remittance statement bills through the end of April 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.

Recently I attended district meetings in the East District (Tracy Bass) and the Northeast District (Irving Cotto) and was very impressed with the dialogue, the communication, the sharing, the support, and the energy and the spirit in our churches. Let’s keep working together to make EPA a great Conference and build our churches up.

EPA Ministry Budget

Schedule 2 and Schedule 2A show 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 $969 thousand for CMF in 2016, $7 thousand above its year-to-date estimated contribution rate and $38 thousand above the amount collected through April in 2015. The ministries spent $872 thousand, which was $210 thousand below the expense budget, and was $97 thousand below the amount that the churches contributed, giving the Conference a positive cash flow. Four of the five areas covered by CMF were under budget, but Developing Principled Leaders was over budget by $10 thousand due to the timing of expenses versus its budget. We expect that DPL will finish its year within its budget parameters. Trustees and Administration was helped by annual conference registration receipts of $110,000.

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

The top section of  Schedule 3 shows the Conference Reserves as of April 30, 2016. Good investment markets increased the balances in the Conference Reserve by $5 thousand to $498 thousand at 4/30/2016 and the Board of Trustees Reserves by $2 thousand to $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 April 30, 2016, the Conference Budget Surplus investment account had a balance of $1.276 million, up $11 thousand from March 31, 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 $274 thousand, up $3 thousand from March 31, 2016. The Fulfilling Our Covenant Campaign has been successful, with a total of $2.812 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 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 insurance and retirement benefits, and the Connectional Ministry programs that are managed across the EPA Conference. 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