Calvary Baptist Church Pastoral Compensation Policy

Transcription

1 Calvary Baptist Church Pastoral Compensation Policy INTRODUCTION Persons who serve as pastors generally do so because they love Christ s Church. In many cases, they could earn a higher salary in a for-profit setting, but they feel called to use their faith, talents and abilities to promote the mission of God through the church. The conviction that they are serving the church can make it difficult for them to engage in conversation about compensation. Nevertheless, the church is called to be a fair and just employer and the health of the pastor-congregation relationship depends on lay leadership addressing the issue of compensation and advocating and providing for it as well. As a faith community, we recognize that this conversation is about more than dollars and cents. We recognize that the call of a pastor is more than the amount of money earned, or the hours worked. A pastor is a central part of the life of a church and plays the largest role in leading, teaching and shepherding the congregation. Achieving Calvary s mission of glorifying God by knowing Him, treasuring Him, and offering Him to the world depends on the faithful leadership of our pastor 1. This policy will help us to honor the work of the pastor by providing just and fair compensation, and a living wage that recognizes the demands made on him. This policy has been prepared by the Elders and Finance Committee to guide recommendations made to the Executive Committee and to the church for compensation to be paid to the pastors. While there may be occasions when compensation falls outside of the guidelines put forth here, these exceptions should be grounded in unusual circumstances that make it difficult or inappropriate to follow the compensation policy. The goal of the policy is to provide a solid foundation and framework for how pastoral compensation is set but also be flexible enough to allow for circumstances unforeseen at the time of writing. 1 Throughout this policy, pastor will appear in the singular. At any given time, CBC may have multiple pastors at the same time. In these cases, this policy will guide compensation for all pastors on staff.

2 COMPENSATION General Considerations Overall compensation is expected to fairly compensate the pastor for the level of work he does for the church and should to provide for a reasonable standard of living. Compensation that is too low can put undue pressure and anxiety on the pastor that can take his focus off of his work for the church. Compensation that is too high can be seen as immodest and put undue pressure on the church budget. Calvary aims to initially set pastoral compensation near the median for similar churches in the area. Median compensation should factor in the salary and all benefits provided to the pastor. When comparing to other churches, we use factors including, but not limited to: the membership or attendance of the church, the size of the church s budget, the pastor s level of education and number of years serving the church, and the church s setting (e.g. metro area, suburb, small town, rural area). This information is gathered by: Asking other churches in the area how their pastors are compensated Using publicly-available research and surveys about pastoral compensation. Such resources are available from Church Finance Today, the Church Law and Tax Store, and other organizations that serve churches and Christian ministries. Reviewing local compensation for teachers, school principals, social work supervisors, or other jobs that have roles similar to that of a pastor A variety of factors, as noted above, are considered in annually determining pastoral compensation; therefore, compensation will likely vary from year to year. The aim is to compensate the pastor at approximately the 50 th percentile (median level) of pastors of similar churches with similar levels of experience. In some cases, the financial circumstances of the church may restrict the level of compensation available; however, unless the church is experiencing significant financial challenges or other extraordinary circumstances, pastoral compensation should be within a reasonable range of the median and should be appropriately supported by the Elders and Finance Committee during the budgeting process and pastor performance evaluation. As part of the annual budgeting process, elders are expected to make recommendations to the Finance Committee for any changes to the pastor s compensation the following year. This includes, but is not limited to: cost-of-living (COLA) adjustments to adjust the salary for inflation, performance-based raises, and changes to the amount budgeted for other benefits received by the pastor. As part of this annual process, the Elders should discuss the proposed compensation package with the pastor. This allows the pastor an opportunity to voice any concerns or elections regarding his salary and/or benefits (ie. adjusting retirement withholding to account for rising or falling insurance premiums or adjusting the salary to account for a higher or lower housing allowance).

3 Salary The basic cash salary is the amount of actual dollars paid to the pastor as wages for services provided during the year. This does not include housing, utilities, insurance, or other benefits. At times when the church has both a full-time senior pastor and a full-time associate pastor on staff, the salary for the associate pastor should be equal to at least 80% of the salary for a senior pastor with equivalent experience. If the senior and/or associate pastor works part-time, the salary and other benefits should be determined by a percentage of the full-time package. Each year, the pastor s salary should be adjusted to account for inflation, often called a cost-of-living adjustment (COLA). This is usually determined as a percentage of the current year s salary. Annual COLA percentages can be found on websites for the Social Security Administration, Department of Commerce, and government agencies. COLA increases may be suspended in cases of financial exigency determined during the budgeting process. In addition to COLA increases, the pastor s salary can also be increased by annual performance-based raises, expected to range between 0% and 4% of the current year s salary. The elders are expected to work with the pastor to set a course, direction and goals for the church as a body and also to set annual performance goals for the pastors that support the goals for the church as a whole. The elders should meet with the pastor throughout the year to evaluate his work towards these goals and recommend any changes that can be made. The amount of performance-based raises should be based on how well the pastor is achieving the performance goals laid out for him by the elders; other relevant criteria can be taken into consideration, if appropriate. Performance-based raises can be suspended in cases of financial exigency determined during the budgeting process. Housing Calvary owns a parsonage adjacent to the church facility that is available to the pastor and his family as housing. The church pays for all parsonage utilities (heat, electricity, phone service, internet, etc.). The pastor is not expected to pay any rent for use of the parsonage, and the fair market rental value of the parsonage, plus the amount budgeted for utilities, should be reported for tax purposes as a housing allowance. The pastor and his family are not required to live in the parsonage; however, the pastor is expected to find housing near enough to the church to be able to effectively minister in our community. An appropriate proximity will be at the discretion of the Executive Committee. If the pastor does not live in the parsonage, he will receive a housing allowance due to the increased costs of maintaining a home. At the beginning of the year, the pastor may set aside a portion of his salary as a housing allowance, which is tax-exempt and may be used for certain household furnishings and supplies. Elders will vote annually, before the ensuing year begins, what part of the pastor s salary is to be treated as a housing allowance and include this figure in the official records. The housing allowance is exempt from federal income taxes but not from self-employment tax and Social Security. Any unused portion of the

4 parsonage utilities budget may be used for the same type of expenses as a housing allowance, as the pastor is required to pay self-employment tax and Social Security on the full amount of the budget, regardless of whether the full amount is used. A disadvantage to the pastor of living in the parsonage is that he is not able to build equity in the property, as he would if he lived in a house not owned by the church and received a housing allowance. As such, he may have few assets with which to provide housing at death, disability, or retirement. To allow him to build an investment equivalent to equity, Calvary will pay an equity allowance to the pastor living in the parsonage. The pastor will be eligible for the equity allowance after serving Calvary for three continuous years. If there is a break in service of more than one year, not including any church-approved sabbaticals, the three-year window will resume upon the pastor s return. The base amount of the equity allowance will be 1% of the appraised value of the parsonage. The parsonage will be appraised every 5 years and the equity allowance will be based on the most recent appraisal. The equity allowance will not be paid if the pastor is not living in the parsonage, as he would receive a housing allowance in its place. The equity allowance can be suspended in cases of financial exigency determined during the budgeting process. The equity allowance can be reduced or suspended when the local housing market has declined in the past year (e.g. declined in 2016 when determining the 2017 budget). When Calvary has a second, or associate, pastor on staff, a parsonage will only be available for this pastor if not in use by the senior pastor. The associate pastor will receive an appropriate housing allowance that can be used to pay for mortgage or rental payments for a home to live in with his family, as well as for certain household furnishings and supplies. The amount of the allowance will be approved by the church as part of the budgeting process and will be retained in the church files. The amount of the allowance will be compared against housing allowance data and other factors as appropriate and, if both the senior pastor and the associate pastor are receiving a housing allowance, the housing allowance for the associate pastor should be at least 80% of the housing allowance for the senior pastor. The associate pastor is expected to find housing near enough to the church to be able to effectively minister in our community. An appropriate proximity will be at the discretion of the Executive Committee. An appropriate home value will be determined by the Elders and Finance Committee and used as the basis for calculating the equity allowance and housing allowance, along with an evaluation of the current housing market and cost of home ownership. Insurance Medical health and dental insurance is provided as a benefit to the pastor, with the percentage of premiums to be covered as determined during the budgeting process. As an employer with fewer than 50 employees, the church is not required under the Affordable Care Act (ACA) to provide coverage; however, any coverage the church determines to provide must be ACA compliant in terms of cost as a percentage of salary and the specific items covered by the plan offered. A taxable stipend will be paid to the pastor each year, in addition to salary, by an amount determined during the budgeting process based on an estimation of the amount of premiums for the year. There is

5 no legal restriction on the use of this stipend; its intention is to supplement the fact that the pastor pays health and dental insurance premiums for the year with after-tax dollars. The pastor is responsible for independently selecting, enrolling and managing an ACA-compliant plan of his choice. The church does not offer coverage directly through a group plan. The plan selected by the pastor, if he does not elect coverage through another employer, will be reviewed and approved by the Elders and Finance Committee for reasonableness of premium costs. At the beginning of the year, each pastor may set aside a portion of his salary for qualified medical expenses. Calvary will pay a set amount towards life insurance premiums for the pastor. The intent is to provide $250,000 of coverage, though if the pastor is able to get more coverage for the amount budgeted for premiums, Calvary will still pay the full premium. The pastor may either pay the premiums out-of-pocket and be reimbursed, or have the church pay the life insurance premiums directly. The church will not offer short-term disability insurance as a benefit; however, the pastor may elect to purchase such coverage independent of the church. Retirement Calvary will contribute toward the eligible pastor's retirement through a Simple IRA. If the pastor elects to contribute a portion of his salary to the plan, Calvary will contribute a match up to 3% annually to the established plan. Additionally, a bonus in the amount of 9% of the pastor's annual salary will be paid, which the pastor can defer into the IRA. The pastor is able to contribute additional amounts to the Simple IRA from his own funds. The pastor is 100% vested immediately the pastor owns any funds contributed to the IRA and can direct the investments made in it. The IRA will be established at a financial institution of the church's choosing. Annual retirement contributions made by the church may be suspended in cases of financial exigency determined during the budgeting process by the Elders and Finance Committee. The pastor is eligible to contribute to the plan if he has earned greater than $5,000 during each of any two preceding years or is reasonably expected to earn $5,000 in the current year. The church must contribute to the plan each year based on the elected method either a match up to 3% of the pastor's salary, or a 2% non-match contribution. Professional Expenses The church will budget an annual amount for the pastor s professional expenses, such as professional journals, books or periodicals, hosting, entertaining, or meeting with church leaders, members or guests, or software and technology used in the line of work. This amount will be determined after consultation with the pastor and consideration of anticipated professional expenses. These professional expenses will be budgeted and paid by the church; however, the pastor may also elect to set aside a portion of his salary toward professional expenses.

6 LEAVE TIME Sabbath The pastor is expected to take off at least one day each week, and preferably 6-8 days each month, in accordance with the biblical practice of Sabbath. The demands of a pastor's role in the church may not follow a typical work week schedule; however, the pastor is expected to work an average of hours each week. Vacation The pastor will be given four weeks of paid vacation each year, during which he will be free of all church responsibilities. At the discretion of the elders, up to one week of vacation time can be rolled over to the next year. Vacation time will be reviewed and approved by the Elders in advance. Study Weeks The pastor will be given two weeks each year away from regular church responsibilities for the purpose of studying professional topics and planning future activities and work. This is in addition to vacation time. Holidays The pastor will be given holiday time on all federally-recognized holidays. For holidays in which the pastor has work-related responsibilities, such as Christmas or Easter, the pastor will have flexibility to take a day off at a separate time. Leave Time The pastor will be given time for illness or to be with his immediate family at times of special celebration such as weddings or graduations or at times of personal emergency or unusual family responsibility. Paid personal leaves will normally be limited to two weeks per year, except when compassion dictates further extension. Extensions will be granted by the Executive Committee. This is in addition to vacation time. Parental Leave Bringing children into a family, whether by birth or adoption, is an important time of adjustment; and both parents are expected to be actively involved in the child s care. The pastor will be given three weeks of paid parental leave at the birth or adoption of a child. Flexible scheduling of the three weeks may be arranged at the discretion of the Elders, such as extending the leave if the pastor is working parttime during the leave. Sabbatical Leave After every sixth full year of ministry in the church, the pastor may take a sabbatical. Refer to Calvary's sabbatical policy for further information.

7 Death In the event of the pastor s death, Calvary will provide full salary and benefits to the spouse and/or family for three months. Continued use of the parsonage and other expenses, such as moving, will be considered on an individual basis.

8 CORE COMMITMENTS Working Conditions Calvary will provide competent support staff as well as suitable office space and equipment to facilitate the pastor s work. In arranging office space, consideration will be given to the pastor s need for study, counseling and administration. Job Description In accordance with Calvary s Constitution, a job description is written by the Pastoral Search Committee at the beginning of a search for a new pastor. Once a pastor is hired, this policy recommends the elders review the description at least once every five years, or when the church goes through a significant change. This will allow the job description to be updated if the needs of the church have changed or if the role of the pastor has changed in any way. Evaluation of the Church s Ministry A regular evaluation of the church s ministry, including staff, is important for the health of the church. At least every three years, the pastor and elders should evaluate the health of the church, its ministry and current needs. This evaluation will drive the course, direction and goals the pastor and elders set for the church and the performance goals set for the pastor.