FINANCIAL REPORTS G-1

Transcription

1 FINANCIAL REPORTS G-1 CALIFORNIA-PACIFIC ANNUAL CONFERENCE Financial Statements and Supplementary Information with Independent Auditor s Report For the Year Ended

2 G-2 FINANCIAL REPORTS Financial Statements with Independent Auditor s Report For the Year Ended Table of Contents Page Independent Auditor s Report... 1 Basic Financial Statements: Statement of Financial Position... 3 Statement of Activities... 4 Statement of Cash Flows... 5 Notes to Financial Statements... 6 Supplementary Information: Net Assets Analysis Schedule The Los Angeles Episcopal Area: Statement of Financial Position Schedule Statement of Activities Schedule Statement of Cash Flows Schedule

3 FINANCIAL REPORTS G-3 Independent Auditor s Report The Council on Finance and Administration California-Pacific Annual Conference of the United Methodist Church We have audited the accompanying statement of financial position of the California-Pacific Annual Conference of the United Methodist Church (the Conference) (a nonprofit organization) as of December 31, 2009, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the Conference s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Conference s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Conference as of, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules listed as supplementary information in the table of contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements of the Conference. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Certified Public Accountants Newport Beach, California September 8,

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5 FINANCIAL REPORTS G-5 Statement of Financial Position Assets: Current assets: Cash and cash equivalents $ 5,606,442 Receivables, net 20,506,508 Investments 10,607,629 Total current assets 36,720,579 Noncurrent assets: Property held for development 350,000 Property and equipment, net 2,806,131 Total noncurrent assets 3,156,131 Total assets $ 39,876,710 Liabilities: Current liabilities: Accounts and distributions payable $ 1,513,637 Notes payable, due in one year 62,105 Other liabilities 398,494 Unfunded postemployment benefit, due in one year 1,362,000 Accounts payable 163,418 Deposits 190,312 Total current liabilities 3,689,966 Noncurrent liabilities: Notes payable, due in more than one year 452,298 Unfunded postemployment benefit, due in more than one year 57,009,000 Total noncurrent liabilities 57,461,298 Total liabilities 61,151,264 Net Assets: Unrestricted (48,560,383) Temporarily restricted 24,329,811 Permanently restricted 2,956,018 Total net assets (21,274,554) Total liabilities and net assets $ 39,876,710 See Accompanying Notes to Financial Statements. 3

6 G-6 FINANCIAL REPORTS Temporarily Permanently Unrestricted Restricted Restricted Total Revenues Support, revenues and other income: Conference apportionment income: World Service and Conference benevolences $ 4,312,803 $ - $ - $ 4,312,803 Ministerial support 2,639, ,639,389 Administration 2,698, ,698,050 Other special benevolences 688, ,090 Conference-designated and other advance special contributions: Quota, special day and advance income 965, ,160 Special income and distributions, net 3,586, ,586,848 General council on finance and administration 103, ,526 Other income: Health/liability insurance premium income 9,044, ,044,441 Camp operations 3,534, ,534,475 Interest and dividends 1,244, ,639-2,070,957 Increase in value of remainder trusts - 1,692,825-1,692,825 Income from investments held by the Foundation - 959, ,503 Change in fair value of investments held by the Foundation - (196,703) - (196,703) Other 246, , ,611 Total support, revenues and other income 29,063,323 3,670,652-32,733,975 Net assets released from temporary restriction 753,419 (753,419) - - Expenses Distribution to the general council on finance and administration 2,988, ,988,686 Other distributions 348, ,110 Other expenses: Other designated distributions 657, ,214 Distributions to the general board of pensions (note 8) 2,155, ,155,358 Health/liability insurance premium expense 8,915, ,915,102 Group hospital and other pension-related distributions and expenses 285, ,086 Camp operations 3,883, ,883,500 General and administrative 9,279, ,279,303 Depreciation 294, ,592 Grant expense 37, ,500 Net periodic pension cost 8,375, ,375,000 Other 26, ,875 Total expenses 37,246, ,246,326 Increase (decrease) in operating items (7,429,584) 2,917,233 - (4,512,351) Nonoperating items: Pension-related changes other than net periodic pension cost 5,150, ,150,000 Increase in nonoperating item 5,150, ,150,000 Increase (decrease) in net assets (2,279,584) 2,917, ,649 Net assets (deficit), beginning, restated (46,280,799) 21,412,578 2,956,018 (21,912,203) Net assets (deficit), ending $ (48,560,383) $ 24,329,811 $ 2,956,018 $ (21,274,554) See Accompanying Notes to Financial Statements. Statement of Activities Year Ended 4

7 FINANCIAL REPORTS G-7 Statement of Cash Flows Year Ended Cash flows from operating activities: Increase (decrease) in net assets $ 637,649 Adjustments to reconcile increase (decrease) in net assets to net cash provided by (used for) operating activities: Changes in fair value of investments (406,246) Income from investments held by the Foundation (959,503) Depreciation 294,592 Investment administrative expenses 61,665 (Increase) decrease: Receivables, net (2,045,126) Due from related parties (1,304,636) Increase (decrease): Accounts and distributions payable 179,537 Other liabilities (1,690) Unfunded postemployment benefit 3,225,000 Total adjustments (956,407) Net cash provided by (used for) operating activities (318,758) Cash flows from investing activities: Purchase of property and equipment (141,056) Net cash provided by (used for) investing activities (141,056) Cash flows from financing activities: Payments on notes payable (57,481) Net cash provided by (used for) financing activities (57,481) Increase in cash and cash equivalents (517,295) Cash and cash equivalents at the beginning of year 6,123,737 Cash and cash equivalents at end of year $ 5,606,442 See Accompanying Notes to Financial Statements. 5

8 G-8 FINANCIAL REPORTS Notes to Financial Statements (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation/Accounting The financial statements of the California-Pacific Annual Conference of The United Methodist Church (Conference) include the accounts of funds that provide programs and support services to, and on behalf of, the member churches of the Conference. These programs and supporting services are considered Conference activities by the Book of Discipline. The financial statements have been prepared on the accrual basis, under which revenues are recognized when they are earned and expenses are recognized when the related liability is incurred. Financial statement presentation follows the recommendations of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) (Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations). Under this guidance, the Conference is required to report information regarding its financial position and activities according to three classes of net assets: Unrestricted net assets Net assets that are not subject to donor-imposed stipulations. As of, the Conference had unrestricted net assets of the following: Operating Funds $ (51,762,696) Fixed Assets Funds 3,202,313 Total $ (48,560,383) Temporarily restricted net assets Net assets subject to donor stipulations that may or will be met either by actions of the Conference and/or the passage of time. As of December 31, 2009, the Conference had temporarily restricted net assets of the following: Operating Funds: Loans $ 13,851,637 Primarily time restriction 9,104,403 Endowment Funds: Pension benefits 1,373,771 Total $ 24,329,811 Permanently restricted net assets Net assets to be held in perpetuity as directed by donors. The income from the contributions is available to support activities of the Conference as designated by the donors. As of, the Conference had permanently restricted net assets of $2,956,018 representing endowment funds. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles includes the use of estimates that affect the financial statements. Accordingly, actual results could differ from those estimates. 6

9 FINANCIAL REPORTS G-9 Notes to Financial Statements (Continued) Cash and Cash Equivalents The Conference maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Conference has not experienced any losses in such accounts. The Conference believes it is not exposed to any significant credit risk on cash. At, the Conference had $5,356,442 in deposits in excess of federally insured limits of $250,000. For purposes of the statements of cash flows, the Conference considers cash and all highly liquid investments with original maturities of three months or less from when purchased as cash and cash equivalents. This includes the money market fund which is also considered a cash equivalent. Investments Investments are stated at fair value (the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date). Investments are measured in accordance with FASB ASC (SFAS 157, Fair Value Measurements) as disclosed in Note 3. Property and Equipment Property and equipment are carried at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets which range from three to forty years. Restricted and Unrestricted Revenue and Support Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. All donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported as net assets released from restrictions. Income Taxes The Conference is a California nonprofit, tax-exempt organization under the provisions of Section 501(c)(3) of the Internal Revenue Code and the corresponding provisions of the California Revenue and Taxation Code. Accordingly, no provision for income taxes is required. Effective January 1, 2009, the Conference adopted the authoritative guidance for uncertainty in income taxes included in FASB ASC Income Taxes (FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109), as amended by Accounting Standards Update (ASU) , Implementation Guidance on Accounting for Uncertainty in Taxes and Disclosures Amendments for Nonpublic Entities. The adoption of ASC 740 (FIN 48) did not have an impact on the Conference s financial statements. 7

10 G-10 FINANCIAL REPORTS Notes to Financial Statements (Continued) Postemployment Health Care Benefits The funded status of the Conference s postemployment benefit plans is measured as the difference between the fair value of plan assets and the accumulated postemployment benefit obligation. The overfunded or underfunded status of the plans is fully recognized as an asset or liability in the statement of financial position. Changes in the funded status of the plans are recognized in the year they occur as changes in unrestricted net assets. See also Note 9 to the financial statements. Recent Accounting Pronouncements The Financial Accounting Standards Board ( FASB ) implemented the FASB Accounting Standards Codification (the Codification ) effective July 1, The Codification has become the source of authoritative Generally Accepted Accounting Principles ( GAAP ) recognized by FASB to be applied to nongovernmental entities. On the effective date of the Codification, the Codification superseded all then existing accounting and reporting standards. All accounting literature not included in the Codification has become non-authoritative. References to GAAP included in the FASB Codification are noted as Accounting Standards Codification ( ASC ). Following the effective date of the Codification, FASB will not release new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force abstracts, but instead will issue Accounting Standards Updates ( ASU ). ASUs will not be considered authoritative in their own right, but will serve only to update the Codification, provide background information about the guidance in the Codification, and provide the basis for the conclusions on the changes in the Codification. In July 2006, the Financial Accounting Standards Board (FASB) issued Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (FIN 48), subsequently included in the Codification as ASC 740. ASC 740 establishes standards for the recognition of income taxes for tax positions taken in income tax returns. In December 2008, the FASB deferred the effective date for non public entities for years beginning after December 15, Management adopted the provisions of ASC 740 and there was no impact on the Conference s financial position or results of operations. In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements, (SFAS 157), subsequently included in the Codification as ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements where FASB has previously concluded that fair value is the relevant measurement attribute. Accordingly, this statement does not require any new fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007, except for nonfinancial assets and liabilities measured at fair value on a non-recurring basis for which the effective date will be for fiscal years beginning after November 15, The adoption of ASC 820 for financial assets and liabilities and non-financial assets did not have an impact on the Conference's financial statements. 8

11 FINANCIAL REPORTS G-11 Notes to Financial Statements (Continued) In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-including an amendment of FASB Statement No. 115, (SFAS 159), subsequently included in the Codification as ASC 825 (effective as of the beginning of an entity s first fiscal year that begins after November 15, 2007). This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The Conference has evaluated ASC 825 and has elected not to apply the provisions of the statement. (2) RESTATEMENT OF BEGINNING NET ASSETS Beginning net assets were restated for unrestricted and temporarily restricted classes in the amount of $539,210. Certain healthcare premiums and related member contributions had previously been reported as temporarily restricted activity and should have been reported as unrestricted activity. As such, $539,210 was reclassified increasing temporarily restricted net assets and decreasing unrestricted net assets beginning balances. (3) INVESTMENTS The Conferences investments as of were held with the California Pacific United Methodist Foundation (Foundation). The Foundation provides the Conference organizations and local churches with a variety of investment instruments, and allocates investments based on the following: Fixed Income - 30% Large Cap Growth - 30% Large Cap Value - 20% International Value - 20% The investments held with the Foundation are valued at fair market value as of December 31, 2009, as discussed in Note 3 below. At, the Conference had an investment in certificates of participation of the United Methodist Development Fund (UMDF). The UMDF is an incorporated, nonprofit organization related to the National Division of the Board of Global Ministries of The United Methodist Church. Certificates of participation in the amount of $500,000 and $200,000 provide for a rate of interest equal to the rate UMDF pays on its Flexible Investment Notes. The interest rates at, were 2.50% and 3.50%. Although certificates are normally repaid upon demand, the UMDF has the option of requiring six months prior written notice and may repay the certificates over a five-year period. The UMDF may redeem the certificates at a 2-1/2% premium by giving six months prior written notice. 9

12 G-12 FINANCIAL REPORTS Notes to Financial Statements (Continued) Total investments held at, consist of the following: Carrying Amount Investments: Investments held by the Foundation $ 9,907,629 Investments in certificates of participation 700,000 Total cash and investments $ 10,607,629 (4) FAIR VALUE MEASUREMENTS FASB ASC establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1: Inputs to the valuation methodology represents unadjusted quoted prices for identical assets or liabilities in active markets that the Conference has the ability to access. Level 2: Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset s or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is the description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying Statement of Financial Position. There have been no changes in the methodologies used at. The fair value of investment securities is the market value based on quoted market prices, when available, or market prices by recognized broker dealers 10

13 FINANCIAL REPORTS G-13 Notes to Financial Statements (Continued) The method described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Conference believes its valuation method is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table sets forth by level, within the fair value hierarchy, the Conference s assets at fair value as of : Investments at Fair Value as of Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Available-for-sale securities $ 9,907,629 $ - $ - $ 9,907,629 (5) RECEIVABLES The receivables held as of is composed of the following: Notes due from member churches $ 7,572,285 Due from related parties 2,212,472 Conference apportionment, quota and special revenues receivable 1,044,495 Interest receivable 785 Contribution from remainder trusts 8,689,647 Other receivables 986,824 Total Receivables, net $ 20,506,508 Notes due from Member Churches The notes due from member churches are generally collateralized by trust deeds on real property and bear interest at rates ranging from 2% to 7%. At, the allowance for uncollectible notes is $121,629. Contribution from Remainder Trusts The Conference is a beneficiary of certain estates. The corpus of the estates will not be received until certain time restrictions have been met. A receivable has been recorded for the Conference s proportionate share of the fair value of the corpus as of. 11

14 G-14 FINANCIAL REPORTS Notes to Financial Statements (Continued) (6) PROPERTY AND EQUIPMENT Property and equipment at, consist of the following: Land $ 1,151,262 Buildings 8,198,366 Furniture and fixtures 1,404,266 10,753,894 Less accumulated depreciation (7,947,763) Total $ 2,806,131 (7) RELATED PARTY TRANSACTIONS At, related party receivables consist primarily of amounts due from the General Level Agencies of the United Methodist Church and the Foundation. Related party transactions with the General Level Agencies of The United Methodist Church consist of apportionment distributions and maintenance of various deposit accounts administered by the General Board of Pensions. Due from related parties at, consists of the following: Operating Fund Pension Funds General Board of Pensions $ 2,212,472 During 2009, the Conference had deposited with the Foundation, funds in an investment pool maintained by outside investment advisers, under the investment guidelines of the Foundation. The Conference has $9,907,629 deposited with the Foundation for the pooling of investments at. Endowment Funds held by the Foundation: Conference Endowment Fund - Contributions received are not distributed. Net revenues derived from dividends and interest earned on investments are paid to the Board of Pensions and eventually distributed to those qualified to receive pension distributions. At, accumulated capital amounted to $2,815,058. The market value of the fund at December 31, 2009, was $3,923,213. Hough Endowment Fund - Contributions received from the donor are designated as not being available for distribution. The net income earned on investments is used by the Board of Pensions, to aid and assist in necessitous cases, the retired ministers and widows and children of 12

15 FINANCIAL REPORTS G-15 Notes to Financial Statements (Continued) deceased ministers of the Conference. At, accumulated capital amounted to $85,201. The market value of the fund at, was $343,353. Mrs. D. A. Crowell Memorial Fund - Contributions received from the donor are designated as not being available for distribution. The net revenues earned on investments are used to aid and assist in necessitous cases, the widows of deceased ministers of the Conference. At December 31, 2009, accumulated capital amounted to $55,759. The market value of the fund at December 31, 2009, was $63,223. (8) NOTES PAYABLE A note is payable to the bank with variable interest rates and variable monthly principal and interest payments. Interest on unpaid principal shall accrue at a rate equal to the LIBOR rate plus 2.10% per year. The LIBOR rate at, was %. Principal payments totaled $57,481 and interest payments totaled $14,346 for the year ended. The remaining principal and interest due are secured by the building. The annual requirements to amortize the note payable outstanding for each of the next five years and in aggregate: Year Ending December 31 Amount 2010 $ 62, , , , , ,293 Total Principal $ 514,403 (9) PENSION PLANS At, there are two pension plans in existence for the ministers of the Conference. The 2004 General Conference of the United Methodist Church adopted the Clergy Retirement Security Program (CRSP), effective January 1, The CRSP is administered by the General Board of Pension and Health Benefits of the United Methodist Church (General Board). The CRSP consists of multi-employer defined benefit and multi-employer defined contribution plans. Since January 1, 1982, ministers of the Conference had been covered by the Ministerial Pension Plan (MPP), which was administered by the General Board. This plan, a multi-employer defined contribution plan, was adopted by the 1980 General Conference of The United Methodist Church 13

16 G-16 FINANCIAL REPORTS Notes to Financial Statements (Continued) and replaced the Ministers Reserve Pension Fund (MRPF), a multi-employer defined benefit plan. On January 1, 2007 participants of the MPP were rolled into the CRSP. In connection with the MRPF, pension expense represents payment for prior service as determined by the consulting actuaries of the Board based on an actuarial valuation as of. Pension expense for the year ended, was $0. Information from the General Board is not presently available to disclose the Conference s share of accumulated plan benefits, net assets available, or the unfunded liability at. Under the defined benefit plan of the CRSP, clergy receive benefits based on a formula which is calculated based on the Denominational Average Compensation (DAC) and years of credited service. The retiree s monthly benefit increases annually by 2% per year, after benefits start. The Conference s actuarial determined contribution for the year ended was $2,744,857. This amount was not recorded as an expense in the Statement of Activities for the year ended, as the General Board allowed the Conference to use surplus reserves from the MRPF to fund the contribution. Information for the General Board is not presently available to disclose the Conference s share of accumulated plan benefits, net assets available, or the unfunded liability at. Under the defined contribution plan of the CRSP, the Conference remits 3% of each minister s salary directly to the General Board. These remittances are placed in the respective minister s pension account. The Conference submits 3% of the same contribution base via Comprehensive Protection Plan (CPP). These funds are placed in a pooled account to provide CPP plus a pension buildup for ministers who are below the denominational average compensation. In 2009, the Conference contributed $1,506,773 to the above pension plans. All lay employees of the Conference can join the United Methodist Personal Investment Plan (UMPIP) of the General Board, a defined contribution plan. The Conference s contribution requirement under this plan is 7% of the applicable employees compensation. The Conference Board of Pensions also administers a group health insurance plan available to member clergy and Conference employees and their families. As reflected in the accompanying financial statements, the Conference Board of Pensions receives premium payments from these parties and then submits payment to the applicable insurance agency. The Conference also administers a general liability insurance plan for member churches through the Conference Board of Trustees. (10) POSTRETIREMENT HEALTHCARE BENEFITS The Conference provides postretirement benefits in the form of healthcare benefits to all clergy retirees, surviving clergy spouses, and retired lay employees, in accordance with Conference policy. The plan provides health benefits to employees who make the required election upon retirement. Employees must have earned at least 10 years of service with the Conference during the last 15 years prior to their retirement and are eligible to retire upon the attainment of age 62 or 35 years of service. The Conference contributes the cost of monthly health insurance coverage. Contributions for 2009 were $1,437,

17 FINANCIAL REPORTS G-17 Notes to Financial Statements (Continued) The following table presents the plan s funded status. At, there were no plan assets invested for postretirement healthcare benefits. Accumulated postretirement benefit obligation $ (58,371,000) Plan assets at fair value - Funded Status $ (58,371,000) The following projected postemployment benefits are expected to be paid in future years: December 31 Benefits 2010 $ 1,362, ,532, ,704, ,878, ,063, ,409,000 The following weighted average assumptions were used in accounting for the plan as of December 31: Weighted-average assumptions used to determine benefit obligations at December 31: Discount rate 4.0% First year health care trend rate 10.0% Weighted-average assumptions used to determine net periodic benefit cost for year ended December 31: Discount rate 4.0% Expected return on plan assets 4.0% Ultimate health care trend rate 5.0% Current retirees were assumed to receive a health insurance subsidy equal to their actual scheduled subsidy for 2010 based on their status and coverage election. 60% of future covered retirees were assumed to receive a health insurance subsidy during 2010 equal to the applicable portion of an annual premium of $2,000 for each of the retiree and his spouse. 40% of future covered retirees were assumed to receive a health insurance subsidy during 2010 equal to the applicable portion of an annual premium of $4,250 for each of the retiree and his spouse. All subsidies were increased by the health care cost trend rates for years after The health care cost trend rates were as follows: 15

18 G-18 FINANCIAL REPORTS Notes to Financial Statements (Continued) Year Increase Year Increase Year Increase % % % % % % % % % % & later 5.0% (11) LINE OF CREDIT The Conference has an agreement with a bank for a line of credit with a maximum of $1,000,000 and an interest rate of one-half percent over the bank s reference rate. As of, the line of credit is unused and expires on August 30, (12) CONTINGENCIES The Conference is subject to various legal proceedings and claims which involve private parties. In the opinion of the Conference management and its counsel it is improbable that the outcome of such litigation will be materially adverse to the Conference. (13) SUBSEQUENT EVENTS The Conference has evaluated subsequent events through September 8, 2010, the date of issuance of the financial statements, and noted no significant events. 16

19 FINANCIAL REPORTS G-19 SUPPLEMENTARY INFORMATION 17

20 G-20 FINANCIAL REPORTS Schedule 1 Net Assets Analysis Year Ended Fund No. Unrestricted Net Assets: Operating Funds Fund Name Dec. 31, 2008 Dec. 31, 2009 Net Assets Net Net Assets (Deficit) Change (Deficit) 10 Apportioned and Other Funds $ - $ - $ - 16 Contingency Fund 1,324, ,727 1,449, Council on Finance and Administration (45,262) (56,727) (101,989) 18 Administrative Services (36,134) 80,244 44, Designated Funds 1,252,467 (5,386) 1,247, Connectional Ministries 517, , , Pacific Islanders Commission 37,463 20,316 57, Jubilee Fund 4,495, ,591 4,859, EMLC Crisis Fund 5,216 11,859 17, Cooperative Advertising Fund 43,627 (19,107) 24, Pacific Islanders/Samoan Fund 14,561 19,636 34, Native American Awareness Fund 40,600 4,032 44, New Ministries Golden Cross Fund 11,056 (900) 10, Commission on Religion and Race 34,731 (6,426) 28, Commission on Status and Role of Women 11,240 9,062 20, Commission on Church Extension in Mexico 35,702 (6,651) 29, Center for Leadership Excellence 9,293 (9,293) - (Continued) 18

21 FINANCIAL REPORTS G-21 Schedule 1 Net Assets Analysis (Continued) Year Ended Fund No. Operating Funds Fund Name Dec. 31, 2008 Dec. 31, 2009 Net Assets Net Net Assets (Deficit) Change (Deficit) 41 Board of Pensions- Health Insurance Fund (539,210) 27,877 (511,333) 44 Clergy Salary Support Fund 14,515 (14,515) - 46 Moving Expense Fund 32,608 (10,452) 22, Vital Presence Ministries District Superintendents' Fund (256,927) 20,536 (236,391) 54 Board of Trustees 82,545 (217,010) (134,465) 56 Episcopal Residence Fund 1,403 3,309 4, Sustentation Fund 41,829 8,741 50, Pension and Other Benefits (54,723,940) (2,715,627) (57,439,567) 71 Bishop's Special Fund 22, , Area Headquarters and Fund Development (261,279) 26,311 (234,968) 76 Board of Ordained Ministry 149,196 19, , Annual Conference Sessions Fund (57,218) 32,824 (24,394) 79 Conference Secretary and Journal Fund 13,876 19,446 33, Strategic Initiatives 593,055 (26,183) 566,872 Camp Funds 84 Camp Operations (3,166,006) (254,869) (3,420,874) 85 Camp Operations 96,414 (16,936) 79, Camp Operations 76,457 (26,938) 49,519 Los Angeles Episcopal Fund 73 Los Angeles Episcopal Area (GCFA) (Continued) 19

22 G-22 FINANCIAL REPORTS Schedule 1 Net Assets Analysis (Continued) Year Ended Fund No. Dec. 31, 2008 Dec. 31, 2009 Net Assets Net Net Assets Fund Name (Deficit) Change (Deficit) Certain Other Funds 53 Trustee Insurance Fund $ 716,472 $ 56,881 $ 773, Board of Trustees Campus Ministries Properties Fixed Assets Funds Total Unrestricted Operating Funds (49,412,550) (2,350,145) (51,762,696) 88 Fixed Assets 3,131,751 70,562 3,202,313 Total Unrestricted Net Assets $ (46,280,799) $ (2,279,583) $ (48,560,383) Temporarily restricted net assets for loans: Loan Fund 45 Congregational Loan Fund $ 13,169,946 $ 681,692 $ 13,851,637 Temporarily restricted net assets (primarily time restriction): Pension Funds 40 Board of Pensions 316,529 98, , Remainder Trusts 7,253,467 1,436,180 8,689, Endowment Funds 672, ,135 1,373,771 Permanently restricted net assets: Endowment Funds Total Temporarily Restricted Net Assets (primarily time restriction) 8,242,632 2,235,542 10,478,174 Total Temporarily Restricted Net Assets $ 21,412,578 $ 2,917,233 $ 24,329, Endowment Funds $ 2,956,018 $ - $ 2,956,018 20

23 FINANCIAL REPORTS G-23 Schedule 2 THE LOS ANGELES EPISCOPAL AREA- UNITED METHODIST CHURCH (A Fund of the California-Pacific Annual Conference of the United Methodist Church) Statement of Financial Position Assets: Assets: Due from General Council on Finance and Administration $ - Liabilities and net assets: Liabilities: Due to Conference $ - Net assets, unrestricted - Total liabilities and net assets $ - 21

24 G-24 FINANCIAL REPORTS Schedule 3 THE LOS ANGELES EPISCOPAL AREA- UNITED METHODIST CHURCH (A Fund of the California-Pacific Annual Conference of the United Methodist Church) Statement of Activities Year Ended Revenues: General Council on Finance and Administration $ 101,347 Other 2,179 Total revenues 103,526 Expenses: Salary 137,338 Benefits 33,083 Payroll taxes 21,689 Office rent 19,200 Staff travel 6,426 Professional entertainment 2,271 Postage 348 Office supplies 3,503 Equipment rental and maintenance 1,901 Miscellaneous 36,982 Total expenses 262,741 Revenues under expenses (159,215) California-Pacific Annual Conference support 159,215 Net assets, unrestricted, beginning of year - Net assets, unrestricted, end of year $ - 22

25 FINANCIAL REPORTS G-25 Schedule 4 THE LOS ANGELES EPISCOPAL AREA- UNITED METHODIST CHURCH (A Fund of the California-Pacific Annual Conference of the United Methodist Church) Statement of Cash Flows Year Ended Cash flows from operating activities: Revenues under expenses $ (159,215) Net cash used for operating activities (159,215) Cash flows from financing activities: California-Pacific Annual Conference support 159,215 Cash at beginning of year - Cash at end of year $ - 23